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Capital gain treatment is designed for the protection of the person who develops a small business, or a farm, sees the result of his/her effort payoff over 20-40 years, then cashes in. Inflation (which is still perking along at 3-5%) overstates the gain and pushes the individual into a higher tax bracket.
Inflation will have been boosting product prices and asset values while lowering long-term debt burdens the entire time as well. It operates on both sides of a balance sheet. The favorable tax treatments of capital gains are actually argued as incentives for promoting investment. It's like Sara Lee -- nobody doesn't like investment.
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Originally Posted by 2nd trick op
Same thing happened to people on the lower rungs of the employment ladder back in the Seventies; the so-called "progressive" tax laws automatically pushed them into higher brackets and confiscated a large portion of salary increases.
Tax brackets have been indexed for inflation for decades, and your top marginal rate applies only to the income that falls in your top marginal bracket. The idea that people in the 1970s were losing large portions of pay increases to being bumped up by a tax bracket is silly. By the way, so-called "bracket creep" was actually a good way to shore up revenue without needing to argue for legislation.
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Originally Posted by 2nd trick op
To be fair, a tax system not only needs a uniform rate; it needs to be based upon consumption rather than income.
Uniform tax rates impose a heavy penalty on poor people and (unsurprisingly) hand a huge tax break to rich people. In the long-run, a consumption tax would be ever so slightly more efficient than an income tax. We could pretty much convert the current system to a consumption tax simply by making net saving a deduction and net dis-saving an addition to income.
We hear endless complaining from all the "progressives" and Left-leaners here that some "one per cent" -- sommewhere - is getting a disproportionaate share of the "nation's" wealth, and that it should e "redistributed".
I would love to hear some to these delusionists tell us all exactly how you would accomplish this.
To begin with, the Constitution doesn't permit seizure of the lawful property of an honest citizen without "due process of law". "Rule bythe peple" can't be allowed to degenerate into rule by the mob.
So we'll just tax those high incomes -- right?
Except that those who are self-employed, or have a share in a growing buisness (partnership, S-corp, etc) often can formulate strategies to drive the incomes of those enterprises down when taxes go up.
On the other hand, the guys anfd gals with mortgages and growing families usually have no choice but to give it everything they've got -- which puts them in a higher tax bracket where they have no choice but to pay a disproportionate share of the freight.
But what about Bill Gates, or Sergei Brin, or Jeff Bezos .... or so many of those "villains" on the Forbwes 400?
The wealth of a lot of these individuals is usually represented by the high value of common stock in an enterprise they created.Until they sell and actually realize any gain (and the value of that stock would drop considerably if the Lefties rattle thir sabers too loudly).
I fully understand that the American econmy is stagnant; that is mostly due to the fact that our real heavy industry can't compete in many global markets -- and that is due to the burden of too much regulatiory, environmental, and egalitarian dreams. We can afford the basics everyone agress upon, but there are limits.
so go ahead, you guys and gals over there on the left side of the aisle; tellus how you woulld "right" what you perceive to be a "wrong" without a field day for the shiftless and irresponsible who take advantage of what was intnded tfor the truly disadvantaged
Because what we've got right now clearly is not working.
What I find interesting about libertarians and ultra conservatives is the way they deliberately confuse two issues:
The first issue is how to best fund government.
The second issue is this "straw man" they erect about income redistribution.
Government is funded largely through a graduated, or progressive income tax not to redistribute income, but for a more practical reason. A flat rate income tax would have to have a very low rate. This is because the poor and lower income groups couldn't afford to part with more than 5% or so of their income. If we reduced taxes for wealthier groups to this level, you could kiss the modern state good bye. We wouldn't have money for a military second to none, social security, medicare, or medicaid. The income tax, taxes those with greater incomes as a higher rate because it would be impossible to run the type of modern state we have without doing so.
Now, if someone wants to argue taxes on the wealthy are too high, that's fine with me. However, its pure dishonesty to not spell out what reducing those taxes would mean. That's why I laugh at anyone who tries to start a discussion about imposing a flat rate income tax. The part they leave out is that such a tax would result in dismantling government as we know it. If you support such an agenda, that's your privilege, but say so. Don't hide behind the dishonesty of a flat rate tax or "how unfair" our current system is to the wealthy.
Nor, does your argument about taking property without due process of law mean anything in this context. Various provisions of the Constitution, including the Sixteenth Amendment give government the power to impose an income and other taxes. In short, taxation is not taking property without due process.
Income redistribution is a totally different animal. Some socialist countries have attempted something like this with varying results. The Scandinavian countries come to mind. I personally don't think income redistribution is the province of government. I don't think you have much to worry about. The current Republican Congress is not going to go down a socialist path.
I will say this: The policies we've pursued in this country have redistributed income. Its just that its been in the other direction. Forty years ago, 1% of this country didn't own 50% of the wealth. If you did get your way, you'd make this problem infinitely worse. Perhaps, you intend for the poor and middle classes to be serfs or slaves of the wealthy?
First, "the 1%" term needs to die, because too many in that group are just normal people without much influence.
So long as you think "normal" people have incomes of at least $400K or so. That's a national number of course, and the number by state would vary by quite a lot. You'd need $678K to make the bottom of that state's top 1% in Connecticut, but a mere $228K would do it in Arkansas.
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Originally Posted by rruff
The core issue has been our perpetually large trade deficit due to an artificially boosted US$, via interest rates, tax cuts, fiscal deficits, loose credit, and unilateral trade policies with certain countries (like Japan, Mexico, and China). This has made it a no-brainer for companies to invest in overseas production rather than domestic, and simply import the goods into the US, greatly increasing their profits. This has depressed domestic investment and wages, and resulted in a huge increase in fiscal and private debt. If we get back to trade parity, the US will be a good place to invest again and we will grow industries where we have a natural competitive advantage.
The lot of that is simply nonsense. Keep in mind that global trade is always in balance, but in the grand scheme of things, large and successful economies should be running the trade deficits that allow small and struggling economies to advance via export-oriented growth. Otherwise, we've had weak dollars and strong dollars, low interest rates and high intrerest rates, tax cuts and tax increases, budget deficits and budget surpluses, and none of it has revolutionized anything. Its prosperity and stability have made the US a premier place to invest right along.
Government is funded largely through a graduated, or progressive income tax...
Personal and corporate income taxes provide about 55% of federal receipts. These taxes are progressive at the federal level. Other significant federal taxes and nearly all state and local taxes are mildly to extremely regressive. The rest of your post was pretty good, by the way.
We hear endless complaining from all the "progressives" and Left-leaners here that some "one per cent" -- sommewhere - is getting a disproportionaate share of the "nation's" wealth, and that it should e "redistributed".
I'm about as conservative as your average working class white male...which is to say, fairly conservative (I do recycle though, so maybe I'm part hippie too). Yes, there is a 1% who are getting disproportionate wealth without working for it, in fact stealing it through taxes and inflation (which is a hidden tax) and redistributing it to themselves through nepotism and cronyism.
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I would love to hear some to these delusionists tell us all exactly how you would accomplish this.
Here's a start: Can't really go wrong with hatchets and firearms. Guillotines are nice too.
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To begin with, the Constitution doesn't permit seizure of the lawful property of an honest citizen without "due process of law". "Rule bythe peple" can't be allowed to degenerate into rule by the mob.
Please describe to me who these Honest Citizens are? Most probably don't give two cookies about the USA and only care about internationalist ideals. Most are not very honest, but like to delude themselves into thinking so.
Due process of law? You mean those laws which tax the hell out of the middle class so that bureaucrats and liberal fascists and neocon warmongers alike can enrich themselves? No thanks.
Dude, I'm all for people who work hard, those who build their own businesses and who make honest profit through service and good commerce, but those who wield law and government as a weapon to enrich themselves have got to go. We can start with bankers and then move on down the line to the lobbyists.
What is good for the nation isn't investing in people and things that return nothing to the nation .We have actually recreated a dependent class in this country which is even bad for them.
Keep in mind that global trade is always in balance, but in the grand scheme of things, large and successful economies should be running the trade deficits that allow small and struggling economies to advance via export-oriented growth.
It's an incidental by-product. The real purpose was to make a few people insanely wealthy. The other incidental byproduct was depressed wages, escalated debt, lower investment, and a huge increase in wealth and income disparity in the US. Did you vote for that?
No matter how much you like the idea of of underdeveloped countries developing, you wouldn't choose this, the oligarchy's method. There is a better way, if we actually had a choice in the matter.
Is China "small and struggling"?
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Its prosperity and stability have made the US a premier place to invest right along.
We've been drained of capital for the last 40 years and replaced it with debt.
I personally don't think income redistribution is the province of government.
Whose province is it then?
Every developed country practices massive redistribution... more than the US. It is necessary because capitalism *naturally* results in the sort of distribution you find in 3rd world countries. Only in the US we pretend this isn't so. Taxation is theft!
You can go at it from the other side if you wish, by boosting and controlling wages. Most developed countries are nearly all unionized, and they negotiate for pay. That works also. I'm not real fond of either though. I'd prefer something like a UBI and an otherwise very free market, which should be more efficient (productive and wealthier, with lower bureaucratic overhead).
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