Obama to Propose Capital Gains Tax Increase & Extending the Earned Income Credit

[Sprouts Farmers Market ✘]

How is Capital Gains double taxation? I get dividends, but why this too? Because they are a function of future dividends gains? Those are getting taxed for someone else (or the company) as they come in. I think 10% is a perfect rate of taxation for CG.

[Sprouts Farmers Market ✘]

How is Capital Gains double taxation? I get dividends, but why this too? Because they are a function of future dividends gains? Those are getting taxed for someone else (or the company) as they come in. I think 10% is a perfect rate of taxation for CG.

Dividends received by individuals are already taxed as income. The problem with capital gains for many in the middle class is that the basis for the gain is the original price. When applied to a long-held asset such as a home or a small stock portfolio no accommodation is made for inflation, so individuals are paying tax on the changing value of the dollar. Tax law provides some exemptions to help offset this, but most middle class families eventually make the discovery that assets they thought would hedge against inflation are subject to a tax simply because they were safe.

I'm aware of the inflation issue (and perhaps that is relevant in real estate), but it's not really double taxation. On a long held stick portfolio, it's not ideal to tax inflation, but when the tax is this low amount, I don't see any problem. Are you going to make people take the time to deduct inflation so they are getting taxed on the ~8% gain per year instead of 10? At the point, the government is just going to up the tax rate (from 10% to 12.5% in thus example) to get the same revenue. Unless there was a serious problem of uncontrollable inflation, this would be a non-issue to me. For the most oart, inflation can be projected on these. You do have a fair point regarding housing though since it's conceivable the real value could decline while reporting a capital gain if you do own for 30 years. I suppose that could rarely apply to portfolios too. I wouldn't be opposed to a change, but the basis isn't double taxation even if you want to call inflation a tax. It's going to exist whether you can deduct it or not.

You can reform capital gains a little, but it's a pretty essential and mostly fair as far as taxes go.

[Sprouts Farmers Market ✘]

That was the counterpoint I gave in my first post, but I don't know if I can fully agree with that. You're effectively cashing out. The gain isn't a cash flow directly related to corporate earnings or the dividends paid out because of risk. This is a change in expected cash flows or timing of them. The price change could entirely be a result of the same expected dividends just getting closer. Nothing about the nominal future dividends has actually changed, but you have experienced a gain. The person who actually receives that dividend would be getting double taxed. You are effectively claiming a triple tax, and I don't fully agree with that.

I'm not set in stone on that either, but I do think there is merit in believing that taxing capital gains is fair. I see the argument for a double tax - I gave it initially - but I think this reasoning is stronger.

[Sprouts Farmers Market ✘]

How is Capital Gains double taxation? I get dividends, but why this too? Because they are a function of future dividends gains? Those are getting taxed for someone else (or the company) as they come in. I think 10% is a perfect rate of taxation for CG.

Because companies are already taxed for their earnings before they are given to shareholders as dividends and they are taxed again.   

And wages aren't taxed twice?  At some point, somebody purchased a good from the company I worked for.  They paid taxes on that salary.  The company that I work for now uses that sales income to pay me, and I get taxed on those wages.  Double taxation.

Taxes are not paid on revenue (assuming that is what you mean the first time you say salary). If that happened, no one would be able to afford to pay any. The wages and all other costs are deducted. Or am I misinterpreting the first tax?

[Sprouts Farmers Market ✘]

How is Capital Gains double taxation? I get dividends, but why this too? Because they are a function of future dividends gains? Those are getting taxed for someone else (or the company) as they come in. I think 10% is a perfect rate of taxation for CG.

Because companies are already taxed for their earnings before they are given to shareholders as dividends and they are taxed again.   

And wages aren't taxed twice?  At some point, somebody purchased a good from the company I worked for.  They paid taxes on that salary.  The company that I work for now uses that sales income to pay me, and I get taxed on those wages.  Double taxation.

Taxes are not paid on revenue (assuming that is what you mean the first time you say salary). If that happened, no one would be able to afford to pay any. The wages and all other costs are deducted. Or am I misinterpreting the first tax?

The person who originally earned the salary to buy the good paid taxes on it.

That's pretty silly. The whole purpose is to pay taxes on transactions. A new transaction occured that grows the economy. Taxes must be paid. There is nothing about taxing a physical dollar twice. It's each individual's income. You should be happy if dollars have higher turnover (so long as it doesn't create inflation). Otoh, A dividend is the owner receiving their share of the transaction. The same person's income is being taxed when it comes in to the corporation and then again as dividends without another economic transaction occurring. That is far from the same thing as what you are proposing - effectively no taxes.

The only aceptable counter argument for double taxation would be that the owners are not responsible for bankruptcy risks as was brought up early in the thread.

[Sprouts Farmers Market ✘]

How is Capital Gains double taxation? I get dividends, but why this too? Because they are a function of future dividends gains? Those are getting taxed for someone else (or the company) as they come in. I think 10% is a perfect rate of taxation for CG.

Because companies are already taxed for their earnings before they are given to shareholders as dividends and they are taxed again.   

And wages aren't taxed twice?  At some point, somebody purchased a good from the company I worked for.  They paid taxes on that salary.  The company that I work for now uses that sales income to pay me, and I get taxed on those wages.  Double taxation.

Taxes are not paid on revenue (assuming that is what you mean the first time you say salary). If that happened, no one would be able to afford to pay any. The wages and all other costs are deducted. Or am I misinterpreting the first tax?

The person who originally earned the salary to buy the good paid taxes on it.

That's pretty silly. The whole purpose is to pay taxes on transactions. A new transaction occured that grows the economy. Taxes must be paid. There is nothing about taxing a physical dollar twice. It's each individual's income. You should be happy if dollars have higher turnover (so long as it doesn't create inflation). Otoh, A dividend is the owner receiving their share of the transaction. The same person's income is being taxed when it comes in to the corporation and then again as dividends without another economic transaction occurring. That is far from the same thing as what you are proposing - effectively no taxes.

The only aceptable counter argument for double taxation would be that the owners are not responsible for bankruptcy risks as was brought up early in the thread.

And dividends are a different transaction than the corporation receiving income and making a profit.  A corporation does not HAVE to pay dividends to their shareholders.  They can accumulate retained earnings.

The double taxation argument is a bogus one because everyone is taxed multiple times.

It's a completely different argument than what you are trying to portray. There is room to support double taxation, but that isn't the way to do it. Not every transaction is taxed multiple times, and this is one income. And there is an expectation that dividends will be paid out. The owner will receive it eventually. I'll resort to preferred stock at this point because those really are barring failure.
The reason double taxation would be acceptable is if the government doesn't want to tax either entity too highly so they attempt to maximize investment for a given level of tax revenue and spread the percentages around. You don't want to destroy investment just to increase consumption a little. That's  not very easy to figure out but they can come close. It's not just because all transactions are double taxed.