A way to ensure that the Mitt Romney's pay a reasonable tax rate

[Mr.Phips]

Remember back in 2012 when Mitt Romney relased his tax returns, it was revealed that despite making over $20 million a year, he managed to only pay around 13% of his income in federal income taxes?  

He and many other of the wealthiest Americans have been able to pay egregiously low tax rates not because of deductions, but because of the preferential rates for long term capital gains and "qualified" dividend income.  For example, the top tax rate for ordinary income is 39.6%, but for long term capital gains and "qualified" dividends, it is only 23.5%(including the unearned income surtax).

You would at least think for Alternative Minimum Tax purposes, these rate exclusions would be wiped out and all income would be taxed at 28% like all other income for AMT purposes, right?  For whatever reason, this unearned income is still taxed at the low rates even for AMT purposes.  

If the AMT was amended to wipe out the exclusion for unearned income provided in the regular tax system, it would ensure that people like Mitt Romney and Warren Buffett paid a more reasonable, minimum 28% tax rate.  

Of course, this change to the tax code makes way to much sense to ever be considered.  

[AggregateDemand]

Dividends are already taxed at the corporate level so the qualified dividends tax rate for individuals is in addition to whatever tax rate the corporation paid for its net earnings (probably 35%). By the time the qualified dividends are done being taxed at the state and federal level, the rates are much higher than the individual rates. Obviously, the tax problem is more acute for ordinary dividends.

Long-term capital gains are also driven by earnings, in theory, which are also heavily taxed at the corporate level before they are imputed into the stock value. Furthermore, long term earnings are reduced by the effects of inflation, hence the lower marginal rates on UNADJUSTED basis.

Romney is paying his taxes, it's just that someone/something else is paying the tax before it gets to him. It poses a serious problem because corporations are able to alter the tax burden by using price leverage and labor negotiation leverage to pass the burden of the tax onto employees and customers.

Why are we taxing the income at the corporate level which allows companies to use bargaining power to pass the costs along to other parties, rather than abolishing corporate income tax? I don't know, maybe Democrats will be able to explain why their insipid anti-business revenge fantasies and noble welfare programs always explode in their own faces.

[Indy Texas]

AggregateDemand,

Would you accept a tax overhaul where the corporate tax was eliminated but personal income and capital gains tax rates were raised high enough to make up for the lost corporate tax revenue?

[Mr.Phips]

Dividends are already taxed at the corporate level so the qualified dividends tax rate for individuals is in addition to whatever tax rate the corporation paid for its net earnings (probably 35%). By the time the qualified dividends are done being taxed at the state and federal level, the rates are much higher than the individual rates. Obviously, the tax problem is more acute for ordinary dividends.

Long-term capital gains are also driven by earnings, in theory, which are also heavily taxed at the corporate level before they are imputed into the stock value. Furthermore, long term earnings are reduced by the effects of inflation, hence the lower marginal rates on UNADJUSTED basis.

Romney is paying his taxes, it's just that someone/something else is paying the tax before it gets to him. It poses a serious problem because corporations are able to alter the tax burden by using price leverage and labor negotiation leverage to pass the burden of the tax onto employees and customers.

Why are we taxing the income at the corporate level which allows companies to use bargaining power to pass the costs along to other parties, rather than abolishing corporate income tax? I don't know, maybe Democrats will be able to explain why their insipid anti-business revenge fantasies and noble welfare programs always explode in their own faces.

A lot of the companies that folks like Romney are invested in are set up as RIC's(Regulated Investment Corps) that pay nothing in tax(they get a special 100% dividends paid deduction).  Not to mention that corps are allowed all kinds of deductions and credits that individuals are not.

[AggregateDemand]

AggregateDemand,

Would you accept a tax overhaul where the corporate tax was eliminated but personal income and capital gains tax rates were raised high enough to make up for the lost corporate tax revenue?

Goes without saying. The corporate income tax system is already falling apart anyway. Revenues are falling (% GDP), and the onerous rates are keeping earnings stashed overseas where they do no good for our citizens.

However, if we're going to lean on the individual income tax system, it will need an overhaul. Right now, everyone has different incentives to save, borrow, invest, educate, etc. We need one marginal rate for everyone, and a system of credits/deductions that protect the working class.

[AggregateDemand]

A lot of the companies that folks like Romney are invested in are set up as RIC's(Regulated Investment Corps) that pay nothing in tax(they get a special 100% dividends paid deduction).  Not to mention that corps are allowed all kinds of deductions and credits that individuals are not.

Romney invests in a C-Corp. The C-Corp has earnings. The C-Corp pays taxes on the earnings, and then distributes the after-tax earnings to Romney.....who pays taxes on them again.

Romney invests in an RIC. The RIC invests in C-Corps. The C-Corp has earnings. The C-Corp pays taxes on the earnings, and then distributes the after-tax earnings to the RIC. The RIC distributes the after-tax earnings to Romney.......who pays tax on the earnings again.

Do you understand why RIC's qualify for tax-exemption? It's not because Romney and Wall Street have invented a clever way to circle-jerk themselves out of taxation. If RIC's were not tax-exempt, they wouldn't exist. No one is going to voluntarily pay taxes three times on the same pile of earnings.

[King]

What on Earth is this thread?

[DC Al Fine]

Dividends are already taxed at the corporate level so the qualified dividends tax rate for individuals is in addition to whatever tax rate the corporation paid for its net earnings (probably 35%). By the time the qualified dividends are done being taxed at the state and federal level, the rates are much higher than the individual rates. Obviously, the tax problem is more acute for ordinary dividends.

Long-term capital gains are also driven by earnings, in theory, which are also heavily taxed at the corporate level before they are imputed into the stock value. Furthermore, long term earnings are reduced by the effects of inflation, hence the lower marginal rates on UNADJUSTED basis.

Romney is paying his taxes, it's just that someone/something else is paying the tax before it gets to him. It poses a serious problem because corporations are able to alter the tax burden by using price leverage and labor negotiation leverage to pass the burden of the tax onto employees and customers.

Why are we taxing the income at the corporate level which allows companies to use bargaining power to pass the costs along to other parties, rather than abolishing corporate income tax? I don't know, maybe Democrats will be able to explain why their insipid anti-business revenge fantasies and noble welfare programs always explode in their own faces.

A lot of the companies that folks like Romney are invested in are set up as RIC's(Regulated Investment Corps) that pay nothing in tax(they get a special 100% dividends paid deduction).  Not to mention that corps are allowed all kinds of deductions and credits that individuals are not.

FFS Phips, even Aggregate Demand is right on this one

http://www.investopedia.com/terms/r/ric.asp

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[Lief 🗽]

Here's my suggestion for how to ensure Romney pays a reasonable tax rate: