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

[Attorney General, LGC Speaker, and Former PPT Dwarven Dragon]

http://www.huffingtonpost.com/2015/01/17/obama-sotu-taxes_n_6493144.html?utm_hp_ref=politics

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FF!

[RFayette]

I like the EITC, not a fan of the capital gains tax hikes, though it is good that they're restricted to high income-earners.


This won't happen of course.

[○∙◄☻¥tπ[╪AV┼cVê└]

Not enough, capital gains would be taxed less than earned income.

[pbrower2a]

We need high taxes on high levels of 'earned' income, especially executive compensation.

[True Federalist (진정한 연방 주의자)]

These proposals are DOA, but unless he was going to suddenly become a Republican, that was always going to be the case.  Frankly, other than extending the EITC to those without children, I don't think much of these proposals.

[DC Al Fine]

These proposals are DOA, but unless he was going to suddenly become a Republican, that was always going to be the case.  Frankly, other than extending the EITC to those without children, I don't think much of these proposals.

I like the automatic IRA proposal. Otherwise, meh.

[jaichind]

Thank goodness it is DOA.  In my view capital gains taxes should be abolished as double taxation.  As long as GOP manage to hold on the the House next couple of elections none of this stuff will see the light of day and stay where it belongs, nowhere.

[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.

[○∙◄☻¥tπ[╪AV┼cVê└]

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.

Double taxations are what the rich pay. Non double taxations are what the poor pay. When the poor pays social security taxes and then sales tax on the same income, that's not a double tax, because they're poor.

[Sbane]

http://www.huffingtonpost.com/2015/01/17/obama-sotu-taxes_n_6493144.html?utm_hp_ref=politics

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FF!

So if the Republicans oppose this, which they surely will, will you be voting Democrat in 2016?

[jaichind]

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.   

[muon2]

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.

[The Free North]

Awful....just awful

[memphis]

This won't happen of course.

^^^^^^^
What else is there to say? The obstinent GOP has blocked everything possible by any means possible since Jan 2009. Obama talks a good game at the SotU but he didn't even campaign hard on these sorts of policies. It's hard to believe it's that much of a priority for him.

[🦀🎂🦀🎂]

is the GOP still under the sway of that dumb pledge by the way?

[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.

[jaichind]

The value of an asset is the current value of future cash flows or dividends.  So when a person sells an asset at price X it is really giving up that flow of future cash flow.  If we agree (perhaps we do not), that taxing dividends is double taxation, then taxing increase in the value of an asset when one sells is which is merely getting the current value of future dividends is double taxation as well. 

[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.

[DC Al Fine]

The value of an asset is the current value of future cash flows or dividends.  So when a person sells an asset at price X it is really giving up that flow of future cash flow.  If we agree (perhaps we do not), that taxing dividends is double taxation, then taxing increase in the value of an asset when one sells is which is merely getting the current value of future dividends is double taxation as well. 

I agree with the premise, but if the aim is to give the appearance of taxing the rich fairly shouldn't we eliminate corporate taxes and tax dividends and capital gains on individuals?

[King]

Obama proving he is bought by Goldman Sachs with this move.

[jaichind]

The value of an asset is the current value of future cash flows or dividends.  So when a person sells an asset at price X it is really giving up that flow of future cash flow.  If we agree (perhaps we do not), that taxing dividends is double taxation, then taxing increase in the value of an asset when one sells is which is merely getting the current value of future dividends is double taxation as well.  

I agree with the premise, but if the aim is to give the appearance of taxing the rich fairly shouldn't we eliminate corporate taxes and tax dividends and capital gains on individuals?

I would have no issues with that. My narrow complaint was double taxation.  If fact what you propose would then make it easier to then move the debate to how progressive tax rates should be but the double taxation issue would be off the table.  My view is that double taxation is a way to make the tax system appear less progressive than it really is.  I have very strong views on how progressive a tax system should be but we can debate that separately.  

[pbrower2a]

Incorporation and hence limited liability are special privileges to investors. If investors were responsible financially for the bankruptcies of the entities that they own as shareholders, then the privilege that justifies the corporate income tax would vanish. 

[MASHED POTATOES. VOTE!]

More socialism

[AggregateDemand]

Raising capital gains tax is a waste of time, unless they are getting ready to slash the corporate tax rate. Raising capital gains is only going to screw everyone who hasn't earned any capital gains yet. Part of Obama's legacy of screwing the American youth who voted for him.

If you want to raise capital gains taxes, slash social security benefits for well-to-do seniors who've milked the tax-subsidies their entire lives.

[Maxwell]

Thankfully the capital gains portion of this is almost certainly DOA. Both major parts of this are pretty ridiculous.