Warren Buffett is awesome.

[sanfran22]

Most of the time, yes. There are certain investments in which they wouldn't (of course ROTH IRA's, etc). However, this is not just a tax on the rich. Most middle class people have some stake in the markets, and they pay taxes on that money as well prior to investing.

So are we just going to raise the taxes on the wealthy cap gains? Or everyone?

[pghin08]

So are we just going to raise the taxes on the wealthy cap gains? Or everyone?

Everyone. If you make 50K a year, and you sell a stock with a cap gain of $10K, then you have $60K of income that year, and you pay the appropriate tax rate.

[habsheaven]

Are not the gains "New" money (ie: earnings) that are being taxed? I do not see how that is being double-taxed.

[pghin08]

Are not the gains "New" money (ie: earnings) that are being taxed? I do not see how that is being double-taxed.

I'm sure what he's talking about is the fact that for most people, when you buy a stock/fund, you're buying it with money that you've already paid taxes on (if I get a paycheck, transfer it to my brokerage and buy 100 shares of Apple--I don't get paid THAT much, btw, I've already paid taxes on that money as earned income).

However, if you're the CEO of a publicly traded company, and you pay yourself with your own stock, then yeah, you're really only paying tax once.

[habsheaven]

I'm sure what he's talking about is the fact that for most people, when you buy a stock/fund, you're buying it with money that you've already paid taxes on (if I get a paycheck, transfer it to my brokerage and buy 100 shares of Apple--I don't get paid THAT much, btw, I've already paid taxes on that money as earned income).

However, if you're the CEO of a publicly traded company, and you pay yourself with your own stock, then yeah, you're really only paying tax once.

So you are saying when you sell those stocks you are paying tax on the "total sales value" and not just the "gain"?

[pghin08]

So you are saying when you sell those stocks you are paying tax on the "total sales value" and not just the "gain"?

No, you're just paying on the gain. My point is more that it's all in how you look at it. You're right, you haven't paid taxes on the gain whatsoever. But most people think "Well, I paid taxes on this money before I invested it, so why are they taxing me again???"

If I had a nickel for every time one of my clients said something to that sort

[AUTaxMan]

3. Tax Capital Gains as Ordinary Income.

If your goal is to kill investment in the middle of a recession, this would be the best thing to do.

Most of the time, yes. There are certain investments in which they wouldn't (of course ROTH IRA's, etc). However, this is not just a tax on the rich. Most middle class people have some stake in the markets, and they pay taxes on that money as well prior to investing.

Anyone with a retirement plan has a stake in the market.

[AUTaxMan]

No, you're just paying on the gain. My point is more that it's all in how you look at it. You're right, you haven't paid taxes on the gain whatsoever. But most people think "Well, I paid taxes on this money before I invested it, so why are they taxing me again???"

If I had a nickel for every time one of my clients said something to that sort

The real double taxation argument exists in the corporate dividend context.

[pghin08]

If your goal is to kill investment in the middle of a recession, this would be the best thing to do.


Anyone with a retirement plan has a stake in the market.

Not true at all. I'm a middle class investor, and what would equate to a 10% tax hike on a small portion of my income surely wouldn't cause me to greatly alter my strategy and certainly wouldn't cause me to bail on the market entirely. Nor would it change my clients. They see the benefit of long-term investment over any tax increase. They'd be punished far more for staying OUT of the market and in cash.

And yeah, that's my point, most people have a stake in the market.

[pghin08]

The real double taxation argument exists in the corporate dividend context.

I have to ask. Why are you so opposed to corporate tax hikes? Or for that matter, any tax hikes? You talk to almost any economist, and they'll say that for the US to adequately address their debt issues, they need to cut spending and increase taxes.

I know the idea behind keeping corporate taxes low. "Well if the corporations have more money, it's good for all of us. More job creation." Yeah, there will be more job creation. IN INDIA. You think Coke or Dell want to hire a bunch of high-paid, entitlement-bearing Americans? Not on their balance sheets. American corporations are seeing more and more of their profits come from overseas, and they're responding with jobs.