Capital gains investments should be taxed at 90%

originally posted by: onequestion
a reply to: Aazadan

The majority of taxes are paid by the poor and middle class through consumption rich people get away with everything.

In terms of tax percentage the upper middle class gets it the worst. They have enough wealth to have something worth taxing, but not enough that they can start using loopholes for lower rates. By dollars paid, the wealthy still pay the most despite their lower percentage because 10% of 10,000,000 is still way more than 14% of 40,000. Or another way to think about it, the bottom 50% have less than 1% of the wealth in the country, how do they possibly have any assets capable of meeting the tax burden?

Consumption taxes are somewhat level between people, but they do rise as your income improves up to a point of about 2 million per year. There just happens to be a much closer gap between someone at 10k and 100k in those taxes than there is between someone at 40k and 400k in income tax. Consumption taxes aren't where the real tax revenue for the government is gained though, it's the largest expense for the poor and middle class, but it's not where any sizable government revenue is coming from.

This is actually why one of the tax plans I favor (there area few of them) involves abolishing all taxes other than an income tax, and taxing each citizen directly. No business taxes, no sales taxes, no payroll taxes, no capital gains taxes, no deductions. Just a straight up graduated/progressive tax based on your income for each year that could fit in a table written on a post card. There would still be some complication, such as if a business bought a work car tax free under this system and then gave it to an employee for use, I think it should count on the employee's income, but that's a matter for legislating.

a reply to: Aazadan

I like your tax idea.

Hidden taxes are a disgrace in my opinion I want up front real cost measures that make sense and I want to know where and how the money is spent.

With the advent of technology and the Internet this is a very real possibility and about damn time we had it.

originally posted by: smirkley
a reply to: Azureblue

Because IT IS the economy. You cant tax the economic engine, but you can tax what work the engine produces.

Just to say, my funds I invested in have a fractional load, and any outright trades I do in the stock market are 100% fee and commission free.

I have to leverage my investments based on my costs to invest. And taxing share purchases or sales outside of capital gains would significantly dampen my enthusiasm.

Thanks for your view. It wouldn't be a tax on the engine it would be a tax on the engines output ie increases in share price. Anyway, even if it was a tax on the engine, it would cut out short term trading and make the share market much more stable as buyers will not be so quick to sell and jump out. Think of all tax that would be generated and what it would do for industries share to pay the national debt?

Also, think of how it would make the rich pay their fair share of tax which as we leared in recent days via the Panama Papers, many of the rich do not pay. Taxing the share market is therefore justified on the basis of equity of tax burden payment anyway.

Taxing the stock market might actually drive investment into productive capacity instead of the financial hot potato game.

thanks

a reply to: Azureblue

And in my view, if I make a profit off of stocks that result in short or long term capital gains tax, that should be it. And certainly I will not tolerate on taxed just because I bought stock. If I lose money, great. If I make money, I pay tax on my profits. That is it.

The stock market.
Not just for the rich.

originally posted by: smirkley
a reply to: Azureblue

And in my view, if I make a profit off of stocks that result in short or long term capital gains tax, that should be it. And certainly I will not tolerate on taxed just because I bought stock. If I lose money, great. If I make money, I pay tax on my profits. That is it.

The stock market.
Not just for the rich.

I pay tax on my profits. That is it.


I like that actually, it means that I should only have to pay tax on that portion of my wage that is my profit for the year?

a reply to: smirkley

Actually what your doing is is profiting off of someone else's labor.

originally posted by: Azureblue
I pay tax on my profits. That is it.


I like that actually, it means that I should only have to pay tax on that portion of my wage that is my profit for the year?

That's how it works now, you can deduct work related expenses from your income tax, even more so when you itemize.

originally posted by: Aazadan

originally posted by: Azureblue
I pay tax on my profits. That is it.


I like that actually, it means that I should only have to pay tax on that portion of my wage that is my profit for the year?

That's how it works now, you can deduct work related expenses from your income tax, even more so when you itemize.

No, If I buy shares free of tax and I make a profit, as you correctly pointed out, I only have to pay tax on the profits made, therefore, I should only have to tax on that portion of my salary, which is my net profit I have earned at the end of the year after deducting all costs, even work related expenses.

As things stand, all my work related costs such as transport to and from work, marketing costs associated with getting a job, meals purchased while at work. clothes etc not currently taxable.

So if I earned $60 a year and at the end of the year I have $5k more money than I had at the beginning of the year then I should only have to pay tax on the $5k like if you have a $5k profit on a $60k investment then you only pay tax on the $5k. Fair's fair init?

a reply to: Azureblue

If you spent enough on trying to work that 55k of your 60k salary were used up, then certainly you could argue that you only had 5k in taxable income. Only specific things are valid deductions though. Also, deductions are just another word for increasing the percentage. The government needs a certain amount of revenue, the percentage they have to tax if your entire 60k is taxable is only half that they need to tax if only 30k of your salary is taxable. So what you're actually arguing for with your example is a 100% tax rate (or very close to it) on everything other than absolute necessities to go to work.

originally posted by: Aazadan
a reply to: Azureblue

If you spent enough on trying to work that 55k of your 60k salary were used up, then certainly you could argue that you only had 5k in taxable income. Only specific things are valid deductions though. Also, deductions are just another word for increasing the percentage. The government needs a certain amount of revenue, the percentage they have to tax if your entire 60k is taxable is only half that they need to tax if only 30k of your salary is taxable. So what you're actually arguing for with your example is a 100% tax rate (or very close to it) on everything other than absolute necessities to go to work.

Na, sorry mate, the little grey cells don't compute what you've said here but I certainly dont agree with any 100% tax my argument is that share trades as distinct from any brokerage should be taxed as much as any goods and services tax rate as this would raise billions, stablize the markets much much more, provide a bit more tax justice in the economy by making the rich pay tax which they otherwise are unlikely to pay. (I say the rich because 90-95% of shares are brought and sold by only 20% of traders, ie the 80 20 rule applies to share trading.)

If we were taught or chose to study how money got created before the govts gave away the power to create money to banks, we would learn that money gets created out of thin air. We would also learn that if govts reserved the right to continue to create money, for we the people, through they themselves, ie the govt, Then we would all pay little or no tax as the govt would create all the money the economy needs, including incomes for all, out of thin air using the exact same method the banks use.

a reply to: Azureblue

If we were taught or chose to study how money got created before the govts gave away the power to create money to banks, we would learn that money gets created out of thin air. We would also learn that if govts reserved the right to continue to create money, for we the people, through they themselves, ie the govt, Then we would all pay little or no tax as the govt would create all the money the economy needs, including incomes for all, out of thin air using the exact same method the banks use.

That right there.

originally posted by: Azureblue
Na, sorry mate, the little grey cells don't compute what you've said here but I certainly dont agree with any 100% tax my argument is that share trades as distinct from any brokerage should be taxed as much as any goods and services tax rate as this would raise billions, stablize the markets much much more, provide a bit more tax justice in the economy by making the rich pay tax which they otherwise are unlikely to pay. (I say the rich because 90-95% of shares are brought and sold by only 20% of traders, ie the 80 20 rule applies to share trading.)

It's simple, the more income that's available for taxation, the lower the on paper tax rate needs to be, although the end result is the same regardless of the rate. Lets say you need to raise $5,000 out of a persons $25,000 salary, that means you need to tax at a rate of 20%. On the other hand if you give a person several deductions and only $10,000 of that $25,000 salary is actually taxable income, you now have to tax at a rate of 50% to get that $5,000. Deductions and tax rates are just ways of tabulating things, in the end the same amount of money is going to be taken regardless.

In the case of buying and selling shares, there's nothing wrong with increasing that tax rate but as was explained earlier a 90% tax rate on the profits (I think the original post just wanted it on the sale, which clearly doesn't work) doesn't work either. The type of investing we're supposed to be encouraging is long term holdings, but inflation ticks up at about 4% per year officially, and unofficially we're closer to 6%. If you buy shares at $100 today, hold them for 5 years, and then sell them at $150 each that's a $50/share profit. Under the concept of a 90% tax rate, you would pay $45 on the profit and make $5/share a mere 1.01% annual return (note that this is much lower than even a checking account).

But that's not all, there's also inflation to consider. The value of $50 profit after 5 years after being diluted by inflation at 4% a year is only worth the value of $42.74 at the time of purchase but you need to clear atleast $45 in order to break even. You can get around this by adding complication to the tax code and deducting inflation in a similar manner to the interest deductions on mortgages. That introduces a new problem however, in that inflation is calculated based on CPI, and CPI is to put it in simple terms, completely screwed up. This results in the actual inflation rate being higher than the on paper reported rate that the deduction would go by and there would be a significant incentive to not invest in shares because other investment opportunities like government bonds would be much safer and have comparable returns, even putting your money in CD's would be an attractive option here.

If we were taught or chose to study how money got created before the govts gave away the power to create money to banks, we would learn that money gets created out of thin air. We would also learn that if govts reserved the right to continue to create money, for we the people, through they themselves, ie the govt, Then we would all pay little or no tax as the govt would create all the money the economy needs, including incomes for all, out of thin air using the exact same method the banks use.

That's a good way to create hyper inflation, you can't just pump new dollars into the system in that quantity every year. Eventually the demand for money will be met and the value of the dollar will fall.

originally posted by: Aazadan

originally posted by: Azureblue
Na, sorry mate, the little grey cells don't compute what you've said here but I certainly dont agree with any 100% tax my argument is that share trades as distinct from any brokerage should be taxed as much as any goods and services tax rate as this would raise billions, stablize the markets much much more, provide a bit more tax justice in the economy by making the rich pay tax which they otherwise are unlikely to pay. (I say the rich because 90-95% of shares are brought and sold by only 20% of traders, ie the 80 20 rule applies to share trading.)

It's simple, the more income that's available for taxation, the lower the on paper tax rate needs to be, although the end result is the same regardless of the rate. Lets say you need to raise $5,000 out of a persons $25,000 salary, that means you need to tax at a rate of 20%. On the other hand if you give a person several deductions and only $10,000 of that $25,000 salary is actually taxable income, you now have to tax at a rate of 50% to get that $5,000. Deductions and tax rates are just ways of tabulating things, in the end the same amount of money is going to be taken regardless.

In the case of buying and selling shares, there's nothing wrong with increasing that tax rate but as was explained earlier a 90% tax rate on the profits (I think the original post just wanted it on the sale, which clearly doesn't work) doesn't work either. The type of investing we're supposed to be encouraging is long term holdings, but inflation ticks up at about 4% per year officially, and unofficially we're closer to 6%. If you buy shares at $100 today, hold them for 5 years, and then sell them at $150 each that's a $50/share profit. Under the concept of a 90% tax rate, you would pay $45 on the profit and make $5/share a mere 1.01% annual return (note that this is much lower than even a checking account).

But that's not all, there's also inflation to consider. The value of $50 profit after 5 years after being diluted by inflation at 4% a year is only worth the value of $42.74 at the time of purchase but you need to clear atleast $45 in order to break even. You can get around this by adding complication to the tax code and deducting inflation in a similar manner to the interest deductions on mortgages. That introduces a new problem however, in that inflation is calculated based on CPI, and CPI is to put it in simple terms, completely screwed up. This results in the actual inflation rate being higher than the on paper reported rate that the deduction would go by and there would be a significant incentive to not invest in shares because other investment opportunities like government bonds would be much safer and have comparable returns, even putting your money in CD's would be an attractive option here.

If we were taught or chose to study how money got created before the govts gave away the power to create money to banks, we would learn that money gets created out of thin air. We would also learn that if govts reserved the right to continue to create money, for we the people, through they themselves, ie the govt, Then we would all pay little or no tax as the govt would create all the money the economy needs, including incomes for all, out of thin air using the exact same method the banks use.

That's a good way to create hyper inflation, you can't just pump new dollars into the system in that quantity every year. Eventually the demand for money will be met and the value of the dollar will fall.

Deductions and tax rates are just ways of tabulating things, in the end the same amount of money is going to be taken regardless. I agree and sometimes I wonder why they bother with deductions unless the purpose is to afford busieness (eg as a parallel comparison) more deductions than wage and salary earners.

I don't doubt your mathematics but make the point that the same mathematics apply to wage and salary earners re rates of return and inflation etc.

"That's a good way to create hyper inflation, you can't just pump new dollars into the system in that quantity every year. Eventually the demand for money will be met and the value of the dollar will fall" - yes and no.

Banks create 90-95% of all money created by opening accounts for people and placing credit deposits in those accounts. There is no law in any country to limit, either max or minimum amounts of credit. Banks create or not create whatever amount of credit that suits their purpose. Think of booms, busts and inflation here.

If banks create 90 - 95% of all money created then that means they exercise 90-95% of the control over the amount of money created, not govt and the amount was limited by a desired inflation number, and the GDP then there is no problem.

In fact they are better placed to establish the economy as the banks have a vested interest in booms, busts and inflation. Suggest read up on the 1929 stock market crash and the depression that followed it. Sue, it was aggravated by margin lending but that's what motivated the banks to call it all in, knowing the market would crash then when it crashed, they went in and brought all the underlying assets. so they have a vested interest in these things.

The govt has no such interest ...... well at least a govt of the people by the people doesn't.