Should investment income be taxed at the same rate as work income (Buffet Rule)?
Let's face it, dark pools, futures manipulation, swaps, HFT & prop desks are economically detrimental and cost jobs....so why are they getting "job creating" tax cuts?... because they bribe Congress to keep it that way.
For corporate taxes, I am too ill informed to make an opinion. For individuals I say yes, sorta. I believe the lower rate for investments of greater than a year was to discourage day trading habits as individuals. Perhaps laws should allow up to say 5% of income be eligible to be taxed at the 15% rate for investments held over a year. Or something similar, that encourages lower wealth individuals to discourage short term trades (since probably most of their income will not be from piles of wealth in investments), but doesn't allow the wealthy individuals to pay lowest earners tax rates simply cause they got piles of money to put into stock x,y or z.
Okay, I know it will never happen, but here is my idea for the new tax form:-
Line 1 your name and SS #
Line 2 amount of all your income of any form (earned, unearned, or whatever)
Line 3 your tax rate (say 4 levels – yeah, it should be graduated)
Line 4 your taxes due (line 2 times line 3)
No deductions whatsoever, no distinctions married or single- no nothing- everybody pays something (I don’t care if the poor pay .25%, something)
Like I said – it will never happen, I’m going to bed.
I don't believe in flat wages / income, so i don't believe in flat taxes. graduated wages / income and graduated taxes for me. spshapiro i like you idea best.
They should be the same rate and all net income treated the same. I agree with SP's system above. Social/economic initiatives and programs should be separate from taxation and everyone should have to pay something.
As for volatility increasing, I don't really think that would be too much. I currently have a mixed strategy of long investing and short trading. I would benefit greatly from holding stocks longer than a year (0% tax due to total income level), yet I would still trade a stock for a gain if less than a year and cough up the 15% if my trading method calls for it.
Sure, if you like economic stagnation and human suffering.
mcohen24 said: I'm trying to see if active traders agree/disagree with the proposal that investment income should be taxed at the same rate as work income. I created this poll about it on Polltopia, so just vote if you get the chance. Thanks!
Patches, as loathe as I am to disagree with you. I must. I concede that incentives can move people to perform in certain ways, some good, some bad. But once this door is opened, no matter how good the initial reform of the tax code might be someone (any politician), somewhere (in whatever legislative venue), and at sometime (especially around an election) will succeed in screwing it up. We should pay our taxes for one reason and one reason only, to fund the government to do things. We will agree to leave aside that some of these things are offensive to some of the people (that is in the nature of any government), but I take it that everyone agrees that there are some things that government should do. So you live here, or you take advantage of those that do, pay your share, as one who benefits from that.I am not saying the government shouldn’t incentivize certain activities, just don’t do it with taxes, or we will return to the present situation.
I have never bought into the "incentives matter" when it comes to making money and taxes. Yes, to a point you can curb behavor, but I don't think there are a lot of people that would choose not to make an extra .65 on a dollar earned because of a 35% tax rate. Would they like to keep the whole dollar? Sure, but to say that people will stop everything if they had to pay more taxes is a little extreme.
The only problem with this outlook is that you would then be more adverse to risk and put your money in safer places such as T-bills or head international. I would rather see the tax code tax you more upon the risk you undertake. If you're doing something like VC, you get more favorable tax conditions than say T-bill investing. I would rather see tax rates based more upon the asset class as well as period held. VC for example does a lot more for the economy than just a standard public equity purchase or mutual fund investment.
I could almost see VC as somewhere that you place a near zero tax rate as it's a significant source of small business funding as well as has a standard holding period of several years. This is against something like a T-bill which the standard holding period is decades but does nothing for the economy in the long run as it's a single cash injection that does little to help the government overall (each bill sold that is, the collective helps but as most of the debt that is bought is from foreign investors, it holds no tax implications here).
Otter, the problem with your proposal, of taxing the moving of money from one place to another, is that it's already done. The businesses make money on the transfers of money and that's taxed as business income (we pay a portion indirectly through things like wire transfers and check costs). The more recent rise of the EBT allows lower costs to the point where financial institutions usually absorb the cost (or pass it onto the receiving party such as the business you used your EBT with, e.g. the store when you use your check card) as a way to bring in more customers (which they nickel and dime on more costly services).
Your idea about taxation is fine if they are able to restrict what the heck they use the money for. I just saw where the Dept. of Agriculture is advertising for food stamps. As if they really need to do that.
The part about incentives and how it impacts peoples behavior is already proven. Not saying that people would quit investing just modify the manner in which they do it. The big complaint about Mitt Romney and Buffet is that they do not have income taxes. Is that such a bad thing after what they do for the economy?
If they truly reform the tax code and make it totally transparent, they could turn the IRS agents loose on the hidden, cash only economy.
Perhaps you don’t understand;- NO INCENTIVES, NO DISTINCTIONS, NO EXCEPTIONS –
If you allow one for any reason, then some else will find just as good a reason for theirs. I will admit to wanting a graduated tax rate, because I’m a damned commie and I believe people should pay according to their ability to pay, by not according to their race, creed, color, marital status, number of dependents, source of income, place of residence, age, etc.I’m sure my system will anger some people (let’s start with accountants), but anything of a lesser change is doomed to having to be revisited again and again in the future. With this system all that can be revisited is the tax rates, and when that happens it will be transparent that the source of the problem is not the tax system but how we choose to spend the money.
I'd rather see sales taxes raised as well as a tax that is based on the inverse value it has towards society. So the less useful it is (a super expensive sports car for example or soda as another) the more it's taxed. Taxing sugar (which is the ONE thing I thought was a good idea Obama had, of course though he didn't pursue or push it) products would probably raise more money than anything else you could think of. Another example would be expensive phone plans as they don't benefit society in any way (for non-business purposes that is) and end up having people burn their money in ways that are stupidly wasteful (even when they can't afford to burn money).
I watch the tv show Shark Tank all the time. The people on there are always saying "this is a billion dollar market, wouldn't you want just 1% of it?". Well 5% of $30M is a lot more than 90% of $30k (not that the person pays anywhere near that, more like 10-15%) and the $30M's cost to society is a lot lower than the $30k.
Here's another idea and that would be to tax a person based simply upon their useful contribution to society. Most of the big liberals would probably end up paying a LOT of taxes as most of them don't add any real value to society (this also goes to the big useless guys on Fox as most of them don't add any real value either, just to show I care more about utility rather than favoritism).