Billionaires dumping stocks

[TURBO2GO]

So no one answered my question. Do you guys believe that It's OK to pay a lower rate that everyone else when almost all your income comes from your millions in hedge funds? Is it ok to pay a lower tax rate than the regular guy who earns his money through a regular job?

Am I clear in understanding this? Yes? you guys are saying yes? He should pay a lower rate than everyone else?

I am not buying this "majority of those people came up and earned their money and paid their dues so they should get a break" thing. Although you guys say that is how most of the wealth is made, evidence has shown me the contrary. I agree that if you want to save for retirement, that deserves special breaks. No problem with that. But to go from 20 million to 30 million and pay half to a third of the rate everyone else is forced to pay.... I'm just not with that. If you are saying that doesn't happen, I'd say it most certainly happens all the time.

 

[Vega$ NSX]

You are saying the same thing docjohn was saying earlier. In that the 100 million dollar guy "paid his dues" of sorts, and now he needs to be left alone and pay a lower percentage and that is OK.

So basically, you, vegas, and docjohn all feel that everyone should NOT pay the same rate. And that if you are really rich, its OK to pay a lower percentage because you already started out poor, worked your way up, paid your dues, and now you should get a break.

When you say 99.9999% of the time, I would have to say that I think your figures are off. The MAJORITY of the wealthiest people in this country earn most of their money from capital gains, and therefore pay a significantly lower percentage than the standard middle class guy. It isn't that this happens 0.000001% of the time, it is actually more like 80% of the time. The facts and numbers are there.

Again, I'm not sure you are getting the numbers. Somebody making high income is already paying at a higher rate. His "paying his dues" is paying at the higher rate. Meaning, someone making $500K a year is going to pay taxes at 30+% every year, period. Someone making $30K a year is going to be probably below 15% per year. How is that unfair? A person making more money not only pays at a higher tax rate, but contributes more total dollars in taxes.

If that person doesn't invest any of that money or buys houses and cars with it, then he will have paid a higher tax rate. End of story.

It is only after that person has made all that money, and already paid all those taxes and THEN decides to invest it into something like a stock or bond, THEN IF (and that's a big IF) that grows he'll pay a capital gains tax on that. But also remember, there is a huge risk they accept too. Unlike a salary, which is just positive income, stocks, bonds and real estate have the risk of losing money as well. Ask me how I know. I've lost hundreds of thousands of dollars in stocks and real estate. So what's in it for me to re-invest my money in stocks and real estate if I have a huge risk to lose money and whatever money I could make is going to be taxed like crazy. That would be like me saying, ok, every time you go to Las Vegas to gamble you play with with the hard earned money you already paid taxes on. Now if you lose that money playing blackjack then that's too bad. But if you win playing blackjack, now you have to pay an additional 30% of your winnings. If that were the case, then who would ever want to gamble? You have a risk of losing and what you do win, you only keep a small percentage. As I mentioned before, it takes all of the incentive of even wanting to gamble, or in this case, invest money back into stocks, bonds and real estate. Rather, now I will be forced to just stuff cash under my mattress or invest my money outside the US, like offshore accounts. In both situations that's bad for the US economy.

 

[blue_myriddn]

For capital gains there's an extremely simple solution....
Have it progressive.
$0-50,000 /yr of dividend income gains is 15% tax
$50,0001-$200,000 is 35% tax
$200,000-$800,000 is 45%
$800,000+ is 55%

I'd rather see:
$0-25,000 /yr of dividend income gains is 0% tax
$25,0001-$100,000 is 15% tax
$100,000-$500,000 is 25%
$500,000+ is 35%

 

[blue_myriddn]

My summary of the answers to your questions:

So no one answered my question. Do you guys believe that It's OK to pay a lower rate that everyone else when almost all your income comes from your millions in hedge funds? Is it ok to pay a lower tax rate than the regular guy who earns his money through a regular job?

Answer 1: Irrelevant because for 99% of the people getting their income from invested income, they are paying a higher % on that $$ because it is being taxed. (ie, they already ARE paying more in taxes percentage wise)

Answer 2: Yes - because if you taxed them at a higher rate the $$ would flee the country and be invested elsewhere and that will ultimately hurt the economy more than the benefit gained by taxing the snot out of the rich.

As for me personally, I am down with the graduated tax system although I recognize it will probably never happen due to "Answer 2" above.

 

[Arshad]

Dave, let me ask you this question:

Why is it that you can lower your taxes as a business owner, but the bus driver can't as a salaried employee? Why can you write off your car lease, your capital expenses, etc. to lower your effective business tax?

The reason is that you are helping the economy with job creation and potentially a lot of tax dollars if your business takes off. You are also taking a big risk versus the bus driver. The bus driver gets the same paycheck every two weeks. You on the other hand have no guarantee -- there is a risk that your business may not make as much next week or even lose money. For you to be willing to take that risk, there has to be a financial incentive for you... and a part of that is the government providing you tax breaks as a business owner.

Similarly, it's in the governments best interests to have people make investments in real estate, the stock market, etc. When you make a capital investment, there is an assumption of risk... and it's on accumulated capital that you've already been taxed on when you first earned it! Even in investments that are typically safe, there can be unexpected downturns. As such, there need to be incentives to make these investments, otherwise people would park their money elsewhere.

 

[Vega$ NSX]

One thing I would like to point out is that regardless if they are paying more at 15% at 10M/yr vs the guys paying 25% at 40K/yr the impact of the tax hit on each individual's life is enormously different. 10K from someone only earning 40K leaves them in a situation where they can't be stupid with their money and have to make sure they make sound decisions, limit themselves to their spending. 1.5M from someone whose earning 10M leaves them in a situation where they can still can go crazy and still be making money by the end of the year. Hell even with a 50% tax they would still be living the life of luxury with no worries of how they are going to make it by next year. Not saying that is the exact scenario but just using it as an example.

Let me ask you this if someone came up to you and were seriously depressed that they were getting a 4M dollar tax hit on their 10M/yr income would you really feel bad for them? I wouldn't, they are still making 6 Million a year which is way more than I could ever want.

This is not a very good argument because it very relative to just your perspective. Yes a guy making $10M/yr is a lot compared to you, but the fact that you have two cars and one of them is an NSX is very rich and extravagant to someone else.

Let's say because you own two cars and one of them is a sports car, that you need to pay double the gas rate, roughly $9/gal. Now, you don't have to, you just need to get rid of your NSX that's all. Do you think someone who only has one car (the majority) is really going to feel bad for you that now you can't have two cars because the gas is too expensive? After all it's a luxury most people can't afford, so we should punish you for indulging in that luxury and make you pay more.

That kind of thinking is most un-American. We are founded on the idea of making it rich; from rags to riches. Regardless if someone was born with a huge trust fund, someone had to have turned nothing into something to have funded that trust.

 

[TURBO2GO]

Arshad the comparison you are making is not relevant to me. I know what I pay in percentages compared to my employees and it's just as high if not higher. I don't know if not working for someone is greater risk, you don't have the risk of being layed off... Or fired. It's all risk, just different ones.

I think the issue here is a lack of clarity and fact. Facts and numbers are often distorted and it is a Herculean job getting to the truth. But in all my efforts to see that truth, I've found that the tax code is favored heavily towards the very wealthy.

Again terms come up like "taxing the shit out of the rich" or "sticking it to the rich" which are ridiculous to me because asking someone to pay the same rate as everyone else has suddenly become "sticking it to".

I'm not on board with this much much lower capital gains rate. It's not investment. I gave a perfect example of how my friend whose family is related to the WSJ spent a tiny amount of his 100M in my business and I actually hired more people, he would be taxed higher than when he parks it in some obscure hedge fund who takes that money offshore.

I just have to politely disagree with some of or guys in that I think reality is very different than the rosey picture painted by how the uber wealthy pay into the system.

 

[Vega$ NSX]

I am not buying this "majority of those people came up and earned their money and paid their dues so they should get a break" thing. Although you guys say that is how most of the wealth is made, evidence has shown me the contrary. I agree that if you want to save for retirement, that deserves special breaks. No problem with that. But to go from 20 million to 30 million and pay half to a third of the rate everyone else is forced to pay.... I'm just not with that. If you are saying that doesn't happen, I'd say it most certainly happens all the time.

But here is what is missing in your logic. Regardless if someone is born with a massive trust fund, SOMEONE had to have funded that trust fund. Let's take the afore mentioned Paris Hilton. Yes you can say she is spoiled and was born into money, but her ancestor, Conrad Hilton immigrated from Norway with nothing. It was he who built the Hilton empire, and it was HE who paid his fair share of taxes.

So when you say "the rich" they are either:

1) Someone who started with nothing and made a fortune (like Bill Gates)
2) The relative of someone who started with nothing and made a fortune (like the Hiltons)

In either case, someone had to make their fortune through hard work and they earned it. The point is, someone had to have worked their butt off in order to be in that scenario of capital gains taxes and huge trust funds. Even if you point to someone rich right now, you can always trace it back to someone who had nothing, worked their butt off, and made something.

Dave, say you work your butt off and really grow your business to the point when you retire you've made $10M. Now being the good father that you are, you want to set up your kids, and your kid's kids with enough money so they can live comfortably off of your hard work. So you put that $10M in investments for your kids to live off of and college funds. However, would it be fair for people to say your kids were born rich and they didn't do anything to earn it so now they want to tax the heck out what you want to give them?

 

[Vega$ NSX]

I'm not on board with this much much lower capital gains rate. It's not investment. I gave a perfect example of how my friend whose family is related to the WSJ spent a tiny amount of his 100M in my business and I actually hired more people, he would be taxed higher than when he parks it in some obscure hedge fund who takes that money offshore.

I just have to politely disagree with some of or guys in that I think reality is very different than the rosey picture painted by how the uber wealthy pay into the system.

I think part of the problem of why you disagree is that (I say this with the highest of respect) I don't believe you really understand how all of it work and correlates.

A capital gains tax applies only to gains invested in:

1) Stocks
2) Bonds
3) Resources and metals
4) Real Estate

So you may say, hey this guy has millions in investments and only pays 15% in capital gains taxes. Yet he doesn't hire anyone, how is he investing and helping the economy.

Well say he invested $4M in investments to each of the 4 categories subject to capital gains taxes.

$1M to stocks. Well what are stocks? When you buy a stock what does that mean? When you buy a stock you are giving money (capital) to a company so they can invest it to make that company grow. When a company wants to grow they need money. A fast way to get money is to offer stocks so people pay them cash in exchange for a small share of "ownership". The company then uses this money to buy machinery, office space, and even hire people. So think about how many people you could hire and how much you could grow if someone gave you $1M in capital to do as you wish. Its the very foundation of how big corporations are built. It's how Microsoft and Apple grew so quickly. If they relied only of the profit and sales of their products it would have taken them 10 times as long to grow to where they are now.

$1M to bonds. Bonds are how projects are done. It's how roads are paved, schools built and bridges made. In order to fund a project, a bond is floated. Basically it's a loan for building construction from an investor. So that $1M investment would mean countless of jobs for paving a road or building a bridge.

$1M in resources/materials. This is things like metals and oil. Buying and selling these commodities is the lifeblood of the entire industry. It supports an entire industry, like mining, which often support entire towns. Think about it, say someone needs to build a bridge and needs tons of steel. But once the project is done I don't need anymore steel. So if I were a producer of steel, how could I hire people for only the few months my customer needs steel and then lay them off once they don't? Here is where the investor comes in. I can keep producing steel at a constant rate, keeping people employed, because a buy (the investor) buys it. The investor then sells it to various bridge builders as they need it, but since investors are in it for the long run (they hold their money in the fund) then it works for everyone. As a manufacturer I can keep people employed because I have a consistent buyer.

$1M in real estate. I think this is the most obvious. If I purchase buildings, houses etc. not only am I supporting the jobs and companies in construction, but I also provide places for people to live, eat, work and play.

So in that regard, you can see how people who invest in things that are subject to capital gains taxes "feed" the economy to a very high degree.

 

[TURBO2GO]

But here is what is missing in your logic. Regardless if someone is born with a massive trust fund, SOMEONE had to have funded that trust fund. Let's take the afore mentioned Paris Hilton. Yes you can say she is spoiled and was born into money, but her ancestor, Conrad Hilton immigrated from Norway with nothing. It was he who built the Hilton empire, and it was HE who paid his fair share of taxes.

So when you say "the rich" they are either:

1) Someone who started with nothing and made a fortune (like Bill Gates)
2) The relative of someone who started with nothing and made a fortune (like the Hiltons)

In either case, someone had to make their fortune through hard work and they earned it. The point is, someone had to have worked their butt off in order to be in that scenario of capital gains taxes and huge trust funds. Even if you point to someone rich right now, you can always trace it back to someone who had nothing, worked their butt off, and made something.

Dave, say you work your butt off and really grow your business to the point when you retire you've made $10M. Now being the good father that you are, you want to set up your kids, and your kid's kids with enough money so they can live comfortably off of your hard work. So you put that $10M in investments for your kids to live off of and college funds. However, would it be fair for people to say your kids were born rich and they didn't do anything to earn it so now they want to tax the heck out what you want to give them?

Here you go again... "tax the heck out of".... When did "the same as everyone else" become so unfair for one group. You know, I don't care that Conrad hilton built an empire. If Paris is EARNING MONEY through whatever it is she is doing, that money should be taxed the same way anyone else earns money. Why should she get a break? We aren't talking about taxing her savings. We aren't taking about her 401K or her little retirement account. We are talking about EARNED INCOME. You all are saying because Conrad worked hard 50 years ago and was able to put her in this position, she now deserves special breaks on any further money she is making. That's what lower percentages are on one type of income versus another type of income. They're special breaks. They aren't "sticking it to" or "taxing the heck out of"...

 

[TURBO2GO]

I think part of the problem of why you disagree is that (I say this with the highest of respect) I don't believe you really understand how all of it work and correlates.

A capital gains tax applies only to gains invested in:

1) Stocks
2) Bonds
3) Resources and metals
4) Real Estate

So you may say, hey this guy has millions in investments and only pays 15% in capital gains taxes. Yet he doesn't hire anyone, how is he investing and helping the economy.

Well say he invested $4M in investments to each of the 4 categories subject to capital gains taxes.

$1M to stocks. Well what are stocks? When you buy a stock what does that mean? When you buy a stock you are giving money (capital) to a company so they can invest it to make that company grow. When a company wants to grow they need money. A fast way to get money is to offer stocks so people pay them cash in exchange for a small share of "ownership". The company then uses this money to buy machinery, office space, and even hire people. So think about how many people you could hire and how much you could grow if someone gave you $1M in capital to do as you wish. Its the very foundation of how big corporations are built. It's how Microsoft and Apple grew so quickly. If they relied only of the profit and sales of their products it would have taken them 10 times as long to grow to where they are now.

$1M to bonds. Bonds are how projects are done. It's how roads are paved, schools built and bridges made. In order to fund a project, a bond is floated. Basically it's a loan for building construction from an investor. So that $1M investment would mean countless of jobs for paving a road or building a bridge.

$1M in resources/materials. This is things like metals and oil. Buying and selling these commodities is the lifeblood of the entire industry. It supports an entire industry, like mining, which often support entire towns. Think about it, say someone needs to build a bridge and needs tons of steel. But once the project is done I don't need anymore steel. So if I were a producer of steel, how could I hire people for only the few months my customer needs steel and then lay them off once they don't? Here is where the investor comes in. I can keep producing steel at a constant rate, keeping people employed, because a buy (the investor) buys it. The investor then sells it to various bridge builders as they need it, but since investors are in it for the long run (they hold their money in the fund) then it works for everyone. As a manufacturer I can keep people employed because I have a consistent buyer.

$1M in real estate. I think this is the most obvious. If I purchase buildings, houses etc. not only am I supporting the jobs and companies in construction, but I also provide places for people to live, eat, work and play.

So in that regard, you can see how people who invest in things that are subject to capital gains taxes "feed" the economy to a very high degree.

Vegas I understand stocks, bonds and commodities. I don't agree that someone earning personal income that way helps the economy any more than the guy that works at a factory and produces and automotive part PER DOLLAR paid into the system. I believe it is on an order of magnitude less actually and there are many economists that would agree with me. But somehow, the wall street investor has become a special very fragile entity that must be protected and given special breaks to because they "aid" in the economy. That's the story. That's where our opinions differ. It is a fundamental difference and I just personally believe, with all due respect because I consider you and I to be in the same boat.... That that is a story, fabricated and polished over time to the benefit of a few.

True investments deserve breaks. The idea that stocks are true investmengs into companies is not exactly correct. Large sums of money these days quietly move around, they are placed in places no one can trace... It is a virtual maze if you try to follow it and see where that money actually went. The story of investing in a company that makes toothpaste is starting to be nothing but a story. It is now the exception rather than the norm.

So the statement is, in the midst of all this shady fund transfers, playing of games with things like LIBOR, all the unethical behind the scenes stuff that take place, this earned money should get a special rate because it helps the economy.

 

[Vega$ NSX]

Here you go again... "tax the heck out of".... When did "the same as everyone else" become so unfair for one group. You know, I don't care that Conrad hilton built an empire. If Paris is EARNING MONEY through whatever it is she is doing, that money should be taxed the same way anyone else earns money. Why should she get a break? We aren't talking about taxing her savings. We aren't taking about her 401K or her little retirement account. We are talking about EARNED INCOME. You all are saying because Conrad worked hard 50 years ago and was able to put her in this position, she now deserves special breaks on any further money she is making. That's what lower percentages are on one type of income versus another type of income. They're special breaks. They aren't "sticking it to" or "taxing the heck out of"...

No I totally get your point and get what you are saying and it is a valid argument. From that perspective, yes, I would agree that it isn't fair and the rich aren't paying their fair share, no different then I would say it isn't fair that 47% of the population don't even pay taxes.

However, we have to look at the big picture. If we only look at it in that vacuum then we could easily say that we should increase the capital gains tax to match that of the standard tax rate. But there is a very important reason why it is prudent to reduce the capital gains taxes, even though the negative trade off is it does spawn the Paris Hiltons of the worlds.

As I mentioned in my previous post, capital gains taxes only apply to those investments that help our economy. So rather than look at it as a reduction in taxes for the rich, look at at an "incentive" for the rich to put money back into the system. Otherwise, like it has been mentioned before, a rich person will have a greater incentive to NOT invest in stocks, bonds, real estate and take his/her money elsewhere like offshore accounts etc. and that would be disastrous for our economy.

 

[RSO 34]

After paying all my other taxes I dont feel as if I am getting much of a break when LTCG tax is piled on. I figure approximately 41 cents out of every dollar I earn goes to cover federal, state, FICA and Medicare taxes. Then if I decide to buy food with the remaining 59 cents, 8 cents goes to cover sales tax. Don't get me started on taxes on a gallon of gasoline in ny...... Add on an additional 15k property/school tax (and don't argue I get services for that because I have volunteer fire dept, part time police, no sewer/water - well and septic- and pay to cart away garbage, and no kids so no school benefits) and quite simply from a total tax paid perspective I feel "entitled" to "only" 15 % capital gains.

Sorry for not feeling guilty but I think I pay more than my share for what I get in return so if i can manage to put aside a few and take the risk of the market then hitting me up for another 15 points is fair as far as i am concerned.

 

[Vega$ NSX]

Vegas I understand stocks, bonds and commodities. I don't agree that someone earning personal income that way helps the economy any more than the guy that works at a factory and produces and automotive part PER DOLLAR paid into the system.

Yes again, this is correct and I do agree with this statement. Yes, I agree the income generated from stocks, bonds and commodities doesn't help the economy one lick other than the stuff the person buys with it. However, it's the lump sum that has been invested into the stock, bond, commodity that is pivotal to our economy. All a stock or bond is just a temporary loan. Without the incentive of a reduced capital gains "break" then there is very little incentive for a rich person to put money into these stocks, bonds, commodities.

 

[TURBO2GO]

After paying all my other taxes I dont feel as if I am getting much of a break when LTCG tax is piles on. I figure approximately 41 cents out of every dollar I earn goes to cover federal, state, FICA and Medicare taxes. Then if I decide to buy food with the remain 59 cents, 8 cents goes to cover sales tax. Don't get me started on taxes on a gallon of gasoline in ny......

Sorry for not feeling guilty but I think I pay more than my share for what I get in return so if i can manage to put aside a few sheckles and take the risk of the market then hitting me up for another 15 points is fair as far as i am concerned.

Putting aside a few for a person like yourself should be no problem. Not only should you not pay more than say 15 on something you truly put aside but it should be less IMO. But are you now ok the with someone who makes say 20 million per year paying 15 and below, down to almost zero?

You're one of the guys carrying the load bob, because many get away with murder. It's one thing when a guy that makes under 20k a year pays little to nothing, it is another for a guy that makes 10M a year to pay little or nothing. That is essentially what is happening now and the capital gains loophole is one of the tools. There are others.

 

[TURBO2GO]

Without the incentive of a reduced capital gains "break" then there is very little incentive for a rich person to put money into these stocks, bonds, commodities.

How about the incentive of doubling or tripling your money? How about the incentive of buying apple and going from 70 to 700? That isn't enough incentive for someone that thinks they are an astute investor? How can you say "there is no incentive" without a GIGANTIC tax break?

 

[RSO 34]

If someone had 10,000,000 in capital gains and paid 15% of that for 1,500,000 I am okay with that. That person gets less in return for that seven figure tax payment than the 25k annual salaried worker gets for around 4000 in tax payments.

 

[TURBO2GO]

If someone had 10,000,000 in capital gains and paid 15% of that for 1,500,000 I am okay with that. That person gets less in return for that seven figure tax payment than the 25k annual salaried worker gets for around 4000 in tax payments.

If they paid 15%.... Big "if" for a lot of people...

Well.... OK... I am not ok with it. I think the percentage should be the same across the board. That was the original concept behind our tax code before it was butchered into a maze no one an really figure out anymore.

 

[Vega$ NSX]

Putting aside a few for a person like yourself should be no problem. Not only should you not pay more than say 15 on something you truly put aside but it should be less IMO. But are you now ok the with someone who makes say 20 million per year paying 15 and below, down to almost zero?

You're one of the guys carrying the load bob, because many get away with murder. It's one thing when a guy that makes under 20k a year pays little to nothing, it is another for a guy that makes 10M a year to pay little or nothing. That is essentially what is happening now and the capital gains loophole is one of the tools. There are others.

Yes, I do agree with many points you are making on this. However, here is the issue/dilemma.

So take me for example. I don't think it's a big secret that I've paid over 6 figures in taxes for the past 6 years. As a single guy who doesn't use public libraries or transportation, schools, never called the police, fire department etc. I've paid MORE than my fair share and then some. I guess you can lump me in with Bob as one of the guys getting "screwed". However, the same system and drive that got me here, is the same one I'm hoping will get me to the $20M trust fund. I would find it wildly unfair that the harder I work the more success I find, the more people would want to take away from me. It's already been a struggle to get to where I am now, and now I would like to get to the next level, but now the rules should change? The hill should get steeper for me? Why? I'm driving business, I'm pumping more money into taxes than most people make in a lifetime. I'm contributing wildly more into the system then I'm taking out. Why try to stifle my drive by increasing the burden I have to carry the more I produce?

I'm not saying there's a right or wrong answer, but just wanted to give you food for though from a "human" perspective to someone who is living it right now as we speak. I'm fairly indicative of many of my peers in the same position.

 

[Vega$ NSX]

How about the incentive of doubling or tripling your money? How about the incentive of buying apple and going from 70 to 700? That isn't enough incentive for someone that thinks they are an astute investor? How can you say "there is no incentive" without a GIGANTIC tax break?

Let me put it to you this way. If there was a new game in Las Vegas, where you bet $100 and they flip a coin. If you lose, you lose all $100. If you win, you win $100, but they take away $30 for a net of $70. How many people would play that game? If that were the only game in town Vegas would vanish in a month.

 

[chado]

Yes, I do agree with many points you are making on this. However, here is the issue/dilemma.

So take me for example. I don't think it's a big secret that I've paid over 6 figures in taxes for the past 6 years. As a single guy who doesn't use public libraries or transportation, schools, never called the police, fire department etc. I've paid MORE than my fair share and then some. I guess you can lump me in with Bob as one of the guys getting "screwed". However, the same system and drive that got me here, is the same one I'm hoping will get me to the $20M trust fund. I would find it wildly unfair that the harder I work the more success I find, the more people would want to take away from me. It's already been a struggle to get to where I am now, and now I would like to get to the next level, but now the rules should change? The hill should get steeper for me? Why? I'm driving business, I'm pumping more money into taxes than most people make in a lifetime. I'm contributing wildly more into the system then I'm taking out. Why try to stifle my drive by increasing the burden I have to carry the more I produce?

I'm not saying there's a right or wrong answer, but just wanted to give you food for though from a "human" perspective to someone who is living it right now as we speak. I'm fairly indicative of many of my peers in the same position.

Vegas (and others) you've done an admirable job trying to explain this already.. might have to call it a day.

 

[TURBO2GO]

Yes, I do agree with many points you are making on this. However, here is the issue/dilemma.

So take me for example. I don't think it's a big secret that I've paid over 6 figures in taxes for the past 6 years. As a single guy who doesn't use public libraries or transportation, schools, never called the police, fire department etc. I've paid MORE than my fair share and then some. I guess you can lump me in with Bob as one of the guys getting "screwed". However, the same system and drive that got me here, is the same one I'm hoping will get me to the $20M trust fund. I would find it wildly unfair that the harder I work the more success I find, the more people would want to take away from me. It's already been a struggle to get to where I am now, and now I would like to get to the next level, but now the rules should change? The hill should get steeper for me? Why? I'm driving business, I'm pumping more money into taxes than most people make in a lifetime. I'm contributing wildly more into the system then I'm taking out. Why try to stifle my drive by increasing the burden I have to carry the more I produce?

I'm not saying there's a right or wrong answer, but just wanted to give you food for though from a "human" perspective to someone who is living it right now as we speak. I'm fairly indicative of many of my peers in the same position.

What am I not getting here? You say "why should the rules change for you as you go up" as if there is some extra burden on you when all I am saying is the burden should be exactly the same and no more. What "rule change"? No one asked you to pay an extra 10%. Just the same percentage everyone else pays, the same percentage you've been paying. If everyone did that that percentage can come down for everybody. But the way it is right now, it's way down for a few and way up for a few (like you and me now).

 

[TURBO2GO]

Vegas (and others) you've done an admirable job trying to explain this already.. might have to call it a day.

What is that supposed to mean exactly? We are having a polite and civil discussion here with friends I like. "Might have to call it a day" sounds like its not worth responding to me?

 

[RYU]

For capital gains there's an extremely simple solution....
Have it progressive.
$0-50,000 /yr of dividend income gains is 15% tax
$50,0001-$200,000 is 35% tax
$200,000-$800,000 is 45%
$800,000+ is 55%


Done

I'll assume you're being serious and not facetious. Hard to tell on this thread sometimes.

I'm in the process of considering taking the "next step" in the startup i've been cultivating for a few years. That next step would require investors.

With this plan, what would motivate my potential investors to invest large sums of money of me if they get penalized the more return my company makes for them? If they decide to hold back their investment to just a small sum then that could mean me hiring 0-2 people instead 5+ new employees.

Help me understand how your plan would benefit the economy and specifically businesses like mine.

 

[Vega$ NSX]

What am I not getting here? You say "why should the rules change for you as you go up" as if there is some extra burden on you when all I am saying is the burden should be exactly the same and no more. What "rule change"? No one asked you to pay an extra 10%. Just the same percentage everyone else pays, the same percentage you've been paying. If everyone did that that percentage can come down for everybody. But the way it is right now, it's way down for a few and way up for a few (like you and me now).

Because it really breaks down to how we each view income. You see income from capital investments as income no different than a paycheck. For me they are separate.

1) Income - I do work, I pay taxes.
2) Investment income - This is money that I already worked my tail off to make and paid 30% taxes on, and now I'm taking a risk/gamble with this money and the earning I get get taxed an additional 15%.

It's much harder to get to the point to make income from capital investments than it is from just straight income. What's easier to get? $50K in salary income or $50K in capital investment income? It's easy to get a job that pays $50K, but to get $50K in capital investment income, you would have to have a $1M invested at a 5% rate of return. And think of all of the income and production, and taxes paid, for someone to have made enough money to invest $1M.

If I was a government, I would want to incetivize my populous to want to get to the $50K of capital investment income because I know in order for them to have gotten there, they would have produce a ton of income and paid a ton of tax dollars in order to get there.