Meg wants to stop paying taxes

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The rich are not like you and I -- a lot of the money they make comes from something other than working. I don't begrudge Meg Whitman the billion bucks she made at EBay (well, I do, really, but never mind). But when you sit on a pile of money, hire someone to manage it for you, and reap major windfalls on the interest, well, you're basically making money for doing nothing.

And you ought to at least pay taxes on it.

But Whitman thinks she and other rich people are so special that she wants to exempt them from taxes on capital gains. That means the rest of us -- the poor fools who actually get up every monring and go to work -- will have to pick up the slack.

Oh, but won't this "create jobs?" Chris Kelly in Huff Po:

For example, if a billionaire didn't have to pay taxes, he could hire you to express his dog's anal glands. And you could pay taxes.

Pardon me for thinking this is about the dumbest tax idea I've heard since Ronald Reagan decided to tax the unemployed.

 

 

Comments

First off, Meg would still pay CGT on any gains. That is, Federal CGT.

Now Federal CGT is 15% and it has always been lower than income tax rates. well certainly for the last 30 years anyway.

Why? Because the gains you make are on money that you have already earned and paid income tax on. Which is why many nations do not tax capital gains at all. it's a form of double taxation.

And because you want to encourage people who risk their capital to create jobs and grow the economy.

And because often a long-term capital gain is just the result of inflation and not a real gain.

Several US States don't tax capital gains either, for all these good reasons.

But more importantly, those States that do tax capital gains, always tax it at a special, lower rate like the Feds, for the reasons given above.

So California is really an anomaly, having a CGT at the level of your top, marginal income tax rate.

It is that anomaly, almost unique in the entire planet, that Meg seeks to amend.

See? It really isn't as bad as you claim, unless of course you just want to bash the rich. But you're not that bitter and envious, are you Tim?

Posted by Folly on Jul. 19, 2010 @ 8:35 pm

Uh-huh... uh-huh... uh-huh... so, basically you're saying that we should cut yet another tax paid mainly by the rich. At a time when ordinary Californians are suffering.

Good luck selling that idea.

Posted by Greg on Jul. 20, 2010 @ 1:23 pm

Kinda reminds me of Nurse Mildred Ratched from "One Flew Over the Cuckoo's Nest."

Posted by Guest LD on Jul. 20, 2010 @ 2:30 pm

Actually, Nurse Ratched was far more attractive that Nutmeg. And she had a better attitude to boot.

Posted by Guest on Jul. 20, 2010 @ 3:43 pm

dont tax the rich just the stupid people

Posted by Guest on Jul. 20, 2010 @ 3:55 pm

Cut all sources of state and local revenue, let the City become unlivable so we can all move to Tracy and work at Wal-Mart.

Posted by Guest LD on Jul. 20, 2010 @ 5:05 pm

Double taxation of capital? Even if they really have paid income taxes on it (not necessarily the case) why the hell not? You people have no problem with double, triple, quadruple taxes on the non-rich. So take that argument home and come back with something more entertaining. Thanks for playing.

Posted by Guest on Jul. 20, 2010 @ 5:34 pm

Sounds like a winner. Hope she runs on that!!!

Posted by Guest on Jul. 20, 2010 @ 5:48 pm

Folly,

Without mixing personal issues into the response, the point made regarding double taxation is incorrect. While the initial principle on which the gains are made has been taxed, the gains themselves have not yet been taxed and therefore fall into the category of income.

As per the IRS:
"Income means all 'income' you received in the form of money, goods, property, and services...including any income from sources outside the United States or from the sale of property..."

If those capable of using principle to illicit gains (be them from interest or dividends what-have-you) wish to avoid taxation, they can use non-taxable accounts, e.g. Roth IRA, SEP IRA, or invest in interest-bearing government backed bonds etc. There are countless closed-end funds on the NYSE that generate dividends that are considered tax-free at both the state and federal levels as well as other instruments that the IRS considers tax exempt.
http://www.irs.gov/taxexemptbond/index.html

Therefore, anyone living within, conducting business within, a citizen or resident of the United States (and subsequently each state), who earns interest, dividends, proceeds, etc, should be liable for the tax upon those sums.

Why wouldn't anyone with the good fortune to generate large amounts of income show integrity fulfill their financial obligations? Why should anyone be exempt? Even those that have been unfortunate enough to have lost their jobs and receive unemployment benefits are expected to pay taxes on that "income".

Forget bashing and subjectivity, take a closer look at the specifics.

Posted by Vimps69 on Jul. 20, 2010 @ 7:14 pm

Vimp,

While I could argue the demerits of double taxation with you all day, you still didn't address any of my other points i.e.:

1) Many capital gains are not real, just inflation
2) Almost every other jurisdiction charges lower rates for cap gains than for income, for very good reasons
3) The tax system should draw a distinction between risk-free income e.g. interest, with capital that is risked, and encourage the latter through lower rates.

Perhaps there isn't a compelling argument for a zero-rate of CGT given the deficit, but the argument for a lower rate on cap gains is compelling.

Posted by Folly on Jul. 21, 2010 @ 8:57 am

thats what meg does, thats why she doesnt list her taxes when asked. but im sure she'll push to pay our taxes to the state (not the rich or herself mind you) via paypal so she can collect fees...after all why else would someone pay $100,000,000.00 for a job that pays 100,000.00

Posted by doug on Jul. 20, 2010 @ 10:28 pm

taxes.

Obamma had a tough time finding any democrats that paid them to fill his cabinet.

Ron Dellums likes you to pay them, but he just hates to do it himself.

It's not democrat Vs republican but them (and Guardian apologists) against us.

Posted by matlock on Jul. 20, 2010 @ 11:03 pm
Meg

So if I understand folley, risky income should be taxed at a lower rate? So we should not save with insured institutions. But rather we should all risk our investments in high risk investments?
Income is income. I do a job that has a high risk to it so should my income be taxed at a lower rate than someone who has a low risk job?
Taxes pay for our services like roads, police, fire, education. Just look at the rest of the industrialized world and you will see that those that have higher taxes than the US also have higher standards of living. Switzerland is an excellent example, high taxes, free education, longer life expectancy, free health care. They also have lots of very wealthy citizens.
Taxes are not bad just they way they are spent is what needs to be fixed, stop taking money and wasting it. Fund education, health, public safety and job creation with our tax money. Not drug wars, big prisons, foreign wars, farm subsidies for not growing food etc...

Posted by Guest on Jul. 21, 2010 @ 12:49 pm

That's probably the worst example you could have chosen since they are a tax haven and make untold billions by allowing foreigners to hide their money there tax-free and reporting-free.

High taxes tend to follow wealth but do not cause wealth. Hong Kong and Dubai are two of the fastest growing economies on the planet. Dubai doesn't have any income tax or CGT. HK has a 15% flat income tax and no CGT.

Again, I wasn't advocating cops paying a lower rate of income tax than you or I because they have a risker job. I was pointing out that almost every other jurisdiction on the planet taxes cap gains either less or not at all to encourage risk investment.

CA loses jobs, businesses and investments because of the puntive levels of CGT. Meg wants to change that.

Posted by Folly on Jul. 21, 2010 @ 8:05 pm

Please check your facts. Interest income, which you refer to in your comments, and dividends would still be taxed at full ordinary income tax rates. Meg's proposal is targeting investment into the state, not interest and dividends, which come from stocks and interest bearing assets.

Capital Gains, the increase in value of an asset (e.g. stock goes from 10 to 12, cap gains = 2). Texas and other states without capital gains have large economies growing more rapidly than California because investors prefer reducing their capital risk by incorporating in lower tax states. The math is simple.

If you receive a Pension of any type, have a 401k, or receive any money from investments via a company (e.g. CalPERS), you benefit from this too.

Want job growth? Want incremental investment? Reduce or eliminate capital gains taxes.

Posted by Guest on Jul. 21, 2010 @ 2:56 pm

She is a republican, able to buy anything she wants without having to ask the price! And so can her friends.

Look at her picture, does she look like she has missed a meal?

As for me, I am on a fixed income but grateful that I share common areas.

Posted by Guest on Jul. 24, 2010 @ 1:46 pm