The National debt

[Mark Davis 446]

11 hours ago, MDC said:

I didn’t say they pay less. I said in many instances they pay a lower rate than the working class.

For example, when  he ran for POTUS, Romney’s effective tax rate was around 15%. Seems unfair to me that his income is charged at a lower rate than most working class people because it comes from capital gains and investments. FICA taxes are also incredibly regressive.

 

On extreme cases like Romney, Buffett, that ilk I agree.  The issue is when politicians discuss tax increases, and because they are increases they are mostly D's, they talk about the incremental rates.  You and I both know why, the donors and the politicians themselves want to act like they are addressing the issue via the tax brackets while not truly addressing why those people are paying a 15% for instance.  If Mitt Romney's effective rate is truly 15%, it's not because the top tax rate is 37% and needs to be higher.  Changing the brackets does nothing, and people across the entire political spectrum need to realize it, whether you are for more taxes or less taxes.

Social Security taxes are capped because benefits are capped.  Most high end earners won't recover their money anyway, but it seems to me unfair to tax those folks even more for no more benefits.  This goes back to the whole earned income and tax bracket question.  The reason removing the SS cap is so popular amongst the D politicians are that this has no impact on the ultra high net worth individuals.  Those folks aren't making much subject to SS earnings, the people making large salaries subject to the SS tax are already paying the highest rates across the board on that income.

[Hardcore troubadour 16,293]

Aren’t capital gains only taxed on the gains? 

[MDC 8,320]

11 hours ago, Mark Davis said:

On extreme cases like Romney, Buffett, that ilk I agree.  The issue is when politicians discuss tax increases, and because they are increases they are mostly D's, they talk about the incremental rates.  You and I both know why, the donors and the politicians themselves want to act like they are addressing the issue via the tax brackets while not truly addressing why those people are paying a 15% for instance.  If Mitt Romney's effective rate is truly 15%, it's not because the top tax rate is 37% and needs to be higher.  Changing the brackets does nothing, and people across the entire political spectrum need to realize it, whether you are for more taxes or less taxes.

Social Security taxes are capped because benefits are capped.  Most high end earners won't recover their money anyway, but it seems to me unfair to tax those folks even more for no more benefits.  This goes back to the whole earned income and tax bracket question.  The reason removing the SS cap is so popular amongst the D politicians are that this has no impact on the ultra high net worth individuals.  Those folks aren't making much subject to SS earnings, the people making large salaries subject to the SS tax are already paying the highest rates across the board on that income.

We’re in total agreement on your first paragraph. I’d be fine on a flat tax across the board if it meant closing all the loopholes that allow Romney and Buffet types to pay a much lower rate than me. I’m right in that sweet spot where I make enough $ that I’m focked by taxes but not enough to hide my income.

[RaiderHaters Revenge 4,611]

10 minutes ago, MDC said:

We’re in total agreement on your first paragraph. I’d be fine on a flat Tac across the board if it meant closing all the loopholes that allow Romney and Buffet types to pay a much lower rate than me. I’m right in that sweet spot where I make enough $ that I’m focked by taxes but not enough to hide my income.

You can hide your income. It’s not that hard 

[easilyscan 1,135]

1 hour ago, Hardcore troubadour said:

Aren’t capital gains only taxed on the gains? 

That might be a sarcastic question, but since I don't know for sure, I'll answer.

Yes.

If you bought 100 shares of XYZ Corp. @ $100 on the first trading day of 2026 in a taxable account, & sold them for $150 on the first trading day of 2027, your net would be 15 K, but only the 5K would have capital gains tax applied.

Since you only held it 12 months, you'd have to pay short term capital gains on the 5K.. What that rate would be depends on your total taxable income and filing status.

If you waited until you'd held that investment at least 18 months, you'd pay a lower long-term capital gain rate.

 

[Hardcore troubadour 16,293]

1 minute ago, easilyscan said:

Yes.

If you bought 100 shares of XYZ Corp. @ $100 on the first trading day of 2026 in a taxable account, & sold them for $150 on the first trading day of 2027, your net would be 15 K, but only the 5K would have capital gains tax applied.

Since you only held it 12 months, you'd have to pay short term capital gains on the 5K.. What that rate would be depends on your total taxable income and filing status.

If you wanted to wait until you'd held that investment at least 18 months, you'd pay a lower long-term capital gain rate.

 

So the claim that it’s taxed twice is untrue then.  

[easilyscan 1,135]

31 minutes ago, Hardcore troubadour said:

So the claim that it’s taxed twice is untrue then.  

Now that you mention it, I'm not sure ?  

I guess the question would be......... Is what you have left after the government applies taxes to your check, considered non-taxed money ?

If I sell those shares for $150, the net would be 15 K. if I decide to put it in a money market account that earns dividends, those dividends are taxed as ordinary income at your standard federal income tax rate. 

I've had a taxable brokerage account at Fidelity since 1998. Whenever I had extra money from my checks, I'd wire it to Fidelity and invest it.

Another example would be State taxes. Back then I was contributing a substantial amount to both my 401(k) and the employee stock purchase program they offered.

Hypothetically, let's just say in addition to that, I had an extra $500 per month. I transfer 250 of that to Fidelity spend the other 250 locally. Depending on what you buy, state sales taxes can be pretty high in Minnesota. Liquor is over 10%, prepared food with all the local add-ons, is taxed at 8.40%, gasoline has a state and federal tax, pretty sure the standard sales tax is 6.75%, property taxes, extra fees as they like to call them, attached to my city water and sewer bill to pay for the LED lights they had to have installed throughout the city, that never went away, franchise fees the city charges to any business like charter spectrum, which they pass along to the customers, etc.

Let's just say both the state and federal government have a steady tax stream.

 

[Alias Detective 1,483]

10 hours ago, easilyscan said:

Never cared for capital gains taxes either. It's the government acting as if they held your hand and told you to buy an investment that ended up doing well so you have to share with them. You save 'after tax' money and invest it, so that money has already been taxed once. Even worse is the idea being floated about taxing unrealized gains. 

 

 

Wait till some scumbag liberal decides those who contributed to a Roth now need to pay tax on the gains to help the leaches.

[Mark Davis 446]

15 hours ago, MDC said:

We’re in total agreement on your first paragraph. I’d be fine on a flat tax across the board if it meant closing all the loopholes that allow Romney and Buffet types to pay a much lower rate than me. I’m right in that sweet spot where I make enough $ that I’m focked by taxes but not enough to hide my income.

The biggest issue with adjusting the capital gains rate upward would be the fallout it would have on our stock market and people's retirement accounts.  Let's say we passed a cap gains increase today to ordinary income levels, or even a more modest increase of say 5% to the cap gains rate, you would have a cascade of selling activity of people clearing their unrealized gains at this year's lower rates.  It would spiral the market in ways I'm not sure we can really estimate and for those who are retired or nearing retirement, would deal them a devastating blow.  Longer term things would correct, but short term you really hurt some vulnerable people as well as send a massive shock wave through the entire economy.

[Hardcore troubadour 16,293]

How about we tax capital gains as income after you realize a 100 percent gain? 

[MDC 8,320]

Just now, Mark Davis said:

The biggest issue with adjusting the capital gains rate upward would be the fallout it would have on our stock market and people's retirement accounts.  Let's say we passed a cap gains increase today to ordinary income levels, or even a more modest increase of say 5% to the cap gains rate, you would have a cascade of selling activity of people clearing their unrealized gains at this year's lower rates.  It would spiral the market in ways I'm not sure we can really estimate and for those who are retired or nearing retirement, would deal them a devastating blow.  Longer term things would correct, but short term you really hurt some vulnerable people as well as send a massive shock wave through the entire economy.

I don’t have a solution. I just know there’s a difference between a workaday guy putting a portion of his paycheck into a 401(k) and someone who gets most of their income from investment returns. Someone smarter than me probably has a way to make that distinction. 

[Mark Davis 446]

1 minute ago, Hardcore troubadour said:

How about we tax capital gains as income after you realize a 100 percent gain? 

Let me kind of give you an example from me personally.  I've done pretty well but I'm no Warren Buffett for sure.  Back in 2007 I made some extra money in my business.  I put that money into a few mutual funds.  Let's look at one specific example:

I bought Vanguard Prime Cap Core Fund (VPCCX) with $17,500 in money over 3 buys at the end of 2007/early 2008.  I've never sold any of it.  Today, those shares are worth a bit over $142,000.  Along the way, I have been taxed on distributions/cap gains that were reinvested to the fund of $65,900.  So my tax basis is now $84,400 ($17,500+$65,900).  If I sold the shares today I'd owe tax on the gain of $56,600 ($142K-$84,400) at 20% cap gains rate, or $11,320 in taxes.  If say I was at a 37% fed rate and we changed the law to where I had to pay that rate on cap gains, I would be a fool to not sell those shares the year prior to that change taking place.  Otherwise I'd owe $20,942 in taxes at 37% vs $11,320 at 20%.  I could even sell those shares today and repurchase them tomorrow if I wanted.  There is no "wash sale" rule for gains.  If everyone started selling it would create a rush to the exits in the market.

 

[Mark Davis 446]

6 minutes ago, MDC said:

I don’t have a solution. I just know there’s a difference between a workaday guy putting a portion of his paycheck into a 401(k) and someone who gets most of their income from investment returns. Someone smarter than me probably has a way to make that distinction. 

The best I could come up with is a slow and incremental change to the cap gains rate.  Maybe 1-1.5% uptick every year or two years so that you make it where it's not as cut and dry about selling your gains to remove the tax burden.  If you're only gaining 1-1.5% do you really want to take the hit today?  I'd say probably not but there are some situations you would, I'd really have to think it through and I'm sure there are angles there I'm not considering.

I get what you're saying and I don't think either side politically wants to hurt the average person putting money in their 401K, but if you're say 50-60 years old and congress did make this change all at once to up the rate to ordinary income or even say 28%, it would devastate your 401K, not because they changed your rates, but the effect all the selling of those who it did impact would have on the market and value of your account.

[Hardcore troubadour 16,293]

4 minutes ago, Mark Davis said:

Let me kind of give you an example from me personally.  I've done pretty well but I'm no Warren Buffett for sure.  Back in 2007 I made some extra money in my business.  I put that money into a few mutual funds.  Let's look at one specific example:

I bought Vanguard Prime Cap Core Fund (VPCCX) with $17,500 in money over 3 buys at the end of 2007/early 2008.  I've never sold any of it.  Today, those shares are worth a bit over $142,000.  Along the way, I have been taxed on distributions/cap gains that were reinvested to the fund of $65,900.  So my tax basis is now $84,400 ($17,500+$65,900).  If I sold the shares today I'd owe tax on the gain of $56,600 ($142K-$84,400) at 20% cap gains rate, or $11,320 in taxes.  If say I was at a 37% fed rate and we changed the law to where I had to pay that rate on cap gains, I would be a fool to not sell those shares the year prior to that change taking place.  Otherwise I'd owe $20,942 in taxes at 37% vs $11,320 at 20%.  I could even sell those shares today and repurchase them tomorrow if I wanted.  There is no "wash sale" rule for gains.  If everyone started selling it would create a rush to the exits in the market.

 

Ok, like MDC said, there’s a big difference between that and someone that does it for a living investing other people’s money and paying capital gains tax rates. It’s out of control. 

[Mark Davis 446]

1 minute ago, Hardcore troubadour said:

Ok, like MDC said, there’s a big difference between that and someone that does it for a living investing other people’s money and paying capital gains tax rates. It’s out of control. 

There is, and you, I and MDC likely all disagree on the levels it should be.  The problem isn't so much me, or even worried necessarily about the ultra wealthy, but that the average worker with a modest 401K for his retirement is tethered to the system.  He's relying on equities in his retirement and if we incentivize those large players to sell off assets in an expedited timeframe, the people that will be hurt most are those older people with retirement accounts.

[Hardcore troubadour 16,293]

4 minutes ago, Mark Davis said:

There is, and you, I and MDC likely all disagree on the levels it should be.  The problem isn't so much me, or even worried necessarily about the ultra wealthy, but that the average worker with a modest 401K for his retirement is tethered to the system.  He's relying on equities in his retirement and if we incentivize those large players to sell off assets in an expedited timeframe, the people that will be hurt most are those older people with retirement accounts.

What else are those big players going to do? Put their money in a savings account? Sorry, I’m not stricken with fear over them all of a sudden leaving the market. It’s like when they say the billionaires are going to move. Ok. Who are they going to sell their mansions too? Other billionaires I imagine.