Posted on 09/20/2011 1:29:47 PM PDT by 92nina
President Obama today endorsed a “Buffett Rule” for tax policy:
“Any reform should follow another simple principle: Middle-class families shouldn’t pay higher taxes than millionaires and billionaires. That’s pretty straightforward. It’s hard to argue against that. Warren Buffett’s secretary shouldn’t pay a higher tax rate than Warren Buffett. There is no justification for it.”
Obama is arguing for another “alternative minimum tax (AMT).” In this case, the “Buffett Rule” seems to imply that high income households should pay taxes (even on capital gains) at about a 25 percent rate, no matter what. That is the marginal tax rate for most middle-income families.
This was the same justification for the AMT back in 1969. Incensed that about 100 high-income taxpayers owed nothing in federal income tax, the alternative minimum tax (AMT) was created to make sure that these people paid at least a little. The AMT is a parallel income tax system that forces people to calculate their taxes twice and pay the higher amount.
Since 1969, the AMT has exploded. The number of AMT taxpayers today is not 100, but 4 million. Without a “patch” which is annually-renewed by Congress, the number of AMT taxpayers would be more like 31 million, or 22% of families.
All taxes originally intended for the rich eventually are paid by the poor and middle class. A good example is the telephone excise tax which was put in place in order to help finance the Spanish-American War of 1898. Back then, a telephone was a plaything of the rich. But the tax stuck, and was only (mostly) repealed in 2006—fully 108 years later...
Read more: http://www.atr.org/buffett-rule-obamas-amt-a6464#ixzz1YWgv38Ol
(Excerpt) Read more at atr.org ...
Take this article and others I found to the fight to the Libs on their own turf; put the Left on the defensive at Digg and at Reddit and in Stumbleupon and Delicious
The issue isn’t the tax rates, it’s how you calculate “taxable income”. Dividends are taxed at a lower rate, becasue the corporation has already been taxed on their profits before the dividends are distributed. There is still double-taxation on corporate profits once they are distributed to the shareholders, but taxing dividends at the same rate as other income would be an obscene tax rate. This debate is all smoke and mirrors and there is nobody on the Republican side who is doing much to explain the issues to the public in simple terms.
And somewhere, among that 66+ thousand pages of the tax code, written by special interests for their own benefit, are loopholes. Too many to count, that the money will be put in, to avoid being taxed. And with all the money they think they’re going to raise from say, increasing fees on plane tickets, what’s the alternative if people stop traveling less and they don’t generate the revenue they thought they would? Nothing but a bunch of morons.
1. Capital gains tax rate is the same as the regular income tax rate for the recipient.
2. The capital gains cost basis in adjusted based on the ratio of the CPI on the sale date and the purchase date.
3. All dividends received are taxed at the same rate as regular income.
4. All dividends paid are counted as legitimate business expenses and are thus tax deductible for companies.
This way dividends are taxed once and only once rather than the multiple taxation we have now, with adjustments in rates for some investments but not others based on how the company is organized. Also, you pay taxes on capital gains, but not on the nominal gain that comes from inflation. Buy stock for $1000 and sell it for $3000, but if inflation would have made that $1000 worth $1800 later you would then pay tax only on the $1200 in real gain, not the $2000 of "gain". You also get rid of all the rules about short and long term capital gains, like it is somehow morally suspect to sell a stock at 364 days, but OK at 365 days.
So why not simply alter the AMT so that everyone, regardless of income, tax credits, deductions, etc has to pay a minimum percentage even if they would otherwise reduce their tax rate below that percentage. How about using the lowest tax bracket as that percentage?
That would mean everyone would be required to pay 10%. EVERYONE ... even those that currently do not pay any taxes.
No, the Buffet rule, if passed, is Obama’s ATM.
For me, the problem is not that capital gains are taxed more than once, it's that we must not discourage capital formation.
I vote for zero tax on capital gains. We must encourage savings and investment. Combined with your idea of a national retail sales tax (to discourage consumption), the economy would soar.
One more thing. We absolutely must change the Federal Reserve's policy to one that targets a stable quantity of currency -- not prices or employment.
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