Obama tax plan

[DosEquis]

Bloomberg.com: Worldwide

It would appear that Obama is proposing an 80 Billion tax cut for the middle class americans.

To help pay for it "The tax cuts would be funded in part by raising tax rates on dividends and capital gains. Now 15 percent, that rate would rise to as high as 28 percent, the rate under former President Ronald Reagan." He also said to help pay for it "Obama would also crack down on international tax havens used by companies. The plan would create a list of countries where companies locate to evade U.S. taxes and use economic pressure to make them comply with international laws. It's time to shed some sunlight not only on companies that abuse the tax code, but also on the secretive offshore tax havens that shelter them."


I can say that this plan of his has bumped up his brownie points in my book. It is about time we had some fiscal responsibilty and some help to the average consumer since they do control 65%+ of the economy with their spending.

[hsmith]

I'd actually like to know what he considers "middle class."

I also think raising capital gains taxes is a bad idea, obviously they are trying to rake in the money that the older generation will be withdrawing from savings and investments in the coming decade.

Personally, I'd really like something to be done to help the younger people in America. I know I am getting raked over the coals when it comes to having deductions. I do well for myself, but it is hard to build up a savings when you have nothing to write off. Houses are ungodly expensive, children - do not want, I can't write off my college student loan interest anymore. It is unpossible to get your feet off the ground being a 20-something.

[6SpeedTA95]

HSmith hit the nail on the head, what constitutes middle class in his mind?

Secondly, raising capital gains taxes would be a big mistake, what is the point of taxing money that has ALREADY been taxed and then taxing it at 28%? If I choose to invest my money to make more I get taxed, if I choose to spend it I get taxed and all this money I have I made at some point which was also taxed

Raising capital gains discourages money movement in capital markets and discourages proper distribution of monies.

[DosEquis]

Some bits and pieces from the article.

``At a time when Americans are working harder than ever, we are taxing income from work at nearly twice the level that we're taxing gains for investors,'' said Obama, an Illinois senator. ``I'll restore simplicity to the tax code, and fairness for the American middle class.''

Senior Citizens

Obama's plan would eliminate taxes on senior citizens who earn less than $50,000 annually and remove the need for them to file tax returns. Campaign advisers estimated the new rule would apply to about 22 million senior citizens, and give about 7 million of them a tax cut of $1,400 on average.

After the speech, Obama's senior economic adviser, Austan Goolsbee, said the $50,000 exemption for senior citizens would apply to households of two.

The plan would also simplify tax filing for many Americans by having the Internal Revenue Service provide pre-filled tax forms using financial data it receives from employers and banks. The service would be available to filers without complex taxes, or those with only wage and bank-interest income.

``This means no more worry. No more wasted time. No more extra expenses for a tax preparer,'' Obama said.

Obama has also proposed repealing President George W. Bush's income tax breaks for households earning more than $250,000 a year to pay for a plan to offer health insurance to more Americans.

[DosEquis]

Originally Posted by 6SpeedTA95

HSmith hit the nail on the head, what constitutes middle class in his mind?

Secondly, raising capital gains taxes would be a big mistake, what is the point of taxing money that has ALREADY been taxed and then taxing it at 28%? If I choose to invest my money to make more I get taxed, if I choose to spend it I get taxed and all this money I have I made at some point which was also taxed

Raising capital gains discourages money movement in capital markets and discourages proper distribution of monies.

It is not taxing your money twice. It only taxes the gains you make on the investment, aka capital gains. If you made $20,000 on your $100,000 investment, you are paying taxes on $20,000. There are some other alternative pre-tax investments you can take advantage of too.

Raising capital gains will not discourage money movement because people will still want to invest. It will not discourage distribution of money either. Trickle down does not work.

[hsmith]

Originally Posted by DosEquis

Some bits and pieces from the article.

``At a time when Americans are working harder than ever, we are taxing income from work at nearly twice the level that we're taxing gains for investors,'' said Obama, an Illinois senator. ``I'll restore simplicity to the tax code, and fairness for the American middle class.''

Senior Citizens

Obama's plan would eliminate taxes on senior citizens who earn less than $50,000 annually and remove the need for them to file tax returns. Campaign advisers estimated the new rule would apply to about 22 million senior citizens, and give about 7 million of them a tax cut of $1,400 on average.

After the speech, Obama's senior economic adviser, Austan Goolsbee, said the $50,000 exemption for senior citizens would apply to households of two.

The plan would also simplify tax filing for many Americans by having the Internal Revenue Service provide pre-filled tax forms using financial data it receives from employers and banks. The service would be available to filers without complex taxes, or those with only wage and bank-interest income.

``This means no more worry. No more wasted time. No more extra expenses for a tax preparer,'' Obama said.

Obama has also proposed repealing President George W. Bush's income tax breaks for households earning more than $250,000 a year to pay for a plan to offer health insurance to more Americans.

Why is he for giving the segment of society that gets the most free money more tax breaks?

How is that beneficial? How about giving the productive members of society something? Oh wait, you have to pay off the old voters.

[Ardentfrost]

Surprised no one has mentioned this: using economic force to make countries comply with us? Because that worked so well with Cuba.

[DosEquis]

Originally Posted by hsmith

Why is he for giving the segment of society that gets the most free money more tax breaks?

How is that beneficial? How about giving the productive members of society something? Oh wait, you have to pay off the old voters.

He is talking about giving the most productive members of society tax breaks, the middle class.

You complain he raises capital gains and how it fucks with old people and their retirement, then when he says he is going to eliminate taxes for seniors who make less than 50k a year, you complain he is giving the segment of society that gets the most free money even more tax breaks. Which one do you want sir?

Unless you consider the upper 1% the most productive members of society.

[DosEquis]

Originally Posted by Ardentfrost

Surprised no one has mentioned this: using economic force to make countries comply with us? Because that worked so well with Cuba.

Excuse the football analogy -

Running the ball against USC didn't work well for Nebraska. Should they never run the ball again?

Just because it didn't work with one or a few people doesn't mean it wouldn't work with others. For those countries that it does not work we just need a different approach.

[hsmith]

Originally Posted by DosEquis

He is talking about giving the most productive members of society tax breaks, the middle class.

You complain he raises capital gains and how it fucks with old people and their retirement, then when he says he is going to eliminate taxes for seniors who make less than 50k a year, you complain he is giving the segment of society that gets the most free money even more tax breaks. Which one do you want sir?

Unless you consider the upper 1% the most productive members of society.

Taxing investments is a horrible idea and I have always thought so. No ones investments should be taxed. They aren't income, they don't fall into the 16th amendment.

Everyones tax burden should be lowered, not just the ones they think should be.

Less government = less taxes. That is what it boils down to.

And I do consider the 1% highly productive. Their investments allow companies to grow, people to be employed, and other investments to be made. Invested money = more jobs and a more productive environment.

[Ardentfrost]

Originally Posted by DosEquis

Excuse the football analogy -

Running the ball against USC didn't work well for Nebraska. Should they never run the ball again?

Just because it didn't work with one or a few people doesn't mean it wouldn't work with others. For those countries that it does not work we just need a different approach.

Look dude, foreign policy isn't a fucking game. I'm sorry, but that's the same loose approach taken by previous administrations and it gave us poor relations with quite a few countries, like Cuba, Iran, Iraq, Russia, China, and North Korea to name a few. Foreign countries don't like to be pushed around, and a lot of time they'd assume band together (make an "Axis of Evil") than bow to another country's demands.

It's preposterous policy that is perpetuated by presidents and politicians increasingly throughout history.

Sorry to go off a bit there, we just have major foreign policy problems coming from Democrats and Republicans alike, and so few of them realize it all leads to the same place, no matter the reason they're doing it.

[6SpeedTA95]

Originally Posted by DosEquis

It is not taxing your money twice. It only taxes the gains you make on the investment, aka capital gains. If you made $20,000 on your $100,000 investment, you are paying taxes on $20,000. There are some other alternative pre-tax investments you can take advantage of too.

Raising capital gains will not discourage money movement because people will still want to invest. It will not discourage distribution of money either. Trickle down does not work.

It will discourage money movement, its been proven to discourage money movement, look at the liquidity of the markets now and after each capital gains tax cut.

[6SpeedTA95]

Not to mention the substantial negative affect it could have on the market as people cash out gains to avoid higher taxes.

[Ardentfrost]

Originally Posted by 6SpeedTA95

It will discourage money movement, its been proven to discourage money movement, look at the liquidity of the markets now and after each capital gains tax cut.

That's exactly what I was going to say. You see a movement toward liquidity when investment is discourages from ALL parties, individuals and companies alike. There's nothing worse than stagnation.

[DosEquis]

Originally Posted by hsmith

Taxing investments is a horrible idea and I have always thought so. No ones investments should be taxed. They aren't income, they don't fall into the 16th amendment.

Everyones tax burden should be lowered, not just the ones they think should be.

Less government = less taxes. That is what it boils down to.

And I do consider the 1% highly productive. Their investments allow companies to grow, people to be employed, and other investments to be made. Invested money = more jobs and a more productive environment.

We are not talking about taxing the investment, we are talking about taxing the income or return on the investment. Return is income or as we technically call it 'capital gains'. You also do not pay capital gains until you realize those gains, like when you sell off your investment.

I agree with you that we need less government. The difference in our agreement would be which areas should we have less government. You may say 'across the board' where I think we should have less in certain areas. In the general sense I agree with you though and recognize government is cheaper when there is not as much. However, I don't think we should have less taxes for a long time because we have a lot of ground to make up from the last 3 republican administrations. 8.7 trillion dollars and counting to be more specific.

I understand investment is what make business possible, but it is really a big circle. The business doesn't run without investment, but it also doesn't run without consumers. Personally i'd rather support trickle up than trickle down. The tax burden to the middle class, 99% of america, consumers to be reduced. Let the business owners compete for their business and get their profit that way. I think we have a habit of ignoring the corporate welfare though too.

[DosEquis]

Originally Posted by Ardentfrost

That's exactly what I was going to say. You see a movement toward liquidity when investment is discourages from ALL parties, individuals and companies alike. There's nothing worse than stagnation.

So you are telling me, that if someone has $100k sitting around..they will just put it in a regular savings account, or keep it in $10s and $20s under the matress, because the return on their investment is going to be taxed more?

I don't buy they are just going to pass on investing because their return is taxed more, then causing stagnation. Warren Buffett is going to pull his money out and not make his 10-12 billion in income, because his taxes will be more on the income?

[Ardentfrost]

Originally Posted by DosEquis

So you are telling me, that if someone has $100k sitting around..they will just put it in a regular savings account, or keep it in $10s and $20s under the matress, because the return on their investment is going to be taxed more?

I don't buy they are just going to pass on investing because their return is taxed more, then causing stagnation. Warren Buffett is going to pull his money out and not make his 10-12 billion in income, because his taxes will be more on the income?

CGT reduces effective ROI. Human nature is to be risk averse, and a certain risk to return ratio must be achieved (different for each person) before they are willing to front the funds (eg., you wouldn't put money in something with moderate risk if the end result would only be a percent return, that'd just be foolish).

Therefore, the things that people will ACTUALLY invest in will favor less risky things (more towards stuff like T-bills and savings accounts) than more risky investments. You will always have people who will invest in all parts of the economy (I've been over this concept before using something else as an example and I'm not going to do it again), but OVERALL, the tendancy will be less movement and less risky, hence a more liquid economy.

[DosEquis]

I just have a hard time thinking people will pass on investments that offer a good return (more risk) because they will be taxed more on the money thats made. People will still make the riskier investments because the return is still more than 3-4% the low risk offers. Low risk barely keeps up with inflation. If you offer them the chance to make money or break even with inflation, they are going to choose making money. Besides he is just talking about putting it to the same level that Ron Reagan had it at...and to you guys he is a Captain AmeriJesus in a suit.

[6SpeedTA95]

Originally Posted by DosEquis

We are not talking about taxing the investment, we are talking about taxing the income or return on the investment. Return is income or as we technically call it 'capital gains'. You also do not pay capital gains until you realize those gains, like when you sell off your investment.

I agree with you that we need less government. The difference in our agreement would be which areas should we have less government. You may say 'across the board' where I think we should have less in certain areas. In the general sense I agree with you though and recognize government is cheaper when there is not as much. However, I don't think we should have less taxes for a long time because we have a lot of ground to make up from the last 3 republican administrations. 8.7 trillion dollars and counting to be more specific.

I understand investment is what make business possible, but it is really a big circle. The business doesn't run without investment, but it also doesn't run without consumers. Personally i'd rather support trickle up than trickle down. The tax burden to the middle class, 99% of america, consumers to be reduced. Let the business owners compete for their business and get their profit that way. I think we have a habit of ignoring the corporate welfare though too.

Exactly you're taxing the GAIN, the entire purpose of investing in the first place. So your 12% return with a 15% tax is now a 10.4% return and you want to make it a 28% tax? Then fine now its down to a 8.4 or 8.5% return, it DRASTICALLY affects ROI which discourages investment in the first place when people do invest it makes them less likely to want to move to other more effecient vehicles for investment due to this affect on ROI.