Wall Street's Lucrative Tax Break Is Under Fire »

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  tiredofwhiners

  Aug. 3, 2007, 6:38 a.m.

  I can only think of an example as follows: A carpenter I know Ted, has a brother, Robert, with investment money. He buys a fixer upper house for $90,000 and offers to Ted half the profit if he fixes it up. So Ted renovates it and Bob puts in another $10,000 for materials. Bob sells it for $150,000 2 years later and gives Ted half the profit after 15% long term capital gains taxes ($7500). So Ted gets $21,250 for his work which took him about 3 months. No tax for Ted because Bob already paid the tax and it is a "gift" per their agreement. Note: Ted didn't do it because he didn't want to deal with his brother's personality.

  It seems to me that if you contribute time and expertise, instead of money, in a long term capital gains endeavor, you should realize the benefit of long term capital gains tax rates on the results. However any money paid during the project (2% management fee), before the sale, should be taxed as ordinary income.
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  browntiger

  Aug. 3, 2007, 9:41 a.m.

  I oppose this tax cut. Everyone should pay same rate. It doesn't matter what source of it is.

  Today what we see too many people cheating. All one have to do instead of paying real salaries - pay little salaries and offer dividends. So instead of me paying myself 200,000 - I would pay myself 30,000 and offer 170k in dividends. Realizing saving of 15% ?(SS) ? 15% fed tax stPlus state

  Total "savings" 50k.

  This is pure cheating.
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  inthemiddleof

  Aug. 3, 2007, 9:43 a.m.

  Please explain how a boss is not an employee.

  It's amazing how the uber rich will attempt to split hairs to save themselves millions in taxes on the income that they can't spend anyways.
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  willottica

  Aug. 3, 2007, 12:16 p.m.

  Just the very definition of the word: 'Capital' gains tax, means you should have to invest 'capital' not 'labor' in order to qualify. If they want to be taxed on the capital they invest, then they should pay income tax on the portion of capital that is allotted to them at the beginning.

  I.e., if they get a twenty percent share in exchange for the work they do, they should be taxed for receiving 20% of the capital...

  ...NO, I can't figure out any logical way to call that capital gains. It's payment for a service rendered, thus it is income.

  The whole tax break for risking their money seems ridiculous to me anyway:

  For having money, they should be taxed less than Joe down the street working hard? Congratulations, you're rich, we'll give you a break. It strikes me that it should be the other way around! The person working hard to earn his money shouldn't have to pay as much tax as the guy who earns money without doing any work.
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  agentX

  Aug. 3, 2007, 12:25 p.m.

  We can't afford these tax breaks anymore. We need to close the Cayman Islands loopholes and the Carry. We need the money to pay for all the medical care our vets are going to need.
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  willottica

  Aug. 3, 2007, 1:02 p.m.

  Do away with income taxes all together and just tack on global, no exceptions sales tax. That way, all money is taxed equally when it's used.

  No tax on what you make, 30% tax on everything you buy.

  (Again, it would probably not fly with congress, because it would require far less bureaucracy, thus people invested in tax law would lobby against it.)

  (And for this to work, you would need to get back the tax on items you sell at a profit - the same thing shouldn't be taxed multiple times. Ex: You buy your house at 100,000, pay 30%=30,000 extra... then you sell at 200,000. The new buyer pays 60,000 in tax, but you get your 30,000 back. Total taxes now paid, 60,000 for an item valued at 200,000.)

  It might also be wise to tax all money taken out of the country at a similar rate (to avoid people just going elsewhere to spend their money).
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  Commodore1

  Aug. 3, 2007, 3:10 p.m.

  It certainly pays to be rich doesn't it? I wonder if Congress will be able to do anything about this. I doubt it. They will either be bribed by these rich guys or propose another non-binding resolution. But Warren Buffett pays less taxes than his $60K a year secretary? Sure he says he doesn't agree but he still doesn't mind paying does he? He is pathetic.
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  endtyranny

  Aug. 3, 2007, 4:08 p.m.

  The Republicans speak at length about tax cuts. In reality, they are only talking about cuts for the filthy rich and they are using their big government to shake down the middle and lower classes to pay for it. How ironic that the GOP has become the big government, tax and spend party.
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  simonsez

  Aug. 3, 2007, 5:01 p.m.

  Schumer and Hillary are under pressure on this one to stop any change. This is primarily a New York problem.

  I would bet there will be no change in this one.
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  BananaSlug

  Aug. 3, 2007, 5:46 p.m.

  The more you make, the more you can afford to pay in taxes. I'm not talking about people who make $70-$100k; I'm talking about people who make more in a year than most people dream of winning in the lottery. Taxes are what pay for roads, police, firemen, schools, and they are what should pay for health care, education through college, and housing assistance for social service people so that they can live in the communities they serve. When you pay taxes, you are paying the government for services you can't provide yourself. The rich balk at paying because they don't need the government's services; they can pay for everything the government would provide, at a higher quality too. Regulation and taxation, which are painted as evils because the rich want you to think they are, are what protect the poor and the middle-class from abuse, when done properly. The business elite have changed the government to suit their interests. We need to take it back so that it serves ours.

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