Quote:
Originally Posted by Abnshrek
Well when you think about it it doesn't gall me. Most people that have shares are investing money they already paid taxes on, or it's part of someone's 401K, IRA or mutual fund. So the people owning a butt-load of shares is limited and they make me sick :^)
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People owning IRAs and 401Ks do not get that advantage--you put money in without paying taxes as earnings--the dividends and gains accumulated--then when you take it out you pay taxes as if it were earned income. People owning a butt-load of shares is limited to the very rich--the top 5 or 10% --they got a 50% tax cut under the Bush tax cut--I got a few hundred dollars--how much did you get?
Quote:
Originally Posted by harveyc
If I own a farm and make a profit, I pay taxes on my earnings. Say I combine my farm with that of nine others and we decide to incorporate to save on some overhead expenses, get more efficient equipment, etc., each owning 10%. Now the corporation I own 10% of pays income taxes on the earnings and then I pay taxes on the dividends when my share of the income is distributed to me. a reduced tax rate on dividends is only slightly off-setting the injustice of double taxation. A bigger company like Apple Computer obviously has many owners (shareholders), but the principle is the same. Those earnings are being taxed twice.
Capital gains rates are designed to encourage investment in capital assets that may have a long period of time to earn a return. Such investments are beneficial to society as they lead to more jobs and stimulate the economy.
Are you equally bothered that individuals/couples can sell a home with a large capital gain entirely tax-free (up to $250k or $500k)?
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You choose to incorporate to save money--mostly from tax advantages for corporations--then you get lower tax rate on earnings because you call them dividends--that is double dipping.
The break for individuals selling a home tax free is really pretty limited--we could always avoid taxes on those gains if it went into a new home--so it really only applies to those moving into a smaller or lower price home, I would not care if it disappeared--it has never applied to me, but again I don't see why I should pay less tax on money I got for doing nothing than money I worked for.