Friday, April 13, 2012

Income taxes

In case anyone is thinking about income taxes this weekend, today's topic is the proposed Buffett rule. Here's a simple explanation of the idea:

And here's a handy calculator, also courtesy of the White House, to help figure out the number of people who make more than you, but pay a lower percentage of their income in taxes than you do:


  1. The presenter fails to discuss different types of income and why the IRS tax code treats them differently. Personally, I don’t care for the current IRS tax code as it is. But it would be helpful and more honest for the video to explain the reasons (good or bad) for the current long-term capital gains levels. Different types of income are taxed differently, as are various types of spending.

    Money invested “hoping” for long-term capital have already been through the progressive tax system that we all currently work from. Long-term capital gains are taxed at a maximum rate of 15 percent in an attempt to encourage investment; and the money invested has already been taxed as income at higher rates; as well, will be taxed again on death. That’s three times.

    Money after taxes, invested in hopes of capital gains, might be lost. Let’s say an uber rich investor loses $10,000,000 in a specific investment. That man or woman can only claim $3000 dollars in losses on his return in a given year. Yet, Obama wants to tax him 30% of any successful investment?!

    Progressives understand what vigorish is. “There are unlimited possibilities for how the presence of vigorish (tax) could affect the amount wagered by a bettor (or investor), since a bettor is free to bet in any arbitrary way based on the odds. There are, however, several natural options to consider which give different results on how vigorish affects a bettor. Raise tax and you alter the way investors invest.

  2. I have heard those arguments in favor of lower income tax rates for capital gains, and several other arguments as well, and I must admit that none of these arguments have ever made any sense to me. I'll just refer you to my previous post on this topic here:

    which notes that Ronald Reagan also never bought the idea that capital gains should be taxed at lower rates than earned income. And I also cite sources indicating that there is no empirical evidence to support the idea that lower rates on capital gains does in fact encourage more investment. It seems like you would want to have some data showing that we get more investment with lower capital gains taxes before you make the argument you are making, but the data does not support it. What lower rates might encourage is for people to cash in on their investments, and realize their gains, and I'm not sure why that is a thing we want to encourage at all.

  3. There is no empirical evidence for Keynesian or Austrian economic policy; let alone relatively minor tax code changes. My reply, like the last one on the mandate, was to add something to the discussion and hear your opinions. You are an honest and when readers ask what your opinion is you don't hide it. Unlike the video. Thanks for adding clarity.