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Forums - Politics - Cut the taxes of rich conservatives, and raise them on all liberals. Problem solved!

Aielyn on 23 June 2012
Kasz216 said:
As for Dividends.  Dividends have their own tax... which is either taxed at Income tax or Capital gains depending on the dividend.  It will be going back to purely income tax rate in 2013.

I've left off the rest, because I think we're not going to make any further solid arguments either way - it'll just end up being the same arguments back and forward, with no resolution.

As for this bit, I have to wonder - dividends are basically the point of the stockmarket to begin with. If you wanted to encourage long-term investment, wouldn't it make more sense to significantly lower tax on dividends, and raise them on the capital gains involved in stock price variations? This would discourage "playing the stockmarket", and encourage treatment of the stockmarket in the way that it is meant to be treated - as a mode of investment. But then, perhaps I'm not understanding it well enough, as I've not yet had the chance to actually invest in anything (if I had money, I'd be investing in Nintendo right now).



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Kasz216 on 23 June 2012
Aielyn said:
Kasz216 said:
As for Dividends.  Dividends have their own tax... which is either taxed at Income tax or Capital gains depending on the dividend.  It will be going back to purely income tax rate in 2013.

I've left off the rest, because I think we're not going to make any further solid arguments either way - it'll just end up being the same arguments back and forward, with no resolution.

As for this bit, I have to wonder - dividends are basically the point of the stockmarket to begin with. If you wanted to encourage long-term investment, wouldn't it make more sense to significantly lower tax on dividends, and raise them on the capital gains involved in stock price variations? This would discourage "playing the stockmarket", and encourage treatment of the stockmarket in the way that it is meant to be treated - as a mode of investment. But then, perhaps I'm not understanding it well enough, as I've not yet had the chance to actually invest in anything (if I had money, I'd be investing in Nintendo right now).

They already have a method for doing this in the United States.

That 15% capital gains tax rate only applies to long term capital gains that have been held for 1 year or Longer.

Short Term capital gains are taxed at the regular 35% that you'd pay on income.

 



richardhutnik on 23 June 2012
Kasz216 said:

Except... they were enforcing Glass Steagall... most people just don't know what Glass Steagal was.

As for removing the cancel option... that would just be a disaster.  The facebook IPO is a good example of what would happen if you did that.

As for a transaction tax right away... then your just punishing regular traders very hard.  Something like 40-60% of American households own stock at any time... and most "ametuer" investors tend to play the short term game.   Your average stock is only held 7 months.

Which sounds like a long time, until you take into account the numerous pension funds, fixed income funds and the like that tend to buy stocks of juggernauts and just lets them sit for a decade or so.

The tax, and getting rid of the cancel button would harm those with less money disproportionatly and also cause them to hesitate more and miss out more.  While the 1 minute waiting time?  Won't effect them at all... except by leveing the playing field. 

Well okay, 1 minute might.... but the SEC is actually looking for a smaller time penalty then that. 

As for Dividends.  Dividends have their own tax... which is either taxed at Income tax or Capital gains depending on the dividend.  It will be going back to purely income tax rate in 2013.

What happened after Glass-Steagall was repealed was that mortgages flowed into Wall Street and became investment instruments that drove up the price of mortgages, and had individuals overleverage on them, assuming they would always go up.  Throw in Fed cheap money, and Washington cheerleading home ownership and it produced a speculative bubble in homes.  the repeal of Glass-Steagall contributed to this. Here is one article.

http://www.electionnews2008.com/glass-steagall-repeal-caused-subprime-disaster.htm

And even Newt said that the not separating the different banks from each other is a bad idea:



Aielyn on 24 June 2012
Kasz216 said:
Aielyn said:
As for this bit, I have to wonder - dividends are basically the point of the stockmarket to begin with. If you wanted to encourage long-term investment, wouldn't it make more sense to significantly lower tax on dividends, and raise them on the capital gains involved in stock price variations? This would discourage "playing the stockmarket", and encourage treatment of the stockmarket in the way that it is meant to be treated - as a mode of investment. But then, perhaps I'm not understanding it well enough, as I've not yet had the chance to actually invest in anything (if I had money, I'd be investing in Nintendo right now).

They already have a method for doing this in the United States.

That 15% capital gains tax rate only applies to long term capital gains that have been held for 1 year or Longer.

Short Term capital gains are taxed at the regular 35% that you'd pay on income.

That's not quite the same thing. I'm saying that it should be dividends that get the tax cut, and stock price profits should be taxed only at the highest rate (or even higher). It encourages investment in companies that you believe will do well, not in companies that you think will get a higher stock price (there's a difference).

I have a big issue with modifying taxes based on how long you hold the investments, in terms of implementation. It adds complexity that I just don't think is a good idea. On the other hand, it is fairly straightforward to distinguish between dividends and stock profits.

I am, of course, aware of the concern that would arise, in the form of usage of stocks and dividends to give low-tax money to the board of directors, and things like that. So there would need to be proper balancing of the tax rates, etc, to make it work correctly.



Kasz216 on 24 June 2012
Aielyn said:
Kasz216 said:
Aielyn said:
As for this bit, I have to wonder - dividends are basically the point of the stockmarket to begin with. If you wanted to encourage long-term investment, wouldn't it make more sense to significantly lower tax on dividends, and raise them on the capital gains involved in stock price variations? This would discourage "playing the stockmarket", and encourage treatment of the stockmarket in the way that it is meant to be treated - as a mode of investment. But then, perhaps I'm not understanding it well enough, as I've not yet had the chance to actually invest in anything (if I had money, I'd be investing in Nintendo right now).

They already have a method for doing this in the United States.

That 15% capital gains tax rate only applies to long term capital gains that have been held for 1 year or Longer.

Short Term capital gains are taxed at the regular 35% that you'd pay on income.

That's not quite the same thing. I'm saying that it should be dividends that get the tax cut, and stock price profits should be taxed only at the highest rate (or even higher). It encourages investment in companies that you believe will do well, not in companies that you think will get a higher stock price (there's a difference).

I have a big issue with modifying taxes based on how long you hold the investments, in terms of implementation. It adds complexity that I just don't think is a good idea. On the other hand, it is fairly straightforward to distinguish between dividends and stock profits.

I am, of course, aware of the concern that would arise, in the form of usage of stocks and dividends to give low-tax money to the board of directors, and things like that. So there would need to be proper balancing of the tax rates, etc, to make it work correctly.

Except Dividends aren't always related to profit and profitability.  Companies need to profit to pay a dividend, but not all profiting companies do... and what they pay often doesn't change.

Espiecally young companies looking to grow.

The End Result would be a further tilting of the field to the "Big 30" of the Dow Jones and other huge blue chip companies while hamstringing startups and new IPOs. 

You'd end up with a more top heavy market.

Also, this would go hard against your strategy... since Nintendo historically is actually pretty bad with dividends as they fluctate widely.  Nintendo a classic equity play, buy low, hope they succeed on their next console, sell high before the next console generation.