Nope, it wasn't a strawman argument whatsoever. But it looks like you don't know what a strawman argument is so here it is: "A straw man is a type of argument and is an informal fallacy based on misrepresentation of an opponent's position" In no way did I misrepresent your position. I simply gave you an example using the parameters you defined. So you were wrong. Get over it and quit being obtuse. And btw, the same concept would hold true if you cherry picked historical capital gains tax rates. If you've been holding a stock valued at a million dollars with your cost basis being $1, would you be more likely to sell it if the cap gains tax rate were 30% or 15%? Thanks for agreeing with me. Like I said, it does depend on timing.
It's 40% vs 15%. Because of your lifetime of investing, you are now the top .1% this tax year even though you were middle class your whole life.
You created a hypothetical (you will get more tax revenue if the cap gains tax is 50% than if it is 100%) and acted as if that was the position that I was espousing. Your comment was a textbook description of a straw man argument, but instead of just admitting it, you choose to double down on stupid without actually addressing my actual argument. Why exactly is it a good thing that we are allowing rich people (most of those who get most of their income from investments would qualify as "rich" IMO) to cash out at preferential tax rates while those of us who work for a living pay higher rates?
I created a hypothetical based on your parameters. Since it fell within your parameters, it was indeed the position you were espousing, and clearly not a strawman argument. Since you seem a little slow-witted, I'll spoon feed it to you. So there you go. You claimed that no matter what, lowering the capital gains rate does not increase revenue for the government. I gave you a hypothetical situation in which it does. Then I gave a situation using actual historical capital gains rates to further illustrate the point. Why are you assuming that rich people don't work for a living? How do you think they got rich? Furthermore, it's not like investing is easy. You can make a lot of money, but you can also lose a lot of money. It takes a lot of work. I don't care if capital gains tax rates are increased, but if they are, the limit on capital losses should be increased accordingly. I also think its unfair to tax only a targeted group of people.
You couldn't spoon feed yourself. My parameters included reality and I have never argued in favor of, nor would I ever advocate for a 100% capital gains tax rate, but that is the position you are insisting, REPEATEDLY, that I prefer. This is the very definition of a straw man, if you are truly unable to see this, you need to go back to school. No, I claimed that, in the real world (which is the only place you could do a statistical analysis using real world numbers), decreasing the capital gains tax rate has lowered revenue every single time and at no time did these tax cuts result in higher GDP growth. You are the one who added the "no matter what" and made up a hypothetical, then attributed that position to me, even though I never said anything of the like. Yes, you were able to make up an absurd situation which has never been and will never be policy in the real world. Your entire "argument" is based on this absurd hypothetical, which makes it absurd. I am asking why someone who makes their money from investments (predominantly very wealthy people) pay a lower tax rate in what is supposed to be a progressive income tax system. It is similarly unfair to give preferential tax rates to the very wealthy (reducing taxes for a targeted group of people) when people who work for a living pay higher rates.
That's why I included a similar scenario using capital gains rates (30% vs 15%) that have existed. And it led to the same conclusions....that your unqualified statement was wrong. And as for the "strawman" argument, it's not one. I even defined it for you and explained how it wasn't. If you refuse to acknowledge it, that's your prerogative. Look, I quoted the entire conversation and even told you that unless you qualified your statement in some way, it was incorrect. You were adamant that the unqualified statement was true....which it obviously wasn't. I don't know, but if I had to venture a guess, it'd be that the monies that are invested have already been taxed once and that investing has a risk of loss while earned wages don't. Capital gains and earned wages are not really an apples to apples comparison.
Where is your data coming from? http://taxfoundation.org/article/federal-capital-gains-tax-collections-1954-2009 Based on the table provided in that link, it looks like taxes paid on capital gains have increased several times in conjunction with decreasing the effective capital gains tax rate. For instance, in 1978, the effective capital gains tax rate was 18% and the capital gains taxes paid were $9,104mm. In 1979, the effective capital gains tax rate dropped to 16% and the capital gains taxes paid rose to $11,753mm. In 1996, the effective capital gains tax rate was 25.5% and the capital gains taxes paid were $66,396mm. In 1997, the effective capital gains tax rate dropped to 21.7% and the capital gains taxes paid rose to $79,305mm. In 1998, the effective capital gains tax rate dropped to 19.6% and the capital gains taxes paid rose to $89,069mm.
Like every year in grade school gym, there are always kids that can climb the gym rope and those that can't. The fat kid whines to his teachers, friends and parents. He had a million reasons why he couldn't climb the rope. From, That kid was lucky to be born to their athletic parents, I'm not strong enough, to That kid is only lifting 80 lbs to my 130 lbs, etc... As the weeks go by, the fat kid still couldn't get up the rope, while the other kids were getting stronger and zipping up and down the line. The fat kid complained to the coach. "Coach is there any way you can slow down those kids? They are making me look bad and the gap between their performance keeps widening. Can you put oil on their rope, weigh them down, or something?" The coach replied, "It won't matter if I slow them down or not, or even if they fall down and break their legs. At the end of the day, you it's not helping you climb that rope". The fat kid asks the coach. "So what am I suppose to do? Try harder? I tried my hardest, but still can't get up the rope". The coach said, "Trying harder is a process, not a single instance effort". There are things that you can work on to help you climb that rope like training for strength, conditioning, technique, diet, etc... Once you climb that rope, it won't matter how many times the other kids can climb the rope.
Monies invested have already been taxed once. This is true. However, capital gains taxes apply only to the profit. The recoupment of your investment is not taxed. Therefore, there is no double taxation. Yes, with investments there is a risk of loss. That is why, if you lose, there is no tax. If you losses are deep enough, you can even carry those losses forward to offset income in future years.
Yes, obviously you don't get taxed on losses. My point was that since capital investments carry risk of loss, that might be a reason why they are taxed at lower rates than earned wages (which have no risk). You can only claim a capital loss of $3,000 per year. For wealthy people, that's insignificant.
You also get a nice tax offset on your gains when you take a loss. There's no reason to tax it at a lower rate just because of that. This is technically true, but irrelevant in the grand scheme of things. If I lose $100,000, I can only take a $3,000 deduction in a given year. But my next $97,000 worth of gains is also tax-free so you get a tax break for all the losses - not just $3k per year.
Maybe that's the crux in our differences of opinion. I think investing is difficult and requires a lot of time and effort. That, and the component of risk, is why I don't mind the long-term capital gains tax rate being lower than regular tax rates. However, you make investing sound so simple. You don't appreciate its difficulty like I do.
My statement, devoid of the bull**** that YOU MADE UP, is correct. Lowering capital gains tax rates does NOT increase government revenue. You made up a hypothetical and claimed that said hypothetical was my position. It isn't my position, so your statement is a straw man. I realize you must be disappointed in yourself for using such a logical fallacy, but that is what you did, accept it and move on. I have subsequently "qualified" my statement by repeatedly pointing out that I am talking about the real world, not your fantastical hypothetical world. An honest interpretation of my statement would lead the reader to conclude that my statement was accurate, only in your twisted hypothetical world was it in any way inaccurate. Every single dollar is taxed more than once, this argument would be a red herring. Does your entire inventory of "arguments" consist of logical fallacies? If a person takes a loss from investing, they can write that loss off, reducing their overall tax burden. That is the tradeoff for the risk, a lower capital gains tax rate is just a giveaway. Income is income, even Ronald Reagan thought they should be taxed equally.
Of course, some of the people who can't climb your hypothetical rope can't do so because they are carrying extra weight over and above their body weight while other people not only don't have to carry that extra weight, but have a stepladder which puts them within a few inches of the top of the rope, reducing their climb dramatically. We can't (and shouldn't) even that playing field completely, but we can at least endeavor to assure that a person only has to lift their own body weight, not the additional weights put on them as a result of flaws in our society.
Being a doctor is leaps and bounds more difficult than being a filing clerk. In addition, this profession carries the risk of malpractice suits, among other risks. However, the doctor pays a higher tax rate than the filing clerk even though the job is far more difficult and carries a risk of loss, not just of money, but of the doctor's career. Income is income, having a lower capital gains tax rate is nothing but a giveaway, mostly to rich people.
so, instead of helping the person work on strength, conditioning, technique, diet, etc... The US brings the bell all the way down to where they can ring it w/o effort, making it more likely that they will never be able climb that rope.
Actual labor is difficult too and requires far more time and effort. Virtually all of my income comes from investing. I lost a fortune in the stock market crash in 2008/2009. I now get to make money tax-free for a while thanks to all my capital losses that I've stocked up. I understand both its difficulty and its benefits. It's silly that I pay a far lower rate (as long as I can make my cap-gains long-term) than someone who works full-time - beyond just the base income tax rate, I also don't have to pay SS or Medicare taxes on those gains. Making money off of someone else's hard work by investing in them should not be taxed at a substantially lower rate than the hard work itself.
And those taxes would have been higher if the rates had stayed the same. I'm not disputing that lower rates entice people to cash out sooner, I'm disputing that lower rates are a good thing for our economy and that they are fair to the lower and middle classes. BTW, the VAST majority of the increase in capital gains tax increases you describe are accounted for by inflation and GDP growth.
