Why not get a loan using your stock holdings are collateral? Or maybe gift it to a bunch of friends who can then cash out at a much lower tax rate? I'm sure if you thought about it, you could come up with more loopholes.
I think we can assume pretty safely that you're not in this bracket. Why do you even care? But if you were - First, you're not taxed at 39.5% on the principal - it's more like, you know, zero. l. Second, if you're 100% in equities with every spare dime and don't have any emergency money, you're probably an idiot (and unlikely to be in the top 1%). Seriously, silly arguments by poor people like you about hypothetical rich people that they hope to be one day acting dumbly and not minimizing their tax liability are about the least compelling ones in the universe.
If you think that building a business from the ground up is easy and not filled with risk, I suggest that you probably haven't tried it before.
Major and Refman's proposals were to tax capital gains the same as wage/salary to stick it to the rich. The example is not for someone in the top 1%. It describes a middle class person building up wealth over time, but taxed like a top 1% because he needed to cash in the capital gains over a short period of time. I am that middle class person, though I don't have that much money built up yet. If I don't get there, it wouldn't be because of the rich taking all that wealth. It would be because of the people that wants wealth equality.
You argue for preferential tax treatment for investing due to the inherent difficulty. Your argument is essentially that investing deserves more preferential treatment than building a business. The natural inference is that you are saying that investing is far more difficult than building a business.
Could you quote anything I said that would lead you to think any of this? B/c to me, it looks like you're putting words in my mouth and then extrapolating an argument/inference that I never made. I argued for preferential tax treatment for investing (compared to building a business) due to increased risk (capital gains loss vs net operating loss). Greater risk should lead to greater rewards, right?
Horse betting is risky; so is being a firefighter. Compensation and risk are not exactly closely linked. You see, in horse betting you risk your money; in fighting fires you risk your body.
Refman, You should also note that I've repeatedly said that I don't mind if long-term capital gains rates increase as long as capital loss limits also increase.
I don't think this is a good analogy, but it looks like the riskier job is guaranteed a wage while less risky job is not. So it still follows the concept of "greater risk should lead to greater reward".
Different situations have different risks. I do not think taxes reflect risk. As far as higher capital gains, this should be mandatory given the increasing disparity between the rich and poor classes. Taxes have a variety of roles: finance, coerce, control, etc. Stock markets create a tremendous amount of wealth and in US's past, stock market crashes have lead to recessions (1893 and 2000), which have powerful impacts on emotions and actions.
Who says greater rewards should necessarily emanate from generically greater risks? This is only true within an all-encompassing perfect risk framework. If there are major risks that are not accounted for, namely systemic risks, then greater risks should not neccesarily lead to greater rewards. So people are free to use the risk/reward theory in business, but when it comes to the lives of human beings the framework is not refined enough to apply it as you suggest it should be applied. In the real world, there are exceptions where small risks lead to great rewards and where large risks lead to disastrous "rewards" for the risk taker and other previously ignored stakeholders. These excpetions can be tolerated, as a I said, within a commercially motivated risk framework, but not in a situation where such exceptions are unacceptable. This is what happens when you commodify humans. More importantly, there is nothing to quantify the idea that investments are riskier than starting a business, or vice versa. You can argue they should be treated the same, but to argue that one is riskier than the other and hence should be taxed differently is baseless.
So instead of a simple tax policy that makes sense - we need to have to have one that covers your unrealized aspirations and hypothetical permutations thereof. (In particular- one based on poor tax planning by you that relies on your own negligence) Based on that alone - I don't think you're going to have to worry about it dude
I think there is a big need for tax reform. I think the marginal rate does need to be higher for millionaires. No reason it shouldn't be in the 40's. Capital gains should have a progressive system as well. And I think certain wealth should be taxed as well. There should be a small tax on any overseas holdings. Finally, eliminate certain deductions for corporations and anyone making over 2 million a year, or on mortgage interest greater than a loan amount on 500k. things like this can do a lot to encourage investment in the country while raising revenue.
That is the biggest load of bull**** I have ever heard. My parents were immigrants from asia, who were poor, that didn't have a college background, who work at Wal-mart, that don't speak English at home. Yet I'm in my first year of medical school aA. My parents started off with nothing but made smart financial decisions, did not spend more than they earned, and expounded the virtues of public education. Even if the "cards are stacked against you" you have a shot to move up in this country. A little luck from God and not being a dumbass can go a long way.
