Re: Gibson raided
Perhaps you missed my discussion of active vs passive income. Passive income is things like dividends, interest, and capital gains.
I have a news break for you... It isn't just wealthy people who own stocks, or put money in savings accts, while interest these days is pretty puny thanks to Bernanke's games with interest rates. Ramping up rates on passive income will hit widows and orphans, retirees, 401ks, more than just the wealthy few.
And where do you think the capital came from in the first place? First generation wealth came from earning it so that seed capital was taxed already once. I have been investing in the stock market for decades and paid taxes on all the money I used to invest, when I first earned it the old fashioned way.
I'd say the all time low was 7% when they first started, but that was the normal tax rate for ordinary income in 1921.
I'm not an economist, but I played basketball last night so I'll pretend to be one. If we raised taxes on capital gains, this would directly reduce the market value of dividend paying stocks, then indirectly this lower return on capital investment would be a disincentive and reduce the amount of "capital" made available to business to expand and grow (create jobs).
[edit- I would consider a significant "very" short term capital gain tax on securities held for fractions of a second by flash traders. There is no good reason for people flipping stocks that quickly, other than the siphon wealth out of the market and away from long term investors. I don't mind rewarding clever, but this is borderline stealing, and they game short term price inefficiencies with very fast computers, often located at the exchanges. I could live with $.05 stock price resolution if that reduced this death by a million cuts. /edit]
So you are in the 49% minority who pay income taxes? (note this is another disputed statistic and used for shock value as it is only talking about income taxes, not all taxes, but still a remarkable number.
+1... they need to put themselves on the same health plan they are forcing on us. They are pigs at the taxpayer's trough.
I was drafted back in 1970 and served the shorted term I could get away with (18 months, 2 weeks). I believe I am eligible for some kind of veterans consideration but I'd have to arm wrestle some bureaucratic clerks for it. The veterans office in the town/city near me (25 miles) was closed years ago (I haven't checked again lately to see if they reopened) so I would have to drive 60 miles to pursue this, and probably for any clinic care. It might be worth the trip if I was destitute and sick. I'll cross that bridge when I come to it, but right now I prefer to remain healthy and not destitue.
Huh... schedule C profit is fully taxable.
In S corp organization the profit can be taken out as regular pay and distributions. The simple income must pay employment tax, while distributions don't have to pay. However the IRS will spank you if they don't think you have paid yourself a reasonable salary, and will reclassify the distribution as regular income.
In C corps you want to pay yourself as much as possible to reduce profit and corporate taxes (dividends are not deductible from corporate taxes). Another observation about passive income, the corporation already paid tax on the that dividend before distribution it to stock holders, who are then taxed on it again... If business was double dipping like that the government would raise holy hell...
So yes, for pass through tax structured businesses, some fraction of income can be treated as a distribution but you are subject to what the IRS considers reasonable. AFAIK there is not strict code definition of what is reasonable, so good luck...
JR
