Republican Tax Reform 2017

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Republican Tax Reform 2017

#1

Post by GregD » Fri Jul 14, 2017 12:17 pm

In case you missed it, there is a web site on the current Republican Tax Reform effort of 2017:
https://waysandmeans.house.gov/taxreform/

I assert that step #2 of their postcard is bad policy. What is the logic for taxing only half of investment income? It is exactly a tax break for the rich on the income they are able to make because they are rich. The idea that someone won't invest their wealth unless it gets a tax break is absurd; if they don't invest they make nothing, whereas if they do invest they still make money after taxes.

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Re: Republican Tax Reform 2017

#2

Post by Scuba » Fri Jul 14, 2017 12:39 pm

I dont think taxes should be paid on investment income. If I put money into a Roth IRA, i have already paid taxes on it when the money was taxed as my income. Now, If you want to tax me on dividends, then I can see that.
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Re: Republican Tax Reform 2017

#3

Post by GregD » Fri Jul 14, 2017 12:51 pm

Scuba wrote:
Fri Jul 14, 2017 12:39 pm
I dont think taxes should be paid on investment income. If I put money into a Roth IRA, i have already paid taxes on it when the money was taxed as my income. Now, If you want to tax me on dividends, then I can see that.
What is your distinction between "investment income" and "dividends"? Dividends are one specific form of investment income, interest is another form of investment income. The money you add to the investment doesn't get taxed after you put it in; at that point it is principal and never becomes income. You likely paid taxes on it BEFORE you invested it.

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Re: Republican Tax Reform 2017

#4

Post by Scuba » Fri Jul 14, 2017 1:21 pm

GregD wrote:
Fri Jul 14, 2017 12:51 pm
Scuba wrote:
Fri Jul 14, 2017 12:39 pm
I dont think taxes should be paid on investment income. If I put money into a Roth IRA, i have already paid taxes on it when the money was taxed as my income. Now, If you want to tax me on dividends, then I can see that.
What is your distinction between "investment income" and "dividends"? Dividends are one specific form of investment income, interest is another form of investment income. The money you add to the investment doesn't get taxed after you put it in; at that point it is principal and never becomes income. You likely paid taxes on it BEFORE you invested it.
My apologies, I misread the postcard. I thought it was taxing investments, period. Investment income/dividends I am ok with.

That said, I truly wish we could have a simplified tax system like this. Still give child credits, and mortgage interest credits, but it would appear to get rid of a metric buttload of loopholes.
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Re: Republican Tax Reform 2017

#5

Post by Scuba » Fri Jul 14, 2017 1:23 pm

one quick thought that just occurred to me. I have a question about retired seniors who live almost solely (along with Social Security) off of investment income. I am not sure if I like how this would impact them.
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Re: Republican Tax Reform 2017

#6

Post by GregD » Fri Jul 14, 2017 2:17 pm

Scuba wrote:
Fri Jul 14, 2017 1:23 pm
one quick thought that just occurred to me. I have a question about retired seniors who live almost solely (along with Social Security) off of investment income. I am not sure if I like how this would impact them.
My plan is to become one of them before too long.

Remember federal income taxes are progressive. There is no tax on income up to some level, and then a low tax rate on the incremental income up to the next level, and then a bit higher rate on the incremental up to the next level, and so on. Retired people with little income will pay the same amount of taxes as working people at the same income level more-or-less; not much. Currently there is (I think) an extra exemption for old people reducing their taxes a bit just for being old.

The big impact will be on rich people that have a lot of investment income, whether working, retired, or young and not working simply because their investment income is more than they need. I'm kinda between these last two categories; I'm not young, but young for retirement. All the financial calculations say I'm never going to spend all the money I already have, so why continue working?

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Re: Republican Tax Reform 2017

#7

Post by Scuba » Fri Jul 14, 2017 3:26 pm

GregD wrote:
Fri Jul 14, 2017 2:17 pm
Scuba wrote:
Fri Jul 14, 2017 1:23 pm
one quick thought that just occurred to me. I have a question about retired seniors who live almost solely (along with Social Security) off of investment income. I am not sure if I like how this would impact them.

Remember federal income taxes are progressive.
And that is part of my problem. Everyone should get taxed at the same flat rate via a federal Sales tax. Then I pay 15% (for example) on my $65,000 car and Joe Blow has to pay 15% on his $15,000 KIA.

I pay just shy of 10K in taxes for choosing to buy an expensive car, and he pays just over $2.2k for his budget minded car. That is what is known as fair.
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Re: Republican Tax Reform 2017

#8

Post by GregD » Fri Jul 14, 2017 4:27 pm

Scuba wrote:
Fri Jul 14, 2017 3:26 pm
And that is part of my problem. Everyone should get taxed at the same flat rate via a federal Sales tax. Then I pay 15% (for example) on my $65,000 car and Joe Blow has to pay 15% on his $15,000 KIA.

I pay just shy of 10K in taxes for choosing to buy an expensive car, and he pays just over $2.2k for his budget minded car. That is what is known as fair.
I assert that whether your proposal is fair and/or desirable depends upon the consequences, and those depend upon the context. I suspect that taking your proposal to its logical conclusion in our current society will result in things like, people dying because they don't have enough money for things they need to live, and in the long term a very small fraction of the population controlling pretty much everything in our society while the vast majority of people subsist from day to day until they die. If you think those are acceptable outcomes then we can happily stop here and agree to disagree on that. If you think those are NOT logical consequences of your proposal, I'll have to spend some time formulating a convincing argument justifying my suspicions; at the moment I don't have one. I have expressed my argument for progressive taxation on a prior thread; it didn't convince you then, so I suspect I'll need a better one to convince you now.

But regarding the OP, I noticed that you have not argued in favor of the proposal to tax only half of one's investment income.

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Re: Republican Tax Reform 2017

#9

Post by Scuba » Fri Jul 14, 2017 4:34 pm

nope, I dont have a problem with them taxing all of it, just as long as it is implemented fairly (which is a fun thing to define)
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Re: Republican Tax Reform 2017

#10

Post by TheBeardedGroundhog » Fri Jul 14, 2017 9:57 pm

Well, we could just tax the left- liberal progressives 99% and give all the free stuff to the right constutional conservatives.
Then even the left will be happy.......they got wealth re-distuabution.....lol

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