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View Poll Results: I......
would increase a tax to be "fair" even if it decreased revenue.
4
14.29%
would NOT increase a tax to be "fair" if it decreased revenue.
22
78.57%
I just don't know, kvrdave....I just don't know.
2
7.14%
Voters: 28. You may not vote on this poll

Tax "fairness" or increase revenue?

Old 06-25-08, 11:16 AM
  #1  
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Tax "fairness" or increase revenue?

I heard this quote from Obama yesterday, so I went and looked it up.

http://www.ontheissues.org/Economic/...Tax_Reform.htm
From the 2008 Philly Debate....
Q: You favor an increase in the capital gains tax, saying, "I certainly would not go above what existed under Bill Clinton, which was 28%." It's now 15%. That's almost a doubling if you went to 28%. Bill Clinton dropped the capital gains tax to 20%, then George Bush has taken it down to 15%. And in each instance, when the rate dropped, revenues from the tax increased. And in the 1980s, when the tax was increased to 28%, the revenues went down.

A: What I've said is that I would look at raising the capital gains tax for purposes of fairness. The top 50 hedge fund managers made $29 billion last year--$29 billion for 50 individuals. Those who are able to work the stock market and amass huge fortunes on capital gains are paying a lower tax rate than their secretaries. That's not fair.

Q: But history shows that when you drop the capital gains tax, the revenues go up.

A: Well, that might happen or it might not. It depends on what's happening on Wall Street and how business is going.
Here is my question....would you make a decision that negatively affected federal income in an effort to be "fair" or would you do what increases revenue to the government?
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Old 06-25-08, 11:21 AM
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Fair or unfair, increasing revenues to the federal government wouldn't be my top priority either.
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Old 06-25-08, 11:26 AM
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I wouldn't raise taxes on people making under $50,000 just to increase revenue, but I can't see raising taxes on something like capital gains when I know that it decreases revenue, either.

Perhaps I should have made the poll question specific to just that.
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Old 06-25-08, 11:29 AM
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Apparently all we need to do is reduce all the tax rates to zero and then the Federal government will be swimming in money.
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Old 06-25-08, 11:32 AM
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Originally Posted by wendersfan
Apparently all we need to do is reduce all the tax rates to zero and then the Federal government will be swimming in money.
A case can be made for a zero capital gains tax increasing the total tax revenue of a country.
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Old 06-25-08, 11:33 AM
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The date showing that dropping the capital gains tax rate increases revenues over the long term are flawed. Clearly, when people anticipate a drop in cap gains taxes, they wait until the new rate becomes effective before taking their gains (and likewise, if the rate goes up, they take their gains before the new rate kicks in). But over the long term, I don't think the effect exists.

More generally, I view this as closing a loophole. Hedge fund managers are, in effect, taking their salary as capital gains. It's gaming the system, and there's no reason a person should be taxed at a lower rate than everyone else simply because of how they earn their living and how their compensation is structured.
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Old 06-25-08, 11:33 AM
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Originally Posted by wendersfan
Apparently all we need to do is reduce all the tax rates to zero and then the Federal government will be swimming in money.
No, no, no. We need to increase tax rates to 100% and redistribute it fairly.
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Old 06-25-08, 11:37 AM
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I guess Alan Greenspan knows nothing about capital gains taxes...

"If the capital gains tax were eliminated ... we would presumably, over time, see increased economic growth which would raise revenues for the personal and corporate taxes as well as the other taxes we have. The crucial issue about the capital gains tax is not its revenue-raising capacity. I think it is a very poor tax for that purpose. Indeed, its major impact is to impede entrepreneurial activity and capital formation. While all taxes impede economic growth to one extent or another, the capital gains tax is at the far end of the scale ... the appropriate capital gains tax [is] zero."
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Old 06-25-08, 11:47 AM
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Originally Posted by crazyronin
No, no, no. We need to increase tax rates to 100% and redistribute it fairly.
I'll split the difference. 50%?

OK, let's do it.
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Old 06-25-08, 11:54 AM
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Originally Posted by JasonF
The date showing that dropping the capital gains tax rate increases revenues over the long term are flawed. Clearly, when people anticipate a drop in cap gains taxes, they wait until the new rate becomes effective before taking their gains (and likewise, if the rate goes up, they take their gains before the new rate kicks in). But over the long term, I don't think the effect exists.

More generally, I view this as closing a loophole. Hedge fund managers are, in effect, taking their salary as capital gains. It's gaming the system, and there's no reason a person should be taxed at a lower rate than everyone else simply because of how they earn their living and how their compensation is structured.

You would have to back that up with stats to convince me. Here is what I see in my business....when capital gains are higher, people do not sell investment properties because it is not worth the loss of the income they receive, OR they only sell if they can get into a 1031 tax deferred exchange. But in the past 6-7 years, I have seen people sell investment properties to buy cars, do additions/remodels, not have to take out loans for kids' college, etc. The lower capital gains tax makes it worth selling an paying the tax.

And the "closing a loophole" is a pile of crap. If you want to close the loophole, do it. It can be done without raising the tax on everything.
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Old 06-25-08, 12:04 PM
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Originally Posted by kvrdave
You would have to back that up with stats to convince me. Here is what I see in my business....when capital gains are higher, people do not sell investment properties because it is not worth the loss of the income they receive, OR they only sell if they can get into a 1031 tax deferred exchange. But in the past 6-7 years, I have seen people sell investment properties to buy cars, do additions/remodels, not have to take out loans for kids' college, etc. The lower capital gains tax makes it worth selling an paying the tax.

And the "closing a loophole" is a pile of crap. If you want to close the loophole, do it. It can be done without raising the tax on everything.
Here's an article describing the data:

http://usbudget.blogspot.com/2008/04...evenue_28.html
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Old 06-25-08, 12:28 PM
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Originally Posted by JasonF
Here's an article describing the data:

http://usbudget.blogspot.com/2008/04...evenue_28.html
Several things. First, it is most important to note that Obama has never said that he disagreed with the data, and this wasn't something he was doing to change revenue, but to be "fair." That is the debate in my mind.

Most important, is that it does not matter why it happens, they both show that it happens. They may show a tiny increase as it goes along (which I assume happens because people get to a time when they need to sell after holding out for a better rate), but it does happen.

Now if you are going to claim that it won't happen this time, I'd have to ask why? Regargless of why it happens, it happens.

It would be interesting to see what the overall increase (if any) is in income tax revenues is during that same time. Because whenpeople sell, and take a gain, that gain goes into the economy one way or another.
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Old 06-25-08, 12:32 PM
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This poll reminds me of the Newsweek poll about the Bush's tax cuts:

'Do you favor receiving a tax cut or saving Social Security?'

My definition of what is fairness in the tax code probably differs from most our members.
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Old 06-25-08, 12:36 PM
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Originally Posted by kvrdave
Several things. First, it is most important to note that Obama has never said that he disagreed with the data, and this wasn't something he was doing to change revenue, but to be "fair." That is the debate in my mind.

Most important, is that it does not matter why it happens, they both show that it happens. They may show a tiny increase as it goes along (which I assume happens because people get to a time when they need to sell after holding out for a better rate), but it does happen.

Now if you are going to claim that it won't happen this time, I'd have to ask why? Regargless of why it happens, it happens.

It would be interesting to see what the overall increase (if any) is in income tax revenues is during that same time. Because whenpeople sell, and take a gain, that gain goes into the economy one way or another.
Here's the bottom line for me: Let's say that in 2009, you earn $100,000 (profit) by selling houses, while I earn $100,000 in salary and Richie Rich earns $100,000 (profits) by selling stocks.

I see no reason why the three of us shouldn't pay the exact same taxes (holding constant our deductions, etc.).
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Old 06-25-08, 12:40 PM
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Originally Posted by wendersfan
Apparently all we need to do is reduce all the tax rates to zero and then the Federal government will be swimming in money.
It's a parabola, not a straight line.

And I would rather make taxes simpler as opposed to more fair.
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Old 06-25-08, 12:41 PM
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Originally Posted by The Bus
It's a parabola, not a straight line.
<i>I</i> know that, but half the WSJ editorial staff and most of the Republican politicians in this country don't.
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Old 06-25-08, 12:42 PM
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Originally Posted by X
I guess Alan Greenspan knows nothing about capital gains taxes...
He knew nothing about the horrific home foreclosure madness that he conveniently allowed to happen during his reign. Or maybe he did.

My point being that I thought we were through with hanging off of his proverbial testicles. More people losing homes than during the Great Depression, and yet he is still sourced as the all-knowing $ guy. Not that his acquired knowledge or expertise just dissipates, it's just, well ....

Greenspan allowed the lending fraud practices to go on during his watch. Period.

E
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Old 06-25-08, 12:43 PM
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Also, it's well documented that Greenspan carried a wallet.
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Old 06-25-08, 12:49 PM
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Originally Posted by JasonF
Here's the bottom line for me: Let's say that in 2009, you earn $100,000 (profit) by selling houses, while I earn $100,000 in salary and Richie Rich earns $100,000 (profits) by selling stocks.

I see no reason why the three of us shouldn't pay the exact same taxes (holding constant our deductions, etc.).
I don't see a problem with the promotion of investment exclusive to earned income. Promoting that is good for the economy and helps create ways for others to earn income.


If you want something to really call fair, you need to start from scratch. Changing Capital Gains taxes won't get rid of any loopholes, but only change how business is done. And slow the economy, imo.
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Old 06-25-08, 12:50 PM
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Are you sure? It's surely documented that you're a forum troll though.

E
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Old 06-25-08, 12:54 PM
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Originally Posted by DeltaSigChi4
He knew nothing about the horrific home foreclosure madness that he conveniently allowed to happen during his reign. Or maybe he did.

My point being that I thought we were through with hanging off of his proverbial testicles. More people losing homes than during the Great Depression, and yet he is still sourced as the all-knowing $ guy. Not that his acquired knowledge or expertise just dissipates, it's just, well ....

Greenspan allowed the lending fraud practices to go on during his watch. Period.

E
I don't think you can fault him much for what happened. The loans made were not conventional loans with conventional terms, but were a result in investment banks getting into the loan business because they say it as a great way to make money on lending fees, and then have a good steady return.

It was about shady lending practices and people getting loans in ways they never could have before. Greenspan didn't pave the way for the "No income verification loan" or the "80/20 loan with the 20% being in the form of a secondary loan." And he sure didn't do anything to encourage people to take ARM loans when regular conventional rates were at historical lows.
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Old 06-25-08, 12:55 PM
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Originally Posted by DeltaSigChi4
Are you sure? It's surely documented that you're a forum troll though.

E

Me?
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Old 06-25-08, 12:57 PM
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Dave, to answer your original question, I probably wouldn't increase a tax just to be fair, but like almost everything else, it really depends. In this specific case I disagree with Senator Obama.
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Old 06-25-08, 01:00 PM
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Originally Posted by kvrdave
I don't think you can fault him much for what happened. The loans made were not conventional loans with conventional terms, but were a result in investment banks getting into the loan business because they say it as a great way to make money on lending fees, and then have a good steady return.

It was about shady lending practices and people getting loans in ways they never could have before. Greenspan didn't pave the way for the "No income verification loan" or the "80/20 loan with the 20% being in the form of a secondary loan." And he sure didn't do anything to encourage people to take ARM loans when regular conventional rates were at historical lows.
Not directly, but a large part of the reason all of those loans came about is because there was a lot of money looking for someplace to invest, and the Fed's policy had made U.S. Treasuries a less attractive investment than they might have otherwise been.
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Old 06-25-08, 01:02 PM
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Simple question...

I plan on selling my home in 3 years. Let's say I will have $100,000 in gained equity.

How much will I pay in capital gains taxes if Obama has his way vs. McCain?
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