15% for the 1%

Taxes 101 via Mitt

Judging from the number of tax preparation services, computer tax programs and statistics put out by the Internal Revenue Service, my guess is that most Americans, particularly those living between the relatively more affluent coasts, know very little about how personal income taxes are computed. As such, it may come as a shock to them that Mitt Romney, our multimillionaire Republican contender for his party’s presidential nomination paid less, as percentage of his income, in taxes than did the average working stiff.

Capital gains, dividends, and so-called “carried interests” are taxed at a preferential rate of 15 percent. Moreover, this income is not subject to Social Security or Medicare tax and you can deduct your losses (should you have them) from your gains.  

For the life of me I cannot understand why capital gains and dividends are taxed at a lower rate than the paltry income I garner from a bank certificate of deposit. And investor assumes certain risks when making an investment choice, but so does a gambler at a casino or racetrack. Making a type of investment which has both risks and rewards should not carry with it a tax advantage not bestowed on more conservative investors.

So “thank you” Mr. Romney for highlighting this inequity to the public. Hopefully, your unintended candor will ignite an effort for serious tax reform in this country.

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Yankee Man February 14, 2012 at 02:56 AM
Since you cannot figure out why things are taxed lower, let me explain. I make a hundred dollars. I get taxed 25 bucks... I invest the 75..... why should I pay tax on the profit, when the money has already been taxed. I also risked it by investing. You did not invent when you put it in the bank. There should be no tax on profit of stock gains !!
EJ48 February 14, 2012 at 10:39 PM
Your "profit" is new income, just like the interest on my bank account is - both should be taxed. I was taxed on the money I put in the bank too. You "invented" nothing by purchasing a stock. You took a risk in the hope of making a better return. Bravo! But that doesn't mean the government should reward you with a lower tax rate. By your logic, lottery, casino, racetrack, betting winnings, all of which involve risk, should be tax free. It doesn't work that way.
Yankee Man February 15, 2012 at 01:38 AM
BUT.... loses on stock are only partially deductable..RIGHT.... so I have a 2,000 winner and a 2,00o loser you would think I was even,,,no,,,,,,,not even close. If the govet raises tax rates then it wont be worth the risk and people wont risk in the market....aka...apple......new drugs... medical devices...invention.....
Yankee Man February 15, 2012 at 01:39 AM
You can never lose money in bank acocunt.. IT IS INSURED by the govt...stock investments are not!!!!! so you risk nothing in the bank..are you starting to get it now !!!
EJ48 February 15, 2012 at 01:48 PM
What I get is your misconception about risk and reward. A rational person takes a risk based upon the cost vs. potential/expected reward. Taking a risk does not entitle the risk taker to a tax break. BTW, I'm not a tax expert but I believe you can net gains and losses in any one tax year and can deduct, against ordinary income, up to $3k over losses which exceed gains (another provision that shouldn't exist).


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