Sansfear
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Obama proposes raising dividend income tax to ~45% if you make more than $200K
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"President Obama's 2013 budget is the gift that keeps on giving—to government. One buried surprise is his proposal to triple the tax rate on corporate dividends, which believe it or not is higher than in his previous budgets.
Mr. Obama is proposing to raise the dividend tax rate to the higher personal income tax rate of 39.6% that will kick in next year. Add in the planned phase-out of deductions and exemptions, and the rate hits 41%. Then add the 3.8% investment tax surcharge in ObamaCare, and the new dividend tax rate in 2013 would be 44.8%—nearly three times today's 15% rate.
Keep in mind that dividends are paid to shareholders only after the corporation pays taxes on its profits. So assuming a maximum 35% corporate tax rate and a 44.8% dividend tax, the total tax on corporate earnings passed through as dividends would be 64.1%."
http://online.wsj.com/article/SB10001424052970204880404577225493025537660.html
I'm sure that this will have no impact on anyone but the filthy rich!
"IRS data show that retirees and near-retirees who depend on dividend income would be hit especially hard. Almost three of four dividend payments go to those over the age of 55, and more than half go to those older than 65, according to IRS data.
But all American shareholders would lose. Higher dividend and capital gains taxes make stocks less valuable. A share of stock is worth the discounted present value of the future earnings stream after taxes. Stock prices would fall over time to adjust to the new after-tax rate of return. And if investors become convinced later this year that dividend and capital gains taxes are going way up on January 1, some investors are likely to sell shares ahead of paying these higher rates."
Can you imagine how badly the market will tank as the entire country sells their stock to avoid the new rates?
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Kjarhall
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Obama proposes raising dividend income tax to ~45% if you make more than $200K
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Tax too high, kick-in too low.
Now if it was a 5% hike for income over a mil, i'd be in favor.
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Sin_of_Onin
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So wait, we are counting entitlement taxes now?
I thought we were ignoring them so we can act like a bunch of people don't pay taxes.
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Lyken-P
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Obama proposes raising dividend income tax to ~45% if you make more than $200K
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Problem: How to we energize the economy.
Obama's Solution: Take money away from it's people.
Classic case of Economics 1-0-dumb.
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Scarne
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No corporation pays 35% so using that as a basis is ludicrous.
If those poor retirees are pulling in over $200,000 per year, they will likely be able to handle the tax increase on their dividends. 
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eodoll
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Obama proposes raising dividend income tax to ~45% if you make more than $200K
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The stock market should tank.. Its a complete joke and a way to rip people off.
People making over 200k a year can afford a tax hike on their interest and dividend earnings.
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Sin_of_Onin
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It makes more sense to lower corporate taxes and increase income taxes than to lower capital gains taxes for everyone.
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Abaddon_Ambrosius
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Obama proposes raising dividend income tax to ~45% if you make more than $200K
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Once again. Until paired with a cap-and-balance amendment, this means nothing.
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Sin_of_Onin
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Abaddon_Ambrosius posted:
dur dur dur
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Abaddon_Ambrosius
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Sin_of_Onin posted:
Shoveling more money into a burning pit to fill it up while you dig the pit deeper twice as fast is AWESOME FISCAL STRATEGY!!!
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Sin_of_Onin
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Abaddon_Ambrosius posted:
 please talk about dur dur dur!!!!
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Abaddon_Ambrosius
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Obama proposes raising dividend income tax to ~45% if you make more than $200K
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Sin_of_Onin posted:
Uh huh. We're listening. Do go on...
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theredkay1
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Obama proposes raising dividend income tax to ~45% if you make more than $200K
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Abaddon_Ambrosius posted:
we only pretend like the deficit is important when we are looking to cut spending on the poor
yes we know
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Rosaria
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There are so many places to and instruments with which to guard your money this is meaningless.
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Sin_of_Onin
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Obama proposes raising dividend income tax to ~45% if you make more than $200K
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Abaddon_Ambrosius posted:
Uh huh. We're listening. Do go on...
If you want to talk about your stupid issue then start a thread. I would be happy to argue about it.
The idea that we can't have this discussion without it is just stupid even if I did believe in your stupid proposal.
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NuEM
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@Rosaria: And that's what needs to be changed! (Sorry)
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Abaddon_Ambrosius
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NuEM posted:
@Rosaria: And that's what needs to be changed! (Sorry)
It is, indeed, the issue. Dead on. And related to my point.
All this does is act as a corporate report telegraphing to rich people 'where not to store, invest or spend your money', asset-class-wise and geography-wise.
Until you start digging the country out of the hole it is in, it just loses more and more leverage to these clowns and the other sovereigns in the world.
Meanwhile, all this "ultra important" talk about corporate rates and the like goes on to placate the useful masses of idiots in the middle and lower class with some illusion of justice.
It's all a side show.
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Yukishiro1
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Scarne posted:
If those poor retirees are pulling in over $200,000 per year, they will likely be able to handle the tax increase on their dividends.
Think of the poor grandmas making only 200,000 a year who are going to be taxed into eating catfood!!11111
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theredkay1
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Obama proposes raising dividend income tax to ~45% if you make more than $200K
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Sansfear posted:
Keep in mind that dividends are paid to shareholders only after the corporation pays taxes on its profits. So assuming a maximum 35% corporate tax rate and a 44.8% dividend tax, the total tax on corporate earnings passed through as dividends would be 64.1%."
This 'total tax' calculation is misleading since both labor and capital owners pay for business taxes. I know we like to pretend that isnt true but there is no real way around it.
But lets just run with it.....the average rate from 1919-1950 was 70%. The average rate from 1951-2000 was 79%. So this 64.1% rate is historically low.
Sansfear posted:
"IRS data show that retirees and near-retirees who depend on dividend income would be hit especially hard. Almost three of four dividend payments go to those over the age of 55, and more than half go to those older than 65, according to IRS data.
But all American shareholders would lose. Higher dividend and capital gains taxes make stocks less valuable. A share of stock is worth the discounted present value of the future earnings stream after taxes. Stock prices would fall over time to adjust to the new after-tax rate of return. And if investors become convinced later this year that dividend and capital gains taxes are going way up on January 1, some investors are likely to sell shares ahead of paying these higher rates."
Worth thinking about the economic impact I suppose. The supremely low rates over the last decade did not produce the economic boom we were promised, so it seems likely a reversal of the rates would not bring the economic doom forecasted by the same people.
There would be a one time readjustment to a lower stock price. Some investors would lose, some investors would gain, some investors would see no real difference in long term gains. There is a distributional impact but no overall economic impact. I dont remember the outrage from the WSJ and the far right when the dividend tax cut of last decade provided a massive one time gain to existing stockholders...but its nice to see them admit that the point of the original tax cut was to provide this massive one time gain. Figuring out the distributional impact would take alot of legwork.
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Ptilk
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Obama proposes raising dividend income tax to ~45% if you make more than $200K
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Raising the tax rate on capital gains to the same as on any other income isn't useless or a side show.
It's common sense. Doing it only on the highest earners however is a cop out and stupid. It's income, pay your damn taxes and get over it.
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Sin_of_Onin
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Ptilk posted:
Raising the tax rate on capital gains to the same as on any other income isn't useless or a side show.
Obviously
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Rosaria
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Abaddon_Ambrosius posted:
NuEM posted:
@Rosaria: And that's what needs to be changed! (Sorry)
It is, indeed, the issue. Dead on. And related to my point.
All this does is act as a corporate report telegraphing to rich people 'where not to store, invest or spend your money', asset-class-wise and geography-wise.
Until you start digging the country out of the hole it is in, it just loses more and more leverage to these clowns and the other sovereigns in the world.
Meanwhile, all this "ultra important" talk about corporate rates and the like goes on to placate the useful masses of idiots in the middle and lower class with some illusion of justice.
It's all a side show.
It comes down to you [or you plural] against the government in the form of the IRS. In between is your wad of cash/assets/ You hire tax accountants, attorneys, tax specialists to fight on your side using the laws that the IRS supposedly follows. The more assets you have the more specialists you can hire to represent you or fight the battle over your cash. This is why GE has close to a thousand tax specialists. The more money you have the more you can access other instruments to protect your wealth, etc. People are converting and rerolling their assets all of the time. Its not just done once a year, its an on-going process.
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Yukishiro1
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I have been very disappointed lately in the WSJ. That article is really atrociously misleading and underhanded. The stuff about 75% of dividens going to people over 55 is meaningless when it's only people with incomes over 200k who would be taxed at the higher rate. It is really very close to lying with statistics and they should be ashamed of themselves.
Grandma eating catfood is usually scare tactics but when it's only grandmas making more than 200k a year who you are trying to say are going to eat catfood you have really lost all credibility.
edit: Maybe the point is that by raising taxes you will lower the amount of dividend payouts period so that ends up hurting everyone. But then you need to know what % of income dividends make up for seniors to know whether it's really important.
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Sansfear
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Obama proposes raising dividend income tax to ~45% if you make more than $200K
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Yukishiro1 posted:
I have been very disappointed lately in the WSJ. That article is really atrociously misleading and underhanded. The stuff about 75% of dividens going to people over 55 is meaningless when it's only people with incomes over 200k who would be taxed at the higher rate. It is really very close to lying with statistics and they should be ashamed of themselves.
Grandma eating catfood is usually scare tactics but when it's only grandmas making more than 200k a year who you are trying to say are going to eat catfood you have really lost all credibility.
edit: Maybe the point is that by raising taxes you will lower the amount of dividend payouts period so that ends up hurting everyone. But then you need to know what % of income dividends make up for seniors to know whether it's really important.
That is exactly the point.
Lowering the dividend tax rate resulted in a lot of money flowing into the market (hundreds of billions) to take advantage of it. That doesn't just help the rich, it helps anyone with any investments at all.
The rich have the ability to move their money elsewhere. The average retiree living off their 401K disbursement doesn't.
The rich will move their money out of the stock market and into other instruments, as Rosaria said. That will tank the stock market significantly, which will hurt all investors, but will hurt the small investors more.
Pretty much any attempt to 'soak the rich' is going to have significant side effects that will hurt the average citizen a lot worse than the intended targets. The rich will always have options and they will almost always outsmart the government at the game.
Remember the 'yacht tax' from 20 years ago?
The government decided to implement a luxury tax on expensive yachts, jewelry, etc. It was supposed to generate tens of millions of dollars for the government.
The actual result? The government LOST money. Why?
All those evil rich people didn't buy as many yachts or jewelry. Thousands of jobs were lost resulting in lost tax revenue and increased unemployment expenditures that was greater than the meager amounts generated by the tax.
Even though the taxes were eventually repealed, the yacht industry still hasn't recovered.
But since you were able to 'soak the rich', I'm sure you don't mind if a few thousand boat builders were sacrificed on the same altar.
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Yukishiro1
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So basically it's just the same old dumb argument about how doing anything to boost the tax share from the rich will always end up hurting the poor more and the best thing for the poor is to cut taxes on the rich.
It's always been a dumb argument and always will be.
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Scarne
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Sansfear posted:
Lowering the dividend tax rate resulted in a lot of money flowing into the market (hundreds of billions) to take advantage of it. That doesn't just help the rich, it helps anyone with any investments at all.
If you let too much money flow into the market, you end up creating bubbles. Making more capital available isn't always a good thing.
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Rosaria
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Scarne posted:
If you let too much money flow into the market, you end up creating bubbles. Making more capital available isn't always a good thing.
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Elkad
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You already earned the money.
You can't keep it in your mattress because of the Federal Reserve's deliberate inflation policy (which is in violation of their own mandate)
So you have to pay capital gains on money you've already been taxed on once.
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theredkay1
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Sansfear posted:
Pretty much any attempt to 'soak the rich' is going to have significant side effects that will hurt the average citizen a lot worse than the intended targets. The rich will always have options and they will almost always outsmart the government at the game.
The supreme majority of equity owners in this country are the rich. If this is as devastating to equity prices as you are saying, they will bear the brunt of it.
The options available to the rich will be to sell their shares at a lower price. If they choose to sell at a lower price, this will hurt the sellers alone, nobody else. If you hold onto your shares and continue to get your dividend and dont make over $200k a year...this will not affect you at all.
If you are on the outside and buy these suddenly cheaper shares, which will now be offering a better dividend ratio, and you dont have to pay the tax, this will be a benefit for you.
The number of high dividend stocks is pretty small, the overall impact on equity prices will be minimal. The losses will affect everyone in the market but will be concentrated on the 'rich' and the people who sell. The big gainers are the non-rich who buy new shares....the very group you are pretending to worry about.
To sum things up, you dont understand this situation at all. But dont let that stop your bleating. 
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Yukishiro1
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Elkad posted:
So you have to pay capital gains on money you've already been taxed on once.
No you arn't. You're taxed on the gain, not on the money itself.
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__Bonk__
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SKONK is blowing bubbles!
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Yukishiro1
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theredkay1 posted:
If you hold onto your shares and continue to get your dividend and dont make over $200k a year...this will not affect you at all.
I think Rakhir's dumb argument is that because it'll be taxed at a higher rate the company isn't going to issue you a dividend any more in the first place. So everyone would be better off if we didn't tax rich people so companies would pay them more dividends and as a side effect also pay more dividends to non-rich people.
Which is a dumb argument.
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eodoll
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If youre making 200k a year just from dividends? Then wow!! Youre f'ing rich. I mean filthy disgusting rich.
Youd need to have millions in straight cash sitting in various stocks to generate that kind of annual income.
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Elkad
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Yukishiro1 posted:
Elkad posted:
So you have to pay capital gains on money you've already been taxed on once.
No you arn't. You're taxed on the gain, not on the money itself.
You missed the point completely. Invest $1000. Make 10%, or $100. But if inflation was 6%, you really made less than $40 (as purchase power). But you still pay tax on the whole $100. If you fall in the 35% bracket, you cleared under $5.
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GrilledCheez
Title: The Lord's Balls
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Subject:
Obama proposes raising dividend income tax to ~45% if you make more than $200K
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This is a good move.
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Another word for expensive is successful.
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Yukishiro1
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Subject:
Obama proposes raising dividend income tax to ~45% if you make more than $200K
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Elkad posted:
Yukishiro1 posted:
Elkad posted:
So you have to pay capital gains on money you've already been taxed on once.
No you arn't. You're taxed on the gain, not on the money itself.
You missed the point completely. Invest $1000. Make 10%, or $100. But if inflation was 6%, you really made less than $40 (as purchase power). But you still pay tax on the whole $100. If you fall in the 35% bracket, you cleared under $5.
Uh that's what inflation is dude. And it's not a bad thing. Modest inflation is good for an economy. It discourages sitting on money and encourages people to make productive use of it.
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__Bonk__
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Subject:
Obama proposes raising dividend income tax to ~45% if you make more than $200K
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GrilledCheez posted:
This is a good move.
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I keep my eyes fixed on the sun!
A change in feeling is a change in destiny.
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