You ask me the same things and I answer it and you ask me the same things again. The richest do not spend all their income like the poorer/middle classes do. Give a billion more to billionaires and most of it ends up in the stock market or in offshore accounts. Give a billion more to the middle class and most of it gets spent, creating demand for more products and services, and jobs.
The capital gains tax laws apply equally to every American...this is a fact! Every American who holds bonds, or directly/indirectly hold stocks in pensions, retirement funds, mutual funds, 401K's, etc. are all subject to capital gains taxes...last I read this is about 80 million Americans. 67% of American households own homes/property and all of them are subject to capital gains taxes. You can punish the wealthier by increasing capital gains taxes, but you'll also be punishing all Americans when you do this. I don't agree with creating separate tax rates for separate groups of people...a single capital gains tax system works just fine...
Again, all cash, unless it is stuffed in a mattress, is energizing the economy. Makes no difference if it's spent buying stocks, yachts, or Walmart goods...all cash is earning some form of dividend or ROI. Cash sitting in banks is energizing the economy. Stop worrying about how others spend their money and let people focus on themselves...
The richest get virtually all the capital gains taxes are paid upon .... this is a fact. People struggling to make ends meet generally don't invest in bonds or mutual funds. Oh I'm sure you don't. That might mean just a bit more of the nation's income and wealth go to the middle classes instead of the richest. Can't have that. More is never enough. - - - Updated - - - Money that goes into the stock market or overseas accounts or banks that aren't lending the money isn't being spent into the economy and isn't creating demand for production of more products and services.
I hope you understand that money invested or placed into areas applicable to Capital Gain Taxes, in the first place, has already been taxed at least once. That is in order to do an investment, you first have to earn it, even if it comes from an inheritance which may have been taxed several times, in many States. Penny Stocks are a good way to invest or even a couple shares of high grade stocks (NYSE/SP) today. For the price of a pack of smokes or a six pack, you can buy some stock. Peoples priorities can dictate outcomes and going to the race track, buying lottery tickets or doing drugs, involve more "struggling people" than you realize. Money going into Stocks, increases the value of that company or pay's dividends, which does cause expansion (jobs) or is spent for goods or services. Markets are very much part of any economy.
I don't think that's true. If you invest $1000, and years later you sell for $10,000, you pay cap gains on the increase of $9000, which has not been taxed. You do not pay taxes again on the original $1000. I'd be interested to see your stats. Money that goes into stocks increases the share value of a company. It doesn't pay dividends. Dividends come from earnings. It doesn't create, at least directly, money spent on goods and services that generate more production and jobs.
Wrong again. Not all cash is equal in its economic effects. In fact savings that are spent buying stocks remove money from the rest of the economy, which has a negative effect on economic growth outside the markets. Of course, if all you care about is market prices you would tell people to stop worrying but because the rest of the economy is not growing the growth in equity markets is an indicator not of widespread economic growth but increasing apprehension that the wider economy will not grow so it is better to put money into the markets, which only exacerbates the situation of lack of available capital for business expansion. Stuffing cash into the stock and bond markets is exactly the same as stuffing it into mattresses at this state of the economy.
If we were short of capital for investment you could argue that stock market investments provide capital. But we are not short of capital for investment. We are short of demand for products and services. And as you point out, billionaires throwing more of the nation's income and wealth into the stock market doesn't help much with that.
The apologists for the 1 per centers rarely are concerned about the non rich. They hold in great esteem the very people religions have spoken out against. When the apologists also call themselves Christians, well, the hypocrisy is neck deep. Capital gains taxes should be no different than income tax. Perhaps it should be a little higher. For no work is being done for the income from capital gains. You can not work at all, and make an income, and then have it taxed at lower rates. Lots of perks for being rich, and they get special treatment. In our economy, we reward people for not working, for what does wall street produce? What do they make, what goods do they create? Yet they can bring down the world's economy in their greed to make more profits while not producing anything.
Very insigntful points. If we had a big issue with capital availability in the country, I could see the basis for lowering cap gains taxes. We don't. We are awash in trillions of idle dollars, and the reason it's not going into expanding production is because we already have excess idle production because there isn't enough demand. And there isn't enough demand because since the Reagan "trickle down" revolution, we've essentially gutted the great engine of spending, the middle classes, to make the richest richer. Now get ready for the 1% apologists to say we're just "jealous" and "envious" and trying to promote "class warfare".
Why whine about who gets more or less of something? Fact is tax laws apply equally to all Americans. 80 million Americans directly or indirectly have stocks/bonds and I don't think we have 80 million wealthy people. The current capital gains tax rates work just fine...they don't benefit the wealthy...they apply equally to all Americans Don't think I know of any banks who don't lend money?? When you buy public stocks, where do you believe the cash you spend goes? In a mattress?
Never said cash is EQUAL in it's economic effects?? Where do you believe the cash goes which you use to buy stocks...in a mattress?
Attempting to use the tax code to address income inequality will likely disappoint those who seek to attack the lower tax rate on high net worth individuals caused by a lower capital gains and dividends rate. Inequalities caused by globalization and differing education levels will not be remedied by destroying future investment; to the contrary those most likely to be hurt the most by lower economic growth are those with lower incomes.
I've explained it many times. 1) It's unfair. 2) It's hurting the economy. So what? Fact is, the richest get almost all the benefit of lower investment tax rates because they have the vast bulk of the investments. 80 million Americans certainly do not own the vast bulk of stocks and bonds. A small percentage of the richest do. Sure, if your goal is help the rich get richer at the expense of the poorer. They certainly are not lending to capacity. They are sitting on trillions of cash. People who sold the stock, 99% of the time. Who also tend to be in the richest category. They take the money and buy T-bills or stick it in the offshore accounts or whatever. The problem is, only a portion of it is getting spent in the economy. And our economy has been so sluggish because consumer spending has been so sluggish.
Typical 1% apologism. The country will fall apart if we don't give the super rich super low privileged tax rates. What utter BS. Reagan was the one who changed the investment tax rate to be the same as the earned income tax rate, and I don't recall the country falling apart. Our country is not suffering because there is a lack of capital. Far from it. There are trillions of dollars lying around that could be invested. Our country is suffering because the people who spend money -- the middle classes -- don't proportionally have the same money to spend as in the 50s,.60s, and 70s. We have trillions laying around and are strangling for lack of consumption.
Everything above is a political diatribe. You have an excuse for everything. You think all your problems can be solved by the wealthy and this is simply not true. The wealthy can pay 100% for the FICA contributions and this won't change a thing with your hopeless people unless those people themselves change how they manage their lives! Those who are uneducated, unskilled, place themselves outside of the major work centers, are involved with crime and gambling, and don't know how to live within their means, will forever be relegated to the lower rungs of society! I don't know a single person who acquired an appropriate education, who sustain top performance in the workplace, who minimize alcohol and tobacco and gambling, who avoid crime, and who live within their means, who is whining about the economy or their potential achievement? Those who choose a different route are gambling on their future and most will be unhappy...and of course whine to government to have others support them... - - - Updated - - - Sounds like a pity-party to me...
It goes into the stock market and never leaves. It might as well be in a mattress for all the good it does for the rest of the economy. The latest study I saw estimated that about 0.0001% of the money that changes hands on the stock and bond and other speculative markets is diverted into the rest of the economy on any given day. It also estimated the average daily volume of money flowing into these markets was 0.005% greater than the money flowing out. These are tiny numbers but over time they have a significant effect. They also make the place of the markets in the economy quite clear, they are a giant vacuum cleaner of the nation's savings, sucking up the wealth the economy generates and keeping it, returning only the trickle needed to buy yachts and mansions and pay for their dry cleaning, and toss a few lucky retirees a bone.
Excuse me, Mr. Economist, but the median wealth of the country has not risen even a little bit when inflation is factored in and the top 5% are factored out. The bottom line is - you have to make stuff. Stacking papers and shuffling bits isn't making stuff.
Got a source for that. every chart I have seen for US wealth i.e. net worth has gone up steeply over time, with drops only on 2001 and 2009.
This is the crux of the problem, too much money, chasing too few opportunities. And I think the last sentance of yours is very relevant too. As we know trickle down is actually the reverse 'trickle up'
And since 1977 until 2007, 60 percent of what was middle class income ended up in the top 1 percent's pockets, creating more disparity. The disparity of income in a nation does matter and their are consequences and not favorable ones when it concentrates income in the top. Our economic policies and the model we now have, globalized neo feudalism, doesn't seek to build, maintain or expand the middle class. Instead it is convoluted now to send more of the income pie to the top. And the top bought the policies that would yield this, for themselves. Capitalism would work for the people, work for the nation, if not for the greed of the rich, who's greed can never be satiated. But when the democrats stopped representing the average American and sided with the republicans, what you see today with the condition of average people is the result of that. Yet average americans will vote for republicans and for democrats, due in most part to ignorance and tribalism. We are in a state where average people vote against their own economic interests due to very clever propaganda and confidence games being played on hundreds of millions "marks" who are conditioned to be blind to reality. That is how an oligarchy arises. And it was a cakewalk.
The Federal reserve, fiat currency, the idea of a national debt and the idea of a Government trying to distribute the wealth of a nation amongst its people are the causes of the decline of the US economy. And most other Governments for that matter. Governments should never be allowed to borrow more than they spend. The problem is that when election time comes along, most political parties promise all sorts to the electorate to "buy their votes" to get into office; pushing the underlying problems down the road. Only to be a burden on the next generation.
I fogot to mention "fractional reserve banking" as a cause. Banks should only be allowed to lend what they actaually have in reserve. Otherwise a financial collapse in certain.
