[apoemtothedead]

Originally Posted by David87

The income tax rate here is tiered....our top marginal tax rate is 35%, then 33%, then 28%, etc and so on.


However, because of a lot of loopholes in the tax code, people in the 35% tax bracket usually pay an effective income tax rate of like 26%.

On top of those income taxes, Americans also pay payroll taxes....6.2% of our paychecks go to Social Security (up until around 115K or so, every dollar made after that is not subject to the SS tax) and 1.45% go towards Medicare. Employers also pay 6.2% and 1.45% towards those things.

Unfortunately, people who make their income through other means (like investments) only pay a 15% tax on the money earned, and nothing into SS or Medicare. Though the new healthcare bill does levy a 3.9% Medicare tax on investment income

What a terrible use of the word 'loophole'

[apoemtothedead]

Originally Posted by David87

People are still going to invest money whether the gain is taxed at 15% or 25%.


A businessman is going to worry about one thing, and one thing only...making money. He'll pay the taxes on the money he makes later.

The more your businessman is taxed, the less money he takes home, decreasing his "real-cash" ROI, decreasing the amount of investments he'd possibly make as they are not as "real-cash" profitable.

Don't pretend like people out there don't sit on hoards of cash.

[apoemtothedead]

Originally Posted by David87

So you're agreeing that a business person will invest if they see opportunity to make money.

A 25% tax rate is not going to stop any significant amount of investment. The uncertainty of what the rates are going to be are a far bigger roadblock to investment than the actual rates themselves.

Yes, they will invest when they see an opportunity. They're also only likely to invest if they feel their investment will return X%, either because they will wait for another opportunity or, simply, feel the investment may not be worth their time.

An increase of tax rates will have a material effect on their real-cash ROI and in instances with push investments from above X to below X, and thus decrease investment.

I'm not saying I don't think capital gains rates should be raised. I think it's something worth looking into but the basis of your argument is flawed.

[apoemtothedead]

Originally Posted by mattmatumbo

We have bracketed taxable income: Most posters in here fall into the 16-20% tax rate as we don't make more than 165,000 dollars a year. Make 165,000 dollars up into the 280,000 range, you pay 33% or higher. The last tax bracket is anything above the 280,000 (or whatever) range and pay 45% or higher or so. But we have tons of loop holes to avoid paying what the supposed tax bracket suggests.

Please, correct me if I'm wrong.

Yeah, you're wrong and a simple google search would have told you so.

[apoemtothedead]

Originally Posted by birdman

What about someone who is 10 years away from retirement and has an investment portfolio that he could sell off now at a 15% cap gains tax or wait and sell it at a 25% rate. Why wouldn't they sell now and reinvest under the new tax code? Why would they reinvest at all?

We aren't talking about a billionaire here either, we are talking about your parents.

Raising the tax rate for the 1% is about symbolism, it's not a solution. Can we get an actual solution already?

Because the average return on investments is greater than the average return on fixed income, regardless of the tax rate.

"Money is money."

[apoemtothedead]

Originally Posted by David87

Not according to her company, she can not. Only a spouse can be listed as the beneficiary for her 401k and pension.

She should try again. Unless there is something special going on with the 401(k), that is not right.

[apoemtothedead]

Originally Posted by birdman

Eh, I don't know. If I am retiring in 10 years and my plan assumes a 15% tax hit, and that rate goes up 10%, it could put quite a hit on my plans.

If you're retiring in 10 years, a large portion of your money should be in fixed income to begin with, so your point is pretty invalid from the beginning.