A Quote by Michael Hudson
Nobody prefers to earn income any more, because that's taxable. Rich people prefer to make capital gains.
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One basic myth is that rich people get wealthy by earning income. But that's not how most get rich. Most of the gains of the rich people since 1945 have been "capital gains".
The biggest revenue target is the preferential rate for long-term capital gains, which raises a perennial question: Why should capital income be taxed at a much lower rate than ordinary income? Capital assets are owned overwhelmingly by the rich.
My rich dad taught me to focus on passive income and spend my time acquiring the assets that provide passive or long term residual income...passive income from capital gains, dividends, residual income from business, rental income from real estate, and royalties.
Tax laws favor capital over labor, giving capital gains a lower rate than ordinary income. The rich get humongous mortgage interest deductions while renters get no deduction at all.
Why do we fully tax some kinds of income from capital, like interest and dividends; partially tax other kinds like capital gains; defer tax on other kinds, like IRAs; and impose no tax at all on still other types of capital income, like interest on municipal bonds? This simply is not rational. These distinctions don't have any inherent logic.
When you tax capital gains income, you don't help the economy, you hurt the economy, which is why President Kennedy, President Reagan, President Clinton and President Bush all believed we should have a lower rate for capital gains.
If you're a wealthy heir with a trust fund, and you sell stocks, make your 10% gains since Donald Trump, and then you buy other stocks, you can avoid paying taxes. And if your accountant registers your wealth offshore in a Panamanian fund, like Russian kleptocrats do - and as more and more Americans do - you don't have to pay any tax at all, because it's not American income, it's foreign income in an enclave without an income tax.
If people want capital gains taxed more like the highest rate on income, that's a good discussion. Maybe that's the way to help close the deficit.
While it is probably a poor idea to own actively managed funds in general, it is truly a terrible idea to own them in taxable accounts... taxes are a drag on performance of up to 4 percentage points each year... many index funds allow your capital gains to grow largely undisturbed until you sell... For the taxable investor, indexing means never having to say you're sorry.
Make no mistake, the point of cutting the personal income tax and the capital gains cut is to send an unmistakable message to business leaders.
Index funds are... tax friendly, allowing investors to defer the realization of capital gains or avoid them completely if the shares are later bequeathed. To the extent that the long-run uptrend in stock prices continues, switching from security to security involves realizing capital gains that are subject to tax. Taxes are a crucially important financial consideration because the earlier realization of capital gains will substantially reduce net returns.
You don't need to raise taxes on rich people, because they create capitalization and investment. But you need to tax speculation - meaning capital gains.
I can make a firm pledge, under my plan, no family making less than $250,000 a year will see any form of tax increase. Not your income tax, not your payroll tax, not your capital gains taxes, not any of your taxes.
Nearly all educational expenditure should be considered a capital outlay. Education provides a future return in the form of enhanced taxable income and an enhanced quality of life.
Nearly all educational expenditure should be considered a capital outlay, whether it provides a future return in the form of enhanced taxable income or in terms of an enhanced quality of life.
Well, certainly the Democrats have been arguing to raise the capital gains tax on all Americans. Obama says he wants to do that. That would slow down economic growth. It's not necessarily helpful to the economy. Every time we've cut the capital gains tax, the economy has grown. Whenever we raise the capital gains tax, it's been damaged.
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