Tax Wealth As Much As Work
Eliminate the Tax Preference for Income from Corporate Stock Dividends and Capital Gains
Revenue: Estimated $100 billion a year
Our proposal is that all income – wages, corporate stock dividends or capital gains –be taxed with the same graduated rates that exist for ordinary earned income. Lower income earners would pay at low rates and higher income earners would pay at higher rates. This would greatly simply the federal tax system and generate an estimated $100 billion a year.
If a person with a low income has a capital gain or dividend, then it will be taxed at the lowest income tax rate of 15 percent. But if a multi-million dollar income person has a capital gain, it should be taxed at the higher rate which today is 35 percent. If we implement this, we close the Hedge Fund manager loophole –and myriad other tax code games that the rich play to avoid paying their fair share.
Seeking Congressional Lead Sponsors
BACKGROUND
Over the last thirty years, wealthy Americans have succeeded in getting Congress to lower taxes on incomes from wealth — both capital gains and dividends. It is time to end the tax preference for capital gains and dividends that benefits the wealthy.
Dividend Income. Corporations periodically pay out stock dividends to shareholders. Prior to the election of George W. Bush in 2000, income from corporate stock dividends was treated as ordinary income. For the wealthy, who own most of the corporate stock, this lowered their tax rate from 39.6 percent in 2000 to 15 percent in 2003.
Capital Gains. A capital gain is the profit from selling capital assets, such as stocks, real estate, bonds, artwork. The profit from selling you primary home is not subject to capital gains if it is under $250,000 for an individual and $500,000 for a couple. Capital gains tax rates have fallen steadily over the last 30 years. The top tax rate for capital gains was lowered in XXXX from 28 percent to 20 percent. In 2003, it was lowered to 15 percent.
Benefits to the Very Wealthy. These tax cuts overwhelmingly benefited the very richest Americans. Those with incomes over $500,000, households in the top one-sixth of one percent, got 73.4 percent of the total tax reduction, an average saving of $81,204. The super-rich, the one out of thousand households with incomes over $10 million, got 28.2 percent of total tax savings. Their average tax break was $1.87 million each!
Taxing Work More than Wealth? Every politician extols the value of “Work” –yet we tax it more heavily than passive investments. Our tax code used to distinguish between “earned income” from paychecks and “unearned income” from investments, dividends and appreciation in property. Prior to 1980, “unearned income” was taxed at higher rates than wages. But now we tax “unearned income” from owning assets at considerably lower rates than “earned income” from work.
Source: Citizens for Tax Justice, “Capital Gains and Dividends Tax Cuts Offer No Benefit to Middle-Income Americans and Add to the Nation’s Fiscal Problems, May 13, 2008. To download a PDF of this report, CLICK HERE.
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June 17th, 2008 at 4:45 pm
Lawrence Mitchell, author of the Speculative Economy, professor of economics in Maryland, advocates a time-stepped capital gains tax. Corporate planning should be rewarded for long-term goals and planning, not the slash and burn with quick pay-offs. I think you should add this reasoning to your argument. He says the stock market is a “lightly regulated casino.” I wrote a fair essay, “A Wealth Tax to Eliminate Poverty” available at my blogspot, http://benL8.blogspot.com.
I advocate using the proceeds from a wealth tax to increase the effectiveness of IDAs. Please take a look. My other essay, “There Are Solutions” outlines ways to lift wages and incomes for the majority who have had a thirty year pay freeze.
April 11th, 2010 at 3:42 pm
Is there a place to sign a petition or take other action for this?