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Tax policies
Kerry wants to roll back tax cuts for families earning more than $200,000 a year. But he wants to keep the higher child tax credit, the lower marriage penalty and the new 10 percent tax bracket for lower-income families. He also calls for new tax credits for health care and college tuition.
Edwards has similar ideas, but has so far offered greater detail. He would repeal tax cuts -- including dividend and capital-gains cuts -- for what he says are the top 2 percent of Americans, those making $240,000 or more a year.
Ah. Ok... How exactly are they planning on doing this?
Big problem. They are mixing their rhetoric with their economics. There is no "capital gains rate for people who make over 200k a year" anywhere in the tax code folks. What the Dems do is look at the statistics of who makes the most money from capital gains and then calculates some percentages of "taxes paid based on income ranges". This is totally bogus. That's not how the taxes actually work. They may end up being that way, but that's not how the tax code is written.
The only way to increase taxes on those making more then 200k a year (or 240k) is to either simply raise income taxes on those higher brackets (which I don't think is what they are doing), or to raise the lowest capital gains rate (lowest being "longest term". Sure. Most people utilizing that rate make over 200k, but that's the cart leading the horse folks. They make over 200k *because* they invest and make use of capital gains. They don't get capital gains rates because they make that much money.
Anyone who says they are targeting capital gains tax increases at "the rich" is lying. Pure and simple. Capital gains tax rates are exactly the same whether you make 20k a year or 20 million a year. You pay a percentage rate on the gain based on the duration that the capital investment was maintained. It's really that simple. The only effect on capital gains based on income is that the "highest" rate you pay for capital gains is equal to your income tax rate. This means that people who have less real income start out at a lower capital gains rate (it'll never be taxed higher then income and their income tax rate is lower). But the longer term rates are identical, no matter what your actual income is.
Kerry and Edwards are using a popular misconception about capital gains (it's only for the rich) to push a political agenda. It's pure bull people.
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Edwards would also keep the tax on very large estates, and he would set the top rate on capital gains at 25 percent for families earning more than $350,000, which he says represents less than 1 percent of all Americans.
More of the same. You can't set capital gains based on real income (not without completely changing the entire tax structure). What he means is that he'll adjust the rate for everyone so that based on the statistics *today* it'll most effect those making over 350k a year. Again though. It's the cart leading the horse. But then it's easy to make bogus promises to a gullible audience that doesn't know better when you're trying to get a nomination. Give them what they want to hear I guess...
And the "death tax". Ok. This at least can be based on the size of the inheritance without completely changing huge sections of law, but what exactly are "very large estates"? What's the dividing line?
And I'm still confused why we feel we must punish people for being successful? That just seems backwards to me.
This is also yet another example of the Dems not understanding the issues. They rail about jobs and wealth leaving the country, yet try desperately to pass laws that will only encourage more of it. Ok. So I'll just move my estate and my holdings to Zurick or something. Anywhere where they wont take it from me when I die.
When you tax a particular group to death (heh literally in this case), you only encourage them to move their money to someplace where it wont be taxed as high. When that group happens to also be those who own the businesses and investment capital in the country, you are literally killing yourself by pushing this kind of agenda. You want to make people want to put money in our country. You want them to own their estates here. You want them to keep their money here. Thue *only* way to do that is to reduce the costs they have to pay to do business in the US. Increasing taxes kinda doesn't do that.
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Furthermore, Edwards would adjust the tax code so that the top 1 percent pay the same tax rate on investment income as middle-class families pay on regular income, to fix what he calls the "two tax systems" in America, "where a millionaire investor sitting by his swimming pool pays a lower tax rate than a Manchester teacher."
More cart pushing the horse logic. Again. People become wealthy because they invest. They invest because there are benefitial tax rates to investing. It's called an incentive. We want people to put their money into business and industry instead of buying up island nations in the pacific where no one will bother them.
It doesn't work in the reverse. Edwards is a financial disaster waiting to happen. The only reason there appears to be a "two tax system" is because the Dems have sucessfully convinced their constituents that they only people who can invest are those who are already wealthy, and that those who aren't wealthy have no chance of every becoming wealthy.
Two huge lies. But it makes this kind of rhetoric possible.
Um... I'd also like to point out that your 401k is catagorized as a long term capital investment. When you retire, do you want to be taxed at 15% (or whatever the low rate is), or do you want your government to take out 50%.
We are literally stealing from our own future with economic ideas like this. It's the kind of thing that appeals to those who've already given up and just want the biggest piece of the pie they can get, no matter what the cost to everyone else.
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Like Kerry, Edwards would keep in place the latest middle-class tax cuts and introduce more breaks, including:
a $5,000 credit for first-time home buyers
a $5,000 credit for first-time home buyers
Eh? What is this supposed to do? That's what most escrow companies charge for their "earnest money" up front cost. When buying a home, $5k here or there really isn't that significant.
Oh. And for first time buyers. Well, I suppose it's nice, but this is still typical Dem thinking. Give a straight dollar amount. After all, don't want to confuse the people with complicated math. Hmmm.... No thanks Edwards. I much prefer those first time buyer benefits that have something to do with lower interest rates instead. That'll amount to tens of thousands of dollars over the long run and will mean a lot more in terms of how much a house payment is per month.
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a $1,000 credit for savings accounts
What does this mean? He'll give 1000 dollars to everyone who opens a savings acount? I really have no idea what he's talking about here.
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a cut in the capital-gains tax rate, along with allowing the first $1,000 in capital gains and the first $500 in dividends to be tax-free
Ok. This is kind of a neat idea, and I could even maybe get behind it (it's at least encouraging investment by the "common" man).
But what exactly is "the first" thousand in capital gains, 500 in dividends? The first in your life? I'm almost positive that the increased cost of implementing this change would far outweigh the benefits given. So, instead of paying say 300 dollars of taxes on that first 1000 I make in capital gains, I fill out a special form (anyone have any idea how much it costs for the IRS to add yet another schedule? Huge) and I get to pay zero. This just sounds like a huge amount of more administration (big government) to regulate a relatively tiny amount of money.
And it's yet again kinda pointless. The whole point of investment is to build "wealth". $1000 isn't wealth. If I'm going to get into investment, I'd much rather that they reduce capital gains tax rates across the board then give a free "trial 1000 dollars" when I start. No one retires on a thousand dollars. This one really is just window dressing IMO. Cute window dressing, but clearly a very bizaare attempt to come up with a way to encourage investment while not appearing to help the "rich folks".
Um... I thought the whole point of investing was to try to become the "rich folks". Why would anyone take this seriously. It's like pulling out an umbrella when you're already floating in the middle of the ocean. So Edwards wants to encourage people to invest, but "not enough so that they become wealthy". Eh? That's just dumb...
Overall, I rate the ideas as ranging from moronic to cutting someone in half with a chainsaw but then putting a bandaide on the wound and calling it "better".
Madness.
Edited, Mon Mar 1 06:42:17 2004 by gbaji