Paul Ryan vs. The Buffett Rule

Originally posted by sh76
"Not always 100% deductible" was a bit of an understatement. In many cases, very little of a small business infrastructure reinvestment is deductible in the year it is made.

That really hasn't been true for a while. Tax changes enacted under Bush and continued under Obama have allowed for immediate expensing of most purchases of plant and equipment.

Originally posted by Metal Brain
Here is part of the Charlie Rose interview with Paul Ryan:

Let’s start with the Buffett Rule. Do you think it’s unfair, as the president said, for Governor Romney to have $21 million in income and pay only 13.9 percent in tax while most Americans pay a much higher rate?
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The Buffett Rule ...[text shortened]... /www.businessweek.com/articles/2012-04-12/charlie-rose-talks-to-paul-ryan

Is Paul Ryan right?

Most American's don't pay at a higher rate. Nearly half don't pay any, or pay negative income taxes. For those Americans that pay higher rates than the rate on capital gains, they are fairly high income middle class workers, paying taxes on salary or hourly wage income, not on investment income, which was already taxed as income.

The really sad thing is that income from capital gains is always investment income, which provides numerous societal benefits, which tend to be reduced as people put less of their money at risk as capital. Increasing capital gains taxes always reduces taxes collected on capital gains.

Originally posted by JS357
Of course. But whenever I hear "...which are our job creators" like Ryan says here, I know I am hearing a PR buzzphrase.

It is as if they say, "Let there be jobs because my taxes are low."

Demand for goods and services by sufficiently large numbers of people is the job creator, as it demands in return, that those people work for what they want.

Demand for goods and services have to be fulfilled by producers, and the people they hire. Those people work in factories, and make stuff out of raw materials that cost money.

Nothing happens without capital, and taking it from the private sector, however much or little you take is less that can be spent, invested, or paid for labor.

How putting that money in the hands of a government that hasn't been able to balance its books since the '50s is a mystery to me.

We simply don't have a revenue problem. We have a spending problem. Even if we agreed that increases in taxation would be applied directly to debt or deficit, how would that put people back to work? And how pray tell is it even remotely possible to restrain Congress from spending when you give them more money?

Originally posted by normbenign
Most American's don't pay at a higher rate. Nearly half don't pay any, or pay negative income taxes. For those Americans that pay higher rates than the rate on capital gains, they are fairly high income middle class workers, paying taxes on salary or hourly wage income, not on investment income, which was already taxed as income.

The really sad thing ...[text shortened]... as capital. Increasing capital gains taxes always reduces taxes collected on capital gains.

Capital gains on passive income yields little societal benefit. A tax system, like ours, which favors passive income over work has perverse incentives.

EDIT: It appears the IRS definition on "passive income" differs from the one I learned. To be clear, I include what the IRS calls "portfolio income" in "passive income". I find it bizarre and counterproductive that capital gain and dividend income is taxed at lower levels than work.

Originally posted by normbenign
Demand for goods and services have to be fulfilled by producers, and the people they hire. Those people work in factories, and make stuff out of raw materials that cost money.

Nothing happens without capital, and taking it from the private sector, however much or little you take is less that can be spent, invested, or paid for labor.

How putting th ...[text shortened]... s it even remotely possible to restrain Congress from spending when you give them more money?

Where did I say the things you are criticizing?

Originally posted by JS357
Where did I say the things you are criticizing?

I wasn't criticizing as much as clarifying. You seemed to be emphasizing the demand side, while the supply side is equally as important. Neither can be favored or ignored.

Originally posted by no1marauder
Capital gains on passive income yields little societal benefit. A tax system, like ours, which favors passive income over work has perverse incentives.

EDIT: It appears the IRS definition on "passive income" differs from the one I learned. To be clear, I include what the IRS calls "portfolio income" in "passive income". I find it bizarre and counterproductive that capital gain and dividend income is taxed at lower levels than work.

"I find it bizarre and counterproductive that capital gain and dividend income is taxed at lower levels than work."

Investment income, dividends and other either passive or portfolio income do differ from work in several ways.

1. They always involve the risk of losing the invested wealth.
2. The capital invested is often saved from money earned working, and therefore already taxed at a higher rate.
3. The "perverse incentives" include getting people to place their wealth at risk, which they tend to do less of when rates are higher.
4. The alternatives to investing, is to spend on enjoyments. That is frowned on by leftists, and led to the near destruction of the Yacht building business, and threatens civil aviation.
5. Accumulated wealth has been taxed, and belongs to the wealthy. How they use it is probably best left to their better judgement, than to give it Congress that has demonstrably poor money management skills.

The first is the most important difference between wage and investment income. Wages aren't subject to many, if any risks. Many workers today enjoy some benefits of investors, while still getting hourly wages or salary.