Progressive Taxation Act (Failed)

[Gustaf]

And hey we lured the Swede back into Atlasian political debate, DON'T LET HIM ESCAPE!!!

Hehe, thanks. I can't help myself when it comes to economic policy, I'm afraid.

Too bad I don't have enough time.

[Fmr. Pres. Duke]

Give me a call when this is up for a vote. Frankly, I'm sick of debating on it now.

[Antonio the Sixth]

I can give up on the increase in the income tax if we agree to increase the capital gains tax. The latter is just too low compared to the first. Anybody willing to discuss that ?

[Ban my account ffs!]

Are you going to withdraw this bill and propose a new bill for a capital gains tax change?

We can't just amend this bill to do as such.. that's too big of a change.

[Southern Senator North Carolina Yankee]

I can give up on the increase in the income tax if we agree to increase the capital gains tax. The latter is just too low compared to the first. Anybody willing to discuss that ?

And how much would you increase the Cap gains tax? For matters of practicality, and unintended consequences, sudden large increases (say from 15% to 40%) would not be wise, unless one enjoys crashes. 

[Badger]

Yes. The best situation for both revenue and for growth is to be as flat as possible. While the best one for income distribution/social engineering is to have it as progressive as possible.

<Dropping the gloves like Brent Johnson>

Okay, I'm still not taking sides in this debate, but that, Yank, is the stupidest thing I've read in a while. Maybe I'm drunk--OK, more than maybe--but kindly explain where how that piece of drek doesn't cross the line from hard-headed fiscal realism into ideological silliness.

Such a sweeping statement just makes no sense, mathematically or otherwise.

You shouldn't drink to excess, its bad for your health.

I suggest you first sober up. Then re-examine the post again and see if you were in fact assuming an exaggerated meaning for my broad statement. If not, we can talk. If so, I doubt we will speak much again.

I am really sick and tired of this liberal tactic. It is okay to not know what someone means or to have multiple "potential meanings" in mind for what a person said, which you can then seek to get clarified. In fact I would prefer that as it is far more respectfull and far less insulting then to assume the worst and fly off the handle in a drunken rage.

In general, the lower and flatter the taxes are made, the better for growth and revenue as a result, however you have diminishing returns. Cutting from 70% to 40% has more impact then a 40% to 35%. Also, there are numerous other considerations including "stability and sustainability long term of the growth and revenue. Nobody said anything about a "flat" tax, no one said anything about top tax rates in the teens. So please put the your ideologically driven hysteria out to pasture, badger. I do suggest you also reread the third sentence which you conveniently cut out of the quote.  It calls for "balance".


And, one more thing.

"Drop the bottle."

I wasn't that drunk Yankee.

I'm sober now, and your comment about flatter tax rates being better for economic groth and revenue still make zero sense. Could you elaborate?

[Southern Senator North Carolina Yankee]

Yes. The best situation for both revenue and for growth is to be as flat as possible. While the best one for income distribution/social engineering is to have it as progressive as possible.

<Dropping the gloves like Brent Johnson>

Okay, I'm still not taking sides in this debate, but that, Yank, is the stupidest thing I've read in a while. Maybe I'm drunk--OK, more than maybe--but kindly explain where how that piece of drek doesn't cross the line from hard-headed fiscal realism into ideological silliness.

Such a sweeping statement just makes no sense, mathematically or otherwise.

You shouldn't drink to excess, its bad for your health.

I suggest you first sober up. Then re-examine the post again and see if you were in fact assuming an exaggerated meaning for my broad statement. If not, we can talk. If so, I doubt we will speak much again.

I am really sick and tired of this liberal tactic. It is okay to not know what someone means or to have multiple "potential meanings" in mind for what a person said, which you can then seek to get clarified. In fact I would prefer that as it is far more respectfull and far less insulting then to assume the worst and fly off the handle in a drunken rage.

In general, the lower and flatter the taxes are made, the better for growth and revenue as a result, however you have diminishing returns. Cutting from 70% to 40% has more impact then a 40% to 35%. Also, there are numerous other considerations including "stability and sustainability long term of the growth and revenue. Nobody said anything about a "flat" tax, no one said anything about top tax rates in the teens. So please put the your ideologically driven hysteria out to pasture, badger. I do suggest you also reread the third sentence which you conveniently cut out of the quote.  It calls for "balance".


And, one more thing.

"Drop the bottle."

I wasn't that drunk Yankee.

I'm sober now, and your comment about flatter tax rates being better for economic groth and revenue still make zero sense. Could you elaborate?

groth? That sure is some wicked sobreity you got there.


I don't see how I can explain such a clear and concise statement any further. Perhaps you are inquiring for something else but "elaborate" was the only such request you could make. You sure you aren't drunk?

[Badger]

Thanks for distorting again what I said.
I still can't understand what in the world justifies that the government rewards investment more than labor.

You don't seem to understand much about economics in general, I'm afraid.

1. You seem to think that taxes can only be avoided by fleeing the country. That's not the case. Whether the French government knows this or not, I don't know.

2. Investment returns are risky is one point. The more crucial point is probably that capital is mobile, why labour isn't. If you tax investment too highly no one will invest in your country. Also, investment is a choice in a way that working isn't. If you raise taxes on working too much eventually people will not work. But the bar there is pretty high, because people who don't work will have to survive on welfare and even in welfare states that's not too good.

On the other hand, no one HAS to invest. If you're going to get taxed to hell, you might as well sit on the money, consume it or invest it elsewhere. So it is more tax sensitive. Which is why income from work is taxed higher than income from capital in every country I know (except those with flat rates of course!).

3. I don't see why providing capital to the productive process should somehow be morally inferior to providing labour.

This seems like typical misinformed populist nonsense. Most grown up people (luckily) learnt the lesson of the 70s to not pursue stupid economic policies for ideological reasons. I hope this forum won't force us to go through the painful process of restructuring the economy again after introducing poor economic policies.

Here's my question Gustaf: At what point are capital investments truly more risky than labor ? As much as we may consider the dashing entrepreneur to be making an educated gamble on their new patent or invention, the vast majority of capital gains seem to be fundamentally safe investments. Preferred Stocks. Bonds. Even most interest  baring devices are subject to lower capital gains taxation than regular income.
 
While an actual small business entrepreneur may actually be risking much with the start of a new business, their income is frequently taxed at regular rates. But for the tiny tiny percentage of persons earning over a mil a year with a disproportionate share coming from capital gains, there income is far less "risky" or unassured than a wage earner subject to possible layoffs or loss of business. As an example, Sam Walton's kids don't have to worry about their Wal-Mart preferred stock not paying very very VERY handsomely through their grandkids lives.

I realize populism has its share of false arguments, but neither must we ignore the reality that often talk of "economic efficiency" and "pro-growth policies" can sometimes be a smokescreen for the extremely mindbogglingly wealthy using their grossly disproportionate political influence to justify paying less of their income in taxes than their secretaries or doormen. That's not "populism", but simple economic reality.

Again, no position taken on the actual proposal at hand to kick the top rate up to 70%.

[Badger]

Yes. The best situation for both revenue and for growth is to be as flat as possible. While the best one for income distribution/social engineering is to have it as progressive as possible.

<Dropping the gloves like Brent Johnson>

Okay, I'm still not taking sides in this debate, but that, Yank, is the stupidest thing I've read in a while. Maybe I'm drunk--OK, more than maybe--but kindly explain where how that piece of drek doesn't cross the line from hard-headed fiscal realism into ideological silliness.

Such a sweeping statement just makes no sense, mathematically or otherwise.

You shouldn't drink to excess, its bad for your health.

I suggest you first sober up. Then re-examine the post again and see if you were in fact assuming an exaggerated meaning for my broad statement. If not, we can talk. If so, I doubt we will speak much again.

I am really sick and tired of this liberal tactic. It is okay to not know what someone means or to have multiple "potential meanings" in mind for what a person said, which you can then seek to get clarified. In fact I would prefer that as it is far more respectfull and far less insulting then to assume the worst and fly off the handle in a drunken rage.

In general, the lower and flatter the taxes are made, the better for growth and revenue as a result, however you have diminishing returns. Cutting from 70% to 40% has more impact then a 40% to 35%. Also, there are numerous other considerations including "stability and sustainability long term of the growth and revenue. Nobody said anything about a "flat" tax, no one said anything about top tax rates in the teens. So please put the your ideologically driven hysteria out to pasture, badger. I do suggest you also reread the third sentence which you conveniently cut out of the quote.  It calls for "balance".


And, one more thing.

"Drop the bottle."

I wasn't that drunk Yankee.

I'm sober now, and your comment about flatter tax rates being better for economic groth and revenue still make zero sense. Could you elaborate?

groth? That sure is some wicked sobreity you got there.


I don't see how I can explain such a clear and concise statement any further. Perhaps you are inquiring for something else but "elaborate" was the only such request you could make. You sure you aren't drunk?

What, you've never forgotten to hit spellcheck before posting, douchewaffle?
And how does that prove my lack of "sobriety"? Please Yank, put down the bottle.

Seriously though, other than noting the very true law of diminishing returns, you didn't explain at all how flatter tax rates lead to greater economic growth or (especially) revenue.

[Gustaf]

Thanks for distorting again what I said.
I still can't understand what in the world justifies that the government rewards investment more than labor.

You don't seem to understand much about economics in general, I'm afraid.

1. You seem to think that taxes can only be avoided by fleeing the country. That's not the case. Whether the French government knows this or not, I don't know.

2. Investment returns are risky is one point. The more crucial point is probably that capital is mobile, why labour isn't. If you tax investment too highly no one will invest in your country. Also, investment is a choice in a way that working isn't. If you raise taxes on working too much eventually people will not work. But the bar there is pretty high, because people who don't work will have to survive on welfare and even in welfare states that's not too good.

On the other hand, no one HAS to invest. If you're going to get taxed to hell, you might as well sit on the money, consume it or invest it elsewhere. So it is more tax sensitive. Which is why income from work is taxed higher than income from capital in every country I know (except those with flat rates of course!).

3. I don't see why providing capital to the productive process should somehow be morally inferior to providing labour.

This seems like typical misinformed populist nonsense. Most grown up people (luckily) learnt the lesson of the 70s to not pursue stupid economic policies for ideological reasons. I hope this forum won't force us to go through the painful process of restructuring the economy again after introducing poor economic policies.

Here's my question Gustaf: At what point are capital investments truly more risky than labor ? As much as we may consider the dashing entrepreneur to be making an educated gamble on their new patent or invention, the vast majority of capital gains seem to be fundamentally safe investments. Preferred Stocks. Bonds. Even most interest  baring devices are subject to lower capital gains taxation than regular income.
 
While an actual small business entrepreneur may actually be risking much with the start of a new business, their income is frequently taxed at regular rates. But for the tiny tiny percentage of persons earning over a mil a year with a disproportionate share coming from capital gains, there income is far less "risky" or unassured than a wage earner subject to possible layoffs or loss of business. As an example, Sam Walton's kids don't have to worry about their Wal-Mart preferred stock not paying very very VERY handsomely through their grandkids lives.

I realize populism has its share of false arguments, but neither must we ignore the reality that often talk of "economic efficiency" and "pro-growth policies" can sometimes be a smokescreen for the extremely mindbogglingly wealthy using their grossly disproportionate political influence to justify paying less of their income in taxes than their secretaries or doormen. That's not "populism", but simple economic reality.

Again, no position taken on the actual proposal at hand to kick the top rate up to 70%.

I don't mean risky as in "I might not get anything." Of course, bonds are less risky than stocks but both still carry risk. I'm assuming we will not start to differentiate between different types of capital gains. Wage payments are usually fixed in contracts which means that the wage is guaranteed (at least if inflation is under control). Capital providers typically pick up all of the risk involved with business enterprises.

That is more to explain why investments will not be made if people are taxed too heavily on them. The same doesn't really go for work. You do see capital gains taxes and taxes on labour being equal in countries with really low taxes (typically flat taxes) but if you have capital gains tax rates of say 50% you won't see a lot of investment being done. Both because it will flee the country but also because people might not find it worth the while to risk their money if the pay-off will not be as high.

Let's take a simple example: I can invest $100. Either it goes well and I end up with $250. Or it goes badly and I lose everything. Let's say that both of these things happen with equal probability. Thus, the net expected gain from the investment is 250*0.5-100=25. It would thus be beneficial for society if the investment is done - we gain $25 from it. But, let us now assume there is a 50% tax on capital gains. So, if the investment goes well I will get 150*0.5=75. If it goes badly I lose 100. In other words, my expected gain is now 175*0.5-100=-12.5, a negative number. Thus, I won't make the investment because I won't gain anything from it. Since the fundamentals of the project are the same as when I assumed there were no taxes, this is bad, because as we saw then the project was good for society as a whole.

One way to think about it is that you will see investment in risky businesses go down if it is taxed too highly.

I think that you're probably using risk as in "risk of becoming poor." But if you look at volatility I do think wealthy people have risky wealth. How much did Bill Gates' fortune decline when the dotcom bubble burst, for instance? When I say risky I mean in the economic sense of volatile, not that Gates runs a risk of becoming poor.

Another way to think of the problem is to consider a company earning $100. They can either pay it out to the suppliers of labour, in which case the supplier of labour will receive 100*(1-labour income tax). Or they can pay it out to the providers of capital, in which case the provider of capital will receive 100*(1-corporate tax)*(1-capital gains tax). It is usually assumed that it's a good idea to keep this equation balanced so that companies do not have an incentive to avoid taxes by manipulating the corporate structure (such as hiring stockholders into phony positions and pay them wages instead of dividends).

I'm not saying that it would be wrong to increase the capital gains tax you have (it sounds low, then again, that's partly because you have such as freakishly high corporate tax rate), merely that I think it's a red herring to think that the rate should be equal to the one on income.

[Ban my account ffs!]

Debate on this bill has ceased for more than 24 hours.  Since Senator Antonio has not asked that this bill be withdrawn, I will call it to a final vote.

Senators, please vote aye, nay, or abstain.

Vote lasts until February 14th, 2011 5:15pm CST

[Ban my account ffs!]

Nay

[Fmr. Pres. Duke]

Nay

[Southern Senator North Carolina Yankee]

Nay

[Lief 🗽]

Aye

[Antonio the Sixth]

I'd have liked the debate to last a bit more, but well.

Aye

[#CriminalizeSobriety]

Nay

[HappyWarrior]

Nay

[Badger]

Thanks for distorting again what I said.
I still can't understand what in the world justifies that the government rewards investment more than labor.

You don't seem to understand much about economics in general, I'm afraid.

1. You seem to think that taxes can only be avoided by fleeing the country. That's not the case. Whether the French government knows this or not, I don't know.

2. Investment returns are risky is one point. The more crucial point is probably that capital is mobile, why labour isn't. If you tax investment too highly no one will invest in your country. Also, investment is a choice in a way that working isn't. If you raise taxes on working too much eventually people will not work. But the bar there is pretty high, because people who don't work will have to survive on welfare and even in welfare states that's not too good.

On the other hand, no one HAS to invest. If you're going to get taxed to hell, you might as well sit on the money, consume it or invest it elsewhere. So it is more tax sensitive. Which is why income from work is taxed higher than income from capital in every country I know (except those with flat rates of course!).

3. I don't see why providing capital to the productive process should somehow be morally inferior to providing labour.

This seems like typical misinformed populist nonsense. Most grown up people (luckily) learnt the lesson of the 70s to not pursue stupid economic policies for ideological reasons. I hope this forum won't force us to go through the painful process of restructuring the economy again after introducing poor economic policies.

Here's my question Gustaf: At what point are capital investments truly more risky than labor ? As much as we may consider the dashing entrepreneur to be making an educated gamble on their new patent or invention, the vast majority of capital gains seem to be fundamentally safe investments. Preferred Stocks. Bonds. Even most interest baring devices are subject to lower capital gains taxation than regular income.
 
While an actual small business entrepreneur may actually be risking much with the start of a new business, their income is frequently taxed at regular rates. But for the tiny tiny percentage of persons earning over a mil a year with a disproportionate share coming from capital gains, there income is far less "risky" or unassured than a wage earner subject to possible layoffs or loss of business. As an example, Sam Walton's kids don't have to worry about their Wal-Mart preferred stock not paying very very VERY handsomely through their grandkids lives.

I realize populism has its share of false arguments, but neither must we ignore the reality that often talk of "economic efficiency" and "pro-growth policies" can sometimes be a smokescreen for the extremely mindbogglingly wealthy using their grossly disproportionate political influence to justify paying less of their income in taxes than their secretaries or doormen. That's not "populism", but simple economic reality.

Again, no position taken on the actual proposal at hand to kick the top rate up to 70%.

I don't mean risky as in "I might not get anything." Of course, bonds are less risky than stocks but both still carry risk. I'm assuming we will not start to differentiate between different types of capital gains. Wage payments are usually fixed in contracts which means that the wage is guaranteed (at least if inflation is under control). Capital providers typically pick up all of the risk involved with business enterprises.

That is more to explain why investments will not be made if people are taxed too heavily on them. The same doesn't really go for work. You do see capital gains taxes and taxes on labour being equal in countries with really low taxes (typically flat taxes) but if you have capital gains tax rates of say 50% you won't see a lot of investment being done. Both because it will flee the country but also because people might not find it worth the while to risk their money if the pay-off will not be as high.

Let's take a simple example: I can invest $100. Either it goes well and I end up with $250. Or it goes badly and I lose everything. Let's say that both of these things happen with equal probability. Thus, the net expected gain from the investment is 250*0.5-100=25. It would thus be beneficial for society if the investment is done - we gain $25 from it. But, let us now assume there is a 50% tax on capital gains. So, if the investment goes well I will get 150*0.5=75. If it goes badly I lose 100. In other words, my expected gain is now 175*0.5-100=-12.5, a negative number. Thus, I won't make the investment because I won't gain anything from it. Since the fundamentals of the project are the same as when I assumed there were no taxes, this is bad, because as we saw then the project was good for society as a whole.

One way to think about it is that you will see investment in risky businesses go down if it is taxed too highly.

I think that you're probably using risk as in "risk of becoming poor." But if you look at volatility I do think wealthy people have risky wealth. How much did Bill Gates' fortune decline when the dotcom bubble burst, for instance? When I say risky I mean in the economic sense of volatile, not that Gates runs a risk of becoming poor.

Another way to think of the problem is to consider a company earning $100. They can either pay it out to the suppliers of labour, in which case the supplier of labour will receive 100*(1-labour income tax). Or they can pay it out to the providers of capital, in which case the provider of capital will receive 100*(1-corporate tax)*(1-capital gains tax). It is usually assumed that it's a good idea to keep this equation balanced so that companies do not have an incentive to avoid taxes by manipulating the corporate structure (such as hiring stockholders into phony positions and pay them wages instead of dividends).

I'm not saying that it would be wrong to increase the capital gains tax you have (it sounds low, then again, that's partly because you have such as freakishly high corporate tax rate), merely that I think it's a red herring to think that the rate should be equal to the one on income.

I still say this argument underestimates the "risk"---and not just of becoming poor, but of simple loss of income---that capital gains income entails. For higher income dividend/bond/interest recipients the greatest risk to interupted income flow is the mailman possibly slipping on ice en route to deliver their trust checks.

Yes, Bill Gates "lost" a tremendous amount of wealth in stock value during the recession, but his income was still phenomenal. But how many persons in the recession lost income---and a much more significant portion too---by layoffs or decline in business? We can't underestimate the risk "regular" income earners take in the modern economy either.

For that matter, the "double taxation" argument is something of a myth. Much (most?) income is subject to multiple sources of taxation. A wage earner has payroll taxes like Social Security and Medicare taken out, and then the remainder gets hit by income taxes. Then that income is taxed further a second or third time when one purchases anything hit with sales taxes, or excise taxes like gas. No, those latter examples are not direct taxes on income, but these regressive taxes reduce one's wallet as much as any other "double taxation" more commonly complained of like capital gains and estate taxes.

This isn't a "populist" argument, but simply a different view of hard economic facts. People ultimately invest in the stock market or a business venture for the same reason they take a job with good wages; to make money. People are drawn to income producing plans whether its a good job or a good investment. I believe your argument, Gustaf, is a cogent analysis as to why capital gains shouldn't be taxed at a higher rate than ordinary income, and I understand there are differences between taxation of short term and long term capital gains (or at least there were before 2003 ). But we'll have to continue this fascinating debate for a bill that actually raises capital gains taxation.

[Gustaf]

Thanks for distorting again what I said.
I still can't understand what in the world justifies that the government rewards investment more than labor.

You don't seem to understand much about economics in general, I'm afraid.

1. You seem to think that taxes can only be avoided by fleeing the country. That's not the case. Whether the French government knows this or not, I don't know.

2. Investment returns are risky is one point. The more crucial point is probably that capital is mobile, why labour isn't. If you tax investment too highly no one will invest in your country. Also, investment is a choice in a way that working isn't. If you raise taxes on working too much eventually people will not work. But the bar there is pretty high, because people who don't work will have to survive on welfare and even in welfare states that's not too good.

On the other hand, no one HAS to invest. If you're going to get taxed to hell, you might as well sit on the money, consume it or invest it elsewhere. So it is more tax sensitive. Which is why income from work is taxed higher than income from capital in every country I know (except those with flat rates of course!).

3. I don't see why providing capital to the productive process should somehow be morally inferior to providing labour.

This seems like typical misinformed populist nonsense. Most grown up people (luckily) learnt the lesson of the 70s to not pursue stupid economic policies for ideological reasons. I hope this forum won't force us to go through the painful process of restructuring the economy again after introducing poor economic policies.

Here's my question Gustaf: At what point are capital investments truly more risky than labor ? As much as we may consider the dashing entrepreneur to be making an educated gamble on their new patent or invention, the vast majority of capital gains seem to be fundamentally safe investments. Preferred Stocks. Bonds. Even most interest baring devices are subject to lower capital gains taxation than regular income.
 
While an actual small business entrepreneur may actually be risking much with the start of a new business, their income is frequently taxed at regular rates. But for the tiny tiny percentage of persons earning over a mil a year with a disproportionate share coming from capital gains, there income is far less "risky" or unassured than a wage earner subject to possible layoffs or loss of business. As an example, Sam Walton's kids don't have to worry about their Wal-Mart preferred stock not paying very very VERY handsomely through their grandkids lives.

I realize populism has its share of false arguments, but neither must we ignore the reality that often talk of "economic efficiency" and "pro-growth policies" can sometimes be a smokescreen for the extremely mindbogglingly wealthy using their grossly disproportionate political influence to justify paying less of their income in taxes than their secretaries or doormen. That's not "populism", but simple economic reality.

Again, no position taken on the actual proposal at hand to kick the top rate up to 70%.

I don't mean risky as in "I might not get anything." Of course, bonds are less risky than stocks but both still carry risk. I'm assuming we will not start to differentiate between different types of capital gains. Wage payments are usually fixed in contracts which means that the wage is guaranteed (at least if inflation is under control). Capital providers typically pick up all of the risk involved with business enterprises.

That is more to explain why investments will not be made if people are taxed too heavily on them. The same doesn't really go for work. You do see capital gains taxes and taxes on labour being equal in countries with really low taxes (typically flat taxes) but if you have capital gains tax rates of say 50% you won't see a lot of investment being done. Both because it will flee the country but also because people might not find it worth the while to risk their money if the pay-off will not be as high.

Let's take a simple example: I can invest $100. Either it goes well and I end up with $250. Or it goes badly and I lose everything. Let's say that both of these things happen with equal probability. Thus, the net expected gain from the investment is 250*0.5-100=25. It would thus be beneficial for society if the investment is done - we gain $25 from it. But, let us now assume there is a 50% tax on capital gains. So, if the investment goes well I will get 150*0.5=75. If it goes badly I lose 100. In other words, my expected gain is now 175*0.5-100=-12.5, a negative number. Thus, I won't make the investment because I won't gain anything from it. Since the fundamentals of the project are the same as when I assumed there were no taxes, this is bad, because as we saw then the project was good for society as a whole.

One way to think about it is that you will see investment in risky businesses go down if it is taxed too highly.

I think that you're probably using risk as in "risk of becoming poor." But if you look at volatility I do think wealthy people have risky wealth. How much did Bill Gates' fortune decline when the dotcom bubble burst, for instance? When I say risky I mean in the economic sense of volatile, not that Gates runs a risk of becoming poor.

Another way to think of the problem is to consider a company earning $100. They can either pay it out to the suppliers of labour, in which case the supplier of labour will receive 100*(1-labour income tax). Or they can pay it out to the providers of capital, in which case the provider of capital will receive 100*(1-corporate tax)*(1-capital gains tax). It is usually assumed that it's a good idea to keep this equation balanced so that companies do not have an incentive to avoid taxes by manipulating the corporate structure (such as hiring stockholders into phony positions and pay them wages instead of dividends).

I'm not saying that it would be wrong to increase the capital gains tax you have (it sounds low, then again, that's partly because you have such as freakishly high corporate tax rate), merely that I think it's a red herring to think that the rate should be equal to the one on income.

I still say this argument underestimates the "risk"---and not just of becoming poor, but of simple loss of income---that capital gains income entails. For higher income dividend/bond/interest recipients the greatest risk to interupted income flow is the mailman possibly slipping on ice en route to deliver their trust checks.

Yes, Bill Gates "lost" a tremendous amount of wealth in stock value during the recession, but his income was still phenomenal. But how many persons in the recession lost income---and a much more significant portion too---by layoffs or decline in business? We can't underestimate the risk "regular" income earners take in the modern economy either.

For that matter, the "double taxation" argument is something of a myth. Much (most?) income is subject to multiple sources of taxation. A wage earner has payroll taxes like Social Security and Medicare taken out, and then the remainder gets hit by income taxes. Then that income is taxed further a second or third time when one purchases anything hit with sales taxes, or excise taxes like gas. No, those latter examples are not direct taxes on income, but these regressive taxes reduce one's wallet as much as any other "double taxation" more commonly complained of like capital gains and estate taxes.

This isn't a "populist" argument, but simply a different view of hard economic facts. People ultimately invest in the stock market or a business venture for the same reason they take a job with good wages; to make money. People are drawn to income producing plans whether its a good job or a good investment. I believe your argument, Gustaf, is a cogent analysis as to why capital gains shouldn't be taxed at a higher rate than ordinary income, and I understand there are differences between taxation of short term and long term capital gains (or at least there were before 2003 ). But we'll have to continue this fascinating debate for a bill that actually raises capital gains taxation.

Well, there is a more fundamental difference in terms of risk between capital gains and wages. After all, if someone like Bill Gates were to lose his job (I'm assuming he has one) that also wouldn't affect his economic status very much. Likewise, a lot of middle class people could lose a lot on capital investments as well as losing out if losing their jobs.

The argument that poor people are more vulnerable to economic downturns might be an argument for progressive taxation in general, but not necessarily for higher labour taxes compared to capital gains tax rates. I would add that handling severe recessions is a different issue than normal business cycle fluctuations. This also depends a lot on how other laws work. If bank deposits are protected that's an argument for higher taxes on capital gains. If it's impossible to fire people (like in Sweden ) that's an argument for higher wage taxes.

It's true that payroll taxes might be something you want to include as well in the calculation. Consumption taxes however is a different issue. I think that's another debate that should be kept separate and based on other arguments.

Finally, I don't believe people get jobs and make investments for the same reasons. The decision to take a job involves a lot of factors, not least social esteem, peer pressure, upbringing and so on. But investment is done almost solely to make money. Even if you tax it heavily some people will still want to make a lot of money. That's not necessarily true of investing.

[Southern Senator North Carolina Yankee]

lol, Gustaf has now posted more in the Senate then half of the actual Senators have since this session began.

[Sbane]

In case this bill doesn't pass, the Senate should look into raising Estate taxes, which are quite low in Atlasia. The estate taxes were last raised by the Public Housing Act.

The current rates are:
a) $0-$5,000,000- 0%
b) $5,000,001-$20,000,000 – 15%
c) $20,000,001-$50,000,000 – 25%
d) $50,000,001 and above – 50%

[Antonio the Sixth]

I'll be working on a general fiscal reform bill for the Senate's next session.

[Gustaf]

In case this bill doesn't pass, the Senate should look into raising Estate taxes, which are quite low in Atlasia. The estate taxes were last raised by the Public Housing Act.

The current rates are:
a) $0-$5,000,000- 0%
b) $5,000,001-$20,000,000 – 15%
c) $20,000,001-$50,000,000 – 25%
d) $50,000,001 and above – 50%

How does this work? Is it per estate or per person? I'm assuming the former. The number of people being affected by the higher brackets must be pretty small right? I don't think a house in Sweden has ever been sold for that more than 3-4 million dollars (though of course many might have been valued higher).

What valuation system is used for this?

But I agree having 0% tax up to 5 million seems pretty crazy. Taxing estate is a great idea from a fiscal perspective.

[Sbane]

The United States has an exemption up to $5 million. After that it's a 35% flat rate. A relatively high exemption is fine with me (though more like $2-3 million) but I want the 15% and 25% bracket rates increased. A top rate of 50% is fine though.

These are the two bills that started the estate tax and expanded it. It could answer some of your questions.

https://uselectionatlas.org/AFEWIKI/index.php/Tax_Increase_Act
https://uselectionatlas.org/AFEWIKI/index.php/Estate_Tax_Reform_Act