Newspaper logo  
 
 
Local News & Opinion

Ref. : Civic Events

Ref. : Arts & Education Events

Ref. : Public Service Notices

Travel
Books, Films, Arts & Education
Letters

Ref. : Letters to the editor

Health Care & Environment

02.12 Instead of Replacing Flint's Old Pipes, Why Not Just Build New Ones?

02.12 SoCalGas fixes gas leak that gushed methane into Los Angeles for 16 weeks

02.12 Toxic chemicals found in beached pilot whales in Scotland [ocean life dying from coal plant pollution...]

02.11 The Court Blocks Efforts to Slow Climate Change

02.10 Supreme court to block Obama's sweeping climate change plan

02.09 These microscopic phytoplankton can be seen from space. And they're disappearing rapidly.

02.09 Air pollution raises risk of death 'for decades after exposure'

02.08 Sailing ships back in vogue as a green alternative to conventional shipping [Cool! New ships to be automated—think motorized sails]

02.08 UN agency seeks to end rift on new aircraft emission rules

02.08 The deadly toll of city smog

02.08 Surge in privatisation threatening free NHS treatment, unions say

News Media Matters

02.12 America's School Teachers Are Confused About Climate Change

Daily: FAIR Blog
The Daily Howler

US Politics, Policy & 'Culture'

02.12 Henry Kissinger’s “mad and illegal” bombing: What you need to know about his real history — and why the Sanders/Clinton exchange matters

02.12 Even if Sanders wins the popular vote, Clinton could still get the nomination [disgraced establishment has its thumb on the scale]

02.11 Wingnuts have a death-grip on Congress: Why Paul Ryan can’t control the House GOP

02.11 Obama Celebrates Nine Years of Doing Nothing About Money in Politics [inaction proves his allegiance to the 'super-rich & corporate democrat party']

02.11 How Elizabeth Warren Helped Sanders Deflate Clinton's Massive Political Apparatus

02.10 Bernie Sanders and Donald Trump Ride the Populist Wave

02.10 5 takeaways from New Hampshire

02.10 David Brooks begins a conservative 12-step program — after eight years of giving right-wing looniness the cover of his respectability

Justice Matters

02.11 United States v. Ferguson

02.10 Texas prosecutor officially disbarred for sending innocent man to death row

02.10 Restoring Voting Rights for Felons in Maryland

High Crimes?
Economics, Crony Capitalism

02.10 The five fears stalking the global banking industry

02.10 Stock market rout intensifies amid fears central banks are 'out of ammunition'

02.09 Oil Dictator Dominos

02.09 Robert Reich: Democrats can’t give in to defeatism

02.09 'Panic situation': Asian stocks tumble amid fears of new global recession

02.09 What's holding back the world economy?

International

02.12 Russia Warns of ‘World War’ as Saudi Plans Syria Intervention

02.12 Partial Syria ceasefire agreed at talks in Munich

02.12 Morgan Stanley to pay $3.2bn over mortgage-backed securities

02.12 Stock markets hit by global rout raising fears for financial sector

02.11 Migrant crisis: Nato deploys Aegean people-smuggling patrols [why not provide ferry service to avoid the many drownings? Why not pay Greece—desperate for economic help—to provide camps?]

02.11 Israel: Friedman of the NY Times surrenders to One-State Solution, sees ME Apocalypse

02.11 Let’s End the Peril of a Nuclear Winter

02.11 How to Build a Streetcar That Works

02.10 Netanyahu plans fence around Israel to protect it from 'wild beasts'

We are a non-profit Internet-only newspaper publication founded in 1973. Your donation is essential to our survival.

You can also mail a check to:
Baltimore News Network, Inc.
P.O. Box 42581
Baltimore, MD 21284-2581
Google
This site Web
  Print view: The Ideal Capital Gains Tax Reform

TAX FAIRNESS:

The Ideal Capital Gains Tax Reform

by Gerald E. Scorse
The tax code—which now makes no distinction between true investments in companies and personal investments in portfolios—should recognize and reward the difference.

Warren Buffett recently enraged the Right by chastising Congress for “coddling” millionaires and billionaires. In a widely quoted op-ed, he urged lawmakers to “raise rates immediately on taxable income in excess of $1 million,” including capital gains. Buffett is right, but not entirely. The ideal reform would make some capital gains tax-free.

President George W. Bush cut the levy on long-term gains to 15 percent. By comparison, the federal income tax alone is 25 percent on the wages of middle-class workers. Including payroll taxes and Medicare, income from work is commonly taxed at more than twice the rate as income from wealth.

Advocates of tax breaks on capital gains claim that investments in the stock market grow jobs and grow the economy. For all but a trace amount of the billions of shares that change hands every day, that’s patently not true. Almost none of the money that flows through Wall Street goes to companies or grows jobs; it simply grows portfolios.

Except for the exceptions.

Small companies with big dreams use initial public offerings (IPOs) to help make those dreams take root and flourish. Later on, companies sometimes issue secondary offerings that raise capital for further expansion.

Investing in offerings like these really does spur the economy. The money goes not into portfolios but to companies that put it to use and create jobs. The tax code—which now makes no distinction between true investments in companies and personal investments in portfolios—should recognize and reward the difference. Capital gains from true investments should become tax-free; capital gains from aftermarket investments should be taxed at the same rate as ordinary income.

Buffett’s call for higher taxes on ultrahigh incomes said nothing about taxing wealth income at the same rate as work income. For that we turn to the recent recommendations of two bi-partisan panels, and to a Republican icon.

Ronald Reagan’s Tax Reform Act of 1986 levied equal taxes on capital gains, dividends, and ordinary income such as wages. In exchange, Reagan won another round of marginal rate cuts and a reduction in tax brackets. His speech at the signing ceremony called the bill “a sweeping victory for fairness” and “the best job-creation program ever to come out of the Congress.”

Reagan’s tradeoff—lower marginal rates in return for equal taxes on all income—is strikingly similar to the one proposed by both of the blue-ribbon, deficit-reduction bodies that weighed in late last year. The chairmen's report of President Obama’s fiscal commission (Simpson/Bowles) and a plan from the Bipartisan Policy Center (Rivlin/Domenici) both called for lower marginal rates. Likewise, both came down in favor of equal taxes on all income.

In 2011, for the second straight year, a special bi-partisan panel has been charged with putting America’s fiscal house in order. The new Congressional “super committee” has an extra incentive: the deal that raised the national debt ceiling mandates across-the-board spending cuts unless ways are found to lower the 10-year deficit by at least $1.5 trillion.

The committee can borrow from Simpson/Bowles and Rivlin/Domenici. It can embrace Ronald Reagan. If it does, one provision that might re-emerge is the return of basic tax fairness: the same rates on capital gains, dividends and wages.

And while tax breaks routinely deserve to be taken away, there’s one exception that deserves to be put in place. Capital gains from investments in job-creating IPOs and secondary offerings should be made tax-free.


Gerald E. Scorse, who writes from New York City, helped pass a bill that tightens the rules for reporting capital gains. Mr. Scorse's stories are republished in the Baltimore Chronicle with permission of the author.



Copyright © 2010 The Baltimore News Network. All rights reserved.

Republication or redistribution of Baltimore Chronicle content is expressly prohibited without their prior written consent.

Baltimore News Network, Inc., sponsor of this web site, is a nonprofit organization and does not make political endorsements. The opinions expressed in stories posted on this web site are the authors' own.

This story was published on September 13, 2011.

 


Public Service Ads: