Newspaper logo  
 
 
Local Gov’t Stories, Events

08.15 RIDE FOR THE OVERRIDE

Ref. : Civic Events

Ref. : Arts & Education Events

Ref. : Public Service Notices

Travel
Books, Films, Arts & Education

09.28 Life is richer when we talk to strangers

Letters

Ref. : Letters to the editor

Health Care & Environment

09.28 Earth 'Locked Into' Hitting Temperatures Not Seen in 2 Million Years: Study

09.28 South Australia storms: entire state left without power after wild weather – live

09.28 New York City accelerates emissions efforts in face of daunting sea level rise

09.28 Lots to lose: how cities around the world are eliminating car parks

09.28 No fracking, drilling or digging: it’s the only way to save life on Earth

09.28 Greenland's receding icecap to expose top-secret US nuclear project

09.27 Germany Has the World's First Hydrogen-Powered Passenger Train [could aviation use hydrogen too?]

09.27 China tops WHO list for deadly outdoor air pollution

09.27 Can the aviation industry finally clean up its emissions?

09.27 US emissions set to miss 2025 target in Paris climate change deal, research finds

09.26 Africa's portable solar revolution is thwarting thieves

09.26 Time for Congress to Stop Hollering at CEOs and Take Action [The U.S. is the only 'advanced country' without healthcare price controls]

09.26 The Impact of Minimum Wage Changes on Infant Health

09.26 New Record Low Solar Price in Abu Dhabi – Costs Plunging Faster Than Expected [maybe Middle East wars will stop now]

09.25 Want to Slow Climate Change? Stop Having Babies

News Media Matters

09.28 Lester Holt Asks Zero Questions About Poverty, Abortion, Climate Change

Daily: FAIR Blog
The Daily Howler

US Politics, Policy & 'Culture'

09.27 The Trump Files: Donald's Creepy Poolside Parties in Florida [bunga bunga' parties like Berlusconi]

09.27 This week: Shutdown deadline looms over Congress

09.27 Murders up 10.8% in biggest percentage increase since 1971, FBI data shows

09.27 Clinton stays calm while Trump loses cool during first presidential debate [videos]

09.26 The Lying Game

09.26 Why Donald Trump Should Not Be President

09.26 The government wants more offshore fish farms, but no one is biting

Justice Matters

09.28 Wells Fargo executives forfeit millions, CEO to forgo salary amid investigation

High Crimes?

09.28 Amnesty calls off launch of Thai torture report after police warning [something sick is brewing here]

09.26 African elephant numbers plummet during 'worst decline in 25 years’

09.26 Russia accused of war crimes in Syria at UN security council session [videos]

Economics, Crony Capitalism

09.23 Wells Fargo's toxic culture reveals big banks' eight deadly sins

International

09.28 Killing People, Breaking Things, and America's Winless Wars [war profiteers rake in huge profits, but countries never “win” wars]

09.28 Syrian troops launch ground offensive against Aleppo rebels [video of devastation; will there be profit from fossil fuel we cannot use?]

09.27 Saudi Arabia cuts ministers' pay by 20%

09.27 Thousands of Saudis sign petition to end male guardianship of women

09.25 Syria conflict: UN chief 'appalled' by Aleppo escalation

09.25 The Natural Gas War Burning Under Syria

09.25 Panic sweeps Calais camp as refugees await the bulldozers [an “empathy wall” blocks acceptance of children]

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: