Local Gov’t Stories, Events
Ref. : Civic Events
Ref. : Arts & Education Events
Ref. : Public Service Notices
Books, Films, Arts & Education
Ref. : Letters to the editor
Health Care & Environment
08.15 Monsanto sold banned chemicals for years despite known health risks, archives reveal [immoral capitalism]
News Media Matters
08.18 Climate change will likely wreck their livelihoods – but they still don't buy the science [a willfully ignorant people? or a public conned by oil-industry subsidized news media distortions?]
US Politics, Policy & 'Culture'
08.18 GOP Senator Drowned Out By Cheers for 'Single Payer' at Town Hall [might our 'representatives' understand better if we took their free healthcare away?]
08.18 The United States was never immune to fascism. Not then, not now [2:54 video; “Stupid is as stupid does.” –Forrest Gump]
08.18 Trump's evangelical panel remains intact as others disband. Who are his religious cheerleaders? [“Stupid is as stupid does.” –Forrest Gump]
08.17 Stranding CEOs Too Slow To Quit, Trump Disbands His Own Business Councils [could a wider boycott accomplish resignations or positive change?]
08.16 Mark Ruffalo, Michael Moore Lead NYC Protest Against 'Absolutely Racist' Trump [short video]
08.16 Companies Linked To Mike Pence Seek An Upper Hand In Infrastructure Policy [our Public Infrastructure is at risk of being transformed into Private Infrastructure with tolls ad infinitum]
08.16 Indiana prosecutors want to incarcerate the opioid crisis away [“Stupid is as stupid does.” –Forrest Gump]
08.18 Buses in Seoul install 'comfort women' statues to honour former sex slaves [immoral crimes are hard to forget]
Economics, Crony Capitalism
08.15 Why Are Drug Prices So High? These Politicians Might Have The Answer [especially since the Citizens United Supreme Court ruling, BIG money corrupts & controls U.S. government to the public’s detriment]
International & Futurism
08.17 Investment Bank Report Predicts the Cost of Electric Vehicles Will Match Regular Cars by 2018 [pressure is building for electric utilities to become 100% renewable or we'll die]
The Ideal Capital Gains Tax Reform
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.