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10.21 Hillary Clinton vs Donald Trump on science, energy, and the climate

10.21 That's 4 straight debates without a single question on climate change. Good job, everyone.

10.21 Bottled Water or Tap: How Much Does Your Choice Matter?

10.21 We are approaching the Trumpocene, a new epoch where climate change is just a big scary conspiracy

10.21 Global warming continues; 2016 will be the hottest year ever recorded

10.21 Onshore windfarms more popular than thought, UK poll finds

10.21 Europe's offshore wind industry booming as costs fall

10.20 Climate Change Got Exactly 2 Seconds of Time in the Final Debate


10.20 Toxic products cost the US $340 billion a year

10.20 Air pollution more deadly in Africa than malnutrition or dirty water, study warns

10.19 Hottest September on Record Basically "Locks In" 2016 as Hottest Year: NASA

10.18 The past two weeks are a perfect illustration of what “solving” climate change will look like

10.17 This new technology could save the troubled nuclear power industry

10.17 Neoliberalism is creating loneliness. That’s what’s wrenching society apart

10.17 Planned Parenthood is 100 years old, but the fight for reproductive rights goes on

10.17 Use of strongest antibiotics rises to record levels on European farms

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10.21 Naomi Klein and Glenn Greenwald Tackle Ethics of WikiLeaks' Podesta Emails [32:21 audio clip]

10.21 Foreign journalists on 2016: ‘Is this the demise of objective American journalism?’

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10.21 Will 2016 Mark the Return of the Blue Dog Democrat? [Dems willing to do anything but look left for support]

10.20 Seven races that could flip the Senate: Trump’s impending defeat may lead to a down-ballot massacre

10.20 Donald Trump refuses to say if he will accept election result in final debate [videos]

10.19 The Popular Populist

10.19 How the 'Losers' in America’s Trade Policies Got Left Behind

10.19 Paul Ryan: If Republicans Lose the Senate, Bernie Sanders Wins

10.19 To Build the Political Revolution, Grassroots Group Endorses 22 "People's Candidates"

10.19 Sanders Champions Colorado Single Payer Effort as Model for Nation

10.19 'Unforgivable': Women Blockade Trump Campaign Offices Nationwide

10.19 With No Illusions, Says Climate Leader, Clinton Must Be Elected—Then Fiercely Confronted

10.19 Donald Trump and Hillary Clinton face fear and loathing at third debate

10.18 Ascendance of Paul Ryan and Hillary Clinton Equals Big Win for Big Business

10.18 In Town for Pramila Jayapal, Bernie Sanders Booed at Mentions of Hillary

10.18 How Trump's Casino Bankruptcies Screwed His Workers out of Millions in Retirement Savings

10.18 Sanders and Warren: First Vanquish Trump, Then Mobilize for 'Political Revolution' [1:12:25 video]

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10.20 Mass incarceration in America, explained in 22 maps and charts

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10.21 Capitalism Is Doomed — Without Alternatives, So Are We

10.21 Debate Moderators Under the Spell of Deficit-Obsessed Billionaire Pete Peterson

10.20 Here’s the Trade Policy That Progressives Should Get Behind

10.19 Prop. 51 Versus a State-Owned Bank: How California Can Save $10 Billion on a $9 Billion Loan

10.18 The privilege of being privileged


10.20 Elon Musk says fully self-driving Tesla cars already being built

10.19 Everything You Need to Know About the Momentous Habitat III

10.17 Break the Silence: Hillary Clinton’s Role in the 2009 Military Coup in Honduras [sadly, we believe Trump would have done even worse for a bigger bribe]

10.17 India's comic-book superheroine trains her powers on acid attacks

10.17 An insider's guide to Beijing: caged birds, smog and internet satire [1:15 audio clip]

10.17 'A bus in a traffic jam? It's as unjust as it once was not to allow women to vote'

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  Print view: The Ideal Capital Gains Tax Reform


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.

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This story was published on September 13, 2011.


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