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02.16 New experimental drug rapidly repairs age-related memory loss and improves mood

02.16 Toxic black snow covers Siberian coalmining region [0:49 video; If its killing us, stop doing it]

02.16 Renewable energy will be world's main power source by 2040, says BP [But in America's capitalistic bubble, bribed-to-be-biased media and government defy reality]

02.16 My generation trashed the planet. So I salute the children striking back [What does inaction tell us about capitalism and our government?]

02.16 US coastal businesses hit by everyday impact of climate change, study shows

02.16 What the pesticides in our urine tell us about organic food [What does inaction tell us about capitalism and our government?]

02.14 Exposure to Glyphosate-Based Herbicides and Risk for Non-Hodgkin Lymphoma: A Meta-Analysis and Supporting Evidence [If its killing us, make it illegal]

02.14 To avoid environmental catastrophe, everything must change [Consider why this headline is laughable or confusing to many, if not most, Americans...]02.13 Study Shows Toxic Pesticide Levels in Families Dropped by 60% After One-Week Organic Diet [2:10 video; Produce and canned vegetables laced with toxic chemicals—from fertilizers and herbicides, too—must be quickly phased out to use safe organic alternatives]

02.12 Biggest offshore windfarm to start UK supply this week

02.12 Scientists Are Totally Rethinking Animal Cognition

02.12 Politicians are complicit in the killing of our insects – we will be next

02.11 'People Shouldn't Be Going Bankrupt and Dying': Nationwide Week of Action Aims to Build Mass Movement Behind Medicare for All [Corporate control of government and media must be limited to allow efficient programs for the public good]

02.11 Sen. Chris Murphy to Doubters: Green New Deal 'Absolutely Realistic' and the Kind of Plan Needed to Avert Climate Disaster

02.11 Plummeting insect numbers 'threaten collapse of nature'

02.10 The truth about big oil and climate change

02.09 The potato solution: how the Guardian switched to biodegradable packaging [Non-recyclable products should be illegal]

02.08 Stripping Social Programs Leads to Lower Life Expectancy

02.08 UK's Met Office Warns Global Temperature Could Soar Beyond 1.5°C Threshold Within Five Years

02.08 Australia can meet Paris targets if government doesn't hinder progress, report claims

News Media Matters

02.16 The Realized Temptations of NPR and PBS [With bribed-to-be-biased media and government, we no longer live in a Democracy—we live in new type of concentration camp]

02.15 Samantha Bee: Fox News 'soiling themselves over the Green New Deal' [video clips from Samantha Bee, Seth Meyers and Stephen Colbert]

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US Politics, Policy & 'Culture'

02.16 ‘A Parkland every five days’: project tells stories of the children lost to gun violence [What does inaction tell us about capitalism and our government?]

02.16 Rambling Trump calls an emergency in speech that goes on and on and on [1:42 video; an incoherent president just paraphrases lies and distortion from Fox News and Rush Limbaugh...]

02.16 Calling Emergency Declaration a 'Patently Illegal Power Grab,' ACLU Sues Trump [Empathy and fairness are scarce when your President is a psychopath]

02.15 Bernie Sanders Wants to Expand Social Security

02.15 Progressives Need to Ignore the Noise and Stay Ambitious

02.15 Jayapal Says Medicare for All Bill Coming in Two Weeks as Expert Calls Plan 'Astonishingly Strong' [Corporate control of government and media must be limited to allow efficient programs for the public good]

02.15 To Be Crystal Clear: 'Medicare for All' Does Not Mean 'Medicare for Some'

02.14 Eugene V. Debs and the Endurance of Socialism [28:59 audio to listen via another window as you browse]

02.14 Pentagon Fears Climate Crisis, w/ Billions in Damage to US Bases & Societal Upheaval [In maniacally twisted capitalist countries inconvenient truths are ignored or harshly ridiculed, and Trump's stupid Wall obsession dominates the news instead.]

02.14 What's more offensive: a racist yearbook photo or structural racism?

02.14 American moms: let's stop feeling guilty and start getting mad

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High Crimes?

02.16 Elliott Abrams Defends War Crimes As Happening Back In The ’80s When Everyone Was Doing It

Economics & Corrupting-Capitalism

02.13 The Green New Deal offers radical environmental and economic change [For the survival of life on earth, capitalism must be effectively regulated or banned]

02.12 Climate and economic risks 'threaten 2008-style systemic collapse' [Willfull ignorance of Trump, Republicans, corporate-media and corporate-Democrats is steadfast, if not worsening]

02.11 Trump offers socialism for the rich, capitalism for everyone else [and the poor will die out like the insects]

02.10 Green New Deal Targets Link Between Trade Policy and Climate Change

International & Futurism

02.15 Who Is Really A Socialist? [Who is really a Republican, etc.?]

02.15 In Germany, the Green New Deal Actually Works

02.14 House passes bill to end US support for Saudi war in Yemen [Congress does something good again!]

02.14 Millions Flowed From Venezuelan Oil Firm to Small Bulgarian Bank [Transactions like Manafort performed for Trump. Which Venezuelan political leader is likely behind this—Maduro or Trump-supported Guaidó?]

02.13 As Macron Prepares New Repressive Measures, Yellow Vests and Red Unions Strike Together

02.13 Harrison Ford: leaders who deny climate change are 'on the wrong side of history'

02.13 Nationalist strongmen are bent on controlling women’s bodies

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  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.



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This story was published on September 13, 2011.

 

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