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OT: Higher taxes..

From an investment newsletter:

By now, we're sure you've heard squawking about Obama's new tax bill? Next year, the dividend tax rate would increase to the higher personal income tax rate of 39.6%. Including the phasing out of certain deductions and exemptions, the rate is 41%. Finally, if you add the 3.8% investment tax surcharge in ObamaCare, the 2013 dividend tax rate would be 44.8% ? nearly triple today's 15% rate.

But dividends are paid after the corporation pays taxes on its profits. If you assume a maximum 35% corporate tax rate and a 44.8% dividend tax, the total tax on earnings paid as dividends would be 64.1%.

But fear not? These new taxes would only hit the rich? as long as you define rich as individuals making more than $200,000 a year and couples making more than $250,000.

But isn't it typical of Komrade Obama to pit the "poor" against the "rich" as a political tool to push his agenda? The ugly truth is that he's not targeting the rich so much as he's simply targeting the successful. An increase to the dividend tax rate of this magnitude will hurt all investors, including many retirees dependent upon dividend income to meet daily living expenses. And as usual, the tax hike will hurt those at the bottom of the bracket much, much more than the top of the bracket.

Like all "taxes on the rich," this is NOT a tax on the rich. It's mostly a tax on the more successful upper echelons of the middle class, the small business owners, and the family farm owners.

According to a study by the Wall Street Journal?

Historical experience indicates that corporate dividend payouts are highly sensitive to the dividend tax. Dividends fell out of favor in the

1990s when the dividend tax rate was roughly twice the rate of capital gains.

When the rate fell to 15% on January 1, 2003, dividends reported on tax returns nearly doubled to $196 billion from $103 billion the year before the tax cut. By 2006, dividend income had grown to nearly $337 billion, more than three times the pre-tax cut level.

And according to a Cato Institute study, 22 S&P 500 companies that hadn't paid dividends before the tax cut started paying them in 2003 and

2004. It's no mystery? Money goes where it is treated best. Prohibitive dividend taxes drive companies to do other things with their capital, like simply retaining the earnings or buying back stock. You can be sure these companies are already working with swarms of lawyers to find ways around this. One easy solution is to expedite cash distributions? Assuming this tax increase becomes law, we'll see lots of companies pay large, one-time "special" dividends, as they're called?

Our only solace is that the dynamism of businesses and individual investors trumps the static nature of government, laws, and taxes. Business is a moving target. Taxes and laws are stationary targets.

Reply to
Robert Baer
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One of the chief failings of socialism is that it pits the citizens against each other, in competition for each other's goods, rather than competing together, to make more.

James Arthur

Reply to
dagmargoodboat

Read the actual proposal:

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Now if you were really concerned about taxes:

1) Did you protest Bush stealing the 2000 election? 2) Did you protest the Bush wars? 3) Did you write congress and the senate to insist the cost of the wars go on the books rather than be funded by supplementals. 4) Did you write congress and the senate regarding Medicare part D not being funded. Did you point out the vote to pass the legislation went overtime and technically was not legal? 5) Did you protest the dirt tricks in Ohio that let Bush steal a second election?

Everything I mentioned lead to the Bush debt.

If you didn't do all of the above, feel free to shut the f*ck up and take your whooping like a man.

Reply to
miso

One of the chief failings of capitalism is that it pits capitalists against the people who worked with the invested capital to turn it into product, which is to say, more money.

The people who own capital-intensive plant have a short term interest in paying their workers as little as possible. The fact that their workers end up ill-fed and unhealthy impairs their productivity, but that's a longer term effect. The fact that the next generation of workers grew up ill-fed and unhealthy is an even longer-term problem.

The workers can combine to get a better deal - this is where socialism came from - but capitalists have more resources, and more political clout, and have been known to bribe trade union organisors, as well as persuading their friends in the newspaper business to present trade unionists as corrupt extortionists with no other interest than extracting the maximum from employers with no concern for the long term effects of this extortion.

James Arthur reliably reproduces this kind of one-sided anti-trade- union propaganda. He's not actually a stupid man, but he doesn't seem to be inclined to see his activities within any kind of larger context.

-- Bill Sloman, Nijmegen

Reply to
Bill Sloman

I don't understand how this effects high yielding corporate bond rates? Seems corporate bond rates are a function of the market, and not taxes. Please clarify.

-Bill

Reply to
Bill Bowden

Bush overspent. Why is that an excuse for Obama's piling on 4x more, deficit-wise?

James

Reply to
dagmargoodboat

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Companies try to maximize the benefit to their shareholders. When dividend tax rates are high, companies don't pay dividends--it's too wasteful.

Companies had mostly stopped paying dividends because most people fared better with capital gains. Then, when the dividend tax was lowered, dividends came back into fashion.

If you cut someone's income or return by 30%, they notice, and adapt. I certainly will.

-- Cheers, James Arthur

Reply to
dagmargoodboat

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Bush overspent to no good purpose.

Obama is spending to keep the economy out of recession. You think that this is voodoo economics - and, even worse, not your brand of voodoo economics - but this is a pointy-headed minority opinion.

-- Bill Sloman, Nijmegen

Reply to
Bill Sloman

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I was wondering about corporate bond dividends and not stock dividends. Seems if a company needs to borrow money (sell bonds) they would have to pay the market rates, and if taxes go up, the rates should increase to offset the tax loss. This seems to be beneficial to those in low tax brackets, like me. Is that a fair assumption?

-Bill

Reply to
Bill Bowden

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I don't know. Seems the REIT would go down to reflect a higher yield to offset the increased tax, but maybe it's the reverse where the REIT goes up to reflect a higher capitol gain and lower dividend. But if both capital gains and dividends are the same rate, it doesn't make much difference. I don't know what the differences are in taxes on gains verses dividends? I remember I had a REIT in 2007 that had appreciated almost 100% and I never paid any attention to the yield. It was sure better than owing a house.

-Bill

Reply to
Bill Bowden

Because the Republicans won't let the tax break Bush passed expire.

Bush and the Republicans knew that they were not going to win in 2008, so they poisoned the economy by giving a tax break to those that supported the economy.

Now those who invested in business and jobs are hording their money.

How many percent increase in taxes would pay the deficit ? In 10 years, 20 years ?

At todays rate, it won't ever get paid off.

But the Republicans (neocons) know that, like Bush, they want to destroy the economy and this country.

Reply to
hamilton

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Income from corporate bonds is called interest not dividends and is taxed as ordinary income.

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Dan

Reply to
dcaster

If the taxes were increased by 56% , the debt would never get paid off, but it would stop growing.

I really do not know what it would take to pay it off in ten years. Maybe something like raising the tax rate to 100 % of income.

Dan

Reply to
dcaster

The fallacy being static analysis of a (very) dynamic system. The same mistake all those on the loony left make.

If you confiscated the entire wealth of the top 10%, it would close this years deficit. What's the plan for next year?

Reply to
krw

So show us the tax rates and numbers that _will_ make it work.

I suspect you can't balance your own checkbook. ...Jim Thompson

--
| James E.Thompson, CTO                            |    mens     |
| Analog Innovations, Inc.                         |     et      |
| Analog/Mixed-Signal ASIC's and Discrete Systems  |    manus    |
| Phoenix, Arizona  85048    Skype: Contacts Only  |             |
| Voice:(480)460-2350  Fax: Available upon request |  Brass Rat  |
| E-mail Icon at http://www.analog-innovations.com |    1962     |
             
I love to cook with wine.     Sometimes I even put it in the food.
Reply to
Jim Thompson

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Nope. That isn't nearly enough money to compensate the $800B or so Obama's added to annual spending.

I think the Bush thing is like $100 or $200 billion a year, or roughly a quarter of Obama's spending boost.

True. They're afraid if they put it out there, Obama will take it, basically. They're afraid of the costs of all this stuff he's doing, and are saving money to cope with that.

$3.6T spending / $2.3T revenue =3D 1.57. But, that doesn't take into account the cost of Obamacare to the federal government. Obamacare puts an even larger "tax" on the public by forcing them to buy more insurance, at higher cost. (That's the essence of Obamacare.)

So, the increase to be seen by the taxpayer is well north of 57%.

Baloney. The tax cuts were a form of stimulus, far better and more effective than Barack's waste-u-lus packages. The failing was that Bush expanded spending at the same time--that was bad. Bush started the TARP / stimulus spending, too.

Obama's done both, but his tax cuts are useless (e.g., cutting Social Security contributions), and he's spending on a far grander scale.

Obama =3D worst of both worlds.

-- Cheers, James Arthur

Reply to
dagmargoodboat

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I'm not sure of the effect on corporate bonds. I'd expect those go mostly with inflation, which we'll have as soon as the economy recovers. Long-term bonds at today's rates aren't going to be worth much when rates jump.

James

Reply to
dagmargoodboat

In keeping with the Oscar awards...

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...Jim Thompson

--
| James E.Thompson, CTO                            |    mens     |
| Analog Innovations, Inc.                         |     et      |
| Analog/Mixed-Signal ASIC's and Discrete Systems  |    manus    |
| Phoenix, Arizona  85048    Skype: Contacts Only  |             |
| Voice:(480)460-2350  Fax: Available upon request |  Brass Rat  |
| E-mail Icon at http://www.analog-innovations.com |    1962     |
             
I love to cook with wine.     Sometimes I even put it in the food.
Reply to
Jim Thompson

Finally getting the economy into proper growth would help. You could stop the deficit-funded stimulus spending at the same time, which would also make a difference.

-- Bill Sloman, Nijmegen

Reply to
Bill Sloman

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Not so much Obama as the idiot bankers whose ninja loans gave us the sub-prime mortgage crisis. Obama's just stuck with dealing with the consequences.

Oddly enough, that's how Keynes explain the self-feeding nature of a recession, but he had enough sense to realise that deficit-funded stimulus spending could encourage the over-cautious venture-nothing capitalists to eventually get back to investin gmoney in the economy, san insight which happens to be beyond you.

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Except that they didn't stimulate anything like enough to generate any compensating increase in government income, and the economy wasn't exactly in need of stimulation at the time.

After the bankers had done to the economy what Al Qaida had done to the Twin Towers, even Dubbya didn't have a lot of choice.

As is required by the far grander economic disaster engineered by the bankers on Bush's watch.

Of course he's a Democrat, so you can skip most of James Arthur's preamble in the confident assumption that the Democrat will come out as the villain of the piece.

-- Bill Sloman, Nijmegen

Reply to
Bill Sloman

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