are getting paid because Romney likes making money?

42

6

1 (Romney)

Roughly 100,000 is the figure I've seen.

A better question would be, how many more jobs will be created by cutting the capital gains tax on people like Romney? As a "Job Creator", how many jobs have we missed out on, had the tax rate been 0 instead of 15?

Serious question. This is regarded as a crucial reform by the Republicans. Romney is as perfect an example as any. He already pays a lower tax rate than his total earnings would suggest, how would lowering them (and thus mandating even more social program cuts to balance the budget) have helped grow the general economy?

there probably are circumstances where tax cuts like that make sense. However given the record amounts of capital being held by many large corporations right now it's not tax levels that are the issue.

The super-rich don't create any jobs. Demand by the middle class creates jobs.

Because when demand increases, profit per widget increases, and only then do companies hire. The upper 1% takes whatever they can at all times regardless, always have and always will. If the goal is to reduce the stripping of companies, Congress needs to set ceilings for C-suite and BoD compensation.

"than his total earnings would suggest" - this actually doesn't mean what you think it means. He makes most of his money from cap gains, and that's why the ONLY rate Rethuglicans ever talk about is the payroll tax rate.. they know that the big issue is actually the capgains rate. However, they demonize the payroll tax so as to get you exhausted from debating an issue which is a non-issue for their true constituents.

Raising the capgains rate, however, forces that money to be actually invested - or to be taxed.

1) Lowering taxes (revenue) and balancing the budget (spending) are two very different discussions - which are you proposing?
1A) Social program cuts aren't "needed" to balance the budget.. rather, all you "need" to do is raise taxes, and have a realistic discussion about paying for what you want to spend. Also, eliminate Medicare Part D - a Republican bill which continues to be the largest single component of spending in the budget. Paul Ryan did not propose a serious plan: It assumes a GDP growth rate for 24 straight quarters that has never existed in the history of this country for one quarter.
2) To the question about how many jobs do we "miss" by having a 15% capgains tax rather than 0%? None.

I say that constantly. Investment does not create jobs, it does not incline business owners to hire new employees. Demand for a product/service creates jobs.

Also, i think I should point out that I am a liberal.

I was hoping my question would be answered by a conservative.

I haven't seen the Payroll Tax as being demonized by Republicans, except in the sense that they tried to take it up as an issue to hold hostage and exact a pound of flesh from the Obama Administration.

It is also worth pointing out that by cutting the Payroll tax, as opposed to shifting the tax burden off of lower/middle class earners, is actually undermining Social Security and feeding into Republican arguments that Social Security is insolvent. In fact, Social Security has turned a surplus every year until very very recently, and had it not been raided time and again by politicians promising future repayment, it could exist intact for much longer than doom and gloom projections are suggesting. Cutting the Payroll tax without filling the void with revenue from elsewhere is, in itself, not a great idea.

..

yes the economy is demand driven.

But lowering the costs of doing business allows prices to decline, thus increasing demand leading to higher output and investment to produce it.

However, capital gains doesn't have much to do with that.

I hope you realize increasing the capital gains tax would also negatively impact a lot of middle class people via their retirement savings though.

perhaps an exemption on the first $30k then? heh

H4xOr: a decline in prices doesn't increase demand, it increases quantity demanded.

An increase in disposable income, on the other hand, does increase demand, (assuming there aren't overwhelming incentives to save).

Additional income (lower cap gains) at the top would not, IMHO, impact demand. It would increase the supply of capital for investing, which should lower the "price" of capital for new ventures. However, as we have learned in the global economy, those investments won't necessarily (and perhaps won't likely) be here in the U.S.A. or create jobs here either.

If the rate of return on available projects/investments/ventures is higher for ventures outside the U.S., increasing available capital for investment will not benefit the U.S. in general, but only the investors. In other words, giving more wealth to the wealthy may increase the wealthy's wealth, but it won't help the folks at the bottom in the U.S. unless we come up with better domestic ventures with a higher RoR than int'l opportunities currently provide.

Increasing disposable income at the bottom CAN improve the RoR of domestic ventures because it increases the demand curve across many sectors. Even better if it isn't all spent on imports.

Not as much as the low interest rate environment is hurting people and probably very little in the grand scheme of things.


"But lowering the costs of doing business allows prices to decline, thus increasing demand leading to higher output and investment to produce it. "

That's true. But lowering taxes doesn't necessarily lower the cost of doing business as the money saved can go into salary expense. It also depends on how competitive the environment is. For example lowering taxes on Bell Canada will not lower phone rates nor will lowering taxes on the Bank of Montreal lower your account fees.

As for "demand" creating jobs. It's a vicious circle. There can be no demand without jobs. There can be no jobs without demand.

As for lowering the capital gains tax: this disproportionately benefits the top 1-2% of individuals. The stock market is *not* widely held.

"Additional income (lower cap gains) at the top would not, IMHO, impact demand. It would increase the supply of capital for investing"; or for market consolidation...

Don't try to argue semantics when there are no semantics to argue.

Using the term "demand" does not automatically mean the demand schedule, which is the assumption that would have to be made for your first paragraph to apply. In fact in this situation we are clearly talking macroeconomics, thus "demand" actually refers to aggregate demand if you want to get anally technical with terms.

Everything beyond the second paragraph I already covered in my second post.

1

martian, you don't think mutual funds, RRSPs etc. are widely held? They are all stock portfolios.

Everything else I agree with for the most part. Bell does have competition though (rogers, telus, shaw in certain markets, WIND in certain markets) thus they do have an incentive to turn at least some of their savings into cost reductions, although perhaps not all of it. Also when it comes to that specific industry, higher QUANTITY demanded for those products makes infrastructure investments more viable which can decrease costs further.

@H4 the semantics approach is called "fisking". Google it:)

and regarding your mutual funds/rrsps: that's the banks' argument. However in terms of stock exposure they really aren't for most people. It's a blanket statement that has been made by prior Liberal and Conservative governments without any real proof.

Most people (sadly) have very little in the way of holdings there to begin with.

Most savings are in bonds/bank accounts and GICs for the average individual for a variety of reasons. Regarding RRSPS and pensions: the issue of capital gains is a moot point. Pension is taxed as *income* when you collect it.

In any case, the capital gains tax (on stock) only impacts people who trade shares for the most part (regardless of how widely held they are) which has nothing to do with raising capital.
If we are talking property trading or currency speculation then we've pretty much eliminated most of the population who can benefit (primary residence in Canada is tax free anyway)..

A better tax credit to help working people would be to raise the tax free amount imo..

just for fun:
"We already have the lowest corporate taxes, and it is not working. The corporations are not reinvesting in Canada, they are outsourcing jobs and banking the profits. Canadian corporations have added over 35% increase in cash holding since the recession began. That was $10 billion in 2009, $66 billion in 2010, and $55 billion in the first 9 months of last year."

Source from Statistics Canada at: http://tinyurl.com/QImpact-CorporateAssets

H4 retirement plans aren't subject to capital gains tax?

@bobby we are referring to Canadian tax laws.. and no they aren't. Under Canadian tax law pension withdrawals are taxes as income because your contributions into a pension fund (or RRSP) are made with pre-tax income and reduces your taxable income by the amount you contribute.

oh, I have no idea about Canada... I assumed b/c this started off about Romney we were discussing American laws. My bad!

Yes that is true Bobby (and Martian) regarding saving mechanisms like RRSPs, however it is not the case for all savings mechanisms.

Plenty of people diversify their savings methods (thats what financial advisors tell peopel to do) so people will tend to hold RRSPs, bonds, and other financial instruments such as stocks.

My parents for example have significant holdings in a financial portfolio with Nesbitt-burns. Those savings will be subject to capital gains (once they are eventually cashed in). My parents are by no means wealthy people (duel income of approximately $110k per year), thus these very much are savings mechanisms that are utilized by the middle class.

right, but for those who aren't *really* wealthy, but have money, simply maxing their RRSP contribution every year will ensure a significant pension that is tax-free; anything on top of that is probably more than the average Canadian can do, though I don't know the number off the top of my head

It isn't "tax free" merely tax deferred, the interest you earn on it will also be taxed when you eventually cash in the RRSP.

Interest made on TFSAs are the only truely untaxed saving gains.

@H4: dual income of $110K/year put's your family in the 80-90th percentile of income in Canada. Also a single example does not make a rule. "Not widely held" does not mean "not held at all". Also we don't have an agreed definition of what "middle class" means but now we are getting into semantics and detracting from the discussion.

The number of people that diversify their portfolio into any material amount of equities is rather low, and the amounts are dwarfed by the volume and amounts held by the very rich and corporate investors (that's not counting pension funds and other investment funds where you are acting as the agent or custodian but does include "policy holder funds" held by insurers). Hence the benefit on reducing a capital gains tax is very minimal for the vast majority of individuals.

Unfortunately I can't quote you an official source to back this up without getting myself into a pile of trouble..

yeah I'm repeating myself.. I think it's better just to agree to disagree here...

And regarding RRSP (as I'm sure H4 knows but for qz's benefit): Your withdrawals from the RRSP are taxed as income upon withdrawal. You do not benefit from the lower capital gains tax or any normal investment tax credits that you could gain by holding them outside of a retirement vehicle.

Not necessarily my view but sort of food for thought regarding Romney and taxes:
http://www.theglobeandmail.com/...ittle-tax/article2317032/

Can we please stop confusing rich PEOPLE with rich CORPORATIONS? They are not interchangeable terms. Raising taxes on rich people's income does not affect whether the corporation they own hires or not.

so, he basically got 100k people to pay him $440 each during the year? i forget how to work that math dealy-bob.

@TheORKINMan the next argument is that it affects them if they own proprietorships. (At least in Canada it would).. but you are correct, personal income tax levels don't normally influence corporate hiring decisions.

More people are employed by small businesses than corporations. Small businesses are impacted by individual tax rates.