FAIL. Obama LOWERED Capital Gains Tax from 40% to 20%! [View all]

[grahamhgreen]

Last edited Thu Jan 3, 2013, 07:55 PM - Edit history (6)

Yes, it's a big win for the the ultra rich, who don't make money from earned income, but rather from what used to be called unearned income (http://bit.ly/131hXjd).

Capital gains are unearned income (this is the way most multimillionaires and billionaires get their money, they don't work for it).

So while a policeman may put his life on the line every day and have to pay 30% in taxes, some non-working trust fund baby who risks nothing except some money, will only have to pay 20%.

How did this happen?

When the Bush tax cuts expired on DEC 13, 2012 at midnight, the UNEARNED INCOME TAX (Capital Gains) WENT UP TO 39.5%!!! http://bit.ly/Rv5elj

But, when the "Grand Bamboozle" (fiscal cliff deal) was reached, those tax rates went back down from 39.5% to 20%. How is that fair?

Oh, and there's more presents for those who make unearned income:

Why do wealthy folks celebrate the Fiscal Gorge? Just this: If you’re Sheldon Adelson you really couldn’t care less about ordinary income. What matters most are estate taxes, dividend taxes, and capital gains taxes. Adelson makes $1 million a year in ordinary income, now taxed at a higher rate. No big deal. He makes billions of dollars in dividends and capital gains, now permanently taxed at 15% and 20% respectively. Now that’s a big deal. Now that’s cool.

Did you notice what happened to those taxes?

Estate Tax: The estate tax exemption rises to $5 million, up from the $1 million it would have been without a Fiscal Cliff deal, and up from $675K when George W. Bush came into office. The tax rate on inheritance locks in at 40%, down from 55% at the beginning of the Bush Administration. Throughout the Bush administration the estate tax exemption stepped up each year or two, and the estate tax rate stepped down every year or two. Under the Obama administration, with the new Fiscal Gorge law passed, the W. Bush-era generous estate tax rates become permanent. Richie Rich is so happy.

Dividends Tax: If you were Sheldon Adelson – which you are not, but let’s pretend you were – right now you would be celebrating a Happy New Year because you just took a special dividend payout in December 2012 from Sands Casino of an estimated $1.2 Billion, based on your ownership of 431.5 million shares and a declared dividend of $2.75 per share. Adelson took the dividend in December fearing that his 15% dividend tax rate might rise to something like the 35% or 39.5% ordinary income tax rates, which would cost him close to $300 million in additional taxes in 2012. He needn’t have worried. The Fiscal Gorge law makes a 15% dividend tax rate permanent, a pillar of the Bush administration’s tax cuts.

Capital Gains Tax – This tax rises from 15% to 20% under the Fiscal Gorge law. Given that top earners and top wealth holders benefit substantially from capital gains, the permanence of this change represents another victory for Bush-era tax cuts.

Read more: http://www.bankers-anonymous.com/blog/the-view-from-the-fiscal-gorge/#ixzz2Gw4zxOfK

At least, that's the way I'm understanding it. Am I wrong? Looks like a bad deal to me based on this data. Oh yeah, and the fact that Big War has been spared from any cuts even though it's 60-70% of our budget.

ON EDIT: Here it is from a reliable source, WaPo:

"5. Capital gains and dividends would be taxed at 20 percent for families with income above $450,000—a concession to Republicans: Boehner and Obama had already agreed to let taxes on capital gains rise from 15 to 20 percent weeks earlier for high-income Americans. Setting the dividend tax rate at 20 percent, however, is a significant concession to Republicans: Obama, in his most recent budget, proposed taxing dividends like ordinary income, with a top rate of 39.6 percent, as it’s scheduled to revert to after Dec. 31."

http://www.washingtonpost.com/blogs/wonkblog/wp/2012/12/31/five-facts-about-the-biden-mcconnell-deal/

Now they are calling it the 'dividend tax rate' and not 'capital gains' so there may be some distinction there....

Then there is this from Forbes:

"Capital gain rates are set to increase from 15% to ordinary income tax rates as high as 43.4% if you are in the top tax bracket and factor in the new Medicare tax on unearned income." http://www.forbes.com/sites/advisor/2012/12/10/fiscal-cliff-strategy-3-tips-for-investors-as-rising-taxes-loom/

And Egalitarian Thug posted a great link to the Tax Foundation that showed the rate at 39.6%: http://taxfoundation.org/article/federal-capital-gains-tax-rates-1988-2011

So there you have it, SHORT TERM capital gains went from 39.6% or 43.5% to 20 percent, yes, that is a FAIL in my book.

EDIT 2: I think I might have to eat a little crow here - it is looking like I like I should have included the words "SHORT TERM" before the words "capital gains" in my OP. But mind you, much, if not most, of the money made these days by the uber-rich is in short term capital gains, as exampled by high-frequency trading in which stocks are held for less than a second.