When is humor no longer funny?

[kandrathe]

That thread makes me want to gouge my eyes out. "Animated and useful" indeed.

Better them than us. :)

One might suggest that liberals make this "mistake" on the basis that capital gains do not even exceed 1% of income until you cross above the 80th percentile, but is over 10% of income for the top 1%, and nearly half of the income of the top 0.01%. You may even be right that in terms of wealth it is a similar amount, but in terms of income, it's not even close. Rich people grow their money through investments, poorer people make their money through wages. The "interest and dividends" category tells a similar story.

So then are you saying that a flat tax on investment income is fair?

Regardless, the easiest way to deal with this is an exemption for low-level capital gains in the form of retirement savings, which nearly everyone is in favour of. Repealing a capital gains tax cut benefits the wealthy, and if it benefits anyone else, it is almost entirely as a side effect of that.

Although, in the libertarian way of thinking, taxes are an almost punitive action. I don't really have issues with taxing conspicuous consumptions, but when you tax "income" and "capital" you are sinking the greedy fangs of government directly into the roots of growth and success. I've made this argument here before, but wealthy people can choose their level of income while its the middle class who cannot and pays the taxes.

According to David Goldman from the former Bear Stearns, "An investor pays the capital gains tax only when he liquidates his investment. In practice, investors liquidate taxable securities and incur the capital gains tax only if they must do so in order to meet large, non-recurring expenses. Wealthy investors often hold onto assets that have appreciated in value until they die, passing them to their heirs and avoiding the capital gains tax (though not the estate tax) altogether. In contrast, middle-class families who have either invested in securities or built small businesses typically must sell a large portion of their investment at the peak of their savings, in order to pay for a large expense like retirement, a child’s education, or the purchase of a home. At that time, these investors have no choice but to pay tax on their capital gains."

Afterthought: Why start measuring tax burden at 1984? The chart goes back to 1979.

I don't have a problem with that. Ronny Reagan didn't get the first wave of voodoo tax reforms passed until midterm, so what we see in 79 is the aftermath of the Carter years. In fact, even through this last Bush term, revenues into the federal coffers have been growing while effective rates continue to fall (source). However, new spending combined with run amok entitlement programs are rising much faster than revenues ever could. Obama offers no change from the past 30 years where both Republicans and Democrats continue to hyper-inflate the size of government.