Join Early Retirement Today
Reply
 
Thread Tools Search this Thread Display Modes
Re: Dividends, Taxes and SWR
Old 10-06-2004, 01:49 PM   #41
Full time employment: Posting here.
 
Join Date: Nov 2002
Posts: 768
Re: Dividends, Taxes and SWR

Quote:
Eliminating or reducing the tax on dividends and capital gains would help me as a middle-class guy more than it would the guy getting rich on stock options.
That was my understanding also. *The AMT was designed to make sure the very rich pay a lot of tax. *Eliminating tax on dividends, capital gains, and interest would mostly help the middle class by encouraging them to save and invest for their future. *They would no longer be punished by paying tax on interest that does not even keep up with inflation, and would not have to keep file cabinets full of cost basis information for their DRIP stocks.

This is not likely to happen though, the rich want the middle class to hate the tax code so the middle class does not ignore complaints of the rich about taxes. *They lobby to make sure that the middle class has to jump through a lot of tax hoops for this reason, despite the fact that the government does not get much of its income tax receipts from the middle class. *The poor are allied with the rich in putting tax pressure on the middle class, because they figure more benefits for them. *The middle class has mostly switched to saving by building up equity in their homes, because they are not similarly punished for doing so.
__________________

__________________
Michael is offline   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Re: Dividends, Taxes and SWR
Old 10-06-2004, 03:28 PM   #42
Thinks s/he gets paid by the post
 
Join Date: Feb 2003
Location: Mesa
Posts: 3,588
Re: Dividends, Taxes and SWR

Quote:

. . .*Eliminating tax on dividends, capital gains, and interest would mostly help the middle class by encouraging them to save and invest for their future. *. . . .
That's not consistent with the data I have seen:


http://www.washingtonpost.com/ac2/wp...&notFound=true

"In fact, those earning less than $50,000 get 14.7 percent of dividend income, and those earning less than $100,000 get 32.7 percent, according to a Brookings Institution/Urban Institute analysis. The former would get 6.8 percent of the benefit of Bush's dividend plan, while the latter would get 20.9 percent. "

So that would mean that over 70% of the benefit of the Bush dividend plan would go to those earning over $100,000.

__________________

__________________
sgeeeee is offline   Reply With Quote
Re: Dividends, Taxes and SWR
Old 10-06-2004, 03:42 PM   #43
Thinks s/he gets paid by the post
wabmester's Avatar
 
Join Date: Dec 2003
Posts: 4,459
Re: Dividends, Taxes and SWR

AMT is broken. The main defect is that it's not indexed to inflation, so it's impacting the middle class more and more each year.

The potentially good thing about fixing the broken AMT is that they may try to fix other parts of the tax code as well. But chances are they'll only make it more complex and less fair.

I wouldn't mind seeing a cut on investment gains/income tax if we keep taxing the rich at high enough rates and with few enough loopholes that we can keep tax revenue coming in at a healthy rate. That's not happening now, and it certainly wouldn't happen if we just blindly cut taxes on gains/dividends.
__________________
wabmester is offline   Reply With Quote
Re: Dividends, Taxes and SWR
Old 10-06-2004, 04:29 PM   #44
Thinks s/he gets paid by the post
retire@40's Avatar
 
Join Date: Feb 2004
Posts: 2,670
Re: Dividends, Taxes and SWR

Quote:

That's not consistent with the data I have seen:


http://www.washingtonpost.com/ac2/wp...n27¬Found=true

"In fact, those earning less than $50,000 get 14.7 percent of dividend income, and those earning less than $100,000 get 32.7 percent, according to a Brookings Institution/Urban Institute analysis. The former would get 6.8 percent of the benefit of Bush's dividend plan, while the latter would get 20.9 percent. "

So that would mean that over 70% of the benefit of the Bush dividend plan would go to those earning over $100,000.
Wait a second. *Now these % are dramatically different from the ones wabmester posted a few posts ago (copied below) AND his numbers included dividends AND capital gains while yours only includes dividends. *My thought is that it's almost impossible to compile these numbers correctly because there are too many unknowns. *You can't just extract dividends and capital gains from tax returns, because not all dividends and capital gains are reported on tax returns and sometimes they are not reported anywhere.

All I know for a fact is that if there were no tax on dividends or capital gains, I as a middle class chump would have more money saved. *I don't care if the rich also benefit, good luck to them. *What are they going to do with all that money anyway?

Quote:
There's a short article in the NY Times about overhauling the tax system. * Interesting statistics relevant to the topic being discussed here:

Percentage of income from cap gains and dividends (by 2000 AGI):

<$50K: 3%
$50-100K: 4%
$100-500K: 11.5%
$500K-$1M: 24.7%
$1-10M: 37.6%
>$10M: 61.4%

50% of all dividends were paid to those in the top 3.8% incomes.
__________________
No man is free who is not master of himself. --- Epictetus
Enjoy Yourself (It's Later Than You Think). --- Guy Lombardo
retire@40 is offline   Reply With Quote
Re: Dividends, Taxes and SWR
Old 10-06-2004, 04:55 PM   #45
Thinks s/he gets paid by the post
wabmester's Avatar
 
Join Date: Dec 2003
Posts: 4,459
Re: Dividends, Taxes and SWR

SG's numbers are consistent with mine. Mine tell you that an average middle class person doesn't make much from dividends and cap gains. SG's numbers tell you that the middle class is larger than the "rich" class.
__________________
wabmester is offline   Reply With Quote
Re: Dividends, Taxes and SWR
Old 10-06-2004, 05:43 PM   #46
Thinks s/he gets paid by the post
retire@40's Avatar
 
Join Date: Feb 2004
Posts: 2,670
Re: Dividends, Taxes and SWR

Quote:
SG's numbers are consistent with mine. * Mine tell you that an average middle class person doesn't make much from dividends and cap gains. * SG's numbers tell you that the middle class is larger than the "rich" class.
What are you talking about? *

Your numbers say under $50K of income - 3% is from dividends and capital gains. *His say under 50K of income - 14.7% is from dividends.

Your numbers say $50k-$100K - 4% from dividends and capital gains. *His say under $100K - 32.7% from dividends.

Average your under $50K and $50K-$100K percentages and you get 3.5%. *His total is 32.7%

You both can't be right. *I still say don't tax me on my investment income and I will be better off. *If it would make you happy then maybe the tax code could be changed to allow no taxes on the first $20K of investment income. *That would still make me happy.
__________________
No man is free who is not master of himself. --- Epictetus
Enjoy Yourself (It's Later Than You Think). --- Guy Lombardo
retire@40 is offline   Reply With Quote
Re: Dividends, Taxes and SWR
Old 10-06-2004, 07:19 PM   #47
Thinks s/he gets paid by the post
wabmester's Avatar
 
Join Date: Dec 2003
Posts: 4,459
Re: Dividends, Taxes and SWR

Quote:
Your numbers say $50k-$100K - 4% from dividends and capital gains. *His say under $100K - 32.7% from dividends.
I'm clearly not making myself clear, so I'll try once more.

Welcome to JoeCountry. Everybody here is named Joe. We have 1000 people named Joe Middle. They all make $100K, $4K of which comes from dividends. And we have one guy named Joe Rich. He made $10M, $6M of which came from dividends.

40% of dividends went to the Joe Middles (1000 x $4K). 60% went to Joe Rich.

__________________
wabmester is offline   Reply With Quote
Re: Dividends, Taxes and SWR
Old 10-06-2004, 08:10 PM   #48
Full time employment: Posting here.
 
Join Date: Jan 2004
Posts: 844
Re: Dividends, Taxes and SWR

They would no longer be punished by paying tax on interest that does not even keep up with inflation

Again with the term "punish"...if anyone is being punished, I'd say its the wage earner, not the investors, and especially the small business owner/wage earner that not only has to pay the 15.3% SS/Medicare tax, but also has to deal with top brackets in the high 30%'s if I remember correctly....(plus state taxes)

15% cap gain rates, and low dividend tax rates and no SS/Medicare taxes on passive earnings stack up pretty favorably to what a small business owner pays when he draws a salary...and is almost as bad for the wage earner too, except he "only" pays the 7.65% to SS/Medicare, Plus federal taxes, plus state taxes (and maybe local too someplaces).

If I had to choose people wether I wanted to "punish" people for living off their investments, or "punish" people for earning a wage, I guess I'd come down on the side of giving the wage earner a break...not the investor.

Yes, we do as a country want to encourage people to save and invest...but first, don't we need to encourage people to work?
__________________
farmerEd is offline   Reply With Quote
Re: Dividends, Taxes and SWR
Old 10-06-2004, 08:23 PM   #49
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
haha's Avatar
 
Join Date: Apr 2003
Location: Hooverville
Posts: 22,382
Re: Dividends, Taxes and SWR

Quote:
Yes, we do as a country want to encourage people to save and invest...but first, don't we need to encourage people to work?
The cruel fact is that workers will work, come hell or high water. Avoidance of starvation is all the encouragement they need.

Mikey
__________________
"As a general rule, the more dangerous or inappropriate a conversation, the more interesting it is."-Scott Adams
haha is offline   Reply With Quote
Re: Dividends, Taxes and SWR
Old 10-07-2004, 04:03 AM   #50
 
Posts: n/a
Re: Dividends, Taxes and SWR

HI Mikey. Not a "cruel fact" at all. Actually, one of the underpinnings of free enterprise. People need clothes , food and shelter. Until the government provides it all,
people either have to work, steal, or be very very
creative.

John Galt
__________________
  Reply With Quote
Reply


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
2% SWR firewhen Hi, I am... 17 12-27-2006 07:49 PM
Roth Conversion Tax halo FIRE and Money 35 11-28-2006 01:00 PM
According to Dave Ramsey, SWR is 10% azanon FIRE and Money 17 10-26-2005 10:53 AM
80% Rule? zbwmy FIRE and Money 33 06-08-2004 11:16 AM
SWR, terminal values, TIPS, I-bnds & comm paper sgeeeee FIRE and Money 144 02-25-2004 04:35 PM

 

 
All times are GMT -6. The time now is 08:55 AM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2017, vBulletin Solutions, Inc.