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View Diary: Washington takes notice of you liberals...for a change (138 comments)

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  •  You are not "loaning" money to firms (28+ / 0-)

    When you invest in the stock market, you are gambling. Nothing more.

    There is no "loan" to the firm, so you lose if you make that claim (as you did). You are not helping the firm to build anything unless you are buying shares directly from the firm at IPO or a secondary offering. All other purchases and sales of stocks are on the secondary market, which is between individuals who hold the stock and those who want to buy it. None of that money goes to the firm!

    The fact is that labor is taxed at a max rate of around 42% (income + payroll), while capital is taxed at a max rate of 15% after a one-year holding period. If tax rates are creating incentives, then our tax policy is trying to de-incentivize hard work and instead incentivize moving money around and gambling.

    •  the secondary market has some (5+ / 0-)

      indirect benefits, in the form of establishing liquidity for the company stock and it boosts the value of treasury stock.  Setting the cap gains tax too high might provide a disincentive to sell stock, but the rates probably could rise.

      In terms of DIVIDENDS, they should be taxed as ordinary income, however, and I do think hedge funds and private equity who are "actively managing" funds should pay a higher rate than other investors.  

      Difficult, difficult, lemon difficult.

      by Loge on Fri Jan 03, 2014 at 03:09:41 PM PST

      [ Parent ]

    •  Well, what I'm trying to say (and may be totally (3+ / 0-)

      wrong in my belief) is that when I buy a share of stock I'm buying a piece of the company - even if it's a infinitesimally small piece.  The money doesn't go to the company directly, but it does mean that I'm supporting the value of the company at a given price, so the company has worth (collateral) when it goes to take out loans to operate the business. I'm not paying them money to directly make the widget, but I'm saying I believe the stock is worth the $10 or more/share (or whatever) and the company can then go to the bank (or whomever) and say our value for our company is 50 billion dollars, our debt is only 10 billion and we want to borrow money to make more widgets.

      I don't disagree that the tax rates should be adjusted.  I just disagree that there's no work involved in the investment of money into a stock.  Maybe (probably) the tax rates for investment income need to be higher.

    •  the stock market is GAMBLING (0+ / 0-)

      period

      i learned that as a young age and no one has ever said anything to move me from it

      Politics is like driving. To go backward put it in R. To go forward put it in D.
      Drop by The Grieving Room on Monday nights for support in dealing with grief.

      by TrueBlueMajority on Fri Jan 03, 2014 at 06:02:03 PM PST

      [ Parent ]

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