Income

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cap gains

The argument:
For low/no cap gains rates
"To many conservatives, it’s a matter of faith that the tax rate on capital gains should be lower than ordinary rates, or even zero. They believe that lower tax rates encourage risk-taking and entrepreneurship, offset the double taxation of corporate profits...
Treat them as ordinary income,
The current system a scam that predominantly benefits the rich. It allows the rich to get richer on the backs of ordinary income taxpayers from the middle class. The poor babies need encouragement to be 'job creators' of jobs like Foxconn iphone assemblers. We'r not buying it anymore. You don't like it here, move to China.

It's a ginormous loophole

"Taxing capital gains at much lower rates than other income creates a ginormous loophole that leads to a tremendous amount of inefficient tax shelter activity. Virtually every individual income tax shelter is devoted to converting fully taxed income into capital gains. If you can transform $10 million of wages into gains, you can save over $2 million. With that kind of payoff, there is a whole industry devoted to inventing schemes to generate current deductions to shelter the wages and ultimately recoup it years later as lightly taxed gains. These shelter schemes entail inefficiency for at least two reasons. First, the investments that work in tax shelter plans are often very inefficient—the kinds of projects that would never attract capital in a rational world. Second, the people who put these schemes together are very intelligent and absent the capital gains windfall might actually do socially productive work like, say, producing American products that people around the world would like to buy." (Len Burman, professor at Syracuse, in Forbes from <a href="http://www.forbes.com/sites/leonardburman/2012/01/18/mitt-romneys-teachable-moment-on-capital-gains/">Mitt Romney's Teachable Moment on Capital Gains</a>)



research

taxes and income inequality

Households making $1 million or more account for just 1 in 364 .2% taxpayers, yet they captured an astonishing 36.1 percent of the total real increase in incomes in America from 2006 to 2007, according to my analysis of new data. Even among the rich, most of the gains went to the very top. Just 18,400 taxpayers make more than $10 million, yet they captured every fifth dollar of increased income going to the whole nation -- and then some. Indeed, this thinnest and richest slice of Americans, just one household in 7,700, pocketed 22.3 percent of the entire national increase.
Table 1. Average Incomes by Income Group, 1980 to 2007
[includes capital gains]
Comparing Average Income of Most to Top Earners
-------------------------------------------------------------------------------------------
Income
 Group         0-90%         90-95%        95-99%         99-99.5%
-----------------------------------------------------------------------------------------
1980      	  $29,797      	   $94,075        $134,839        	 $235,651
1990        	 $29,663        $102,915        $156,518        $301,139
2000        	 $32,978         $124,641        $213,641        $460,678
2001        	 $32,323        $120,936        $199,477    	 $410,818
2002        	 $31,215      	   $117,526        $190,076        $383,527
2004        	 $31,125       $119,668        $198,553        	 $419,239
2005        	 $31,318         $121,930        $207,894        	 $452,258
2006        	 $31,528         $125,831        $213,600        	 $471,207
2007        	 $32,421    	     $128,560        $220,105        	 $486,395
 
1980 to
2007 
change    	 $2,624        	 $34,485         $85,267         $250,744
 

Percent
change     8.8%           36.7%          63.2%           106.4%
2000 to
2007
change $(557)          	 $3,918           $6,464         $25,717
Percent
change     (1.7)%           3.1%             3.0%             5.6%

-----------------------------------------------------------------------------------------
Income
Group     99.5-99.9%     99.9-99.99%    99.99-100%
-----------------------------------------------------------------------------------------
1980   $383,543        	 $972,329     $5,236,852
1990         $569,273       $1,725,190    	 $10,378,717
2000         $931,609       $3,653,296  	  $28,738,549
2001         $784,914       $2,735,152     $19,507,508
2002         $712,224       $2,333,103   $17,361,653
2004         $820,109    $2,974,824  	  $22,691,819
2005         $925,657     $3,549,692     $27,975,648
2006         $983,594       $3,812,256    	 $30,570,215
2007      $1,021,643     $4,024,583   $35,042,705

1980 to
2007
change      $638,101       $3,052,254     $29,805,853

Percent
change        166.4%         313.9%        569.2%

2000 to
2007
change       $90,034         $371,287       $6,304,156

Percent
change           9.7%           10.2%           21.9%
-----------------------------------------------------------------------------------------

Source: Prof. Emmanuel Saez from IRS.

top400

"The top 400 taxpayers posted an average of $153.7 million in gains each (or a total of $61.5 billion in gains) down from $228.6 million (or a total of $91.4 billion) in 2007. As a result, the average adjusted gross income of the 400 declined nearly 22% to a mere $270.5 million, from a record $344.8 million for 2007. It was still the second highest on record, topping 2006’s average AGI of $263.3 million. The cut-off for making the top 400 in 2008 was AGI of $110 million, down from $139 million in 2007."
Average Itemized Deductions - United States
AGI(000)Medical Taxes Interest Contributions Total
$15-30	$5,390	$2,270	$5,442	$1,338	$10,306
30-50	4,226	3,112	5,716	1,465	10,938
50-75	4,722	4,428	6,587	1,768	13,194
75-100	6,544	6,171	8,063	2,286	16,896
100-200	12,277	9,758	11,107	3,433	23,870
200+	32,113	36,076	25,046	16,882	65,871

from: average itemized deductions

irs top 400 http://www.irs.gov/pub/irs-soi/07intop400.pdf


mitt romney's teachable moment on capital gains good quotes to counter the anti-capgains tax rhetoric

In 2010, the average person with income under $200,000 had a capital loss, not a gain. Only the top 10 percent had gains on average, and people earning over $1 million had $258 billion of the $261 billion of net gains reported on tax returns. That is 97% of the gains went to people earning over $1 million. In 2008, Janet Novack reports, the richest 400 taxpayers–income over $110 million–earned 13.1% of capital gains.


http://dspace.mit.edu/bitstream/handle/1721.1/63740/incomeinequality00feen.pdf?sequence=1

http://www.taxfoundation.org/news/show/250.html#table3

http://www.measuringworth.com/calculators/uscompare/

peoples guide to federal budget

http://rationalrevolution.net/articles/american_income_taxation.htm

http://elsa.berkeley.edu/~saez/saez-UStopincomes-2006prel.pdf

top 400

http://www.irs.gov/taxstats/index.html

Percetile	Labor	Capital	Transfer
10th	$4,615.4	$601.8	        $5,212.7
30th	$18,173.1	$3,836.5	$7,442.3
50th	$35,277.8	$8,092.6	$6,388.9
70th	$67,109.0	$13,597.2	$4,834.1
88.5th	$110,299.4	$24,347.3	$3,592.8
97.5th	$148,421.1	$67,333.3	$3,789.5
100th	$594,545.5	$535,454.5	$6,545.5

http://elsa.berkeley.edu/~saez/saezJEEA-PP05us-canada.pdf


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