|Thomas Sowell explains Why Capital Gains Taxes Are Lower:
SUMMARY: “Business income is different from employees’ income…The profit that a business makes is first taxed as profit and the remainder is then taxed again as the incomes of people who receive dividends.
The biggest losers from politicians who jack up tax rates are likely to be people who are looking for jobs that will not be there, because investments will not be there to create the jobs.”
One of the many false talking points of the Obama administration is that a rich man like Warren Buffett should not be paying a lower tax rate than his secretary. But anyone whose earnings come from capital gains usually pays a lower tax rate.
How are capital gains different from ordinary income?
Ordinary income is usually guaranteed. If you work a certain amount of time, you are legally entitled to the pay that you were offered when you took the job.
Capital gains involve risk. They are not guaranteed. You can invest your money and lose it all. Moreover, the year when you receive capital gains may not be the same as the years when they were earned.
Read the full article here.
FACTS: ROMNEY TAX RATE
The Obama campaign and the liberal media falsely claim that Romney pays a “lower tax rate” than the “average” American. In reality, Romey pays a 14.1% effective tax rate while Americans pay 11% which means that Romney is paying a higher rate than 97% of Americans.
To incite class warfare, these leftists fail to make a distinction between effective tax rates and tax brackets/marginal rates – which are different. They also fail to mention that Romney pays a lower rate than regular income (i.e. paycheck), because he earns most of his income from investments (capital gains) which have already been taxed when he earned those dollars the first time. That capital was already taxed at the corporate level, as high as 35%. Capital gains are usually taxed at a lower rate than regular income to incentivize people with money to take risks and invest in the economy…which will create jobs for others…and get the economy rolling.
WHY HATE ROMNEY?
Romney pays at a higher tax rate than 97% of Americans. Not only that, he gives a lot of money away to benefit others:
– The Romneys paid $1,935,708 in taxes in 2011 alone.
– The Romneys donated $4,020,772 to charity in 2011, amounting to nearly 30% of their income.
NOTES TO PONDER
So, why hate the rich? Don’t we all want to be rich? Or at least be financially solvent? It’s time to stop the promoters of class envy like Obama, Hollywood actors, and Warren Buffett. Do you see any of them (who are filthy rich) giving away all their money and assets to become poor?
– Effective income tax rate is what a taxpayer pays as a percentage of his income after deductions and other benefits.
– Capital gain is when you make profit from the sell of a capital asset (investments such as mutual funds, bonds, stocks, real estate, etc.).