OT: Majority of Wealthy Support Taxing Themselves: Poll
Papi_Chulo
Miami, FL (or the nearest big-booty club)
House Republicans are opposing tax increases on anyone – whether it's Americans making $250,000 or $1 million or more a year.
But a new survey shows that they might be opposing the very people they claim to protect.
American Express Publishing and The Harrison Group found that 67 percent of the top one percent of American earners support higher income taxes. Their support has grown since the election. This summer, 62 percent of them supported higher taxes.(Read more: Why 'Plan B' Would Actually Raise Taxes on Low Earners)
Some might say the rich are hoping to tax people richer – or poorer -- than themselves. The top one percent consist of people making more than $450,000 a year. But the survey clearly shows most One Percenters favor taxing themselves. More than half say that they support taxing those making $500,000 or more.
That's up from 51 percent in the second quarter.
"There is an absolute willingness for the vast majority of the One Percent to take a tax increase," said Jim Taylor, Vice Chairman Harrison Group. "What the Republicans think is not necessarily what their constituents think."
Granted, the one percent is not happy about paying higher taxes. The American Express/Harrison poll shows that 64 percent say they carry an "unfair tax burden in the amount of money I pay in taxes." This number is higher for Republicans and lower for Democrats. (Read more: Super-Rich: Tax Us When We're Dead)
Nearly three quarters of them are "extremely or very concerned about their taxes going up." Other recent surveys show that the wealthy support higher taxes as part of a balanced solution to the government debt problem that includes spending cuts.
Still, a majority support for tax increases on themselves, presumably for the sake of the broader economy. Taylor said that for many of the wealthy, the possible reduction in asset values stemming from problems in Washington far outweigh the potential reduction in their income.
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The top 1% of Americans 'make' most most of their money via capital gains and dividends and other schemes like 'carried interest' (Ala Mitt Romney) that are taxed differently than 'earned' income.
The 'earned' income tax rates are totally irrelevant to 'rich' Americans that don't have to pay 'earned' income tax (or FICA for that matter) no matter what the 'earned' income rates rates are.
First time is when the dividend-paying company's corporate taxes are paid (dividends come from after tax profits).
The second time dividends are taxed is when they are reported as income by the recipient.
In USA, this double taxation usually amounts to 50% on the original company profit paid out in dividends. In Canada, the double taxation is somewhat less. For my company and the dividend flow to me the total tax rate is 38.3%.
Who among you American wage earners here on tuscl pays 50% tax on your earned income? In Canada there is NO federal income tax rate of 50% on earned income, no matter how high that earned income may be.
Capital gains income is a different story. I don't know the tax particulars of capital gains in USA. In Canada I pay approximately 22.5% federal tax on any capital gains that I report on my tax return. My impression is that the capital gains tax rate is higher than that in USA. Anybody know for sure?
IMO, there is a great deal of ignorance in the general population about how the tax system deals with the wealthy. Apart from the black market and the underground cash economy, governments know exactly where every single dollar in the economy can be found.
It is a common complaint by all that deductions benefit the higher income earners, but yet Obama does not want to address deductions.
I know several self employed individuals earning 500K/yr that only get taxed on 40-50K due to favorable deductions for their businesses. They laugh at the cry to increase tax rates as it has no effect on them.
In US there are states (like Washington) with no state income tax, but all provinces in Canada have high rates. If you are dealing with a business or trust which is non- resident and hence isn't a resident of any provincial they tack on a surtax so you get back to the high rates.
As for capital gains, the main difference in Canada is that only 50% of that gains are being taxed. So, in general, Canadians have it easier on capital gains, but it is complicated by tax brackets, and short term versus long term gains, and futures/forex gains which are treated as a combination if both.
Sounds like if they increase dividend taxes companies will be less inclined to pay them and people will just sell off stock instead for a capital gain. Don't think the government wants people selling stock right now, though.
Yes, I made no attempt to take into account any state/provincial taxes. I was trying to compare just apples to apples.
For example: I live in Alberta - 10% flat tax on income. Last year my effective Alberta tax rate was 7.1% (after claiming tax credits available to all Albertans). My effective federal tax rate was 21.5% (again, taking only the tax credits available to all Canadians). This gave me a blended effective tax rate of 28.6%. How does that compare to a US state with income taxes?
Regarding deductions, the Canadian tax system is much less liberal than is the USA system. For instance, there is no mortgage interest deductability in Canada. For the life of me I can not see the logic of that plum in the USA tax system. Charitable donations are the biggest plum in Canada (about a 38% total tax credit for me in Alberta). I was not particularly charitable last year so that explains why my effective tax rate last year was 28.6%. I do not find my effective tax rate to be onerous and I report a fairly high income each year, probably comparable to the vaunted 1% in USA.
It must be the different availability of deductions that explains the difference between my rate of effective taxation and that of Mitt Romney and the rest of the 1%.
Let's not get started on corporate taxes. I always blush with embarrassment with what I can do with my company's taxes.
In the US long term capital gains have a much lower tax rate (20%) than short term gains (35% in the top bracket). Futures and forex are a blend and it comes almost exactly your 29% once you hit the top bracket.
So if you can engineer your income to be almost all long term capital gains or dividends you might do slightly better in the US.
Think you need $1million to be a 1%'er in the USA but maybe only $200k in Canada?
The numbers I gave you for my personal taxes for last year included no capital gains income - I booked no capital gains (or losses) during my last tax year. My income stream was primarily dividend income from my company and other investments with a small bit of earned income ($80k) as an employee of my company. I always take enough salary from my company to max out my CPP payments (Canadian equivalent of Social Security).
There is no difference between long term and short term capital gains in Canada for tax purposes. If your capital gains are very short term (less than 30 days, I think) that income will be treated as regular earned income for tax purposes.
Capital losses in Canada may only be applied against capital gains; they may not be deducted from any other income. However, capital losses do not need to be booked in the year that the losses occur. Capital losses can be carried forward indefinitely. Capital losses can also be sent backwards for a maximum of three years for a refund of taxes paid on capital gains during any of those last three years. That is a very effective tax planning tool. Does that exist in USA?
I really don't know the stats in Canada re: top 1%ers. From my personal net worth I am just assuming that I am one of Canada's 1%ers.
I am pretty sure that capital losses can be carried fotrward indefinitely in the US. You can use up to $3000 of losses against other income per year. Have not heard of being able to carry losses back, but I have not looked into it. Also not sure if the limit changes for deductions of cspital losses change if a person dies.
In terms of favourable tax treatment in Canada for me capital gains is best, then comes dividend income (except first $68K of dividend income which is my absolute least taxed income), then comes all other income (wages, interest, commissions, rents, payment-in-kind, whatever else it may be).
One caveat on that: farm income is an entirely different kettle of fish in Canada. I also have a very small amount of income that is classed as agriculture-based but that income is so tiny that it is not germane to this discussion.