Income is income, tax it all the same.

[edhopper]

As a clear and simple message to begin addressing income inequity in this country, how about we treat all income the same. No difference for capitol gains, hedge fund loop holes, performance pay to CEOs, options or any of the other ways the wealthy have gotten Congress to give them a break.
In think this would be a winning idea the Democrats could run on. "Income is Income!"
It's a meme our nation should embrace.

[last1standing]

1. I think that's a good slogan.

On the other hand, more and more, I'm starting to believe that taxing income isn't going to fix our problems any more. I know it's radical even on a progressive board but I'm thinking we should start taxing wealth, instead.

Taxing wealth would provide an immediate surge to the economy as those hoarding it will likely start spending to keep from having so much taken by the government. It would also be a more fair system in that the main expenditures by government go toward protecting wealth so those who have the most to lose should pay the most for protection.

[Blanket Statements]

2. The problem comes in how do you assess and tax wealth?

Do you tax 401k or pension accounts? Homes?
It's a great idea but really hard to carry out

[last1standing]

4. I would tax just about everything in this system.

I think providing an exemption of a limited value for essentials such as food, clothing, transportation and shelter would be wise, but overall there's not too much I wouldn't think belongs there including 401k and pension accounts. They're all wealth.

On the other hand, if we taxed wealth, the rate could be much, much lower so it wouldn't have to be a very noticeable hit to the average person trying to save for retirement or college.

[truebluegreen]

11. How about starting with the standard of a living wage

which would include everything--housing, medical, education, etc--and then tax all income above that.

Edited to add: I'd rather just make education free tho.

[last1standing]

17. I'm all for a guaranteed living wage but in itself that would not lead to fair taxation.

A large part of the problem, in my opinion, with the current tax system is that it doesn't fairly account for the actual value of the services rendered.

As an obvious example: The government provided a military that costs roughly one half of all federal expenditures. What does that military protect? It doesn't protect persons; if the Chinese (or any scary foreign nation of your choosing) invade, they aren't going to slaughter the citizens, they're going to subjugate them and confiscate wealth. When our military fights overseas, it is nearly (maybe always) for the benefit of the wealthy classes. Therefore, why shouldn't taxation follow wealth rather than income?

As a not so obvious example: The government provides (ever decreasing) stipends to those in need. Why does it do this? History shows that it is not out of a spirit of generosity but instead a method of crowd control. After WWI there are great unrest as soldiers came back to a poor economy, few jobs, and limited means for survival. This poverty led many to consider alternatives to the capitalist system such as communism. After riots, bombings, protests, sit-ins and rallies, the government created programs to provide for basic sustenance in hardship cases which grew over time into the social safety net. Yet the programs, while helping the poor, do even more to aid the wealthy in that for a pittance they are able to continue to accumulate vast assets which, once taxed, are out of the reach of government.

These examples show why the republicans push so aggressively for capital gains cuts and the elimination of the estate tax. These are two of a very limited number of taxes that actually touch wealth instead of income. Capital gains are the rewards of owning valuable assets while estates are the wealth, itself.

I have no illusion that this idea will ever take off; the very thought is anathema to everything we've been taught since birth in a capitalist economic society. However, I don't see this plan as contrary to capitalism, merely a modification of it.

[Laelth]

30. Hear, hear!

I strongly favor a much higher minimum wage. In fact, I'd prefer a guaranteed minimum income, but I'll be happy to start with a $15.00/hr. minimum wage.

-Laelth

[edhopper]

3. I don't disagree

As I said, it's a good place to start.

[last1standing]

5. Sorry, it really is a great idea to use "income is income."

I was mostly typing my thoughts. Didn't mean to hijack the thread.

[Laelth]

29. Property taxes are wealth taxes.

It's not like this idea is unprecedented.



-Laelth

[last1standing]

35. No, not entirely unprecedented but few will get the connection.

Thanks for pointing it out.

[joeglow3]

33. My wife and I choose to save for our future

Why should I have to pay taxes on those savings year after year?

[last1standing]

34. Because you are provided services to protect and guarantee those savings year after year.

Does the military stop protecting your wealth after you stop earning an income? Does the Fed stop guaranteeing your savings in the bank once you stop depositing more money into the account?

[joeglow3]

36. How is the military protecting my wealth?

How about the money I have invested in emerging markets? How is the military protecting that? And how is the Fed guaranteeing the balances in my 401(k)?

[last1standing]

37. the military protects your wealth from seizure due to invasion.

It is also there to protect wealth around the globe as we have seen countless times. As to how the Fed is guaranteeing the balances in your 401(k), that comes from the regulators who work to ensure fair dealings and courts that punish those who steal your wealth.

Not to mention the police, firefighters, etc... Much goes into protecting your wealth even after your income stops.

[lumberjack_jeff]

50. You're suggesting that they were protecting your *life* in Iraq and Afghanistan?

The primary purpose of the military is to protect wealth.

[oldhippie]

38. The Fed does not guarantee your savings in the bank .......

Sorry, I don't think you understand finance enough to be coming up with tax policy.

[last1standing]

41. As I understand it, the FDIC guarantees up to $100,000 should a bank fail.

As I further remember, this statute came into being at the time of the Great Depression after many lost their life savings. What am I not understanding - other than your need to make rude statements.

[oldhippie]

44. The FDIC is not The Fed .......

... for one thing. And the limit is not $100,000. There is probably more that you are not understanding about finance. Keep digging.

You also seem to have a pretty broad definition of rude statements.

[last1standing]

45. No, I think my definition is pretty standard and you've met it twice now.

I think that's enough. Goodbye.

[oldhippie]

46. Can't take a little discussion and .....

... criticism, huh? Just want to spout erroneous facts and devise new tax policy based on them? OK. Bye.

[closeupready]

51. Wow. You are really condescending, for a "hippie".

[oldhippie]

53. Some people, when they can't defeend their positions, ...

... will instead change the subject and attack the messenger. Seen it before.

[lumberjack_jeff]

49. Why should you not?

Why should earned income be treated any differently than unearned income? Everyone who works for a living already pays 15% on every dollar they earn (unless they earn more than the SS cap).

And you're not being taxes on your savings, the OP is talking about the gains on that savings.

What social good does your interest and capital gains do that wages do not?

[TheFarseer]

6. I'd like to see

Income from wages and income from investments taxed at the same rate but it's going the other way currently. We'll be lucky if there isn't a tax *credit* for investing next time we get a Republican president.

[edhopper]

7. exactly

So let's make it an issue.
Democrats, the part of fairness.
Republicans, the party of the 1%.

"If you earn a living, this has no effect on you!"

[freshwest]

10. They've already had a tax credit for investiong overseas... Just sayin' n/t

[truebluegreen]

12. Yes. In essence we paid to move their factories and our jobs overseas. nt

[cherokeeprogressive]

8. HERE is the place where BOTH parties are guilty and should be swept clean VIA Term Limits.

They write the fucking tax laws.

Yeah... You're not going to convince me that ONE of the political parties is responsible for eleventy hundred thousand pages of tax code... check the history of how many years each party has been in control of the House.

Call me Michio... and take my prediction to heart: It ain't happenin' soon. Too many RELATIVES OF ELECTED OFFICIALS (of both parties, Thank You) WITH TOO MUCH MONEY to make that happen.

[last1standing]

18. Term limits generally create a government more beholden to lobbyists' money, not less.

While the initial gut reaction to sweeping them all out by legislative force is to think it's a good idea, I have to ask why we should expect the new crop of politicians to be any better when they know they will need to depend on the good will of the wealthy for jobs and further political advancement after they are term limited.

[colsohlibgal]

9. Tax It All For Sure

And make sure Warren Buffett gets his wish, that he pays a higher rate than his secretary.

Enough of all this "job creators" nonsense, as Pope Franks says trickle down is a myth.

[hfojvt]

13. what about retirement income and social security payments?

Can we tax that?

http://taxes.about.com/od/statetaxes/a/State-Income-Taxes-In-Retirement.htm

"Out of all 41 states with personal income taxes, 37 states have some type of exemption for retirement income."

In order to avoid a race to the bottom in competing for retirees, there should be a federal law prohibiting tax breaks on retirement income.

But I expect this idea will not be popular even on DU. Tax retirees??? The horror, the horror. Only working people should have to pay taxes.

[Glassunion]

21. I'm torn on taxing the 401k

Pre-retirement:
If it is no longer a pre-tax contribution, some folks may reduce their contribution, and if the gains are then taxed its growth will be slowed considerably.

Then if you continue to tax its gains, and the withdraws a retiree makes in retirement, this could significantly delay retirement.

[oldhippie]

40. My social security payment is already taxed .....

.... as is my retirement pension income. I pay full tax on 85% of my social security benefit.

[customerserviceguy]

61. "Income is income"

would scare the crap out of retirees and those nearing retirement. Right now, your Social Security only gets taxed when your income is only over a certain amount, would you really want to tax people making the minimum payment amounts?

What about your Medicare benefits, is the value of that not part of your "income"?

No candidate from either party is foolish enough to spout this meme.

[hfojvt]

62. actually McCain hinted at it

taxing health insurance. Is the value of my health insurance benefits NOT part of my income?

NOT under current tax law. My employer pays about $600 a month to provide me with health insurance, yet I pay the same income taxes as somebody with the same income who does not get insurance (at least in theory). Although if his/her employer fills out the proper paperwork, then health insurance costs can be "pre-tax" as they were for me when I was a part-timer and paying half of them.

"People making the minimum payment amounts" would be paying no more taxes than people making the same amount in wages. In fact, under current tax law you ALREADY get an extra $1,100 deduction that a younger, working person does not get.

Well a person who gets their money from wages - that is, they have to work for it. They pay FICA taxes on the first, and EVERY dollar (up to a maximum, but we are talking about low income people here) AND they sometimes pay a "city income tax". In Kansas City, for example, that is 1% of EVERY dollar if you work there, whether you live there or not.

Whereas a retired person (in theory) can make the exact same income without paying either of those taxes AND having a shelter from federal taxes AND a shelter from state income taxes AND many times (in many places) other benefits such as a "food sales tax rebate" and a "homestead credit" in Kansas and subsidies for their water/sewer bill in my city. And often they can get these benefits even if they make MORE than other people who are working. The food sales tax rebate applied to income below $30,300. But I, myself, as a working person under age 55 got ZERO even though my income was $12,000. Same for the Homestead credit (for income up to $29,700).

How is that fair? It simply is NOT. But few dare say so, because retired people have political CLOUT thanks to AARP.

[customerserviceguy]

63. If McCain is your idea of a progressive

or even if you think he ever had a truly progressive thought go through what's left of the mind that the Viet Cong scrambled, then we really shouldn't engage in a discussion.

Complicated tax policy changes scare older folks, and every politician knows that. Maybe McCain's espousal of fiddling with the way that health care benefits provided by an employer is one of the things that killed his chances of becoming President. Politicians from both parties have taken note.

[edhopper]

76. I am not talking about changing all the tax code.

I am saying that all income should be taxed at the same progressive rate as earned income (wages, salary). People on SS pay at a higher rate than rich people who get most of their income from investments, that is what i am addressing.

[customerserviceguy]

83. Generally speaking, I'm fine with that

There are a lot of sorts of compensation that are disguised as something given preferential treatment that should be taxed as regular ordinary wage income, and subjected to FICA and Medicare taxes, as well.

I don't get where you get the idea that Social Security is taxed higher than all investment income (capital gains, perhaps, but not dividends and interest) From the Social Security website ( http://www.ssa.gov/planners/taxes.htm ):

"No one pays federal income tax on more than 85 percent of his or her Social Security benefits based on Internal Revenue Service (IRS) rules.

If you:
•file a federal tax return as an "individual" and your combined income* is between $25,000 and $34,000, you may have to pay income tax on up to 50 percent of your benefits, more than $34,000, up to 85 percent of your benefits may be taxable.

•file a joint return, and you and your spouse have a combined income* that is ◦between $32,000 and $44,000, you may have to pay income tax on up to 50 percent of your benefits, more than $44,000, up to 85 percent of your benefits may be taxable.

That works out to a fifteen percent exclusion of income, minimum, for Social Security benefits. Pension, interest and dividend income, and withdrawals from an IRA or 401K don't get any such exclusion.

When you go fiddling around with capital gains exclusions, are you going to include the gain on principal residences? That's something a lot of retirees have come to depend on, and if they hear "Income is income" they might fear for that tax break.

[edhopper]

84. I meant tax rate

If you pay taxes on SS, it is taxed at the same rate as income. As opposed to Cap gains.

As i have said, I am not talking about changing existing exemptions for people. Just taxing all income that is taxable at the same rate.
It's the simple nature of my proposal that i think will resonate with voters.

Dems; "Everyone is treated the same."

Reps; "No, the wealthy need to be treated better."

[taught_me_patience]

14. Should we do away with the 250k capital gain exemption for selling a home?

after all... income is income right?

[edhopper]

25. No

I didn't say stop all exemptions. I said treat all taxable income the same.

[oldhippie]

42. So you are just refining your definition of "taxable income" ...

... to what suits you.

OK by me.

[edhopper]

47. No

I am saying we don't have to change what is taxable. Just not make a distinction about it's source. Why should Cap Gains get taxed at a different rate from a salary?

[oldhippie]

52. Then why should capital gain from the sale of a house .....

... be taxed different than capital gains from shares of stock?

[edhopper]

58. Again

I am not saying that we should change the entire tax code. I am saying that taxable income should all be treated the same. If you prefer that Cap Gains and other forms of income that favor the rich continue to be taxed at a lower rate, you have a right to your opinion.
If you are nitpicking for the sake of argument, I don't have time for that.

[hfojvt]

66. but that $250,000 exemption from home sales

clearly benefits the rich. Somebody just made $240,000 from the sale of a home and they pay ZERO tax on that windfall? Not only that, but they got their equity back out of it. Yet they are paying NO tax? That's more money than I will make for seven years of working - and paying double taxes on.

Of course, I personally found capital gains from real estate to be strange. For my own example, I bought some land in 1987 for $4,500 (a mere 2 hectares). Then I sold it in 2009 for $22,000 (minus commission and some other expenses). My question is - why shouldn't the 22 years worth of property taxes that I paid, be considered part of the "cost"? Clearly they were a cost - about $2,000 that I would not have had from the sale of stock. In fact, stocks would often PAY dividends every year instead of COSTING taxes every year.

The gross income was NOT the same as the NET income.

But I see NO reason why the NET income from the sale of a home shouldn't be taxed the same as any other income.

[oldhippie]

69. And again .....

... I do not prefer that the rich get taxed at a lower rate. I asked should the capital gain on the sale of a house be taxed at the same rate as a capital gain for a stock. Can you answer the question?

[ieoeja]

70. He has already said that capital gains on a house after the first $250K should continue being ...

... taxed at the same rate as a capital gain for stocks.

[oldhippie]

71. So he wants to tax them differently ......

... exempting the first $250K for sale of a home, but not sale of stocks. Why? If income is income.....?

[edhopper]

75. Yes

And those should be taxed the same as earned income from wages.

[edhopper]

77. There would be no different rate for Cap Gains.

The $250,000 would stay in place.
It is a big benefit for the middle class and removing it would mean something like this would never pass.

[oldhippie]

81. That's what I thought ....

Some income is more equal than others.

[edhopper]

82. The way things are now, yes.

That's what I suggest changing.

[FogerRox]

72. How dare you ask the person to actually think it thru.....

[oldhippie]

73. I know, I know .....

..... silly me.

[edhopper]

79. I am not changing any definition

I am saying we leave things as they are EXCEPT there are not different rates for different types of income.
Same indexed progressive structure as now. (though a few more percent to the top 5% would help as well)
It's pretty simple, but some people want to nit pick or make things more complicated than they are.

[adirondacker]

15. I'd prefer a PROGRESSIVE Tax system.

"A progressive tax is a tax in which the tax rate increases as the taxable base amount increases.[1][2][3][4][5] The term "progressive" describes a distribution effect on income or expenditure, referring to the way the rate progresses from low to high, where the average tax rate is less than the marginal tax rate.[6][7] The term can be applied to individual taxes or to a tax system as a whole; a year, multi-year, or lifetime. Progressive taxes are imposed in an attempt to reduce the tax incidence of people with a lower ability-to-pay, as such taxes shift the incidence increasingly to those with a higher ability-to-pay. The opposite of a progressive tax is a regressive tax, where the relative tax rate or burden increases as an individual's ability to pay it decreases.[5]

The term is frequently applied in reference to personal income taxes, where people with more income pay a higher percentage of that income in tax than do those with less income. It can also apply to adjustment of the tax base by using tax exemptions, tax credits, or selective taxation that creates progressive distribution effects. For example, a sales tax on luxury goods or the exemption of basic necessities may be described as having progressive effects as it increases a tax burden on high end consumption or decreases a tax burden on low end consumption respectively.

http://en.wikipedia.org/wiki/Progressive_tax

[struggle4progress]

24. +

[edhopper]

26. I am not calling for a flat tax

I prefer the progressive system we have. I simply think all taxable income should be treated the same.
Somebody making $250,000 from a salary should pay the same rate as someone making that from investments.

[cantbeserious]

16. What - And Ruin The Sweet Deal That The 1% Has Arranged For Themselves

eom

[abelenkpe]

19. K&R

[SheilaT]

20. I'm going to guess that if we taxed all income

the base line would be a lot higher than it is now.

I don't even know what you can earn before needing to pay taxes, but if the rich were not getting away with their bullshit, and actually had to pay taxes on all their income, I'm guessing that the base line before taxes would be a lot higher than it is now.

I'm actually of the opinion that there ought to be some sort of minimum income guarantee for all. Meaning everyone would get some sort of base income. Those who earn more would of course be better off. But everyone would have enough to provide a minimum level for survival.

There's more than one way to accomplish this, of course. One thing I'd advocate is that every single citizen get foot stamps, SNAP. If you're so wealthy you don't need it, then you can decline and your share can be put back into the pool, which would increase what those who actually need it would get.

Personally, I'd take the SNAP, even though I can manage just fine on my current income. It would free up that amount of money for me every month, and even though I'm not living at the absolute bottom, that boost would absolutely help me.

Lots of people who make more and less than what I do would also benefit.

[bbgrunt]

22. Be careful of what you wish for

It sounds reasonable: "income is income" but it is not so simple. Theoretically, anything that improves one's well being can be considered income.

What about unrealized capital gains? should the appreciation in your housing value be taxed even if you have not sold your home?

should non-monetary benefits your employer provides such as training, transportation, child care help, occasional meals, etc. be considered taxable?

should scholarships be taxed?

there are millions of examples of things that can be considered income and are not taxed. Should produce grown in your garden be considered income?

Every time someone seeks to "simplify" the tax code by simply taxing everything at the same rate they confuse the real problem behind the horrendous task of dealing with income--which is that the arbitrary definition of income itself is the cause for most of the complexity to begin with

edited to add:
that being said, there are many things in the tax code that probably SHOULD be considered income that currently are not included in that definition.

[edhopper]

28. I am not calling for

a flat tax or a tax system without exemptions. I would not add new definitions of income that harm the middle class. I am calling for an end to a tax system that since Regan has been revamped to allow the very wealthy to pay less and less taxes and keep more and more of their wealth to the detriment of everyone else.

[bbgrunt]

65. you are correct to hope that

exemptions will be maintained for the "middle class" but the real problem is all the items that are EXCLUDED from the definition of income under the current code.

[Jeff In Milwaukee]

55. As a start...

I think the OP is basically saying that we should stop making a distinction between income from wages and income from capital gains.

If you're in the 39.6% tax bracket and sell an asset that you've held long-term, you're going to pay only 20% in capital gains taxes, which can be an enormous windfall for someone who is already pretty wealthy. For a married couple, the top tax rate doesn't kick in until after $450k in Taxable Income (that income - deductions, so your Adjust Gross Income would be even higher).

Your definition of income ("anything that improves one's well-being&quot is ridiculously broad, as any number of non-monetary "events" in one's life can improve one's well-being. A night of passionate sex with Sophia Vergara would do wonders for my well-being, but I'm not sure how you'd tax that.

But you are right that there's a veritable can of worms that would have to be hashed out.

And there's no fucking way you're going to tax my rhubarb patch. So forget it.

[bbgrunt]

64. haha--free rhubarb and Vergara for all.

yes, I hope it doesn't go that far, but the theoretic comprehensive defn of income to economists is Income = consumption + changes in net wealth.

[Jeff In Milwaukee]

67. I don't have enough rhubarb to go around...

and I'm definitely not sharing Sophia (because in some parallel universe, that's on option for me).

[Recursion]

23. Wages are mostly easy to track. Other income isn't.

For that matter a large part of the problems with our tax code come from not being able to come up with a useful definition of "income". Its yet another way FDR entrenched the corporate-state complex.

[el_bryanto]

27. I think there's some merit to this

But of course the counter argument is that by treating different sources of income as different we encourage different economic activities - by having lower taxes on certain types of income we encourage the wealthy to engage in that sort of economic activity. Specifically - the capital gains rate is intended to encourage the wealthy to invest their money.

Bryant

[edhopper]

31. Which has been shown by

various studies to not stimulate the economy or create jobs.
Bush's Cap Gains tax cut led to one of the weakest periods of job growth in recent history.
It's a gift to the rich, nothing more.

[Laelth]

32. In prinicple, I agree with the strategic goals of the OP.

That said, I like different forms of income being treated differently. There was a time when capital gains were taxed at a lower rate when the securities in question had been held for 5 or more years. That encouraged long-term investment and long-term-thinking. When that rule was abolished, we saw a rapid increase in speculation and a complete focus on short-term economic benefit. This had a powerful and negative impact on our economy, and it drove the income and wealth disparity we see now (Wall Street got a lot richer; the rest of us got a lot poorer).

Not to be completely contrary, but there is some value in using the tax code to encourage some behavior while discouraging other behavior.

-Laelth

[FogerRox]

74. 86TRA IIRC, IT altered the domestic investment field forever.

There is a lot of value in using the tax code to encourage some behavior while discouraging other behavior. That and the Glass Steagal bank firewall kept recessions short and shallower for 50 yrs, 1933-1983.

[Puzzledtraveller]

39. Don't stop there!

Tax birthday money, change on the street, graduation money....

[n2doc]

43. I notice people are trying to confuse the issue

Income is defined as money earned. So yes, make capital gains, carried interest, etc. all subject to the same rates. Frankly, I am ok with taxing all housing gains with no exception. I would much rather see that then see medicare, medicaid and social security cut. Would end the flipper crap quickly also.

No need to be concerned about paper gains (on unsold stocks, etc) or stuff produced for personal consumption, as those aren't considered income. Those that are suggesting such might as well propose that the OP is saying we should tax all babies on their income earning potential at birth.

[edhopper]

48. Thank you.

Some people want to read more into my simple, and I think winning, proposal.

[hedgehog]

54. Yes!

[indie9197]

56. You only have to look at historical tax rates to see why things are so screwed up now

Even as recently as the 1980s the system was pretty fair IMO. And I agree that capital gains and other investment income should be taxed the same as payroll income.

http://taxfoundation.org/sites/taxfoundation.org/files/docs/fed_individual_rate_history_adjusted.pdf

[closeupready]

57. Democrats (not investment bankers) have to keep hammering at this,

making it clear that the regressive income tax code we have today needs to CHANGE to be progressive - way more progressive than it is today.

[edhopper]

59. So do you think

"Income Is Income" is a good meme to promote this?

[closeupready]

60. No; it has to be something jingo-istic, like - to use an example,

"if it bleeds, it leads" - the well-worn TV journalism axiom.

Similarly, .... lessee, what? I'd have to think a bit about it - it should either rhyme or syncopate, as a meme.

[BKH70041]

68. Give it a go.

For every one law you make that tries to tax me more, I'll find 10,000 ways to avoid it.

Capital gains will always be treated differently because promoting investment is good for America. That's a basic Democratic Party tenet.

[WinkyDink]

78. Because savings are simply already-taxed income. Way to mess up the Middle-Class even more, OP!

[edhopper]

80. What are you talking about?

If you are talking about the "taxing wealth" discussion. That was another poster here. i am only talking about the same things people pay income tax on now, but not differentiating where the money comes from.