Posted on 01/23/2012 9:51:35 PM PST by CaptainK
The only potential issue I see is the Swiss acct. However, if everything is on the up & up, this is operating in our tax code.
On the other hand, I can see why Mitt never took a bold stance in the tax code debate. The status quo works for him and doesn’t want to trouble the water.
Bain Capital began looking at investing in the steel start-up in late 1993. At the time, Steel Dynamics was weighing where to locate its first plant, based in part on which region offered the best tax incentives. In June 1994, Bain put $18.2 million into Steel Dynamics, making it the largest domestic equity holder. It sold its stake five years later for $104 million, a return of more than $85 million.
As Bain made its investment, the state and county pledged $37 million in subsidies and grants for the $385-million plant project. The county also levied a new income tax to finance infrastructure improvements to benefit the steel mill over the heated objections of some county residents.
“I’m very pro-business, but I’m not pro-business-welfare,” said DeKalb County resident Suzanne Beaman, 58, who fought the incentives. Steel Dynamics “would have done fine without our tax dollars, I have no doubt.”
Another steel company in which Bain invested, GS Industries, went bankrupt in 2001, causing more than 700 workers to lose their jobs, health insurance and a part of their pensions. Before going under, the company paid large dividends to Bain partners and expanded its Kansas City plant with the help of tax subsidies. It also sought a $50-million federal loan guarantee.
“This is corporate welfare,” said Tad DeHaven, a budget analyst with the Washington-based Cato Institute, which encourages free-market economic policies. DeHaven, who is familiar with corporate tax subsidies in Indiana and other states, called the incentives Steel Dynamics received “an example of the government stepping into the marketplace, picking winners and losers, providing profits to business owners and leaving taxpayers stuck with the bill.”
http://thehill.com/video/campaign/203497-romney-likens-work-at-bain-to-obamas-auto-industry-bailout
Go Mitt,go
I think the idea is that the tax rate for income earned by the sweat of your brow ought not to be taxed at a higher rate than the income earned by the sweat of someone else's brow.
what is the justification for the disparity in tax rates?
For the small investor that may be true, but people like Romney never invest their own money, they take out loans to buy big chunks of stocks and write off the interest on the loans and when they turn the stock over they pay off the loan and pay the 15% tax on the gain.
So you get a tax break going in and a tax break coming out.
The guy who gets screwed is the poor schmuck, like me and you, who invests his own money. I think you will find that Romney is much more clever than that.
One generates a W2 and one does not. The tax on capital gains is double taxation and should be eliminated. Presumably the money was taxed at ordinary income rates prior to being invested. A flat tax is better, a fair tax (national sales tax) is best. I’m tired of paying a 50% marginal tax rate on ext a money I make to try to pay for my kids college or worse, my tax bill for this year, while half the country pays nothing. The tax code needs to be scrapped! Let’s start over with either flat or fair tax now!
The company has already paid the income tax at about 35% rate. The money has been taxed already. Dividends are double taxation. That’s why some people think the tax should be zero.
Capital gains tax is also around 15%, and Romney probably has some of his income from sale of assets, taxed at capital gains rate.
Warren Buffet would like it to be raised. Not to be fairer to his secretary, but because when you raise it people hang onto their stocks longer, which is good for his company.
In addition to what I just posted, capital gains taxes are not indexed for inflation. For example, if you bought a house as an investment, for 50,000, and the cost of replacing it 10 years later was 100,000, then there is not really a profit there, unless you sell for more than $100,000.
Yet under our tax code selling at $100,000, you would still have to pay taxes on the $50,000 nonexistent gain, leaving you with not enough money to replace the house.
It is also an incentive to “risk” your capital which provides money for businesses to operate.
Not if the dividend is paid with money that was borrowed or leveraged.
You obviously don't know how the game is played.
[REMEMBER...folks....Capital Gains have already been TAXED PRIOR to the 15% tax....at the time the money was EARNED and then invested.....
For the small investor that may be true, but people like Romney never invest their own money, they take out loans to buy big chunks of stocks and write off the interest on the loans and when they turn the stock over they pay off the loan and pay the 15% tax on the gain.
So you get a tax break going in and a tax break coming out.
The guy who gets screwed is the poor schmuck, like me and you, who invests his own money. I think you will find that Romney is much more clever than that.]
The small investor can also borrow money if they want to. You can even set up your brokerage account to buy on margin. It’s not something I do, but it is available.
The interest paid is a real cost. A small business owner who pays the interest on the loan he took out to build his business gets the same “break”.
In addition, short term capital gains are taxed the same as wages. Long term capital gains are taxed at 15% because the company has already paid income taxes at the corporate rate.
You as part owner of the corporation have paid that already. From an accounting standpoint, capital gains taxes should be zero, unless you like double taxation.
In addition, capital gains is not indexed for inflation, so you could wind up paying 15% on phantom gains.
You really don’t get how the game is played.
Leverage has nothing to do with the reason for the capital gains rate. The corporation pays taxes on it’s income at the corporate rate. If it has sufficient funds, it can make a distribution of dividends. The term double taxation applies to that fact.
Loans are accounted for on the companies books as an increase in assets(cash) and an increase in Liabilities(debt). Interest paid on the loans are business interest, but merely taking out a loan does not mean the company no longer pays it’s income tax.
Go back and take some accounting 101.
Now lets see the Obamas tax returns, itemized and his tax rate.
Capital gains are paid on the final dividends paid or asset sale, and paid after layers of taxes have already been paid by a business. The 35% corporate rates are paid before dividends are distributed. you think the government needs to suck more money out than that?
We all can and should be using our personal earnings to invest, profit and pay capital gains on investments. Not doing so is unwise.
That money has already been taxed, thus the “second tax” is at a lower rate.
The tax code is stuffed filled with tax exemptions and loop holes that benefit people with wealth and accountants. It needs to be streamlined and simplified. And lowered.
As I understand it, capital gains get taxed at a lower rate because it is on already taxed income that you have already paid tax on when you earned it.
So, hypothetically, PM & USN take home income that they each set aside 500 for investments. They play the stock market and do well. They each earn after years so much on those already taxed investments. That money is taxed at 15%.
The problem with some of these managers is that they somehow are “paid” with equities, or something like that, and rather than being taxed on those equities’ value, they are taxed on the earnings from those equities as capital gains. So, they never pay the first tax, but they get the benefit of the 2nd tax rate.
I guess we all should ask our bosses to pay us in equities instead of cash. I’m sure the IRS and the Congress will not react if that becomes standard practice. /s
If it were true that these were simply investments made from a high income that at some point was fully taxed, then I’d say Romney is in the clear. If, however, these investments were the result of pay/profit/fees somehow put in the market in his name, then I’d say they actually were 1st tier income and not “income from income”.
That, incidentally, is the definition I heard once of “wealthy”, that you don’t live on your income, but you live on the “income from your income”.
Sorry, but explain to me why an “individual” in that corporation should be personally (not corporately) paid with corporate after tax money, and it not be considered first tier income for the individual?
Nothing the individual receives, other than legitimate business expenses incurred by an employee, should be considered other than personal income, taxable at the 1st tier rate.
$1.6 mm over a period of years, right?
Anyway, let’s really compare $6mm to $. 6. A factor of 10?
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