Rich people do not keep their money under a giant mattress; they invest it so that it makes its own money, and they have so much money that the money their money makes is enough to live on. It’s the same thing middle-class people do with bonds or dividends, just on a much greater scale. The issue shouldn’t be whether or not Romney is too rich, it should be whether or not capital gains should be taxed at their current low rate of 15%. I’ve never understood why capital gains is taxed differently than income: it’s money that I get that lets me live, just like money I get from my employer. The double taxation distinction is completely off base; unless you want to get rid of all taxes in an economy, you cannot castigate one form of taxation. Given the false double taxation distinction, I’ve never understood why it’s not taxed at the same rate as income. That way Romney would pay way more on his millions of dividend income than I do on $15 of annual GE dividends. I don’t think the two of us should have the same tax rate.
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Maybe rich people don’t keep their money under giant mattresses because no one makes giant mattresses. There’s a business idea for ya… But seriously, I think there’s a lot of legitimacy to your point, it needs all the pub it can get.
The capital gains issue is mostly a matter of inflation. If inflation is 3% per year I would find a $1 investment would be worth $1.03 after 1 year if there was no real gain in value. If I sell the investment I have a $0.03 gain to pay taxes on. So I would end paying tax even if there is no real gain. A lower capital gains tax rate compensates for this effect. On dividends the double taxation effect is real. If I own a business and make $5 I should pay taxes. Shareholders are the owners. If the company makes $5 then the $5 should be taxed. But with dividend taxation the profit of $5 is taxed, and then it is taxed again when the after tax profit is put in the bank (when the amount is given to the owners, the shareholders). Either tax corporate profits at full rates and have dividends untaxed, or eliminate the corporate income tax and tax the dividends, or have a lower rate for both.
You and Romney probably don’t pay the same rate on dividends. The tax rate for dividends for lower income individuals is as low as 0%. This encourages savings and investment. Also, the higher rate of return afforded by no taxation is a great way to get lower income people to create their own retirement accounts.