Forum Post: dividends are tax free income
Posted 13 years ago on Nov. 1, 2011, 11:37 p.m. EST by gestopomilly
(497)
This content is user submitted and not an official statement
In 2003, President George W. Bush proposed to eliminate the U.S. dividend tax saying that "double taxation is bad for our economy and falls especially hard on retired people". He also argued that while "it's fair to tax a company's profits, it's not fair to double-tax by taxing the shareholder on the same profits."[3]
the Tax Increase Prevention and Reconciliation Act of 2005 ("TIPRA") extended the lower tax rate through 2010 and further cut the tax rate on qualified dividends to 0% for individuals in the 10% and 15% income tax brackets. On December 17, 2010, President Obama signed into law the Tax Relief, Unemployment Insurance Reauthorization and Job Creation Act of 2010. The legislation extends for two additional years the changes enacted to the taxation of dividends in the JGTRRA and TIPRA.[7]
Liar!
http://www.irs.gov/taxtopics/tc404.html
read the LAW not the propaganda
I am no where near the 1%, and I know what I pay taxes on since I pay taxes on such little amount of income..
My taxes are easy to file.
Dude, why does the IRS have a spot to report and pay on them?
Dividends are taxed at 15% unless your in at 15% income tax bracket in which case they are 0%. the confusion comes from the fact that average people usually hold dividend paying investments in retirement accounts so get taxed at ordinary income levels. However, "In terms of types of financial wealth, the top one percent of households have 38.3% of all privately held stock, 60.6% of financial securities, and 62.4% of business equity. The top 10% have 80% to 90% of stocks, bonds, trust funds, and business equity, and over 75% of non-home real estate." http://sociology.ucsc.edu/whorulesamerica/power/wealth.html Since the wealthy own most of the dividend generating assets and there are limits to how much they can contribute to retirement accounts, being taxed at 15% is effectively lowering their tax rates. Not only that but they can "tax harvest" where they can sell investments at a loss deduct the loss from gains (up to certain limits) to further reduce their taxes.
Also, having a low capital gains tax does not help with job creation. In fact I think it hinders job creation. First, when you buy a stock, most of the time you are buying the stock from the previous owner and no money actually goes to the company you bought. Second, let's say I win the lottery. I could start a business and get taxed at ordinary income (probably 35% if the business does well) and would have to pay payroll taxes, pay for benefits, etc. Or I could make investments in stocks and bonds and only have to pay 15% on the returns. By having a low capital gains rate, and a lot of hoops to jump through to start a business, people are more likely to simply invest and create 0 jobs.
at last. a smart person
It isn't fair to tax anybody for anything.
Aww, I think you just made a socialist cry.
i see why your laffin
So you think it's fine for someone to take the money I earned and spend it how they see fit?
Were they alongside me earning this money?
Once you realize how absurd taxes are to begin with, your eyes will really be opened.
Once you realize having a police force, fire department, roads, and bridges are somewhat useful you will realize taxes are necessary. The problem is politicians can't control themselves and spend out of control.
I was unaware that those things cost billions/trillions of dollars.
It would cost 1.3 BILLION dollars to build the golden gate bridge in 2003 dollars. http://goldengatebridge.org/research/facts.php#Cost That is only 1 bridge (granted a large one) now multiply that by ?cities in every state... Not to mention yearly maintenance. So yes it does cost Billions/Trillions to build/maintain a bridge. Not to mention how much it costs to maintain our armed forces (regardless of whether you agree with how they are used). Since we all benefit from the luxuries of living in a developed country, we all get to contribute.
Consider this: If my employee pays 15% of their gross income as taxes and taxes are then repealed, what incentive do I have to continue paying at the current rate. Why wouldn't I cut their pay 15%?
Keep in mind if taxes were repealed, it would apply to yourself as well.
they wouldnt work for you for one thing. for another. a stock is not an employer you kinda lost me there
My comment regarding the pay cut was in response to the idea that taxes are unfair and absurd.
There is no reason to believe they would not work for me. Someone grossing $58k before tax and $50k take home. Employee no longer pays 8k tax, so why pay them the extra $8k? Why quit when your net pay has not changed?
because now i am paying you the 8k you are not a good guy it would then become the question why do you think you deserve the 8k. you are paying me to do a job. it really isnt your business if i pay taxes or not is it?
No, as employee, you would not be "paying" the employer $8k. The payment goes in one direction, the labor goes in the opposite direction. Eliminating income taxes on wages earned though labor will reduce the price I am willing to pay for the labor. My justification for the cut will be: 1. your net pay has not changed, and 2. I previously paid your taxes by paying you a higher gross salary.
Yes, that is completely unfair. Especially given that some of that tax money could have been used to provide a social safety net.
still you have to say why it is your business if i pay taxes or not. you should just pay me an stay out of what i do with my money
You may or may not cut their pay based on competitive pressures, not boneheaded laws.
One thing is for sure, they won't miss the 15%. The employee's spending is based on their net pay and access to credit. If they quit, the new hire starts at lower pay regardless.
What was stopping you from doing that before?
In that case, I do think it is fair to bill you for government services provided.
And if I don't support or advocate those services?
They're not other than at the lowest tax brackets. They're taxed at the corporate rate (more accurately they're some of what's left over after revenues are taxed) and taxed when paid at the cap gains rate when received by shareholders.
Why would you want to increase taxes on relatively poor folks? It's a fairly small amount of money in the scheme of things and a lot of them rely on dividend payments for their retirement.
people that receive dividends are not poor. what planet are you from
Many retirees use dividends as a source of income and believe me they show up at the annual shareholder meetings when dividends are cut. These are retirees on fixed incomes not some high rollers, why would you assume only wealthy people receive dividends when anybody can buy stock in a company?
regular people that are old receive soc security. not dividends. if they did not save up enough to make it thru retirement is that the fault of the rest of the taxpayers?
Many if not most old people are irregular. Haven't you seen the commercials on the nightly news?
regular people that are old own stocks and have pensions too...or is there a law that they can not and must subsist on social security only.
no it is not a law but if they are receiving any other type of income there should be tax
Why tax productive efforts (income), why not tax consumption (with exculsions for various necessities of life)?
That way when a bobblehead doll like Paris Hilton spends 50k on a purse, she can taxed according to her consumption.
why not tax her income? im sure it all comes from dividends.
You are missing or avoiding my point.
You do realize that with a consumption tax, people like Paris Hilton would pay considerable more in actual taxes (and a far more commensurate percentage of their "fair share")
Yes the wealthy pay more in total on consumption, but a higher percentage of the poor's income goes towards consumption. A higher "fair tax" would put an increasing burden on the poor who can barely afford their daily lives. What we need to do with the tax system is get back to theory and tax land. The wealthiest have always owned all the land and if anyone has studied economics, land is the source of all wealth. We can't control the economy but we can make it work in everyone's favor. Tax the source of wealth to keep the wealthy honest, and spread the fruits of labor to everyone. Let the free market set wages so we can enjoy the free market, but lets take the surplus to increase the quality of life for everyone.
i see your point but that tax would not be fair. that would mean if i saved up for 5 years to buy that same purse then i would also have to pay that tax.
gestopomilly, I can't seem to reply to your last comment so I am replying here...
As to starvation etc...
See my first comment regarding a consumption tax. I mentioned exclusions for certain necessities of life (i.e. most: food, clothing, housing -- note I said most, as there are foods that are not staples and often quite unecessary to life, same for clothes and housing up to an inflation adjusted dollar amount at the time of sale).
yes i see. if there were restrictions , like paying it for yachts and Tiffany diamonds ,caviar and houses costing more than a million. then yes why not
Sorry to break it to you, but life's not fair. Never has been, never will be.
The percentage you pay is equal to the amount you consume. No tax lawyer is needed to get the rich to pay their "fair share" as they (and everyone) would pay in direct portion to what they take. Don't like the amount you pay in taxes? Consume less.
The problem with a consumption tax is it does the exact opposite of what we need for economic growth. We need people to buy stuff from companies so they can hire workers to make more stuff, the workers can then buy stuff, creating growth. 2nd, a consumption tax would be horribly regressive (fall more on low income earners) because people that make less have to spend a larger portion of their income to get the same stuff to survive.
wouldnt that lead to starvation and homelessness as there are millions of those and only a few rich? so wouldnt they have to make it up by taxing the products sold to the many and not to the few? like food and shelter which have to be consumed to live?
Wrong. You should check your facts before assuming that everyone who receives dividends are some high rollers. If not received directly, then most do through their pension holdings.
And since the exclusion is only for the lowest brackets, that's true by definition.
seriously.. you think the guy making 50k with 2 kids is getting dividends? the 1% wants to end pensions.
Yes, many are. And if you want to count retirement funds, then most are.
i dont agree. at 50k a person does not have the thousands needed to invest enough to reap dividends you will never convince me other wise. at 50k a person is desperate to pay the rent and insurance not using money for investing
Well then you'll just stay stupid I guess. lol
See table 1211 here:
http://www.census.gov/compendia/statab/2012/tables/12s1211.pdf
At the 40 - 60 percentile of incomes which would include your hypothetical $50K family, 49.5% had direct or indirect stock holdings with a median value of $17,700 which represented about 38% of their financial assets. How many are dividend-paying stocks specifically isn't broken out but since most are held as retirement funds you can expect that it would be a substantial portion.
thats a bunch of economic drivel. your basing this on 401k investing i assume. most contribute less than 5k to this. and some how your getting 17k out of that investment? that has only happened for bernie
Sorry dumbass, those are the actual numbers from a 2007 study done by the Board of Govenors of the Federal Reserve published in 2009.
But, yeah, I know... Your estimates that are just pulled out of your ass are better. lmao
my estimates are based on real life not the number manipulations done by the government. you can make anything look good on paper. it just isnt true.
Lmao flat earth thinking "I see the ground I stand on is flat, therefore the world must be flat." Never mind the space photos... Those are all photoshopped and the government has never sent anyone to space. It was all a lie.
yes and your going to believe the government because your too lazy to do the math.
Yeah, OK. It's clear that you're not going to let any facts get in the way of your own preconceptions. No wonder most of you guys suggest such stupid stuff. lol
You can look at any number of other similar studies and they'll all reflect basically the same information. But as I said, I'm sure that your own very limited view of the world is more accurate so keep on believing whatever you'd like.
I get dividends on my small investments that I have to test the waters....
They are taxed. Maybe large dividends are tax free? I would have to check this out.
then you need a better tax accountant lookin over your mistakes. unless of course you are above the 10-15% tax bracket or below
You have never heard of the 1099-DIV form?