Quote:
Originally Posted by badrunner
Capital gains being taxed at a lower rate sets up a regressive tax structure. It's not even a flat structure. It's actually punitive to the poor and working class. This isn't even mentioning all the other tax loopholes and shelters that are only available to the wealthy (example: Trump carrying a $1b loss forward for 20 years).
I see the mis-education is going well. This is why capitalists love low information voters (aka "useful idiots").
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It's understandable that people feel corporate and capital gains taxes are a sideswipe against the poor...until one realizes they are in fact taxes on the poor.
Let's start with business taxes. For every dollar a business must pay either in corporate income tax or Euro-style VAT there is one dollar that must be accounted for in one of the following ways:
1) Cut costs, which of course usually ends up meaning cut labor.
2) Ratchet down investment, which inevitably also means utilizing less labor.
3) Raise prices, which hurts the masses.
Taxing capital gains chokes off investment, which in turn means there is less business expansion, and thus less need for labor.
Supply side economics is based on a simple premise: Stimulating business activity increases demand for labor while simultaneously lowering prices. Lowering taxes on business and capital gains directs economic surplus towards the expansion of enterprise and thus drives labor need. Without addressing supply side concerns, any wage gains made by legislation or bargining will be quickly be sopped up by inflation.
Even AOC's plan to drive income taxes to 70-80% is still a nod to this basic premise. Raising income taxes will help discourage rent seeking but still keep the functional mechanisms of economic investment in tact. European countries also tax investment income at a lower rate than ordinary income.
There's no path to solving poverty w/o supply side. Period. No supply means everyone's "demands" are just vapor. Can't acquire what's not there. When we move past class resentment on both sides, wither it's contempt for the poor or seething towards the rich can we begin to see real solutions being offered.