Hellobee Boards

I think it's scary as hell. They're calling for a mild recession in 2013 if this isn't resolved. I'm scared that one or both of us will lose our jobs just as we're about to have a baby, that our housing market will lose footing right after we bought a house... It just freaks me out in general and makes me so upset that both sides seem interested only in letting things tank just so they can blame the other side. That being said, going over the cliff right now would be preferable to passing any deal floated so far. $400,000 doesn't go far enough and isn't what Obama ran on.

@shopaholic The debate's occurred in the past on the board, about whether it's right or wrong to tax people in that bracket. I don't think $250,000 is rich, but
1. the tax cuts would expire on the amount you make over $250,000, so if you make $251,000, you're taxed extra on $1 and
2. The proposal has always been to let tax cuts expire, which means that portion of that bracket would revert to the levels at which it was previously taxed. Higher tax brackets are being taxed at historically low levels, which I think is completely inappropriate in our current financial climate. The Bush tax cuts are the only time in HISTORY that taxes were cut during a war. And now we're paying for it -- and it's going to get worse, and everybody is going to feel it, if something drastic isn't done.

This isn't a "rich vs. poor" warfare (though there are many that make it out to be so), but rather something that needs to be done to find income to keep our country from becoming completely irrelevant.

I would like to see this resolved, but only with some increased revenue (i.e. taxes for the wealthiest Americans). I would also like to see tax loopholes closed for those who earn most of their money off of investments. It still doesn't seem fair to me that a small business owner making 300k per year should pay far more in taxes than some wealthy investor like Mitt Romney.

@skibobrown: if there weren't wealthy investors, there wouldn't be economic growth. Businesses need cash from their shareholders in order to get started, grow, etc. Higher taxes on investments would reduce the capital available to businesses.

@septemberlove: I'm not clear on why the business owner should be taxed at a higher rate than the investor. To me this just sounds like a pyramid scheme. The rich get richer... (And just to be clear, I do have investment income, as does my family. I don't mind paying some taxes on my investments in the name of keeping our country fiscally solvent.)

I think it's unrealistic to say people will stop investing because tax rates go up. Let's see...should I make $5 on this investment, or $0 by not investing at all? Before tax rates went up, I would have made $10, but now I'll go with $0 because I'm upset about new tax rates? I invest, and that won't change under higher rates.

Aside from that, I think it's an interesting judgment that our tax code makes to basically value investment income more than labor income for each individual. We tax capital gains at a small rate compared to income gained from actual work.

@BlueWolverine: I agree with you 100%. We also invest our money, and even if it's taxed more, we're still making more by investing than not investing at all. I highly doubt anyone would decide to stop investing just because they're taxed more, because honestly, that wouldn't make any sense to do - you're not going to get nearly the returns by just letting your money sit in the bank.

@ladyfingers: Thanks again for the clarification! I definitely agree with you - letting tax cuts expire just makes sense for our economy right now, especially on the top 2% (those making $250,000+).

@skibobrown: without the risk taken by the investor, the business owner wouldn't be able to have their business because businesses need capital. You don't invest your money for free, why should investors? The lower rates are just an additional enticement to get dollars invested.

Raising the taxes on investment income takes that money away from the investor at a time when the economy needs all the investment dollars possible. In an above comment, someone said that last year they make have made $10 and this year $5 but that didn't mean they wouldn't invest the $5 this year, despite being taxed at a higher rate... But what about the businesses on the other side that would've gotten $10 of investment but now only are getting $5? I don't think now is the time to reduce investment in our economy. That's how the economy grows and jobs are created, which I think everyone agrees more jobs are a good thing!

@septemberlove: Really we want people to spend money in a down economy. Treating capital gains preferentially is actually not good for the economy. Some fun facts:

- "Mark Zandi of Moody’s Economy.com studied the federal budget and found that $1 used to give preferential tax treatment [for capital gains] would generate $.36 in increased GDP. While $1 used to improve infrastructure or extend unemployment benefits would generate $1.50 in additional GDP"

- A study in Montana found the state based capital gains tax did not lead to improved economic growth.

@mrbee: For sure, the stereotype of capital gains beneficiaries is wealthy investors like Mitt Romney. But I don't think that's a comment on work ethic, since a lower cap gains tax tends to value investment over labor.

@jedeve: But I am putting in sweat labor into my businesses though... this isn't just a story of labor versus investment.

That's what frustrates me: a lot of the coverage of the fiscal cliff lumps lump together entrepreneurs with people receiving passive "investment income." But I am not investing cash into a business, and sitting back passively and getting checks in the mail. I am working really hard for no pay for years at a time. That's what America is supposed to be all about.

Anyway like I said, I support a higher capital gains tax rate. It's just really depressing to read the debate around the topic. I know a number of entrepreneurs who support a higher capital gains tax rate, but have gotten really demotivated by the discussion as well.

I have had a lifelong love affair with America, and I have been heartbroken by these discussions with my fellow Americans.

While I agree that $250k/year in NYC is very different from $250k/year in Idaho; only a very small fraction of people make over $250k a year regardless of where they live and I think it’s utterly ridiculously that we act like we have to continue to cater to the less than 5% of the population who makes that kind of money at the expense of 95%+ of the population who make nowhere near that amount. These tax cuts were suppose to be temporary; the much higher tax rates that the wealthiest Americans have paid for the entire rest of the history of the US hasn’t stopped anyone from trying to be as successful as possible, and they certainly didn’t stop massive growth in our country.

@brownie: I could be wrong here, but I think that's the difference between a public and a private company. To do that you'd have to allow public investors which would mean you would lose some control over your company.

@Brownie: Re: personal income vs corporate income, YES! There are different corporate structures for tax purposes S-Corp vs C-Corp. I work for a privately owned company, and this is something we are considering. Changing our tax structure to minimize the tax impacts on the income of the company. The analysis isn't the easiest in the world depending on the size of the company.

In general, I'm just disappointed that we can't come to an agreement. I'm also disappointed that so much of the conversation seems to focus on the revenue (tax) side of the equation rather than the expense (spending) side of the equation. In recent days I've seen more media on the spending cuts, but in the early days it seemed skewed to tax as being the only solution.

@jedeve: oops! my bad! see, even I admit, I have no idea the real cost of living in other places! *insert foot in mouth*

@mrbee: Thanks for your perspective. I totally get what you mean. I do support increasing capital gains taxes b/c I don't think that people living off of the interest from their investments should be getting a free ride. However, you make a good point that not all capital gains income falls into this category. I just think we need to even things out. Why pay a different tax rate on capital gains then you would on wages? If there is a sound counter-argument (that doesn't involve treating the wealthiest Americans as all-entitled divine "job-creators") I would really be interested to hear it.