Thursday, September 22, 2011

Does John Cornyn Not Realize that Capital Gains is a Form of Income?

I guess private citizens don’t have the right to express their own views on tax policy without the Republican Party demanding to see their tax return:

Republicans on Capitol Hill have found a new hidden document conspiracy to push to now that President Obama's long-form birth certificate is a matter of public record. Warren Buffett, they demand, show us the tax return!

But what cracks me up is this statement from Senator Cornyn:

I know that Mr. Buffett's not likely to release his tax records but I'll bet what it'll show you is that most of what he earns is from capital gains, which is taxed at a 15 percent tax rate rather than deriving it as income [for] which he'd pay a much higher tax rate," Cornyn said. "If he doesn't derive ordinary income and if all of his, what he puts in his pocket is based on capital gains, I think that would be an important information.

Capital gains allow one to either consume more or enjoy an increase in one’s wealth. So it is income – but income taxed at a much lower rate than other characterizations of income. Which is the point that people that Mr. Buffett are making. If someone does not understand this simple point – then why are they qualified to serve in the Senate?


Jack said...

"If someone does not understand this simple point – then why are they qualified to serve in the Senate?"

Because that is one job that has no basic requirement other than ass kissing and legal forms of bribery. A Senator's level of ignorance can be helpful to those who have provided financial support. He's stupid, but not so stupid as to not be aware of how and by whom his bread is buttered. In the best American political tradition, of course.

John said...

File under "Duh..."
And make a note that a feature of Reagan's 1986 tax reform bill taxed capital gains and ordinary income at the same rate. One of those little factoids lost in the discussion.

Bruce Webb said...

Not to mention that Buffett showed his tax return on the Charlie Rose Show A MONTH AGO.

And the made the very cogent point that on a combined basis including FICA most people in his office were paying in the 35-39% rate or some 20 points over what he was. And in passing that combined SS and HI fica adds up to just over 15% (12.4% plus 2.9%)

Meaning that a burger flipper making minimum wage pays a higher percentage from his first dollar earned than a billionaire who can classify all his income as 'carried interest', for example Hedge Fund Billionaires and their Trust Fund Baby grandkids.

Yet it is an article of faith in the GOP that the working class gets a free ride where they wealthy are cruelly slapped with 'Death Taxes'. Which since large estates are mostly the product of various forms of unrealized capital gains, and the heirs get the advantage of the step up is more a deferral of that tax than anything.

Jack said...

If it sounds like an idiot, talks like an idiot and can't even recognize wither signs of its own idiocy the it is definitely an idiot.