Individuals Dodging Taxes

Did you decide to buy via a magic 8 ball?
Do you follow any of the companies you own or just never look at them again?

Many of us are buy and selling individual stocks which requires work. That’s why investment firms pay analysts, they don’t get returns by chance. Hardly passive…

 

I do a little research or meet with my investment advisor, buy, and then let it be. I don't follow the companies closely. It's almost totally passive, and I get run of the mill returns.

 

Meh it’s only a few people who cares..

At least you admit those paying income taxes are paying for those who don’t.

 

Well then you maybe a pretty passive investor.

Many of us are not.

 

Let’s do this cap all wealth at 300k.

Who needs more than that, besides the Gov can do better things with it than the people who have earned it.

 

Agreed. Plus, the investors have already pain income tax on the funds once, before even using the remaining after-tax funds to buy the stock. Most of the time when people complain about a low tax rate on dividend income they conveniently omit that it's a tax on income earned with money that's already been taxed once.

 

Yes, but when you spend those dollars to purchase goods you're guaranteed to receive the goods you chose to purchase. No risk of loss. I'd accept higher tax rates on dividends if the IRS would also compensate me for any investment losses (and, yes, I know how losses are used to offset gains).

 

Actually, it is. The top 1% of taxpayers — those who earn $561,351 or more — paid 42.3% of the total tax revenue collected in 2020, according to the latest figures from the IRS. In fact, the top 1-percent of taxpayers paid more income taxes than the bottom 90-percent all together. Additionally, the top 1-percent of taxpayers paid $723 billion in income taxes and the bottom 90-percent paid $450 billion.

 

I don’t agree with keeping it where it is. Currently .08% of estates are subject to the estate tax and at an effective rate around 20%. That’s too low. It was around 2% of estates in the early 80s, late 90s/early 00s.

 

The magic is in whether that income is taxable income, tax-exempt, subject to deferred tax, subject to taxes offset by deductions or losses, etc.

 

Of course, most investment firms don't even beat a passive index fund once the fees charged (to pay those analysts) are factored in.

 

And in 2021 that figure went to 46%. But as dangolegarors will say….that isn’t 50%!

 

You can do all of that stuff if you enjoy it but it doesn’t buy you anything. If it does, it is luck. Passive investors do better than active, because basically passive = active universe less fees. This has been demonstrated over and over again.

I don’t do individual stocks. Almost all index funds. I do tilt here and there but I don’t profess it will help me in the long run.

 

the investor / owner pays corporate income tax (which is remitted by the corporation ) and then pays capital gains or dividend taxes. They are both taxes on return of capital.

Look at it this way. If you are the owner of a C Corp, you pay corporate income tax, and then pay taxes on dividend distributions or capital gains. If you are the owner of an S Corp the SCorp income flows directly to you at ordinary income rates.

If the C Corp shareholder is getting such a great deal with low taxes, why do many small businesses opt for S Corp? Because being taxed once is more favorable than being taxed twice.

 

The claim was 'taxes', not just 'income taxes'. And even if 'income taxes' had been specified, 42% is less than the 50% that was claimed. And when you look at all taxes, not just income taxes, the picture changes considerably.

 

It's a meaningless distinction that the returns are taxed twice. What are the actual rates? If corporate profits are taxed at 1% and capital gains are taxed at 1%, people would gladly take double taxation over a single tax of 20%.

 

Index funds are great for slow and steady hands off the wheel. A percent of your portfolio.

Real gains come with individual companies.
It’s not based on luck.

 

It’s very strange to me that people sit around and contemplate new ways to tax others.
I find the whole idea sick and unnatural.