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Posts Tagged ‘capital gains’

The rich are about to win politically again through their corruption of the federal government.

President Trump has wasted no time in taking aim at the Affordable Care Act (ACA), otherwise known as Obamacare. Joint research from the Urban Institute and the Robert Wood Johnson Foundation show up to 30 million Americans may lose their healthcare coverage if the ACA is repealed. For high-income investors, however, the end of Obamacare could bring a financial windfall.

Rebecca Lake of Investopedia.com points out that individuals earning over $200,000 and couples filing jointly and earning over $250,000 a year pay an additional 0.9 percent Medicare tax helping to fund the ACA. In addition, another “provision is the 3.8% net investment income tax. This tax applies to capital gains on investments and it follows the same income thresholds as the additional Medicare tax.” Capital gains is money earned through the sale of assets, such as stocks and bonds.

Repealing Obamacare would put significant amounts of money back into the pockets of the rich, who would then use their newly created windfall to pump more money into the current stock market bubble, blowing it up even more and blowing away the economy much more severely when it explodes, as well as use the funds to corrupt government even more in their favor. The rich already own the entire Republican Party, and most of the Democratic Party.

“An analysis by the Center on Budget and Policy Priorities has found that millionaires would stand to get an 80% tax cut if the additional Medicare tax and the tax on net investment income were to disappear. The average tax break for those earning more than $1 million annually would total just over $49,000.” The 400 biggest income earners would receive a tax cut of over $7 million each. That would be a tax cut every year for infinity for the folks who have corrupted both major political parties and rigged the economic and political game in their favor.

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No doubt, any replacement for the ACA will be written to shift the tax burden from those who have political and economic power to those who do not. In other words, the Republicans and President Trump are redistributing income and wealth from the 99 to the 1 percent via repeal of the ACA. The Republicans are likely setting up some form of death panels by simply repealing the ACA and replacing it with something that will be underfunded.

Read more: Why a Repeal of Obamacare Could Be a Boon for Wealthy Investors | Investopedia http://www.investopedia.com/insurance/why-repeal-obamacare-could-be-boon-wealthy-investors/#ixzz4aqwCkpYw
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According to Jack Bogle, founder of Vanguard, the mutual funds investment company, Social Security is in crisis.

Bogle said the system’s finances could get a big boost from changes that may be rejected as “politically sensitive,” including

  1. adopting a less-generous approach to calculating cost-of-living adjustments,
  2. raising the maximum annual earnings subject to Social Security tax,
  3. and raising the age for full retirement benefits further from the current range of ages 66 to 67.

First of all, Social Security is not in a crisis. The Fund has a reserve of $2.5 trillion that earns $180 billion in interest a year. That money is due to be used up by roughly 2036 as more and more baby boomers retire. Then Social Security can still pay 84 percent of everybody’s benefits after that.

This means it won’t take much to make up the shortfall. Currently, nobody pays social security taxes on income above $118,500. Simply eliminating this cap on taxing income would erase the future shortfall. However, we could go farther and with good reason.

Here’s what the corporate media doesn’t want you to know.

Trillions of dollars every decade earmarked for the social security trust fund are redirected from the fund into the already fat wallets of the super rich. The rich don’t pay social security taxes on capital gains and dividends. Every time a job is exported, the wages and social security contributions from that job are transformed into capital gains and dividends.

Millions of jobs have been exported. That’s hundreds of billions of dollars every year no longer heading into the Trust Fund because the difference between the old higher US wages and the new lower third world wages goes straight into the pockets of the ultra wealthy via capital gains and dividends.

Capital gains and dividend income are exempt from paying social security taxes.

So why not establish social security taxes on dividends and capital gains above a certain point, say $100,000 a year in income from those sources?

Then you could increase monthly payments to retirees while simultaneously raising the demand for goods and services, which would strengthen the economy, as well as spur job and wage growth.

Wall Street won’t like it, but millions of older folks could use the money being stolen from social security via international income redistribution scams falsely marketed as “trade agreements.”

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The nation is on the cusp of the largest inter-generational transfer of wealth in history. A study from the Boston College Center on Wealth and Philanthropy projects a total of $59 trillion passed down to heirs between 2007 and 2061.

As the French economist Thomas Piketty reminds us, this is the kind of dynastic wealth that’s kept Europe’s aristocracy going for centuries. It’s about to become the major source of income for a new American aristocracy.

The tax code encourages all this by favoring unearned income over earned income.

The top tax rate paid by America’s wealthy on their capital gains — the major source of income for the non-working rich – has dropped from 33 percent in the late 1980s to 20 percent today, putting it substantially below the top tax rate on ordinary income (36.9 percent).

If the owners of capital assets whose worth increases over their lifetime hold them until death, their heirs pay zero capital gains taxes on them. Such “unrealized” gains now account for more than half the value of assets held by estates worth more than $100 million.

At the same time, the estate tax has been slashed. Before George W. Bush was president, it applied to assets in excess of $2 million per couple at a rate of 55 percent. Now it kicks in at $10,680,000 per couple, at a 40 percent rate.

Last year only 1.4 out of every 1,000 estates owed any estate tax, and the effective rate they paid was only 17 percent.

Republicans now in control of Congress want to go even further. Last Friday the Senate voted 54-46 in favor of a non-binding resolution to repeal the estate tax altogether. Earlier in the week, the House Ways and Means Committee also voted for a repeal. The House is expected to vote in coming weeks.

Yet the specter of an entire generation doing nothing for their money other than speed-dialing their wealth management advisers is not particularly attractive.

It puts more and more responsibility for investing a substantial portion of the nation’s assets into the hands of people who have never worked.

It also endangers our democracy, as dynastic wealth inevitably and invariably accumulates political influence and power.

Consider the rise of both the working poor and the non-working rich, and the meritocratic ideal on which America’s growing inequality is often justified doesn’t hold up.

That widening inequality — combined with the increasing numbers of people who work full time but are still impoverished and of others who have never worked and are fabulously wealthy — is undermining the moral foundations of American capitalism.

The Rise of the Working Poor–Robert Reich

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(Reuters) – Republican Mitt Romney acknowledged Tuesday that his income tax rate is “probably closer to 15 percent than anything,” suggesting that one of the wealthiest people to ever run for U.S. president pays a much lower rate than most Americans.

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