haha "hit them again" because they are so close to the breaking point amirite? Because we've been "hitting" them so hard over the last 10 years... oh wait no we haven't... over the last 50 years... oh wait no.... over the last 100? omg you mean they paid less % of income at the end of Bush than EVER BEFORE?

Don't gimme that "hit them again" b.s. stressed. If you want to argue they deserve every penny they earn, I'll have that conversation, but don't try to phrase it like they've been overtaxed when you compare to either past America or modern rest of the civilized world.

@Draug *yawn* same tired crap. That argument only applies to 1st generation self-made wealth. What percentage of the top 1% do you suppose that applies to? There isn't any real *risk* beyond that (the kind of risk I'm making with my investments).

Anyways, you making 101K is not exactly who I'm talking about, and I'm not talking about capitol gains either. I'm mostly talking income tax, plain and simple. I don't necessarily have a problem with a low CG tax, so long as the person paid a reasonable income tax before he invested (or after, so long as he DOES pay). I'm guessing what you and I call "reasonable" differs by quite a bit though. Actually I think the wealthy do pay a higher percentage of their income also, so I think I was talking out my ass to some degree earlier.

The point is that big shots did fine in 1900. Income Tax 'em like we did then and they'll get on just fine.

@YJ - Do you have any investments in the market? I didn't think so. Your a paycheck to paycheck kinda person, the kind that believes those who make more should pay a higher percent, even though most of what they make comes with risk. Well, go ahead and tac them at 25 or 30 percent and then when they stop investing in small business because the risk now outweighs the reward and the economy stagnates and companies start folding (possibly yours) then you will see what I am talking about.

Draug, I do have some modest investments made in the market, yes. I don't feel that my earnings there are overtaxed, though to be fair they are modest enough that I might not notice if they were.

As to your second point, that argument has never been true. Investments have been strong regardless of income tax rate on the wealthy (again, see early 20th century America or modern Germany). You COULD make that risk/reward argument (maybe) referring to CG taxes, but the idea that people won't start a new business because they'll get a few less points on their direct income millions (as opposed to stock millions) is fairly ludicrous.

Ask anybody around and they'll tell you they'd rather pay 50% on 2 million annual than 25% on 30,000.

YJ notice I did not put a tag on who the 'rich were' but you knee jerked into it ASAP I did nto say top 1% or top 5%, or even an income level. You just jumped right into it with both feet, without even knowing who I was talking about.

However, is what i said false? I was not saying anything, other than running down the 10 point program in the communist manifesto. If you care to dispute that, then go ahead, but I was not actually defending or attacking who pays the taxes, so relax for a moment, and digest that fact.

Stressed, yeah I know I wasn't challenging any points you were trying to make, I just feel that that phrasing is spin (in that it makes it sound like they are paying a higher rate than they are), whether you are talking about the top 5% or 1% doesn't relate to that.

I wasn't trying to call you down for anything - just the turn of phrase.

fair enuff YJ I really was just putting out the facts behind the manifsto. I am sure some fucktard will come around though to call me some CT or something because I put it there.

@YJ - The argument was about CG taxes. The whole "Romney only paid 14% on 20 million" was misleading. That entire 20 million was CG gains. But the sheeple of America only see it as income and not a reward for taking a risk.

As far as your 2 million versus 30,000. Do you honestly think a CEO is only going to make 30,000? Hell, I make 6 figures with bonuses (barely, but still). So, the CEO will make (and pays actual income tax in theory) 7 figures and pay 35% on that. It's the money above and beyond that which is made via stocks and stock options, things that are at risk if the company (or other companies he is divested in) fails. You tax his options at the higher rate and he'll hold out for an 8 figure salary instead. *That* is the comparison. So someone who makes 30,000 would happily pay 50% on 2 million. But the 2 million person would rather pay 35% on a 4 million salary and forego the stock options and would not invest any of the remaining 2.4 million and put it at risk.

OK I think you misunderstood what I was going for with my 30,000 example but its irrelevant to the major picture now that you've clarified your position.

Let me make sure I understand... because I actually don't know exactly how this stuff works for the super wealthy

Are you saying that when a business ownever (or anybody) pays income tax, he doesn't pay income taxes on the portion that he invests? Instead, he pays capitol gains tax on the returns of that investment - but that portion of his income is NEVER subject to income tax? And it is arranged this way with the idea that it will stimulate investments which grow the economy?

And you are saying that forcing a person to pay income tax on that portion he is investing is effectively reducing the risk/reward ratio and making him less likely to invest?

I can't speak to a business owner, only to investments (stocks and VCs/business partners). Those who invest most certainly *do* pay income on the money before they invest or upon withdrawal (like in a 401K).

Now, in the case of drawing upon the company profits, that should (although, I'm no expert not being a business owner or partner/VC in the traditional sense) be taxable as standard income the same as a salary. I know the income I chose to draw out of Draugnar Productions gets filed on a Schedule SE and is adding to my personal income liability. There are deductions I take like investments in new computers and others things that get amortized over time (may acocuntant handles that), but my company never shows a profit as I draw it out for personal use at the end of the year and pay it as Self Employment income, which is higher than normal income because I have to pay both parts of the tax system (employer's share and employee's). That's right, your employer pays additional taxes for having you in their service that you never see on any forms.

I have no problem saying "you make $X in earned income, not CG, and you have to pay taxes on it" and making that at a graduating scale tax rate like the current system. But the Democrats love to call CG income and not deliniate between earned income and risk/reward income. It's their bread and butter in the war on the upper class - mislead the sheeple and they'll pick up their torches and pitchforks and have sitins because they don't understand the difference between investments and earnings.

If you are not incorporated you business is simply you - the money you draw out or not is taxed the same. If you are a business owner but have a corporation which you own that does the business, you may draw money out up to the amount you have put in, without being taxed. Thereafter if you continue to draw it will treated the same as employment income. Other ways to get money out (other than also paying yourself a wage) include dividends as well as simply selling the business. Taxation on dividends is different than other income, but the intended purpose is to keep the tax moving downstream (so, the corporation will recover tax but the shareholder will then pay tax). They are complicated and likely different b/w Canada and the US. The other way is to sell the business, any gain you make through this is a capital gain which is taxed at a far lower rate than any other income (and in Canada most people have $250,000 worth of an exemption). However, you would no longer be entitled to any profits from your old business.

@Yellowjacket - I am not sure what you are talking about. Any money that a person has and invests is their personal property and should have already been taxed on the way they acquired it. If they then invest that money only the amount of return over their investment is taxable, at different rates depending on the type of investment income they are earning.

Thanks Lando. I am technically incorporated as an LLC to protect my personal property should some disaster befall the business, but I am the sole owner and employee of the business. I have only a couple of computers and routers and such plus a dedicated business class cable connection that I write off. I could write off some of the electric and gas as operational, but that would just draw the IRS' attention and cause me to have to take time away for a potential audit, time that is worth more to me than the savings I might make writing off hlaf my electric, ga, and cell bills. I only write off the cable connection because it is for business only. I have a separate one for personal needs around the house so the wife's chat room excursions and gaming doesn't interfere with real work.

Likely what happens then Draugnar is you draw out the profits as you see fit and then the accounting "dividends them out" to you after the fact so that you are in a better tax position.

Also, I doubt the IRS would be drawn into you if you start charging yourself $200 / month for rent of that office space (technically you should go through receipts and allocate a percentage based on square footage). I am pretty sure that is standard practice (it is here, anyway).

I assume you also get your dedications for KM driven for business as well as some other things (like you accountant's bill).

Another if your income levels start to get pretty high you might consider paying your wife for "bookkeeping" or "cleaning" or whatever even if she doesn't do that, then she gets some of the income and it spreads it out and keeps most of it in the lower brackets.

Obviously I have no idea of your tax position but I am just spitballing. I do this stuff for a living and quite enjoy it.

The accountant's bill, yes. But my private business rarely has travel as I do web development from the basement/man cave. Most times I conference call or video chat.

Heck, I only did the LLC on my accountant's and attorney's reccomendation to protect my personal assets. Before that, I just did everything as a Schedule SE and wrote off just the laptops. But the business took off a on 2004 so I did the LLC as a safety net. But the only company assets are a router, printer and two computers.

Seems like a good business, low costs. You do need to find some more things to write off, though. Incorporating is almost always a good idea, just gives you more options.

I have thought about renting one of the small "visual" offices just to put a real face to Draugnar Productions. But to write it off, you have to spend it and to spend.it you have to charge more to afford it. My clients like my rates and I like the client base: churches and private schools and some.small businesses.

"Yeah should be tough with the house stonewalling and republicans in the senate filibustering."
Your joking right?

The Democrats filibustered, they declared that America could run without a budget. Obama's budget wen 0 for 99 against 1 abstain in the democratic senate. That is the way we are on a fiscal cliff

@Draug, The argument that it is a risk vs reward thing may be true but I don't believe it is a valid argument for why tax rates shouldn't be raised on the wealthy. The most prosperous times in our country the rich were paying a much larger tax rate. We stand to increase taxes. That being said I think it is fair to say we need to stop expanding spending so we can pay down the debt with our increased tax revenue.

SIXTY PERCENT WANT MORE TAXES

Republicans say no tax increases.

They have a phantom mandate.

Thanks for explaining Draugnar. I think we fundamentally agree on most things. I don't have an opinion on capital gains taxes - if they've already been taxed on the income that invests in the market, and that tax was reasonable. Again, I think it's the definition of "reasonable" that trips up most people.

@smcbride - A moderate increase I can agree with. But making CG be the same as regular income *will* stifle the economy. The best thing that could happen would be an end to the tax cuts we currently enjoy. Hit the fiscal cliff and fall off. Then everyone is paying more and we start paying off the debt.

@Santa - First, please provide a reference to this 60% of which you speak. Second, make certain that the 60% want to *pay* more taces themselves. If all they want is for the rich to pay more and don't want to do their fair share as well, then they are losers with a capital 'L' permanently tattooed into their foreheads.

I dunno about that draug... if the proportion of wealth is sufficiently skewed, it's not a ridiculous thing to ask.

@YJ - Again, I have no problem increasing taxes on the rich. Increase it on the middle too, but not as much as on the rich. (The poor pay no taxes because of the baseline where taxes begin.) And you can increase captial gains, but not so much that it becomes more affordable for the rich to start taking salaries instead of stock options or to discourage VC investments in small business ideas. You have to be careful when increasing taxes on investment earnings.

But the biggest thing we need to do in income tax reform is close the loopholes. Honestly, the reason companies don't pay corporate taxes is because of the loopholes they find. The little guys don't have the time or money to invest in tax accountants and tax attorneys to look for the loop holes so they pay their corporate taxes, but the big dogs who could provide a *huge* windfall take advantage of every loophole they can find. Eliminate the loopholes and you could actually lower the SMB's tax bill because the major Fortune 500 companies would be paying their taxes finally.

Tax reform will not happen, Draugnar. It would have been a near thing to have happened with a Romney win and a Republican Senate, there's almost no chance now. Democrats will push for tax hikes, and Boehner will agree to a deal that includes spending cuts. Spending cuts which never end up happening, probably.

The Republican agenda isn't going to go into effect now. We should stop pretending that policy initiatives from the right will even be relevant for the next six months or so.