Obviously

 

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It comes down to you [or you plural] against the government in the form of the IRS. In between is your wad of cash/assets/ You hire tax accountants, attorneys, tax specialists to fight on your side using the laws that the IRS supposedly follows. The more assets you have the more specialists you can hire to represent you or fight the battle over your cash. This is why GE has close to a thousand tax specialists. The more money you have the more you can access other instruments to protect your wealth, etc. People are converting and rerolling their assets all of the time. Its not just done once a year, its an on-going process.

 

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I have been very disappointed lately in the WSJ. That article is really atrociously misleading and underhanded. The stuff about 75% of dividens going to people over 55 is meaningless when it's only people with incomes over 200k who would be taxed at the higher rate. It is really very close to lying with statistics and they should be ashamed of themselves.


Grandma eating catfood is usually scare tactics but when it's only grandmas making more than 200k a year who you are trying to say are going to eat catfood you have really lost all credibility.


edit: Maybe the point is that by raising taxes you will lower the amount of dividend payouts period so that ends up hurting everyone. But then you need to know what % of income dividends make up for seniors to know whether it's really important.

That is exactly the point.

Lowering the dividend tax rate resulted in a lot of money flowing into the market (hundreds of billions) to take advantage of it. That doesn't just help the rich, it helps anyone with any investments at all.

The rich have the ability to move their money elsewhere. The average retiree living off their 401K disbursement doesn't.

The rich will move their money out of the stock market and into other instruments, as Rosaria said. That will tank the stock market significantly, which will hurt all investors, but will hurt the small investors more.

Pretty much any attempt to 'soak the rich' is going to have significant side effects that will hurt the average citizen a lot worse than the intended targets. The rich will always have options and they will almost always outsmart the government at the game.

Remember the 'yacht tax' from 20 years ago?

The government decided to implement a luxury tax on expensive yachts, jewelry, etc. It was supposed to generate tens of millions of dollars for the government.

The actual result? The government LOST money. Why?

All those evil rich people didn't buy as many yachts or jewelry. Thousands of jobs were lost resulting in lost tax revenue and increased unemployment expenditures that was greater than the meager amounts generated by the tax.

Even though the taxes were eventually repealed, the yacht industry still hasn't recovered.

But since you were able to 'soak the rich', I'm sure you don't mind if a few thousand boat builders were sacrificed on the same altar.

So basically it's just the same old dumb argument about how doing anything to boost the tax share from the rich will always end up hurting the poor more and the best thing for the poor is to cut taxes on the rich.


It's always been a dumb argument and always will be.

If you let too much money flow into the market, you end up creating bubbles. Making more capital available isn't always a good thing.

 

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You already earned the money.
You can't keep it in your mattress because of the Federal Reserve's deliberate inflation policy (which is in violation of their own mandate)
So you have to pay capital gains on money you've already been taxed on once.

 

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The supreme majority of equity owners in this country are the rich. If this is as devastating to equity prices as you are saying, they will bear the brunt of it.


The options available to the rich will be to sell their shares at a lower price. If they choose to sell at a lower price, this will hurt the sellers alone, nobody else. If you hold onto your shares and continue to get your dividend and dont make over $200k a year...this will not affect you at all.


If you are on the outside and buy these suddenly cheaper shares, which will now be offering a better dividend ratio, and you dont have to pay the tax, this will be a benefit for you.


The number of high dividend stocks is pretty small, the overall impact on equity prices will be minimal. The losses will affect everyone in the market but will be concentrated on the 'rich' and the people who sell. The big gainers are the non-rich who buy new shares....the very group you are pretending to worry about.


To sum things up, you dont understand this situation at all. But dont let that stop your bleating.

No you arn't. You're taxed on the gain, not on the money itself.