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Old 11-09-2013, 09:01 PM   #42
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Join Date: Nov 2006
Posts: 5,634


Originally Posted by Arkie View Post
Investors will always invest. It just may be in another country. We already tax capital and income much more than any other rich country. Only Denmark, France and UK exceeded us in 2011, but we are the worst in 2013.

Where in the hell are they making that sh*t up from?

The maximum cap gains rate is short term gains for $400,000+ earners, which is taxed @ 39.6%+state taxes. Minimum (long term gains) is now 20%+state, up from 15%+state.

The maximum dividend rate for is 39.6% +state for foreign investment, or 20%+state if you invest long term (defined as >120 days) in companies that are incorporated (and taxed) in the U.S. It's also unchanged except the reintroduction of the 39.6% bracket up from the 35% top bracket.

Of course, dividends come from taxed profits, but if you are investing in a foreign company, their profits are not being taxed. Thus, the max becomes:

Qualified dividends
(i.e. a U.S. taxed Company): (against original corporate income)

35% (max corporate rate) + 9.75% (15% of 65%) + state = 44.75% + state (49.38% in Colorado)

The above assumes a company paying their marginal rate, which is almost never the case. The average effective tax rate for a corporation is 12.6%, making the above:

12.6% + 13% (15% of 87.4%) + state = 25.6% + state (30.23% in Colorado)

Regular Dividends
(investing in a foreign company):

0% + 39.6% + state = 39.6% + state (44.23% in colorado)

For an upper middle class person/family in Colorado ($150,000 single taxpayer, Colorado), the typical rates are:

Qualified Dividends: 29.4% (rate including average corporate ETR)
Long Term Gains: 23.8% (new 2013 rate, was 19.63%)
Short Term Gains: 31.8%

Compare this to an average federal tax rate on regular income (read, income derived from adding value to the economy) in that bracket (using $150,000 Gross income)

20% (income with tons of deductions ETR, could easily be much higher) + ~13% (FICA est) + 3.8% (state ETR) = 37%

(EDIT: corrected based on > 113000 income being regressive under FICA)
(EDIT2: all rates corrected for state ETR vs state MTR)

...and, you know why I'm hoping to expand the portion of my income derived from caps and divs. Actually producing something of worth in the economy is taxed far more than sitting on your ass making money from money. Which is why our society and economy are fundamentally broken.

Last edited by Fedaykin; 11-09-2013 at 09:30 PM..
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