The local mouthpiece for the billionaire Koch brothers, Kelly Sloan, gave us his predictable bashing of President Obama's State of Union speech in last week's Free Press.
Mr. Sloan, as usual, champions the cause of the uber-wealthy, claiming that "the much maligned 15% rate is a capital gains tax levied on investment income, which ... has already been taxed once as either corporate or personal income, at the relevant rate"
Let's look at an example: Imagine that a rich person, say, a presidential candidate, bought $1 million in General Electric stock on the last trading day of 2009 (at $14.22 a share). Then, after a year of hangin' out, chillin', perhaps taking a vacation to Canada with Seamus the Irish Setter strapped to the roof of the car, he then sells his 70,323 shares in GE on the first trading day of 2011 (at $17.66 a share). His profit on the sale is $241,904, on which he would pay the 15% capital gains tax rate.
At the same time, Joe Sixpack in Grand Junction works his tail off all year, and earns $241,904 (as I'm sure the average GJ resident makes). He would be pushed into the 33% tax bracket due to his sin of working for a living instead of providing canine ventilation.
General Electric, during 2010, made a profit of over $14 billion, more than $5 billion of that in the United States. And how much tax did they pay that year? You probably know the answer to that one...
Whether GE paid taxes or not, it really has nothing to do with the fact that the capital gain was made on the increase in value of an asset, be it stock, real estate, hedge fund shares, etc. Income tax has not previously been paid, in any way, shape or form, on the increasing value, and thus profit, on the sale of that asset.
Mr. Sloan finishes, as usual, by insulting those who may beg to differ, mentioning that the president is "banking on the plurality of American voters remaining economically illiterate long enough to keep him in the White House." I keep forgetting that conservatives are literate and logical, while liberals are illiterate and emotional. Then how is it that right-wingers have such a belief in the Business Confidence Fairy, that will magically create jobs and prosperity as soon as we get rid of those nasty regulations and taxes that are hurting the "job creators"?