Re:Debunking the claim that higher income-tax rates reduce GDP
by lsc on Wednesday February 24, 2010 @07:10PM
(#1149631)
dividends don't help us, as to pay out dividends, I first have to pay corporate tax, which is usually lower than personal tax, but in California, I think, not lower than personal tax plus capital gains which I would have to pay on the dividends.
Sure, I recoup all the money I put in as well as my 'sweat equity' when I sell, and I pay the low capital gains tax rate on that, but like I said, this encourages short-term thinking. Hell, I could happily run my company for another 10 or 20 years. But the capital gains taxes being so much lower than the income tax I pay on money I take out without selling that it might make sense for me to sell out once I'm not doubling twice a year. It's sad, I think, as I think I'd be happier running the company, and the company would probably be better off with someone with a long-term view running it.
But to claim that capital gains are the same as income is incredibly misleading. In the special case where you are a small business owner that works at the business then yes you are taxed as an employee. The money you invested will be recouped just as venture capital would -- when the company is sold or by paying dividends.