Kilroy Was Here
November 07, 2004
 
The Kilroy Platform: Fair Taxes for All
My dear American friends:

America needs your help. We are at war. Our economy is sputtering. Wages are flat or declining.

Right now, as our children graduate from high school and college, there are not enough new jobs for them. Right now, as our brothers and sisters are being laid off from manufacturing firms, there are not enough new jobs for them. Over the last year, for every 2 jobs our economy has added, our schools have added 3 people looking for work. This cannot continue.

As it was during the Civil War, during the Great Depression, during World War II, our great nation has once again reached a watershed--a crossroads where we need the sacrifice of our citizens in order to prevail.

And our platform is asking you for your help. For those of you who are making more than $200,000 a year, America needs your help. We need you to give more to this country.

If you believe, as we do, that our forefathers, our soldiers, our country has given far more to us than we can ever repay, then join with us to help this country in its time of need.

Taxes

The Kilroy Platform understands that even the most efficient and effective government needs resources to fund it. It is our sacred duty to do our part in funding our military, our currency, our government.

But we should do so fairly.

Right now, the Republican government punishes work and rewards leisure. Those dollars that are earned by sweat can be taxed as high as 35%. Those dollars that are earned by signing the backs of dividend checks or capital gains are taxed at no higher than 15%.

That is unfair. Why should we punish people for working? Our country was founded on the work ethic: that our national character is stronger when each of us is working to make our lives better.

Why is the dollar that the fireman, the teacher, the policeman, the autoworker, the nurse, the doctor, the lawyer, earn through the practice of their craft taxed higher than the dollar earned by the wealthy endorsing their checks?

A country that rewards work should not have a tax system that punishes work.

Now, the Kilroy Platform understands that investment is needed to create jobs and run the country.

Because of that we do not believe that dollars earned from investing should be taxed higher than dollars earned from working.

They should be taxed the same. All income, whether it's source come from labor, wealth, the lottery, or inheritance, should be taxed at the same rate.

We do not believe that labor is more or less important than investing or inheriting. All sources of income motivate people. As a result, they should all be taxed the same.

The Kilroy Platform is not advocating a flat tax. We still believe a progressive tax system is a fairer system of taxation.

Not all dollars are equal. The dollar that's used to buy milk for your children and pay for your mortgage are more important than the dollars we use to buy yachts and Jaguars. Since we have to fund the government, we would rather fund the government with dollars that might be used to buy yachts rather than dollars used to buy bread. As a result, we feel that a progressive tax system is the fairest way to do this.

But we don't feel that we should change the tax rates just because a dollar comes from labor rather than leisure. We need to reward work, not punish it.


Comments:
If you receive capital gains (perhaps from exercising options received as part of compensation for labor), you are really receiving a share of the profits of a company. The profits of that company are taxed at an effective rate of about 30%. (http://www.factcheck.org/article225.html) . So when you receive your final check from selling the stock, you've received only 60% of the original profits made by the corporation. That's an effective tax rate of 40% right there.

So what's regressive about that?
 
Hi Bob,

Capital gains are not a direct result of profit; rather, it's a result of the value that a company has in the marketplace.

When I talk stocks with my clients, I usually try to avoid the corporations and go right to a small business analogy. For example, the Old Pro in Palo Alto is a business that has see declining profits over the last few years; however, if it owned the land it was built on, it would see appreciating capital value.

If you owned the Old Pro since 1970, and sold it to me, the gain you would receive wouldn't be from rising profit, but from rising real estate values and should be taxed.

Think this doesn't happen at the big corporation level? I'd just point out the current K-MART-Sears merger. That's primarily a deal for real estate that's undervalued, not a deal for a company that is earning great profits.

Furthermore, as PBS's Frontline has reported (see a href=http://www.pbs.org/wgbh/pages/frontline/shows/tax/), large corporations are getting better and better at sheltering taxes. So much so that, as a percentage of total government revenue, corporations have paid a significantly lower share of taxes (see the Center for Public Policy - http://www.cbpp.org/10-16-03tax.htm for more on this topic.)

Furthermore, most large corporations pay closer to 20% rather than the 35% corporate tax rate (ibid).

Howerver, I do agree that corporate dividends do face double taxation.

So, here's my compromise.

1) Corporate taxation on income must be based on the same reports that are given to the financial community. That is, taxable income should equal reported income. All other deductions will be removed.

2) All profits distributed as dividends to shareholders would be deducted from the taxation needs of the corporation.

Again, not to get to technical on this point, but the goal of this is to just be fair and tax money earned from investment and money earned from labor at the same rate.
 
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