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Originally Posted by aceventura3
If true why do people like Buffet and Gates pay themselves trivial amounts compared to their real wealth. These men through most of there tenure among the wealthiest people in the world could have paid themselves $10 million or more in salary but did not. They hold their wealth in unrealized capital gains and don't pay dividends (MSFT just started). Capital gains are taxed at a lower rate, salary and dividends are taxed at a much higher rate. To a "poor" person what you wrote is true - but if a "poor" got to certain income levels, there behaviors would fall into a pattern followed by most other people in that same wealth category.
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It should always be assumed that those in the know will maximize their tax efficiency. This is not a good defense for tax cuts.
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He wants you taxed more. He avoids paying taxes.
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He maximized his tax efficiency. He's not an idiot, and I won't criticize him for it. I'd likely attempt the same thing were I in his shoes. However, there are ways to tax income in such a way where the rich end up paying more regardless, if that were the goal. You can only be so tax efficient.
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The real marginal tax rate can be much higher than 35%. People in high marginal brackets tend to hire expensive consultants to help get into a lower real marginal tax rate.
Even looking into this legal tax avoidance business, don't you agree that it is unproductive in terms of real economic activity. Wouldn't society be better off if these minds and resources worked on activities other than saving "rich" people tax dollars? At lower rates these resource would be employed doing other things, potentially much more productive things.
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I doubt lower taxes for the rich will destroy the "legal tax avoidance business." I sincerely doubt it. But I do agree that these minds and resources could be better spent. But, alas, the rich want to maximize their net worth. Again, I won't criticize them for doing that.
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You suspend logic. Every decision made has a pivot point, where a yes becomes no or a no becomes yes. 1%, 3%, 5% can make a measurable difference in some cases.
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Oh, I assure you I did no such thing. I didn't say anything about how expired tax cuts on capital gains taxes would affect investing activity; I merely stated that the difference in taxation wouldn't stop many people from investing—period. Investors need to take many things into account even beyond taxes: another one is fees. Investors will always work with what stands in their way to make a profit. Reverting to a capital gains tax rate 3 to 5% higher than it was over the past several years won't stop people from buying and selling. They'll just need to work harder and make sounder decisions to maintain their desired ROI.
So, again, reverting to the previous tax rates won't stop them from investing.