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Capital Gains Taxes

Derek85 Wrote: Oct 03, 2012 11:03 PM

When a company makes a profit for the year, that company must pay income taxes on the profits. Small businesses are frequently Sub S companies that just add the profits to the owner's other income and he or she pays income tax at regular rates. If the company then declares a dividend from the after tax profits, the recipient of the dividend must pay Income Tax again on the same company profits that have already been taxed once. Since this income is taxed TWICE it receives special treatment in that the secod time it is taxed at 15% rather than regular rates.

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simon77047 Wrote: Oct 03, 2012 11:23 PM

The recipient of the dividend pays taxes on capital gains, it is not called income tax. The capital gains is not given special treatment because it was taxed twice, but because there was an investor who took the risk to invest in the business.

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Dick 2992 Wrote: Oct 04, 2012 5:38 PM

Agreed!!

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Capital Gains Taxes

One of the many false talking points of the Obama administration is that a rich man like Warren Buffett should not be paying a lower tax rate than his secretary. But anyone whose earnings come from capital gains usually pays a lower tax rate.

How are capital gains different from ordinary income?

Ordinary income is usually guaranteed. If you work a certain amount of time, you are legally entitled to the pay that you were offered when you took the job. Capital gains involve risk. They are not guaranteed. You can invest your money and lose it all. Moreover, the year...

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