ROMNEYS BUCKET PLAN - DON'T BE FOOLED BY THE POLITICAL TALKING POINTS

The rich continue to get Richer and the Poor continue to get Poorer while we argue the talking points without addressing the real issues.

I was listening to a discussion today on tax policy and it was focused on the Romney Tax Bucket Plan.  I'm no tax specialist but I know enough to know that Romney's Bucket Plan neglects to attack the real problem.  The main mechanism in our tax problem is that it favors the Rich therefore it allows the Rich to get Richer and the poor to get poorer.   Tax brackets or exemptions are not the real problem the real problem is too low of taxes on Capital Gains and Dividends.  But not once did that come up in the discussion.

Capital Gains are the profit realized on the sale of a non-inventory asset that was purchased at a cost amount that was lower than the amount realized on the sale. The most common capital gains are realized from the sale of stocks, bonds, precious metals and property.

Dividend is a portion of a company's earnings that is returned to shareholders. Dividends provide an added incentive (in the form of a return on your investment) to own stock in stable companies even if they are not experiencing much growth. 

For the most part, poor people do not own non-inventory assets so they do not benefit from the lowering of Capital Gains and Dividends tax.  Most of Rich People's wealth is in some way tied into non-inventory assets, therefore they significantly profit from the lowering of these taxes, which is why they have been able to significantly grow their wealth. Which means these tax cuts greatly favor the wealthy and they need to be changed.

In the United States, with certain exceptions, individuals and corporations pay income tax on the net total of all their capital gains. Short-term capital gains are taxed at a higher rate: the ordinary income tax rate. The tax rate for individuals on "long-term capital gains", which are gains on assets that have been held for over one year before being sold, is lower than the ordinary income tax rate, and in some tax brackets there is no tax due on such gains.

The tax rate on long-term gains was reduced in 1997 via the Taxpayer Relief Act of 1997 from 28% to 20% and again in 2003, via the Jobs and Growth Tax Relief Reconciliation Act of 2003, from 20% to 15% (for individuals, whose highest tax bracket is 15% or more), or from 10% to 5% for individuals in the lowest two income tax brackets (whose highest tax bracket is less than 15%). The reduced 15% tax rate on eligible dividends and capital gains, previously scheduled to expire in 2008, was extended through 2010 as a result of the Tax Increase Prevention and Reconciliation Act signed into law by President Bush on May 17, 2006, which also reduced the 5% rate to 0%. Toward the end of 2010, President Obama signed a law extending the reduced rate on eligible dividends until the end of 2012.

The law allows for individuals to defer capital gains taxes with tax planning strategies such as the structured sale (ensured installment sale), charitable trust (CRT), installment sale, private annuity trust, and a 1031 exchange.

The playing fields need to be made fair. It seems the rich feel that they continue to get richer because they are more intelligent, work harder and are more responsible than the poor, I say this is not true. I say it is a direct result of policies favoring the rich.