Why are Dividends tax at a lower rate and is it fair?

Fat, the reason that GE didn't pay a dime in taxes is because of huge losses to GE capital during the financial collapse. However, GE has the larges tax department of any corporation in the country, they have many former heads of the IRS working for them, and they spend millions lobbying congress for more tax breaks, and government contracts. Of course the reason you don't hear about this is because they own own of the larges media companies in the country. Funny how that works isn't it?

Kind of funny you mention GE its really a good example. They're an American based company that's really no longer American. Just like a lot of other companies. But the big stock holders and execs getting rich on them are mostly American. So let's just speculate that there might have been a few Americans who made millions from GE last year, and probably paid very little taxes if any. Its possible some profits never even went into a US account. It gets entirely too complicated when your company is more profitable in another country. Its also a bit sad. But bottom line taxes should be paid on capital gains. Is it really fair that a guy who does nothing more than buy and sell stocks make millions, while the people who are working they're butts off to make that company profitable, struggle financially, and possibly pay higher taxes. I personally find it quite disturbing that some companies are showing huge profits while most of their employees are receiving government assistance. Is it somehow the responsibility of everyone else who pays taxes to subsidize the employees of a company that makes billions and pays little taxes?

Bob, where I work, we did capital projects, and we our leaders wanted only projects that had a 3 year pay back. In the calculation for the 3 year payback, we had to include 40% taken out for taxes. When I say 40% I mean at the top level of taxing. Of course, just like personal taxes, there are different level that the first x amount of money is taxed at 15%, then there is a second level taxed at 25%, and so on until you get in the 40% taxed on the top level. Yes when a company is in the to 40% level, of course the percent of tax all off it is not 40%, but lower. So we need to make sure we are on the same page. Many companies pay 40% on some of their profits, but the average may be a lot lower when you look at total paid versus earned because of the tax structured. GE earned money overseas and paid the taxes overseas in the country they earned the money. In the US they lost money and did not have to pay taxes on any US earned money. I think you need to study the tax code a little before you use the GE example. My company is foreigned owned. They pay the taxes in the US on US earnings, and do not have to pay taxes on US earnings until they take the money to their country. And generally it the tax in only dividend, because the company is listed as a corporation in the US, and profits are sent to the other countries as dividends.

The tax system is kind of complicated. From what I've seen the capital gains tax only goes to prevent it from being taxed at the higher rates of income. However if your below the 15% tax bracket. You'll still pay lower rates. I had a year when my only income was less than a few thousand in capital gains. I ended up paying no taxes that year.

Social Security is taxes twice if you planned for retirement and saved money for your retirement and when you earned it. Your tax refund is taxes twice once when you earn the money and in the years the government gives your money back. People who are on the government dole do not pay taxes on the benefits they receive and based on what a friend of mine received when she was on welfare it is close to $35,000. If everyone paid their fair share the bottom 45% would be paying Federal Income Tax instead of many of them being paid more in a tax refund than was collected. In reality everyone paying their "Fair Share" means those who are working and paying taxes should pay more so that those who aren't paying taxes now can get more money from the government.

All that will do is add to the unemployment lines, since very few people would be inclined to invest.

First off, there's nothing stopping people with lower incomes from investing and profiting from those investments that they pay capital gains on. I do. Aside from that, lowering capital gains taxes encourages people to invest more which spurs growth in the economy. Even CLINTON lowered capital gains taxes to spur the economy although democrats are loathe to admit it.

I think that a big misconception is that investing in stocks somehow creates jobs. First off the only investing that creates jobs is when a company invests in something that requires more labor, which and it still doesn't help if the jobs are produced overseas. Investing in small businesses and that whole buying American made products produced jobs. Some investing actually hurts the economy. Look what happened with oil speculation a few years ago. All that great investing drove gas prices up helping us into a recession. We need to stop buying into the bs that an investment in stocks is the same as investing in the country.

When the government is involved it will automatically cost more money simply because the government has to hire someone to oversee the program, and people to handle the money and decide who gets what. I once read an article written by a small business man who was justifying charging the government $120 for a hammer that could be purchased at the local store for about $10.00. To get the bid he had to be paying the prevailing wage (Union). The prevailing wage was based on the large city in his state. His wages were considerable less because the cost of doing business in his area was much less than in the large city. Next he had to hire an extra person just to collect the necessary data for the government, such things as: -The wood used in the handle had to be traced back to the tree it was cut from to prove it was not Old Growth Timber. -The Steel used in the head of the hammer was made from US steel and not imported or using imported iron or other foreign ingredients. -The materials were transported by Union Truck Drivers. -Prove that the companies he dealt with were hiring minorities and handicapped people. -Prove that his company was compliant with all laws and regulations. -He had to show that his plant was OSHA compliant. -He had to make sure any supplier of his had the necessary documentation for Affirmative Action Plan in hiring. These are the requirements that Congress imposes on business but not on themselves. Many people feel that if Congress had to comply with all the rules and regulations we would have a lot fewer. Even Senator McGovern a strong believer in a central government said that after he retired from Congress and started a business of his own that he never realized the burden imposed by Congress.

Fat, find me a corporation that is paying 35% in taxes!!!! I use to ask the same thing of people who complained about the top tax bracket paying 35%. Corporations have departments that lower their overall tax rate by all means. Last year GE made billions and didn't pay a dime in taxes.