Dividend Tax Rant for DGI

[Dividend Watcher]

(07-18-2015, 12:58 PM)Concasto Wrote: If one is ONLY living off dividends/cap gains, would they have to pay any taxes? I thought if you made under 10k or so in income, you didn't have to pay any taxes on your dividends or cap gains.

Disregarding the accounting for long-term vs. short-term capital gains and also qualified vs. non-qualified dividends, in 2014 you were entitled (at a minimum) to take the standard deduction of:

• Single or married filing separately: $6,200
  
• Married filing jointly or a qualified widow(er): $12,400
  
• Head of household: $9,100
  

plus exemptions of $3,900 for yourself and for each dependent if your total income was less than approximately $152,00 before you have any taxable income.

So, a married couple entering retirement with just their dividends, interest and capital gains would have to have taxable income greater than $20,300 before they would owe any federal income tax.

(07-18-2015, 12:58 PM)Concasto Wrote: And I fully agree with the sentiment here. We are taxed in every possible way by our government. Our founding fathers are rolling in their graves as they revolted over a 3% tea tax.

This is waaaaaay too simplistic to describe the sentiment that led up to the Declaration of Independence and the war that led to the founding of "a new nation, conceived in Liberty, and dedicated to the proposition that all men are created equal."

It started with the Stamp act which, amongst other things, taxed certain financial transactions and trading that took place in the colonies. The tea tax was a result of the objections and resistance to the Townshend Acts which taxed numerous goods imported from around the world by British merchants and trading companies; principally the East India Company. All of these taxes were imposed on the Colonies by Parliament without any feedback or participation of those subject to the tax. In other words, they had no "representation" when the taxes were instituted. The tea tax was especially repugnant because it was intended to help a private company, the East India Company, recover from financial losses in the 7 Year War and also as a result of the Townshend Acts. The biggest troubling point was the tax was meant to be remitted to the British home government and not used for administering the colonial governments and improve conditions in the Colonies.

But these taxes were only a cog in the growing discontent. The British government forced colonial households to house and support British troops in their own homes, at their own expense, to control the population of those same colonies. The Parliament used foreign mercenaries, frequently Hessians, also to control those objecting to Parliament's actions with respect to the Colonies. The King, with ultimate "veto power", refused to allow some laws enacted in Colonial legislatures to go into effect. Additionally he & Parliament refused to enact such laws as Colonial legislatures deemed necessary for public order within the Colonies. The Colonial Governors & the King forced legislatures to move the location and times of the legislative sessions in order to stymie actions by those legislatures that the King didn't like. The King effected military superiority over Colonial assemblies when that legislature didn't agree with his own wishes. Numerous legal rights available to British subjects anywhere else in the world were suspended may times in the Colonies. Trade among the Colonies or amongst other countries was frequently seized or interrupted so that the British home government could extract monies from the transactions. All this, and much more, without any representation in Parliament to defend the British subjects in the new world.

This isn't to start an argument with you, Concasto. Volumes have been written about the circumstances and thought process that led up to our forefathers "revolting" against the British crown. Using the symbolism of the Boston Tea Party to stand for the reason 56 representatives drafted and signed a document declaring the 13 Colonies "free and independent states" is an indictment of our educational system's failure to instill a better understanding of why and how a wholly new way of governing a country came into effect. This isn't the forum to argue this topic either so I shan't continue this part of the dialog. However ...

I too think some taxes are getting a little out of hand but so is government spending which is what those taxes go to pay for. The answer, to me, is to use the opportunities to petition my Senators & Representative for change and when their goals and mine don't agree to vote against them. Most don't.