Visa holders Not required to pay capital gains

Did you know that the top 5% of all high income earners pick up 60% of the entire Federal tax burden for the US, while the bottom 50% of all  US taxpayers pay less than 4% of all Federal taxes?

I don't know why, but somehow the tall tale that America favors it's rich,and doesn't tax them is an enduring one. However, as you can see, nothing could be further from the truth.

Another enduring myth is that Republicans favor the rich and tax the poor. In reality, low income people earning under 31K have paid slightly less in taxes for the past eight years,than they did during the Clinton Administration, while high income earners, making between 183K and 388K, have been hit with highest taxes in a decade beginning in 2006, under the Bush Administration.

Speaking about tax concerns, President Bush, along with people on both sides of the aisle, expressed concern that the tax breaks for farmers in the recently passed Farm Bill were too high. Economists have been warning that President Bush's tax cuts, designed to benefit small business will be unsustainable in the coming years, and that the next administration is going to be faced with some tough choices on taxes.

While John McCain who has an A rating from the National Taxpayers Union has promised not to raise taxes on anyone, Obamas plan to raise both capital gains tax and Social Security taxes on high net worth individuals earning over 250K, has drawn criticism from many economists including the National Taxpayers Union, and the Heritage Foundation.

So where do we tax?

There are workable options to increase government revenue available that aren't being discussed by either party. One solution would be to close loopholes in the law which have opened up since Hurricane Katrina, that give individuals and companies making overseas charitable contributions the ability to write off the entire donation on their tax return.

In addition to scaring capital out of the United States, and discouraging domestic investment, US charities are complaining that the incentives to send money overseas, has caused their donations to US Charities to
decrease.

Though remittance payments are down, charitable tax contributions are increasing. Lack of regulation, over the increasing number of charitable organizations offering write offs is a worrying sign, that loopholes are being exploited "legally" to act as conduits for "value
added" "remittance payments" with a "write off". While doing research on this, I discovered firms that specialize in corporate "gifting", going out of their way to describe these loopholes in the law that allow people send money overseas, while getting a tax write off.

Trust me, high net worth individuals like Bill Gates and Oprah aren't just investing in Africa out of the goodness of their hearts. They are getting a 100% tax write off! And it's not just high net worth individuals who are sending money overseas and getting write offs,
remittance payments are well over a trillion dollars a year.By closing the loopholes, the US can expect to increase it's revenue, without raising taxes on our high income earners, and US entreprenuers, or by raising taxes on the lower and middle income earners.

Another option would be to review the tax treatment given to foreign companies and workers who have reciprocal agreements with the US.

The US has long favored giving different tax treatment to foreign investors and workers. In addition to giving foreigners a break on paying capital gains tax on stock market gains, I was suprised to learn tha we allow foreign visa holders the ability to come here with short term visa's, and purchase a home, even though they don't have permission yet to remain in the US indefinitely. On top of this, we allow them to sell the home for a profit, and give them a capital gains write off of up to $500,000 on profits made from the sale of the home.

While I am already getting alot of negative feedback from some people about my feelings on this, I have to say, that in my four years as a journalist and Legislative developer,that this the most unfair policy I have come across.

Most of the state personal income tax in my home state of California, comes from profits made on capital gains made by our top income earners.California has long been the top destination spot for foreign visa holders, who enjoy our generous state benefits, have kids here in our state school system, and have teenagers in higher education. And it is upsetting to know that they aren't contributing to healthcare, education or higher education in my state.

Chart