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• Wednesday, April 2, 2008 01:16 PM

  re: Worst letters ever

  Dear Lynx,

  You wrote:

  "Heck, square_n_level doesn't even understand the concept of "income". With people like these, how can you have a conversation? They lack the basic education and understanding necessary to move beyond "but Limbaugh said so!""

  Here's your homework assignment, Lynx: look at the front of Form 1040 (yes, the tax return). Now, find line 13. This is the spot where your reconciled Schedule D Capital Gains and Losses enter in to your INCOME. Some of these are taxed today at reduced rates (some not), but it is still INCOME which adds to your Adjusted Gross INCOME. If you sell anything for a capital gain, and you do not have offsetting capital losses, you will required to pay INCOME tax at a percentage of the amount of the recognized capital gain. Hopefully that's not confusing for you. Capital gains is INCOME for taxation purposes, with a reduced rate (today).

  But here's the point (with an example) for our better-educated readers: Michael Eisner's 1997 sale of $570M of stock options. Back out his stock options, and his salary for the year was $750,000. A lot of money - no question. So my point is simply that stock option exercises and sales are the lion's share of the rich/poor income disparity people complain about. I would think that everybody knows this by now.

  The wealth disparity is a different discussion. People at all levels simply need to live within their means. It's not hard to point out the oversized SUVs, houses, and living-large vacations that drive a lot of the debt out today. A Fed governor has stated that people "used their houses as ATM machines" and we all know where that money went (hint: it wasn't buy groceries).

  —square_n_level Read square_n_level's other letters
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