Tax status of corporate stock ownership

[LC]

Interesting article:

 

https://www.taxpolicycenter.org/taxvox/only-about-one-quarter-corporate-stock-owned-taxable-shareholders

[Tim Eriksen]

It is interesting.  Higher than I would have guessed.

 

Not sure why the writer said "Income accrued within retirement accounts is tax free."  Tax-deferred is a more appropriate description.

[Hielko]

I guess he was focusing on capital gains taxes. Most foreigners are probably also not investing tax free. But they aren't paying capital gains in the US, but still a large part probably pays dividend withholding taxes (and possibly other taxes in their home country).

 

And this graph also misses all the foreign stocks owned by US tax payers that do pay capital gains taxes in the US.

[bizaro86]

It is interesting.  Higher than I would have guessed.

 

Not sure why the writer said "Income accrued within retirement accounts is tax free."  Tax-deferred is a more appropriate description.

 

I don't know anything about the source.  But anyone smart enough to do that study probably understands the important difference between tax deferred and tax free. That implies to me the statement is intentional, and probably driven by bias of some kind.

[LC]

The statement is accurate. Income does accrue tax free in these accounts. When that income is eventually withdrawn, it is taxed. There is a difference between accrued and earned income.

 

Regardless the main point is the large decline in taxable accounts, and the implications on tax revenue and budgets