The Housing Bubble

Yes, for those people for whom it still wasn’t common knowledge.

He also said it needed to end.

That’s just it. It is just so acceptable that the President can just casually mention it in his speech. And yes, he talked about ending it along with creating jobs in clean energy (Solyndra) and lots of other complete bs. We are all too familiar with how well he gets things done.

It is just so acceptable that the President can just casually mention it in his speech.

It is? For whom is it acceptable? I’m willing to bet the vast majority of Americans are not aware that insider trading is legal for congressman, and would be against it if they found out.

And he didn’t ‘casually mention it’, he pointed it out as an abuse that must be ended. There’s quite a difference.

And he didn’t ‘casually mention it’, he pointed it out as an abuse that must be ended. There’s quite a difference.

Well, gee, 3 years into office and the huge Dodd-Frank Bill to bail out Wallstreet banks and pretend they are working to stop all this abuse, and more talk. Why didn’t this useless EEOC appointee try to make some changes during all this economic meltdown.
And don’t even try to blame the Republicans. When the economic turmoil was in full swing, the Democrats controlled BOTH houses of Congress and they took full advantage of that by working extensively on OBAMA_CARE and paying off their buddies with political graft. They didn’t give a hoot about these “ethical issues”, even though Nancy Pelosi and Obama were trying to pass off their reign as the most Transparent and Ethical and well-intentioned government, ever.
This was a pure political speech, like ALL other Obama speeches. There has been NO TRANSPARENCY. WE can’t even see his school grades, or most any personal information about the man. 27 Czares working behind the scenes. Everything is hidden. It’s all talk that sounds so sweet, but just like DODD_FRANK, and the huge “medical fiasco” called Obama-care, the actual implementation is an entirely different matter. We won’t see any meaningful reforms. If the Republicans proposed any in a bill, they will be “dead on arrival” in the Senate, unless there is plenty of money to be used at the discretion of the president for things like Solyndra. Oh, yea, they’ve taken the 5th. Where’s the money? I refuse to answer that question………
The most corrupt administration, ever.

“The most corrupt administration, ever.”

I don’t think that many administrations can beat U.S. Grant, although there are more recent exemplars of graft. And I don’t believe that hyperbole a la the Comic Book Guy from the Simpsons helps your argument.

I’m not an Obama fan and no corruption is good corruption, but in terms of money, Solyndra is small potatoes compared to the corruption in many other administrations.

Who is the EEOC appointee? Why do you want to see the president’s grades from school?

I don’t think that many administrations can beat U.S. Grant, although there are more recent exemplars of graft.

Agreed. When it came to corruption, the Grant administration pretty well retired the trophy.

You have to fess up all on your own.

That’s why drug lords and tax cheats love them, in addition to the mega-wealthy.

drug lords=tax cheats=mega-weathly.

All the same.

drug lords=tax cheats=mega-weathly.

All the same.

There is a lot of overlap in their Venn diagrams.

Actaully, I just read an article on what the “sheltered partly because it is located in the Cayman’s” referred to. It is an actual way of sheltering the income from tax. There are certain kinds of income that you have to pay tax on, even in tax sheltered accounts like an IRA. Using the Cayman corporation converts it from that sort of income to a corporate dividend and, obviously, IRAs don’t pay tax currently on dividend income. It is the same tax dodge that universities use to not pay tax on their hedge fund investments. I have never heard anyone talk about getting rid of it. Actually, the last time I heard it mentioned, someone was proposing that universities and the rest of the folks that use this strategy be allowed to not pay tax even without the off-shore corporation because it puts small, less sophisticated HEDGE FUNDS at a disadvantage in getting business.

Yes. That is how Washington works.

That isn’t even the way a Roth works.

Are you sure? Not having one, but I thought you put after tax money in and did not pay taxes on what that earns inside the “plan”. When you take money out, in excess of what you originally put in, you pay income taxes on it then.

What am I missing?

Skye, in a Roth you put in after-tax dollars, they accumulate tax-free and are NOT taxed after withdrawal. At least at the Fed level, not sure about state income taxes. So, all earnings are completely free of Fed taxes. A sweet deal if one is eligible (there are income limits for eligibility).

(there are income limits for eligibility).

Not in the Caymans!

Not in the Caymans!

Sure there are: minimum income limits.

There are income limits for putting in a certain amount yearly. But there is no income limit for converting money in a regular IRA to a Roth. That is what Bill who pretends to live in Phoenix has bragged about doing so often. He is converting his regular IRA to a Roth. Paying taxes currently so that the gains won’t be taxable when he withdraws them.

“gains won’t be taxable when he withdraws them”

Except that it doesn’t work that way.

Blue, you are going to have to clarify. What doesn’t work what way?

The tax on withdrawals. If you put $100 into a Roth and it grows to $103, when you take the money out of the appropriately aged account, you do not pay taxes on the first $100 (that was already after tax money) withdrawn, but you do pay taxes on the $3 when withdrawn. Earnings sit untaxed until withdrawn. Al least that’s the way it read to me when I looked at Roths a few years ago.

Blue,

It does work that way. Tax placed in a Roth IRA is clear from taxes forever according to current law. The taxation happens when you convert a regular IRA to a Roth IRA. Whatever amount you transfer is added into your adjusted gross income for the year and you pay income tax on the transferred amount.

This means if you can defer all or most of your income out of one year into another, you can transfer the IRA’s during your zero/low income year and be taxed on them at a lower overall rate. If you “move” to a non taxing state the same year you do this you won’t pay state income tax on that AGI either.

Once money gets into the ROTH IRA, you don’t pay tax on it ever again, which is why people try to use up their 401k’s and regular IRA’s before touching their ROTH’s.

Blue, what you are describing is what happens when you put money beyond the deductible amount into a 401(k). One of my law firms allowed us to do this. You put money in that has already been taxed and don’t get taxed on it again on the way out, but the gain is taxed as it is withdrawn. Same thing would apply if you put non-deductible money into a regular IRA. The bookeeping is onerous, so very few do it, but if you were positive of getting huge returns, it might be worth it to get to reinvest the returns without paying tax. If Romney’s offshore account with the Cayman blocker corporation is really an IRA, then this is probably what he did.

I get it. Thanks.

Bubb,

There really are people who get off on the power. Not a few Congresspeople are middle class mortgage-owners with kids, bills, and a genuine calling for public service. I know it’s not politic to say this sort of thing, but not everyone is in it for the money. (At least not to begin with….)

BTW, when Obama mentioned ending insider trading for members of Congress last night, didn’t I hear a few boos from the audience? THAT really caught me off-guard.

Obama acts as though “historically low interest rates” are not at all a completely fabricated occurrence that would not exist if not for his administrations’ criminal meddling. Nothing in his speech does not involve a scam involving massive money borrowing to solve a problem. Nothing innovative or genuinely inventive. What idiot couldn’t solve any problem with more money?

Liz

Please give us one example of a presidential policy enacted by Obama that creates low interest rates, and then explain how it is criminal?

I know it’s hard to think when your mouth is foaming so take a minute.

“Please give us one example of a presidential policy enacted by Obama that creates low interest rates, and then explain how it is criminal?”

It`s not criminal but niether is not giving approval to the Keystone XL Pipeline so Warren Buffet can bring the oil to market.

Obama keeps Bernanke as Fed chairman
Published: Tuesday, August 25, 2009, 10:26 AM

OAK BLUFFS, Mass. — President Barack Obama announced Tuesday he wants to keep Ben Bernanke on as Fed chairman, saying he shepherded America through the worst economic crisis since the Great Depression.

“Ben approached a financial system on the verge of collapse with calm and wisdom; with bold action and out-of-the-box thinking that has helped put the brakes on our economic freefall,” said Obama, with Bernanke standing by his side. “Almost none of the decisions he or any of us made have been easy.”

Obama made the announcement while on vacation on the island of Martha’s Vineyard off the coast of Massachusetts after aides said initially that the president intended a news-free week there. Both he and Bernanke sported the open-collar look.

http://www.oregonlive.com/news/index.ssf/2009/08/obama_keeps_bernanke_as_fed_ch.html - 81k

Fed extends conditional commitment until late 2014

January 25, 2012

The US Federal Reserve predicted that interest rates will stay on hold at least through late 2014 in a dramatic extension to the period for which it expects to keep rates low.

Thanks for not answering the question.

1. Obama kept the Bush appointee - True, but this is not a policy nor is it criminal.
2. The FED operates independently, certainly he did not appoint all the FED governors.

I’m still hoping that Liz will explain the “criminal policy” and “meddling” by Obama that have caused these low interest rates.

In her world what’s keeping rates low has nothing to do with the lac of faith in WS and the fears of a collapsing debt bubble.

“1. Obama kept the Bush appointee - True, but this is not a policy nor is it criminal.”

Not giving approval to the Keystone XL Pipeline so Warren Buffet can bring the oil to market and make a fortune is not criminal either, but is it policy?

Jeff it appears that you have a problem with the Keystone pipeline Jeff. My guess is the added revenue to Berkshires total revenue stream from this delay is a rounding error, but if you have facts that prove otherwise let me know. There are plenty of others who are against it, I’m not one of them. There are also plenty of things you could bash Obama on, things I’ve bashed him on.

My point was if your going to go all foaming mouth on the guy at least make it factual and back it up. Sorry if you didn’t get that. If Obama has delayed this to pay back a campaign contributor that’s criminal and in my opinion a good post, not sure you’ve backed it up with anything other than opinion. To claim that

Obama acts as though “historically low interest rates” are not at all a completely fabricated occurrence that would not exist if not for his administrations’ criminal meddling

Is loony. One he isn’t in charge of interest rates. Two he didn’t have some long relationship with Bernanke before appointing him. He did what most presidents have done he reappointed the guy in the seat. There is absolutely no meddling that Obama has done that has resulted in low interest rates and certainly no criminal meddling. All your deflection to other talking points just points out the weakness of your position.

He did drop Steve Jobs name quite a bit.

Does George Kaiser`s secretary pay more in taxes than her boss too?

Chu: Politics Had No Influence on Solyndra

By Amy Harder | National Journal – Thu, Nov 17, 2011..

Energy Secretary Steven Chu insisted at a House hearing on Thursday that politics did not influence Energy Department actions on a $535 million loan guarantee to the solar-energy company Solyndra, which defaulted on the federal loan this summer after filing for bankruptcy.

Chu also told lawmakers on Thursday that he was unaware that officials at his department urged Solyndra to hold off on announcing planned layoffs in 2010 until after the Nov. 2 elections, prior to which the Obama administration was touting Solyndra as a successful use of funds from the controversial stimulus package in 2009.

“I don’t know. I just learned about that,” Chu replied to Rep. Joe Barton, R-Texas, when Barton asked whether Chu knew about Solyndra’s delay in announcing layoffs.

Private investors of Solyndra, including a venture-capital firm founded by George Kaiser, an Oklahoma oil billionaire who bundled campaign donations for presidential candidate Barack Obama in 2008, said in an e-mail released this week that DOE officials did urge Solyndra to hold off on a layoffs announcement until Nov. 3, 2010, a day after the midterm elections in which Republicans took control of the House.

When Barton asked him if he knew who Kaiser was, Chu replied: “I know now.”

Several months later when Solyndra was on the brink of bankruptcy, DOE decided to restructure the loan to put $75 million of new private investments from firms including Kaiser’s before the government’s interests in the event of a default.

http://news.yahoo.com/chu-politics-had-no-influence-solyndra-120417999.html - 258k -

What I don’t get is, what do Republicans have against jobs? Is it all about trying to keep the unemployment rate high and trying to blame Obama, in order to get one of their not-Romney candidates into the WH?

I hope America never forgets that it was on W’s watch that we slipped into the most brutal recession since the 1930s.

Jobs dropped out of college.

He also dropped a lot of acid and lived in an Ashram in India for a while.

Hey now Mr. Knot $tucco, iffin’s you’d typed that:

Job$! Job$! Job$!

Eyes mighta brought up before Judge Lucy under the Looney Tunes Plagiari$m clause,…yous was close thar Mr., just yous watch it!

So? The capital gains are new income. I paid taxes on the money I used to pay for my law degree. Does that mean my income as a lawyer should be taxed at a lower rate? Because I already paid taxes on the “investment” I had to make in order to earn my salary?

They come from earned income (taxed at a higher rate) that he’s already paid the tax on and then invested.

Yes, we’re hearing that talking point a lot. But did Bain only use money that the partners had earlier earned as income? Or did they perhaps use a bit of borrowed money? I’m willing to bet they used a lot of leverage in their corporate raiding/takeovers. And borrowed money wasn’t earned, at least not by the borrowers.

Alpha, don’t give in and accept the argument on his terms. The fact that you paid tax on some amount of money, invest it and make MORE money from that investment which is then taxed is completely irrelevant. The basis in an investment is not taxed, just the gain. The only time when you can make money off an investment that was not taxed is in a 401(k) or deductible IRA or some other tax advantaged savings plan. Overtaxed fantasizing about unlimited tax deferral for his savings is not a legitimate argument.

I’d think that someone who makes in excess of $430K a year would have better things to fantasize about.

Alpha, don’t give in and accept the argument on his terms.

I agree with your framing of the argument, but I thought it might be illustrative to defeat the argument on its own terms, too: Borrowed money ain’t earned. ( An easier talking point for those who like it simple.)

“The basis in an investment is not taxed, just the gain.”

That’s not true for me (maybe it is for the Warren Buffets of the world, I can’t speak to that). The basis is taxed as regular income.

“Overtaxed fantasizing about unlimited tax deferral for his savings is not a legitimate argument.”

I’m not looking for unlimited tax deferral. I’m simply defending the argument that there is a legitimate argument that capital gains do deserve special tax treatment.

“I’d think that someone who makes in excess of $430K a year would have better things to fantasize about.”

What does this have to with anything? How about we leave the personal insults on the sidelines and debate facts, not throw mud.

It only comes from earned income at first.

After that is comes from… wait for it… wait for it… previous capital gains.

But so what if it comes form earned income all the time. That’s one channel. Capital gains is a TOTALLY SEPARATE & DISTINCT CHANNEL of income.

This is the same bull crap argument that heirs shouldn’t pay taxes on their inheritance. Income is income. Money is NOT an entity.

Don’t feel bad, Marie Antoinette didn’t get it either.

“I’m simply defending the argument that there is a legitimate argument that capital gains do deserve special tax treatment.”

Then let’s hear it.

Captial gains deserve special tax treatment because investing is something we want people to do (it puts money in the hands of corporations and banks where it can be used to grow our economy) and one way that we can encourage people to invest is by altering tax rates.

I think that is a simple enough argument. The ’special tax treatment’ that capital gains deserve are (imo) currently out of alignment with income taxes and others here in the past have suggested rates I could agree with.

So is a flat 15% on all income and capital gains acceptable to you?

The argument that capital gains should be taxed differently is based on encouraging people to invest in companies. Makes sense from the standpoint of getting people to risk their money to help build something. It’s an extra reward.

The argument fails when it’s applied to buying pre-existing shares and waiting for the appreciation. Such money isn’t creating anything, it’s just buying someone else out. It really breaks down when you see someone with billions invested making millions without working and getting preferred tax treatment.

“That’s not true for me (maybe it is for the Warren Buffets of the world, I can’t speak to that). The basis is taxed as regular income.”

You don;t even understand what you are saying. Of course your basis is taxed when you earn it. All income is (or should be). Then you invest it. When you cash out of the investment, you get your basis back tax-free because it was already taxed. It isn’t new money.

Why is the fact that you paid tax on the initial investment, relevant to the fact that you should pay tax on the new money you earn? The two have *nothing* to do with each other.

If your argument has changed to, you shouldn’t pay much tax on it because investing is a good thing, then you are going to have to explain why investing is BETTER than working, not just why investing is good.

And Al has a fantastic point. Investing only creates new working capital for companies when they are issuing new shares. The secondary market makes people more willing to buy new shares because they know they will be able to get their money out, but if you are arguing that capital gains should be tax advantaged because the people involved are creating a secondary market that encourages other people to invest in new shares that give working capital to companies (that they also could get by borrowing) then you are going to have to explain why that small participation in creating that secondary market is more important/worthy of tax advantage than working.

Captial gains deserve special tax treatment because investing is something we want people to do

You could say the same thing about income taxes, no? They deserve special treatment because we want people to work. Or is it just a given that we can get the little people to work, while we have to beg and bribe the rich to invest. (What else do you do with mega-money? Spend it? Great! That will help the economy.).

I’m not sure I agree that spending every dollar an economy has creates a particularly heathly economy. The average person already spends too much and saves not nearly enough.

I guess the standard deduction is the ’special tax treatment’ for working income. I’m sure rich people would still invest if there were no tax advantages, but I’m not sure the average person would.

As an example of this average people can get Roth IRAs which have max income limits and even more special tax treatments than capital gains, but does every person who is eligible and could be helped by one have one? No.

After reading these responses I think I want to buy more tax exempt bonds.

I understand the arguments, and realize that many of the responders feel that capital gains being taxed lower than income is unfair/unjust. I don’t feel that way, and, as such, I suppose we just have to agree to disagree.

What I can tell you, were it not for the capital gains rates, I would not own the investments that I currently do. There’s no way I’d play in the Wall St. casino without the favorable tax treatment.

Also, remember (if it helps) back when the market crashed, I, and many others, took big losses. Those losses cannot be written off in the year they were taken; I have a carry-forward loss likely that I’ll never get to fully take. So, pay regular income when you win, and then be unable to take the losses when you lose? That wouldn’t be very attractive to me.

“I’m sure rich people would still invest if there were no tax advantages, but I’m not sure the average person would. ”

The rich would invest from outside this country and get their own “personal” special tax advantage. It’s the “average person” who would be unable to skate the rules and wind up paying regular income on their investments.

Taxing the “super rich” is a red-herring, when people talk about that, they are really talking about taxing the “not rich yet” crowd. The super rich are just about immune to tax laws. Take a look at what happened when we had income tax rates at their very highest in this nation’s history (70%+, IIRC). Nobody paid it. Because, at that income range, you can afford the best legal help money can buy, and, more likely than not, your income is “mobile”, you can shift it offshore or through tax shelters.

Sounds like many people here would prefer that I pay more tax; where we’ll just have to “agree to disagree”. But, at the same time, don’t frame this incorrectly; we’re not talking about “taxing the rich” here, we’re talking about taxing “high income earners”. That’s 2 very different things.

average people can get Roth IRAs which have max income limits and even more special tax treatments than capital gains, but does every person who is eligible and could be helped by one have one? No.

That’s because the average person is spending all his/her money just getting by. And it certainly doesn’t justify having higher tax rates on income than on capital gains.

Anyone can make a capital gain. It’s just that the rich make the most of them, and yet we tax them at lower rates than we do the other form of income that everyone else tends to make.

The tax rates should be altered, that I agree with.

——————-
That’s because the average person is spending all his/her money just getting by. And it certainly doesn’t justify having higher tax rates on income than on capital gains.
…
Anyone can make a capital gain.
——————–
So does the average person have spare money to invest and make capital gains or do they not? I’m not a politician, I don’t know what ‘just getting by’ means. It sounds like you are creating a tatuology where only those who are not ‘just getting by’ can invest or save. Maybe ‘getting by’ needs to include some savings.

In any case, that’s not the world that I live in. The mall is crowded. Most people have some spare money they can use for consumption or investment. It seems that most choose to use it for consumption.

I’m not sure the entire economy should be gauged only to support to those who make at and less than the median income, if that’s what you mean by ‘just getting by’.

I think a distinction needs to be made with regards to capital gains. There are multiple forms of capital gains, but I basically see two main categories:

A) increasing asset values, and the difference at sale time of the asset value, and interest paid on bonds, or to savings accounts

B) dividends

Of the two, I think column A should be taxed at about a 50% rate, and column B should remain at 15% for a very simple reason. Money coming out of column B already has a large corporate tax paid out of it as the corporate income tax. A company can pay 0% interest in corporate income tax by spending all of their “income” on salaries, growth, etc. If a company ‘breaks even’ they have no income, but their stock value can appreciate with their growth. According to accounting rules, dividends are not deductible from a corporate tax return. Any money that comes in and goes out as a dividend must have corporate income tax paid on it.

Therefore, it would be fair to have dividends paid at the 15% rate since the corporate tax was already paid, and let the other forms of income be taxed at the higher rate where corporate tax was not paid.

I have a solution then

1. Capital gains tax break for all those in the bottom 95%. Most of these people earned their money via labor.
2. All capital gains and dividends above this level of income are taxed at the highest level.

I say just tax it as income. If you’re poor and living off it you won’t pay squat in taxes on it thanks to the standard deduction and the lowest brackets.

Comment by Realtors Are Liars®
2012-01-25 08:56:05
So is a flat 15% on all income and capital gains acceptable to you?
—————————————————
I’m hoping you’ll answer this question.

“So is a flat 15% on all income and capital gains acceptable to you?”

If you’re talking to me, yes, that would be wonderful. But never going to happen.

But you said Capital Gains should be taxes at a lower rate? So what you really want is to pay LESS taxes in total. I want to pay less too but I don’t have any capital gains. Why should you your earnings be set aside as a special case deserving a lower rate while excluding the majority of us who earn no capital gains?

Why should you your earnings be set aside as a special case deserving a lower rate while excluding the majority of us who earn no capital gains?

Seconded!

“Why should you your earnings be set aside as a special case deserving a lower rate while excluding the majority of us who earn no capital gains?”

Because without a low capital gains rate, the incentive to invest is greatly reduced. And, as someone pointed out above, it’s a “heads I win, tails you lose” situation when you start taxing cap gains at the same rate as regular income. I’d be much more willing to consider it if I could take unlimited short/long term losses on my return every year.

Even still, the net result of this kind of change (right or wrong) would be to drive people to tax free investments and stifle investment in “normal” businesses.

without a low capital gains rate, the incentive to invest is greatly reduced.

Once again I ask, what else does one do with the money?

“Once again I ask, what else does one do with the money?”

Lend it to other people. Either directly or through bonds.

Lend it to other people. Either directly or through bonds.

So? That’s great for the economy. Lend it to ‘job creators’ who aren’t afraid of paying higher tax rates if they’re successful.

WE already tax property why not other forms of wealth. Could it be because the middle class has a large share of their wealth in real estate while the elite control other assets. Not only that but the middle class borrows money to buy a house so they are paying a wealth tax on money they borrowed.

Bingo we have a winner.

There you go.

Now the question is why our politicians live like they were CEOs of large multinational corporations, which they are not.

Now the question is why our politicians live like they were CEOs of large multinational corporations, which they are not.

I guess because they need to fly back home to see their constituents a lot? And/or do their jobs there (like Dr. Paul)? Then fly back to the ‘office’ in DC?

And I don’t think the average congressman has private jets and limos, unless they own them themselves. (Yes, I know the top dogs get them, but you said ‘politicians’ in general.)

I think it’s rather obvious why the President doesn’t fly commercial.

Not sure why Buffett’s paying higher rates and the middle class staying on the same rates supposed to help the middle class?

If the mega-rich paid taxes at closer to the average rates in modern history, there would be more money available for middle class tax breaks, and for programs that help the middle class. It’s only complicated if you want it to be.

If the mega-rich paid taxes at closer to the average rates in modern history, there would be more money available for middle class tax breaks, and for programs that help the middle class.

There are just so many things wrong with that sentence. Where’s let’s stop the nonsense wars? Where’s let’s stop the corruption and waste? Where’s let’s close down one or two bureaucracies?

Still playing the Peter and Paul?

Still playing the Peter and Paul?

No, I’m responding to your argument. You’re avoiding mine by bringing in a host of other issues.

“If the mega-rich paid taxes at closer to the average rates in modern history, there would be more money available for middle class tax breaks, and for programs that help the middle class. ”

That’s assuming that the mega-rich would pay those rates. And it’s also assuming that the input of money into the tax system has a relationship to the output of “programs that help the middle class”. I’d argue that relationship is as best, tenuous, at worst, non-existent.

, they are calling for taxes on people who are “high income, not rich yet”.

No. He’s calling for capital gains to be taxed more like income. He’s not calling for higher income tax rates.

And if the mega-rich will just avoid the taxes anyway, then why are they (and you) so against the rates being raised? Seems like they’d just shrug their shoulders and laugh, if what you say is true.

No. He’s calling for capital gains to be taxed more like income. He’s not calling for higher income tax rates.

In fact, it should be readily apparent that if we taxes capital gains exactly the same as income, the income tax rates could be lowered for everyone.

“And if the mega-rich will just avoid the taxes anyway, then why are they (and you) so against the rates being raised?”

I’m nowhere near “mega-rich”. I’m closer in income to a guy living on the street than I am to a Warren Buffet/Bill Gates type guy. In general, the “mega-rich” seem to be pretty open to paying higher taxes, it’s generally the people in the middle (between “upper income” and “rich”) that are most against it. People like me don’t have the resources to fight (some would say “bilk”) the system like the mega-rich, we just pay a whole lot of tax and see much of it being wasted (IE, bank bailouts).

“In fact, it should be readily apparent that if we taxes capital gains exactly the same as income, the income tax rates could be lowered for everyone.”

That’s assuming that this is a “zero sum” game. And, if that were the case, I’d be much more willing to support it. What would more likely (IMHO) happen is that cap gains would become = ordinary income and the rates would stay as they are. It would just become a larger income stream for the government and would be wasted like the other 90% of the resources that they take in.

Give us a TABOR type arrangement (revenue neutral changes) and I’d be much more accept capital gains taxation being changed. But, without some way to control overall revenue, it would just increase the aggregate burden and make all of us pay the same, or more, taxes. That I’ll never support.

“would be wasted like the other 90% of the resources that they take in.”

Where is this 90% waste?

Paying for Grandma’s visit to the doctor.

“Where is this 90% waste?”

Let’s start with the military and TARP. Grandma’s visit to the Dr isn’t really a high priority for me, although, the reason that Grandma’s visit costs so much is because the government got involved in the first place.

That’s assuming that this is a “zero sum” game. And, if that were the case, I’d be much more willing to support it.

I would definitely like to see it done in a revenue-neutral manner. That way the taxes for the vast majority of people would go down, and this inequity would be removed from the system.

They’re creating jobs- in China!

“I realize this is oversimplified, because you can carry back 3 years and forward to reduce the impact of market fluctuations,”

You can’t simplify it to the place where you are lying. First of all, individuals can’t do capital loss carrybacks, though corporations can (they can do it for ordinary income as well). However, you also said that you can’t shelter the gain from the following years with the losses you suffered before, even though you can. Capital losses are carried forward indefinitely until they are used up. Indefinitely. That means forever. In addition, with capital gains, you can time your sales so that you have enough losses to offset the gains if you have this horrible loss situation that you are so scared of.

You can’t complain about rules that don’t actually exist. Or, I guess you can. Just don’t expect the rest of us to care that much.

Diogenes - “So, I put $100,000 in stock. I goes up 20%. the government gets to take 20,000/3 = 6667 dollars.”

Was all $100,000 in stock sold for $120,000 or are you forced to pay unrealised gains in the US?

“I now have 84,750. I have no other income, so I have a loss, that I could write off against income if I had any.”

Is there no carry forward of losses?

Your example seems to imply that you’re selling it all and repurchasing it every year. None of those things happen unless you sell.

That was not my understanding of losses carried forward.
Thanks for the correction. If what you say is true, then what your are saying is that my cost basis remains the same each year, after deducting any taxes previously sent in, so that if i occur a loss it maintain it as part of the new cost basis until a year in which i show a gain. Is the correct? In which case I would pay the 33% tax on the year a gain is shown and not pay again until the balance exceeded the prior years gain?
In that case I am totally wrong. The government just skims off the profits until i get back to a position of no gains.

While my example is dynamically wrong, I still see the government as the real winner. They will take the gains in winning years, reducing my balance and allow me to re-gain my new basis before taking more, if I occur losses. It’s alot different than IRA and 401k where gains and losses don’t amount to anything until the money is dispersed.

Try writing that up again with some actual scenarios that I can analyze for you (ignoring the short term/long term issue, too complicated).

The basic rules are this: You only pay taxes on capital gains when you realize the capital gain. Generally that means you are selling. In any given year, you net the gains and losses for that year. You get to make these decisions, so if you want to sell some of your big winners in a year, then you are welcome to use that opportunity to sell some losers as well so you have plenty of losses to offset those gains. If youy net comes out to a large loss, you get to use up to $3000 to offset ordinary income and the rest get carried forward to offset future ordinary income and future capital gains until it is all used up.

There is no circumstance that I can think of that conforms to your example where you have a net loss in year 2 and then pay tax in year three even though your gains in year 3 are less than the losses in year 2. Maybe if you have only long term losses in year 2 and short term gains in year 3 you would be stuck with it (even then you would be able to use that $3000, I think), but, since you get to decide when to sell what, you would not make that choice.

” my cost basis remains the same each year, after deducting any taxes previously sent in”

What do you mean by that? I didn’t say it, so I’m not sure where you are getting it. You don’t pay taxes on stock market gains unless you realize them. Most of the time that means you have to sell the shares. You don’t add taxes to your basis because you haven’t paid any taxes on those unrealized gains. I really have no idea what you are trying to say.

Scenario where capital gains are not treated differently: Someone sells stocks for $50k that were purchased for $40k, and has no other income. Net income is $10k. In Canada that would put you in the lowest marginal tax rate, and with the basic deduction would net a few hundered bucks in taxes.

That same person has $100 million in other stocks that cost $80 million, but it doesn’t matter because they’re unrealised gains.

Diogenes, no offense, but in addition to polly’s valid points, you also appear to have no understand if cost-basis.

Take just your first year of example: $100K invested, $20K of capital gains realized (assuming you sold), $6,667 taxes paid. After the gain is realized and the taxes paid, your cost-basis would NOT be $100K anymore. If you re-invest the $113,333 elsewhere, that is your new basis.

Let me simplify it for you. You do not exist in a vacuum.

You pay taxes on “your” money because you obtained it in the context of a larger society that allows you to do so. That society provides you a relatively safe place to procure food and shelter, interact with your fellow citizens, trade with them without undue fear of bandits or pirates, guarantees that “your” money will be accepted and accounted for and fungible.

When the society and its institutions advance, so do you. When the society declines, so does your proportionate share. In the meantime, you pay for the privilege of living within that generational society– one that’s been created by your forebears, and which will continue (in some form or another,) after you leave it. It’s called “civic responsibility,” and at present it’s not proportionately (or justly,) shared.

without undue fear of bandits or pirates

Politicians and banksters excepted, of course…

Warren is paying all the taxes he owes. I pay all the taxes I owe. RAL pays all the taxes he owes. Everyone is doing what they are supposed to do.

Now, how is changing that a precursor to a discussion of whether the amounts owed are where they ought to be.

Look I get that it is a cute rhetorical turn. It is. But it is entirely irrelevant to the discussion.

For example, Romney’s tax returns show that he is not paying the minimum amount of tax that he could. He made some of his charitable donations in cash, even though there is a tax advantage to making them with appreciated stock (which he certainly has available to him somewhere in his ortfolio). Do you think he is excluded from a discussion of lowering taxes because he isn’t even taking advantage of all the tax reducing strategies available to him?

OK buffet will pay if all the Tea Party and GOP types stop accepting Medicare, SS, and gov contracts.

“Would I be a hypocrite if I tell you not to drink, while, at the same time, enjoying a nice frosty beer in front of you?”

Not if you are arguing for an anti-beer law that would apply to you too.

“Not if you are arguing for an anti-beer law that would apply to you too.”

Really?

And, even so, that’s the thing. The “mega-rich” arguing for higher taxes aren’t talking about THEIR taxes. They are talking about MY taxes. They have shelters and elaborate setups already in place that will sidestep any increase in taxes; they want those darn 99%s to pay more, not really their buddies at in Davos.

“The “mega-rich” arguing for higher taxes aren’t talking about THEIR taxes. They are talking about MY taxes. They have shelters and elaborate setups already in place that will sidestep any increase in taxes; they want those darn 99%s to pay more”

I disagree with your take on this, though I have no more than you to go on, as far as getting inside the heads of rich folks. But when Buffett says that he should be paying more in taxes, I get the impression that he means just that, as opposed to some new scheme that he’d be able to skirt. He seems to be saying, “our tax laws should be such that people like me can’t get around them”.

Do you plan on accepting medicare, ss? Do you or have you ever used the mortgage interest deduction? Did you send in an extra check for the war in Iraq.

You guys all get the same talking points at the same time. Some guy pulls a lever and you all race to your computer.

“You guys all get the same talking points at the same time. Some guy pulls a lever and you all race to your computer.”

I thought I was the only one who noticed that.

Once they find out that Social Security would be fine if we removed the income caps on its funding,

Removing caps isn’t a tax increase.

You have been brainwashed well in public schools and the universities…

Removing caps isn’t a tax increase.

So I guess LOWERING the SS cap would not be a tax DECREASE for you and me?

Good, I propose we lower the SS cap to $5. This would not be a tax decrease according to your socialist logic.

Kling-on,

You need to get your naming convention aligned with reality. Taxes and revenues are not one and the same.

Removing caps isn’t a tax increase.

RAL, I agree with this approach even though it would be a tax increase for me.

But saying it is not a tax increase is disingenuous. It is not a RATE increase, but it is clearly an increase for anyone who ends up paying more than they did under the current formula.

How is it an increase when I pay into SS as much as Bill Gates?

It’s a tax increase.

It’s not a tax increase.

get a grip.

No no

The Republican credo is that they can take it away from those that worked hard and redistribute it to the wealthy. That’s why I pay a 24% effective tax rate and Mitt pays a 14% effective tax rate. That’s why we spend trillions on our military and war. That’s why there are massive no bid contracts handed out. That’s why Hank Paulson is allowed to become treasury secretary for 2 years and saves 200 million in taxes making him the highest paid gov employee ever. That’s why we allow WS to sell worthless mbs with bought and paid for AAA ratings. That’s why we have trade policies that gut manufacturing in this country. That’s why they would be fine with allowing corporate America to pollute our water and air.

Now to be fair a lot of Dems do the same thing. Most of our politicians are bought and paid for by the big money that you defend, but one party includes this stuff in it’s platform.

That’s the democrat credo. The hope if they can take everything away from those who have worked hard, they can distribute it more “equitably”.

The proper name for the party is the Democratic Party. Members of that party are referred to as Democrats. Note the capital “D.”

I’m noticing that quite a few of them also have exaggerated views of how good they are at things. I guess it may be the “everyone gets a trophy” mentality, but that doesn’t work as well in the real world as it does with a kids’ soccer team.

And don’t get me started on their lack of social skills. Just don’t.

Oh, brother. I’m starting to sound like a grumpy old curmudgeon.

Europe was “War-ing Up” by the mid 30’s. Hitler had everyone building war machines like mad and that Maginot Line cost some big bucks. The US is probably currently maxed-out as far as “War-Sh*t” being part of the GDP.

“War-ing” up is government funded stimulus.

Keynesian spending created the rebound. The middle class made money. The wealth was distributed as the elite paid for war and the middle class built the machines and fought it.

wikipedia
The Great Depression was a severe worldwide economic depression in the decade preceding World War II. The timing of the Great Depression varied across nations, but in most countries it started in about 1929 and lasted until the late 1930s or early 1940s.

Great for Germany!! Guess we should get a Hitler-type to take over the economy to get it fixed, right?

Great for Germany!! Guess we should get a Hitler-type to take over the economy to get it fixed, right?

But you’re right, Europe did get out of the depression faster than the U.S…wonder why? Could it be because of World War II?? The exact same thing that brought the U.S. out of depression. Europe just got to it sooner (and on Germany and Italy’s part helped caused it).

My FIL was a youth in Germany when Hitler rose to power. In addition to building up the military the Germans did a lot of public works and infrastructure projects, including the autobahn.

Germany, Japan, and Italy all followed Keynesian stimulus plans, which unfortunately involved building up big armies. Their resulting earlier exit from the Depression led many to believe that fascism was the Answer (when in fact Keynesian stimulus was, as was shown here when we began the major arms build-up, and subsequently ended the Depression).

eg
Japan’s Finance Minister Takahashi Korekiyo was the first to implement what have come to be identified as Keynesian economic policies: first, by large fiscal stimulus involving deficit spending; and second, by devaluing the currency. Takahashi used the Bank of Japan to sterilize the deficit spending and minimize resulting inflationary pressures. Econometric studies have identified the fiscal stimulus as especially effective.[65]
wikipedia

“including the autobahn”

The album Nagelbett was great!!

I can’t believe 2 banana is supporting Keynesian spending with his post.

Germany:

Rearmament played the greatest role in economic growth, although government investment in industry, public works programs, and tax relief for major industries also contributed to the rapid recovery. Unemployment, which had reached six million in 1932, fell to less than one million by 1936.

In addition to building up the military the Germans did a lot of public works and infrastructure projects, including the autobahn.

And guess what the American system of Interstate Highways was based on? If you guessed the autobahns, you’re right.

General Eisenhower was very impressed with them. We all know what he went on to become (President of the United States). Construction of the Interstates was his baby.

It is ironic isn’t it? Germany came out of their horrible depression by utilizing huge gov’t spending. Somehow, austerity and gov’t downsizing is supposed to end this great recession. Scratch head.

“And why are we REPEATING the same mistakes?”

Not enough government stimulus?

Because Hitler eliminated the Banksters and sent them off to concentration camps for being parasites on Germany.
We won’t do that here, so the same plan won’t work. You can’t have effective building and growth programs when you have a class of non-productive parasites leaching off the system.

Because Hitler eliminated the Banksters and sent them off to concentration camps for being parasites on Germany.
We won’t do that here, so the same plan won’t work. You can’t have effective building and growth programs when you have a class of non-productive parasites leaching off the system.

Ah, now we get to the root of the problem. You’re an anti-semitic fascist. So there’s really no rational arguing with you. (I already knew that, having gotten to this point with you before, but some may be learning it for the first time.)

‘Greece has its hooks in Italy, which has its hooks in France, which has its hooks in Germany, which has its hooks in British banks, which has its hooks in U.S. banks.’

Golly, you might be right. If we don’t borrow some money from China and give it to Greek bondholders, I could be eating gruel the rest of my days!!

‘Greece has its hooks in Italy, which has its hooks in France, which has its hooks in Germany, which has its hooks in British banks, which has its hooks in U.S. banks.’

Sounds like a giant circle jerk.

Perhaps it’s time for the financial industry to pull its pants back up and start working to support the real economy, and stop being a paper-shuffling ponzi scheme unto itself.

Sounds like a human centipede, except with countries.

Sounds like a human centipede, except with countries.

eew. Thanks for implanting that thought this morning, Carl!

It’s all about who is going to pay for the mess created by the credit bubble. The average worker or the elite. Make no mistake we could let Greece fail and then we could let the Hedge Funds that bought up a lot of Greek debt loose money (ie all those rich people that “earn their wealth” according to some) We could let the Hedge Funds go to the insurance companies that for some reason sold them policies. We could let the AIG’s of the world go bust and let asset prices fall as everyone tried to come up with cash to cover their positions. Then we could nationalize the failing banks and keep them loaning money for payrolls and such. Break them into smaller parts and sell them. The problem of course is that a lot of currently rich elite people would be made poor.

“The problem of course is that a lot of currently rich elite people would be made poor.”

Not anymore. They’ve had enough time to cash out their chips.

” Not anymore. They’ve had enough time to cash out their chips”

Which was the game plan all along. BTW Measton, nice summary. It is all about who’s going to pay for the mess. So far the rich elite are winning.

Ask Christopher Hitchen’s

Too late, he’s dead.

I think the point was that’s why he knows now :-).

At least TARP had to travel the Halls of Congress. Fannie/Freddie/AIG never left their quiet rooms.

“small fees”

If you use quotes around a phrase like that, it means that exact phrase appears in the article- which it doesn’t.

2banana

Do you have evidence that these are no doc loans?

Cricket’s

Trade imbalances are not just international. They are not going to be corrected with a “please”.

Apparently unless Obama imposes his will dictatorially it doesn’t count.

“Apparently unless Obama imposes his will dictatorially it doesn’t count.”

Now now…. let’s not strawman.

His proposal was like,
“hey business, please bring jobs back to America.”

What I want is more like,
“hey congress, please pass a law placing a tariff on money leaving the country to plug the international trade imbalance, bring back jobs and create upward wage growth.”

“Trade imbalances are not just international. They are not going to be corrected with a “please”.”

No, they would be corrected with devaluing the dollar in comparison with the currencies of our trading partners. But since everyone wants to do that, I don’t think we are going to pull it off.

Where are those off-planet trading partners?

The problem is the elite are still making money stripping wealth from the middle class, ie outsourcing labor. The elite control all levels of gov and most of the press. Thus you can expect little change no matter who is elected. Obama is probably a long shot that he would be more vocal on these issues if re elected as he would then no longer be dependent on big money, although he still mike to go on the lecture circuit when he’s done. Gingrich would sell his children for a buck, and Mitt would be first term and all his friends pay effective tax rates of 15% or less. STill I think Mitt and Obama would most likely have very similar presidencies.

IIRC, the republicans filibustered a bill that would remove tax breaks from outsourcing?

Awww…you’re welcome. I just typed it because I have a personality type that doesn’t deal well with slimy sales tactics. If it’s a purchase I really want to make I’ll ignore it as best I can, but once I’ve had it the deal is over. It sounded like Blue had hit his limit. I don’t think they’ve seen much of that during the bubble…

Realtors Are Antisocial Liars!

Maybe the advertising industry taught it to them. The TV shows have many messages. The ads have only one.

I would accept that if I could go to the store and buy stuff that isn’t imported.

For many things it’s too late. For other’s it’s not.

I recently bought a hatchet (perfect timing given all the storms and downed limbs we’ve had lately). I was able to find one made in the US, though it cost about 3x what the chinese-made ones cost. I bought it, though, and it’s certainly better quality.

Some battles are already lost. Fight the ones that aren’t.

You miss the point. I’m not saying end imports. I’m saying that without rising debt, imports would have to be balanced by exports.

Our situation is very similar to Brazil, which went through repeated “lost decades” following a debt driven consumption binge.

The result was stagnation, until its exports and imports could be brought into balance — either by exporting more, or substituting domestic production for imports.

Of course Brazil had to introduce new currencies and go through defaults along the way…

I recently bought a hatchet

I recently bought another American made Cutco brand knife (the only brand we buy). The quality is superb, but don’t expect to find them next to the junky imported knives on sale at places like Bed, Bath and Beyond.

Where does one buy a Cutco knife?

Yeah, I know. Dumb question. They probably have a website, right?

They only sell direct.

Don’t know where the ex- got our set. As I recall, they had regional sales people at the time.

Can’t tell you for sure, she took the knives and the paperwork when she moved into her own house.

My wife and I are seeing more and more quality products at competitive prices in many categories including clothing, shoes, a doormat, and even at the 99-cent store.

Read labels and vote with your dollars.

Freeloader?

Whatever.

I worked on an ice cream truck when I was 14. Worked McD when 16-17. Worked the the stock room of uncle’s buiness for a year. Waited tables.

At 19 I joined the Navy, served 7.5 years. While on shore duty working full time days, I drove pizza non-duty weekends and went to school evenings to support wife and 3 kids. Earned BSCS in 3.5 years with a 4.0 GPA.

I have never received an unemployment check or food stamps. Closest I’ve come to being a freeloader was WIC and EIC when I was an E4 in the Navy supporting a family on $15K a year.

This year I earned $95K and my wife earned another $55K. I’ve pencilled in our taxes and looks like we’ll be paying somewhere around $22K in federal income taxes on top of $7500 payroll taxes and about $4k payroll.

Stop making assumptions and off topic, irrelivant aligory (strawmen).

In the modern concept of momey, money is a representatin of other peoples’ debt. Money and debt ALWAYS equally offset.

So, is it possible for people with debt to pay it off without the people with money first having less money?

It is not a trick question.

It is not intended to promote one political party over the otehr as I think they both suck equally… or all 4 if you want to add Libertarians and Greens.

It is simple math.

Debt = money.

We’ve created lots and lots of money by creating lots and lots of debt.

Now, if we want to bring down debt, what has to happen to money?

Geez Darrell, if you don’t identify with the debtor in my parable, which is the American Persona, what in the world are your relentless rambling rants on the tragic doom of the debt spiral about anyway!?!

Man on dog action!

OHS NOS!!!

It’s more than that

This message would go out as talking points. The press would have expert after expert come on and say OMG this would lead to a depression. It would absolutely kill the middle class. You of course would get minimal time to make your point. They would choose the most unflattering clips. Someone would dig through your past and the cry of hypocrisy would ring through every talk radio and TV in the nation. A think tank would be formed with the goal of removing you from office. The head of your party would ring you on the telephone and tell you the the power full people didn’t like the waves you were making and those who had donated to your campaign in the past would call as well. Finally your political opponent would get a 5 million dollar check in the mail with the promise of more to come if there were any problem.

Exactly. Which was the point of my earlier statemetns about us being toast. To which you responded, next you will say we are all going to die.

I get it.

We are not going to do what would be required to avoid cascade default into depression.

Now, what to do about it?

‘what to do about it’

Some would say we are already in a depression. Recessions/depressions aren’t like catching the flu. These are adjustments that correct previous imbalances. The problem is our system responds by preventing the correction, thereby perpetuating the imbalances. So, will these people drive us into a Japan like scenario? I don’t think anyone can say, but it could turn out that way.

I try and speak out against these measures. But if it gets really bad, I intend to fight like hell to keep the bastards from using that ‘crisis’ to ram some globalist crap down our throats like they are doing to Greece, Italy and the rest of the EU right now.

Friend from college fits the “highly mobile hobo” description to a tee.

He’s had to move all over the country in order to stay employed as an optical engineer. And, guess what, he has high blood pressure. What a surprise.

SS is dully funded by payroll taxes(for now), Medicare is not.

Total payroll tax receipts in FY 2011 were $807B.
Expendatures were $744B SS and $494B Medicare.

The fact is, that someone retiring this year will get back everything they paid in 3 years or less, will get it back with interest in 8 years, and will live, on average, 18 years.

It worked when we were constantly raising rates, increasing the cap faster than inflation, and each generation was larger than the last. Not going to work when the boomers retire.

Not unless we do something to drastically increase tax receipts, like jobs and wage inflation…. and quick. In short, we’re doomed.

“The fact is, that someone retiring this year will get back everything they paid in 3 years or less”

Do you have a source for that? The reason I ask is that the current average SS reture benefit is about $1200 a month, or about 14K per year. That would mean that the average worker has only contributed (along with the employer’a match) about 43K.

I know that I have already contributed over 250K and I’m not even close to retirement age (I should have contributed 500K by the time I’m done). Sure, I made more than the average Joe over the years, but not 10X.

It will, as it usually has, come down to which is the least damaging choice.