Capitalism at it's finest. (2 Viewers)

[otello]

Its finest 

not

It's finest

Carrie on.

 

[IvanKaramazov]

Nearly 10% of Americans have a net worth of at least $1 million and 5% have $2 million.

Invested at 5% that's an income of $50,000 and $100,000, respectively.

So?  We've already established that these aren't the people we're talking about. 

 

[Andy Dufresne]

"Because I earned it and I want it to go to where I choose" doesn't make sense but "Because you earned it and I want it to go where I choose" makes perfect sense.

Okay, comrade.

 

[msommer]

"Because I earned it and I want it to go to where I choose" doesn't make sense but "Because you earned it and I want it to go where I choose" makes perfect sense.

Okay, comrade.

You know what, you are right. We should tax the living daylights out of people who actually work for a living. That makes so much more sense

 

[NCCommish]

"Built on the backs"...you're so dramatic sometimes.

Someone did the work. In today's environment they did it with some of the longest hours in the first world and with 30 years of a declining share of the profits from that labor despite the huge growth in productivity which should lead to higher wages. And it does if you are a CEO, everyone else not so much.

If I were a parent I would be furious that we live in a system where my children will be the generation that sees a decline in their standard of living due to the economic policies of the last 30 years. I would be furious with the legalized bribery in our political system that brought that to fruition. And I would think a little higher tax rate might not be all bad.

 

[Andy Dufresne]

You know what, you are right. We should tax the living daylights out of people who actually work for a living. That makes so much more sense

Is this really the either/or or is it perhaps more subtle?

 

[IC FBGCav]

Was FDR wrong when he taxed at 94% on all income over 200K?

 

[Andy Dufresne]

Someone did the work. In today's environment they did it with some of the longest hours in the first world and with 30 years of a declining share of the profits from that labor despite the huge growth in productivity which should lead to higher wages. And it does if you are a CEO, everyone else not so much.

If I were a parent I would be furious that we live in a system where my children will be the generation that sees a decline in their standard of living due to the economic policies of the last 30 years. I would be furious with the legalized bribery in our political system that brought that to fruition. And I would think a little higher tax rate might not be all bad.

I'm not going to argue that our tax code is fine the way that it is.

But your lump characterization of the wealthy is offensive and is no way to get people to even listen to you, much less agree.

 

[Andy Dufresne]

Was FDR wrong when he taxed at 94% on all income over 200K?

I don't know but I could probably get behind an increase in the number of tax brackets. 

 

[NCCommish]

"Because I earned it and I want it to go to where I choose" doesn't make sense but "Because you earned it and I want it to go where I choose" makes perfect sense.

Okay, comrade.

2 out of every thousand estates face an estate tax. The current individual exemption is 5.45 million for 2016. The effective rate of the estate tax is 16%. So it's very few estates and they tend to be very big. So it isn't half to taxes like conservatives like to claim. It's just another case of a break for people who don't really need one. The same people, if they ever worked at all, whose fortunes benefited from the investments made with the taxes of others.

 

[NCCommish]

I'm not going to argue that our tax code is fine the way that it is.

But your lump characterization of the wealthy is offensive and is no way to get people to even listen to you, much less agree.

What was exactly offensive? That the wealthy in this country have benefited from 30 years of #######s from our representatives? From Reagan right on through to Obama and most of the legislators elected in that span. That's an incontrovertible fact. Was it that CEO pay has skyrocketed while workers pay has stagnated? Despite huge productivity gains that means workers are way more profitable and yet share in little to none of those profits realized? Again that's a fact. So having reread I don't see where I called the rich any names or attacked them for being rich. I simply laid out the reality of the world today.

 

[E Street Brat]

BREAK THE CHAINS

 

[cstu]

As far as estate taxes go yes they should be taxed. Of course they should. It makes no sense for someone to get their wealth tax free because they popped out of the right ######.

I subscribe the opposition to estate taxes to poor deluded Americans who think one day that will be my fortune. No it won't. The odds say it is very unlikely that most of us on this board will ever achieve a level of wealth where estate taxes are even a thing. Chet excluded of course and there are plenty of ways around them or to at least mitigate them. I am sure Chet is aware.

Socialism never took root in America because the poor see themselves not as an exploited proletariat, but as temporarily embarrassed millionaires.

 

[IvanKaramazov]

Was FDR wrong when he taxed at 94% on all income over 200K?

I think so, yes. 

 

[msommer]

Is this really the either/or or is it perhaps more subtle?

Who gets to pay the national debt down?

 

[IC FBGCav]

I think so, yes. 

Cool, can you unpack your thoughts.

 

[msommer]

You're right, at his peak John Rockefeller was worth 2% of the national economy. In today's dollars, that's $360 billion, quadruple Gates' wealth. Carnegie was also about 2% of the GDP.

The Vanderbilt peak was maybe $250 billion. And a few generations later, they're broke.

I'm sure anti trust regulation had absolutely no influence on that (hint: Standard oil)

 

[NCCommish]

I think so, yes. 

BTW I agree. But I also think we need to be higher than we are now. I think we passed the point of cuts having a stimulative effect a while ago.

 

[NCCommish]

I'm sure anti trust regulation had absolutely no influence on that (hint: Standard oil)

Awful lot of other wealthy families survived that and the Great Depression just fine. The Vanderbilts clearly screwed up.

 

[IvanKaramazov]

Cool, can you unpack your thoughts.

I think there's a point at which income taxes become confiscatory and are no longer justifiable.  To be clear, our current taxes in the US are nowhere near that level, but a 94% marginal tax rate is.  Different people would draw that line in different spots of course.

 

[wikkidpissah]

I think there's a point at which income taxes become confiscatory and are no longer justifiable.  To be clear, our current taxes in the US are nowhere near that level, but a 94% marginal tax rate is.  Different people would draw that line in different spots of course.

That determining an equiibrium, an approximation of what % of taxation disincentivizes innovation and such, has not occured in the 40some yrs this has been a major political begging point shows what a whore science economics has become.

 

[Andy Dufresne]

BTW I agree. But I also think we need to be higher than we are now. I think we passed the point of cuts having a stimulative effect a while ago.

I'd agree there too. The much maligned Laffer Curve says as much.

 

[NCCommish]

So on the tax thing I am sure I've done this before but for fun I'll put it here since we are talking about it.

In general I would be good with a top rate of no more than 45%. Maybe 40%. But there would be few if any deductions.

If we say there will be no Fair Tax here is what I'd do on individual taxes:

The first 20,800 you make no matter how much you make is federally tax free. Every dollar after that is taxed with very few loopholes. All income is income no income is more income than others so it all counts.

As for brackets probably something like this

20801-31200 : 5%

31200-52000: 7.5%

52001-65000: 10%

65001-100000: 15%

100001-250000: 20%

250001-500000: 25%

500000-1000000: 30%

1000001-5000000: 35%

5000001 - 10000000:40%

10000001 up : 45%

Now given the lack of deductions, and I would close virtually all of them, this would actually be pretty close to the effective rates. Also given the lack of deductions filing taxes for 80-90% of the American public just became a one page ten minute issue.

 

[IC FBGCav]

I think there's a point at which income taxes become confiscatory and are no longer justifiable.  To be clear, our current taxes in the US are nowhere near that level, but a 94% marginal tax rate is.  Different people would draw that line in different spots of course.

I understand that but what other actions should have FDR taken that would have had equal or better results?

 

[NCCommish]

I'd agree there too. The much maligned Laffer Curve says as much.

Common ground is a good thing

 

[Jayrod]

If you make $50k by working or by doing nothing then you still have to pay rent. 

Not if you don't sell the house.  Rent isn't an expense unless the house (asset) is sold.

Options are:

1) keep the house and have no liquid gains, but pay no rent.

2) sell the house and earn interest on the investment, but pay rent.

 

[NCCommish]

I understand that but what other actions should have FDR taken that would have had equal or better results?

To be fair we'll never know. Would 70% have been enough to get the revenue and leave enough for more growth increasing that revenue? We'll never know. We can only hypothesize based on our own opinions. There is no way to test that hypothesis. What's done is done. It worked mostly so that's the only thing we have to work with.

 

[Warrior]

They already paid income taxes when they earned the $, taxes on any additional $ earned from investments, taxes whenever anything was purchased with that $, property taxes for owning property with that $, etc. etc. et. Not sure they should have to pay taxes AGAIN on the same $ when they pass it on.

 

[Warrior]

Not if you don't sell the house.  Rent isn't an expense unless the house (asset) is sold.

Options are:

1) keep the house and have no liquid gains, but pay no rent.

2) sell the house and earn interest on the investment, but pay rent.

3) Keep the house and take out a loan.

 

[NCCommish]

They already paid income taxes when they earned the $, taxes on any additional $ earned from investments, taxes whenever anything was purchased with that $, property taxes for owning property with that $, etc. etc. et. Not sure they should have to pay taxes AGAIN on the same $ when they pass it on.

They aren't. The people who didn't do any of those things pay the tax for the money they just got for being born and managing to live long enough.

 

[Jayrod]

Well I was addressing FUJB and the snip he took, not Pickety or the article.

- eta - do me a favor (seriously) and help me out with a subtext, I know I suck at the internet talk thing, so please just spell out the point.

The quote was directly from the article.  The idea is that Gates' investing activities after leaving IBM have increased his net worth at the same rate or better than his working activities when he was running IBM.  

In other words, Gates' money makes more money (% wise) on its own than he increased his net work by actually working. 

 

[IC FBGCav]

The quote was directly from the article.  The idea is that Gates investing activities after leaving IBM have increased his net worth at the same rate or better than his working activities when he was running IBM.  

In other words, Gates' money makes more money (% wise) on its own than he increased his net work by actually working. 

Now if he only worked at IBM 

 

[dgreen]

That the wealthy in this country have benefited from 30 years of #######s from our representatives? From Reagan right on through to Obama and most of the legislators elected in that span. That's an incontrovertible fact.

I've always found it interesting that some blame the rich that our government has been bought by the rich. I guess blame can be put on both parties, but I'd put more blame on the government for being bought than the rich for making the purchase.

 

[Jayrod]

Now if he only worked at IBM 

Is he still?  I was under the impression that he was done and focuses all his time on the foundation.

 

[NCCommish]

I've always found it interesting that some blame the rich that our government has been bought by the rich. I guess blame can be put on both parties, but I'd put more blame on the government for being bought than the rich for making the purchase.

To be clear I blame the system for making it legal. I blame the guy that takes the money as much as the guy who gives it. Both parties are wrong in this transaction.

 

[IC FBGCav]

Is he still?  I was under the impression that he was done and focuses all his time on the foundation.

Microsoft....

 

[NCCommish]

Is he still?  I was under the impression that he was done and focuses all his time on the foundation.

Microsoft

 

[Jayrod]

3) Keep the house and take out a loan.

Good point.  This is basically what I tell anyone who will listen.  Finance your home at these sub-4% loans for as far out as you can.  Tying up money in your house is a waste at these rates.

 

[msommer]

I'm sure Gates' heirs will be non-billionaires and maybe non-millionaires faster than the Vanderbilt's lost their fortune (hint: he's giving away 99% of his wealth and wants his grandchildren to have to earn their own way).

Same with Buffett, but that's voluntary

 

[Jayrod]

Microsoft....

Got it.

 

[NCCommish]

I'm sure Gates' heirs will be non-billionaires and maybe non-millionaires faster than the Vanderbilt's lost their fortune (hint: he's giving away 99% of his wealth and wants his grandchildren to have to earn their own way).

One percent of what he has is still a lot. Plus it's the privileged upbringing that makes a big difference. All the wealthy friends, the resource laden social network you get, the top education, etc. These kids will have every advantage and opportunity to make their own way and make it big. Definitely born on third.

 

[wikkidpissah]

I'm sure Gates' heirs will be non-billionaires and maybe non-millionaires faster than the Vanderbilt's lost their fortune (hint: he's giving away 99% of his wealth and wants his grandchildren to have to earn their own way).

I've long wondered if the world would be better off if baron philathropists had exercised fair practices on the way to their fortunes than it is for them giving it away after.

 

[Rove!]

https://m.youtube.com/watch?v=qBJMZKgDj48

 

[IC FBGCav]

Good point.  This is basically what I tell anyone who will listen.  Finance your home at these sub-4% loans for as far out as you can.  Tying up money in your house is a waste at these rates.

My house is almost paid off but you are saying get the cash up to 80% of the homes value and invest it?

 

[NCCommish]

Speaking of taxes it's past time we got a VAT tax. Germany's is 19%, sounds good. It's a defacto import duty and we are pretty much the only advanced economy without one.

 

[James Daulton]

One percent of what he has is still a lot. Plus it's the privileged upbringing that makes a big difference. All the wealthy friends, the resource laden social network you get, the top education, etc. These kids will have every advantage and opportunity to make their own way and make it big. Definitely born on third.

More like born on third and the pitcher just balked. 

 

[Jayrod]

My house is almost paid off but you are saying get the cash up to 80% of the homes value and invest it?

Mathematically, yes it is better to re-finance at 3.75% or better and then invest it at 5% or better return.  You will be taxed on your gains, but if you itemize deductions, the home interest is deductible.  It is situationally dependent, but also, if you are in dire straits, it is easier to access an investment account than try and get a home loan when things aren't going well.

 

[Joe T]

Mathematically, yes it is better to re-finance at 3.75% or better and then invest it at 5% or better return.  You will be taxed on your gains, but if you itemize deductions, the home interest is deductible.  It is situationally dependent, but also, if you are in dire straits, it is easier to access an investment account than try and get a home loan when things aren't going well.

Agree with the bolded.

 

[Buckna]

But the reality is that Bettencourt saw her fortune grow by just as much as Entrepreneur Gates, over the same period, despite

the fact that she contributed absolutely nothing to the world's prosperity in that time. What's more, Investor Gates's fortune grew to eclipse that of Entrepreneur Gates, despite the fact that all that growth was made by moving money around, rather than making things that made the world better.

These seem like pretty politically charged statements written with some inherent bias.

 

[cstu]

My house is almost paid off but you are saying get the cash up to 80% of the homes value and invest it?

Why would you not?  There's no capital gains tax for a married couple until you reach $75k and mortgage interest is deductible.

If you have $1.5 million invested at 5% interest then you are not paying any capital gains tax at all.  Any interest you pay on your home is tax deductible so it's possible to make $75k in dividends tax free and pay zero taxes on your income.