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It’s true you lose your property tax and other dedcution on AMT, but it doesn’t mean your tax bill is increased by tax rate*(property tax + deduction) because AMT has its own deduction.
Very true. The loss of incentive is not that straight-forward. As you say, plugging in faux numbers in Turbo Tax would give a clearer picture.
I should also clarify. I am not for AMT. I am just trying to find +ves in it. I would prefer SIMPLE and FLAT taxation with no deductions (not even state income tax etc), no deferred taxes (no 401K plan) and no other BS. Since that is not ever going to happen, I prefer everyone has to pay AMT - rather than abolishing it.
IMHO, AMT is not as horrible as the media makes it out to be, though nobody likes to pay extra taxes. We do a good amount of tax projections here and for those that fall into AMT, the difference between AMT and regular tax is usually only a few percent of total taxes.
NTA
Uh..... they're BACK!
I don't know if anyone has had the chance but Mortgage Imploder guy had some great articles about how defaults and downgrades are "bleeding" over from subprime! CFC's "Alt-A" paper is being put under review for a credit downgrade. Hmm.... :)
IMHO, AMT is not as horrible as the media makes it out to be, though nobody likes to pay extra taxes.
And what the media does not address is - how is the tax revenue shortfall going to be filled if AMT is abolished. Is there any viable answer that is likely to get majority support ? Hence I don't expect AMT to go away.
If I understand StuckinBA's post correctly, then I must say I largely agree with his conclusion. At this point in time, funneling more money into BA would just lead to a bigger property/credit/dot.comish bubble.
I actually like a completely flat federal tax system (though I know characterization is an even bigger part of the tax dodge game), though I think it needs to apply equally to capital gains and earned income. There's no reason why the Paris Hiltons of the world are paying at a lower tax rate than hard working med school grads and whatnot.
SP,
I must buy now or I'm going to miss out on at least $100K of tax free appreciation a year...
Obstinant FBs remind me of the girl who was counting her chicken before they hatched.
Has anyone seen this? Can someone tell me how housing sales can be sharply down and sharply up at the same time across the nation? Is CNBC biased?
allah,
And get this, the quote is from: Hugh Johnson!
Yes, they're biased.
Allah,
Sounds like they mean down compared to Dec 05, but up compared to Nov 06. Nothing new here.
allah,
It's obvious, we live in a multiverse with numerous realities. We live in one and the FBs in another. We can glimpse at certain events in the FB reality, but due to fundamental differences between the two realities, we find their reality puzzling and incomprehensible.
Allah,
Your link it to December's numbers. CNN was reporting on January's numbers.
I wasn't buying any of that talk at all, I just didn't realize that CNBC was so biased!
I thought it was kind of stupid when he said that the median was up so therefore the housing prices haven't dropped; that is kind of stupid!
I also watched the other video; how he said the Auto job market has crashed and alot of jobs were lost there, but we gained alot more jobs in other areas; but what are the salaries of these new jobs????
Just a comment or two regarding the estate tax...
So far as I know, justme, the estate tax has not been repealed. It does seem to me, however, that too much has been made of those who lose a modest- or mid-sized family enterprise to estate taxation.
My family's had a long-term, substantial interest in a mid-sized supply, warehousing and distribution company which long ago incorporated and was, until its sale to Goldman Sachs this January, closely held. Since the 1920s, it's been owned by our extended family, and has withstood a variety of inheritance taxation environments.
I consider that evidence enough that it has never been the fault of estate taxation when someone 'loses the farm' but, instead, an unwillingness to plan and take action.
There is now a boom in employment for repo men and foreclosure auctioneers. The companies that manufacture those battering rams used by local sheriffs to evict delinquent FBs are also cranking up production, completely offsetting all loses in auto mfg.
Everything is fine. Move along. Nothing to see here.
:lol: :lol: :lol: :lol: :lol: :lol:
Yeesh, so hostile! Those Google drones are probably putting finishing touches on a fantastic free Linux based OS...keep them there!
It is kind of funny how the Gates foundation dumped their house building stocks and invested heavily in ventilators and respiratory systems.
Microsoft Corp. Chairman Bill Gates has shed most of his investments in home builders, as revealed in a quarterly filing of the holdings of his charitable foundation.
The Gates Foundation took on an interest in Respironics Inc. , reporting a new stake of 500,000 shares in the maker of ventilators and respiratory drug-delivery systems.
Smart move I think because when all these FB's lose all that equity, there will be a huge demand for this stuff!! :lol:
Look at this realtor trying to convince people that the housing market isn't in trouble.
DinOR Says: It’s no accident that AMT is so “murkyâ€. What CH needs to calculate is the American Taxpayer Threshold of Pain. Until there’s a national outcry, don’t look for change. Again what absolutely befuddles me is that we’re hardly the only ones complaining about AMT and yet FB’s are having their day in court before US? With AMT impacting more filers each year you’d think that a more unified voice would arise?
Is it simply that FB’s bitch louder? Better? More often?
Taxpayers losing money to AMT are hurt themselves. This is capitalism. The individual is empowered and thus requires fewer protections.
On the other hand, F--ked Buyers losing their houses also severely injures banks and institutional lenders. The government is tied to banks, and it cares about how a sharp decline in mortgage backed securities would trash an already battered Fannie Mae and Freddie Mac.
Large MBS losses it would be a huge national scandal if the MBS market dragged down the values of a bunch of mutual funds when their 401k/IRA investors didn't even know they held that junk in the first place. I'm not even talking like 80% losses here, I'm talking like 20-25%. That's enough to set most baby boomers back another 5-10 years of retirement. The outrage would be on the scale of Enron. And if it looks like the bust was caused by a regulatory failing, you can guess who everybody is going to blame. Not just the realtors, mortgage brokers or the banks. The voters are going to blame the U.S. government.
And that, my friends, is why Congress cares.
Although if timed correctly, the Republicans could live a ticking bundle of dynamite for the Democrats next year. :twisted:
Hey FormerAptBroker,
I need to move this July to the Penninsula. Currently I'm in South Bay.
When would I find the best rates? Before the summer (April?) or during the summer (June?)
Thanks!
I passed those colorful cubes and balls (BALLS), and Lava lamps, then I remembered the gourmet lunch I had with google workers, cooked by the famous cook, I had a disgust.
sounds like hell...
eburbed Says:
> Hey FormerAptBroker,
> I need to move this July to the Peninsula.
> Currently I’m in South Bay.
> When would I find the best rates? Before the
> summer (April?) or during the summer (June?)
There is no “best time†to move to the Peninsula since the demand for rental properties is fairly stable year round (with the exception of the Holiday season when landlords get few calls since once most families set up the tree or menorah they are not moving until the next year).
I think the tax situation is only going to get worse. Who is going to pay for the medicare and Iraq bills? You can only inflate so much, and the Chinese bag holders will eventually get tired out.
Not an expert on tax myself, but if we are stuck in the middle or middle upper class, we become the easy target for tax income. US can't let the bottom class fall out because hey, they may take it to the street. The middle lower has little to offer. Obviously the middle and middle upper who consider themselves "well off" should chip in to help everyone out, shouldn't they? The rich can obviously shield their assets in convoluted offshore accounts.
So the bottom line is, try to become rich, if that fails, be poor. If both fail, try to be a middle upper class in another country for the coming 20 years.
OO: The problem with taxes is that the middle class massively outnumbers the rich. So if the AMT grazes down into the upper middle class and eventually into the "true" middle class, the tax base paying more will grow exponentially. I'd rather have 150 million nickels than 1 million $1 bills.
The other issue is that the real rich often have a significant majority of their wealth in static assets, especially land and amazing homes. This is particularly true of "old money". If those rich folks aren't generating much income relative to their static investments, then they aren't paying extra taxes beyond property tax. So the federal government isn't getting much money out of them. In contrast, the middle class has to work for a living, and thus provides a nice juicy income stream to the IRS.
If we want to bail out Medicare and other huge programs, we need to get more out of CORPORATE taxes. That's where all the real money is. We're drawing from the U.S. AND other countries there. Unfortunately, many companies now incorporate in Singapore or other Asian countries with a 15% tax rate and lots of tax credits. Singapore can afford to do that because it is tiny in comparison to the U.S. We need to find a way to keep U.S. businesses competitive and growing so that they generate better tax returns for the government. I think that will probably involve motivating U.S. companies to keep high-paying jobs onshore, either through improved competition or other incentives.
GC, The reason I asked if you have a daughter is your remark about that the girl should learn how to maintain home, cooking and whatever.
You ** might ** feel differently if you had a daughter, you probably wouldn't want that to be her primary skill set. A goal I have for my daughter is for her to be self sufficient, so that she has other choices besides just being able to maintain home and cooking.
GC,
I don't know where you got the idea I worked at Google. I don't even know where it's located, nor can I do much more on the computer than type into this submit comment box.
The arrogant swagger you saw in the Google workplace, reminds me of the ambiance at Lockheed in the height of the Reagan defense build up. It seemed just as phoney to me at the time.
Brand,
So if the AMT grazes down into the upper middle class and eventually into the "true" middle class, the tax base paying more will grow exponentially.
Amen. That may indeed be the bipartisan intention.
On the other hand (and as an Australian I do not pretend to be an authority on the AMT) I would have thought that the AMT would in normal circumstances act to reign in overmortgaging. On that basis the consensus here should therefore support it. :)
This is starting to sound to me like the UK Estate tax. Originally planned as purely a tax on the rich, house price appreciation has been so much greater than CPI indexation of the threshhold that middle class (and even working class around London) inheritances are now being hit. Indeed my own aunt's estate had to pay 10K GBP or so a couple of years ago.
The threshhold (currently about 270K GBP which = US$530K) and in particular the rate (40% of the above-threshhold balance) are enormous middle-class issues in the UK, but neither major party has committed to making any changes. I presume they are both too mindful of the ever-increasing income stream.
And in passing, you will probably not be surprised to learn that estate planning is a fast growing and very lucrative part of the financial services industry in the UK. ;)
Unless one works in a geographically isolated town with zero available rentals, housing is never a must buy. It is, at best, a strong buy bias. Kids can grow up in apartments and still get into good colleges, get good jobs, avoid drug use, etc. Babies don't care about housing anyways until after they start school.
ajh,
I don't think the problem lies with estate tax (it's hard for me to feel too sorry for people who are inheriting money). It's more of a fundamental problem of shortsighted tax/fiscal policy without accounting for inflation.
theotherside,
I acknowledge the "cute baby" factor, but it really applies to the parents rather than the baby itself.
I myself lived in a 12x8 caravan in a farmer's field in Yorkshire, England for the first 6 months of my life. (My mum keeps reminding me that we don't know what a really tight RE market is these days; it's just a question of price. In post WW2 England, even as late as the mid-1950's, there was a genuine housing shortage.)
Did that worry me, and the subsequent 2 1/2 years in a rented flat in Nairobi, Kenya? Of course not; I literally have no memories from that period.
astrid,
Any way you cut it, a marginal inheritance tax rate of 40% is too high.
With respect to indexation, even an honestly calculated CPI is the wrong measure, as it systematically penalises real income growth. Median income would be better.
The tax issues are different here in Australia. We have no inheritance tax at all, but we can't deduct mortgage interest on property owned for personal use. I wouldn't mind an AMT at all, it would rein in the more egregious tax minimisation techniques including some which have exacerbated our housing bubble.
I don't think a 40% marginal inheritance tax is particularly high, when compared to approximately 50% taxation on salary. I can't say how the other Anglophone countries deal with this issue, but to me, the US system is basically the opposite of fair, where the hardest working is penalized the most and where the indolent rich are rewarded for their womb picking skills.
Also, inheritance tax is just taxing dead people...a dead person is unlikely to notice a difference.
Huh, sorry, that was me typing without my thinking caps, didn't mean to be impersonating ajh.
Anyhow, I would like to hear a formula for defining a "decent/stable ... income outlook." My personal experience is that unless you work for the government, there is no such thing as a stable income outlook. As for decent...what's decent for the BA again?
I’m also looking forward to meeting Bizarro Randy H…
He's currently living with me again, after having burned through another spouse. He shares my last name and many of my genes, although he's a few years younger. When he told me he's eying some great condo in the city that just dropped below $1m I retreated to my "study" and opened the '84 port. He lives in the bearded Spock universe.
Inheritance taxes are ridiculous in all forms. It's double taxation. The government already got its cut once, why should it get a second piece of the pie? The only taxable exception should be tax exempt stuff like 401(k) plans that still had funds at the time of death.
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With millions now wishing they had not borrowed so much on such awful terms, can they use stupidity as a defense? If you are found to have been mentally incompetent at the time you signed a loan, you may be able to evade responsibility for it. Certainly you cannot make binding contracts with people who do not understand what they are signing.
Now the question is, what happens to the loan if you are declared a moron by a court of law?
Patrick