patrick.net

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.

I'm also looking forward to meeting Bizarro Randy H...

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So far as I know, justme, the estate tax has not been repealed.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.

Smart move I think because when all these FB's lose all that equity, there will be a huge demand for this stuff!! :lol:

oops, forgot to close the link.

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 “murky”. 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.

Wow, the prices have really dropped, check this out!

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.

I'm telling you, the picture of the frazzled bird at the beginning of this thread = your average Silicon Valley new mortgage owner.

That doofy-lookin' bird is the face of your average, bamboozled Silicon Valley Adjustable Rate Mortgage holder.

Ha, ha!

Keep on flappin' your little winglets, ARM owners. Keep 'em flappin' into the hurricane force financial winds beginning to blow in from the Pacific.

You little housing Icaruses...

astrid,

40% is high enough so that people go to extreme lengths to avoid it, thereby introducing inefficiencies into the overall system.

It's the same with the difference between the top income tax rate in Australia of 48.5% vs the over-12-months capital gains tax rate of 25%. A lot of people are prepared to take big risks to change their 'income' into 'capital gains' because of the differential.

(I could bore you to tears about how that impacts the Oz RE market, suffice it to say that's a major factor why we have consistently high prices.)

Any system where the benefits from (legal) tax avoidance significantly exceed the benefits from increasing income is flawed.

I believe the biggest single bonus paid by Goldman Sachs last year was to the head of the London "Structured Finance" team. I.e. to the guy heading up the tax avoidance team.

Brand,

I agree with you, in any case, being a middle class in the US of A is the worst combination of all when it comes to tax suffering (speaking of which, I am in the middle of doing my taxes).

ajh,

I was recently on a flight with an English couple who flew to Taihiti to camp out so as to escape estate tax from UK IRS. According to them, UK IRS can still get their tombs if they happen to die within 7 years of moving overseas, so they told me that there is a wave of financially better-off UK seniors retiring overseas early in the hope of escaping that death tax, and seeking warmth on the side.

completely OT, but is an amazing story that occurred here yesterday. Girl got sucked up into a storm on a paraglider, went up to 30,000 ft and -40 deg, was unconscious with oxygen deprivation for an hour while the glider flew itself, beaten by melon sized hail, then landed safely, and inadvertently set a new record for a human at altitude...

Mount Everest is 8848 metres, or 29,028 feet. Ms Wisnierska's track log - a flight trajectory downloaded from her GPS handset and altimeter - recorded her top altitude at 9946 metres.

+ here

One of the more intriguing taxation proposals I recall - and I imagine it's from sufficiently long ago that some here may be too young to remember it - was Steve Forbes' flat tax.

He had computer modelling done to see what the figure would have to be to provide a budget surplus (at the time) if all deductions of every kind were eliminated for both individuals and corporations. It was just shy of ten percent. Add up what came in this year, move the decimal one to the left, and then cut Uncle Sam his check.

No incentives involved, no social engineering or calculations of depreciation and so on, and on...

Well, memory's a beast. It was 17%.

HK has the optional flat 15% rate even now -- I believe you have the choice of doing all the usual calculations, or else just cutting them a check for 15%.

Oz used to have estate taxes ('death duties') levied on a state basis, so when one state removed death duties as a ploy, the flight of grey capital to that state meant all the other states soon followed suit...

I found in looking up Forbes' ideas that many of the countries which made up the former Soviet Union have adopted a flat tax. In Russia, the figure is 13%, and capital gains, inheritance, pensions and savings are exempt.

This is giving me ideas, though I imagine St. Petersburg's a bit chilly and dark about now.

I'm not a fan of flat tax systems, unless I can be convinced that social justice will be served by letting off people who have far more than they need to live lightly. You will still have 5% unemployment and welfare needs to service. However, you might see the disappearance of many of the tax avoidance advisors, which would be a welcome relief, although I'm concerned that people would still seek to avoid even the 15% tax rate. It might be better to close off some of the more obvious avoidance loopholes instead. Most ordinary wage earners find it very hard to find much to claim as a deduction in general, unless they are tradespersons. Altho if total tax revenues were reduced considerably, what would be the first thing to go? Expenditure on arms and the military-industrial complex? Congress salaries and perks? Maybe Washington would be less manipulative on the world stage with less money to throw around...

One of the more intriguing taxation proposals I recall - and I imagine it’s from sufficiently long ago that some here may be too young to remember it - was Steve Forbes’ flat tax.

I remember that... aside from that he had some other "interesting" ideas early on that are summed up in this wiki entry:

http://en.wikipedia.org/wiki/Steve_Forbes

Steve Forbes claimed, in a TV ad, that he helped craft a tax cut in New Jersey prior to entering the 1996 primary. Forbes entered the Republican primaries for President of the United States in 1996 and 2000, primarily running on a campaign to establish a flat income tax. He also supported the ideas of re-introducing 4 1/2% mortgages and term limits in 1996, but dropped both in 2000 (as they were minor planks in his overall platform).

In his 2000 campaign, Forbes professed his support for social conservatism along with his supply-side economics. Despite holding opposite positions in 1996, for the 2000 campaign, Forbes announced he was adamantly opposed to abortion and supported prayer in public schools.

Ah... voodo economics.