patrick.net

Vicente says

You pour your every cent into "investing" and what comes out of it?

I think that is the result of our financial markets replacing investing with speculation and other zero-sum games. In the beginning of the 20th century, America invested heavily in its infrastructure and industry. That, along with progressive reforms, is what lead to the creation of the middle class and the prosperity of the mid-20th century.

Today, I think our business leaders are pillaging the country and plundering all the resources created by those early 20th century investments. However, investment does not need to be this way. Perhaps if William Black got to prosecute all the parasites responsible for the financial collapse, we could return to real investment.

In the absence of that, I agree that individual investors are better off in foreign markets.

clambo says

Consumption not only should be taxed, it IS taxed. They call it sales tax.

Sales Tax: 6.25%
Margin Federal Income Tax: 33%

Big difference. Not that I support sales taxes.

Why do we have to pay cap gain taxes at all?

Because millions on welfare/food stamps/section 8 housing/etc. depend on you!

California gasoline tax=$0.69 per gallon.
Where do you live? The sales tax where I live is almost 9%.
I do not like taxing people's wealth, labor, capital gains, passive income. The reason is it is government theft of your property to distribute it to others without your permission.
The other reason is that is accomplishes a negative effect on the economy. Seeking wealth sometimes raises our standard of living.
If they told Steve Jobs and Wozniak that they could never aspire to have wealth from their own balls, brains, and work, maybe they would not have started Apple.
If their first investor was not sure he could keep a large portion of the wealth his investment produced, maybe he'd be content to just buy muni bonds and say fuckit.
Of course zzyzzx is correct. There is not enough money being earned by wage slaves to pay for the social programs. So, where is there any money lying around? In investment accounts, of course! This is where the money saved went. So, Obama and the liberal hypocrites want a piece of this money.
You liberal fools don't seem to be aware. The next target of Reid, Pelosi, Obama and their asshole ilk is your 401K. Oh, you think that rich pot of gold will be left sacrosanct? You're smoking dope.
You have no recollection of their plans to "nationalize" 401Ks? The Democrats suggested taking it from you and giving you an annuity payout in exchange.
Their lame excuse for this proposed theft of your money? "The stock market is too risky for Americans retirement."
Of course, no one mentions that you can also own bond funds in your retirement accounts.

I can detect the wage slave hypocrites are just angry that they see their checks reduced by taxes. So, instead of complaining about it, they envy guys who have already saved and worked and invested. "Let uncle Sam take it from HIM!"
Sorry, your financial difficulties do not allow you to steal from someone else.
If you envy those jerks down on Wall St. go and try to be hired by someone down there and try your luck.
Go get hired by Goldman and join the squids. Go work for stupid B of A or their other ilk.
You'll be riding subways in Dante's hell to go to work with a bunch of nasty infighthing evil squids who want to fuck you over and climb your back to go higher.
But those who have other investments are not those guys, they are everyone who has ever saved a penny of his own sweat.
I didn't find a briefcase of cash in the street in 1982 when I began investing.

clambo says

Where do you live? The sales tax where I live is almost 9%.

Florida, just like my user info says. 6 to 7 percent is typical of state income taxes. California has an unusually high sales tax.

clambo says

Go get hired by Goldman and join the squids. Go work for stupid B of A or their other ilk.

No thanks, I just want to see these vermin taxed at LEAST the same rate I am. Why should I have to pay anything north of 30% when they pay 15%?

One founding principle is that "all men are created equal" and thus they should be treated equally before the law. Giving special tax privileges to "squids" should be a no-brainer even for no-brainers.

Vicente says

Why should I have to pay anything north of 30% when they pay 15%?

I think you need a new accountant. How are you paying 30%? last time I checked, US tax rate is progressive, the higher your taxable income, the higher your tax rate. Get a tax chart from IRS.

rockyroad says

I think you need a new accountant.

My tax table shows a top rate of 35%, perhaps you need some reading glasses. I do my own taxes thanks.

Here’s a quick rundown of what the Federal income tax brackets for 2012:

Tax Bracket Married Filing Jointly Single
10% Bracket $0 – $17,400 $0 – $8,700
15% Bracket $17,400 – $70,700 $8,700 – $35,350
25% Bracket $70,700 – $142,700 $35,350 – $85,650
28% Bracket $142,700 – $217,450 $85,650 – $178,650
33% Bracket $217,450 – $388,350 $178,650 – $388,350
35% Bracket Over $388,350 Over $388,350

Vicente says

My tax table shows a top rate of 35%, perhaps you need some reading glasses. I do my own taxes thanks.

So, your tax rate is 35%? meaning your "taxable" income is above $380k? And you are calling people that work for GS vermons?

Vicente says

No thanks, I just want to see these vermin taxed at LEAST the same rate I am. Why should I have to pay anything north of 30% when they pay 15%?

They are people too, if they mad as much as you do ($300k+), and able to get 15% tax rate, and you are making the same, but pay 2x the taxes.... shouldn't you get a new accountant?

Just saying...

rockyroad says

So, your tax rate is 35%? meaning your "taxable" income is above $380k? And you are calling people that work for GS vermons?

OK 28%, but let's call it' "about 30%".

Whatever bracket I'm in, it torques me that capital gains is taxed at 15%. It should be higher. I hold dividend-paying and some long equities I would not be unaffected myself.

Vicente says

Whatever bracket I'm in, it torques me that capital gains is taxed at 15%. It should be higher. I hold dividend-paying and some long equities I would not be unaffected myself.

What does it torque you? Capital gains, in theory, result from investment gains, such as selling real estate, business, or commonly from stocks and bonds. You do want to encourage investment right?

They fact that "poor" people don't get to participate as much in capital gains 15% rate is a different issue. "poor" people, by definition, have less discretionary income to invest...

But then again, "poor" people pay nearly no tax or

rockyroad says

What does it torque you? Capital gains, in theory, result from investment gains, such as selling real estate, business, or commonly from stocks and bonds. You do want to encourage investment right?

And thus we loop back around to the "rent-seeking" problem.

Most "investment" these days does not seek to expand our economy in ways that benefit the common man. They seek to extract rents using finance shenanigans. The richest families in America are majority inherited wealth not personal achievement.

Vicente says

The richest families in America are majority inherited wealth not personal achievement.

Dude, either you are ignorant or simply lying. Overwhelmingly, rich people are self-made: people with good incomes (doctors, dentists, veterinarians, managers, engineers, etc.) who have saved all their lives.

1. According to a study of Federal Reserve data, the nation’s richest 1%, inherited wealth accounted for only 9% of their net worth.

2. Less than 10% of today’s multi-millionaires cited “inheritance” as their source of wealth.

3. among millionaires, inherited wealth accounted for just 2% of their total sources of wealth.

http://blogs.wsj.com/wealth/2008/01/14/the-decline-of-inherited-money/

Vicente says

Most "investment" these days does not seek to expand our economy in ways that benefit the common man. They seek to extract rents using finance shenanigans. The richest families in America are majority inherited wealth not personal achievement.

Well said.

The WSJ is just another propaganda arm of NewsCorp.

wthrfrk80 says

The WSJ is just another propaganda arm of NewsCorp.

Right. WSJ data you don't believe... but charts from zillow you do believe. I thought you folks wanted the truth? or only the truth you can stomach?

I don't believe much of anything. I'm a radical skeptic.

clambo says

Someone above said that the death tax should be 50%! That's not only crazy, it's stealing wealth again.

The reason I support an inheritance tax (and I am likely to be affected by it) is because of the concentration of wealth that results from inheritance. I find it hard to maintain faith in the idea that everyone has a fair shot if money is being passed down from one generation to the next. I think flatter income distributions are better for the health of the country than large disparities, and I think policies should encourage things that are better for the country. Confiscating, stealing, taxing or otherwise taking money from rich dead people to combat the disparity is fine by me (again, I'm likely to be materially affected by this) Hopefully it gets used for good things, though, and not just to tilt the tables away from multi-generational wealth accumulation.

my two cents.

swebb says

Confiscating, stealing, taxing or otherwise taking money from rich dead people to combat the disparity is fine by me (again, I'm likely to be materially affected by this)

Who cares if you are affected? Doesn't make it any more legit. This is america, do you still believe in private property rights? The money was earned by someone, and you want to take half of that money just because the earner died?

What you proposing simply amounts to a cap on how long private property remains private? Wow, if you can't join 'em, tax 'em right?

Two seemingly contradictory facts drive a lot of this debate:

1. Most wealth in inherited, not earned.
2. Most millionaires did not inherit their money.

They are both true, but how can they both be true?

The answer is that a fairly small number of people inherit a VAST amount of wealth. Most people don't inherit very much.

rockyroad says

The money was earned by someone

No, not necessarily. The money could have been gained purely by non-productive rent-seeking. And it usually is, for the vast fortunes of the elite.

rockyroad says

do you still believe in private property rights?

Would you still be for private property rights if ONE person owned 100% of everything, and everyone else has to be their slaves, forever, because that one person owned all the land and extorted maximum rent from everyone?

The question is, what is the limit of private property, beyond which the situation is simply unfair and harmful to the whole society?

rockyroad says

Who cares if you are affected? Doesn't make it any more legit. This is america, do you still believe in private property rights? The money was earned by someone, and you want to take half of that money just because the earner died?
What you proposing simply amounts to a cap on how long private property remains private? Wow, if you can't join 'em, tax 'em right?

Your argument seems to have outlived your memory.

Lots to respond to here

clambo says

There is no moral explanation for the government stealing my money by force of prison simply because a group of people have the stupid idea that government knows what to do with my money better than I do.

I haven't ever justified taxation with the stupid idea that government knows what to do with the money better than you do. The way I make sense of it is that the government fills a vital role in providing infrastructure, security, and big program spending that private entities would not (or in a way that private entities would not). Think bridges and highways, military, and the 60s space program. I think these are good things that you and I have benefited from, and they have to be paid for somehow. Taxing the people, especially the ones who benefit the most, seems reasonable. Is there a limit? Absolutely. Are we taxing and spending beyond the "reasonable limit"? Perhaps. But it's obvious to me that some amount of tax is necessary, and it seems justified to me.

clambo says

Obviously this is false. Fannie&Freddie, Solyndra, and other examples abound.

Good examples, but just anecdotes. The plural of anecdote is not data.

clambo says

You liberal fools don't seem to be aware. The next target of Reid, Pelosi, Obama and their asshole ilk is your 401K. Oh, you think that rich pot of gold will be left sacrosanct? You're smoking dope.

Indeed if they come after my IRA/401K, I'm going to be livid. I put the money in with certain rules in place, and I expect the "contract" to be honored. I'm saying that it would lead to a guns blazing on the capital steps for me, but yes, I'd be pissed off and I might even join you in the republican/libertarian ranks if that happens.

rockyroad says

swebb says

Confiscating, stealing, taxing or otherwise taking money from rich dead people to combat the disparity is fine by me (again, I'm likely to be materially affected by this)

Who cares if you are affected? Doesn't make it any more legit.

Just preempting the "of course you are in favor of it because it doesn't affect you" argument. You are right, though, it doesn't justify it.

Two seemingly contradictory facts drive a lot of this debate:

1. Most wealth in inherited, not earned.
2. Most millionaires did not inherit their money.

They are both true, but how can they both be true?

Both are not facts. NO research supports that most wealth are inherited. All research find that modern wealth are earned, not inherited.

No, not necessarily. The money could have been gained purely by non-productive rent-seeking. And it usually is, for the vast fortunes of the elite.

Who's the judge of non-productive income? Tax patent-income more? Patent royalties sky-rocket. Tax rent-income more? rent increases.

Would you still be for private property rights if ONE person owned 100% of everything, and everyone has to be their slave, forever, because that one person owned all the land and extorted maximum rent from everyone?

Who owns everything? Mathematically, that can't happen. There are laws to prevent biz monopoly; are you suggesting a law to prevent private wealth monopoly? A cap on how rich you can be?

Patrick, what would you think of moving this thread to the Politics forum?

Just floating a suggestion. This topic doesn't seem to be related to investing at all.

OK Swebb,
The infastructure you mention is funded by 1. special taxes on gasoline, etc. 2. money raised by selling Bonds. You may even see them around from time to time, they are like the bonds to build a bridge, etc. Often the revenue bonds are paid by the bridge tolls, etc.
Airports are paid this way. The users of airplanes pay for the airport in the ticket.
Is it necessary to have a military and a space program. Sure. This of course should not grow huge however.
Evidently you weren't even aware that the target of the Democrats IS your retirement investments. There is so much money there they find it almost irresistible.
RE: Wealth inherited v made.
The richest people today didn't inherit their wealth. The richest people however also may seek ways to prevent the grave robbers in Washington from taking it after they are dead.
Both Bill Gates and Warren Buffet are not charitable people. They are getting their money out of the hands of Uncle Sam in their favorite way, rather than letting it be taken after they are dead.
It is true that robber barons existed and still exist. A good example is Carlos Slim, the richest man on earth. Telephones of all kinds are super expensive to use in Mexico and the people are gouged to the benefit of Telmex.
The answer to this problem is not within this discussion. I am talking about not stealing money from Dunross because Pelosi and Reid want to give it to someone in the slums who gets sec 8, food stamps, etc.
The guy bumming from me this afternoon at mcdonalds ($1 smoothies, I'm lovin it) told me about how he gets SSI but the meanie wants him to "narc out some people". The conclusion is this bum is getting SSI but they withhold it when he misses his meetings with the parole guys. So it goes.
Since "baby carries no cash" I had to let him bump off.

rockyroad says

NO research supports that most wealth are inherited. All research find that modern wealth are earned, not inherited.

Really? You don't seem to have researched the subject very well.

Look up the paper by Kotlikoff and Summers "The Role of lntergenerational Transfers in Aggregate Capital". Most wealth is in fact inherited and they proved it.

rockyroad says

Who owns everything? Mathematically, that can't happen

Actually, it's mathematically inevitable. Whoever has the most just has to get interest and rent from everyone else without any inheritance taxes. Game over.

msilenus says

Patrick, what would you think of moving this thread to the Politics forum?

OK.

zzyzzx says

Why do we have to pay cap gain taxes at all?

Because millions on welfare/food stamps/section 8 housing/etc. depend on you!

honest question: do you vote democrat, republican, either/or, or neither?

I'm not judging either way-- just curious.

Look up the paper by Kotlikoff and Summers "The Role of lntergenerational Transfers in Aggregate Capital". Most wealth is in fact inherited and they proved it.

Next time, you give a dollar to your son or daugher ..
I want the Govt to be there to take half of it !

Look up the paper by Kotlikoff and Summers "The Role of lntergenerational Transfers in Aggregate Capital". Most wealth is in fact inherited and they proved it.

We live in 2012. The paper you reference is dated 1981. The WSJ article I dated is 2008 (using 2001 data, latest available). WSJ asserted since 1989 inherited wealth has declined from 23%+ to less than 10% in 2001. Since we like extrapolations on this site, it's not a stretch to see inherited wealth dropping to well below 5% in 2012.

So yes, if we lived back in 1981, you'd be right. But we are discussing "modern" wealth correct?

----------------------------------------------------------------------------
Ideology aside, isn't the definition of rich/wealth to own significantly more than the average? So, as long as wealth is distributed unevenly, there will be rich and poor. Unless you want even distribution of wealth... but that's a different topic, and I hope none of us want that?

What about "fair" distribution of wealth? Unless you are Midas, I don't think anyone can be "fair". Which is what I began arguing... that fairness is a pipe dream, especially a fair tax. Heavily officiated activities, such as the Olympics, with enormous emphasis and motivation to enforce "fairness" see some of the most unfair results. Why do Russians and Chinese dominate gymnastics? Can't be economics... as Africans dominate marathon events. Can it be race? But that can't be; we are all equal; one human race right?

Fairness-anything is a misguided lesson to teach your kids. Asian Americans weren't treated fairly at anytime in US history. Jews certainly weren't treat fairly throughout world history. Yet, as a group, they are performing exceedingly well in modern America. I rarely hear about these groups marching on Washington, or occupying the Man. They simply study, work, emphasis on the family and respect the elderly.

America is still the most upwardly mobile society in history. You only need the drive, work ethic, and a little luck to be extremely successful. Family wealth is not a requirement, and has never been in America.

All this talk of the "rich" is relative. If you make $45k annually in America, that puts you in lower middle class in fly-over states, and barely surviving on the East/West coast. Yet the same salary puts you in the TOP 1.72%
richest people in the world! Maybe we should tax you more? Kids in Africa are starving, and that's not fair!

http://www.globalrichlist.com/

How you be "fair"? Do something with your talents/ideas, accumulate wealth and share the wealth with projects that seek to preserve culture and save lives. It's a never ending effort, as this is the human condition. BUT, seeking fairness by taking (too kind of wording) wealth from others based on perceived "justice" is dangerous.

rockyroad says

BUT, seeking fairness by taking (too kind of wording) wealth from others based on perceived "justice" is dangerous.

Sure. Also, what may be "perceived justice" by the voting public, is actually a bought politician demagoguering for the aristocracy to buy more votes/power.

Obama presents himself as robin hood. This might be accurate if Robin Hood were stealing from his fellow countrymen, giving half to the sheriff of nottingham, using the rest to buy loaves of bread at an inflated price from his brother's bakery, then tossing the bread into the ghetto for the poor to fight over.

The government is not a proper charity, and most here seem to agree.

Wealth disparity, or specifically limiting the political power resulting therof, is thus far the only valid argument for Obama's tax hikes on capital gains.

Is tax policy a valid tool to limit the political influence of the extreme rich? The government itself is owned by these very same extreme rich people. A few hundred or so in the government/aristocracy have convinced the masses that we need to take extra wealth away from the estimated 500k american millionaire tax filers last year. Taking money from the mini-rich, and giving this power to the super rich isn't going to remove private money-fluence from politics.

clambo says

s it necessary to have a military and a space program. Sure. This of course should not grow huge however.

And it's that question of where to draw the line (what should/shouldn't the government do) that most of the argument (generally) is really about. We probably don't agree on what services the government should provide. I understand why the government taxing you and spending it on things you don't agree with would boil your blood...but we are never all going to agree on where that line should be drawn, so we have to all get comfortable with being uncomfortable. At the end of the day the whole is greater than the sum of the parts, and I believe most of us benefit from the big society (along with the government) that we have built. No, it's not perfect, yes we should strive to improve things, but capital gains taxes and inheritance taxes aren't the battles I'm going to choose -- after all the wealthy have benefited from our great society more than anyone else (notwithstanding their hard work, risk, etc).

clambo says

Evidently you weren't even aware that the target of the Democrats IS your retirement investments. There is so much money there they find it almost irresistible.

I'm still not aware of it. You have asserted it a few times -- it's something I will have to look into.

rockyroad says

Unless you want even distribution of wealth... but that's a different topic, and I hope none of us want that?

Even, as in everyone has the same amount? No, of course not. More even? Flatter? Yes! I think it's better for the country. Scary things happen when the wealth disparity grows too severe.

rockyroad says

America is still the most upwardly mobile society in history.

I don't believe this is true, or at least not generally accepted as such.

http://moneyland.time.com/2012/01/05/the-loss-of-upward-mobility-in-the-u-s/

"Both pieces cite numbers from the Pew Charitable Trusts’ Economic Mobility Project and other studies that found that 42% of American men with fathers who were in the bottom fifth of the earning curve stay there. Meanwhile, only a quarter of Danes and Swedes and 30% of Britons born into the lower-income bracket will die in that same bracket."

Vicente says

Whatever bracket I'm in, it torques me that capital gains is taxed at 15%. It should be higher. I hold dividend-paying and some long equities I would not be unaffected myself.

Anything to prevent people for saving for their retirement, right?

Just trying to understand your line of thinking.

Left out from this conversation is not only income tax, but the de facto regressive tax on wages and salaries paid by workers:

Social Security and Medi- care/caid withholding.

Someone working and being paid ~$100k is paying a marginal rate of ~40%.

I think it bizarre that somebody could make ten times more by NOT working, but rather off dividends, and pay far lower tax rate.

Our tax code seems to say:
"Productive endeavors bad, laying on beach collecting dividends good."

thomas.wong1986 says

Look up the paper by Kotlikoff and Summers "The Role of lntergenerational Transfers in Aggregate Capital". Most wealth is in fact inherited and they proved it.

Next time, you give a dollar to your son or daugher ..

I want the Govt to be there to take half of it !

Wow, are you determined to misunderstand or what?

Not talking about a dollar. We're talking about VAST UNEARNED HEREDITARY wealth. Meaning permanent ruling class whose ownership of all resources (especially land) makes everyone else into a permanent servant class with no escape no matter how hard they work.

Can't happen? Hmmm....

French revolution
Russian revolution
Chinese revolution
and 1,000 other examples

Why did those people revolt?