Taxes, Spending, the Fiscal Cliff, and Austerity

[Foxfyre]

GM is losing money in Europe and not Asia or the US.

If you believe that, I have a nice assortment of bridges to show you.

President Obama is proud of his bailout of General Motors. That’s good, because, if he wins a second term, he is probably going to have to bail GM out again. The company is once again losing market share, and it seems unable to develop products that are truly competitive in the U.S. market.

Right now, the federal government owns 500,000,000 shares of GM, or about 26% of the company. It would need to get about $53.00/share for these to break even on the bailout, but the stock closed at only $20.21/share on Tuesday. This left the government holding $10.1 billion worth of stock, and sitting on an unrealized loss of $16.4 billion.

Right now, the government’s GM stock is worth about 39% less than it was on November 17, 2010, when the company went public at $33.00/share. However, during the intervening time, the Dow Jones Industrial Average has risen by almost 20%, so GM shares have lost 49% of their value relative to the Dow.
General Motors Is Headed For Bankruptcy -- Again - Forbes

It is true that GM has not been doing well in Europe this last year.
GM posts profit in spite of Europe woes - Aug. 2, 2012'

And it is true that most of GM's profits, such as they are, come from its Asian markets.

 

[Foxfyre]

Apologies to Wiseacre for veering off course with this thread, but the effects of government economic policy as reflected in the budget or lack thereof is pertinent to the discussion I hope.

It also speaks to whether we do want the Republicans to throw up their hands and give up and allow the Democrats and Obama to do whatever they want in hopes this will educate the people out there. I just remind us that we've had four years of history of Obamanomics now and the results didn't much affect the election. Why would more misery with a media blaming the Republicans for anything that goes wrong make any difference. And how far do we fall over the cliff before the damage cannot be reversed?

 

[The Rabbi]

I can't imagine what they are teaching re economics in public schools and in the universities these days. It seems that far too many Americans seem to believe that government really can fix our problems and make everything right if it just has a bit more money and is give more power to do so.

Certainly in my lifetime, the education system was emphasizing that all true wealth is generated in the private sector and through the initiative of all those who work together by virtue of each person trying to get ahead. And when the people are prospering through their own efforts, the whole country prospers. And the government treasury is then filled.

Isn't that being taught anywhere any more?

Well, I taught economics in a couple of colleges many years ago when I still had hair, so I'll venture an answer. The level of economic education at the high school and introductory college levels has always been horrendously bad, consisting of one part civics and nine parts cant which never passed the smell test. Long-term unemployment is impossible in a capitalist society. Really? This sort of drivel doesn't stand up to anyone who can read a newspaper. What good is economic theory that can't explain unemployment?

Now "all true wealth is generated in the private sector" is another piece of bullpucky which cannot pass the smell test. Really? I suppose the University of Michigan never educated anyone. You drive an automobile over an illusionary Interstate highway. The Hoover dam does not exist. Private enterprise pays for constructing aircraft carriers. Come on, my eight year old grandson can see the error in that (the six year old still believes in the tooth fairy, however).

Just because the United States is virtually the only nation on the face of the earth that does not publish a capital budget does not mean that one does not exist. The next time you get all lathered up about the national debt consider this: The per capita share of the public debt is estimated to be less than a third of the per capita share of the public capital stock. I'll gladly take my share of both.

Of course I expect that all of the free enterprise types will want to take any public goods and sell them to Chinese investors so we can pay off the national debt and everyone can pay tolls every time they drive a car. The Navy can also rent its airplanes; miss a payment and no more interventions!

If the federal government kept books according to the same rules used for SEC registrations, it would have a helluva retained earnings account. But that doesn't fit the bash government narrative, so I guess it will never be taught in schools. Instead we'll get more of the "monopolies act just like perfectly competitive firms" manure the Chamber of Commerce puts out.

Is a university true wealth? Is a road? Was the bridge to nowhere an asset to the country or a liability? I agree human capital is important and represents a resource. But the mere presence of the university (which was built by tax dollars taken from the private economy of course) is not in itself "wealth." It might be necessary to creating wealth. But it is not wealth itself.

 

[Foxfyre]

I can't imagine what they are teaching re economics in public schools and in the universities these days. It seems that far too many Americans seem to believe that government really can fix our problems and make everything right if it just has a bit more money and is give more power to do so.

Certainly in my lifetime, the education system was emphasizing that all true wealth is generated in the private sector and through the initiative of all those who work together by virtue of each person trying to get ahead. And when the people are prospering through their own efforts, the whole country prospers. And the government treasury is then filled.

Isn't that being taught anywhere any more?

Well, I taught economics in a couple of colleges many years ago when I still had hair, so I'll venture an answer. The level of economic education at the high school and introductory college levels has always been horrendously bad, consisting of one part civics and nine parts cant which never passed the smell test. Long-term unemployment is impossible in a capitalist society. Really? This sort of drivel doesn't stand up to anyone who can read a newspaper. What good is economic theory that can't explain unemployment?

Now "all true wealth is generated in the private sector" is another piece of bullpucky which cannot pass the smell test. Really? I suppose the University of Michigan never educated anyone. You drive an automobile over an illusionary Interstate highway. The Hoover dam does not exist. Private enterprise pays for constructing aircraft carriers. Come on, my eight year old grandson can see the error in that (the six year old still believes in the tooth fairy, however).

Just because the United States is virtually the only nation on the face of the earth that does not publish a capital budget does not mean that one does not exist. The next time you get all lathered up about the national debt consider this: The per capita share of the public debt is estimated to be less than a third of the per capita share of the public capital stock. I'll gladly take my share of both.

Of course I expect that all of the free enterprise types will want to take any public goods and sell them to Chinese investors so we can pay off the national debt and everyone can pay tolls every time they drive a car. The Navy can also rent its airplanes; miss a payment and no more interventions!

If the federal government kept books according to the same rules used for SEC registrations, it would have a helluva retained earnings account. But that doesn't fit the bash government narrative, so I guess it will never be taught in schools. Instead we'll get more of the "monopolies act just like perfectly competitive firms" manure the Chamber of Commerce puts out.

Is a university true wealth? Is a road? Was the bridge to nowhere an asset to the country or a liability? I agree human capital is important and represents a resource. But the mere presence of the university (which was built by tax dollars taken from the private economy of course) is not in itself "wealth." It might be necessary to creating wealth. But it is not wealth itself.

Correct. Good government follows economic activity with infrastructure to support it. You don't just decide to build a city. Almost always, a new economic center always starts out with one homestead that usually is self sustaining and benefits from no government services. And as others establish homesteads, eventually there is sufficient market base to support sall businesses. In time, as there are more and more of these, some kind of shared infrastructure makes sense and is profitable to all. And then as there is more and more shared infrastructure, some kind of government is warranted to coordinate and manage all of that. And thus an unincorporated community, then a village, then a town, then a city is born. Eventually shared commerce between cities generates a practical motive in connecting infrastructure between cities.

For many generations we had good government that was created by the people to support the economic activity they were generating. Economic activity generated by government is a fairly new invention, and it is definitely showing far more downside than benefit.

 

[Trajan]

Ah, I see, its a matter of 'fairness' despite the fact that the rates will yield approx. 83Bn dollars (in year one and almost certainly go down there after) means little, until the gop agrees to tax people because it presents the appearance of 'pitching in', the dems will not compromise?

So, the carrot isn't effective tax policy to collect more revenue, but, what will be almost a useless exercise in axe grinding.

I have to say I find that ridiculous.



you are representing a false premise, in any case- I do NOT sppt. rate hikes, I support tax reform, with or without entitlement reform, one has little do with another.

It really doesn't matter a damn what you think.

it matters when you ask or infer I have not said anything on that topic. So I clarified, You asked, I answered.

The point is if you want to reform entitlements and get agreement that is the price you need to pay.

And if you right and it is a small amount your more obstinate than I believed and you define the problem with the Republican Party. They put the interests of the one percent over the country.

I will say it again- if this price ( of what? that has yet to be offered or determined btw) is a useless exercise is raising rates to raise an amount of $ ( 83 Bn in year 1) that runs the gov. for a week and half, accusing me of being obstinate for not partaking in that useless change does not help you ro anyone, you Appear to see this as an emotional issue, I see it as an economic one, just becasue its a 'small amount' doesn't changes anything, except put a point on the fact that is it next to usless.

You want that rate increase yet cannot seem to understand that that is not going to fix anything, why raise rates when we can garner just as much if not more $$$ by Tax reform?

 

[Trajan]

That is wrong. The problem with this country is not that the wealthy are payng too little. They pay way too much, is one problem. But the bigger problem is the spending. Democrats have welched any number of times to address this but now we're being told "this time it's different." It is not different. It is the same shit, different day. They will gladly vote for a tax increase but point fingers and swear solemnly that if the GOP cuts one dollar from the budget widows and orphans will be starving in the street.
The Dems have no credibility when it comes to cutting spending. They simply cannot. So if they propose serious spending cuts--not 10 years down the road maybe--maybe the GOP should consider a tax increase. But they won't. The Dems will propose it to get the tax increase and then strip the cuts out of the bill at the last minute in their usual quasi-legal parliamentary maneuver.

The Republicans control the house last I checked. If the House leaders and President Obama agreed on a deal that raised taxes for the wealthy and reformed entitlements the Senate would pass it. The problem with the deficit is clearly the Republican Party has so many of you have aptly proven. I have not seen a single person argue against spending cuts and entitlement reforms. All I see is you and those like you digging in your heels on tax rates for the wealthy.

You all illustrate the problem completely and that is why the country is blaming Republicans for not getting to a deal.

The gop has agreed to raise revenue.

please show me the demcorats , say durbin, pelosi et al Obama too, that has put a solid offer on the table OR responded to an offer on the table that will for instance tie/index SS cost of living increases to inflation, not the CPI-W as in wages, or raise the retirement age(s)?

and the debt ceiling?aside from double what he asked last year, 1.6 trillion, the Obama 'offer' is for total control of the purse to raise the ceiling at his will, do you think that is an equitable offer?

 

[Sactowndog]

" In terms of businesses the lower hurdle rate arises in terms of the seller not the buyer. Most sellers have an after tax number in their head they want to receive for their business. With a lower capital gains tax rate the sellers can reach that number more easily making them more likely to sell and the employees more likely to be off-shored. "


This makes no sense, if the taxes are low enough for the seller to make the desired after tax profit, why would the buyer move the company offshore? All other things being equal, the buyer isn't going to incur the considerable moving expenses without a damn good reason.

Because by moving the business off shore the company substantially improves their cash via labor arbitrage. So "all other things aren't equal". Generally the seller may not want to take this step so they sell to the buyer who then comes in and off shores the labor.

This makes absolutely no sense at all. Arbitrage? Are you talking labor disputes with a union? Who's gonna buy a company in the middle of a labor dispute? Who's gonna sell out if there's more profit to be made elsewhere? I do not understand your position at all.

Doesn't matter. If I have a capital gain on it, I will pay capital gains taxes. If the taxes are high, I will leave the profit locked in rather than pay the tax and reduce my return. That's the whole point.

Exactly. It doesn't matter where the investments are. If you go through a U.S. broker, you will pay the tax on any applicable gains. I don't have enough in investments to go to the expense of setting up overseas accounts. But make the capital gains tax unattractive enough, and those who do have such wherewithal will simply not keep their money working at home but will find ways to shelter it.

There is a point that investment, whether in stocks and bonds or real estate or whatever, becomes too risky or unattractive. The USA has one of the highest capital gains taxes in the world as it is now and is second, by a hair, only to Japan in Corporate taxes, plus has a brutal regulatory policy that becomes more oppressive and complicated all the time.

That is not the way to keep jobs at home and/or encourage economic growth.

Can any of you read? I have said the taxes are paid where you live. But that doesn't have anything to do where I am going to invest. Yes at some point a higher capital gains tax limits taking more risk but the capital gains tax here has no affect on if I invest in the US or China. In either case, I pay he same tax. What would impact investing here or in China is the Corporate Income tax here versus the corporate income tax in China.

We can reduce the capital gains rate all day and investors will still send more money to China if their income tax rate is lower (assuming Taxes are a key decision factor which is debatable)

 

[Foxfyre]

And still we have a President with no fears whatsoever other than what his legacy will be. And he's feeling pretty darn cocky after pulling off his re-election and maintaining control of the Senate. But his largest asset is the media. You can find out the real deal if you dig deep enough, but they word it and present it in such a way that those who don't dig--and that would be most folks--believe what they hope they will believe. Namely, that this whole debate is about the rich, protecting the rich, and helping the rich on the back of the poor. There is absolutely nothing further from the truth than that, but that is what most people believe the debate is about.

Because spending cuts are not in the headlines or leading paragraphs, most people don't even think about that. Or the national debt. Or the deficit. All they are concerned about is that the Republicans are to blame for everything and they are for the rich and nobody else. And frankly, except for Fox News and conservative talk radio, we have little or nothing to context that perception. And how many Obama supporters watch Fox News or listen to conservative talk radio? Slim to none?

So the President doesn't care if we go over the fiscal cliff. The Republicans will be blamed and the public will be so outraged they'll retaliate any way they can. And he doesn't care of the Republicans cave. Same scenario. Whatever the results, it will be the Republicans fault.

Maybe Ann Coulter is right. We are screwed and we might as well not fight it.

 

[oldfart]

Question: Could a rich American setup a business overseas in Hong Kong (no cap gains tax there) and put money into that foreign company. That business invests in businesses around the world, but since it's not here does the rich American pay taxes on those earnings? I'm having a hard time believing rich guys can't find ways to park their money in foreign places and avoid paying taxes on earnings from that.

As a matter of tax law, an American can invest in offshore companies almost anywhere in the world except Cuba. An American citizen is required to report all income worldwide on the United States income tax return. In addition, there are two different reporting requirements for United States citizens with forein assets and bank accounts. If the total of all such accounts exceeds $10,000 on any day of the year, a report must be filed with the Treasury. The form filed wit the tax return has a higher threshold ($50,000) and some broader exceptions.

Of curse there are legal ways around these requirements that taxpayers can avail themselves of. And a lot of people decide to simply not report the assets and income they are required to. So yes, there is a way to do it, lots of affluent people do it legally, and a lot of people, affluent or not, try to do it illegally.

 

[Sactowndog]

it matters when you ask or infer I have not said anything on that topic. So I clarified, You asked, I answered.







I will say it again- if this price ( of what? that has yet to be offered or determined btw) is a useless exercise is raising rates to raise an amount of $ ( 83 Bn in year 1) that runs the gov. for a week and half, accusing me of being obstinate for not partaking in that useless change does not help you ro anyone, you Appear to see this as an emotional issue, I see it as an economic one, just becasue its a 'small amount' doesn't changes anything, except put a point on the fact that is it next to usless.

You want that rate increase yet cannot seem to understand that that is not going to fix anything, why raise rates when we can garner just as much if not more $$$ by Tax reform?

You are pretty much in the minority in believing raising revenue isn't part of the requirement to balance the budget. Even rational Republicans acknowledge this point. But why bother discussing it. We can just agree if we all were in congress the country would go over the fiscal cliff. You would blame me and I would blame you. That is pretty much what will happen and we will see who the voters punish in the elections. We have been down this road before in CA and the Republican Party is below the ability to be relevant. The national party is on the same track but we shall see.

 

[Sactowndog]

The Republicans control the house last I checked. If the House leaders and President Obama agreed on a deal that raised taxes for the wealthy and reformed entitlements the Senate would pass it. The problem with the deficit is clearly the Republican Party has so many of you have aptly proven. I have not seen a single person argue against spending cuts and entitlement reforms. All I see is you and those like you digging in your heels on tax rates for the wealthy.

You all illustrate the problem completely and that is why the country is blaming Republicans for not getting to a deal.

The gop has agreed to raise revenue.

please show me the demcorats , say durbin, pelosi et al Obama too, that has put a solid offer on the table OR responded to an offer on the table that will for instance tie/index SS cost of living increases to inflation, not the CPI-W as in wages, or raise the retirement age(s)?

and the debt ceiling?aside from double what he asked last year, 1.6 trillion, the Obama 'offer' is for total control of the purse to raise the ceiling at his will, do you think that is an equitable offer?

While I would agree some GOP politicians have agreed to raise revenue, I would not agree the House leadership has agreed and quite frankly they are all that matters.

Should Boehner agree and pass a bill that raises revenue and reforms entitlements I will be on this board singing his praises. I don't see it happening but I can be hopeful.

 

[Foxfyre]

Because by moving the business off shore the company substantially improves their cash via labor arbitrage. So "all other things aren't equal". Generally the seller may not want to take this step so they sell to the buyer who then comes in and off shores the labor.

This makes absolutely no sense at all. Arbitrage? Are you talking labor disputes with a union? Who's gonna buy a company in the middle of a labor dispute? Who's gonna sell out if there's more profit to be made elsewhere? I do not understand your position at all.

Exactly. It doesn't matter where the investments are. If you go through a U.S. broker, you will pay the tax on any applicable gains. I don't have enough in investments to go to the expense of setting up overseas accounts. But make the capital gains tax unattractive enough, and those who do have such wherewithal will simply not keep their money working at home but will find ways to shelter it.

There is a point that investment, whether in stocks and bonds or real estate or whatever, becomes too risky or unattractive. The USA has one of the highest capital gains taxes in the world as it is now and is second, by a hair, only to Japan in Corporate taxes, plus has a brutal regulatory policy that becomes more oppressive and complicated all the time.

That is not the way to keep jobs at home and/or encourage economic growth.

Can any of you read? I have said the taxes are paid where you live. But that doesn't have anything to do where I am going to invest. Yes at some point a higher capital gains tax limits taking more risk but the capital gains tax here has no affect on if I invest in the US or China. In either case, I pay he same tax. What would impact investing here or in China is the Corporate Income tax here versus the corporate income tax in China.

We can reduce the capital gains rate all day and investors will still send more money to China if their income tax rate is lower (assuming Taxes are a key decision factor which is debatable)

It doesn't matter where you live. If you are a U.S. citizen, your income must still be reported to the U.S. IRS. In most cases, if the country where you are living requires taxes at least some of taxes paid there can be a credit to your U.S. taxes owed. And, as I previously posted, those doing business in other countries can tack advantage of a foreign tax credit.

 

[Bern80]

Clinton raised taxes on the rich in '92. And the economy cratered, right? Not quite. Longest sustained economic boom in our naton's history.

Then Bushie Baby cut taxes, while engaged in two wars. And the economy did great, right? LOL. 16 trillion in homeowners value and 401Ks lost in two years, from 2007 to 2009.

So, what are we to believe? Recent history or rightwing ideology?

There are so many problems when looking at this from any perspective. First off, there is some merit to the idea that raising taxes will hurt more than help, at least in the short term. The problem is that we have gotten ourselves into a severe pickle because we have used tax cuts over the past decade plus as a way to stimulate the economy. Problem is, the tax cuts only helped in short stints, but in the long run, it did nothing. We can't cut taxes any further to stimulate the economy because revenue has hit rock bottom due to the already low tax rates.

So what about spending? Well, we could cut some here and there, but nobody can agree where to cut. In the end, there is not going to be a simple solution, and this storm is going to be with us for some time; we're going to just have to ride it out. My thoughts are that we end the payroll tax cut, and raise the tax rate on anyone making over $100,000 per year. The rate increase does not need to be massive. Secondly, raise the tax rate on capital gains to 20% with the idea of raising it higher once the economy gets rolling again, if necessary. As for cuts, the easiest way to cut spending is to freeze it across the board, other than for SS and Medicare. As for the long term, SS and Medicare spending must be reduced in comparison to what we are expecting to pay out. We can't cut spending on those programs because we have more and more people retiring. What we can do is raise the retirement age gradually for everyone until we hit a point where revenue and payouts are close to being balanced for the long term.

One thing nobody thinks about is that if we do what needs to be done to get spending under control, even if it is done slowly, the economy is going to pick up eventually. There are two factors to look at that have nothing to do with politicians, taxation, or government spending. The baby boomers are all retiring. Even if they haven't retired yet, they are downsizing and not spending as much money anymore. This wouldn't be such a problem but for the fact that their kids have delayed starting their own families. While there are reasons for this, mostly economic, they are starting to hit the age where they have to begin getting married and having kids. My thought is that within the next ten years, we are going to see a boom in child births which will lead to a lot of younger people needing to buy homes and bigger cars. The spending cycle will kick into high gear once again, and then we will see things improve dramatically.

Arguments like this unfortunately miss the big picture. When you argue for increasing government revenue one has to do so under the assumption that the government actually needs more money. That is the assumption that needs to be tackled first if we're ever going to get out of this. Instead of trying to figure out how to get the government more money, we should first be trying to figure out what does government actually need. Once we figure that out we can then devise a tax policy that ensures they get it.

 

[Sallow]

Clinton raised taxes on the rich in '92. And the economy cratered, right? Not quite. Longest sustained economic boom in our naton's history.

Then Bushie Baby cut taxes, while engaged in two wars. And the economy did great, right? LOL. 16 trillion in homeowners value and 401Ks lost in two years, from 2007 to 2009.

So, what are we to believe? Recent history or rightwing ideology?

There are so many problems when looking at this from any perspective. First off, there is some merit to the idea that raising taxes will hurt more than help, at least in the short term. The problem is that we have gotten ourselves into a severe pickle because we have used tax cuts over the past decade plus as a way to stimulate the economy. Problem is, the tax cuts only helped in short stints, but in the long run, it did nothing. We can't cut taxes any further to stimulate the economy because revenue has hit rock bottom due to the already low tax rates.

So what about spending? Well, we could cut some here and there, but nobody can agree where to cut. In the end, there is not going to be a simple solution, and this storm is going to be with us for some time; we're going to just have to ride it out. My thoughts are that we end the payroll tax cut, and raise the tax rate on anyone making over $100,000 per year. The rate increase does not need to be massive. Secondly, raise the tax rate on capital gains to 20% with the idea of raising it higher once the economy gets rolling again, if necessary. As for cuts, the easiest way to cut spending is to freeze it across the board, other than for SS and Medicare. As for the long term, SS and Medicare spending must be reduced in comparison to what we are expecting to pay out. We can't cut spending on those programs because we have more and more people retiring. What we can do is raise the retirement age gradually for everyone until we hit a point where revenue and payouts are close to being balanced for the long term.

One thing nobody thinks about is that if we do what needs to be done to get spending under control, even if it is done slowly, the economy is going to pick up eventually. There are two factors to look at that have nothing to do with politicians, taxation, or government spending. The baby boomers are all retiring. Even if they haven't retired yet, they are downsizing and not spending as much money anymore. This wouldn't be such a problem but for the fact that their kids have delayed starting their own families. While there are reasons for this, mostly economic, they are starting to hit the age where they have to begin getting married and having kids. My thought is that within the next ten years, we are going to see a boom in child births which will lead to a lot of younger people needing to buy homes and bigger cars. The spending cycle will kick into high gear once again, and then we will see things improve dramatically.

Arguments like this unfortunately miss the big picture. When you argue for increasing government revenue one has to do so under the assumption that the government actually needs more money. That is the assumption that needs to be tackled first if we're ever going to get out of this. Instead of trying to figure out how to get the government more money, we should first be trying to figure out what does government actually need. Once we figure that out we can then devise a tax policy that ensures they get it.

The reality is, the government DOES need more money.

We have a rising population. It's pretty simple, more people equals the need for more services provided for by the government.

It's an astoundingly simple reality.

I find it interesting that the same folks that advocate against population control also advocate for starving the government of revenue.

 

[Bern80]

The reality is, the government DOES need more money.

We have a rising population. It's pretty simple, more people equals the need for more services provided for by the government.

It's an astoundingly simple reality.

I find it interesting that the same folks that advocate against population control also advocate for starving the government of revenue.

From a certain perspective that's true. The extremely obtuse and narrow minded perspective that is. Certainly you can argue that the government needs more money now that it has put itself hopelessly in debt. But that came about from the mentality of people like you. Listen to yourself for two seconds. You say it's so simple. More people means more government. A statement that rests on another assumption; that people simply can't survive without some level of government hand out. That's not simple. That's sad that you think that way. And it's that thinking that got us to this point and it's that thinking that is going to keep us there. Along with determining what governments obligations truly are and determining what that costs also needs to come a realization by many that the purpose of our government never was meant to be nor should to ensure some basic outcome for people. In that sense I am very much for population control.

 

[The Rabbi]

The gop has agreed to raise revenue.

please show me the demcorats , say durbin, pelosi et al Obama too, that has put a solid offer on the table OR responded to an offer on the table that will for instance tie/index SS cost of living increases to inflation, not the CPI-W as in wages, or raise the retirement age(s)?

and the debt ceiling?aside from double what he asked last year, 1.6 trillion, the Obama 'offer' is for total control of the purse to raise the ceiling at his will, do you think that is an equitable offer?

While I would agree some GOP politicians have agreed to raise revenue, I would not agree the House leadership has agreed and quite frankly they are all that matters.

Should Boehner agree and pass a bill that raises revenue and reforms entitlements I will be on this board singing his praises. I don't see it happening but I can be hopeful.

Boehner has already agreed to this. Obama has already rejected it since it does not raise rates, which is all he wants. He doesnt care about revenue.

 

[The Rabbi]

Because by moving the business off shore the company substantially improves their cash via labor arbitrage. So "all other things aren't equal". Generally the seller may not want to take this step so they sell to the buyer who then comes in and off shores the labor.

This makes absolutely no sense at all. Arbitrage? Are you talking labor disputes with a union? Who's gonna buy a company in the middle of a labor dispute? Who's gonna sell out if there's more profit to be made elsewhere? I do not understand your position at all.

Exactly. It doesn't matter where the investments are. If you go through a U.S. broker, you will pay the tax on any applicable gains. I don't have enough in investments to go to the expense of setting up overseas accounts. But make the capital gains tax unattractive enough, and those who do have such wherewithal will simply not keep their money working at home but will find ways to shelter it.

There is a point that investment, whether in stocks and bonds or real estate or whatever, becomes too risky or unattractive. The USA has one of the highest capital gains taxes in the world as it is now and is second, by a hair, only to Japan in Corporate taxes, plus has a brutal regulatory policy that becomes more oppressive and complicated all the time.

That is not the way to keep jobs at home and/or encourage economic growth.

Can any of you read? I have said the taxes are paid where you live. But that doesn't have anything to do where I am going to invest. Yes at some point a higher capital gains tax limits taking more risk but the capital gains tax here has no affect on if I invest in the US or China. In either case, I pay he same tax. What would impact investing here or in China is the Corporate Income tax here versus the corporate income tax in China.

We can reduce the capital gains rate all day and investors will still send more money to China if their income tax rate is lower (assuming Taxes are a key decision factor which is debatable)

Geezus what nonsense. Loweing cap gains taxes increases the amount of capital available to invest. Many things will determine where that gets invested, chiefly after tax return.

 

[saveliberty]

The reality is, the government DOES need more money.

We have a rising population. It's pretty simple, more people equals the need for more services provided for by the government.

It's an astoundingly simple reality.

I find it interesting that the same folks that advocate against population control also advocate for starving the government of revenue.

You'd have a point if all these people didn't pay taxes. Its Tuesday, maybe Wednesday is a thinking day for you?

 

[catatomic]

Hello again,

I looked up capital gains tax in the congressional budget office cbo.gov. I looked up capital gains tax, then I went to Information on Changes in Federal Revenues and Tax Rates on Capital Gains.

In the article I found the following sentence about capital gains tax hikes.

(Page 3)

"On net, we project that
federal revenues will increase in response to the higher tax rates, but that
reduced realizations will temper that increase."

So there you have it, once again as expected, raising taxes is potentially able to cut the deficit.

 

[The Rabbi]

Hello again,

I looked up capital gains tax in the congressional budget office cbo.gov. I looked up capital gains tax, then I went to Information on Changes in Federal Revenues and Tax Rates on Capital Gains.

In the article I found the following sentence about capital gains tax hikes.

(Page 3)

"On net, we project that
federal revenues will increase in response to the higher tax rates, but that
reduced realizations will temper that increase."

So there you have it, once again as expected, raising taxes is potentially able to cut the deficit.

The CBO uses static scoring, assuming people do not change their behavior in response to changes in tax law. IN the real world that doesnt happen. Obama himself acknowledges that higher cap gains rates produce less revenue, not more. Is Obama lying?