Have We Hit The Top?

[Jaygo]

53 minutes ago, changegonnacome said:

 

I think that's where we're headed in the West. For a few reasons:

 

A curious thing has happened due to the wealth inequality divide in the West.......see you create enough people who are poor or feel poor relative to the top 10%......and it distorts the traditional party structures in a two party state like the UK or USA.....traditionally you had poor people vote democrat or labor in the UK........middle income & upper income voted for fiscally conservative Republicans or the Conservatives in the UK. Now I get the Republic party in the USA has that evangelical wing, the liberatrian wing & single issue voters....all of whom can be 'poor'. To that mix in the Republican party you've now added IMO a nearly prototypical democrat voter.

 

So you see the issue now is you build a large enough constituency of in equality in your society.....of actual poor people or simply those envious enough of the top 10% such that 'feel' poor (but to be clear arent!)........well.........you get what we have now.....a growing 'poor' voter constituency base upsets the balance in a two party system and encourages the fiscally conservative party to shop for those voters such that they can hold on to power....so now IMO there is enough poor people in the tent to fuel an element of keynesianism moving forward in not ONE party, both potentially BOTH parties.

 

The bond market shut down the UK conservative parties move to placate the new working class Red Wall voters it had picked up in the last election. The question is what latitude successive US administrations will have.

 

Donald Trump's great innovation was to pull in what you might think of as traditionally democratic voters (or in his case he found voters who had never really voted at all) and he pulled them into his version of the Republican party.

 

Democrats not to be out flanked promised more and Biden with his 2021/2022 trillion dollar bills delivered more.

 

Its why IMO we arent going back to ZIRP - fiscal largese, deficits and give aways wont allow it..... because both parties now in the USA have a constituency inside them that has gained ground to become the swing vote.....that swing vote, in both parties, deep down wants versions of cheques in the mail ala 2020....and well politicians aim to please. It's just another reason why when running a capitalist liberal democracy you really shouldn't let wealth inequality get too extreme....cause all your doing is expanding a group of voters who feel left behind....... left to their own devices they will elect politicians who do nothing but advocate for sending big cheques in the mail to people & will destabilize the system.

Wow. Really great points here. It’s something I will have to noodle on a little more to fully understand

[Dinar]

33 minutes ago, Luca said:

Yes, tax cuts for the bottom 70% and increases for the super high income earners+more responsibility in spending--> No more unnecessary money for wars, no funding for bullshit projects at unis etc

20$ in NYC? Can you even live of off that lol?

Actually, if you hike tax rates on high earners, they will either work less or leave the country.  Who the hell will pay 70% tax rates?  Yes, you certainly can live on $20 per hour wage in NY, and sure as hell could have four years ago.  

[Luca]

34 minutes ago, Dinar said:

Actually, if you hike tax rates on high earners, they will either work less or leave the country.  

You surely are aware that you are still taxable in the US even if you leave?

34 minutes ago, Dinar said:

Who the hell will pay 70% tax rates?  

Somebody making 10m a year? The redistribution HAS to be skewed downwards MORE. Who the hell wants to pay 50% tax with making 50k? Paying a very high tax rate with having 50m USD passive income by owning 20000 appartment houses or whatever is acceptable.

34 minutes ago, Dinar said:

Yes, you certainly can live on $20 per hour wage in NY, and sure as hell could have four years ago.  

in NY maybe, i think you mentioned NYC.

[Luca]

Look, public infrastructure needs investment and PE guys are crooks and will milk the people while invest as little as possible and make as much money as possible. Especially with things like hospitals where you as a sick person cant just say no (can say no to an iPhone 15 Pro Max), its unacceptable to have Bruce Flatt and Co have their fingers in all of that and be a parasite on sick people. At least i dont want to live in a world like that. This public infrastructure needs investment and somebody has to come up with the money. There are many things that can be scaled down moneywise in the budget but i think its still time for a slightly differently skewed tax rate in favor of the little guy.

 

All of this combined with a keynesian boost and igniting competition where it is needed by regulation will boost the economy back to full power. 

 

The opposite would be further unwillingness to do infrastructure spending, further unwillingness to

guarantee affordable basic necessities of life to the public, more consolidation, more political extremism and more ghettoization leading to a complete dystopia where you have a insect like bottom 50% and feudal technocratic lords at the top

Edited November 16, 2023 by Luca

[Dinar]

16 minutes ago, Luca said:

You surely are aware that you are still taxable in the US even if you leave?

Somebody making 10m a year? The redistribution HAS to be skewed downwards MORE. Who the hell wants to pay 50% tax with making 50k? Paying a very high tax rate with having 50m USD passive income by owning 20000 appartment houses or whatever is acceptable.

in NY maybe, i think you mentioned NYC.

Actually if you give up your US citizenship, then you are not.  You can certainly live in NYC on $20 per hour wage, I know people who do. 

[TwoCitiesCapital]

4 hours ago, Luca said:

Yes, tax cuts for the bottom 70% and increases for the super high income earners+more responsibility in spending--> No more unnecessary money for wars, no funding for bullshit projects at unis etc

20$ in NYC? Can you even live of off that lol?

 

Not even enough to pay the average monthly rent in Manhattan after 40 hours a week 

 

Of course, nothing stopping you from living an hour or two out, but you're still paying transportation/food/taxes/etc. which are unaccounted for. 

 

Only way to make this work is to share a 1-2 bedroom apartment with several other people, live way out in the outer Burroughs or further, and out in overtime hours. Sure - it's doable - but not a particularly attractive existence. 

Edited November 16, 2023 by TwoCitiesCapital

[Spekulatius]

11 hours ago, Dinar said:

Actually, if you hike tax rates on high earners, they will either work less or leave the country.  Who the hell will pay 70% tax rates?  Yes, you certainly can live on $20 per hour wage in NY, and sure as hell could have four years ago.  

Check out Bill Gates or WEB tax rates. The US tax system is very degressive once your income is not through working for somebody else any more. These guys own business and for larger business, the tax rates are at all time lows.

 Just check out the tax rate for any large business , it’s probably in the 15% range. Tax advantages galore for real estate (Trump tax reports are an example), private equity, venture capital etc.

Edited November 16, 2023 by Spekulatius

[Dinar]

8 hours ago, TwoCitiesCapital said:

 

Not even enough to pay the average monthly rent in Manhattan after 40 hours a week 

 

Of course, nothing stopping you from living an hour or two out, but you're still paying transportation/food/taxes/etc. which are unaccounted for. 

 

Only way to make this work is to share a 1-2 bedroom apartment with several other people, live way out in the outer Burroughs or further, and out in overtime hours. Sure - it's doable - but not a particularly attractive existence. 

NYC is not just Manhattan.  Saying that you cannot live in NYC because you cannot afford Manhattan is like saying that you cannot afford a car because Ferrari is out of your price range.

[Luca]

2 hours ago, Spekulatius said:

Check out Bill Gates or WEB tax rates. The US tax system is very degressive once your income is not through working for somebody else any more. These guys own business and for larger business, the tax rates are at all time lows.

 Just check out the tax rate for any large business , it’s probably in the 15% range. Tax advantages galore for real estate (Trump tax reports are an example), private equity, venture capital etc.

Well said, imagine how much better it could be for the little guy, how much better it could be for start ups and SMEs if you put in a bit more of a progression, it would also result in way more willingness for new business to come into existence. No tax hassle etc-->more competition-->better products and services-->better overall economy.

[Ross812]

I think a wealth tax of 2 to 3% a year, maintain FICA (with no income limit), and a 10% VAT tax would be far more "fair" than the income tax system we have now.  FICA and VAT are essentially flat taxes that tax everyone equally based on income and consumption. The wealth tax would tax those in proportion to the wealth they hold.   

[Gregmal]

6 minutes ago, Ross812 said:

I think a wealth tax of 2 to 3% a year, maintain FICA (with no income limit), and a 10% VAT tax would be far more "fair" than the income tax system we have now.  FICA and VAT are essentially flat taxes that tax everyone equally based on income and consumption. The wealth tax would tax those in proportion to the wealth they hold.   

As a holder of several discount to NAV co's I support this new plan...already being ahead of the curve on the tax benefit aspect!

[RedLion]

18 minutes ago, Ross812 said:

I think a wealth tax of 2 to 3% a year, maintain FICA (with no income limit), and a 10% VAT tax would be far more "fair" than the income tax system we have now.  FICA and VAT are essentially flat taxes that tax everyone equally based on income and consumption. The wealth tax would tax those in proportion to the wealth they hold.   

I like the VAT idea but a wealth tax and fica are both extremely easy to work around and will be rife with issues. 

 

Also what about a sin tax? Seems like states like Nevada seem to do well with this. 
 

Maybe Congress should legalize drugs but then impose a huge tax on users, mandate that they be sold in pharmacies, and impose life prison sentences for selling impure quality. This way every time I pass a junkie nodded out on the street, at least I can be thankful that my taxes are being subsidized and they got what they paid for. 

Edited November 16, 2023 by RedLion

[Ross812]

8 minutes ago, RedLion said:

I like the VAT idea but a wealth tax and fica are both extremely easy to work around and will be rife with issues. 

 

Also what about a sin tax? Seems like states like Nevada seem to do well with this. 
 

Maybe Congress should legalize drugs but then impose a huge tax on users, mandate that they be sold in pharmacies, and impose life prison sentences for selling impure quality. This way every time I pass a junkie nodded out on the street, at least I can be thankful that my taxes are being subsidized and they got what they paid for. 

 

We need to replace 5T in tax receipts. FICA would be no easier to get around than it already is. A wealth tax could be difficult for some assets, but I'm sure all the accountants put out of work figuring up the current income tax rules could figure out a way to value those assets . I'm not against a sin tax, but I seriously doubt it would raise a meaningful amount of revenue. Fortune 500 companies are using SBC for mid-level workers to assist with "tax management". A wealth tax get rid of a lot of shenanigans.  

[Intelligent_Investor]

I think they should do away with special treatment of LT cap gains for people with a net worth over a certain threshold.

[RedLion]

19 minutes ago, Ross812 said:

 

We need to replace 5T in tax receipts. FICA would be no easier to get around than it already is. A wealth tax could be difficult for some assets, but I'm sure all the accountants put out of work figuring up the current income tax rules could figure out a way to value those assets . I'm not against a sin tax, but I seriously doubt it would raise a meaningful amount of revenue. Fortune 500 companies are using SBC for mid-level workers to assist with "tax management". A wealth tax get rid of a lot of shenanigans.  

FICA tax really only taxes the w2. If you’re talking about placing it with no limit then high earners will simply incorporate. There’s already a whole class of CPA’s that survive off of doing k1s for smallish s corps for exactly this reason.
 

I could only imagine how huge this would get if there were serious stakes. 
 

 

[ValueArb]

4 hours ago, Spekulatius said:

Check out Bill Gates or WEB tax rates. The US tax system is very degressive once your income is not through working for somebody else any more. These guys own business and for larger business, the tax rates are at all time lows.

 Just check out the tax rate for any large business , it’s probably in the 15% range. Tax advantages galore for real estate (Trump tax reports are an example), private equity, venture capital etc.

 

The income tax rate for businesses should be zero. Income should be taxed when its dividended out to an owner, not when its invested in the business.

[ValueArb]

54 minutes ago, Intelligent_Investor said:

I think they should do away with special treatment of LT cap gains for people with a net worth over a certain threshold.

 

We should just index capital gains to inflation and then tax them at ordinary income rates. The only reason to give them special treatment is the fact they include false (inflationary) gains, indexing eliminates that. 

[Gregmal]

1 minute ago, ValueArb said:

 

The income tax rate for businesses should be zero. Income should be taxed when it’s dividended out to an owner, not when it’s invested in the business.

100%. Look at the multi levels of theft in the system. 
 

Money made at corporate, taxed by federal, state, and local

Paid to employees, taxed again at Fed, state, local levels

Spent by employees on housing, taxed annually by local gov 

spent by employees on goods, taxed by the state gov

 

Not bad for a country founded on the principals of rebellion against unfair taxation…unless we believe Bobby Menedez is my representation and Chuckie Schumer covers @changegonnacome and @BG2008….

 

Total fuckin farce 

 

Then I go to Florida and see entire cities being built in the time it takes NY/NJ/CT to fix a couple roads….

[TwoCitiesCapital]

3 hours ago, Dinar said:

NYC is not just Manhattan.  Saying that you cannot live in NYC because you cannot afford Manhattan is like saying that you cannot afford a car because Ferrari is out of your price range.

 

Average rents aren't much lower elsewhere. 

 

I lived there from 2011 - 2018. Had apartments in Jersey City, Spanish Harlem, and Yorkville while I was there - long before those places got popular with the general population for being cheaper. I have friends who live out in Brooklyn and Journal Square - I'm well aware of the costs outside of Manhattan and lived outside of "desirable" areas myself basically the entire time I was up there. 

 

As I said, to accomplish living there on $20/hr, you're going to be an hour or two out of the city, and you're going to be sharing cramped spaces, and not really going out. 

 

I know it - I lived it. Didn't have a full-time job for the first 4 months that I moved there. Was working part-time/over-time hours and sharing a one bedroom apartment by sleeping on a friend's couch. Basically made enough to pay "rent" for the couch, pay for one night out a week if I took advantage of happy hour specials, and then groceries. No savings, no car note, no insurance, nothing extra to support anyone else, etc. 

 

Just me at 21 hustling to make it work. And it did once I landed a salaried role at Bridgewater. But I know what it is to live on those wages up there and it's not a lifestyle that is sustainable or that you can realistically do long-term. 

[Gregmal]

There goes the whole oil gonna cause inflation part of the thesis. 

[changegonnacome]

4 hours ago, Gregmal said:

There goes the whole oil gonna cause inflation part of the thesis. 

 

Or it could be part of the thesis which says the Fed is successfully achieving what it set out to do! Depends on your perspective I suppose.

 

Like you could see the oil price decline as just another sign that Fed's tightening of financial conditions are starting to bite even in the face of supply cuts by OPEC...........marginal activity where the oil price gets set looks a little soft....an expanding US/European economy needs more oil, a slowing one does not....would be interesting to hear @SharperDingaan take on declining energy prices in the context of supply demand dynamics...............you can argue that oil prices and the market for temp workers (Hirequest) are kind of the same thing>

 

Swing workers and swing energy are starting it seems to have a tougher time of late!

 

 

 

The reality remains IMO that 3% to 2% move in inflation will indeed come....but it wont be a bloodless victory as many have hoped for (lets forget the blood of SVB, FRC for a sec)......I've spoken recently with lots of folks in companies, who are,  from an incremental capital investment perspective 'downing tools' to 'wait and see'...the math doesnt work for lots and lots of things assuming you can even line up the financing........give Powell his dues.......'wait and see' and deferring consumption is a proxy for central bank success in disinflating & a cooling an overheating economy down via the crude & blunt instrument that is the credit channel....as I've said the Fed is in my opinion more determined of seeing the whites of sustainable 2-ish% inflation than the market has given it credit for.....for what 12 or more months now.

 

I remain also convinced that they will stay higher for longer even when the populous & @Gregmal is screaming at them to cut when quantifiable and statistically significant unemployment spikes occur twinned with MoM inflation prints that perhaps dip below even 2%..which will make the screams even louder  ........I think they keep the shoulder to wheel a little longer than most expect. The next identifiable Fed misstep, from Powell's perspective, is cutting too soon.......a successful Fed chair in an inflationary environment is one who gets spit at in the street......and that hasn't quite happened yet. I suspect it kind of will. We'll find out.

Edited November 16, 2023 by changegonnacome

[james22]

7 hours ago, ValueArb said:

 

We should just index capital gains to inflation and then tax them at ordinary income rates. The only reason to give them special treatment is the fact they include false (inflationary) gains, indexing eliminates that. 

 

And because both the investor's income and corporation's profit has already been taxed once.

[SharperDingaan]

Oil is the most manipulated commodity price on earth; wouldn't read much into the current price level.

 

The big inventory build is per an EIA report, following a two-week reporting silence. Whereas, the intervening API reports showed a cumulative crude build that was well under the EIA number; and is consistent with the reduced demand of the concurrent refinery maintenance season. Most would surmise it's simply market overreaction to EIA modelling quirks.

 

The US wants prices < USD 70 for SPR refill; the ME wants prices in the USD 80-90 range for budget purposes. Most would expect WTI range bound between USD 70-80 with periodic spikes up/down; all nothing new for o/g!

 

Within NA, heavy oil is the temporary exception, Demand continues to rise, and supply essentially remains flat (why Cushing has been draining); the imbalance showing up in smaller differentials. Cushing storage is currently so low, that it will take months of expanded TMP flow to restore normality. 

 

Global oil prices aren't going to change much until Iran/Iraq egress is reduced. OPEC+ can extend cuts for another 6 months, but until there are reductions in the sanctioned flow ... don't expect price hikes to stick. Iranian oil flowing out of an Iraqi pipe, looks like it is Iraqi oil ... especially when both flows come from the same reservoir.

 

The US is in a tough place, and will act accordingly. 

Welcome to higher volatility.

 

SD 

Edited November 17, 2023 by SharperDingaan

[ValueArb]

4 hours ago, james22 said:

 

And because both the investor's income and corporation's profit has already been taxed once.

 

Right, but my other suggestion was to eliminate corporate income taxes. Do that, and you can tax dividends and capital gains as ordinary income because their investment earnings only one layer of taxation. Increases fairness of income tax system, makes it much simpler to comply with and might not even reduce Federal tax receipts much.

[james22]

Gotcha.