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Obama Agrees to Extend Bush Tax Cuts for 2 Years


dcollon
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Another day another cave. Oh well.

 

Now the right can go back to complaining about the deficit and unpaid for bills (that is excluding this bill  ;)).

 

The beast will be starved.

 

" Thou shalt not muzzle the ox that stampeth out the corn"

 

The administration proposal also is for whacking off a big chunk of the most regressive tax of all, the payroll tax.  This is huge!  It will finally get the unemployed  back to working again!

 

Three cheers for JFK, Reagan, Bush II and now Obama!

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I was for a payroll tax holiday a few months ago.

 

Now I am against it. LOL

 

The right will simply look to lock in these "tax cuts" next year. They will push SSI to its breaking point, in an attempt to get rid of it. Starving it of contributions makes sense. Also its been pounded into my head that this is structural. Stimulus will help but we had a bubble economy and many of those service jobs arent coming back. The consumer is tapped out, businesses will not hire until AD raises. I would prefer long term strategic investment vs. temporary permanent tax cuts. You have to ask yourself, if Millionaires who comprise 2% of the population couldnt have their taxes raise, then who will ever have their taxes raised?

 

Setup an infrastructure fund with $200 billion and lever it 10 to 1. Then fund any venture or Company infrastructure as long as it makes sense and the private sector puts up 30% Equity. Think of all the pipelines, and other assets that will be built that we need. We basically need an overhaul of our electric grid (to switch to nat gas / hybrid cars), new bridges, pipelines, roads, all sorts of stuff. Do what Siemens does. Fund all building improvements and efficiency gains as long as they pay for themselves over 10 years. Then collect the savings until repaid. If it doesnt workout levy a fine / tax on the entity. I would prefer something like that.

 

I thought Obama was on to something. I would have at least got the Republicans to pass the Stark Treaty and repel dont ask dont tell. You have to take them to the woodshed, tax cuts for the wealthy is the only issue they really care about.

 

Oh well. I will just enjoy my 2% payroll holiday raise, and keep investing. I need to join the base of the winning team. The Dems have cut taxes more then anyone in recent history and no one knows. You have to love the Marketing team on the right. Those are the guys I would hire.

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Surprised no one jumped on web's plan of taxing all income over a certain amount...let's say 50 million, at 50 percent (on all income, dividends, etc)

 

Worst ideas... People complain about the number of brackets.  Come on...are u doing this by hand?

 

Why did these jokers start a deficit commission?  This is the worst of all worlds.

 

 

The joke here is my tax policies are the only ones that would create jobs.  But who cares about that?

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Surprised no one jumped on web's plan of taxing all income over a certain amount...let's say 50 million, at 50 percent (on all income, dividends, etc)

 

Did he include corporations in that proposal?  In other words, was he really offering to give up HIS dividends?

 

I could always start my own investment holding company, put my money in there, and collect my dividends under corporate tax rules too.  Dividend tax?  Just buy back some of my own shares and "launder" the dividend as a capital gain (there won't be capital gains if I buy the shares back at the cost basis).  Is that even legal by the way?  Is it allowed to start your own investment holding company and have a share structure where you are the only shareholder?  If not, what percentage do you need to make public?  I suppose sometimes you don't mind if your shares never rise in price and fall after IPO  ;D

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I could always start my own investment holding company, put my money in there, and collect my dividends under corporate tax rules too.  Dividend tax?  Just buy back some of my own shares and "launder" the dividend as a capital gain (there won't be capital gains if I buy the shares back at the cost basis).  Is that even legal by the way?  Is it allowed to start your own investment holding company and have a share structure where you are the only shareholder?  If not, what percentage do you need to make public?  I suppose sometimes you don't mind if your shares never rise in price and fall after IPO  ;D

 

Its because of people like you the CPA exam is so damn hard  :), and our tax system is so complex.

 

---

 

The personal holding company tax is designed to prevent taxpayers from achieving unwarranted individual income tax deferral through the use of corporations to carry on essentially "personal" activities. By imposing a significant additional tax on the corporation for its undistributed income, the tax encourages corporations to make distributions to shareholders rather than accumulate earnings.  Due to the potentially large impact of this tax -- and the costly litigation that certainly could accompany it -- practitioners should plan to avoid its imposition at the outset by understanding its requirements.

 

Plain English definitions for the following: (1) a closely held corporation, (2) a personal holding corporation, and (3) a personal service corporation

 

Generally, a closely held corporation is a corporation that, in the last half of the tax year, has more than 50% of the value of its outstanding stock owned (directly or indirectly) by 5 or fewer individuals. The definitions for the terms "directly or indirectly" and "individual" are in Publication 542, Corporations. Generally, closely held corporations are subject to additional limitations in the tax treatment of items such as passive activity losses, at-risk rules, and compensation paid to a corporate officers.

 

A personal holding company is defined in Internal Revenue Code section 542. Basically, a corporation is a personal holding company if both of the following requirements are met:

 

   * Personal Holding Company Income Test. At least 60% of the corporation's adjusted ordinary gross income for the tax year is from dividends, interest, rent, and royalties.

 

   * Stock Ownership Requirement. At any time during the last half of the tax year, more than 50% in value of the corporation's outstanding stock is owned, directly or indirectly, by 5 or fewer individuals.

 

http://www.pro1040.com/personal_holding_company_tax.htm

 

------------------------------

 

You are quite good though my friend. I will have to send you an email should my investments work out and I need some avoidance advice  :). The Roth IRA coupled with a loan based on assets was ingenious. I need to go back and bookmark that thread.

 

Berkshire also benefits from the DRD. Dividends Received Deduction - DRD

 

If a company owns less than 20% of another company, it is able to deduct 70% of the dividends it receives. If the company owns more than 20% but less than 80% of the company paying the dividend, it is able to deduct 80% of the dividend received. If it owns more than 80% of the dividend-paying company, it is allowed to deduct 100% of the dividends it receives.

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Thanks Myth for that tax explanation.  One of these days I'm going to hit upon an elegant solution to getting around these double taxes on dividends, and I think the answer is comprised of these letters:

 

Nyorwa.  Can you figure out what country that spells?

 

I'm married with a family, but to a young man out there I'd also suggest that the natives are friendly :-)

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YAY! We in the US are closer to fiscal insolvency! WOO HOO!

 

It's very easy in theory to balance the budget merely by cutting the subsidies for all the unproductive stuff.  Everything from tuition subsidies for flower arranging to agriculture subsidies and bribes for placing hazardous solar panels on the roof.  Attic fires anyone?

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Twa... Write your congressman.  Sounds like a great start to me.

 

These guys just increased the odds of another collapse in my opinion.  I'm saddened by the bunch of buffoons on both sides. 

 

Like what Jim tisch said on cnbc... Get rid of all the other junk and make corporate rate 25 percent.

 

I'm not sure how this bill is good for stocks in the long run.  Good for aem and ng and gg (not Gordon g) IMO.

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I don't know if you guys have noticed, but Bernanke has said many many times that the U.S. government needs to put the deficit in order.

 

This action yesterday goes completely in the opposite direction. While this may create jobs, it is still uncertain as to how many and when and what will be the resulting tax revenue increase of a growing economy. Since it is so uncertain, I will guess something in the middle: more jobs, more tax revenues due to growth, but net net a deficit that is still not much improved from today's situation.

 

Hence comes the Bernanke warning. His action of buying treasuries and other securities by growing the Fed's balance sheet could have been unwound in an orderly manner in the future if the economy is growing and everything else is stable. With the government doing its stimulus at the same time as Bernanke QE program and continuing to pile up debt, I suspect that he is worried that we get into a permanent structural issue with the Fed balance sheet: can't be unwound. You have two entities trying to do their best to help the economy, but not coordinating anything.

 

The impact: dollar devaluation, commodity inflation, higher interest rates? I don't know which one or if all, but it seems that it is getting into motion and that we will soon learn about the unintended consequences.

 

Cardboard

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YAY! We in the US are closer to fiscal insolvency! WOO HOO!

 

It's very easy in theory to balance the budget merely by cutting the subsidies for all the unproductive stuff.  Everything from tuition subsidies for flower arranging to agriculture subsidies and bribes for placing hazardous solar panels on the roof.  Attic fires anyone?

 

 

Yep, I've heard that before.  Usually it's during an election campaign, be it municipal, provincial or federal, and some candidate or party develops a platform that includes new spending initiatives that will be financed by "savings from cutting the fat."  What most of these candidates/parties find is that it's very easy to talk about cutting spending when they're on the outside looking in, but it's a great deal more difficult to actually find fat that can be cut.  Despite all the stories that abound about wasteful government, most of the spending programs have an underlying policy goal and constituency group.  It's a lot easier to mentally chop numbers on a page than to disavow an existing policy objective and alienate a particular constituency group.

 

I get your point, but it's much more difficult in practice than in theory!

 

 

SJ

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Guest broxburnboy

I don't know if you guys have noticed, but Bernanke has said many many times that the U.S. government needs to put the deficit in order.

 

This action yesterday goes completely in the opposite direction. While this may create jobs, it is still uncertain as to how many and when and what will be the resulting tax revenue increase of a growing economy. Since it is so uncertain, I will guess something in the middle: more jobs, more tax revenues due to growth, but net net a deficit that is still not much improved from today's situation.

 

Hence comes the Bernanke warning. His action of buying treasuries and other securities by growing the Fed's balance sheet could have been unwound in an orderly manner in the future if the economy is growing and everything else is stable. With the government doing its stimulus at the same time as Bernanke QE program and continuing to pile up debt, I suspect that he is worried that we get into a permanent structural issue with the Fed balance sheet: can't be unwound. You have two entities trying to do their best to help the economy, but not coordinating anything.

 

The impact: dollar devaluation, commodity inflation, higher interest rates? I don't know which one or if all, but it seems that it is getting into motion and that we will soon learn about the unintended consequences.

 

Cardboard

 

The big (self serving) lie is of course that tax cuts creates jobs and returns more tax revenues to the Treasury hence more than paying for itself. That was the premise to justify the tax cuts to the rich at the same time that corporate America signed the taxpayer up for the biggest, ongoing malinvestment in history... the mid east wars... using the premise of the second big self serving lie, that war is good for the economy.

The burgeoning national debt (and deficits) starting from that point onward are testament to the failure of both the premises. This latest decision to further impare revenues coupled with the Fed's hinting at QE3 guarantee the continuing and accelerating decline of the US empire and its currency.

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bribes for placing hazardous solar panels on the roof.  Attic fires anyone?

 

I agree, that's an inefficient and wasteful subsidy.

 

My house is run on 100% renewable energy.  I've never bought a solar panel or any other kind of equipment.

 

I merely mailed in a postcard telling my utility that I'd like them to purchase "green power" to exactly offset my usage.  It costs me a 10% premium.  http://www.pse.com/energyEnvironment/renewableenergy4/Pages/GreenPowerProgram.aspx

 

The company that is creating that green power likely is getting a subsidy themselves, but I argue that they have likely created a more cost efficient and scalable solution -- imagine all the wasted dollars in having all these disparate systems scattered across rooftops.

 

 

 

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Bronx - we've danced this dance before, so I won't go down the same roads.  But you paint a broad picture of your beliefs.  But they can't be entirely accurate when pushed to the extremes. 

 

In other words, a 100% tax rate would generate very little revenue.  A 1% rate would do the same.

 

So in your expert opinion, where should the individual brackets and rates be set to maximize tax revenue?

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Nyorwa.  Can you figure out what country that spells?

 

I'm married with a family, but to a young man out there I'd also suggest that the natives are friendly :-)

 

MMM, hot blonds. Hopefully I meet some on vacation in December. I dont think I can get a visa there, but am thinking of trying Australia on a work and holiday visa. Why Norway in particular.

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Nyorwa.  Can you figure out what country that spells?

 

I'm married with a family, but to a young man out there I'd also suggest that the natives are friendly :-)

 

MMM, hot blonds. Hopefully I meet some on vacation in December. I dont think I can get a visa there, but am thinking of trying Australia on a work and holiday visa. Why Norway in particular.

 

yes, why norway?

 

additionally, can someone post a link to the thread about the roth IRA and a loan that ERICOPOLY wrote??

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I agree, that's an inefficient and wasteful subsidy.

 

My house is run on 100% renewable energy.  I've never bought a solar panel or any other kind of equipment.

 

I merely mailed in a postcard telling my utility that I'd like them to purchase "green power" to exactly offset my usage.  It costs me a 10% premium.  http://www.pse.com/energyEnvironment/renewableenergy4/Pages/GreenPowerProgram.aspx

 

The company that is creating that green power likely is getting a subsidy themselves, but I argue that they have likely created a more cost efficient and scalable solution -- imagine all the wasted dollars in having all these disparate systems scattered across rooftops.

 

 

 

 

I was talking to a guy who was responsible for installing the nat gas Bloom boxes

 

http://www.bloomenergy.com/

 

An in that case distributed power is actually more efficient.  Power from a station many miles away loses a certain amount of energy before it reaches it's destination.  Supposedly getting the nat gas directly to the site and converting it there is more efficient than doing it in a power plant.  All second hand knowledge so can't corroborate one way or the other...

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Love him or Hate him, inmo you have to respect Obama. I really enjoyed the first 2 minutes and am looking forward to the commentary. You can tell he means well, I just wish he had more fight. To quote Bill Maher, he needs Bush's balls.

 

The proposed tax accord between President Obama and Republicans

 

http://www.charlierose.com/view/interview/11334

 

The Ericpology thread might be a tough one to find. Its buried deep in one of those long off topic political threads.

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I agree, that's an inefficient and wasteful subsidy.

 

My house is run on 100% renewable energy.  I've never bought a solar panel or any other kind of equipment.

 

I merely mailed in a postcard telling my utility that I'd like them to purchase "green power" to exactly offset my usage.  It costs me a 10% premium.  http://www.pse.com/energyEnvironment/renewableenergy4/Pages/GreenPowerProgram.aspx

 

The company that is creating that green power likely is getting a subsidy themselves, but I argue that they have likely created a more cost efficient and scalable solution -- imagine all the wasted dollars in having all these disparate systems scattered across rooftops.

 

 

 

 

I was talking to a guy who was responsible for installing the nat gas Bloom boxes

 

http://www.bloomenergy.com/

 

An in that case distributed power is actually more efficient.  Power from a station many miles away loses a certain amount of energy before it reaches it's destination.  Supposedly getting the nat gas directly to the site and converting it there is more efficient than doing it in a power plant.  All second hand knowledge so can't corroborate one way or the other...

 

You are correct about transmission loss -- I read somewhere that it's in the 20% range, or maybe it's a quarter of electricity generated is lost to the transmission lines.  Something like that.  So I could be completely wrong about the efficiency -- however if that commercial operation can acquire some efficiencies of scale then I could still be correct... for each dollar spent on equipment (including cost of installation and maintenance) maybe they can afford 40% more solar cells per dollar, for example.  I think I read that a large amount of cost in a residential system is the installation -- makes sense to me so I believe it.  Anyhow, even if there is not net efficiency gained I can at least feel good that a higher percentage of the dollars spent by me go into the actual solar panels themselves, and less to the installer.  That helps channel more money to the companies engaged in R&D.

 

It's also a cheap way for me to finance it -- I just pay a bill instead of sinking my dollars into owning the equipment.  Then if the typical person were to finance it with a loan they would then find it harder to finance other things they wish to purchase (debt/income limits).  Then there's also the trees around my house that would shade solar panels -- a commercial plant one would think is located without shade issues for part of the day.  Or if they break I've got the hassle and cost of getting them repaired.  If I'm a renter what do I do if my landlord won't buy them?  Do I buy my own solar panels and then move them from house to house?  Or if I own the house and then choose to move -- do I take them with me?  If my new house already has solar panels, how much can I sell them for on the used market and how much do I lose in that transaction?  etc... etc...

 

One inefficiency of it though is that I tend to leave the lights on more and turn the heat up higher than I would otherwise do -- I have no conscience nagging me about ruining the planet.  I also reason that by purchasing a greater amount of green power I am helping to accelerate the buildout of green power.  Either way it's waste of capital... maybe I could have fed somebody with that money.

 

 

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Nyorwa.  Can you figure out what country that spells?

 

I'm married with a family, but to a young man out there I'd also suggest that the natives are friendly :-)

 

MMM, hot blonds. Hopefully I meet some on vacation in December. I dont think I can get a visa there, but am thinking of trying Australia on a work and holiday visa. Why Norway in particular.

 

yes, why norway?

 

additionally, can someone post a link to the thread about the roth IRA and a loan that ERICOPOLY wrote??

 

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

 

Norway does not "double tax": "To avoid (economic) double taxation, shareholders receiving dividends from Norwegian limited companies, [are] entitled to full credit.... Consequently dividends from Norwegian companies were in practice tax free on the hands of the shareholder".

 

I think he's referring to a thread at the end of April, or was it early May.  I don't remember exactly what I said at the time but it's in these archives somewhere.  I was extremely raw at the time after paying my 2009 taxes.  So I laid out a plan where I could effectively never pay much tax again, or worst case only pay capital gains taxes -- I have about 42% of my net worth in Roth IRA, and basically if I just let dividends accumulate there and borrow an offsetting amount on margin in my taxable account, then no taxes triggered.  I'm still 37, and when I get to about 59 I can then pull the gains out of the IRA to help pay down the margin loan a bit (or entirely) -- or I could just sell some of the non-dividend paying stock, but then likely having to pay some capital gains taxes.  I reasoned that if you have stocks like Berkshire in the taxable account that grow in value but don't distribute dividends (only capital gains), then you've got a situation where you never have to worry about dividend taxes.  So in that thread I said that if you're counting on me to pay my fair share, then you'd better adopt some kind of VAT because it's nearly the only way to get me.  I can even get out of inheritance taxes if I wish (provided I act before I die) because I'm a dual citizen and can just go to Australia and renounce my US citizenship.  I think after about 5 years the IRS can no longer reach me.  Australia has no inheritance tax and no gift tax -- they have other taxes of course but their dividend franking is rather interesting (you pay less in dividend tax there than you do here... even with our low 15% rate.  I think with fully-franked dividends you wind up paying about 9% dividend tax in Australia).  They also have a "land tax" but it's only for investment property or second homes -- not for your primary residence (I think there's an exemption for the first $1m of assessed land value if it's your primary residence).  And the tax is only levied on the value of the land... not the building!

 

 

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Guest broxburnboy

Bronx - we've danced this dance before, so I won't go down the same roads.  But you paint a broad picture of your beliefs.  But they can't be entirely accurate when pushed to the extremes.  

 

In other words, a 100% tax rate would generate very little revenue.  A 1% rate would do the same.

 

So in your expert opinion, where should the individual brackets and rates be set to maximize tax revenue?

Maximizing taxes by pitting one income group against the other should not be the name of the game.

Tax revenue is not maximized by setting different rates for different income revenues... its only class warfare.

The legal, illegal and accounting overhead incurred by all segments trying to seek personal advantage negates the benefits of a graduated tax regime and ends up with less revenues to the Treasury.

Revenues are maximized when private and public investments (spending) are efficient and wealth producing.... the economy is growing.

Tax revenues should balance spending and the pain of taxation would in turn rationalize government spending.

For example if the Bush tax cuts were accompanied tit for tat with reduced federal spending...the fiscal situation would look very much the same as the almost balanced budget of the final Clinton years.. but with reduced government presence. Unfortunately tax revenues were deliberately reduced as a sop to the ruling oligarchy at the same time that spending was ramped up for the "wars" which are in reality supply side stimulus for the war machine and associated travelers.

No matter how you feel about the wars.. if taxes were raised to fund them.. there would have been a lot less enthusiasm for them in the first case and they certainly would have come to a conclusion long before now and the associated debts incurred would not be hanging over the whole economy.

But that ship has sailed, it can't be undone but going forward  tax revenues and spending must be balanced, by a combination of higher tax rates and eliminating ALL non productive government spending. The money supply must be further dilluted to pick up the slack because the other math doesn't work, until future public and private investments become productive. This process will take years (decades).. but it starts with raising tax revenues... not extending tax cuts.

I favour wiping out the current tax code and introducing a flat income tax at say 25% (after allowances for those at the very bottom).

which will generate more revenues than the current regime without the expensive overhead. Obviously this is not going to happen as it would result in the unemployment of all the sycophants.. tax lawyers, accountants, political aparatchiks, lobbyists etc. Nor will the wars or other pork barrel spending be seriously pared.. for the same reason.

Therefore the hyperinflationary collapse of the US dollar is assured because the most politically doable piece of the remedy..QE.. is well under way and in absence of the 2 other necessary steps can only result in inflation and currency collapse. Eventually however the golden rule will apply... those that have the gold will make the rules.

 

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Bronx - we've danced this dance before, so I won't go down the same roads.  But you paint a broad picture of your beliefs.  But they can't be entirely accurate when pushed to the extremes.  

 

In other words, a 100% tax rate would generate very little revenue.  A 1% rate would do the same.

 

So in your expert opinion, where should the individual brackets and rates be set to maximize tax revenue?

Maximizing taxes by pitting one income group against the other should not be the name of the game.

Tax revenue is not maximized by setting different rates for different income revenues... its only class warfare.

The legal, illegal and accounting overhead incurred by all segments trying to seek personal advantage negates the benefits of a graduated tax regime and ends up with less revenues to the Treasury.

Revenues are maximized when private and public investments (spending) are efficient and wealth producing.... the economy is growing.

Tax revenues should balance spending and the pain of taxation would in turn rationalize government spending.

For example if the Bush tax cuts were accompanied tit for tat with reduced federal spending...the fiscal situation would look very much the same as the almost balanced budget of the final Clinton years.. but with reduced government presence. Unfortunately tax revenues were deliberately reduced as a sop to the ruling oligarchy at the same time that spending was ramped up for the "wars" which are in reality supply side stimulus for the war machine and associated travelers.

No matter how you feel about the wars.. if taxes were raised to fund them.. there would have been a lot less enthusiasm for them in the first case and they certainly would have come to a conclusion long before now and the associated debts incurred would not be hanging over the whole economy.

But that ship has sailed, it can't be undone but going forward  tax revenues and spending must be balanced, by a combination of higher tax rates and eliminating ALL non productive government spending. The money supply must be further dilluted to pick up the slack because the other math doesn't work, until future public and private investments become productive. This process will take years (decades).. but it starts with raising tax revenues... not extending tax cuts.

I favour wiping out the current tax code and introducing a flat income tax at say 25% (after allowances for those at the very bottom).

which will generate more revenues than the current regime without the expensive overhead. Obviously this is not going to happen as it would result in the unemployment of all the sycophants.. tax lawyers, accountants, political aparatchiks, lobbyists etc. Nor will the wars or other pork barrel spending be seriously pared.. for the same reason.

Therefore the hyperinflationary collapse of the US dollar is assured because the most politically doable piece of the remedy..QE.. is well under way and in absence of the 2 other necessary steps can only result in inflation and currency collapse. Eventually however the golden rule will apply... those that have the gold will make the rules.

 

 

I'm actually agreeing with you more than disagreeing these days.  I'm not totally sold on gold as the vehicle, but everything else you said above I agree with.  I mean, pretty much everything.  What percentage is your gold allocation?  Do you have anything outside of that?  I feel like this country is headed for soup kitchens.  It doesn't have to be that way, they could cut the waste per the deficit commission findings, but will they?

 

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