Death & Taxes

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    Posted: 20 February 2012 07:12 PM #16

    Mace - 20 February 2012 07:22 PM
    JDSoCal - 20 February 2012 06:16 PM

    Bottom 50% <$32,396 2.25%

    Wonder how accurate is their computation.  As the nation with a large middle-income group, one would expect the big bulk of the tax to be paid by the median i.e. expect to see top 50% paid about 55%-60% and bottom 50% paid 40%-45%.  The statistics is more consistent with nations like China where most folks are still poor so bottom 50% won’t be taxed much.

    How about Sales tax and other taxes? Aren’t those at lower incomes taxed at higher rate (as a percentage of their income)?

    If the rich are getting richer (they are) and the poor are getting poorer (they are), then if that current trend continues, wouldn’t the % that those at the top contribute be proportionally larger even though the income gap is getting wider?  Didn’t massive unemployment make the statistics look even worse? (How do you pay a fair share when you can’t?).

    Great piece on 60 minutes Sunday about the chronically unemployed. These were college-educatied, middle-upper class people that worked their entire lives suddenly thrust into unemployment. Out of unemployment funds and many of them living on food stamps. Tons of employers unwilling to hire them simply because they were currently unemployed! (should be illegal). These aren’t lazy people that don’t want to work. Funny, the economy was doing much better and we had much lower unemployment when the top earners were taxed at higher rates. How’s that possible?

         
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    Posted: 20 February 2012 09:55 PM #17

    ChasMac77 - 20 February 2012 11:12 PM

    Funny, the economy was doing much better and we had much lower unemployment when the top earners were taxed at higher rates. How’s that possible?

    You mean when Reagan cut the top marginal rate in half, and created 23 million jobs, and the DJIA doubled after 20 flat years? Or when Clinton cut cap gains taxes?

    Just because Obamanomics isn’t working, don’t blame the tax rate.

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  • Posted: 20 February 2012 10:10 PM #18

    nkmho - 20 February 2012 08:25 PM
    Mav - 20 February 2012 08:17 PM

    iPad’s terrible, wonderful mod powers at work!  Topic splitting!

    Last thought for nate’s original question before we continue the tax discussion:  Uh…you’re getting very good rates for a typical margin account, nate.  Ameritrade looks to be at about 9% (lowest margin balance).  Etrade is about 8.5%.  Schwab is at 8.5%.  Scottrade’s at 7.75%, quite a bit better in my quick informal comparison.

    For a balance of $0-$49,999, OptionsHouse has a rate of 4%, and TradeMonster has a rate of 3.5%.

    Yeah, I’m at major Canadian brokerage and get 4.5%.

         
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    Posted: 20 February 2012 11:12 PM #19

    JDSoCal - 21 February 2012 01:55 AM
    ChasMac77 - 20 February 2012 11:12 PM

    Funny, the economy was doing much better and we had much lower unemployment when the top earners were taxed at higher rates. How’s that possible?

    You mean when Reagan cut the top marginal rate in half, and created 23 million jobs, and the DJIA doubled after 20 flat years? Or when Clinton cut cap gains taxes?

    Just because Obamanomics isn’t working, don’t blame the tax rate.

    We’re talking about the Bush tax cuts no? 10 years and counting and nothing to show for it except debt.
    BTW, Bushanomics created 3 million jobs and RR 16 million, not 23.
    Just the facts ma’am

         
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    Posted: 21 February 2012 01:03 AM #20

    ChasMac77 - 21 February 2012 03:12 AM
    JDSoCal - 21 February 2012 01:55 AM
    ChasMac77 - 20 February 2012 11:12 PM

    Funny, the economy was doing much better and we had much lower unemployment when the top earners were taxed at higher rates. How’s that possible?

    You mean when Reagan cut the top marginal rate in half, and created 23 million jobs, and the DJIA doubled after 20 flat years? Or when Clinton cut cap gains taxes?

    Just because Obamanomics isn’t working, don’t blame the tax rate.

    We’re talking about the Bush tax cuts no? 10 years and counting and nothing to show for it except debt.
    BTW, Bushanomics created 3 million jobs and RR 16 million, not 23.
    Just the facts ma’am

    Reagan, not Bush. And I guess you just missed that whole housing and credit crash of 2009?

    Perhaps if we had a Reaganesque - or any other post-crash-like recovery - instead of this meek Obamanomic one, we could grow our way out of things. And maybe if Obama would get serious about deficit reduction instead of Keynesian spending gimmicks, we wouldn’t be running record deficits. Funny how it’s never a spending problem with you lefties.

    If Obama loses, just watch the markets rally, and growth take off. I mean is there a single market commentator who doesn’t believe that now?

    I don’t get you. You really want the government stealing and wasting more of your Apple gains? How about you just give it voluntarily, and leave us non-believers alone. There is a provision for that in the US tax code. Funny how libs never take advantage of it, and give more than they have to. Just generous with other people’s money.

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  • Posted: 21 February 2012 02:12 AM #21

    Just a couple of quick thoughts.  Sales taxes are unrelated to income.  It’s a consumption tax and it would be logical to assume that those making far more are spending far more and once again generators of considerably more tax revenue.

    Politicians taking credit for job creation is one of my pet peeves.

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  • Posted: 21 February 2012 04:20 AM #22

    Sales taxes are unrelated to income.

    I’m sure the recently acquired new Lexus and the used 6 year old Toyota get you the down the interstate. The tax bill is somewhat different however.

    Income is related to sales tax payments.

         
  • Posted: 21 February 2012 04:23 AM #23

    And Reagan tax policy doubled revenues to the gov’t. Congress spent it all and way more.

         
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    Posted: 21 February 2012 06:13 AM #24

    danthemason - 21 February 2012 08:23 AM

    And Reagan tax policy doubled revenues to the gov’t. Congress spent it all and way more.

    And of course, at this point in the Reagan recovery (Q1 1984), we were at 9.3% growth - over three times the current growth rate - and headed for 3 more quarters of 8%+ growth.

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    Posted: 21 February 2012 08:22 AM #25

    Okay, here are the New Rules.  Debate is fine; name-calling is not.  If your post contains name-calling, I will delete it.  Focus on the issues, not the parties, and everything should be fine.

    [ Edited: 21 February 2012 08:28 AM by lovemyipad ]      
  • Posted: 21 February 2012 11:24 AM #26

    awcabot - 20 February 2012 07:07 PM

    date=“1329781630”]

    JDSoCal - 20 February 2012 06:16 PM

    Actually, no, rich people pay the vast majority of income taxes in this country.

    Percentile/AGI/% of US taxes paid

    Top 1% $343,927 36.73%
    Top 5% $154,643 58.66%
    Top 10% $112,124 70.47%
    Top 25% $66,193 87.30%
    Top 50% $32,396 97.75%
    Bottom 50% <$32,396 2.25%

    I wonder, if it could be done, where you two would be on this list compared to someone like Mitt Romney, Warren Buffet, or even Steve Jobs, if he were alive.

    Difference in tax planning.  My investments are short term vs long term.  It is a strategic and conscious decision because the gain is so high (typically I’m making well over 1000% per annum investing short term).  I may make just as much long term, but to do so I have to invest way OTM, which increases my risk quotient beyond my risk tolerance level.

    The three you mention are making ~20% - 25% on their portfolio, and can afford (risk tolerance) to do so.

    There is also the unintended effects of Sarbanes/Oxley (one of the dumbest pieces of legislation ever).  Sarbanes/Oxley changed the way executives are compensated from salary to one more heavily biased toward stock options.  Holding those options for more than one year puts them in capital gains territory, whereas salary was taxed as ordinary income.

    The real difference between those three and others like them, is that they have the ability to derive all of their income as capital gains.  This opportunity exists for lower income persons as well (simple IRA, Roth IRA, etc).  Lower income persons do not take advantage of tax planning the way higher income persons do.  Don’t give me the ‘they can’t afford it’ argument.  By and large they just don’t think in those terms, and if they did, our tax system prevents them from doing it.

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  • Posted: 21 February 2012 11:27 AM #27

    JDSoCal - 21 February 2012 01:55 AM
    ChasMac77 - 20 February 2012 11:12 PM

    Funny, the economy was doing much better and we had much lower unemployment when the top earners were taxed at higher rates. How’s that possible?

    You mean when Reagan cut the top marginal rate in half, and created 23 million jobs, and the DJIA doubled after 20 flat years? Or when Clinton cut cap gains taxes?

    Just because Obamanomics isn’t working, don’t blame the tax rate.

    The largest tax rate cut ever, prior to Reagan’s cut, was by Kennedy back in ‘61.  It spurred economic growth and lead to the Laffer curve.

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  • Posted: 21 February 2012 07:48 PM #28

    Gregg Thurman - 21 February 2012 03:27 PM
    JDSoCal - 21 February 2012 01:55 AM
    ChasMac77 - 20 February 2012 11:12 PM

    Funny, the economy was doing much better and we had much lower unemployment when the top earners were taxed at higher rates. How’s that possible?

    You mean when Reagan cut the top marginal rate in half, and created 23 million jobs, and the DJIA doubled after 20 flat years? Or when Clinton cut cap gains taxes?

    Just because Obamanomics isn’t working, don’t blame the tax rate.

    The largest tax rate cut ever, prior to Reagan’s cut, was by Kennedy back in ‘61.  It spurred economic growth and lead to the Laffer curve.

    Gregg some people call it the Khaldun-Laffer Curve because Arthur Laffer credited Ibn Khaldun a Muslim philosopher of the 13th century for the idea. Mr. Khaldun said the following in his Muqaddimah “Prolegomena”:

    “In the early stages of the state, taxes are light in their incidence, but fetch in a large revenue…As time passes and kings succeed each other, they lose their tribal habits in favor of more civilized ones. Their needs and exigencies grow…owing to the luxury in which they have been brought up. Hence they impose fresh taxes on their subjects…[and] sharply raise the rate of old taxes to increase their yield…But the effects on business of this rise in taxation make themselves felt. For business men are soon discouraged by the comparison of their profits with the burden of their taxes…Consequently production falls off, and with it the yield of taxation.”

    Makes sense to me but not to everyone it seems.

         
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    Posted: 21 February 2012 08:20 PM #29

    nate010203 - 20 February 2012 06:43 AM

    i dont trade professionily so i guess it looks like i cant deduct my margin costs.. which i think is very unfair. Government always craps on the little guy while giving the rich people lots of breaks.

    Because if i had enough money in my account i wouldnt need to use margin but i use margin because i only have 9k in my account at this time and im not going to buy only 18 shares.

    made 1100 last year, margin cost 150, have to pay them 200.. figure it all out my 1100 gain turns to less then 800, not fair.  I think taxing me is one thing but not allowing me to offset my gains with the margin interest cost isnt fair at all.

    is there any broker that doesnt charge an arm and a leg for margin? scottrade charges 7 percent. I would need to have cheap commissions though no more then 7 a trade.

    Trade in larger blocks. Trading expenses shouldn’t ever be over 1% or you’ll lose money. Moreover, short-term cap gains are taxed at 40% unless you earn 55% or more of your income from trading in which case, short-term cap gains are taxed as regular income (and you need an accounting firm that is up to speed on this, trust me).

    $1100
    -7% slippage
    -40% cap gains > $517.00
    ??????????
    or $583.00

    That said, Scottrade charges $7.00 a trade. From where do you get 7% from?

    Anyway, if you earn 55% or more of your income from trading, then you can move to mark to market accounting where costs of your Bloomberg terminal, trade pubs, cable, losses, capital expenses and anything else required to perform your job are all deducted from your earnings and then taxed in the appropriate bracket. This is confused by multiple trading accounts, multiple brokers, multiple states, long term cap gains, retirement accounts and so forth. 

    If you’ve only got $9K, you shouldn’t be seeking to trade frequently. First, more than three round trips a week and you’ll receive a house margin call to pad your account to $25K or go on a 90 day trading restriction (ask Kiwi about that). Secondly, as an active trader, anytime your account falls below $25K, you’ll receive a house margin call to pad it back up to $25K.

    Secondly, 80% of traders lose their shirt through inexperience. Active trading is a skill that takes thousands of dollars and about three or four years to learn how to do it and grind out a living. It isn’t for everybody. The 6% of the population who are primarily thinkers and less effected by feelings are generally more successful and people born with asperger’s do even better because they’re even less emotional.

    As far as rich people go, on a forum where there are more millionaires than you can shake a stick at, rich people will happily assume all of your taxes if you assume all of theirs.

    God bless, I hope you are successful.

    [ Edited: 21 February 2012 08:27 PM by Eric Landstrom ]

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  • Posted: 21 February 2012 08:21 PM #30

    Platon - 21 February 2012 11:48 PM
    Gregg Thurman - 21 February 2012 03:27 PM
    JDSoCal - 21 February 2012 01:55 AM
    ChasMac77 - 20 February 2012 11:12 PM

    Funny, the economy was doing much better and we had much lower unemployment when the top earners were taxed at higher rates. How’s that possible?

    You mean when Reagan cut the top marginal rate in half, and created 23 million jobs, and the DJIA doubled after 20 flat years? Or when Clinton cut cap gains taxes?

    Just because Obamanomics isn’t working, don’t blame the tax rate.

    The largest tax rate cut ever, prior to Reagan’s cut, was by Kennedy back in ‘61.  It spurred economic growth and lead to the Laffer curve.

    Gregg some people call it the Khaldun-Laffer Curve because Arthur Laffer credited Ibn Khaldun a Muslim philosopher of the 13th century for the idea. Mr. Khaldun said the following in his Muqaddimah “Prolegomena”:

    “In the early stages of the state, taxes are light in their incidence, but fetch in a large revenue…As time passes and kings succeed each other, they lose their tribal habits in favor of more civilized ones. Their needs and exigencies grow…owing to the luxury in which they have been brought up. Hence they impose fresh taxes on their subjects…[and] sharply raise the rate of old taxes to increase their yield…But the effects on business of this rise in taxation make themselves felt. For business men are soon discouraged by the comparison of their profits with the burden of their taxes…Consequently production falls off, and with it the yield of taxation.”

    Makes sense to me but not to everyone it seems.

    If you take resources away, something has to decline.  Simple logic.  Its too bad that there are so many that think the Golden Goose can lay unlimited Gold Eggs, no matter the burden put on the Goose.

    Our Asian competitors don’t tax the Golden Goose, they tax the consumer when they BUY something.  That gives them a very real competitive edge over competing US made product.

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