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Message 1296348 - Posted: 17 Oct 2012, 21:26:10 UTC - in response to Message 1296341.

Gary, we've had this discussion before, a home is not capital.

Actually, it is: privately owned capital.

Definition: Capital is something owned which provides ongoing services. In the national accounts, or to firms, capital is made up of durable investment goods, normally summed in units of money. Broadly: land plus physical structures plus equipment. The idea is used in models and in the national accounts.

http://economics.about.com/cs/economicsglossary/g/capital.htm

Well the text books I studied defined the three factors of production as land, labor and capital. If you gave any other answer you got to redo your freshman year.
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Message 1296355 - Posted: 17 Oct 2012, 21:35:16 UTC - in response to Message 1296310.

lower capital gains taxes on stocks and investments has had no effect on investments in the last 40 years.

One could argue that higher Capital gains taxes encourage continued investments in a stock. Moving the stock would cause one to incur the tax. Leaving in one place reduces ones exposure to the tax.

A lower tax could also be a cause of market volatility as investors see a small tax as less of a burden than losing a money on a stock in the short term.

One can argue anything one wishes, but if lower capital gains taxes have "had no effect on investments in the last 40 years", as you say, then why the explosion of mutual funds and the heavy reliance on equities by pensions? I think that decision makers, individuals and fund managers, put more into equities, in large part, because of the lower tax rate on the investor. This stimulates economic growth. If the capital gains tax is increased, people may go to other investments, which would inhibit expansion by companies (hiring, capital improvements) and negatively impact the economy--how much is open to debate, but in these hard times, do you want to risk such a contraction?

Capital gains taxes is only a part of tax policy. Congress (for the feds) and state and local legislators have put in place tax breaks, as I have outlined, to serve a societal purpose. If any particular tax policy isn't working, it can be changed.

Right i'm not an economist.

they might be
or them
or the Washington post

Its apparent that the capital gains lowered rate only helps the weathiest of us. Again, I bet not one of us fits the top 5% and do not have the investments that the top 5% have. We have been hoodwinked, bamboozled,...lied to time and again. Its those of ust that don't drink the grape flavored drink that get it. I understand the wealthy want cleap easy money and the cheapest easiest way to get it is not being taxed on investments. There's a reason this is called unearned income. That's also why it needs to be taxed higher otherwise we end up having a culture hereditary wealth which the founders did not want
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Message 1296356 - Posted: 17 Oct 2012, 21:40:34 UTC - in response to Message 1296348.

Gary, we've had this discussion before, a home is not capital.

Actually, it is: privately owned capital.

Definition: Capital is something owned which provides ongoing services. In the national accounts, or to firms, capital is made up of durable investment goods, normally summed in units of money. Broadly: land plus physical structures plus equipment. The idea is used in models and in the national accounts.

http://economics.about.com/cs/economicsglossary/g/capital.htm

Well the text books I studied defined the three factors of production as land, labor and capital. If you gave any other answer you got to redo your freshman year.

http://www.investorwords.com/694/capital.html
The money, property, and other valuables which collectively represent the wealth of an individual or business.

I note the economic definition is only for firms and ignores individuals.

Also I can argue that a building, home, does provide the service of keeping you warm and dry.


However we are discussing the US tax code. It is defined there.
http://www.irs.gov/publications/p550/ch04.html#en_US_2011_publink100010476
Capital Assets and Noncapital Assets
For the most part, everything you own and use for personal purposes, pleasure, or investment is a capital asset. Some examples are:

Stocks or bonds held in your personal account,

A house owned and used by you and your family,

Household furnishings,

A car used for pleasure or commuting,

Coin or stamp collections,

Gems and jewelry, and

Gold, silver, or any other metal.

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Message 1296393 - Posted: 17 Oct 2012, 23:24:13 UTC - in response to Message 1296356.

Gary, what that says is that the tax code ignores economics but seriously effects economics.
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Message 1296403 - Posted: 18 Oct 2012, 0:08:17 UTC - in response to Message 1296393.

Gary, what that says is that the tax code ignores economics but seriously effects economics.

That's not what my finance professor and tax law instructors taught me. The tax code has the definition of "capital" correct. But you are right that tax policy, as codified in the tax laws, does, by design, affect the economy.

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Message 1296415 - Posted: 18 Oct 2012, 0:32:16 UTC - in response to Message 1296403.

Economics is a science not a tax code.
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Message 1296419 - Posted: 18 Oct 2012, 0:41:11 UTC - in response to Message 1296415.

Economics is a science not a tax code.

Is it, I thought it was social philosophy.

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Message 1296420 - Posted: 18 Oct 2012, 0:44:04 UTC - in response to Message 1296415.

Economics is a science not a tax code.

Huh? Who said economics is a tax code? The tax code uses certain economic principles from economic theories that you may not agree with, but as a science, economics is rather too fuzzy for me. It offers no absolute answers before the fact, and answers that are often highly disputed after the fact.

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Message 1296425 - Posted: 18 Oct 2012, 0:53:22 UTC - in response to Message 1296420.

Gary used the tax code to define economic terms.
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Message 1296436 - Posted: 18 Oct 2012, 1:42:19 UTC - in response to Message 1296430.

Music, I thought this thread was about taxes.
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Message 1296438 - Posted: 18 Oct 2012, 1:44:38 UTC - in response to Message 1296425.

Gary used the tax code to define economic terms.

What he did was quote the definition in the tax code of "capital". The tax code has it right. The code doesn't disagree with the definition I was taught in finance and tax law courses.

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Message 1296442 - Posted: 18 Oct 2012, 2:05:27 UTC - in response to Message 1296438.
Last modified: 18 Oct 2012, 2:06:18 UTC

Gary used the tax code to define economic terms.

What he did was quote the definition in the tax code of "capital". The tax code has it right. The code doesn't disagree with the definition I was taught in finance and tax law courses.

I fail to see how this is a tool used in production yet the US tax code calls it capital, "A car used for pleasure or commuting". It is referred to as a capital asset. I agree it is an asset but it is not capital.
This arcane stuff does help determine who is taxed and how much they pay.
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Message 1296477 - Posted: 18 Oct 2012, 7:00:13 UTC - in response to Message 1296393.

Gary, what that says is that the tax code ignores economics but seriously effects economics.

So does the dictionary. And the 99% of the people who are not economic academics. I did not know that economic academics had purchased the word capital and the right to its definition. I would like to see who owned the rights and therefore could sell it to them. Otherwise you might want to have a talk with some academics in the English department about how definitions of words are placed into the language.

Of course I know when you listen to a lawyer you need a copy of Black's Law dictionary to understand what was meant, but lawyers are special bottom feeding scum. :)

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Message 1296485 - Posted: 18 Oct 2012, 7:35:40 UTC - in response to Message 1296477.

. . . but lawyers are special bottom feeding scum. :)

Thanks. That's a promotion from ambulance chasing blood-sucker.

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Message 1296501 - Posted: 18 Oct 2012, 11:50:20 UTC - in response to Message 1296477.
Last modified: 18 Oct 2012, 11:50:47 UTC

Gary, what that says is that the tax code ignores economics but seriously effects economics.

So does the dictionary. And the 99% of the people who are not economic academics. I did not know that economic academics had purchased the word capital and the right to its definition. I would like to see who owned the rights and therefore could sell it to them. Otherwise you might want to have a talk with some academics in the English department about how definitions of words are placed into the language.

Of course I know when you listen to a lawyer you need a copy of Black's Law dictionary to understand what was meant, but lawyers are special bottom feeding scum. :)

Gary, in this context I think you can blame it on Adam Smith.
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Message 1296654 - Posted: 18 Oct 2012, 19:15:46 UTC - in response to Message 1296485.

. . . but lawyers are special bottom feeding scum. :)

Thanks. That's a promotion from ambulance chasing blood-sucker.

And I ate dinner with a tax lawyer for a fortune 500 company last night. For those of you who wonder that company has 10 offices just for IRS persons who are there year round. Your tax dollars at work.

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Message 1296655 - Posted: 18 Oct 2012, 19:17:53 UTC - in response to Message 1296654.

or the companies finances are so complicated and diverse it takes that many IRS personel to weed through all the filings
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