Gosh Gary, I really didn't know that the millions the R-Money's of the world made were in Treasury Savings bonds.

How about this, define a top limit that is 'tax free'

Gosh, I know you seriously need to protect the 1% -- especially with Dull's absence, but really?

http://www.businessweek.com/articles/2012-04-17/how-to-pay-no-taxes-10-strategies-used-by-the-rich

I'm not protecting the 1%, I'm simply pointing out that your proposed changes also effect the bottom end, the people who might be able to get a $10 US Savings bond once a month in a savings plan.

I note that in one of those tax avoidance plans in the article, you actually have to loose as much as you need to shelter. The loss would exceed the amount of tax saved. Another of them has ruled illegal. A couple of others force the user to forgo any possibility of making their money grow, perhaps acceptable with interest rates where they are now, but not on a long term basis or in a highly inflationary period. In another he brushed off the real cost to continue the churn on the options to prevent the tax trigger, that is real money. The author seemed to not realize that put and call options have an expiration date. Finally most of these strategies are for the purpose of giving your money tax free to heirs, which is avoidance of estate tax, not income tax.

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Remember, there was a pretty solid economic expansion from 1993 to 2001.

Yes, it was called Y2K. Or have you forgotten how many people were temp hired to do Y2K compliance? Once we got past Y2K all these positions become useless and that was the beginning of the recession. However no one ever wants to hear the truth.

I would say there is some plausibility to this, but just how many jobs are we talking about? Besides, I thought you said the major problem was the Clinton era expansion of the Carter era FaAH Act. ?

Actually quite a lot of jobs. The two person firm I worked at then got more than one request a day to produce Y2K certification documentation from our clients who threatened to leave if we didn't pump paper out the door. Every executive must have had a twenty foot pile covering his behind. At the end, many of the workers weren't fired, but placed elsewhere in companies, reducing the need for additional labor. As you may remember there was a mini recession about that time.

As to the CRA revision, it participated the crash, by creating a huge unsustainable bubble, which Mr. Greenspan called froth, but the recession, or expiration of the growth phase, was already in motion by that time. Absent the crash we simply might have entered a decade or two long malaise period as we are now in. Yes, this is the new normal, get used to it.

As to the exact timing and amount, remember the long term 50-65 year growth phase should have ended in the late 90's. Y2K artificially pushed it back. It may have also been slightly lengthened due to longer life spans on a generation to generation basis. In any case the expiration started, but the massive CRA inflation in RE prices, the Bush tax cuts and an unfunded war spending (no different in effect than an unfunded jobs program) held it at bay for several more years. Unfortunately in that time we began a near versicle rise. To return to a sustainable level a waterfall had to occur, or a crash.

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Sarge, he left this determination to the states, if they requested it AFTER a number of states dominated by .... wait for it .... Republicans pressed about these changes.

Standard Teapublican approach these days -- if Obama responds to Teapublican requests, this is bad. If he doesn't -- this is bad.

It doesn't matter if the Teapublicans are credible in their complaints as they are playing to a credulous base.

What caused this? Obama dropped the requirement the do 20 hours training to get a job per week.

Left the decision of what requirements to make to state and local governments? If correct, then I would think a Libertarian would be happy.

What caused this? Obama dropped the requirement the do 20 hours training to get a job per week.

Left the decision of what requirements to make to state and local governments? If correct, then I would think a Libertarian would be happy.

Wikipaedia calls them a "movement".

That is a fair assessment.

Remember, there was a pretty solid economic expansion from 1993 to 2001.

Yes, it was called Y2K. Or have you forgotten how many people were temp hired to do Y2K compliance? Once we got past Y2K all these positions become useless and that was the beginning of the recession. However no one ever wants to hear the truth.

I would say there is some plausibility to this, but just how many jobs are we talking about? Besides, I thought you said the major problem was the Clinton era expansion of the Carter era FaAH Act. ?

Of course the Trust is also able to "invest" money in off shore tax havens and work other lurks to minimise the amount of tax it pays.

Edit: Similar methods of tax "minimisation" include private holding companies which work in a way similar to the trusts and a combination of both, where the trust owns the holding company. This way they are able to take advantage of the tax breaks available to both trusts and companies.

Of course all of this takes a lot of money to set up. But that's deductible anyway as "Accountant's Fees".

T.A.

Would you list those loopholes that very wealthy people use. It will be interesting to see if they are all that bad, or if it is just envy.

I'll start it.

Far away the biggest one is the Charitable Deduction. You can give half your earnings away and get a deduction for it.

"Creative Accountancy" is a Black Art indeed. I don't how the US tax system works but here in Oz, a favourite trick is the "Family Trust". These trusts are taxed at a lower rate than normal income tax (IIRC around 15%).

All remuneration (salary, share dividends, bonuses etc.) are paid into the trust. The trust is the legal owner of the mansion, the yacht, the car, share holdings and most other assets. The "Trust" then pays the person a nominal dividend which is their legal income. i.e. The amount they pay tax on.

Using this method, the late Kerry Packer, who was Australia's richest man and was worth around 6 billion dollars, had a "taxable income" of less than $20,000. Just enough to lift him over the no tax threshold.

I presume the US has similar lurks.

T.A.

True, I am using economic definitions. After all capital is an economic term.

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I kind of like the idea of three parties though -- I think I mentioned this sort of thing a year ago.

Democrats -- pretty much their current definition

Republicans -- define these as Republicans of the 1950 to 1990 range of positions. Exclude all those advocating Teapublican views.

Teapublicans -- the new party. Runs on the following platform:

No abortions - ever, anywhere
Eliminate Medicaid
Privatize Medicare
Privatize Social Security
Eliminate Food Stamps
Get rid of all illegal immigrants (any way possible)
Reverse Tax rates -- 35% from dollar 1 to $50K, 20% from $50K to $200K, 10% from $200K to $1M. O% above that.
Eliminate Welfare
Eliminate all regulatory agencies
Privatize all education

Gosh Gary, I really didn't know that the millions the R-Money's of the world made were in Treasury Savings bonds.

How about this, define a top limit that is 'tax free'

Gosh, I know you seriously need to protect the 1% -- especially with Dull's absence, but really?

http://www.businessweek.com/articles/2012-04-17/how-to-pay-no-taxes-10-strategies-used-by-the-rich

I also think the time has come to eliminate the 'deferred interest' tax scavenger hunt prize as well.

I am so glad you wish to tax US Savings Bonds on a every year basis and not just when they are cashed in. I am sure that will help cure the 47% problem.

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By the way, since the only named player there is Cantor -- color me just a tad cynical, ok?

Didn't read the footnotes did you?

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Gary, the rate of wealth creation over the past 8 years seems to have been discouraged by low rates.

I'm not talking increases to punitive rates --- rather the decidedly non-punitive rates of the Clinton era. Given how much wealth creation there was in those years, the rate clearly was not punitive.

Capital Gains and Dividend tax rates are not a case of 0/1 -- I believe the current rates are too low, particularly for those making millions a year off of them. I also think the time has come to eliminate the 'deferred interest' tax scavenger hunt prize as well.

Gary, I'm so glad the increase had in 'slackers and leeches' had nothing to do with the economy. We can simply legislate or executive order them out of existence.

By the way, since the only named player there is Cantor -- color me just a tad cynical, ok?

Similarly, it should be noted the states which pushed for a bit more interpretive room regarding Welfare -- were states dominated by Republicans. Obama provided it and got blamed for the request.

Fact checking, it is a pain.

Noun: capital
1) Assets available for use in the production of further assets
2) Wealth in the form of money or property owned by a person or business and human resources of economic value.


I think you are restricting it to something perhaps better called an income producing tangible asset. Although I didn't ask if you consider a patent or copyright capital.

We can argue 'till the cows come home if we aren't using the same dictionary.

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"And speaking of a house, then what is the profit on the sale, presently called a capital gain, called under your system? Since it isn't a capital gain I guess we can repeal the $250,000.00 capital gain tax exemption on the sale of that house ..."

[/quote]
Gary, the house is not capital! A lot of confusion that is occurring because people do not understand the 3 factors of production, land, labor and capital. A house produces nothing, it is not a factor of production. If the house is used as a home office then that part of the house would be capital, as are the tools used in the office.
The PC I have at home is not capital the one I had at work was.

Misnaming things just clouds the issues.
As an aside the issue about the sale of the house is a tax policy issue and should be addressed as such but it should be named more correctly as the gains or losses on the sale of stocks.

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Slackers and Leeches
http://majorityleader.gov/uploads/CRS_Memo_ABAWD.pdf
Page 3, Table I ABAWD
That is: Able Bodied Adults Without Dependents.
Percentage change +126.9%

What caused this? Obama dropped the requirement the do 20 hours training to get a job per week.

I've been asked to identify Slackers and Leeches, I think this might be a pretty good place to look for them.

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Surely the way to get the rich to make capital investments, at a time like this, rather than to make vain attempts to get more taxes out of them, is to do a FDR "new deal".

Gary, I didn't realize that we didn't have capitalism in this country until the Bush tax cut.....

Clearly, that is not what you meant to suggest

I didn't think I did, I was talking about the rate of creation being discouraged by an increase in taxes. To kill it the rate would have to get to the other end of the Laffer curve.

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