Obama has us small town folk figured out (1 Viewer)

[CT Saints Fan]

I have no problem with raising capital gains tax to a rate that is at least equal to ordinary income tax. I think its morally wrong for the profits made off stock investments to be taxed at a lower rate than the the blue collar worker's paycheck.

If you want more of something or you want to encourage that activity, you subsidize it. If you want less of something or you want to discourage that activity, you tax it.

What's the benefit from discouraging investment?

 

[Shawn]

The problem is they were already taxed on the money they invested. High taxation on the gains of the money they earned and risked losing (that also happens to help fuel the American economy) is unwise and IMO unfair.

I'm not saying don't tax it at all. I'd actually like to see it fall into the 11% range which I've read some compelling arguments for that as being the Capital Gains sweet spot between government revenue and encouraging investment. I'd also like to see us refine the definition of capital gains so we separate out true invested capital gains from some of the loopholes on things like stock options (lower rates for risked income vs. benefits like options).

I agree with the second part of your post, not the first per se.

You get taxed on the interest of your savings account, at the same rate as income tax. So you're being taxed on the profit (interest), because it's new income.

To oversimplify my limited understanding of capital gains taxes--part of the punitve part of that tax occurs from exhorbitant profits generated from passive income. If you buy stock at $1 share this week, and it goes up to $25/share next week and you cash out, you've made a boat load of income by flipping some stock for one week. Capital gains taxes also discourage people from engaging in too much speculative and risky investment, in order to turn fast profits. It seems to me that a certain amount of capital gains tax also helps to stabilize the economy, but encouraging people not to flip investments too quickly, or cash out the investments too abruptly.

I agree however, that there are instances where you could invest and actually lose money on your investment, then try to cash out and be crushed by capital gains taxes on what was part of your original investment. That sucks.

It seems to me that the tax has become pretty messy and flawed, but the general idea of it isn't bad.

 

[dapperdan]

How can we have this much detail about the plans that are so vague and lack substance?

I think raising the Capital Gains tax is absolutely crazy. It's one of the many reasons that while I like Obama as a politician and appreciate his message McCain still has my vote.

Lol. Funny you mention it. "Rich hedge fund managers", the vague realm of economic "fairness" are not exactly a detailed responses.

Real quick, and I realize the claim can be made that it's taking his words out of context, but what the heck, let's parse this paragraph:

"Mr. Obama answered by citing rich hedge fund managers. Raising the capital gains tax is necessary, he said, "to make sure . . . that our tax system is fair and that we are able to finance health care for Americans who currently don't have it and that we're able to invest in our infrastructure and invest in our schools. And you can't do that for free.""

Sentence 1: "Mr. Obama answered by citing rich hedge fund managers. Raising the capital gains tax is necessary, he said, "to make sure . . . that our tax system is fair"

Ah, rather than deal with economic reality, or something resembling sound economic policy, Obama equates economic policy with "fairness". Mixing economics with morality. Not a good policy. It's vague. "Fairness" means whatever you want it to mean.


Next up, second half of sentence:
"that we are able to finance health care for Americans who currently don't have it and that we're able to invest in our infrastructure and invest in our schools. And you can't do that for free."

Two huge problems with this statement, actually quite contradictory. 1) Merging tax revenue issues with spending issues. "You can't do that for free." No you can't. But it's a completely meaningless statement, economically. Sounds good on the sound bite. Completely meaningless. And tying health care spending and investment in schools to boot. Extraordinarily disingenuous. Again, brilliant political rhetoric, but complete economic rubbish. Completely empty words. 2) Second problem is the nagging issue that raising capital gains taxes will REDUCE tax revenues. If he wants to pay for all these entitlement programs, you need to look for ways to increase revenues, not decrease.

This is why I say he is straight-jacketed by his belief system. He won't acknowledge that raising capital gains tax rates will HURT his ambitions for spending on health care and the like. If you follow his own words, logically, he hurts his own goals.

 

[Shawn]

If you want more of something or you want to encourage that activity, you subsidize it. If you want less of something or you want to discourage that activity, you tax it.

What's the benefit from discouraging investment?

That's vastly oversimplified. Certain amounts of taxation have no effect on investment at all. The trick is to find the sweet spot, which is akin to reading tarot cards.

 

[mister pc]

I know that reducing capital gains tax has the effect of encouraging investment, and thats why it is beneficial. But it also has the unintended effect of widening the gap between rich and poor, and I just dont think the working class should pay higher tax rates than the wealthy.

Maybe Im just a simple man, but I dont see stock investments as actual work. Many of the more successful investors dont work at all. They just put their sums of money into different investments and become even wealthier while they sit on the behinds or play golf all day (I know a couple people who earn handsome livings this way). Like I said, maybe Im simple but I think people who are doing real work should not be taxed more heavily than people who are increasing their money w/o actually doing anything real. I gotta work until Im 65 or 70 years old, while the investor gets to retire at the ripe old age of 40. Let him pay taxes equal to mine.

 

[Shawn]

Lol. Funny you mention it. "Rich hedge fund managers", the vague realm of economic "fairness" are not exactly a detailed responses.

Real quick, and I realize the claim can be made that it's taking his words out of context, but what the heck, let's parse this paragraph:

"Mr. Obama answered by citing rich hedge fund managers. Raising the capital gains tax is necessary, he said, "to make sure . . . that our tax system is fair and that we are able to finance health care for Americans who currently don't have it and that we're able to invest in our infrastructure and invest in our schools. And you can't do that for free.""

Sentence 1: "Mr. Obama answered by citing rich hedge fund managers. Raising the capital gains tax is necessary, he said, "to make sure . . . that our tax system is fair"

Ah, rather than deal with economic reality, or something resembling sound economic policy, Obama equates economic policy with "fairness". Mixing economics with morality. Not a good policy. It's vague. "Fairness" means whatever you want it to mean.


Next up, second half of sentence:
"that we are able to finance health care for Americans who currently don't have it and that we're able to invest in our infrastructure and invest in our schools. And you can't do that for free."

Two huge problems with this statement, actually quite contradictory. 1) Merging tax revenue issues with spending issues. "You can't do that for free." No you can't. But it's a completely meaningless statement, economically. Sounds good on the sound bite. Completely meaningless. And tying health care spending and investment in schools to boot. Extraordinarily disingenuous. Again, brilliant political rhetoric, but complete economic rubbish. Completely empty words.

This is where we part company, because I don't take it that way at all.

1. We have an issue with receipts and expenditures in this country. Not even in dispute. We need to cut expenditures and raise receipts.

2. He's stating that he feels education and health care should be a higher priority in this country. I happen to agree, because I think it's better for the long term health and competitiveness of the country. That's an issue of philosophy, one with which I agree. But how to get there?

3. Financing that will cost money that doesn't currently exist. Even if we made massive cuts to the government (shrinking the government, or eliminating subsidies to the uber-profitable oil industry), we still need to increase receipts. How we do that is up for debate.

4. Fairness and equitableness of tax policy. Shouldn't tax policy be equitable and fair? Why should some types of income be taxed differently than other types? Why should a coal miner be taxed at a higher rate than someone living on the passive income of stock fund, or because they flipped some stock? This is where things get insanely complicated. The answers are complex, and they have nothing to do with fairness, but rather with efficiency. There are legitmate arguments to be made that taxes need to be assessed differently because it creates an overall benefit to the economy, in terms of jobs, etc. But that's not always true, nor is it always provable. Just because something is good for the overall economy, doesn't make it fair.

5. The words aren't empty. Any economist, when presented with some notion of spending more on schools and health care, is going to first ask where the money is coming from. It's a fair question. The issues are tied together. How could they not be?

If that level of commentary by Obama bothers you, I would imagine the things said by GW before and after he got in office gave you a stroke. Or at least caused a touch of vomit in your own mouth.

 

[CT Saints Fan]

I agree with the second part of your post, not the first per se.

You get taxed on the interest of your savings account, at the same rate as income tax. So you're being taxed on the profit (interest), because it's new income.

To oversimplify my limited understanding of capital gains taxes--part of the punitve part of that tax occurs from exhorbitant profits generated from passive income. If you buy stock at $1 share this week, and it goes up to $25/share next week and you cash out, you've made a boat load of income by flipping some stock for one week. Capital gains taxes also discourage people from engaging in too much speculative and risky investment, in order to turn fast profits. It seems to me that a certain amount of capital gains tax also helps to stabilize the economy, but encouraging people not to flip investments too quickly, or cash out the investments too abruptly.

I agree however, that there are instances where you could invest and actually lose money on your investment, then try to cash out and be crushed by capital gains taxes on what was part of your original investment. That sucks.

It seems to me that the tax has become pretty messy and flawed, but the general idea of it isn't bad.

And that's why capital gains are taxed differently than your savings account - RISK. You assume no risk putting your money in a savings account. But when you invest, you assume 100% of the risk. Who would do that if there wasn't some benefit?

 

[V Chip]

The problem is they were already taxed on the money they invested. High taxation on the gains of the money they earned and risked losing (that also happens to help fuel the American economy) is unwise and IMO unfair.

But how is that different than if I decide to start my own business, or take a second job?

I make my money with my 40-hour a week job. I have extra and decide there is a market for sawhorses, so in my spare time I work another 30 hours a week making sawhorses, buying the materials with the money I save from my job (already taxed). I could end up losing money on this by underestimating the demand for sawhorse, or by putting more time and money into it that I get out (i.e., while I might not lose actual cash, if you consider the time I put in I would have been better off not making and selling sawhorses). regardless, I still have to pay taxes on that money I earn selling sawhorses, or if I take a second job, or any other way I can earn extra income.

I don't see how capital gains income should be exempted (or be significantly lower) than someone's regular tax rate. By the same rate, I don't see why capital gains taxes should be fixed -- theoretically it should be taxed at the normal tax rate a person would make. Perhaps if there HAS to be an incentive for people to invest (which I think the incentive is the making of extra money as opposed to letting it do nothing) then have a discount on the rate for capital gains -- like 15% off the amount you would pay. Not sure on the numbers, but again to me it doesn't make sense that those people with extra cash to invest should be lauded and rewarded more than someone who works two jobs or has some other means to try and make extra income.

 

[Saint Mike]

But how is that different than if I decide to start my own business, or take a second job?

I make my money with my 40-hour a week job. I have extra and decide there is a market for sawhorses, so in my spare time I work another 30 hours a week making sawhorses, buying the materials with the money I save from my job (already taxed). I could end up losing money on this by underestimating the demand for sawhorse, or by putting more time and money into it that I get out (i.e., while I might not lose actual cash, if you consider the time I put in I would have been better off not making and selling sawhorses). regardless, I still have to pay taxes on that money I earn selling sawhorses, or if I take a second job, or any other way I can earn extra income.

You can apply any loses from your poor investment in sawhorse manufacturing towards your income tax liability. If you have enough depreciable assets and loses you may not have any tax liability.

 

[V Chip]

You can apply any loses from your poor investment in sawhorse manufacturing towards your income tax liability. If you have enough depreciable assets and loses you may not have any tax liability.

Can someone who invests in stock (or things that would trigger a capital gains tax) not do the same?

 

[Pure Energy]

dapperdan, that reminded me of this thread from Pure Energy.

For those who think Gibson wasn't making any sense, this may help explain it:

Laffer Curve (Taxes): Presidential Politics - SaintsReport Community Forums

Here's the funny thing. When I put that thread out there a couple of months ago, I thought Obama would have taken the time to peruse the EE board and bone up on the Laffer Curve. His lack of initiative has been somewhat of a disappointment

 

[SoonerJim]

This is where we part company, because I don't take it that way at all.

1. We have an issue with receipts and expenditures in this country. Not even in dispute. We need to cut expenditures and raise receipts.

2. He's stating that he feels education and health care should be a higher priority in this country. I happen to agree, because I think it's better for the long term health and competitiveness of the country. That's an issue of philosophy, one with which I agree. But how to get there?

3. Financing that will cost money that doesn't currently exist. Even if we made massive cuts to the government (shrinking the government, or eliminating subsidies to the uber-profitable oil industry), we still need to increase receipts. How we do that is up for debate.

4. Fairness and equitableness of tax policy. Shouldn't tax policy be equitable and fair? Why should some types of income be taxed differently than other types? Why should a coal miner be taxed at a higher rate than someone living on the passive income of stock fund, or because they flipped some stock? This is where things get insanely complicated. The answers are complex, and they have nothing to do with fairness, but rather with efficiency. There are legitmate arguments to be made that taxes need to be assessed differently because it creates an overall benefit to the economy, in terms of jobs, etc. But that's not always true, nor is it always provable. Just because something is good for the overall economy, doesn't make it fair.

5. The words aren't empty. Any economist, when presented with some notion of spending more on schools and health care, is going to first ask where the money is coming from. It's a fair question. The issues are tied together. How could they not be?

If that level of commentary by Obama bothers you, I would imagine the things said by GW before and after he got in office gave you a stroke. Or at least caused a touch of vomit in your own mouth.

As I best understand it, Obama has the following tax revisions in store:

1) changing the top marginal rate as it was under Bill clinton, 39.9% for incomes above $350K

2) Remving the FICA cap for the ceiling of 97K, but putting in a "donut" hole exemption between 100K and 200K, or perhaps $250K. Incomes above that upper limit will get an additional 6.2% levy, matched by the employer.

3) Raising cap gains and dividends from the current 15% to between 25 to 28%. for middle income earners, this would be coupled with rebates to keep overall taxes frozen. Loopholes and incentives will affect companies with overseas interests or are contemplating same. Penalties will be enacted should they relocate for tax purposes.

4) Estate tax limit raised to $7 million, or $3.5 million per person.

Lost in the 45 minute "tabloid" component of the debate was an exploration of Obama's taxing philosophy, which extolled "fairness" as its guiding principle. This is why God made estate tax and trust attorneys, and why I'll be seeing on in 2009 after resolution of the post-2010 estate problem occurs.

The WSJ today develops Obama's tax policy further, Online Newspaper Editorials - Opinion Editorials - Political Editorials - Op Eds - WSJ.com.

 

[dapperdan]

If that level of commentary by Obama bothers you, I would imagine the things said by GW before and after he got in office gave you a stroke. Or at least caused a touch of vomit in your own mouth.

It's a good time to look back on the Bush policies. I remember when Bush took office, and I remember wondering whether the Bush Administration would look more like Nixon or Reagan in terms of policy. In some respects, he's been a blend of the two. Placating the Right Wing with tax cuts, but ultimately being a Big Government Republican, a la Nixon.

So, do we repeat the 70's with back to back big spending Administrations? That would be interesting, and I believe the results would be remarkably similar to the late 70's/early 80's.

You are quite correct, of course, that we need to do a better job of matching revenues and receipts. The difference between now and when Bush took office is that the markets (i.e. currency markets right now, and I'm about 99% the bond market will follow suit next year) will apply some market discipline to Presidential policies if spending gets very far out of line. Bush had more room to work with, and frankly his spending policies have been quite hurtful.

Now, regarding more spending for education. Obviously, I'm not one that favors national education policy; I've always felt that local school boards spending local property taxes is a better approach. However, now that Bush has crossed the rubicon with the No Child Left Behind, I believe that the better argument that Obama could make would be that he could spend the money currently in the budget more wisely than the current No Child Left Behind programs, which would set the bar plenty low for his Administration to hop over and claim victory, rather than proposing new spending above and betond what's currently in place.

It really shouldn't be a very difficult partisan move to declare Bush's education policy a failure, totally eliminate the program, and then replace the same dollars with his own program. The partisan choir could celebrate gutting a hated Bush program (throwing some political red meat in the process) and at the same time, limiting the growth of overall spending, as he would be replacing one program with another; rather than adding another layer of spending.

 

[champ76]

Well, this isn't going to help Obama win that rural Pennsylvania vote. Lesley Stahl interviewing Whoopi Goldberg, among others:

"LESLEY: Whoopi, I think the fear the Democrats have with this issue is not because he’s a person of color. It’s because the Republicans latch onto this exact kind of argument time and again and make it work for them. As with Adlai Stevenson, with Dukakis, with Kerry, with Gore …

WHOOPI: Well, what’s the matter is the Democrats are an elitist group. That’s the truth."

Does a Little Obama Go a Long Way in Politics? | WOWOWOW (warning- Whoopi drops the * and * bombs in interview)

 

[DavidM]

Many locals giving troubles to God during these hard times

By Laura Johnson • ljohnson@monroe.gannett.com • July 24, 2008

Editor's note: The News-Star takes a look at how the people of northeastern Louisiana are dealing with the issues America faces during a difficult period in our history.

At a time when the economy, the war in Iraq and upcoming national elections are sparking anxious feelings in people across the United States, at least one local pastor says people in northeastern Louisiana are coping by trusting in God.

Randy Bardwell, pastor of Harvest Assembly of God in West Monroe, said he has had one-on-one conversations with church members about the stresses they are feeling. He is reminding them to follow the advice of King Solomon in Proverbs 3:5, to trust and acknowledge God.

http://www.thenewsstar.com/apps/pbcs.dll/article?AID=/20080724/NEWS01/807240320/1002