Close Hedge Fund Tax Loopholes

[J.T]

Republicans are perpetrating a fraud. They say they’re concerned about reducing government deficits. But you don’t need to look at how they treat all of the country’s biggest corporations (which is extremely well) or even how they kowtow to its richest 400 families, who now have 6900 times as much income as the average household.

(http://www.epi.org/economic_snapshots/entry/where_has_all_the_income_gone_look_up/) You only need to look at the way they treat 25 people.


The top 25 hedge fund managers in the United States collectively earned $22 billion last year, and yet they have their own cushy set of tax rules. If they operated under the same rules that apply to other people — police officers, for example, or teachers — the country could cut its national deficit by as much as $44 billion in the next ten years.


We're not talking about "raising taxes on the rich," either. This money could be raised simply by removing a tax loophole that protects hedge fund managers. And that's not counting all the other people who run hedge funds. We'd get that $44 billion from just 25 people. They can certainly afford it, and at least one of them (George Soros, #2 on the list) undoubtedly would approve.





http://www.alternet.org/story/151479/if_the_top_25_hedge_fund_managers_paid_taxes_like_ you_and_me%2C_we%27d_cut_44_billion_of_the_nationa l_deficit_/

[fj1200]

The income is taxed as investment income so is not taxed as wages. We have lower taxes on capital gains and dividends because it generates growth not as a "loophole" to hedge fund managers.

[logroller]

The income is taxed as investment income so is not taxed as wages. We have lower taxes on capital gains and dividends because it generates growth not as a "loophole" to hedge fund managers.


You're absolutely correct, less tax increases investment. However, not all investments, or more specifically,not all strategies of investment are good for the market.

Here's the hedge strategy, create artificial losses which you write off, then move that money into a cap gain tax-friendly area. Never mind you just took a dump on the market table you left, you don't have to eat there anymore; and now nobody else wants to either, putting you ahead of the curve at the next table. Repeat. This is the investment lowered cap gain tax encourages of hedge funds. I'm not too keen.
What's that you say, increased regulations instead of taxes. Well regulations are intended to mitigate the damages one may inflict against another, and this is effective at lower levels. However, as we've seen time and time again, Institutional investors, like those of hedge funds (which are exclusive to institutional investors), have repeatedly colluded with regulators, rendering regulations impotent at these levels. As far as investment, I agree regulation is a far superior strategy to heightened taxes, but given it's ineffective history, the only way to mitigate damages from these high-level financial activities is through fixing the problem after it arises; a costly endeavor when investors are deducting 90% of collateralized debt obligations, whilst simultaneously enjoying decreased tax rates on the profits they still have.

[darin]

Or, better yet, stop double, triple, and more taxation of income. :)

[gabosaurus]

As a financial adviser for some very wealthy people, my husband has a lot of knowledge about hedge funds. It's not really a viable practice for individuals, since they can't create the artificial tax bases and dummy companies that groups can.
Most major corporations have tax lawyers who are experts at this. There are not a major corporation in America that does not hide much of its true profits through hedge funds and other such practices.
Lawmakers agree to turn a blind eyes for the proper amount of compensation, delivered as campaign funding.

[fj1200]

As a financial adviser for some very wealthy people, my husband has a lot of knowledge about hedge funds. It's not really a viable practice for individuals, since they can't create the artificial tax bases and dummy companies that groups can.
Most major corporations have tax lawyers who are experts at this. There are not a major corporation in America that does not hide much of its true profits through hedge funds and other such practices.
Lawmakers agree to turn a blind eyes for the proper amount of compensation, delivered as campaign funding.

I truly believe you have zero idea what you're talking about and even on the off chance that you did you likely support the very ideas that bring about the utter waste of money that tax laws cost in complying with them. Of course corporations have expert tax lawyers, Congress has created the complete clusterF' that is our convoluted tax code and the fact that they utilize every loophole available is completely unsurprising. If you don't like it when corporations use the law to their benefit remove the laws that make them jump through hoops. Fire corporate tax lawyers by eliminating the corporate tax, it's that simple.

And hedge funds are a viable practice for individuals, they just need to be wealthy. "Regular folks" don't need them, understand them, or would be able to handle the risk involved in investing in one and wouldn't meet the income or asset requirements to become involved anyway. But of course, the issues you bring up are not even the ones being discussed.

[fj1200]

You're absolutely correct, less tax increases investment. However, not all investments, or more specifically,not all strategies of investment are good for the market.

Here's the hedge strategy, create artificial losses which you write off, then move that money into a cap gain tax-friendly area. Never mind you just took a dump on the market table you left, you don't have to eat there anymore; and now nobody else wants to either, putting you ahead of the curve at the next table. Repeat. This is the investment lowered cap gain tax encourages of hedge funds. I'm not too keen.
What's that you say, increased regulations instead of taxes. Well regulations are intended to mitigate the damages one may inflict against another, and this is effective at lower levels. However, as we've seen time and time again, Institutional investors, like those of hedge funds (which are exclusive to institutional investors), have repeatedly colluded with regulators, rendering regulations impotent at these levels. As far as investment, I agree regulation is a far superior strategy to heightened taxes, but given it's ineffective history, the only way to mitigate damages from these high-level financial activities is through fixing the problem after it arises; a costly endeavor when investors are deducting 90% of collateralized debt obligations, whilst simultaneously enjoying decreased tax rates on the profits they still have.

I don't accept your premise. If they are using existing laws to maximize shareholder value then those strategies are good for the market. Keep in mind there are armies of analysts pouring over every bit of information that they can get their hands on so if companies are using legal methods of avoiding taxation then I see no problem... as far as that goes.

The problem is that these legal hoops are not good for the business community because it creates ridiculous requirements to lower the statutory corporate rate to the effective corporate rate and ultimately makes the US firms uncompetitive globally. We need laws that increase transparency and reduce the requirement that companies go hat-in-hand to Congress to get the loophole of the day.

[logroller]

I don't accept your premise. If they are using existing laws to maximize shareholder value then those strategies are good for the market. Keep in mind there are armies of analysts pouring over every bit of information that they can get their hands on so if companies are using legal methods of avoiding taxation then I see no problem... as far as that goes.

The problem is that these legal hoops are not good for the business community because it creates ridiculous requirements to lower the statutory corporate rate to the effective corporate rate and ultimately makes the US firms uncompetitive globally. We need laws that increase transparency and reduce the requirement that companies go hat-in-hand to Congress to get the loophole of the day.
these aren't companies, they're institutions-- foundations for profiteering. An d of course we need more transparency, that and world peace! That's not gonna gonna happen either. Those who manage hedge funds are among the elite group of people who no one, including government, can influence; but rather, it's the other way around, where those managing hedge funds influence everybody, including government, and the companies who assess liability risk (whom are supposed to provide that transparency) And remember "too big to fail", who benefited from that false belief?, not the bank who took the bailout, not the portfolio investor, not the small business, not the international conglomerates, but the elites. I'm not gonna sit here and say all rich people are bandits, its not true; but by and large those who benefit are the ones who put the motions in action to bring that benefit. Hedge funds make money on markets performing shitty, ergo, it behooves them to see that happen. Take away the incentives$$$$$ to do so, and they stop. Therefore, Taxation is the only feasible means of accommodating for, monetarily, the inevitable market failures which result from the strategic institutional hedge betting. I wish it weren't so, the market would be a better place if the people were the most powerful investors, but that isn't reality.

[fj1200]

these aren't companies, they're institutions-- foundations for profiteering. ... but by and large those who benefit are the ones who put the motions in action to bring that benefit. Hedge funds make money on markets performing shitty, ergo, it behooves them to see that happen. Take away the incentives$$$$$ to do so, and they stop. Therefore, Taxation is the only feasible means of accommodating for, monetarily, the inevitable market failures which result from the strategic institutional hedge betting. I wish it weren't so, the market would be a better place if the people were the most powerful investors, but that isn't reality.

Sorry, but those are some massive leaps of logic that aren't there. Besides no one is legislating that hedge funds go away or even that all hedge funds pay higher rates of taxation on gains, it's only the compensation by hedge fund managers that is proposed be taxed differently. They are paid a percentage of the gain rather than earning management fees like most other asset management and that's not slated to change.

"Profiteering" eh? Any more talk like that and I'll start thinking your favorite Pres was FDR. :laugh: By that logic, Wall Street is built on profiteering because they like to make a profit while completely ignoring the basic free market functions that they serve; bringing together capital and people to create business and growth.

[logroller]

Sorry, but those are some massive leaps of logic that aren't there. Besides no one is legislating that hedge funds go away or even that all hedge funds pay higher rates of taxation on gains, it's only the compensation by hedge fund managers that is proposed be taxed differently. They are paid a percentage of the gain rather than earning management fees like most other asset management and that's not slated to change.

"Profiteering" eh? Any more talk like that and I'll start thinking your favorite Pres was FDR. :laugh: By that logic, Wall Street is built on profiteering because they like to make a profit while completely ignoring the basic free market functions that they serve; bringing together capital and people to create business and growth.

A sacrificial lamb to appease the masses. Of course that's all that's being proposed. I may have a few things still to work out, so please address any faults specifically. But profiting isn't profiteering. Profits are good, losses are bad. That's the way its supposed to work right? When someone with a boatload of cash takes a loss on something intentionally, it's no mistake; they are sowing the seeds by which they will make more money down the road. They didn't get where they are by being stupid or careless, there's something amiss. And I can't fathom how selling at a loss as an investment strategy is good for the markets. Good for them sure, but not the markets. And govt shouldn't cut breaks except in the interest of the market as a whole. By all means, enlighten me, but don't say all investment is good for the market, because its clearly not.

[fj1200]

A sacrificial lamb to appease the masses. Of course that's all that's being proposed. I may have a few things still to work out, so please address any faults specifically. But profiting isn't profiteering. Profits are good, losses are bad. That's the way its supposed to work right? When someone with a boatload of cash takes a loss on something intentionally, it's no mistake; they are sowing the seeds by which they will make more money down the road. They didn't get where they are by being stupid or careless, there's something amiss. And I can't fathom how selling at a loss as an investment strategy is good for the markets. Good for them sure, but not the markets. And govt shouldn't cut breaks except in the interest of the market as a whole. By all means, enlighten me, but don't say all investment is good for the market, because its clearly not.

I'm not even sure what you're talking about there. If you have a stock position that is going down and you no longer have faith in the company then you are supposed to sell the position, with no regard to purchase price, and buy something you do have faith in. That strategy is good, holding because you don't want to take a loss is bad.

I think you are giving them power that just isn't there.

[J.T]

I don't accept your premise. If they are using existing laws to maximize shareholder value then those strategies are good for the market.
So tanking the economy is good for the market so long as the few shareholders in the few companies which orchestrated the collapse get money?

So... Enron and the collapse of the banks and housing markets were good for the economy?

[fj1200]

So tanking the economy is good for the market so long as the few shareholders in the few companies which orchestrated the collapse get money?

So... Enron and the collapse of the banks and housing markets were good for the economy?

Do you even want to have a rational conversation? You ignorantly assume that hedge funds caused those results. For someone who espouses his brilliance in self education and reason and whatever else you've convinced yourself of... you don't demonstrate much independent thinking.

[J.T]

You ignorantly assume that hedge funds caused those results.

Cite. I never said hedge funds were behind all those, you fucking retard. I specifically mentioned Enron. Do you know what Enron was?

You said Enron was good for the market because their strategies were maximizing stockholder value. Why can't you even be honest about what you just said?

[fj1200]

Cite. I never said hedge funds were behind all those, you fucking retard. I specifically mentioned Enron. Do you know what Enron was?

You said Enron was good for the market because their strategies were maximizing stockholder value. Why can't you even be honest about what you just said?

http://maplewood.southorangevillage.com/uploads/2011/04/wh-double-facepalm.jpg

This thread is about HEDGE FUNDS, don't you understand that simple issue? You brought up Enron and I didn't reply to that point so there is no way I could have made that claim. Or don't you understand fraud and people going to jail?

But please enlighten us all about Enron because I'm sure that was the hot topic for you and your reasoned friends in elementary school. :rolleyes: Now go away and read some of those books that someone else bought for you.

[logroller]

I'm not even sure what you're talking about there. If you have a stock position that is going down and you no longer have faith in the company then you are supposed to sell the position, with no regard to purchase price, and buy something you do have faith in. That strategy is good, holding because you don't want to take a loss is bad.

I think you are giving them power that just isn't there.

Do you have a direct interest in a hedge fund? As I understand them, they don't have individual investors(excepting hedge fund managers). SO what you or I would do isn't pertinent to the discussion.

I said nothing of purchase price, because you're right, a free market should allow anyone, group or indi, to sell whenever, for whatever price. But when someone sells short, which hedge funds, as their namesake suggests, do; it begs the question--- WHY? Well the short answer (no pun intended) is to entice buyers. There are natural swings in the market, and hedge funds depend upon this; and I don't think it takes a significant logical leap to realize distressed and event-driven investment strategies are polarized towards deeper market swings. Boom and bust isn't good for society in the short run, long term maybe. I'm not saying their behavior should be outlawed, it plays a valued role is securing capital investment; but I don't believe their behavior should go unchecked. Regulations aren't effective with hedge funds, it takes too long for regulators to react--so taxes are the next best alternative. If you cant stop a fire-sale from starting, better have a lot of water on hand. Not water IOUs, but real assets. Obviuosly, I would feel differently if the bailouts hadn't happened, and we'd seen the real effects of these strategies, but its too late for that. Now we need to stay the course, which involves recouping the trillions of covered losses covered by tax dollars. Well, more accurately future tax dollars, which only reinforces my point- Who's gonna pay the taxes when the market's in the tank. You can't tax people who are losing money, so who then, if not those who making capital gains?

[fj1200]

Do you have a direct interest in a hedge fund? As I understand them, they don't have individual investors(excepting hedge fund managers). SO what you or I would do isn't pertinent to the discussion.

Hedge funds (http://en.wikipedia.org/wiki/Hedge_fund):

Hedge funds are open to a limited number of accredited or qualified investors who meet a criteria set by regulators.


I said nothing of purchase price, because you're right, a free market should allow anyone, group or indi, to sell whenever, for whatever price. But when someone sells short, which hedge funds, as their namesake suggests, do; it begs the question--- WHY? Well the short answer (no pun intended) is to entice buyers. There are natural swings in the market, and hedge funds depend upon this; and I don't think it takes a significant logical leap to realize distressed and event-driven investment strategies are polarized towards deeper market swings. Boom and bust isn't good for society in the short run, long term maybe. I'm not saying their behavior should be outlawed, it plays a valued role is securing capital investment; but I don't believe their behavior should go unchecked. Regulations aren't effective with hedge funds, it takes too long for regulators to react--so taxes are the next best alternative. If you cant stop a fire-sale from starting, better have a lot of water on hand. Not water IOUs, but real assets. Obviuosly, I would feel differently if the bailouts hadn't happened, and we'd seen the real effects of these strategies, but its too late for that. Now we need to stay the course, which involves recouping the trillions of covered losses covered by tax dollars. Well, more accurately future tax dollars, which only reinforces my point- Who's gonna pay the taxes when the market's in the tank. You can't tax people who are losing money, so who then, if not those who making capital gains?

Why are you bringing up short sellers? That's a whole different discussion and does not encompass the entirety of hedge funds. They have multiple strategies and hedging downward movements is not their sole strategy anymore, if it ever was. But you are still working under the assumption that hedge funds are the reason for the meltdown, I don't buy it and I don't feel the real evidence is there to support your proposition; it's a populist answer looking for a question and populism is rarely correct.


As of 2009, however, hedge funds represented only 1 percent of the total funds and assets held by financial institutions.[8] (http://en.wikipedia.org/wiki/Hedge_fund#cite_note-HFFacts-7) The estimated size of the global hedge fund industry is US$ (http://en.wikipedia.org/wiki/United_States_dollar)1.9 trillion.[9] (http://en.wikipedia.org/wiki/Hedge_fund#cite_note-8)

BTW, short selling is not done to "entice" buyers, it's to make money on a downward movement in the price of the stock. If the fundamentals don't support the price then someone may short it but not solely to entice a buyer.

Question: Which losses are you referring too?

EDIT: And no, no interest in a hedge fund that I'm aware of. But I can hope. :laugh:

[logroller]

Hedge funds (http://en.wikipedia.org/wiki/Hedge_fund):




Why are you bringing up short sellers? That's a whole different discussion and does not encompass the entirety of hedge funds. They have multiple strategies and hedging downward movements is not their sole strategy anymore, if it ever was. But you are still working under the assumption that hedge funds are the reason for the meltdown, I don't buy it and I don't feel the real evidence is there to support your proposition; it's a populist answer looking for a question and populism is rarely correct.



BTW, short selling is not done to "entice" buyers, it's to make money on a downward movement in the price of the stock. If the fundamentals don't support the price then someone may short it but not solely to entice a buyer.

Question: Which losses are you referring too?

EDIT: And no, no interest in a hedge fund that I'm aware of. But I can hope. :laugh:

I stand corrected, so individuals can invest, but its still not open to everyone. Only accredited investors (http://en.wikipedia.org/wiki/Accredited_investor) can invest in hedge funds. Which amounts to the top 1% of the population.(ie the wealthy) And i'm sure if we really looked at it closely, it'd be upwards of the top .1%. But that's not really my point, I'm not saying people shouldn't short sell, nor hedge funds do what they do. I'm saying it's not the governments role to encourage or discourage either by offering discounted tax rates. Do you disagree?

[fj1200]

I'm saying it's not the governments role to encourage or discourage either by offering discounted tax rates. Do you disagree?

They are the same rates offered to other investors in the markets but yes I think it's entirely appropriate to offer lower rates on investment income. No one is even talking about taxing hedge funds differently, they are only talking about taxing the fund managers at the ordinary income rate.

[logroller]

They are the same rates offered to other investors in the markets but yes I think it's entirely appropriate to offer lower rates on investment income. No one is even talking about taxing hedge funds differently, they are only talking about taxing the fund managers at the ordinary income rate.

I couldn't disagree more! The capital gains discount rate is a tax law which clearly makes the wealthy wealthier. I cannot accept that the government's means to achieving a strong economy is the financial oppression of a majority of it's people.

http://www.mybudget360.com/wp-content/uploads/2009/12/financial-wealth-united-states.png
I noticed the year is before the great recession...Do you think this has changed?

[PostmodernProphet]

there are economic practices permitted that are detrimental to the economy as a whole.....I don't think it's necessary for conservatives to support them just because liberals hate corporations.......hedge funds, derivatives, and mega mergers that reduce competition are among them......

as for capital gains taxes I have to confess I used to profit because of them.....back before Michigan real estate stopped being sold I usually made an extra $15-$20k a year acting as an escrow agent in IRS 1031 tax exchanges........the last couple of years I've been lucky to have one or two sales a year.....

[fj1200]

as for capital gains taxes I have to confess I used to profit because of them.....back before Michigan real estate stopped being sold I usually made an extra $15-$20k a year acting as an escrow agent in IRS 1031 tax exchanges.....

No, you profited because of ridiculous tax rules that altered economic behavior.

[fj1200]

I couldn't disagree more! The capital gains discount rate is a tax law which clearly makes the wealthy wealthier. I cannot accept that the government's means to achieving a strong economy is the financial oppression of a majority of it's people.


I noticed the year is before the great recession...Do you think this has changed?

I imagine that it's the same, or worse, but you also ignore all of the wealth destroying policies that we have as a country. You haven't addressed those as of yet. I also don't accept your premise we're oppressing a "majority of it's people."

Also, do you really expect that the poor would be better off if we stuck it to the wealthy a bit more?

[logroller]

I imagine that it's the same, or worse, but you also ignore all of the wealth destroying policies that we have as a country. You haven't addressed those as of yet. I also don't accept your premise we're oppressing a "majority of it's people."

Also, do you really expect that the poor would be better off if we stuck it to the wealthy a bit more?

:laugh::laugh::laugh::laugh::laugh::laugh: They're getting wealthier by the minute; all together greater in sum and concentration, irrespective of market integrity and easily outpacing inflation. So no, I'm certainly not suggesting that we continue the policies which "stick it to the wealthy a bit more."

We'll always have the poor; just as we'll always have the uber wealthy---and the poor will always be worse off than the wealthy. Please understand, I have no disdain for those investors who've spawned the most powerful economy in the history of man. Far from it; the premise of investing being good for the society is irrefutable. However, investment and building wealth should be non-exclusionary-- whereas, current policies grant those with wealth a greater advantage on investing over new market entrants-- assistance which is unnecessary, as an advantage will always exist to those who have more to invest. What I'm talking about is a having a policy which grants anyone, not everyone, the same opportunities to invest, not build wealth. The top .1%ers might see their relative wealth decrease, but investment from any source "grows the pie"; so it's false assumption that we will destroy wealth before it's been created. Through the rose-colored glasses of conservative economic policies, any attempt to tax the rich is seen as a reallocation of wealth to benefit the lower brackets; but it's too late for that, we've already given those revenues away, trillion$ worth, only the rich are richer, and the poor are poorer. The policies in effect exist under the premise that those with wealth have more investment experience and thus will have a greater impact upon growth than new investors; which has served to reduce the general public's fiscal opportunities and, when combined with entitlements, have reduced the public's fiscal responsibility--clearly reflected in our every-growing public debt. Not in spite of our tax policies, but because of them.

Is a greater number of people having an interest in future growth a bad thing?

[fj1200]

:laugh::laugh::laugh::laugh::laugh::laugh: They're getting wealthier by the minute; ...

... current policies grant those with wealth a greater advantage on investing over new market entrants-- assistance which is unnecessary, as an advantage will always exist to those who have more to invest. ... but it's too late for that, we've already given those revenues away, trillion$ worth, only the rich are richer, and the poor are poorer. The policies in effect exist under the premise that those with wealth have more investment experience and thus will have a greater impact upon growth than new investors; which has served to reduce the general public's fiscal opportunities and, when combined with entitlements, have reduced the public's fiscal responsibility--clearly reflected in our every-growing public debt. Not in spite of our tax policies, but because of them.

Is a greater number of people having an interest in future growth a bad thing?

You keep raising, along with your hurtful smilies :(, an issue that I am not disputing. I would love to have more people have an interest in future growth and that is my goal. Do you dispute that all of the issues I brought up foster the environment that you are now complaining about?

CG tax policy doesn't grant advantage over new entrants, they get the same benefit that the wealthy do. Once they are investing then they will be paying the same low, or possibly lower, CG rates than the wealthy. Also over time, the poor haven't been getting poorer, it's just that the rich are capturing a higher percentage of the income and there's no guarantee that the income would have been created without it going to the higher end.

We haven't given anything away, Federal revenues are determined by GDP, surely you can't still insist that rates are determinant of revenues? The historical average is ~18.5% and higher rates won't change that. If you want to drive the deficits lower then you have to drive economic growth because that is what will bounce revenues back up to the average; until unemployment gets down to the 5% range we will still run deficits... except for the entitlement problem of course.

The policies don't exist because we assume they have more experience, they exist because lower rates are better for economic growth and have minimal effect on federal revenues.

[logroller]

You keep raising, along with your hurtful smilies :(, an issue that I am not disputing. I would love to have more people have an interest in future growth and that is my goal. Do you dispute that all of the issues I brought up foster the environment that you are now complaining about?

Well, I doubt I dispute all of them.



CG tax policy doesn't grant advantage over new entrants, they get the same benefit that the wealthy do. Once they are investing then they will be paying the same low, or possibly lower, CG rates than the wealthy.
Internal fallacy; once they are invested to the point they qualify for long-term cg discounts, they are no longer NEW entrants. I right on this one! I happily yield to your understanding of more complex issues, but this one is pretty straight forward.


Also over time, the poor haven't been getting poorer, it's just that the rich are capturing a higher percentage of the income...
(I assume you meant investment income. i.e. cap gains; which is treated different than compensation; which is my whole point--it shouldn't be)

In consideration of std of living, you are correct. The standard of living has risen in this country, due to, in no uncertain terms, the policies which encourage capital investment and resultant market growth. Which, as luck(no luck about it) would have it, has benefited the wealthy more than the poorer %90; though all have benefited.


...there's no guarantee that the income would have been created without it going to the higher end.

Nor is there a guarantee that it would have been created had it not. Nor is there a guarantee that the additional income made available from capital gains would be reinvested.


We haven't given anything away, Federal revenues are determined by GDP, surely you can't still insist that rates are determinant of revenues? The historical average is ~18.5% and higher rates won't change that. If you want to drive the deficits lower then you have to drive economic growth because that is what will bounce revenues back up to the average; until unemployment gets down to the 5% range we will still run deficits... except for the entitlement problem of course.

The policies don't exist because we assume they have more experience, they exist because lower rates are better for economic growth and have minimal effect on federal revenues. It's complex and I certainly agree growth is goal. But that growth needs to be fueled by Americans taking ownership of our prosperity; only then will we see the entitlement problem abated. :salute:

[logroller]

there are economic practices permitted that are detrimental to the economy as a whole.....I don't think it's necessary for conservatives to support them just because liberals hate corporations.......hedge funds, derivatives, and mega mergers that reduce competition are among them......

as for capital gains taxes I have to confess I used to profit because of them.....back before Michigan real estate stopped being sold I usually made an extra $15-$20k a year acting as an escrow agent in IRS 1031 tax exchanges........the last couple of years I've been lucky to have one or two sales a year.....


That's great; not that you needed me to tell you that. Benefiting from market exchange is desirable to the market as a whole. As an escrow agent was your income taxable at the income rate or cap gains? at what %?

[fj1200]

Benefiting from market exchange is desirable to the market as a whole.

Do you still think that given that the whole reason for a 1031 exchange is the avoidance/deference of CG taxes? The rich getting richer you know.

[logroller]

Do you still think that given that the whole reason for a 1031 exchange is the avoidance/deference of CG taxes? The rich getting richer you know.

Who's eligible for such deferment; any land owner, or certain qualified landowners?

[fj1200]

Some high grade quote fornication right there. :laugh:


Well, I doubt I dispute all of them.

Which would you dispute?


Internal fallacy; once they are invested to the point they qualify for long-term cg discounts, they are no longer NEW entrants. I right on this one! I happily yield to your understanding of more complex issues, but this one is pretty straight forward.

So new entrants aren't new entrants because to be a new entrant you are no longer a new entrant? Fallacious indeed. ;) I believe that the non-wealthy may also pay zero on some gains but I don't know the minimum thresholds.


(I assume you meant investment income. i.e. cap gains; which is treated different than compensation; which is my whole point--it shouldn't be)

In consideration of std of living, you are correct. The standard of living has risen in this country, due to, in no uncertain terms, the policies which encourage capital investment and resultant market growth. Which, as luck(no luck about it) would have it, has benefited the wealthy more than the poorer %90; though all have benefited.

I was actually referring to earned income challenging your "poor getting poorer" statement. Well at least we agree on that last part which leads back to my question above because you can't ignore all of the other conditions and solely rest your argument on the concentration of wealth and the CG effects. I might call that cherry picking. ;)


Nor is there a guarantee that it would have been created had it not. Nor is there a guarantee that the additional income made available from capital gains would be reinvested.

It's complex and I certainly agree growth is goal. But that growth needs to be fueled by Americans taking ownership of our prosperity; only then will we see the entitlement problem abated. :salute:

Where would that income go? And yes so especially right now let's not reduce the capital stock to be invested.

[fj1200]

Who's eligible for such deferment; any land owner, or certain qualified landowners?

Anyone who meets the requirements. Here's (http://www.1031taxexchange.org/) a rundown of the hassle one must go through to avoid CG taxes on property; another benefit to society of a lower CG tax is unlocking assets that otherwise wouldn't be sold purely to avoid the tax hit.

I didn't realize the extent to which a 1031 could go, from the IRS (http://www.irs.gov/businesses/small/industries/article/0,,id=98491,00.html):


Section 1031 does not apply to exchanges of inventory, stocks, bonds, notes, other securities or evidence of indebtedness, or certain other assets.Like-Kind Property
Properties are of like-kind, if they are of the same nature or character, even if they differ in grade or quality. Personal properties of a like class are like-kind properties. However, livestock of different sexes are not like-kind properties. Also, personal property used predominantly in the United States and personal property used predominantly outside the United States are not like-kind properties.

Livestock?

[logroller]

Some high grade quote fornication right there. :laugh:
The 26th was my b-day; 34 years old---I had my suit on while punking these quotes prison style! Madoff ain't got shit on me, save a few million$ in overseas accts:ssex:


Which would you dispute?
State them individually, I'll gladly address them.


So new entrants aren't new entrants because to be a new entrant you are no longer a new entrant? Fallacious indeed. ;) I believe that the non-wealthy may also pay zero on some gains but I don't know the minimum thresholds.

I stopped trying to understand this to prevent an aneurysm. Once you qualify for cap gains discounts, you're vested. i.e. not a new participant. Don't muddy a valid point.:slap:




I was actually referring to earned income challenging your "poor getting poorer" statement. Well at least we agree on that last part which leads back to my question above because you can't ignore all of the other conditions and solely rest your argument on the concentration of wealth and the CG effects. I might call that cherry picking. ;)

Earned income is shit; the top 1% claim about 20% of there total income as earned income; in addition to the disproportionate amount the do earn. I'm not above accusations either... I ought to accuse you of obfuscation.


Where would that income go?
Blowjobs at the BunnyRanch for all I care; post tax, it's their money-- let them spend/invest it where they want. Freedom isn't doing what somebody else wants.


...let's not reduce the capital stock to be invested.

Don't you mean "stick it to the wealthy a bit more"?:rolleyes:

[fj1200]

The 26th was my b-day; 34 years old---I had my suit on while punking these quotes prison style! Madoff ain't got shit on me, save a few million$ in overseas accts:ssex:

You young kids and your crazy sayings. That does explain much though. :laugh:


State them individually, I'll gladly address them.

No, they've been stated.


I stopped trying to understand this to prevent an aneurysm. Once you qualify for cap gains discounts, you're vested. i.e. not a new participant. Don't muddy a valid point.:slap:

Just trying to clarify. You don't like that some don't qualify for lower rates but once they invest and become qualified they're now... getting away with something?


Earned income is shit; the top 1% claim about 20% of there total income as earned income; in addition to the disproportionate amount the do earn. I'm not above accusations either... I ought to accuse you of obfuscation.

What did I obfuscate and why is earned income S'? The more qualified, more educated earn more income which is separate from gains.


Blowjobs at the BunnyRanch for all I care; post tax, it's their money-- let them spend/invest it where they want. Freedom isn't doing what somebody else wants.

So now it's their money but you keep complaining that they get to keep to much of it.


Don't you mean "stick it to the wealthy a bit more"?:rolleyes:

:laugh: No, that would be you.

BTW it seems we have descended into the land of a quote orgy where we feel better about ourselves for a moment but have only really created a big mess; I apologize for my part in it. I need to go hang with DMP in Jamaica mon. :420:

[J.T]

livestock of different sexes are not like-kind properties

So livestock of the same sex are, but livestock of different sexes aren't?

wth?

[logroller]

quote orgy

:laugh:

[fj1200]

So livestock of the same sex are, but livestock of different sexes aren't?

wth?

Pay attention next time your standing back there. ;)

[logroller]

So now it's their money but you keep complaining that they get to keep too much of it.

:420:


I didn't say that. Nor do I think it. I'd like to see everybody keep more of their money. What I disagree with is letting somebody keep more of their money based on where they get it.

[PostmodernProphet]

No, you profited because of ridiculous tax rules that altered economic behavior.

??....true.....it altered behavior.......not having 1031 tax provisions resulted in stagnation of the economy......of course, eliminating capital gains taxes would have been better for the country, but at least the government was smart enough to alter economic behavior by having a tax rule that permitted continued investment to occur......

[PostmodernProphet]

That's great; not that you needed me to tell you that. Benefiting from market exchange is desirable to the market as a whole. As an escrow agent was your income taxable at the income rate or cap gains? at what %?

I received a flat fee of $500 per transaction, which was paid to a corporation I had set up for that purpose, thus taxes were paid at the corporate rate.....

[PostmodernProphet]

Do you still think that given that the whole reason for a 1031 exchange is the avoidance/deference of CG taxes? The rich getting richer you know.

lol.....no, the purpose of a 1031 exchange is NOT to make rich people richer.....the purpose is to stimulate the economy......when people have a choice between holding onto one piece of investment real estate or perhaps selling it and buying a more expensive piece of real estate there is a disincentive if a large portion of the investment goes to Washington......at that level of investment we used the rule of thumb that every thousand dollars of sale generated 7.5 times that amount in economic activity before it finally came to rest......

[PostmodernProphet]

it was a fascinating business.....I first got involved when a client was advised by his accountant that he qualified for a 1031 exchange....at that time we could only find two companies in the whole country that were providing the service......one was in California, the other in Las Vegas......my client said he wasn't sending $250k to any company located in Las Vegas so he told me to contact the IRS and get qualified to serve and he would pay for it.....I did and I did my first exchange....six months later a friend of his needed one.....after a while it got busy enough I needed a separate corporation just to keep it organized....at the peak I was doing thirty a month......

I recall my biggest transaction......I got a call from a client who said he was selling property in California and buying in Florida, could I handle the transaction......I faxed all the documentation to the title company.....I was going on vacation the week of the closing......I was out visiting my parents in Iowa and my cell phone rang (a very rare occurrence)......it was my bank.....they had tracked me down because they thought I would want to know the wire transfer had come in.....as they had never done that before, puzzled, I asked how much it was.....$1.3 million.....from a person I had never met who had talked to me about five minutes on the phone....

over the years I processed over $30 million through that company....never had a client have a problem in audit from the IRS.....

I hope that the economy improves and we get back to the days of people making a profit on real estate.....I miss the business......

[fj1200]

...true.....it altered behavior...

Thank you for reinforcing my point.


lol.....no, the purpose of a 1031 exchange is NOT to make rich people richer.....the purpose is to stimulate the economy...

I know the purpose of a 1031. It's rules that are available to the rich that are not available to the poor brought to us by lobbyists and ill-thought out government policy.

[logroller]

Thank you for reinforcing my point.



I know the purpose of a 1031. It's rules that are available to the rich that are not available to the poor brought to us by lobbyists and ill-thought out government policy.

Was this meant sarcastically FJ? I'm more accepting of 1031 exceptions, as it clearly requires the money be reinvested; like-kind no less.

[fj1200]

Was this meant sarcastically FJ? I'm more accepting of 1031 exceptions, as it clearly requires the money be reinvested; like-kind no less.

Truthful sarcasm??? Should we extend 1031s to securities so that we can influence behavior on those as well? Or would it just be more efficient to offer lower rates so that government regulations don't encourage investing behavior by tax law as opposed to fundamentals?