Obama's Capital Gains Tax

[Krill]

Originally posted by Ramo


Quite possibly the dumbest point ever made on Poly. Congrats.

Considering BK still posts on Poly, I doubt that.

[Patroklos]

This statement.

We can't have the same level of consumption relative to our wealth if our wealth is concentrated in the hands of a few compared to if our wealth is concentrated in the hands of the many.

The idea at just because one groups wealth increase means anothers decline. I don't mind wealth desparity if everyone is better off in the end. Disparity can result just as easily from multiple groups inceasing wealth, simply not at the same rate.

I don't care how much more wealth someone else is than me as long as I have what I need. That may not be the case in general, If you have something that says otherwise I will glady read it.

[Jon Miller]

Originally posted by rmsharpe

But the total amount of wealth isn't concentrated. Perhaps I should restate that; it doesn't matter even if it is because the consumer economy for even the lowest income groups is greater now than it ever has been. Even in my own situation, I'm in the lowest income group but I have more and better stuff available to me now than my parents did when they were growing up.

When you measure the number of cars on the road, televisions per household, etc., etc., the numbers are astounding.

Plus, we simply can't be fall into the trap of viewing the economy as one giant zero-sum pie; when someone gets a bigger piece, it doesn't come at the expense of your piece.

"Make the pie higher!"

But the thing is, the increase in our economy is based upon acquiring even greater and greater amounts. If this isn't possible, our economy slows down and doesn't do as well.

So yeah, obviously more is acquirable now than when our parents were young. That is what has grown our economy the last ~50 (?) years. Every year, people can buy more stuff, and so the economy grows. If people could only buy the same amount of stuff (in our current economic model), the economy would stagnant, not grow.

If people could buy less stuff, our economy would shrink.

Recently, by taking wealth (the ability to purchase), away from the people who consume at ~100% of their income (the poor), and giving it to those who consume at a much lower precent of their income (The rich), the percentage of our economy going to consumption decreases. And since it decreases, our economy grows slower. Or possibly becomes stagnant. Or possible shrinks.

Now yeah, this might not be sustainable. Maybe we need to go back to a manufacturing economy or something. But this economy is good at providing lots of people with material positions.

JM

[Kidlicious]

Originally posted by rmsharpe

Removes money from the economy? What are you talking about? Cutting spending should mean that less revenue is collected (or is spent on the deficit/having the debt paid down, also beneficial to the economy) and that money would still be in the pockets of consumers and investors.

In the same sense that raising taxes would raise revenue. That was my point, that cutting spending has the same effect as raising taxes.

[snoopy369]

That's not technically true.

Raising taxes and raising spending (or keeping spending the same) takes more money and puts it into the economy, in the sense of salaries and materials for road construction and such. Lowering spending and lowering taxes (or keeping taxes the same) does less of this.

Of course, some of that same money would still go into the economy, so this is not entirely a relevant point. And whether this is a better or worse use of said money is another interesting point (if you tax CGs, say, and directly reduce investment by the amount of the tax - even assuming no other behavioral changes - is it better for the money to go to those the government pays, or to be invested?). But, it is certainly different.

[Kidlicious]

Originally posted by rmsharpe
All the better, since a long-term investment would generally yield more benefits than short-term consumption.

If only someone had told that to hundreds of thousands of people in the mortgage mess today.

You know there's a reason why companies don't just spend all their money on long-term investments. You need customers for that.

[Kidlicious]

Originally posted by snoopy369
Raising taxes and raising spending (or keeping spending the same) takes more money and puts it into the economy, in the sense of salaries and materials for road construction and such. Lowering spending and lowering taxes (or keeping taxes the same) does less of this.

No, no, no. Money is created by loans. The deficit is a loan. Therefore it creates money. Raising taxes does not create money.

[snoopy369]

Well, someone has to have the money to lend to us...

It only 'creates money' if someone makes a loan without actually having the money to loan, to make the loan. IE, a bank. If that's not the case, or if it is not making a loan it wouldn't make regardless, then no 'money' is created.

And who's to say that loans aren't taken out to pay taxes? Or, stocks sold to pay taxes (effectively making money again, by your definition, as the stock is not money either, and could easily be bought on margin or otherwise without actual money)?

I think the 'making money' element of raising taxes vs. cutting spending is irrelevant. If that's what you are saying, good for you, but it's an irrelevant point... much more relevant is the money inserted into the economy (as Imran says above).

[Kidlicious]

Originally posted by snoopy369
Well, someone has to have the money to lend to us...

It only 'creates money' if someone makes a loan without actually having the money to loan, to make the loan. IE, a bank. If that's not the case, or if it is not making a loan it wouldn't make regardless, then no 'money' is created.

No, you create money by making a loan. You don't have to be a bank. If I loan you money we now both have assets that we call money. One is credit money and the other is cash. The person with the credit money can sell that asset for cash or something else, just like any other asset. Thus money is created.

And who's to say that loans aren't taken out to pay taxes? Or, stocks sold to pay taxes (effectively making money again, by your definition, as the stock is not money either, and could easily be bought on margin or otherwise without actual money)?

Who would borrow to pay their taxes? Rich people who have money to pay their taxes? Most people have most of their taxes taken out of their checks.

I think the 'making money' element of raising taxes vs. cutting spending is irrelevant. If that's what you are saying, good for you, but it's an irrelevant point... much more relevant is the money inserted into the economy (as Imran says above).

There's no difference between "making money" and "inserting money" I don't know what you are trying to say.

[snoopy369]

How could I create money by loaning you money? I'm not able to loan you money I don't have physically, because I'm not a bank. "Physically" of course doesn't have to be actual green dollars, money in my bank works too (since it's actual money).

The only way I can be involved in creating money is to use a credit card, which is still the bank technically 'creating' the money (and it has to have collateral for that, just not 100% collateral).

Plenty of people borrow to pay taxes. Income taxes are not the only form of taxes (property taxes, for example, often are borrowed for), and even for those sometimes you owe more than you expect (particularly if you have multiple jobs, and end up well into a higher tax bracket than either of the jobs expects, and you don't plan for it). I've known many people (including fairly well off people, in the scheme of things, ie 100k+ earners) who ended up owing more in taxes than they expected (particularly with CGT, in fact) and had to borrow or sell off stocks to cover taxes.

There is a huge difference between 'making money' and inserting money into the economy.

'Making' money (as you define it): increasing the M2 Money supply. Increasing the total amount of actual money in the economy. It can be good or bad, depending on inflationary trends and such - I don't know that much about M2 money supply levels and their effects on the economy.

Inserting money, as I used it: increasing the amount of money that actually changes hands in an economically productive sense (ie, buying stuff, paying salaries, etc.), as opposed to money that is not fluid such as in the form of stocks, physical assets, etc. Increasing this is good for the economy, because it means money is changing hands more, and every time it changes hands, someone profits from that.

[Kidlicious]

Originally posted by snoopy369


How could I create money by loaning you money? I'm not able to loan you money I don't have physically, because I'm not a bank. "Physically" of course doesn't have to be actual green dollars, money in my bank works too (since it's actual money).

The only way I can be involved in creating money is to use a credit card, which is still the bank technically 'creating' the money (and it has to have collateral for that, just not 100% collateral).

I just told you how money is created. It's that simple. Before there was just the money that was to be lent, but afterwords there was still the money that was lent and another asset. In the case of deficit spending there is a govt bond. That bond can be used to purchase goods and services. Now there is more money!

Plenty of people borrow to pay taxes. Income taxes are not the only form of taxes (property taxes, for example, often are borrowed for), and even for those sometimes you owe more than you expect (particularly if you have multiple jobs, and end up well into a higher tax bracket than either of the jobs expects, and you don't plan for it). I've known many people (including fairly well off people, in the scheme of things, ie 100k+ earners) who ended up owing more in taxes than they expected (particularly with CGT, in fact) and had to borrow or sell off stocks to cover taxes.

I'm sorry, but I'm not inclined to just take your word for it. I've personally never known people who borrow money to pay their taxes. You can't even give us any numbers.

There is a huge difference between 'making money' and inserting money into the economy.

'Making' money (as you define it): increasing the M2 Money supply. Increasing the total amount of actual money in the economy. It can be good or bad, depending on inflationary trends and such - I don't know that much about M2 money supply levels and their effects on the economy.

Inserting money, as I used it: increasing the amount of money that actually changes hands in an economically productive sense (ie, buying stuff, paying salaries, etc.), as opposed to money that is not fluid such as in the form of stocks, physical assets, etc. Increasing this is good for the economy, because it means money is changing hands more, and every time it changes hands, someone profits from that.

I don't really know what you are talking about but "inserting" money into the economy, the way that you are describing, also can cause inflation. Maybe that will help.

[Dauphin]

Originally posted by Kidicious
I'm sorry, but I'm not inclined to just take your word for it. I've personally never known people who borrow money to pay their taxes. You can't even give us any numbers.

If you are a regular tax preparer as you claim I'm astounded that you've never known anyone to do it.

[Kidlicious]

I'm not concerned with what astonishes you.

[Kidlicious]

btw, you can make payments to the IRS. They will charge you for it, but it's not enough to make you want to go out and take out a loan for your tax payment.

[Dauphin]

Oh, right. Let me rephrase. You are talking out of your arse, as it is a very common occurence.

A 2 second google search provides a simple example:

http://www.easytaxsupport.com/cantpay/

The bottom line is that it would be cheaper and less costly if one would take out a bank loan or make a credit card payment to take care of an outstanding tax bill.

https://www.debthelp.com/guides/taxes/how-to-pay-taxes-with-loans.html

Can I get a loan to pay my taxes?

To help you quickly pay off any tax debt you may have before any serious action can be taken by the IRS, applying for an IRS tax loan may be just what you need. It is important that you consider your options and apply early in the process. The longer you wait the more it will cost you since the IRS will charge penalties on any money that you owe after the due date. A debt consolidation company like DebtHelp.com may be able to help you find a loan with a lower interest rate than what you might pay through the IRS.

Maybe the IRS says something about taking loans to pay tax bills.....

http://www.irs.gov/newsroom/article/0,,id=172694,00.html

IRS Summertime Tax Tip 2008-11

The vast majority of Americans get a tax refund from the IRS each spring, but what do you do if you are one of those who received a tax bill? What do you do if you owe money to the IRS and can’t pay?

The IRS encourages you to pay the full amount of your tax liability on time. If you get a bill for late taxes you are expected to promptly pay the tax owed including any additional penalties and interest. It is often in your best interest to get a loan to pay the bill in full rather than to make installment payments to the IRS. You can also pay the bill with your credit card. The interest rate on a credit card or bank loan may be lower than the combination of interest and penalties imposed by the Internal Revenue Code.