Which of you twits...

[Al B. Sure!]

Didn't see any part of this discussion, but I'm assuming that the "point" albie is attempting to make is "tax-free investments exist therefore capital gains/interest taxes don't matter" and "inflation-linked investments exist, therefore inflation (well, let's say unexpected inflation to avoid the issue of neutrality of money) doesn't matter"

That is ****ing idiotic. Munis are only a relatively small part of the universe of the capital markets, and are only available to those with relatively low risk preferences. The linkers market is ****ing INCREDIBLY tiny.

In fact, in order for these to completely remove distortions due to taxes/inflation they would have to take up the entire market....

And no. You're wrong. The tax-free muni thing had nothing to do with the capital gains tax discussion. I think it was just a side thing but nothing to do with cap. gains. The inflation-adjusted securities was in reference to Kuci's claim that inflation only negatively affects those with wealth. Kuci said some outlandish thing like all investments will suffer in periods of inflation because all investments are denominated in currency.

[KrazyHorse]

I think you misunderstood the thought process that went into it (I'm using the term loosely).

He was apparently making some kind of statement about my real-world life not matching my Poly claims about the extent of my expertise

1) As already pointed out, I've made no unsubstantiated claims about my professional/academic experience here
2) You should be embarrassed that somebody with virtually no academic background in economics or finance understands the field so much better than you do, rather than trumpeting my virtually complete lack of formal training...

[KrazyHorse]

And no. You're wrong. The tax-free muni thing had nothing to do with the capital gains tax discussion. I think it was just a side thing but nothing to do with cap. gains.

In an analysis of the inter-temporal distortion of consumption due to various compounded taxes on investment earnings (viz. capital gains tax and the income tax when applied to interest), what do you think the consequence is of introducing a limited category of tax-sheltered investments?

One of you is lying. I'm going to guess it's you.

[KrazyHorse]

By the way, one of your weaknesses in any discussion is to become myopically focused on a detail which doesn't materially impact the conclusion of an argument omitting that detail.

Kuci's narration of the argument would conform to that pattern...

[KrazyHorse]

For example, if you were discussing the distortionary effects of capital gains, and Kuci glossed over the 3000$ window available to apply capital losses to ordinary income, then a move by you to make that 3000$ the focal point of the discussion would be pretty much classic albie.

Oh wait, you did that too.

[Al B. Sure!]

Oh really?

To be honest, I don't even remember where the tax-free muni thing was brought up. But I can assure you, I was just looking through the capital gains thread ('For Nye', if you would like to check) for some of the earlier stuff and it was not brought up in that discussion. It was somewhere else along the line and it was NOT in that context. How stupid do you think I am if you think I would seriously claim that taxes on investment earnings do not matter because people can buy tax-free securities? I mean really?

[Al B. Sure!]

For example, if you were discussing the distortionary effects of capital gains, and Kuci glossed over the 3000$ window available to apply capital losses to ordinary income, then a move by you to make that 3000$ the focal point of the discussion would be pretty much classic albie.

Oh wait, you did that too.

DIFFERENCE.

He didn't gloss over it. He flat-out did not know! He said that capital losses can only be deducted from capital gains, not from earned income! I've quoted him in this thread in which he stated that.

[Al B. Sure!]

And no, KH, if you see my lengthy post that I quoted in this very thread, you can see what I was trying to do by noting the $3000 window.

[Al B. Sure!]

As for his ignorance of inflation-adjusted securities:

http://apolyton.net/showthread.php/192258-The-Shrinking-Middle-Class-in-America?p=5839382&viewfull=1#post5839382

Inflation represents a depreciation of all assets denominated in the relevant currency, not just cash.

WRONG!!!

As I responded:

Oh really? Ever heard of TIPS? Series I Savings Bonds? Munis that are CPI-indexed (and rich people sure love Munis!)?

There's also the fact that wealthier people are more able to re-allocate their savings at the first signs of inflationary pressure. How many low wage earners are buying commodities?

[KrazyHorse]

Yeah, that's what I suspected.

In the context of a discussion regarding the effects of cap gains/interest income tax on investment/consumption decisions, it is COMPLETELY acceptable to say "capital losses can only be deducted from capital gains".

In the context of an accountant discussing the tax strategy of a middle-income earner with a modest investment portfolio it is not.

You ****ing moron.

[KrazyHorse]

Or do you think it's valid to object to a statement that "energy is conserved" when talking about a classical mechanics problem, based on effects at the quantum mechanical/general relativistic levels?

[Al B. Sure!]

Yeah, that's what I suspected.

In the context of a discussion regarding the effects of cap gains/interest income tax on investment/consumption decisions, it is COMPLETELY acceptable to say "capital losses can only be deducted from capital gains".

In the context of an accountant discussing the tax strategy of a middle-income earner with a modest investment portfolio it is not.

You ****ing moron.

No, not for what I was trying to do. I was trying to express that the distortion would be mitigated by the $3000 capital losses window... look what I said in this very thread:

I don't know. Does that make sense that if you were to have an average risk measure of all securities in a market weighted by the proportion by which capital losses up to $3000 per income earner are distributed among investors and considering all the different nominal tax rates, that you could, with a more complicated model than the one I posted, describe a capital gains tax threshold at which, on average and in aggregate, effective tax rate is nearly equal to the nominal tax rate, WITHOUT that savings inhibiting distortion you discussed?

It's really hard for me to express what I was getting at. Capital gains only exist from securities that carry risk. There would be a statistical distribution of losses and gains in which the presence of a capital gains tax would be beneficial to encourage investment on the loss side up to the $3000 and cause a distortion against investment on the positive side. So if you want to look at it in aggregate (ie- not just with a single investor), it could be relevant if you weight it by investment size and market risk.

I have difficulty explaining what I'm getting at. Kuci's whole Alice and Bob thing just struck me as so incomplete.

[KrazyHorse]

There's also the fact that wealthier people are more able to re-allocate their savings at the first signs of inflationary pressure. How many low wage earners are buying commodities?

Holy **** you are stupid.



Your statement here is predicated on the assumption that somehow rich people can beat the market on timing. What ****ing planet do you live on, you twit?

[KrazyHorse]

And no, KH, if you see my lengthy post that I quoted in this very thread, you can see what I was trying to do by noting the $3000 window.

I have no urge to read your lengthy post. What were you trying to do?

[KrazyHorse]

Capital gains only exist from securities that carry risk.

No.