America is not broke...

[Doove]

Originally Posted by pjorourke

Okay Doofus.

Don't make me have to ask for a ban-free pass, PJ!

[Marcus Aurelius]

Originally Posted by Doove

Don't make me have to ask for a ban-free pass, PJ!

Actually that is funny.

[Naomi4u]

Originally Posted by Marcus Aurelius

How is that hilarious?

Hilarious that you would accuse someone of post stalking.
Say what you want but Doove does not "post stalk" anyone. Just sayin'.

[Marcus Aurelius]

As I said, I went back and read several threads. Marshal would say something and Doove would use his post and respond. Stalking was a poor word to use by me. It was all healthy back and forth for the most part. I have no problem with Doove at all. I like his contributions here. Marshal has pushed the boundaries here as well. What is not good is the baiting that's been going on as of late.

[Naomi4u]

I understand. However, no one should be accusing anyone of being a sociopath or murderer. Let's be adults here.

Originally Posted by Marcus Aurelius

Stalking was a poor word to use by me.

I am glad you realized that.

[Doove]

Originally Posted by Naomi4u

Say what you want but Doove does not "post stalk" anyone. Just sayin'.

Well, i wouldn't go that far, Naomi. Though i would add that given my options, if i did decide to stalk someone, it wouldn't be Marshall - that's for damn sure!

By the way, am i the only one who's detected a bit of a thread drift?

[discreetgent]

Originally Posted by Marcus Aurelius

No ban free passes handed out. As I'm sure you know.
I ask you to work things out or try the ignore function. If things progress to rudeness or worse no warnings will be given out as D & T is on it's way back to the friendly and safe community it once was. Some people may not like others but we will get along or else take it somewhere other than here.

Is this the same theory as "the beating will increase until morale improves"

[pjorourke]

Originally Posted by discreetgent

Is this the same theory as "the beating will increase until morale improves"

What? That doesn't work?

[Valerie]

Originally Posted by Naomi4u

I understand. However, no one should be accusing anyone of being a sociopath or murderer. Let's be adults here.

+1...and among other things, people really shouldn't accuse you of something you didn't do either

[WTF]

Originally Posted by Doove

Don't make me have to ask for a ban-free pass!

That should be the forum's new motto

[gnadfly]

Nothing like the market dropping big three straight days to make the US feel "broke." Nothing but doom and gloom on most of the major financial networks.

We need the Federal Govt to stop for a couple of days. The meltdown may be inevitable already.

[TexTushHog]

Originally Posted by pjorourke

God I love static revenue analysis.

Certainly economic actors can and will react to changes in the economic climate, including tax law changes. However, those reactions take some time to implement, depending on the policy. It is also why I included a fundamental reform of tax policy in my original post. We need to make taxation of different categories of income more uniform so that you can't shift strategies so easily to minimize taxation.

Obviously, voting with your feet is the ultimate ticket out. And the very wealthy can do that. However, I doubt returning income tax rates to the level that they were at during the Clinton administration is going to cause a mall exodus of people from the US. And if we end preferential treatment of capital gains and qualified dividends (at least beyond a certain point), end the tax free status of muni bonds (again, at least beyond a certain point), I think you can generate more revenue. Will there be some consequences for some parties? Sure. There is no free lunch. Muni borrowing rates would go up in the last scenario. But that may not be all bad as it will decrease borrowing by those entities which I think would be good.

[pjorourke]

Just for the record, I am 100% in favor of killing the income exclusion for muni bonds. That has led to more useless crap being built.

[Texas Contrarian]

Originally Posted by TexTushHog

Obviously, voting with your feet is the ultimate ticket out. And the very wealthy can do that. However, I doubt returning income tax rates to the level that they were at during the Clinton administration is going to cause a mall exodus of people from the US.

Well, it wouldn't cause a "mall exodus" (whatever that is) from the U.S. -- but it wouldn't raise much revenue, either, unless you applied 1990s tax rates to all income, not just that earned by top-bracket taxpayers. Remember, the bulk of the early '00s tax cuts went to the under-$250K/year groups, not to the more affluent.

Originally Posted by TexTushHog

...And if we end preferential treatment of capital gains and qualified dividends (at least beyond a certain point), end the tax free status of muni bonds (again, at least beyond a certain point), I think you can generate more revenue.

Since we've discussed all of this before, I'll just quote myself from previous D&T threads, where I explained the issue in some detail:

Originally Posted by CaptainMidnight

I am amazed by the extent to which non-investors seem mystified by capital gains tax issues.

Since the tax is levied on realizations, not accumulated gains, investors can easily make choices that reduce their tax liability. When the rate is low (as it is now) the incentive to do so is limited. But if you were to increase the cap gains tax rate to, say, 35% (the current top rate on ordinary income) taxable realizations would dry up so fast it would make your head swim. For one thing, it would create an incentive to delay realization until the taxable gain could be partially or totally mitigated by offsetting losses in the same tax year. In the case of stocks and other financial assets, it's usually very easy to "protect" unrealized gains by means of options or other hedging strategies.

Another way investors can dodge the bullets is by simply borrowing against appreciated assets instead of selling them.

Scroll down and take a look at the chart posted on this site:

http://adamsmith.org/files/capital-gains-tax.pdf

You'll see a graph showing a very marked inverse correlation between the top tax rate on capital gains and taxable realizations.

And if policymakers actually did somehow manage to create a draconian capital gains tax increase in such a way that investors couldn't escape it, they would knock a few percentage points off stock values. People have actually written dissertations on modeling the dynamic effects of such changes. They have been exaggerated by some, but no credible, unbiased observer believes they are zero.

The large bulk of public equity is held by retirement accounts in one form or another. Beating up, even if just a little bit, on the retirement accounts of non-affluent working Americans would not seem to be great public policy.

About the only people benefiting from a large capital gains tax rate increase would be politicians who want to score cheap political points by appealing to a dumbed-down public that doesn't understand the issue.

As for municipal bonds, people often forget that you're not avoiding taxation if you buy them -- you're simply paying the tax (although typically at a lower rate) to an entity such as a state, city, or school district. The extent to which the yield is lower than a taxable instrument with a similar risk profile is the tax.

Stripping the tax-favored status from munis would simply create demands for even larger bailouts of profligate states. The administration and congress certainly wouldn't want to risk diminishing state and local politicians' abilities to buy the votes of public employee union members and other favored constituencies with other people's money.

Originally Posted by CaptainMidnight

Big increases in capital gains tax rates never raise anywhere near the revenue predicted by static analysis, and often don't raise significant additional revenue at all. This somehow seems mysterious to a lot of liberals, but experienced investors understand the issue quite well. There is a very clear negative correlation between aggregate realizations and the top tax rate on capital gains.

Another problem with high capital gains tax rates is that they produce an impediment to the flow of capital. The economy suffers when capital does not flow freely into sectors, industries, and companies deemed the highest and best use by investors and entrepreneurs. Further damaging the economy with another wave of bad economic policy is not exactly something we can afford right now.

Raising the tax rate on qualified dividends (now 15%) to 35% (or 39.6% in the future, as planned) would also produce negative unintended consequences. Since most of them are obviously not interested in paying income taxes at a 39.6% rate, high net worth individuals would simply divest themselves of large amounts of issues that pay high dividends, putting downward pressure on their prices. Many retirees and other individuals of rather modest means depend, at least in part, on income from dividend-paying stocks. Although most of them (especially if retired) may not be in high income tax brackets, their portfolios would be devalued by selling pressure on high-dividend stocks. I don't think most of us want to see the non-affluent lose net worth, even if just by a few percentage points, as a result of bad tax policy.

When politicians fire bullets at the wealthy, they often hit a lot of people who aren't so well off.

[Mazomaniac]

Oh great. Now Midnight's post-stalking himself.