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It's Customer Demand that drives Jobs, not Trickle Down Fantasy


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In reply to an earlier post on Jun 11, 2012 6:09:26 PM PDT
Last edited by the author on Jun 11, 2012 6:10:52 PM PDT
and their deduction rate was 91%. if a shelter gave them a 3-1 loss. for example. they put in $1000 and lost $3000. 91% of that $3k loss is $2,730. Generating the tax shelter loss cost them $1,000. They net $1,730 in a tax loss to shelter $1,730 in other income. The richer one was, the more the tax laws benefited them.

TS: Most of those "losses" were due to timing (reporting IRS expenses early); meaning they would revert back to gains in future years -- unless someone could continue the losses forever.

And if you really were running losses like that, you would have hit bankrupcy early.

I remember 20-30 years ago, my father was determined to enter a Merrill Lynch oil and gas fund that gave him this kind of tax deduction.

He had very nice losses for tax purposes the first couple of years -- But then OOPS he really did lose all his investment money ($10K) He eventually got a tax loss on those investments.

Think a -70% return [-100% investment loss +30% tax loss] was really a good idea?

Luckily I caught him before he sank more money in this. Turns out I found a footnote in the SEC document that there were 2 groups of investors, and the general investors like him absorbed all the losses first.

Nice, for the other group of investors.

In reply to an earlier post on Jun 11, 2012 6:40:58 PM PDT
Ryan says:
The EPA's budget is about $9 billions, so half savings are... $4.5 billion.
Think that will close the gap.
++++++++++++++++++
Nope might just cover what they borrow tomorrow..

In reply to an earlier post on Jun 11, 2012 11:46:07 PM PDT
Last edited by the author on Jun 14, 2012 7:34:31 PM PDT
Think a -70% return [-100% investment loss +30% tax loss] was really a good idea?

========================

Not exactly how it works. Many shelters were deigned to lose 2x 3 x or more on the actual cost. Invest $1000 in shelter. Lose $3000. x70% tax rate, Net amount of loss is $2100. Cost of loss is $1000. Rich person has sheltered $1100.

Posted on Jun 12, 2012 5:29:01 AM PDT
Ryan says:
Watch Billmoyers.com for more exposure on corrupt politics good show

In reply to an earlier post on Jun 12, 2012 7:53:23 AM PDT
*TS: It's still not enough unless you add raise taxes AND cut defense.

The military is not growing. It is only 20% of the budget and you can cut some from officers that make over 110, as well as DoD civilians and even contractors. Raising taxes is a bad idea because it will result in less money because of the negative economic effects. The place of the budget that is growing is the old because of demographics they are living longer and increasing in numbers.

*The EPA's budget is about $9 billions, so half savings are... $4.5 billion.
Think that will close the gap.

No but the economic growth they are blocking will generate more revenue.

In reply to an earlier post on Jun 12, 2012 7:56:25 AM PDT
*Not exactly how it worlds. Many shelters were deigned to lose 2x 3 x or more on the actual cost. Invest $1000 in shelter. Lose $3000. x70% tax rate, Net amount of loss is $2100. Cost of loss is $1000. Rich person has sheltered $1100.

I think the real effect of tax shelters is not revenue but draining productive resources out of the economy.

In reply to an earlier post on Jun 12, 2012 8:39:41 AM PDT
Last edited by the author on Jun 12, 2012 9:03:51 AM PDT
Joseph M. Creaney says:I think the real effect of tax shelters is not revenue but draining productive resources out of the economy.
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yes, and that was primary rationale for the tax reform and probably the most important reason for the change.

In reply to an earlier post on Jun 12, 2012 9:40:19 AM PDT
*yes, and that was primary rationale for the tax reform and probably the most important reason for the change.

After living through the 70s and the 80s I saw more new products come down in price as well as all kinds of new business that started in the 80s. Even in the great 50s few new products came into being people were just able to afford what has been invented 20-30 years before.

In reply to an earlier post on Jun 12, 2012 4:47:53 PM PDT
Think a -70% return [-100% investment loss +30% tax loss] was really a good idea?

========================

Not exactly how it worlds. Many shelters were deigned to lose 2x 3 x or more on the actual cost. Invest $1000 in shelter. Lose $3000. x70% tax rate, Net amount of loss is $2100. Cost of loss is $1000. Rich person has sheltered $1100

TS: It's all timing kbw. Now, if you have a GROWING company ad infinitim, where you are constantly adding assets AND you have a lot of accelerated depreciation on the tax books, then you can continually roll this over into the future.

If that stops, boom -- the difference between book and tax income reverses and you pay the gains then.

If you can do this over many years you get the interest on not paying taxes early.

The principle is like accelerated depreciation -- you have to keep ADDING more assets all the time to keep the difference between tax and book depreciation from turning around and evening out.

For the long term. A company can't deduct more losses than what they have in stockholder's equity.

So your model is far too simplistic, and any downturn in activity means suddenly you have a bill you pay the tax man -- and at the higher rates.

In reply to an earlier post on Jun 12, 2012 4:56:26 PM PDT
JMC: The military is not growing. It is only 20% of the budget

TS: Here are the facts. It is 25% AND when counting in Social Security and Medicare:

I took a 2011 US gov't source; and calculated the %s myself in Excel. (see table below)
Notice this is TOTAL federal government spending: Therefore it includes the General Fund AND it includes Medicare and Social Security (the latter are tracked OFF Budget, which means separate from the General Fund)
The REAL numbers show:

(1) Defense is 25% of Total Spending.
(2) Medicare and Social Security * are 44%
(3) Medicaid is 13%
(4) Interest is 5% of the total.
(5) That leaves 13% for everything else - including Transportation (Highways), Parks, science and weather (including NASA). CIA/FBI, etc.

source:

Which is why all HONEST people note that if you want to get serious about spending cuts you have to touch the 100 ton gorillas in the room - Defense and Medicare/Social Security too.
OK?
Show me with REAL numbers why that isn't true, if you disagree.

======================================================
Here is the data
Source: http://www.usgovernmentspending.com/budget_gs.php
........................ Billions %
Pensions........... 793.2 20.8%
Health Care..... 882 23.1%
Education........ 129.8 3.4%
Defense............ 964.8 25.3%
Welfare............ 495.6 13.0%
Protection....... 60.7 1.6%
Transportation.. 94.5 2.5%
General Government 33.2 0.9%
Other Spending..... 158.4 4.1%
Interest........... 206.7 5.4%

Total .................. 3818.8 100.0%

++++++++++++++++++++++++++++++++++++++++++++++++++++

So please try again -- this time with ALL the facts, ok?

In reply to an earlier post on Jun 12, 2012 5:03:03 PM PDT
Last edited by the author on Jun 12, 2012 5:03:24 PM PDT
JMC: Raising taxes is a bad idea because it will result in less money because of the negative economic effects. The place of the budget that is growing is the old because of demographics they are living longer and increasing in numbers.

TS: The way it works JC, is that cutting taxes OR increasing spending both have a stimulative effect. And Presidents starting with Reagan have been doing it consistently (with the exception of Bill Clinton).

The reverse -- raising taxes OR decreasing spending have a NEGATIVE impact on the economy.

It is a basic economic fact that raising taxes has a negative impact, but $1 for $1 cutting spending has an even worse drag on the economy.

Why? If you raise taxes on the wealthy, their personal spending is likely not going to be impacted -- they'll pay for it out of savings.
And it's already been proven they haven't invested with the tax cuts they got from George Bush and continued by Obama. Estimates have it, that companies are sitting on at least $2 trillion of uninvested capital. Why? Because they think consumer demand might be weak. Did you not read my lead in article?

As for spending cuts, you're talking about laying people out of work. And this snow balls. Say you cut oonly welfare. Almost all the spending now is for rent, food, and medical care. Businesses (landlords, ggrocery and retail stores, doctors) now are no longer getting paid. More layoffs and business failures ooccur. Banks have defaults from landlords and foreclosed retail stores.

This fantasy trickle down thing you guys have been sold on... it's scary you believe this stuff JMC.

If trickle down works, South America would have been a paradise in the 1990s. Not to mention under George W. Bush.

In reply to an earlier post on Jun 12, 2012 5:05:23 PM PDT
Last edited by the author on Jun 12, 2012 5:20:38 PM PDT
JMC: After living through the 70s and the 80s I saw more new products come down in price as well as all kinds of new business that started in the 80s. Even in the great 50s few new products came into being people were just able to afford what has been invented 20-30 years before.

TS: Government stimulus is great for business. That's why when Reagan decreased taxes AND increased government spending (tripling the then US deficit from $1 trillion to $3 trillion) -- things felt great. Like putting a lot on your credit card, and not worrying about paying it back.

It's when you have to pay that credit card back, that things don't feel so great.

As for lower prices, China inports were starting... and yes, that helped Clinton out too!

In reply to an earlier post on Jun 12, 2012 7:05:51 PM PDT
we are not on the same page, let's start over.

Prior to Reagan tax reform. Companies were using the tax code to generate the largest loss they could for an investor. They had no interest in making money. Their entire effort was to generate a loss. A loss that was a multiple of the money invested. Invest a dollar, deliberately generate a TAX loss of $3/$5/$10 dollars. The investor would get the entire loss, but it only cost him a dollar (relative.) The companies didn't want to make money. The whole point was to lose money. They would fold and start up new all over again as a different shelter. Oil drilling offered big TAX deductions and losses.

This is pre-Reagan tax reform.

In reply to an earlier post on Jun 12, 2012 7:16:48 PM PDT
Last edited by the author on Jun 12, 2012 7:18:14 PM PDT
A customer says:
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Posted on Jun 12, 2012 9:42:42 PM PDT
Ryan says:
Europe is melting down economically, this cuts china growth, so both of them quit buying our stuff. The new dark ages is coming.

In reply to an earlier post on Jun 12, 2012 11:29:10 PM PDT
TN says:
<<The new dark ages is coming>>

Don't worry. I've got all the LED lights you ever need.

In reply to an earlier post on Jun 13, 2012 8:19:35 AM PDT
Last edited by the author on Jun 13, 2012 8:21:13 AM PDT
M. Daniel says:
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In reply to an earlier post on Jun 13, 2012 8:05:32 PM PDT
Last edited by the author on Jun 13, 2012 8:17:12 PM PDT
kbw: Prior to Reagan tax reform. Companies were using the tax code to generate the largest loss they could for an investor. They had no interest in making money. Their entire effort was to generate a loss. A loss that was a multiple of the money invested. Invest a dollar, deliberately generate a TAX loss of $3/$5/$10 dollars

TS: I agree with this part. You are looking at the early term of the deal. You get to deduct losses and then it wasn't limited to your income.

Here is where I disagree.

these losses did turn around.

See they were due to accelerated depreciation rules that made tax income lower (even negative) compared to book income.

over the LONG term, these about even out, ok -- so at some time the tax losses will flip to be tax gains.

The idea is to to invest the tax savings (at an interest/return) which you get to keep after you have to pay the gain in some future year.

My point was when eventually you do pay a gain -- it's at a high tax rate.

And there was a risk this could happen quickly.
The business could fail, AND the investor gets a large tax bill for the same year.

What Reagan's tax reform did was to limit the losses on a passive activity to an investor's income for a year.

By the way, look what it did to capital gains:

http://www.answers.com/topic/tax-reform-act-of-1986

Provisions Affecting Individuals

1. lowered maximum marginal tax rates from 50% to 28% beginning in 1988 and reduced the number of basic tax brackets from 15 to 2-28% and 15%.

--Also instituted a 5% rate surcharge for highincome taxpayers

Read more: http://www.answers.com/topic/tax-reform-act-of-1986#ixzz1xjXdyncn

2. eliminated the preferential tax treatment of capital gains. Starting in 1988, all gains realized on asset sales were taxed at ordinary income rates, no matter how long the asset was held.

5. repealed the deduction for two-earner married couples.

8. restricted the deductibility of IRA contributions.

9. mandated the phaseout of consumer interest deductibility by 1991.

Grover Norquist should have had a fit, no?

In reply to an earlier post on Jun 13, 2012 8:14:22 PM PDT
Superman: "get serious about spending cuts you have to touch the 100 ton gorillas in the room - Medicare/Social Security "

Big golden public union wages & pensions are the debt drivers.

TS: Was that a coincidence, I miss your proof

Let me help you out. Congress must approve all wage increases for federal wages and pensions -- they are the ones who pass the budget. It was a very low wage increase last year. As I recall, that's what Obama asked for too.

In reply to an earlier post on Jun 13, 2012 9:49:34 PM PDT
D. Mertins says:
That's part of it, but the ELEPHANT in the room is Medicare...... 2/3'rd of ALL unfunded liabilties including the DEBT

http://www.usdebtclock.org/

WAKE UP

In reply to an earlier post on Jun 13, 2012 10:15:22 PM PDT
A customer says:
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In reply to an earlier post on Jun 13, 2012 10:24:29 PM PDT
Last edited by the author on Jun 13, 2012 10:28:46 PM PDT
A customer says:
" It was a very low wage increase last year. As I recall, that's what Obama asked for too."

Now, go read the true facts

"Retirement programs for former federal workers - civilian and military - are growing so fast they now face a multitrillion-dollar shortfall nearly as big as Social Security's, a USA TODAY analysis shows...............

The retirement programs now have a $5.7 trillion unfunded liability, compared with a $6.5 trillion shortfall for Social Security. An unfunded liability is the difference between a program's projected costs and its projected revenues, both valued in today's dollars.

USA TODAY's analysis is the first comprehensive calculation of how much the government spends on benefits for retired federal workers. The $275 billion paid last year - roughly two-thirds cash, one-third medical benefits - are spread over dozens of overlapping programs in many departments and agencies.

Outgoing Defense Secretary Robert Gates told Congress in June in his final budget testimony that health care costs "are eating us (the Defense Department) alive.""

http://www.usatoday.com/news/washington/story/2011-10-11/federal-retirement-pension-benefits/50592474/1

Add in Medicare & it gets scary. I read a few years ago the US had 126 trillion dollars in unfunded Federal liabilities for entitlements.

In reply to an earlier post on Jun 13, 2012 10:47:47 PM PDT
Last edited by the author on Jun 13, 2012 10:50:19 PM PDT
D. Mertins says:
Super, I love ya, but 82 Trillion in unfunded Medicare makes you look silly

Additionally, Federal is WAYYYYY lower, especially considering what FDR had to say about them.

Check out the Debt clock...... even you could learn something................. http://www.usdebtclock.org/

and the sad truth is WI invented them in 1959 and look what happened in such a short time.......

In reply to an earlier post on Jun 13, 2012 11:11:21 PM PDT
Last edited by the author on Jun 13, 2012 11:12:25 PM PDT
A customer says:
I cant seem to be able to verify that 100s of trillions in Federal pension obligations, LOL.

I know that I read that somewhere a few years ago, but this is still shocking enough.

"June 03, 2011 ~ The real problem is that as large as America's 14.3 trillion dollar debt may be, it is dwarfed by the United States' unfunded obligations from entitlement programs.

The big three entitlement programs: Social Security, Medicare, and Medicaid, are the elephant in the room that most of the government wants to ignore. They have been called the third rail of American politics, in reference to the electrified third rail found on many train tracks which gives a dangerous shock to anyone foolish enough to touch it. Many Republicans are afraid to seriously pursue fundamental changes to entitlement programs that might cut into their constituents' benefits, and many Democrats refuse to even consider large scale entitlement reform. However, no matter how much we would prefer not to talk about it, entitlement spending is not an issue that we can continue to ignore. The United States is estimated to owe about $7.7 trillion in unfunded Social Security obligations, and an astounding $37.9 trillion in unfunded Medicare liabilities. To put that in perspective, $37.9 trillion is more than two and a half times greater than America's 2010 GDP..............."

http://www.freedomworks.org/blog/jhammerton/the-entitlement-deficit-america%E2%80%99s-other-national-d

Posted on Jun 13, 2012 11:27:58 PM PDT
Last edited by the author on Jun 13, 2012 11:28:45 PM PDT
A customer says:
It's pretty obvious with the interest rates on 10 year US treasury notes @ historical lows that there are trillions of dollars of investment capital ready to go to work in America.

And Governor Romney being the worlds best capital investor, I have no doubt he will put America back to work @ good paying manufacturing jobs. We got cheap energy ( Natural Gas), cheap steel, the most intelligent workforce & the most productive workforce.

It will be nice to see all those rusted manufacturing plants opened back up & producing.

I have 100% confidence Governor Romney will surround himself with brilliant advisers & fix America.

And Governor Romney has the patriotic Americans behind him 100%.

The left is just making noise.
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Discussion in:  Politics forum
Participants:  43
Total posts:  2678
Initial post:  May 26, 2012
Latest post:  Jul 14, 2012

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