Azalin Posted October 23, 2014 Share Posted October 23, 2014 I got this one for you, gatorman. The Federal Reserve web site has a .gov domain, so it's a government entity. from the .gov website: 'The Federal Reserve System fulfills its public mission as an independent entity within government. It is not "owned" by anyone and is not a private, profit-making institution' http://www.federalreserve.gov/faqs/about_14986.htm Link to comment Share on other sites More sharing options...
DC Tom Posted October 24, 2014 Share Posted October 24, 2014 from the .gov website: 'The Federal Reserve System fulfills its public mission as an independent entity within government. It is not "owned" by anyone and is not a private, profit-making institution' http://www.federalre...about_14986.htm Next paragraph: " It is considered an independent central bank because its monetary policy decisions do not have to be approved by the President or anyone else in the executive or legislative branches of government, it does not receive funding appropriated by the Congress, and the terms of the members of the Board of Governors span multiple presidential and congressional terms." Like I said, they're both wrong. But hey, thanks for ruining the trap I set for gatorman. Admittedly, trapping gatorman in a mistake is a decidedly minuscule and extraordinarily common achievement...but sometimes you've got to take time to enjoy the little things... Link to comment Share on other sites More sharing options...
Azalin Posted October 24, 2014 Share Posted October 24, 2014 But hey, thanks for ruining the trap I set for gatorman. Admittedly, trapping gatorman in a mistake is a decidedly minuscule and extraordinarily common achievement...but sometimes you've got to take time to enjoy the little things... ruin it? me? sir, he's going to walk right into it despite my gaffe. Link to comment Share on other sites More sharing options...
DC Tom Posted October 24, 2014 Share Posted October 24, 2014 ruin it? me? sir, he's going to walk right into it despite my gaffe. This is true. I momentarily forgot his remarkable inability to comprehend anything is truly universal. Link to comment Share on other sites More sharing options...
TakeYouToTasker Posted October 24, 2014 Share Posted October 24, 2014 You're both wrong Hardly. It's federally commissioned and sanctioned, and it's scope, in theory, is federally dictated, but it's stakeholders are all privately owned banks. Link to comment Share on other sites More sharing options...
TPS Posted October 24, 2014 Share Posted October 24, 2014 Not quite. Because corporations pay the full tax bore, you rarely see transactions that would merit the full taxation on the capital gain. That "subsidy" is gained by corporations utilizing the numerous M&A techniques that avoid the tax altogether. Because a smart tax policy works towards maximizing revenue without introducing friction to creating capital that grows and economy. Smart tax policy recognizes that lowering tax rates is not a subsidy to the people who earned that income. I'm not sure what you're talking about. What is "full tax bore"? Since they only face one tax rate on income, and gains are taxed as ordinary income, there is no distortion like there is for investors' and cap gains. Link to comment Share on other sites More sharing options...
GG Posted October 24, 2014 Share Posted October 24, 2014 (edited) Hardly. It's federally commissioned and sanctioned, and it's scope, in theory, is federally dictated, but it's stakeholders are all privately owned banks. Stakeholders are different than shareholders. Of course private banks are the Stakeholders, as well as the rest of the private sector. That was the reason the Fed was created. I'm not sure what you're talking about. What is "full tax bore"? Since they only face one tax rate on income, and gains are taxed as ordinary income, there is no distortion like there is for investors' and cap gains. Companies have a lot more flexibility to dispose of assets at full market value and avoid any tax on the gain than do individual investors. Miraculously a sale can be treated as an asset swap of the currency is equity and not cash. When was the last time you set up a reverse Rabbi Trust to sell some of your assets? Dividend a portion of your house? Edited October 24, 2014 by GG Link to comment Share on other sites More sharing options...
Tiberius Posted October 24, 2014 Author Share Posted October 24, 2014 from the .gov website: 'The Federal Reserve System fulfills its public mission as an independent entity within government. It is not "owned" by anyone and is not a private, profit-making institution' http://www.federalre...about_14986.htm Thanks! Somehow dick beater Tom thinks this proves me wrong?? Link to comment Share on other sites More sharing options...
TPS Posted October 24, 2014 Share Posted October 24, 2014 Stakeholders are different than shareholders. Of course private banks are the Stakeholders, as well as the rest of the private sector. That was the reason the Fed was created. Companies have a lot more flexibility to dispose of assets at full market value and avoid any tax on the gain than do individual investors. Miraculously a sale can be treated as an asset swap of the currency is equity and not cash. When was the last time you set up a reverse Rabbi Trust to sell some of your assets? Dividend a portion of your house? One more time, there is no tax differential regarding gains and income for corps. The fact that they try to shield any type of income from taxation is independent of the fact that investors face a tax differential. The focus is on the personal tax side because that's where cap gains matter. The issue is whether that tax differential on the personal income side has any impact on corporate decisions to invest in productive assets and therefore influence economic growth? If the cap gains differential has no impact on economic growth, then in reality it is simply a way to allow investors in brackets > than the cap gains rate to pay lower taxes overall. Since it will make Tasker happy, we'll call it an incentive to invest in growth stocks over income stocks, since taxes by design do create incentives and disincentives. Chef claims it's a reward for risk-taking, but the reward for risk-taking is built into risk premiums on investments. In reality, the tax is an "incentive" for investors to put their money into assets that appreciate vs assets that pay some form of income. There is very little evidence that higher stock prices directly fuel increases in productive investment; rather, I would argue that it is increases in investment (which for corporations is mainly financed by internal funds or bonds) that generate higher earnings which fuel higher stock prices. GG argues that somehow the cap gains rate on personal income fuels M&A activity; but as Chef pointed out, the rate was increased via ACA and one would expect that increase to cause a decrease in M&A activity, but it hasn't. There are obviously other reasons for M&A activity as Jauronimo pointed out. As Gman has tried to argue, the cap gains rate also allows "the rich" to pay lower taxes than the tax on wages (as Warren Buffett tells us). Managers paid with stock options pay a lower tax on their "salary income" than workers, and many argue the incentive of managers paid with stock options create a focus on short term profitability over long term viability. Private equity partners are also given this tax break over income with the carried interest distinction. So, the issue, if the lower cap gains rate for individuals who own shares of stock doesn't create greater economic growth, then why should there be a tax differential? As I said in another post, if the government is trying to create an incentive for risk-taking that creates growth and jobs, then focus the tax breaks directly on those who make decisions to invest in productive capital and hire people, not indirectly for those who own pieces of paper... Link to comment Share on other sites More sharing options...
TakeYouToTasker Posted October 24, 2014 Share Posted October 24, 2014 Stakeholders are different than shareholders. Of course private banks are the Stakeholders, as well as the rest of the private sector. That was the reason the Fed was created. They aren't only stakeholders, they are shareholders as well. The Federal reserve issues shares of stock to it's member banks, and those banks are the only stock holders. Link to comment Share on other sites More sharing options...
GG Posted October 24, 2014 Share Posted October 24, 2014 They aren't only stakeholders, they are shareholders as well. The Federal reserve issues shares of stock to it's member banks, and those banks are the only stock holders. The stock isn't marketable, but it gives the member shareholders an advisory role, but not the governing role. Thus, as the resident crap throwing monkey points out, the Fed is neither fish nor fowl. It's a weird entity that has public and private components to it. Link to comment Share on other sites More sharing options...
DC Tom Posted October 24, 2014 Share Posted October 24, 2014 Thanks! Somehow dick beater Tom thinks this proves me wrong?? http://forums.twobillsdrive.com/topic/169534-wealth-inequality-hurting-economy-duh/page__st__280#entry3310393 You idiot. Link to comment Share on other sites More sharing options...
GG Posted October 24, 2014 Share Posted October 24, 2014 One more time, there is no tax differential regarding gains and income for corps. The fact that they try to shield any type of income from taxation is independent of the fact that investors face a tax differential. The focus is on the personal tax side because that's where cap gains matter. The issue is whether that tax differential on the personal income side has any impact on corporate decisions to invest in productive assets and therefore influence economic growth? If the cap gains differential has no impact on economic growth, then in reality it is simply a way to allow investors in brackets > than the cap gains rate to pay lower taxes overall. Since it will make Tasker happy, we'll call it an incentive to invest in growth stocks over income stocks, since taxes by design do create incentives and disincentives. Chef claims it's a reward for risk-taking, but the reward for risk-taking is built into risk premiums on investments. In reality, the tax is an "incentive" for investors to put their money into assets that appreciate vs assets that pay some form of income. There is very little evidence that higher stock prices directly fuel increases in productive investment; rather, I would argue that it is increases in investment (which for corporations is mainly financed by internal funds or bonds) that generate higher earnings which fuel higher stock prices. GG argues that somehow the cap gains rate on personal income fuels M&A activity; but as Chef pointed out, the rate was increased via ACA and one would expect that increase to cause a decrease in M&A activity, but it hasn't. There are obviously other reasons for M&A activity as Jauronimo pointed out. As Gman has tried to argue, the cap gains rate also allows "the rich" to pay lower taxes than the tax on wages (as Warren Buffett tells us). Managers paid with stock options pay a lower tax on their "salary income" than workers, and many argue the incentive of managers paid with stock options create a focus on short term profitability over long term viability. Private equity partners are also given this tax break over income with the carried interest distinction. So, the issue, if the lower cap gains rate for individuals who own shares of stock doesn't create greater economic growth, then why should there be a tax differential? As I said in another post, if the government is trying to create an incentive for risk-taking that creates growth and jobs, then focus the tax breaks directly on those who make decisions to invest in productive capital and hire people, not indirectly for those who own pieces of paper... So in effect, you're arguing for zero corporate tax? I'll agree to that. Again, you're mixing up a lot of corporate decisions and tangential relationship to equity prices with what individual investors do with their assets. The bottom line for lowering taxes on capital gains is to remove possible friction from market liquidity. If I take the extreme and raise the cap gains tax to 90%, few individual investor would voluntarily sell stocks and much of the market liquidity would fall away. And as the income tax contribution imbalance continues to grow between the payers and non-payers, you don't want to kill another golden goose for tax revenue collections. I would have thought that the increased cap gains tax collections (after rates were lowered) in Slick Willy's terms would have taught progressive a lesson in reality rather than in theory. I guess not. Link to comment Share on other sites More sharing options...
TPS Posted October 24, 2014 Share Posted October 24, 2014 So in effect, you're arguing for zero corporate tax? I'll agree to that. I would support changes that give incentives for companies to create jobs, especially smaller businesses. Some of that would mean lower taxes, but not necessarily 0. Again, you're mixing up a lot of corporate decisions and tangential relationship to equity prices with what individual investors do with their assets. The bottom line for lowering taxes on capital gains is to remove possible friction from market liquidity. If I take the extreme and raise the cap gains tax to 90%, few individual investor would voluntarily sell stocks and much of the market liquidity would fall away. And as the income tax contribution imbalance continues to grow between the payers and non-payers, you don't want to kill another golden goose for tax revenue collections. I would say you are the one mixing things up. The bottom line is that it creates an incentive that distorts market "liquidity" in that it provides an incentive for wealthy investors to purchase non-dividend paying stocks. Fortunately for the majority of the market comprised of institutional investors (pensions and MFs) the cap gains rate doesn't matter, so the "liquidity bias" only matters for rich individual investors. Also, historically the differential cap gains rate was designed to incentivize investors to HOLD stocks, not sell. The point was to create a long term focus for investors instead of short term, thus less volatility. A lower rate was paid if you held onto the investment for more than a year. You can make up an extreme example if it makes you feel better, but the bottom line is I'm arguing for elimination of the distortion--cap gains should be taxed as ordinary income. Maybe a better policy is to lower the top income rate to say 30% and eliminate the cap gains rate? In reality, the only time the market needs to worry about liquidity is in a crisis... I would have thought that the increased cap gains tax collections (after rates were lowered) in Slick Willy's terms would have taught progressive a lesson in reality rather than in theory. I guess not. I think we argued about this previously...I wouldn't say that the lower rate "caused" the dot.com bubble. The dot.com bubble caused a stock bubble which led to higher cap gains revenues. In addition, the 1990s was when managers' compensation went from income to stock options, and you can certainly attribute that change to the lower cap gains rate.... Link to comment Share on other sites More sharing options...
Azalin Posted October 24, 2014 Share Posted October 24, 2014 http://forums.twobil...80#entry3310393 You idiot. see? I told you. Link to comment Share on other sites More sharing options...
DC Tom Posted October 24, 2014 Share Posted October 24, 2014 see? I told you. One really wonders, sometimes, precisely where he resides on the evolutionary ladder. If fish could type... ...they'd probably be calling gatorman an idiot, too. Link to comment Share on other sites More sharing options...
Chef Jim Posted October 25, 2014 Share Posted October 25, 2014 I'm pretty sure I mentioned this up thread but gator you do know the people making over &400k saw their LT cap gains taxes go up by nearly 60% while "poor" people making under &40k pay zero LT cap gains right? So who has the better lobby now?? Link to comment Share on other sites More sharing options...
Tiberius Posted October 25, 2014 Author Share Posted October 25, 2014 I did some picking around and read some interesting articles on capital gains taxes and revenue and it seems pretty clear that lower capital gains taxes do increase revenue. So I'll stand corrected on that one. http://www.adamsmith.org/sites/default/files/resources/capital-gains-tax.pdf I'm entering the fifth year of my investing life and starting to see some real dividend wealth role in. So im not complaing about the capital gains taxes. But the risk argument means nothing to me, i would invest and reinvest my dividends no matter where the tax rate was. Does anyone know if their is a correlation between companies paying higher dividends and lower capital gains taxes? Have a good weekend Link to comment Share on other sites More sharing options...
Chef Jim Posted October 25, 2014 Share Posted October 25, 2014 So low rates of cap gains taxes suck except when it for you. Ahhh the hypocritical liberal rears its ugly head again. Link to comment Share on other sites More sharing options...
TPS Posted October 25, 2014 Share Posted October 25, 2014 I did some picking around and read some interesting articles on capital gains taxes and revenue and it seems pretty clear that lower capital gains taxes do increase revenue. So I'll stand corrected on that one. http://www.adamsmith.org/sites/default/files/resources/capital-gains-tax.pdf I'm entering the fifth year of my investing life and starting to see some real dividend wealth role in. So im not complaing about the capital gains taxes. But the risk argument means nothing to me, i would invest and reinvest my dividends no matter where the tax rate was. Does anyone know if their is a correlation between companies paying higher dividends and lower capital gains taxes? Have a good weekend corporations don't pay cap gains taxes. All of their income is taxed as ordinary. Here's an alternative analysis for you. http://www.cbpp.org/cms/index.cfm?fa=view&id=1286 Link to comment Share on other sites More sharing options...
Recommended Posts