The Obama Administration thread

[JuicySwoos]

before you crucify anyone for only paying 16.6%, remember, there's a significant amount of money being invested to generate these billions of dollars in capital gains. and the principal being invested is "at risk." AND that money being invested is benefitting all of us. if you start taxing capital gains at say, 50%, these investors will think "why risk losing my money when i am only going to keep 50% of my ROI?" it wouldn't make much sense. so they would invest in other things such as real estate overseas, and our economy would suffer as a result.

You get to write off the losses as well.  That's why.

[sandman]

before you crucify anyone for only paying 16.6%, remember, there's a significant amount of money being invested to generate these billions of dollars in capital gains. and the principal being invested is "at risk." AND that money being invested is benefitting all of us. if you start taxing capital gains at say, 50%, these investors will think "why risk losing my money when i am only going to keep 50% of my ROI?" it wouldn't make much sense. so they would invest in other things such as real estate overseas, and our economy would suffer as a result.

You get to write off the losses as well.  That's why.

but if the majority of your income is from capital gains, and you lose money, those write-offs aren't doing much for you.

[JuicySwoos]

before you crucify anyone for only paying 16.6%, remember, there's a significant amount of money being invested to generate these billions of dollars in capital gains. and the principal being invested is "at risk." AND that money being invested is benefitting all of us. if you start taxing capital gains at say, 50%, these investors will think "why risk losing my money when i am only going to keep 50% of my ROI?" it wouldn't make much sense. so they would invest in other things such as real estate overseas, and our economy would suffer as a result.

You get to write off the losses as well.  That's why.

but if the majority of your income is from capital gains, and you lose money, those write-offs aren't doing much for you.

That statement doesn't make sense.  If your income is from capital gains, you can't be losing money, because it would cease to be income.  The writing off of loses reduces the taxable income overall. 

Don't get me wrong, I agree with you in general. The high roller investors are a big reason many of us have jobs. I just don't buy the "I am going to take my ball and go home" thing. Capital gains is your money working for you, so even at a higher tax rate, it is still going to be the best and most efficent way to make money.

[pilferk]

but if the majority of your income is from capital gains, and you lose money, those write-offs aren't doing much for you.

If you lose money, overall, you're not paying taxes....because there's no GAINS to pay taxes on.  If the majority of your revenue, in any given year, is typically made from capital gains, and in ONE year you lose money (overall) you have no tax burden to worry about (and hopefully enough capital to sustain your investment and way of life).  Thus is the risk you take when you choose to go into that "career".  The thing is, the risk to reward (especially long term) is significantly weighted toward the investor.  That's par for the course. 

If you lose money on a particular investment, you can write that loss off against your other gains, and reduce the amount of money you'd pay taxes on.  Thus, the point JuicySwoos was making.

[GeorgeSteele]

Just to clarify, not all, in fact, probably most, of the money invested that is eligible for capital gains tax treatment is not the job creating / economic growth variety.  It's money used to buy securities in the secondary market.  For example, if I buy stock in GE, GE is not using that money to build a new plant in my community to employ my neighbors.  GE is not getting any of that money at all, rather it's just going to the guy selling the GE stock to me.  Nothing more than a money/property exchange.  

[JuicySwoos]

Just to clarify, not all, in fact, probably most, of the money invested that is eligible for capital gains tax treatment is not the job creating / economic growth variety.  It's money used to buy securities in the secondary market.  For example, if I buy stock in GE, GE is not using that money to build a new plant in my community to employ my neighbors.  GE is not getting any of that money at all, rather it's just going to the guy selling the GE stock to me.  Nothing more than a money/property exchange.  

I am not a market guy, too risky for my blood.  So what you are saying, if I invested in google when it went public, which gave the company capital to become huge and create jobs, that investment is not subject to capital gains? 
Or are you saying that doesn't happen very often?

Or am I way off base here?

[sandman]

but if the majority of your income is from capital gains, and you lose money, those write-offs aren't doing much for you.

If you lose money, overall, you're not paying taxes....because there's no GAINS to pay taxes on.  If the majority of your revenue, in any given year, is typically made from capital gains, and in ONE year you lose money (overall) you have no tax burden to worry about (and hopefully enough capital to sustain your investment and way of life).  Thus is the risk you take when you choose to go into that "career".  The thing is, the risk to reward (especially long term) is significantly weighted toward the investor.  That's par for the course. 

If you lose money on a particular investment, you can write that loss off against your other gains, and reduce the amount of money you'd pay taxes on.  Thus, the point JuicySwoos was making.

exactly. so if your whole portfolio loses money, there's no tax to write off.

[sandman]

Just to clarify, not all, in fact, probably most, of the money invested that is eligible for capital gains tax treatment is not the job creating / economic growth variety.  It's money used to buy securities in the secondary market.  For example, if I buy stock in GE, GE is not using that money to build a new plant in my community to employ my neighbors.  GE is not getting any of that money at all, rather it's just going to the guy selling the GE stock to me.  Nothing more than a money/property exchange.  

you're way off. the primary reason companies issue stock is access to additional capital.

[JuicySwoos]

Just to clarify, not all, in fact, probably most, of the money invested that is eligible for capital gains tax treatment is not the job creating / economic growth variety.  It's money used to buy securities in the secondary market.  For example, if I buy stock in GE, GE is not using that money to build a new plant in my community to employ my neighbors.  GE is not getting any of that money at all, rather it's just going to the guy selling the GE stock to me.  Nothing more than a money/property exchange.  

you're way off. the primary reason companies issue stock is access to additional capital.

I think he is saying most of the capital gains come from trading established stock, which does not increase the capital of the company.  I wouldn't know if that is the case or not.  But if it is, he is right. Even if he is, the inital investment into a company does create jobs, which usually comes via rich people. Take more money from them, less money for investment, and round and round we go.

Maybe one could argue that a higher capital gains tax, even if it comes from the secondary markt ilk, means less money into the market, resulting in less demand for stock. Companies are beholden to share holders, so they need to create more demand for the shares. One way of doing that is cutting expenses,  the biggest expense a company has it the workforce.  So it may not create new jobs, but it helps "save" the jobs. Sounds like Obama's logic for the stimilus package..

[sandman]

Just to clarify, not all, in fact, probably most, of the money invested that is eligible for capital gains tax treatment is not the job creating / economic growth variety.  It's money used to buy securities in the secondary market.  For example, if I buy stock in GE, GE is not using that money to build a new plant in my community to employ my neighbors.  GE is not getting any of that money at all, rather it's just going to the guy selling the GE stock to me.  Nothing more than a money/property exchange.  

you're way off. the primary reason companies issue stock is access to additional capital.

I think he is saying most of the capital gains come from trading established stock, which does not increase the capital of the company.  I wouldn't know if that is the case or not.  But if it is, he is right. Even if he is, the inital investment into a company does create jobs, which usually comes via rich people. Take more money from them, less money for investment, and round and round we go.

Maybe one could argue that a higher capital gains tax, even if it comes from the secondary markt ilk, means less money into the market, resulting in less demand for stock. Companies are beholden to share holders, so they need to create more demand for the shares. One way of doing that is cutting expenses,  the biggest expense a company has it the workforce.  So it may not create new jobs, but it helps "save" the jobs. Sounds like Obama's logic for the stimilus package..

he's just pointing out that stocks are bought and sold. i'm saying the initial offering (which is what you had said regarding google) generates capital for the company which they use in ways that provide benefits to our economy.

[pilferk]

exactly. so if your whole portfolio loses money, there's no tax to write off.

But there's no taxes to pay...so you don't NEED a write off...which is what Juicy's point was.

It's the counterpoint to yours on the tax rates.

 The risk is balanced both by the opportunity for gain, and the fact that if you LOSE, you don't pay ANY taxes (so you don't need the write off).  But if you lose on one investment and gain on another....you can write off the loss against the gain.  It's sorta win/win on the tax code which needs to be balanced with the higher rate on gains.

[pilferk]

you're way off. the primary reason companies issue stock is access to additional capital.

Yes, but most of the stock being sold isn't first issue.  It's a "2nd generation" transaction, meaning you're buying from an owner, not from the company, itself.

The price you pay for that stock isn't going to the company, it's going to the person that owned the stock.

Now, companies can dilute their stock pool (and usually you see a drop in value) by issuing MORE stock to raise capital.  But again, that's not the vast majority of the transactions that go on every day.

[pilferk]

he's just pointing out that stocks are bought and sold. i'm saying the initial offering (which is what you had said regarding google) generates capital for the company which they use in ways that provide benefits to our economy.

Yes, in the google example used, you're 100% correct.

I think George's point was that the vast majority of the volume on the market (and thus, the vast majority of capital gains money generated) ISN'T that type of sale.  So MOST of the money changing hands, in terms of capital gains, isn't going directly to the company so it can create jobs.

But SOME of it is, that's true.  And Juicy's logic also stands true:  Depressed stock prices reduce a businesses ability to raise capital (because their credit to value ratio goes kaput), which can reduce their ability to maintain or grow their workforce.  So by increasing stock value (based on 2ndary transactions on the market) CAN see increased credit, which, in turn, can see an increased ability to fund the companies expansions (be that jobs, production, etc).

[JuicySwoos]

Oh and hey pilferk, after further review...I am not a fan of the healthcare bill. You did a good job selling it though, and helped me understand the purported benefits.  

[GeorgeSteele]

Just to clarify, not all, in fact, probably most, of the money invested that is eligible for capital gains tax treatment is not the job creating / economic growth variety.  It's money used to buy securities in the secondary market.  For example, if I buy stock in GE, GE is not using that money to build a new plant in my community to employ my neighbors.  GE is not getting any of that money at all, rather it's just going to the guy selling the GE stock to me.  Nothing more than a money/property exchange.  

you're way off. the primary reason companies issue stock is access to additional capital.

Compare the volume of the primary market to the secondary market (assuming you know the difference) and then tell me who's way off.  

If preferential tax treatment for capital gains applied only to purchases of initial stock issuances, then you may have a point.

Or would you?  What do most companies do with additional capital?  Are they required to invest that capital domestically rather than overseas?  Are they prohibited from using that capital to acquire competing businesses and then effect mass layoffs when consolidating operations?

[GeorgeSteele]

he's just pointing out that stocks are bought and sold. i'm saying the initial offering (which is what you had said regarding google) generates capital for the company which they use in ways that provide benefits to our economy.

Yes, in the google example used, you're 100% correct.

I think George's point was that the vast majority of the volume on the market (and thus, the vast majority of capital gains money generated) ISN'T that type of sale.  So MOST of the money changing hands, in terms of capital gains, isn't going directly to the company so it can create jobs.

But SOME of it is, that's true.  And Juicy's logic also stands true:  Depressed stock prices reduce a businesses ability to raise capital (because their credit to value ratio goes kaput), which can reduce their ability to maintain or grow their workforce.  So by increasing stock value (based on 2ndary transactions on the market) CAN see increased credit, which, in turn, can see an increased ability to fund the companies expansions (be that jobs, production, etc).

Pilferk, my only objection to that would be that a capital gain generated from shorting a stock is still eligible for the preferential tax rate, so an activity that theoretically can depress stock value is still encouraged by the tax code.  Also, I would cite my above point re: what's done with the capital may not necessarily create jobs. 

[JuicySwoos]

he's just pointing out that stocks are bought and sold. i'm saying the initial offering (which is what you had said regarding google) generates capital for the company which they use in ways that provide benefits to our economy.

Yes, in the google example used, you're 100% correct.

I think George's point was that the vast majority of the volume on the market (and thus, the vast majority of capital gains money generated) ISN'T that type of sale.  So MOST of the money changing hands, in terms of capital gains, isn't going directly to the company so it can create jobs.

But SOME of it is, that's true.  And Juicy's logic also stands true:  Depressed stock prices reduce a businesses ability to raise capital (because their credit to value ratio goes kaput), which can reduce their ability to maintain or grow their workforce.  So by increasing stock value (based on 2ndary transactions on the market) CAN see increased credit, which, in turn, can see an increased ability to fund the companies expansions (be that jobs, production, etc).

Pilferk, my only objection to that would be that a capital gain generated from shorting a stock is still eligible for the preferential tax rate, so an activity that theoretically can depress stock value is still encouraged by the tax code.  Also, I would cite my above point re: what's done with the capital may not necessarily create jobs. 

So you're suggesting that higher capital gains tax would not result potentially decreased capital? Or if it did, big deal since it may not create jobs?

Again, just asking.  My knowledge of this subject is limited to political propaganda and forgotten accounting classes.

[sandman]

Just to clarify, not all, in fact, probably most, of the money invested that is eligible for capital gains tax treatment is not the job creating / economic growth variety.  It's money used to buy securities in the secondary market.  For example, if I buy stock in GE, GE is not using that money to build a new plant in my community to employ my neighbors.  GE is not getting any of that money at all, rather it's just going to the guy selling the GE stock to me.  Nothing more than a money/property exchange.  

you're way off. the primary reason companies issue stock is access to additional capital.

Compare the volume of the primary market to the secondary market (assuming you know the difference) and then tell me who's way off.  

If preferential tax treatment for capital gains applied only to purchases of initial stock issuances, then you may have a point.

Or would you?  What do most companies do with additional capital?  Are they required to invest that capital domestically rather than overseas?  Are they prohibited from using that capital to acquire competing businesses and then effect mass layoffs when consolidating operations?

my bad. just noticed juicyswoos' post actually came after yours.

my only point is that increasing capital gains too much could be bad for the economy.

[GeorgeSteele]

he's just pointing out that stocks are bought and sold. i'm saying the initial offering (which is what you had said regarding google) generates capital for the company which they use in ways that provide benefits to our economy.

Yes, in the google example used, you're 100% correct.

I think George's point was that the vast majority of the volume on the market (and thus, the vast majority of capital gains money generated) ISN'T that type of sale.  So MOST of the money changing hands, in terms of capital gains, isn't going directly to the company so it can create jobs.

But SOME of it is, that's true.  And Juicy's logic also stands true:  Depressed stock prices reduce a businesses ability to raise capital (because their credit to value ratio goes kaput), which can reduce their ability to maintain or grow their workforce.  So by increasing stock value (based on 2ndary transactions on the market) CAN see increased credit, which, in turn, can see an increased ability to fund the companies expansions (be that jobs, production, etc).

Pilferk, my only objection to that would be that a capital gain generated from shorting a stock is still eligible for the preferential tax rate, so an activity that theoretically can depress stock value is still encouraged by the tax code.  Also, I would cite my above point re: what's done with the capital may not necessarily create jobs. 

So you're suggesting that higher capital gains tax would not result potentially decreased capital? Or if it did, big deal since it may not create jobs?

Again, just asking.  My knowledge of this subject is limited to political propaganda and forgotten accounting classes.

Well, we all seem to agree that use of capital for purposes of economic expansion and job creation is a good thing.  So the key is to incentivize that behavior in a manner that is more direct than lower capital gains taxes, which, like I said, don't necessarily generate that result.   

How do we do that?  Wow, anything short of a PhD dissertation wouldn't adequately answer that.  But, one thing I always wondered was why you pay lower taxes on stock gains than on bank deposit interest.  I like the idea of having lower tax rates for bank deposit interest for deposits at "qualified" community banks that invest depositor funds in community businesses and real estate. 

Also, I like the idea of businesses getting tax credits for new hires.

[Jdog0830]

From what I think there is a time and place for small goverment like how the republicans want it.
That would be when everyone has a job and that the minimum wage is set at a level where people can make a living.

But these are not the current events.







Joe