Oodain
big chief wulla bamboom alakaway
Joined: Jan 31, 2011
Age: 23
Posts: 5022
Location: in my own little tamarillo jungle,
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 Posted: Wed Jul 11, 2012 1:56 pm Post subject: |
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deosnt change the fact that at any one time there is only a certain ammount it is not dynamically created.
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//through chaos comes complexity//
the scent of the tamarillo is pungent and powerfull,
woe be to the nose who nears it.
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JWC
Phoenix
Joined: Mar 01, 2011
Posts: 740
Location: Macondo Wellhead
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| Posted: Wed Jul 11, 2012 1:59 pm Post subject: |
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| Oodain wrote: | | deosnt change the fact that at any one time there is only a certain ammount it is not dynamically created. |
Sure doesn't...but I don't think that's what Ana meant. Ana, correct me if I'm wrong. |
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TM
Phoenix
Joined: Feb 04, 2012
Posts: 2122
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| Posted: Wed Jul 11, 2012 3:57 pm Post subject: |
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The thing with taxes is that there is a "sweet spot" and if you cross that in either direction you get negative consequences. In the case of the US the tax income is not sufficient to run the big government that Americans vote for every election. And no, most republicans are not for small government.
In the case of some other countries, the tax level is completely separate from the governments need for income and put so high that it discourages small/medium businesses. In this case the taxes end up being a tax on working capital.
Although, I think capital gains should be tax free, since the person already had to pay once for the original investment capital and paying tax because you invested/saved the money is like paying tax on it twice. |
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visagrunt
Polymath
Joined: Oct 17, 2009
Age: 45
Posts: 5754
Location: Vancouver, BC
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| Posted: Wed Jul 11, 2012 4:41 pm Post subject: |
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| TM wrote: | The thing with taxes is that there is a "sweet spot" and if you cross that in either direction you get negative consequences. In the case of the US the tax income is not sufficient to run the big government that Americans vote for every election. And no, most republicans are not for small government.
In the case of some other countries, the tax level is completely separate from the governments need for income and put so high that it discourages small/medium businesses. In this case the taxes end up being a tax on working capital.
Although, I think capital gains should be tax free, since the person already had to pay once for the original investment capital and paying tax because you invested/saved the money is like paying tax on it twice. |
Making capital gains tax exempt, however, creates an incentive for companies not to pay out profits in the form of dividends. If the principle of investment is to create return for the investor, then differential tax treatment of dividends and capital gains is inappropriate.
Furthermore, the tax is assessable on the gain only--not on the original principal amount of the investment. So the after tax money used for that purpose is not taxed twice in the adjusted cost base.
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--James |
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TM
Phoenix
Joined: Feb 04, 2012
Posts: 2122
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| Posted: Wed Jul 11, 2012 6:40 pm Post subject: |
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| visagrunt wrote: | | TM wrote: | The thing with taxes is that there is a "sweet spot" and if you cross that in either direction you get negative consequences. In the case of the US the tax income is not sufficient to run the big government that Americans vote for every election. And no, most republicans are not for small government.
In the case of some other countries, the tax level is completely separate from the governments need for income and put so high that it discourages small/medium businesses. In this case the taxes end up being a tax on working capital.
Although, I think capital gains should be tax free, since the person already had to pay once for the original investment capital and paying tax because you invested/saved the money is like paying tax on it twice. |
Making capital gains tax exempt, however, creates an incentive for companies not to pay out profits in the form of dividends. If the principle of investment is to create return for the investor, then differential tax treatment of dividends and capital gains is inappropriate.
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The incentive not to pay a dividend, or pay out small dividends is already there in the form of capital gains tax. Warren Buffett said it the best himself when he said that the reason Berkshire has never paid a dividend and never will is that his stockholders would have to pay taxes on every dollar, and he's turned every dollar into more than a dollar.
To me the dividend is a nice bonus, but I'd rather have the dividend paid through the appreciation of the stock in a good company unless I for some reason want to diversify.
| Quote: |
Furthermore, the tax is assessable on the gain only--not on the original principal amount of the investment. So the after tax money used for that purpose is not taxed twice in the adjusted cost base. |
What I mean by saying "taxed twice" is that I already paid taxes for my $1, I only got the additional money from being a good boy and investing it at a risk of loss, so at the very least I should be able to deduct the return at a risk free rate from the gains tax. In essence I get punished by having 28% of my dollar taken away because I didn't immediately spend it on something useless like most people would.
I also already took inflation loss on that dollar, for the period that it was invested, so in the end I end up paying a higher capital gains tax (depending on inflation) than most people pay income tax.
Alternatively, I should only have to pay capital gains tax on returns that I don't reinvest. Half the reason I'm registered as a limited liability company for my trading is that I don't have to pay 28%, but only 3% on 28% on dividends in addition to having access to a wide variety of other loopholes. |
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Oodain
big chief wulla bamboom alakaway
Joined: Jan 31, 2011
Age: 23
Posts: 5022
Location: in my own little tamarillo jungle,
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| Posted: Wed Jul 11, 2012 7:38 pm Post subject: |
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in denmark there is a grace amount before companies are required to pay taxes, it is rather small.
it does however allow for small or hobby buisness to function without any tax, if you pull money out of the company as profits however you still have to count it towards your taxable income.
if that ammount were doubled i think it could give more upstart buisnesses a real chance at success
_________________
//through chaos comes complexity//
the scent of the tamarillo is pungent and powerfull,
woe be to the nose who nears it.
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SilverStar
Phoenix
Joined: May 13, 2008
Age: 33
Posts: 519
Location: Ohio, USA
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| Posted: Wed Jul 11, 2012 7:40 pm Post subject: |
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| simon_says wrote: | | Yes, flat taxes have little to do with fixing the deficis and more to do with shifting burdens. An old dream for very high income people. Anyway, whatever paper scheme someone comes up with, call it the flat tax, the 4th dimensional tax, or the gum drop tax, the net result has to be more revenue not less. |
Not entirely. Simplifing the tax code, with or without a flat tax, would eliminate some of the bureaucracy in our bloated government, and improve efficiency. It's a drop in the bucket, but you have to start somewhere. |
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TM
Phoenix
Joined: Feb 04, 2012
Posts: 2122
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| Posted: Wed Jul 11, 2012 7:44 pm Post subject: |
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| SilverStar wrote: | | simon_says wrote: | | Yes, flat taxes have little to do with fixing the deficis and more to do with shifting burdens. An old dream for very high income people. Anyway, whatever paper scheme someone comes up with, call it the flat tax, the 4th dimensional tax, or the gum drop tax, the net result has to be more revenue not less. |
Not entirely. Simplifing the tax code, with or without a flat tax, would eliminate some of the bureaucracy in our bloated government, and improve efficiency. It's a drop in the bucket, but you have to start somewhere. |
The funny thing is that enough drops in that bucket and you can put out a fire. Bloat in government isn't as bad as it used to be, but its still excessive when compared to the private sector. |
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ooOoOoOAnaOoOoOoo
Rasta is about freedom and the living God
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Joined: Jun 19, 2008
Posts: 7998
Location: Babylon
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| Posted: Wed Jul 11, 2012 7:46 pm Post subject: |
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| JWC wrote: | | ooOoOoOAnaOoOoOoo wrote: | | You have to keep in mind, there is only a certain amount of money in print. |
This is entirely false. The federal reserve monitors and adjusts the amount of money in circulation. The amount is not fixed nor is it tied to any type of 'real' asset. |
The question is, is there enough money for everyone who wants to have the high salary, benefits, pensions, etc to have them? NO. That's what I meant. There is only a certain amount of money in print. The Fed does not print enough money to meet demand because of inflation. |
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JanuaryMan
Aspierational
Joined: Jan 02, 2012
Age: 28
Posts: 2548
Location: Hants, UK
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| Posted: Wed Jul 11, 2012 8:02 pm Post subject: |
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| ooOoOoOAnaOoOoOoo wrote: | | JWC wrote: | | ooOoOoOAnaOoOoOoo wrote: | | You have to keep in mind, there is only a certain amount of money in print. |
This is entirely false. The federal reserve monitors and adjusts the amount of money in circulation. The amount is not fixed nor is it tied to any type of 'real' asset. |
The question is, is there enough money for everyone who wants to have the high salary, benefits, pensions, etc to have them? NO. That's what I meant. There is only a certain amount of money in print. The Fed does not print enough money to meet demand because of inflation. |
That's funny, I thought the Fed just print however much they want.
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TM
Phoenix
Joined: Feb 04, 2012
Posts: 2122
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| Posted: Wed Jul 11, 2012 8:12 pm Post subject: |
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| ooOoOoOAnaOoOoOoo wrote: |
You have to keep in mind, there is only a certain amount of money in print. Moving people from the government jobs to private sector ones means they would still need to be paid and want a pension and all that. Who is going to pay for it? Big corporations? Their shareholders come first, not their employees. |
Companies would hire all those people if the hirings had a positive NPV. The difference between a private sector job and a public sector job is that the private sector does not hire people unless the employee creates value for the company. |
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ooOoOoOAnaOoOoOoo
Rasta is about freedom and the living God
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Joined: Jun 19, 2008
Posts: 7998
Location: Babylon
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| Posted: Wed Jul 11, 2012 8:27 pm Post subject: |
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| TM wrote: | | ooOoOoOAnaOoOoOoo wrote: |
You have to keep in mind, there is only a certain amount of money in print. Moving people from the government jobs to private sector ones means they would still need to be paid and want a pension and all that. Who is going to pay for it? Big corporations? Their shareholders come first, not their employees. |
Companies would hire all those people if the hirings had a positive NPV. The difference between a private sector job and a public sector job is that the private sector does not hire people unless the employee creates value for the company. |
And the chances of getting laid off are higher in the private sector if the NPV decreases. |
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TM
Phoenix
Joined: Feb 04, 2012
Posts: 2122
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| Posted: Wed Jul 11, 2012 9:08 pm Post subject: |
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| ooOoOoOAnaOoOoOoo wrote: | | TM wrote: | | ooOoOoOAnaOoOoOoo wrote: |
You have to keep in mind, there is only a certain amount of money in print. Moving people from the government jobs to private sector ones means they would still need to be paid and want a pension and all that. Who is going to pay for it? Big corporations? Their shareholders come first, not their employees. |
Companies would hire all those people if the hirings had a positive NPV. The difference between a private sector job and a public sector job is that the private sector does not hire people unless the employee creates value for the company. |
And the chances of getting laid off are higher in the private sector if the NPV decreases. |
That's why the private sector doesn't bloat like the public sector does. If your job doesn't involve you producing enough of a service or good to represent a net gain for society, then you should be fired. |
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Oldout
Phoenix
Joined: Feb 10, 2012
Posts: 1539
Location: Reading, PA
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| Posted: Thu Jul 12, 2012 11:34 am Post subject: |
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| I've been "fired" in the private sector a few times by non-productive corporate drones. Your theory does not stand. |
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visagrunt
Polymath
Joined: Oct 17, 2009
Age: 45
Posts: 5754
Location: Vancouver, BC
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| Posted: Thu Jul 12, 2012 1:23 pm Post subject: |
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| TM wrote: | The incentive not to pay a dividend, or pay out small dividends is already there in the form of capital gains tax. Warren Buffett said it the best himself when he said that the reason Berkshire has never paid a dividend and never will is that his stockholders would have to pay taxes on every dollar, and he's turned every dollar into more than a dollar.
To me the dividend is a nice bonus, but I'd rather have the dividend paid through the appreciation of the stock in a good company unless I for some reason want to diversify. |
But you only realize the gain when you sell, which obliges investors to engage in speculative trading in order to lock in their gains. It also means that companies can have their cake and eat it too, because they are "providing" their shareholders with a return on investment (actually, it's other investors who are doing that, but never mind), and they never have to pay out a penny in cash.
At the end of the day, the broader the base on which tax is imposed, the lower the marginal tax rate that government must charge in order to meet its revenue requirements. By completely exempting capital gains, government is putting a higher burden on other sectors of the economy to generate that revenue.
| Quote: | What I mean by saying "taxed twice" is that I already paid taxes for my $1, I only got the additional money from being a good boy and investing it at a risk of loss, so at the very least I should be able to deduct the return at a risk free rate from the gains tax. In essence I get punished by having 28% of my dollar taken away because I didn't immediately spend it on something useless like most people would.
I also already took inflation loss on that dollar, for the period that it was invested, so in the end I end up paying a higher capital gains tax (depending on inflation) than most people pay income tax.
Alternatively, I should only have to pay capital gains tax on returns that I don't reinvest. Half the reason I'm registered as a limited liability company for my trading is that I don't have to pay 28%, but only 3% on 28% on dividends in addition to having access to a wide variety of other loopholes. |
First, you have that 28% taken away, regardless of what you spend it on. The only exceptions are spending in areas that create tax credits or income deductions. (Pension contributions are a key example). But the gain that you realize on the investment that you make is never taxed. And the risk is reflected in your ability to write off capital gains with capital losses.
The inflation issue is a canard. Tax applies to income in nominal dollars in the year that it is realized. You could just as easily argue that your income tax on salary should be adjusted downward to account for inflation--but since that does not occur, why should it occur in the case of any other type of income.
As for reinvestment, remember that the principal amount of reinvestment contributes to your adjusted cost base on your next capital gain--you are only taxed on new value--never on the adjusted cost base.
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--James |
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