Wealth distribution

[Ganesh]

The need to acquire money has nothing to do with the government taking away my money. If the government took nothing from me I have more to spend.

No, you wouldn't. You would be paying for for-profit, private companies to provide the services you now get from the public sector. Do you think these folks are going to give you a discount out of the goodness of their hearts?

Interest rates help control inflation. As for the control of uses, all government has to do is limit the products it wants to control.

Interest rates are one economic tool, but are not sufficient in all cases for good economic management.

If there was no public direction in the use of resources, it would be a race for the cheap and easy, and we would have more dirty coal plants, unsafe nuclear reactors, gas guzzling cars, and questionable food and drug products, among other things.

I rest my case as I said above and now you agree, I suggest to cut all taxes as you claim the national debt means nothing. In which case the government can borrow all it wants with never a consequence.

Nobody has said the national debt means nothing, but is is inherently different from personal debt. Money that leaves your household, leaves. It is gone. Hopefully you have received good value for it, but it is gone. Public "spending" is actually redistribution of resources within society (except for some small items, like foreign aid). A tiny bit of your tax money becomes a tiny bit of someone else's school, or a few molecules of an F-35 fighter. The trick is of course to move things about in the best fashion, something open to a large amount of subjectivity. Individuals also do not have the ability to create money, manipulate the money supply, inflation, and foreign exchange rates, or do other things that vastly alter the value and meaning of any "debt" they may hold.

 

[gdgyva]

Well i guess i'm at a loss for why we would want ownership to be a form of reliable income. Seems that the investors are bleeding stagnant companies who grow slowly, if at all.

Shouldn't investment be risky? Why should anything short of maybe t-bills be treated as a safe bet?

ALL investments have some risk other than tbills

i bet that most people thought their investment in BP was pretty safe until the well in the gulf blew up

the more risk one takes, the more reward one is entitled to

so investing in startups, and venture capital projects is the most risk....but the highest reward if they hit

investing in Pepsi is fairly safe....unless they accidentally poison a bunch of people somewhere in the world, the returns are fairly much guaranteed to be between x and y

do you think people on fixed incomes should only invest in tbills giving them less an a 1% return? less than inflation in a LOT of cases

or should they invest in utility stocks that dont move much on price, but can pay 2-5% annually on a good dividend?

what would you have your grandparents do if they had 250k to invest?

you have this whole thing wrong....you think dividends inherently are BAD....because they take value out of the company that instead could be used for growth or if you had your druthers, salaries to their employees

they serve a purpose....a very important purpose....

 

[Critter7r]

We tax income, not wealth.

Unless it's land, we tax land every year.

And cars (and boats, and ORVs and vehicles in general), we tax those every year. It's called a "registration fee", so technically not a tax, but a government agency collecting a $200 "fee" every year for my car simply for the purpose of keeping track of the fact that I own the vehicle.

 

[imagep]

...

So for us, it worked out, as we were able to scrape by and stay in the house. Many others weren't as fortunate. And not because they were stupid ... but they were just too optimistic, or "short sighted" as you mentioned.

That describes me also, perfectly. For decades our desires and materal wants were bigger than our checkbook, but we justifed the spending by thinking that we would make more money in the near future. Never did make more money, and we have always struggled, but somehow we always seem to get by. At least I provided a decent and fairly safe lifestyle for my child while he was growing up.

 

[Absentglare]

Actually we tax some income and some wealth via the inheritance (death?) tax and property taxes. I prefer a consumption (sales) tax applied to most goods/services to an income tax.

Actually inheritance is a form of income, the tax is on the inheritance.

 

[Absentglare]

ALL investments have some risk other than tbills

i bet that most people thought their investment in BP was pretty safe until the well in the gulf blew up

the more risk one takes, the more reward one is entitled to

so investing in startups, and venture capital projects is the most risk....but the highest reward if they hit

investing in Pepsi is fairly safe....unless they accidentally poison a bunch of people somewhere in the world, the returns are fairly much guaranteed to be between x and y

do you think people on fixed incomes should only invest in tbills giving them less an a 1% return? less than inflation in a LOT of cases

or should they invest in utility stocks that dont move much on price, but can pay 2-5% annually on a good dividend?

what would you have your grandparents do if they had 250k to invest?

you have this whole thing wrong....you think dividends inherently are BAD....because they take value out of the company that instead could be used for growth or if you had your druthers, salaries to their employees

they serve a purpose....a very important purpose....

You're only demonstrating that they reward the investors, you have yet to convince me that the investors deserve it.

Wouldn't it be obscene if i could get money out of the value of my house increasing without selling it? Doesn't that make very little sense, if at all ?

 

[Absentglare]

Unless it's land, we tax land every year.

And cars (and boats, and ORVs and vehicles in general), we tax those every year. It's called a "registration fee", so technically not a tax, but a government agency collecting a $200 "fee" every year for my car simply for the purpose of keeping track of the fact that I own the vehicle.

I guess.

Property tax is not a tax on wealth, it is a tax on land ownership where that land receives services from the government.

You're taxed when money from the economy goes into your hands via income. You are not taxed on the money you have accumulated. You may also be taxes when you own things that we have deemed to require government services.

Just holding cash isn't a taxable transaction.

 

[mmi]

Interest payments on the national debt are currently at 2.5% of GDP.

I'd say you should calculate that stat for only the ($12.8T) public debt. The interest we pay on intergovernmental debt goes to … us.

The interest payment on the public debt in 2014 was $231B, or 1.32% of GDP.

>>That's very low historically.

Yes, it is.



The all-time high was 3.15% in 1991, as we were wrapping up twelve years of "conservative" fiscal policy, while the recent high was 1.72% in 2008, as we were concluding the second round of SSE mismanagement.

A certain amount of debt, sure . . . but over over $20 trillion? Definitely unnecessary.

We're not at twenty yet, but we'll get there. I'd say it's a more or less manageable figure, but ask yerself how we got to it. Foregone revenues resulting from massive and unproductive tax cuts for wealthy households, combined with a multi-trillion dollar outlay for a completely unnecessary and very much counter-productive military misadventure in Iraq.

We continue to pay for these mistakes in a variety of ways. Who's the incompetent bungler on foreign policy? Obummer? Or maybe Chaingang and Dumbsfeld. And how much better off would we be economically if we hadn't practiced all this voodoo SSE fiscal policy?

What do GOP presidential candidates propose? Yep, let's EFF UP … AGAIN!!

"Experts Predict Rising Deficits and Debt in GOP Candidates’ Tax Plans, Fiscal Times, Oct 30, 2015

Here's a perspective from the Great White North: "Taxes for the Common Good: The High Cost of Low Taxes," Loonie Politics, a blog, Jun 19, 2015

Obama has borrowed over 8 trillion so far with nothing to show for it.

We do have something to show for it. We avoided a worldwide depression. And who put us in that position? Obummer?

mmi … a partisan avenger when he referenced winning elections.

I "referenced winning elections" in response to a claim from another member that liberals whine about spending cuts. And I thought you didn't like "multiparty responses."

>>I'm the one that pointed out that if you see the current distribution of wealth as a problem, then the taxing of wealth is the obvious solution.

I'd say you argued in favour of that position more than "pointed it out." I pretty much reject it at the federal level, beyond the estate tax. We can instead tax the income that's collected on that wealth.

"You can say that if you wish; doesn't make it true."

And yet you offer nothing to refute it.

 

[gdgyva]

You're only demonstrating that they reward the investors, you have yet to convince me that the investors deserve it.

Wouldn't it be obscene if i could get money out of the value of my house increasing without selling it? Doesn't that make very little sense, if at all ?

you didnt answer the question

what would you want your parents or grandparents to invest in with 250k if they had it?

people that are on fixed incomes that want income with as little risk as possible

you want them in tbills losing money to inflation?

please tell us what you want these people to do....

 

[gdgyva]

You're only demonstrating that they reward the investors, you have yet to convince me that the investors deserve it.

Wouldn't it be obscene if i could get money out of the value of my house increasing without selling it? Doesn't that make very little sense, if at all ?

btw....

you can....it is called a loan

they will loan you up to 95% of the value of your home in some circumstances

take out a second....

 

[Absentglare]

you didnt answer the question

what would you want your parents or grandparents to invest in with 250k if they had it?

people that are on fixed incomes that want income with as little risk as possible

you want them in tbills losing money to inflation?

please tell us what you want these people to do....

If i want my parents to have money, i'd rather reform social security to better target the demographic.

 

[Absentglare]

btw....

you can....it is called a loan

they will loan you up to 95% of the value of your home in some circumstances

take out a second....

A mortgage/heloc is very different from a dividend.

 

[Glen Contrarian]

I don't agree. If when America was founded they set aside some monies every year in a trust account, and each administration added to that yearly, we'd have an enormous bankroll now that we could be making interest on to fund our economy.

In addition, if progressives and others weren't so darn intent on propagating the murder of 50 million innocent unborns, we'd have one hell of a lot of additional tax money for our coffers.

1. On the matter of a trust account, that's a "what if" scenario that didn't happen and won't happen, and so it's not even worth considering. Deal instead with what has happened, and what is happening.

2. On the matter of abortion, I wish I could take you to the Philippines. That's a much more religious nation than America (even divorce is very difficult to obtain), and abortion is strictly illegal there with the exception (I think) of preserving the life of the mother. Right now, their big political fight is over whether women should be able to purchase The Pill - which we've had here in America for about forty years now.

Anyway, if you go there and stay for a while, you'll start to realize that there's a LOT of single-parent households. Why? Because in the sexually-charged atmosphere of the modern world, there's a lot more pressure on girls to have sex...and it winds up being unprotected sex, and then she becomes pregnant, the guy gets scared and leaves her, and she's stuck raising a child - or another child - by herself. What's worse is, once she's a single mother, it's that much harder to attract a mate, because the men don't want to take care of some other guy's child...so she tries to attract him with sex, and the same cycle starts all over again. Not only that, but a single mother is far less able to make a good living...so she and her children become stuck in the cycle of grinding poverty.

In other words, while your moral stance against abortion sounds all well and fine and oh-so-logical, in the REAL world, what happens in the above paragraph is how it really is. I'd love so much to take you there, that you may see with your own eyes how your goals work out in the real world.

 

[Cally]

Ya gotta be careful about looking at the marginal tax rate and assuming that's the whole story - it's usually not:

But these numbers might understate how low taxes have been in the U.S. Unlike most advanced economies, the U.S. don't supplement personal income taxes with a national sales tax, or value-added tax (VAT). Consumption taxes accounted for about a fifth of total U.S. revenue in 2008 (mostly at the state and local level) compared to an OECD average of 32 percent. In other words, the U.S. relies uniquely on personal tax rates to raise revenue -- and we have relatively low personal tax rates.

Maybe not a VAT tax per se but embedded taxes certainly drive up costs for consumers, and since "buying things" seem to be what little fuel we have left pushing this economy forward, increasing taxes is a bad idea. Lower taxes equals more money in people's pockets-- more money they will spend driving this consumer economy.

 

[gdgyva]

If i want my parents to have money, i'd rather reform social security to better target the demographic.

so you dont care about the incomes of the elderly

got it

thanks

 

[Critter7r]

1. On the matter of a trust account, that's a "what if" scenario that didn't happen and won't happen, and so it's not even worth considering. Deal instead with what has happened, and what is happening.

2. On the matter of abortion, I wish I could take you to the Philippines. That's a much more religious nation than America (even divorce is very difficult to obtain), and abortion is strictly illegal there with the exception (I think) of preserving the life of the mother. Right now, their big political fight is over whether women should be able to purchase The Pill - which we've had here in America for about forty years now.

Anyway, if you go there and stay for a while, you'll start to realize that there's a LOT of single-parent households. Why? Because in the sexually-charged atmosphere of the modern world, there's a lot more pressure on girls to have sex...and it winds up being unprotected sex, and then she becomes pregnant, the guy gets scared and leaves her, and she's stuck raising a child - or another child - by herself. What's worse is, once she's a single mother, it's that much harder to attract a mate, because the men don't want to take care of some other guy's child...so she tries to attract him with sex, and the same cycle starts all over again. Not only that, but a single mother is far less able to make a good living...so she and her children become stuck in the cycle of grinding poverty.

In other words, while your moral stance against abortion sounds all well and fine and oh-so-logical, in the REAL world, what happens in the above paragraph is how it really is. I'd love so much to take you there, that you may see with your own eyes how your goals work out in the real world.

but but but but but .... Einstein was born to a poor, single mother!!

 

[imagep]

so you dont care about the incomes of the elderly

got it

thanks

You very well know that he didn't say or imply that.

But as far as investing strictly for retirement income, an annuity would be most logical. Social Security is an annuity even though it works a little differently than the private sector annuities which are issued by insurance companies.

 

[gdgyva]

You very well know that he didn't say or imply that.

But as far as investing strictly for retirement income, an annuity would be most logical. Social Security is an annuity even though it works a little differently than the private sector annuities which are issued by insurance companies.

annuities suck as investments

and if you as advising relatives to buy them....well, bad on you

What's bad about annuities

On the downside, annuities tend to lock your money up. With bank accounts and stocks, you can withdraw funds or sell shares to free up cash whenever you want. With most annuities, you'll pay a hefty "surrender" fee if you take your money out too soon. It's not uncommon to be charged 7% -- and sometimes as much as 20% -- if you pull your money out within the first year, and then smaller percentages in each successive year for a few years.

Many annuities are sold by brokers who collect fat commissions for doing so, and some commissions can be as high as 10%! If you don't see a commission fee broken down for you, that doesn't mean it's not there. It may simply be baked into the annuity's operating costs, which you're charged for.

Speaking of fees, many annuities charge annual fees. This is most common among variable annuities, and it's one of the knocks against them. It's not unusual to pay between 2% and 3% per year. By comparison, managed mutual funds often charge around 1% to 1.5% per year, while many ETFs charge 0.50% or less. If your annuity is averaging a 7% annual return but charging you 3% per year, you're losing a lot of ground. Keep in mind, too, that on a $100,000 investment, a 3% charge amounts to a whopping $3,000 per year!

With variable annuities, you often get to choose how your money is invested. But remember that what you're doing is a lot like selecting mutual funds, and you could always pay far less to invest directly in funds, cutting out the annuity middlemen.

Finally, consider that if you buy a lifetime annuity for just yourself, and you have not paid extra for a minimum number of payouts, it's possible that you could die long before you recuperate your significant investment. Money that might have gone to heirs will instead remain with the annuity company. Still, for many people that's a risk worth taking.

Annuities: Good or Bad? -- The Motley Fool

i would NEVER recommend an annuity to a friend or family member....NEVER

i would rather they be in tbills over any annuity

 

[gdgyva]

You very well know that he didn't say or imply that.

But as far as investing strictly for retirement income, an annuity would be most logical. Social Security is an annuity even though it works a little differently than the private sector annuities which are issued by insurance companies.

and here is one more article

http://www.cnbc.com/2013/12/03/annuities-more-cons-than-pros.html

snip....Unfortunately for each of the pros, there are pretty significant cons. At this time, prevailing interest rates (and correspondingly the rates used to calculate immediate annuity payouts) are so low that committing funds could expose you to a meaningful amount of inflation risk. So even if you're predisposed to lock in a more secure income stream with an immediate annuity, consider waiting until rates normalize. The same could be said for most fixed annuities.

The tax deferral of annuities is worth something, but there's a price—or prices, really—to be paid. All of your gains will be taxed at your ordinary income rate. Especially if you're investing in a variable annuity with equity exposure, you're trading the tax privilege of capital gains for a rate—deferred or not—that could be twice as much.
Another negative tax implication is the loss of a "step-up" in cost basis to your heirs. Capital assets that were purchased at a low cost—like stocks and real estate, for example—are afforded a step-up in their cost basis upon your death.

If you sold those assets during life, you'd paid capital gains tax. If you gave them to your heirs while you were alive, your heirs would inherit your cost basis. But if you wait to pass them to heirs until after your death, they will receive a step-up in their basis to the cost of the holding on your date of death.

Annuities with significant appreciation, however, receive no such benefit. In fact, not only will your heirs inherit your cost basis, they'll be paying tax at their ordinary income rate and may be forced to distribute the policy and take that gain in short order, resulting in a tax time bomb for those you hope to bless with an inheritance.


Annuities are wonderful for the insurance company...not really anyone else

They get all your money up front, charge you exorbitant fees, and give you less than market rates on a return

its a BIG win for them.....

 

[Absentglare]

Maybe not a VAT tax per se but embedded taxes certainly drive up costs for consumers, and since "buying things" seem to be what little fuel we have left pushing this economy forward, increasing taxes is a bad idea. Lower taxes equals more money in people's pockets-- more money they will spend driving this consumer economy.

That's only an argument against consumption taxes.

The wealthy are making record incomes with record low taxes to show for it. That's what we need to tap into if we give half of a flying **** about the public debt.

Either way, we need to increase government expenditure on Americans. When you have so few who can afford college, when jobs pay so little that many can barely feed their families; it doesn't make any sense to give wealthy people a pay raise which is exactly what top-tier FIT cuts, dividend cuts, and capital gains cuts do.

so you dont care about the incomes of the elderly

got it

thanks

I don't care about the incomes of the super wealthy without regard to age.

I do care about the elderly, hence SS reform. Why do you care only for the rich and not the elderly ?

 

[Absentglare]

annuities suck as investments

and if you as advising relatives to buy them....well, bad on you

What's bad about annuities

On the downside, annuities tend to lock your money up. With bank accounts and stocks, you can withdraw funds or sell shares to free up cash whenever you want. With most annuities, you'll pay a hefty "surrender" fee if you take your money out too soon. It's not uncommon to be charged 7% -- and sometimes as much as 20% -- if you pull your money out within the first year, and then smaller percentages in each successive year for a few years.

Many annuities are sold by brokers who collect fat commissions for doing so, and some commissions can be as high as 10%! If you don't see a commission fee broken down for you, that doesn't mean it's not there. It may simply be baked into the annuity's operating costs, which you're charged for.

Speaking of fees, many annuities charge annual fees. This is most common among variable annuities, and it's one of the knocks against them. It's not unusual to pay between 2% and 3% per year. By comparison, managed mutual funds often charge around 1% to 1.5% per year, while many ETFs charge 0.50% or less. If your annuity is averaging a 7% annual return but charging you 3% per year, you're losing a lot of ground. Keep in mind, too, that on a $100,000 investment, a 3% charge amounts to a whopping $3,000 per year!

With variable annuities, you often get to choose how your money is invested. But remember that what you're doing is a lot like selecting mutual funds, and you could always pay far less to invest directly in funds, cutting out the annuity middlemen.

Finally, consider that if you buy a lifetime annuity for just yourself, and you have not paid extra for a minimum number of payouts, it's possible that you could die long before you recuperate your significant investment. Money that might have gone to heirs will instead remain with the annuity company. Still, for many people that's a risk worth taking.

Annuities: Good or Bad? -- The Motley Fool

i would NEVER recommend an annuity to a friend or family member....NEVER

i would rather they be in tbills over any annuity

You're right, rich people didn't spend money lobbying congress to artificially inflate the profitability of annuities, so you're better off investing elsewhere.

 

[imagep]

and here is one more article

http://www.cnbc.com/2013/12/03/annuities-more-cons-than-pros.html

snip....Unfortunately for each of the pros, there are pretty significant cons. At this time, prevailing interest rates (and correspondingly the rates used to calculate immediate annuity payouts) are so low that committing funds could expose you to a meaningful amount of inflation risk. So even if you're predisposed to lock in a more secure income stream with an immediate annuity, consider waiting until rates normalize. The same could be said for most fixed annuities.

The tax deferral of annuities is worth something, but there's a price—or prices, really—to be paid. All of your gains will be taxed at your ordinary income rate. Especially if you're investing in a variable annuity with equity exposure, you're trading the tax privilege of capital gains for a rate—deferred or not—that could be twice as much.
Another negative tax implication is the loss of a "step-up" in cost basis to your heirs. Capital assets that were purchased at a low cost—like stocks and real estate, for example—are afforded a step-up in their cost basis upon your death.

If you sold those assets during life, you'd paid capital gains tax. If you gave them to your heirs while you were alive, your heirs would inherit your cost basis. But if you wait to pass them to heirs until after your death, they will receive a step-up in their basis to the cost of the holding on your date of death.

Annuities with significant appreciation, however, receive no such benefit. In fact, not only will your heirs inherit your cost basis, they'll be paying tax at their ordinary income rate and may be forced to distribute the policy and take that gain in short order, resulting in a tax time bomb for those you hope to bless with an inheritance.


Annuities are wonderful for the insurance company...not really anyone else

They get all your money up front, charge you exorbitant fees, and give you less than market rates on a return

its a BIG win for them.....

I don't know to much about investment vehicles, but the type of annuities I am talking about pay dividends for life, then the annuities expire. If an old person desires a guaranteed income for life, and could care less if anything was going to be left over for others to inherit, then annuities make sense to me. These are more like insurance products, than investments.

This article explains it a little: An 8.3 Percent Return on Your Money, Guaranteed for Life? | PBS NewsHour. An 8.3% annual payout is much better than than what most people can get on other investments, and it's for life. Name something else that you can put $100k in and get $8,300 a year back...for the rest of your life.

I'm not saying that I recommend them for most people, except for people desiring a lifelong income. Yes, if you don't live long, then annuities suck, but at that point, then so does every other investment (because you lose your ability to get a return when you die...because your dead and dont need money any more).

Also, the advantage of the SS annuity is the fact that it is indexed to inflation.

 

[Glen Contrarian]

but but but but but .... Einstein was born to a poor, single mother!!

Just to let you know, Einstein wasn't the only one working on relativity at the time - he was just the first to get it published. Again, I'd love to take you overseas to show you - and to rub your nose in - how your goals work out in the REAL world.

 

[Glen Contrarian]

Maybe not a VAT tax per se but embedded taxes certainly drive up costs for consumers, and since "buying things" seem to be what little fuel we have left pushing this economy forward, increasing taxes is a bad idea. Lower taxes equals more money in people's pockets-- more money they will spend driving this consumer economy.

That's conservative economic theory - and it sounds really reasonable to you, doesn't it? It sounds really, really sensible, doesn't it?

Now, if that's how it really worked out in the REAL world, then shouldn't it be reflected in the economies of the world, all over the world? Yes, it should...but it doesn't.

Look at ALL the first-world democracies on the planet - every single one. What do they ALL share in common? "Big Government", high effective taxes, and strong regulation. EVERY first-world democracy has ALL of those traits. (and FYI, some try to argue "Singapore" as an instance of low taxes, but their taxes are even higher when the "mandatory savings account" is taken into account - it's a tax in all but name)

On the other hand, are there democracies that have the conservative trifecta of small government, low effective taxes, and weak regulation? Absolutely...and they're ALL third-world nations.

So this begs the question: WHY is it that ALL first-world democracies have the kind of economic policies that conservatives claim are a sure-fire recipe for economic doom, whereas when it comes to democracies that have the kind of economic policies that conservatives do support, ALL of them are third-world nations? WHY is that?

Why is it that in every single instance, the actual RESULTS of conservative economic theory are precisely the opposite of what conservative dogma requires? WHY is that?

 

[jet57]

I'll ask a follow up question. Why is it that America.. who is much less socialized than the other first world democracies. that has less regulation than these countries.. has lower taxes, is the the greatest economic power in the world AND boasts the most freedom?

That's an easy answer. Our population is larger than most industrialized western countries. We have a legal system that favors darwinian business climates. We have a labor system that favors a darwinian system and we have a government policy of corporate welfare. Our stock market is purely based on pyramiding and monopoly thereby creating a gambling environment that favors the big players the way Monaco favors royalty.

It's a rigged game and the volume of that game is what generates such enormous profits with a government policy of keeping the margins as high as they can get. We have what is really a completely deregulated market when compared to other western countries. It's really got nothing to do with "the best system in the world", it's got everything to do with a system that generates the most money.

So "freedom", really has nothing to do with this either, as most western countries share the majority of the freedoms we have. Countries that are what you refer to as socialized have developed into societies that treat health care as important as eating.