Taxing Capital Gains

[avalon]

based on this response I don't believe I'm making my point clear, but it's not worth really going on about because it was just supposed to be a quip to think about. Not a reflection on two individuals or their circumstances

He is simply saying that, in general, someone who has demonstrated success is likely going to find relative success in whatever environment he finds himself, whereas someone who has demonstrated a lack of success is likely going to find a similar relative lack of success wherever he is. If the whole countyr goes to shit, then the successful person may be at the top of the pile and the unsuccessful person is SOL.

OK, so this is just a different tangent than the discussion over the need for the existence of a strong government for different occupations to thrive.

The investment banker better watch his back if the country goes to shit, though. I know many, very few of which I would bet on in a fight. (Sales & trading guys / gals are another story.)

 

[Deacon923]

at the risk of running further down the rabbit hole, where you end up in life in America has a great deal to do with where you start, bootstraps notwithstanding. the Sudanese ibanker cognate is much more likely to have been born in a walled compound as the child of a well connected warlord in the dominant tribe, while the janitor cognate is much more likely to have been born in a tent in a refugee camp to persecuted minorities.

 

[Baconwfu]

I said I would leave it alone, but I didn't....again, this isn't some grandiose point that I was trying to make
It wasn't a comment that said..."if the country goes to shit" then so-and-so will thrive and the other guy won't

I'll try and illustrate better...
Let's look two babies from a medieval economy. Both born in the same station in life (poor). A "highly productive" person will probably (or, be more likely to, let's not dwell on historical accuracy, and just think about the illustration I'm trying to make) establish some trading, develop a skill, something that will allow him to live a relatively comfortable life for the time. A person who isn't productive will probably be a peasant working the fields and be living on the edge of starvation (like most of the people around him).
923's point was that he would argue an ibanker would benefit more in a day from "government" than the janitor would benefit in his lifetime. His point was that the ibanker makes tons of money because government produced a society/economy that is so sophisticated to allow the ibanker to do what he does and make loads of money...whereas the janitor might get food stamps, but that pales in comparison. So his point was that the wealthy benefit greatly from "government" because it allows them to generate their wealth.
I made an generalization (again, not necessarily true in any individual case) that wealthy/ibankers were highly productive and that janitors were not.
With that being said, in every government and economy there have been highly productive people and people who weren't. In the shittiest government/societies/economies, the people that weren't highly productive lived on the edge of starvation and had a greater mortality rate, thus if you extrapolate that out, while the ibanker (or highly productive person) benefits monetarily the janitor also benefits greatly as someone in his position in life might become a Darwinian victim. It wasn't meant to be a topic of discussion, just a very little something to think about.

 

[PhDeac]

bacon, my point above was that there's something wrong in the private sector if someone who has a full-time job that is necessary in our society is at risk to die without help from the government. There will always be janitors until we get to the Roomba 7.0 or something. Why shouldn't we have a society in which "lower productive" people can meet their basic needs without government intervention?

 

[BDL]

interesting thread for the most part. I have nothing to add but this cool piece on a janitor: http://www.tampabay.com/features/hu...man-finds-meaning-in-the-working-life/2132028

 

[deacphan]

great stuff. seems like a "highly successful" person to me.

The monthly senior pass costs $35 — almost five hours worth of sweeping. "I am lucky," he says. "God bless America!"

 

[jhmd2000]

i was discussing this thread with my wife yesterday, and we got to talking about capital gains and home ownership. the current tax landscape greatly encourages saving and investing via your primary residence. this reward people for entering illiquid and expensive investments. it would seem better for lower or middle classes to take that invested capital and be encouraged to invest in other ways.

Right. The barriers to entry into the capital markets are so low that the e=trade baby advertises to consumers during the Super Bowl. $6/trade gets you in. Meanwhile, I need 20% down to get into the housing market these days. One of those markets is shut down to the middle/working classes, the other is wide open. We're pushing the feel good path instead of the easy road.

We need to teach people how to better their lives and their trajectories through incremental savings/investments and compound returns. Neither side of the spectrum is doing a good job of that: one side wants to label everyone a victim and the other side wants to ask them to stop engaging self-destructive behaviors. We could tweak a few things and really turn the tides for the lower middle and working classes if we encouraged employers to increase their match (how about a "credit" instead of a deduction for employer matches to qualified plans?)

 

[deacphan]

Right. The barriers to entry into the capital markets are so low that the e=trade baby advertises to consumers during the Super Bowl. $6/trade gets you in. Meanwhile, I need 20% down to get into the housing market these days. One of those markets is shut down to the middle/working classes, the other is wide open. We're pushing the feel good path instead of the easy road.

We need to teach people how to better their lives and their trajectories through incremental savings/investments and compound returns. Neither side of the spectrum is doing a good job of that: one side wants to label everyone a victim and the other side wants to ask them to stop engaging self-destructive behaviors. We could tweak a few things and really turn the tides for the lower middle and working classes if we encouraged employers to increase their match (how about a "credit" instead of a deduction for employer matches to qualified plans?)

well the government propping up the real estate market makes the economic incentive less strong too save/invest which is unfortunate. it's a weird tangle like that of jobs->health insurance. fortunately getting out of the housing market should be easier if only anyone actually wanted to discuss the mortgage interest deduction and capex waiver.

 

[stevewhite14]

Not going to bother with reading all of these responses, but inflation is a big reason why you cannot tax capital gains at very high rates. That 50k I made in gains on the condo I bought 10 years ago and sold today has gotten eaten away by inflation throughout that 10 year period.

And capital investment is absolutely the best investment for our economy but I know some people would disagree with it.

A lot of the argument that I hear in favor of capital gains taxes being at ordinary income is just wealth envy or a misunderstanding of the economics at play.

 

[ChrisL68]

Right. The barriers to entry into the capital markets are so low that the e=trade baby advertises to consumers during the Super Bowl. $6/trade gets you in. Meanwhile, I need 20% down to get into the housing market these days. One of those markets is shut down to the middle/working classes, the other is wide open. We're pushing the feel good path instead of the easy road.

We need to teach people how to better their lives and their trajectories through incremental savings/investments and compound returns. Neither side of the spectrum is doing a good job of that: one side wants to label everyone a victim and the other side wants to ask them to stop engaging self-destructive behaviors. We could tweak a few things and really turn the tides for the lower middle and working classes if we encouraged employers to increase their match (how about a "credit" instead of a deduction for employer matches to qualified plans?)

I think that is an excellent idea. Some sort of EITC investments tax credit based on yearly W-2 wages.

 

[Wakelaw2006]

well the government propping up the real estate market makes the economic incentive less strong too save/invest which is unfortunate. it's a weird tangle like that of jobs->health insurance. fortunately getting out of the housing market should be easier if only anyone actually wanted to discuss the mortgage interest deduction and capex waiver.

BallStateDeac batsignal. I think it is (or at least was before he bought a house) his goal in life to eliminate the mortgage interest deduction.