OT-Taxing the rich

I feel so sorry for them really I do.

FWIW:

My 401K has more than doubled under Obama.

Don't worry...

--if we just keep extending tax breaks for the rich everything will get better.

Trust me I promise it will.

New York, New Jersey, Connecticut and Illinois-states that are the most heavily reliant on the taxes of the wealthy-are now among those with the biggest budget holes.

As they've grown, the incomes of the wealthy have become more unstable. Between 2007 and 2008, the incomes of the top-earning 1% fell 16%, compared to a decline of 4% for U.S. earners as a whole, according to the IRS. Because today's highest salaries are usually linked to financial markets-through stock-based pay or investments-they are more prone to sudden shocks.

After the dot-com bust, the state's revenues from capital gains fell by more than two-thirds, to $5 billion in 2003 from $17 billion in 2001, while personal-income taxes fell 15% over the same period. The recession created a mirror image of the boom, with the wealthy leading the crash and dragging tax revenues down with them. By 2002, California had a budget shortfall of more than $20 billion.

Perhaps the idiots in those states should stop depending on projected earnings before they spend thier citizens income in advance. Wishfull thinking will not fix thier budget busting spending spree. Free markets are a cruel misstress.

Best Regards Tom.

What do "free markets" have to do with it, Tom? What are you doing, trying to explain economics or making a fruit salad?

After the dot-com bust, the state's revenues from capital gains fell by more than two-thirds, to $5 billion in 2003 from $17 billion in 2001, while personal-income taxes fell 15% over the same period. The recession created a mirror image of the boom, with the wealthy leading the crash and dragging tax revenues down with them. By 2002, California had a budget shortfall of more than $20 billion.

To me it seems the markets had a lot to do with it in 2002.

How much tax revenue was lost when the the market created the real estate bubble that imploded ?

Best Regards Tom.

The rich are the most attentive to the loopholes congress creates to dodge their own taxes.

The rich are the most attentive to the loopholes congress creates to dodge their own taxes.

And rich people didn't get rich by being stupid. Some attain richness as a temporary thing, and then blow it. As in some lottery winners, and some business successes. A friend of mine in Las Vegas was a HUGE success in the construction boom ten to twenty years ago. Had all the toys. Three Hummers, fantastic infinity pool, lodge (defined as 10,000 sf cabin) in the woods of Utah. Now, he's back to a 2500 sf house and used cars dodging creditors.

Point is, rich people as you say, pay attention to the pennies, and the dollars just take care of themselves.

Steve

Heart surgery pending?

I believe that the income that you are referring to, includes capital gains. No surprise that it fell 16% between 2007 and 2008, since there were not too many capital gains.

I think that you are reading too much into the article.

i

It is possible that your friend never was truly rich, he just had a big balance sheet.

i

High net worth at best. There is a big difference between percieved wealth and statistical placement. You aren't among the "wealthy" these days at less than $30 million in net worth and $1.5 million in taxable income. Hard to believe perhaps, but true.

Mine, too.

You should be more thankful to Bush for this, who contributed greatly to a market panic, which created an opportunity to buy stocks on the cheap.

All Obama did was restoring confidence that things will not go to hell, and created a concern that holding on to cash may lead to ruin due to inflation. But the buying opportunity was, basically, presented by Bush.

I think that it is very dumb and shortsighted, for the "rich", to insist on ruinous tax breaks. All that the rich could possibly get from tax breaks, would amount to extra 10% of wealth. That will hardly change their well being.

But financial instability and inflation that comes from an unbalanced budget, may easily make "the rich" lose their shirts.

If I was rich, I would certainly root for having a stable budget and stable financial system.

i

>>

I may be reading you backwards. As for depending upon projected earnings, there's a good subject for debate -- one that I couldn't, and wouldn't, engage right now. d8-)

Your California figures are pretty strange in light of state reports. For example, as of 1999, capital gains taxes were 26.13% of all income tax revenues in the state (see table 5):

If that fell by 2/3, it would equal 17.4% of California's income tax revenue loss *all by itself*, disregarding any other revenue losses when the bubble burst. It seems unlikely that the percentage represented by capital gains would have fallen much between 1999 and 2001. The general trend at that time was up. (BTW, California taxes all income, including short-term and long-term capital gains, at the same rate.)

However, I have enough on my plate at the moment. Your point probably is accurate, disregarding specifics. For the country as a whole, the total revenue figures did not swing down, but your principle would still hold.

You might want to compare your figures with this, as well:

NO

Under Bush, my 401K had lost over 2/3 of it's value

--about $100K of it was lost because unbeknownst to me, Bank Of America had been unlawfully taking very short term postions on one of my mutual funds....I recovered a little over $700 as the result of a class action suit ~ last Aug IIRC

IOW, I still have a LONG ways to go before I'm even close to breaking even.

Things had already gone to hell with no hand baskets anywhere in sight if you were to ask me.

"The line separating investment and speculation, which is never bright and clear, becomes blurred still further when most market participants have recently enjoyed triumphs. Nothing sedates rationality like large doses of effortless money. After a heady experience of that kind, normally sensible people drift into behavior akin to that of Cinderella at the ball. They know that overstaying the festivities -- that is, continuing to speculate in companies that have gigantic valuations relative to the cash they are likely to generate in the future -- will eventually bring on pumpkins and mice. But they nevertheless hate to miss a single minute of what is one helluva party. Therefore, the giddy participants all plan to leave just seconds before midnight. There's a problem, though: They are dancing in a room in which the clocks have no hands."

--Warren Buffett--Berkshire Hathaway 2000 Chairman's Letter

IMO you have it backwards---in his second term, Bush oversaw a selling opportunity which lasted a very long time before finally burstng.

Admittedly, I was being facetious....

If *you* were rich, most likely it would be because you are a stingy ruthless psychotic bastard who despises the poor and enjoys watching the gap between the middle and upper classes grow increasingly wider.

But you aren't, and you don't.

Mine did not, because I stayed away from stocks when they were expensive.

What fund was that? What happened?

You are trying to look at things from the perspective of an ideologue. Not really very different from the perspective of right wingers -- seeing everything through the prism of certain preconceived notions.

I try to see things as they are, without being constrained by a specific ideology, trying to be a good analyst (and not always succeeding).

I consider myself a value investor, buy things when they are cheap, and sell when they are expensive. Listening to Warren Buffett keeps me out of trouble.

I am a stingy psychotic bastard, but I do not wish ill to general categories of people. I would like to be rich some day. What I do not do is spend time with excuses on why exactly I cannot be doing something productive.

i

This was a company sponsored 401K, invested in mutual funds--had I known, I would have withdrawn most of the funds and transferred to a self-administered program.

Here is a brief mention :

The actual settlement papers I would have to look around for...

From what I understand, Bank of America was illegally taking short term positions effectively manipulating the stock prices within the fund.

We were losing jobs at a rate of 700,000 a month and the banks had no money to loan even if they could have found some sucker that wanted to go further into debt...

The way I see it, 2 decades of savings went down the drain because somebody tossed Bush's favorite chew-toy into the brush someplace over in Iraq.

Suggest think extra hard when financial advisors keep telling you "Don't sell now because the market will surely recover soon".

I have no desire to become rich--seen though the eyes of many, I'm already quite wealthy.

One excuse is as good as another--if I don't feel like doing something productive then it's my perogative...no excuses needed.

You got it exactley right Ed, basing a budget on projected revenue seems to have some serious pitfalls. How the heck are they ever going to pay off all that accumulated debit ?

Best Regards Tom.

The same way anyone else would. Revenues in excess of expenditures.

But is it much ahead of where it was before the melt down?

Not true.

All company sponsored 401k plans have a money market (stable value) or other safe option.

Would be interesting to read the court filings.

This underscores the riskiness of capital markets (and idiocy of the republican idea of gambling with Social Security funds).

I did not make an enormous amount of money on the recession, but I did have a decent positive return, because I actively tried to avoid doing anything that would be silly in my opinion.

I am well aware that a lot of people lost huge amounts of money, and to this day, I wonder if I was just lucky.

In any case, having a value based outlook and not going along with the crowd, seems to prevent major disasters.

First, I never, ever, listen to any advisors.

Second, I was buying when the market was going down, and I have no problem with that. I thought that the prices were quite attractive, and had no way to know that they would become even more attractive.

Good for you!

This is true, also.

i

Yes some.

But it's still down about $250K from where is was before Bush.