Very nice advice - but it has nothing whatsoever to do with my comments. The risks of investments have nothing to do with the government stealing from investors.

Why do you quote me if you then ignore the content of my post?

The subject is tax rates, widened to include 401k contributors and the effects of tax rates on demographically divided equity market investors. Where does government theft enter the picture?

For what? Having and using a 401k for the purpose it was intended for?

Neatly? Ever heard the saying, those that fail to plan are planning to fail? My morgage is a fixed rate that we can afford with our real income, not an ARM or balloon payment scheme that we hoped we could recoupe by selling our property at an ever-increasinng value before it hit.

Nor did I say they were, as a matter of the word scum is your addition, not mine. Who I did in fact, say are "braindead," are those that bought up "securities" that are little more than bundles of high risk, bad loans. Try getting your target straight before posting a pointless rant.


So a rise in interest rates to an ARM or a balloon payment now is called a "curve ball?" I must be quite magical, because it sure seemed obvious to me. Banks and "investment brokers" don't build those multi-million dollar buildings by losing money.

As are the deffered income tax savings when they put the money in. Likewise, the penalties are known to said investers should they withdraw the funds before the agreed upon timeframe. It's an incentive to provide for oneself in retirement, is it not? Pulling it out to give to the same crowd of charletons that put you in a huge financial pickle to begin with, isn't exactly the best use of your "investment" is it?

I've got a news flash for you bud, the Washington rightists have managed to steal fully 1/3 of every dollar there is by putting their Iraq adventure on a Chinese credit card they don't have the slightest clue how to pay back.

Hells bells Tim, you haven't even got a start on addressing what I did say, just convoluted version you dreamed up.

Considering the National debt, your version of "conservative" isn't something I'd recommend you go bragging about.

Who should I have compassion for, Tim? People who knowingly got in way over their heads taking out loans for properties they clearly couldn't afford? Or the lenders who gave out "stated income" morgages and scampered away with the money they skimmed off the top and disappeared? Or "securities investers" that bought the worthless bundles of paper?

I'll save my "compassion" for us "liberals" that didn't buy into the con game of easy money via property speculation and invested in our future a more traditional way.

What the chart shows is the reaction to tax cuts, people hold onto unrealized gains in anticipation of a rate cut, and then all those pent up gains are taken once the rate is lowered, the opposite effect happens with unrealized losses, people hold onto those in anticipation of a tax increase and take them when the rate gets raised.
You'll also see a huge spike up in anticipation of a rate increase, as people take their gains before the rate goes up, then take their losses after the increase.

You'll also see a gain because of income conversion, if you have enough money you can control how you get your income, and you can convert ordinary income to capital gains, which may increase cap gains tax revenue, but reduces ordinary income tax revenue by a greater amount, for a net loss of revenue. What you see is the result of accounting gimmicks.

In practice, raising tax rates raises revenues and lowering tax rates lowers revenues, changes to the relative rate structure can create the illusion of increased revenue after a tax cut, but once you look at the total picture, all of that disappears.

The only real way to lower the cost of government is to cut spending, but while every politician has a tax cut package they go into in great detail, they address spending cuts only in the broadest terms ("We need spending cuts") but very little detail is provided because they don't intend to cut spending, even the few guys who come out and list their proposed spending cuts in detail only do it because they know it will never pass. Actual spending cuts are the rarest thing in Washington.

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“ The subjects of every state ought to contribute towards the support of the government, as nearly as possible, in proportion to their respective abilities; that is, in proportion to the revenue which they respectively enjoy under the protection of the state.”

Adam Smith , The Wealth of Nations 1776

"We have always known that heedless self-interest was bad morals; we know now that it is bad economics"
FDR's second Inaugural Address

what it shows is specific related data to the cap gains taxes over years, yes theres always an initial impetus when the cuts occur, just as if obama rasied it, pre raise there would be a reaction as well......and I already am on record as to how bush incompetently blowing out the very issue he at least appeared to attempt to address, he created more revenue, but then blew it like any tax and spender, he just used a deficit to play that slight of hand....it stinks.

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No individual can plan his own existence in their view.

So the state planners must arrogate to themselves the right to manipulate any sector of the economic system if the good of “society” or the “general welfare” is paramount.

Ipso- if the rights of the individual get in the way, the rights of the individual must be sublimated.

The Road to Serfdom
FA Hayek (interpretation)


Mortgage Backed Security survivor

LOL Oops, that's true. Makes no difference at all to my argument, but it's still a bit funny.

Regarding capital gains taxes and their effect on investment, one thing that must be borne in mind is that all of these effects, whether positive or negative, are short-term only. The impression can be gained from charts like Imperator's that there is a simple, direct correspondence between capital gains tax rates and investment rates, but that is an illusion created by the fact that the capital gains tax rate is changed pretty frequently. If the rate were to be set at a particular level and fixed, where it was fixed would have only a marginal effect on investment rates. (Unless it was fixed at something preposterous like 90%.) The only reason it would have any effect at all, is because the tax reduces the marginal profitability of any investment, so that an investment that might have been very marginally attractive without the tax becomes unprofitable with it. But this amounts to a very small effect, particularly at times like these when lack of consumer demand is a far greater drag on profitability than any non-absurd tax could ever be.

Raising the capital gains tax will have a short-term negative effect on investment; the question in my mind is whether other actions also proposed by Obama will sufficiently offset this by increasing real incomes of working people.

Supply-side thinking, the idea that the greater the wealth gap between the rich and the rest of us, the better the economy does, is a complete fallacy, disproved by the history of the U.S. economy since 1945, in that the times when it grew fastest and did best were also the times when the wealth gap was lowest.

The reason the thinking is flawed, is because it starts with the assumption that the limit on investment is available capital to invest. Under almost all conceivable circumstances, and under all real-world observed circumstances without exception, that is not true; there is always money available that could have been invested in job-creating ventures but instead was either invested in other things such as precious metals, foreign currencies, or real estate, or else was spent on consumption. The limit, rather, is expected profitability of the venture to receive the investment, and that, in turn, is a function of consumer demand -- which is a function of how broadly wealth is distributed, and an inverse function of how narrowly it is collected.

The problems our economy is experiencing today are partly fiscal and partly due to the looming oil peak, but in large measure they arise from the decline in real incomes for most Americans, and this decline is a direct (and intended) result of supply-side thinking and policies. If Obama is able to reverse this trend and change the rules so that wealth is heavily redistributed downward through normal market mechanisms, as it was in the 1950s and 1960s, rather than upward as it has been since the 1980s, then this positive effect is likely to completely outweigh any losses from an increase in the capital gains tax, especially since those losses will be strictly temporary anyway.

The so-called working class folks live paycheck to paycheck and don't save any extra $ to invest in the stock market.

So typically, the only way they could invest is w/the equity of their homes, boats, and cars, which is certainly OK, however, . . .

it goes without saying that these same working class folks hardly ever do it.

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Life only becomes meaningful at its extremes

-- S

Every working class person I know has a 401K or Roth IRA. They are stupid if they don't. You might not know it but your 401k should be working for you without you realizing it on Wall St. You either play it safe for the long run or stick your neck out there for the short term benefit. But working class Americans are what drive the stock market. You might just be surprised at how many elderly living off of SS and a retirement that is still in play. But I would have to say that a majority of all stock is owned by middle working class people. You invest in a company, they use your money, when you are ready to retire, you take it back plus the companies match, plus whatever gain the stock made for you over the years.

Cannot explain it any simpler.

Petty change, nothing more.

401K plans are esp. dumb because they typically restrict the kind of securities the employee can put his/her money into.

Most of the capital for old, working class folks is not in their retirement plans; it's in their homes.

So if they wanna get ahead financially, they have to take out massive home equity loans and then invest that $ into the markets (in addition to the S their IRAs).

The problem is these working class folks don't spend any time researching the stock market, so they think risking their homes for a security investment is always a Vegas-style gamble (which it's not). The truth is that carefully placed large-scale investments (w/leverage) in securities and commodities can yield financial gold mines.

But these folks don't take advantage of it. Then they complain they're poor

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Life only becomes meaningful at its extremes

-- S

I am working class, and ensure that I live below my means, so that I can invest.

Almost everyone I know is working class, and they all do the same. Funny.

By the way, is a millionaire that still works, working class? Are sit at home welfare recipients working class?

I bet that millionaire works harder than the dude digging the ditches. The guy in the ditch will only do it for so many hours where I know some self made men that work no less than 80 hours a week.

My buddy owns a barber shop. He stands on his feet 75 to 80 hours a week 7 days. The week of Prom and graduation he will open at 8am and will be lucky if he closes at 11pm. But when he is 55 he wont have to work because of his long hours and investments.

Where the ditch digger will still be working without a retirement because he wont commit to the long hours that get you ahead.

Both are working class, one is just brighter and has the drive to succeed where they other will hold their hand out for a SS check.

BTW solletic you must be very young and only know young working people because if you believe all working class people cannot find ways to invest your very naive to the situation. I know people who work at Kroger that have worked there for 12 years and have over 50K in stock. One of the managers retired last year with over 2 million dollars in stock plus his 401K.

I think the term, in most political arenas, refers to people in households that make $25-100K/yr. (combined).

But I think the more appropriate meaning is anyone who has to work for a living,

i. e. as opposed to merely collecting fixed income from a hedge fund, and doing something he/she likes during the day.

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Life only becomes meaningful at its extremes

-- S

I agree with all of that and never said working class people can't find way to invest.

If you carefully read what I wrote, you'll notice what I actually said was that they won't find ways to invest. Clearly, many of these lower income folks have homes they can borrow on to invest; they just refuse to do it because they're risk-averse to the point of silliness.

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Life only becomes meaningful at its extremes

-- S

Borrow money to invest... Now that is just Rich, and Stupid. Where did you get that wounderful idea?

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Fear the Government

The important words in the above being "has to." Look at the life of your typical multi-gazillionaire, and you will find someone who holds down a more-than-full-time job, usually running a big business. So he works -- but he doesn't have to. He could quit any time and not even sacrifice any luxuries, let alone see his kids go hungry. And that fact removes him from the "working class."