Actually, there would be quite a bit of revenue taxing the rich, but that's somewhat besides the point. I'm surprised that you would accept a weaker economy in order to satisfy your principles. I assumed it would be the other way around. Thanks for letting us know.
$500,000 becoming $1,400,000 over a 30+ year period (for argument's sake I'll say 30 years) has about a 3.43% nominal rate of return (compounded continuously) before you factor in the money spent on annual upkeep/property taxes. You can buy a 30 year risk free T-bond with a 3.43% yield. In other words, you just described a horrible investment any re dumb enough to take should lose his shirt on.
That was a pretty good beatdown.
It would increase the required rate of return on investment which would be possible since a high cap gains and estate tax is the only way the middle class has sustained purchasing power. I challenge you to find an example of a society in history that was able to have a strong middle class while also providing the favorable tax treatment on estates and cap gains our tax code provides.
Anyone re ed enough to make a 30 year real estate investment with a 3.43% rate of return shouldn't be getting saved by the IRS for their dumb investing decisions.
I guess since you are so smart you have already made your millions...arrogant little prick.
BTW dumbass, the inflatioin adjusted return is 0, not 3.43%
The point was that the investor is taxed on a phantom $900,000 profit that wasn't a profit at all.
Well you did say it would "destroy the real estate market", then proceeded to give an example of how a 30 year investment in a commercial property was a bad deal. As if these types of investments are what drive the real estate market
The point is that inflation creates taxable phantom profits on any long term investment.Well you did say it would "destroy the real estate market", then proceeded to give an example of how a 30 year investment in a commercial property was a bad deal. As if these types of investments are what drive the real estate market
You don't need to be the 2nd coming of Warren Buffet to know that a long term real estate investment earning the rate of return a T-bond for the same duration earns is a horrible investment. That's especially the case here because of how high interest rates were in 1980. At the time you could buy a 30 year T-bond with a yield to maturity over 10%.
I understand the point, but there is a tax exemption for profits on residential properties so I hardly think that backs up your claim that raising the cap gains tax will kill the real estate market. It won't and you know that.
The nominal return was 3.43%, I didn't say anything about the real return.
The investor made a horrible investment in something and should have weighed tax factors at the time. The reason why 30 year illiquid investments generally require a much higher nominal return is because of inflation, the investor should look into purchasing T-bonds next time.
who are you responding to? I know it wasn't me since.... well. I wasn't having a conversation about EIC.
Should have gone with something else. This is a horrible horrible example.
This may yet be an awesome investment. Did you not rent out the property? Did you not use it for business purposes. Also, you might be paying higher taxes in the end, but you have been able to deduct property taxes, upkeep, etc from your previous 30 years of taxes. Just because your Capital didn't out-appreciate inflation in value doesn't mean you didn't kill on it.
Now, if you were stupid enough to buy a commercial property and let it sit empty for the last 30 years. I think that you should be taxed at 75%. - lol
I could live with doing away with the cap gains tax if returns were indexed for inflation and losses were fully deductible as ordinary income.
I chose the numbers to illustrate inflation created phantom profits....$500,000 in 1980 = 1.4 million in 2013.
Rent received would have been taxed as ordinary income as it occurred.
And deductions still mean you had to spend $1 to save 30 cents in taxes.
That's reasonable.
That would work for me tbh. If cap gains are taxed as ordinary income it should also mean they create ordinary losses and you can take one in excess of $3,000.
any capital gains lossses need to be capped, like mortgage deduction must be capped to median house price in a region and restricted to primary home
Let me give you a real world example using the two scenarios.
My family bought 450 acres of farmland for $330 an acre in 1963 ($148,500)
We sold it recently for $5000 an acre ($2,250,000.)
Under the present tax code we should be taxed at 23.8% on $2,101,500. of "profit", or $493,852.30
Indexed for inflation that original $148,500 is now worth $1,117,535 in 2013
Under my proposal I would be taxed at 39% on the difference between $2,250,000 and $1,151,169, or $1,098,831. Tax at 39% would be $428,544.09
Y'all still want to do that deal?
Anyone with a house nicer that Bouton's single wide trailer is an evil rich bas .
Yeah actually. Your family paying slightly less on the farmland it's owned for 40 years wont really bother me since that's the kind of investment that should be encouraged. The main source of income from farmland isn't its appreciation in value so that part being taxed less makes sense.
CC your plan would actually benefit capital investments that create jobs while it makes sense. Only taxing cap gains in excess of inflation means it's only real returns that are being taxed which is what's fair.
While on the subject of that investment, it was purchased during a time of those ultra-high individual tax rates that Bouton's is so fond of referring to as "fair" The only thing was, those high rates were offset with a myriad of credits, deductions, and tax shelters, farmland being one of them. Most of these were eliminated in 86 with "tax simplification" where all those went away in exchange for lower rates. That land was basically bought with legally avoided taxes.
Common to richies:
they never have enough,
are paranoid about losing a penny of it,
will eventually, as their wealth inures them to scruples, anybody to get more,
and everybody who isn't rich.
And of course, they think God wants them to be rich. They are rich because God loves them specially, which justifies them ing over the non-rich. Their God aprproves of the over.
I approve of God ing you over, Boutons.
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