Debt Debate in Congress

[heironymouspasparagus]

18% came from a note I saw (I thought it was here) that talked about the average rate for the really rich - that is their average percentage.  So, instead of using mine, yes, higher than that, I took the richest people rate just to minimize the shock to their psyche.  (And you never go by brackets - you just look up the table number.  Like I do.)  Only guido does the bracket thing.


I would concede the roll over exemption into a new house, just like it used to be.  No problem with that.  The gain gets counted eventually.  Keep your receipts for maintenance expense to deduct from gain.  Nothing really changes except the percentages you get tax free.  And who is it that gets that?  The middle class and up economically.  How many really poor people - those that guido beats up for "not paying taxes" - can buy a house anyway?  If you start with the 67% of housing units occupied by owners - or at least by holders of a mortgage - then you can see that somewhere along that lower 35% zone, people can start to own.  Compare to the bottom 45% or so that get earned income credit and end up "not paying taxes"; then there is that 10% band of people that are poor enough to get some help, but 'rich' enough to find a house they can buy.  Have a couple family members right in that band.  It is always paycheck to paycheck and hand to mouth with them.  (I do their taxes most years, so I know exactly where they are...and $23,000 to $27,000 per year ain't much of a paycheck to try to raise a family - even a small one.  Hey, didn't guido say he spent more than that just for his kids to go to school?  Try raising that family on less than school tuition.)  I know, some don't want to tie themselves down to buy a house, but they are the very small percentage.  Most would buy if could, but can't. 

Old car - well, if you buy for 500 and sell for 1,000, then you are basically a used car salesman on a very small scale.  Tax due on $500.  Don't forget to deduct your advertising expense for the newspaper ad.

Not sure how excessive gifts are treated today, but just a couple years ago, it was $11,000 per year maximum or gift tax was triggered.  55% of the amount over 11k.  And the cumulative total of lifetime annual gifts counted toward the maximum inheritance exemption.  Like I say, I don't know how it is this year, but I thought either 2010 or 2011 originally were the end points of the $5 million exemption, but it was raised or retained with the tax cut extension.  If I ever get someone to inherit more than that from, will check it out again.

[Conan71]

18% came from a note I saw (I thought it was here) that talked about the average rate for the really rich - that is their average percentage.  So, instead of using mine, yes, higher than that, I took the richest people rate just to minimize the shock to their psyche.  (And you never go by brackets - you just look up the table number.  Like I do.)  Only guido does the bracket thing.


I would concede the roll over exemption into a new house, just like it used to be.  No problem with that.  The gain gets counted eventually.  Keep your receipts for maintenance expense to deduct from gain.  Nothing really changes except the percentages you get tax free.  And who is it that gets that?  The middle class and up economically.  How many really poor people - those that guido beats up for "not paying taxes" - can buy a house anyway?  If you start with the 67% of housing units occupied by owners - or at least by holders of a mortgage - then you can see that somewhere along that lower 35% zone, people can start to own.  Compare to the bottom 45% or so that get earned income credit and end up "not paying taxes"; then there is that 10% band of people that are poor enough to get some help, but 'rich' enough to find a house they can buy.  Have a couple family members right in that band.  It is always paycheck to paycheck and hand to mouth with them.  (I do their taxes most years, so I know exactly where they are...and $23,000 to $27,000 per year ain't much of a paycheck to try to raise a family - even a small one.  Hey, didn't guido say he spent more than that just for his kids to go to school?  Try raising that family on less than school tuition.)  I know, some don't want to tie themselves down to buy a house, but they are the very small percentage.  Most would buy if could, but can't.  

Old car - well, if you buy for 500 and sell for 1,000, then you are basically a used car salesman on a very small scale.  Tax due on $500.  Don't forget to deduct your advertising expense for the newspaper ad.

Not sure how excessive gifts are treated today, but just a couple years ago, it was $11,000 per year maximum or gift tax was triggered.  55% of the amount over 11k.  And the cumulative total of lifetime annual gifts counted toward the maximum inheritance exemption.  Like I say, I don't know how it is this year, but I thought either 2010 or 2011 originally were the end points of the $5 million exemption, but it was raised or retained with the tax cut extension.  If I ever get someone to inherit more than that from, will check it out again.

Heir, I think you are referring to the tax rate on dividends which might be where you were confused which I believe is still 17%.  That's the metric commonly cited as well as the famous Warren Buffet comment about his tax rate and his secretaries.

[Cats Cats Cats]

Long term Capital Gains is 15%.  The reason why the top 400 richest have a lower tax rate is because a huge portion of their income is taxed at 15%.  (which is where you come up with 15%).  Its the people (who work for a living) that make a large salary end up with a much higher rate in the mid 20's to low 30's.

[Cats Cats Cats]

I will agree with you that the wealthier folks have handled the recession better than those not so wealthy. But when it hit, I, like many, lost nearly 50% of my portfolio. So it's not like I didn't suffer. But the rich should be taxed more because they have been taxed less? Not buying it.

I do not think we need to rehash the "rich benefit more from society than the poor" argument because we are hopelessly entrenched in our positions.

This is perfect for the wealthy with liquid cash.  If you didn't lose all your money on your Lehman Brother's stock.  You have low inflation (for now).  You have depressed pricing in real estate, banked owned property everywhere.  Interest rates are low (they can actually get loans since they don't need them).  You lost 50% of your portfolio, a lot lost 100% of their job.  The rich get screwed when inflation can't keep up with investments.

[nathanm]

Not sure how excessive gifts are treated today, but just a couple years ago, it was $11,000 per year maximum or gift tax was triggered.  55% of the amount over 11k.  And the cumulative total of lifetime annual gifts counted toward the maximum inheritance exemption.  Like I say, I don't know how it is this year, but I thought either 2010 or 2011 originally were the end points of the $5 million exemption, but it was raised or retained with the tax cut extension.  If I ever get someone to inherit more than that from, will check it out again.

IIRC (and I am not an estate planning attorney), the estate tax exemption can also be used for gifts given prior to your death. Obviously, that reduces the amount of estate tax exemption your heirs get when you die, which may or may not matter to the particular individual.

[guido911]

I learned today that people making over $250K are considered jet owners by Ogenius.

[nathanm]

I learned today that people making over $250K are considered jet owners by Ogenius.

Did anyone actually say that, or is this something you're making up?

[guido911]

Did anyone actually say that, or is this something you're making up?

President Obama has a new term for the people he wants to tax more: jet owners.

In his news conference today, the president said: "I think it's only fair to ask an oil company or a corporate jet owner that's doing so well to give up that tax break....I don't think that's real radical."

Asking private-jet owners to give up tax breaks may not be that radical. And it probably would be supported by the vast majority of the nonjet-owning voters.

The problem is that most of the people that would be subject to the higher taxes the president wants aren't likely to be private-jet owners.  Someone earning $250,000 a year–among those scheduled for a tax increase in 2012–is unlikely to afford a jet–or even a few charter trips on a jet.

http://blogs.wsj.com/wealth/2011/06/29/obama-calls-people-earning-250000-a-year-jet-owners/

[Townsend]

"I think it's only fair to ask an oil company or a corporate jet owner that's doing so well to give up that tax break....I don't think that's real radical."


Was he speaking of an individual?  Oil companies and entities owning a "corporate" jet?

I'm not sure some guy making $250,000 is going to say "Just bought myself a corporate jet."

A corporation might own a corporate jet.

ADDITIONAL NOTE:  While Obama was referring in part to the Democratic effort to close a tax loophole for jet owners, known as "accelerate depreciation," the loophole would raise only $3 billion over the next decade. The larger point is that his "jet owner" comment blurs the lines between super-rich jet owners and the far lesser rich, whose whose taxes would go up under the Democrats plan.

Only worth $3 billion over a decade anyway.  That's how we should look at it per this blogger.

[guido911]

"I think it's only fair to ask an oil company or a corporate jet owner that's doing so well to give up that tax break....I don't think that's real radical."


Was he speaking of an individual?  Oil companies and entities owning a "corporate" jet?

I'm not sure some guy making $250,000 is going to say "Just bought myself a corporate jet."

A corporation might own a corporate jet.

Only worth $3 billion over a decade anyway.  That's how we should look at it per this blogger.

Not going to bother interpreting his intention. The fact is, as pointed out by this blogger, while going after a juicy target like the mega-wealthy he is diverting attention away from those that will also get a tax increase. Basic class warfare approach.

And the "only $3 billion" issue. I have repeatedly decried those who make light of small increases in tax revenue or small spending cuts. I have read in here recently how little revenue would be generated in we required the near 50% of those that pay no income tax kick in $10.00/month, which works out to be $2.50/week. That is not unreasonable to me.

[Teatownclown]

The Journal may be a little off as my insiders say it's referred to as "jet set owners".....don't believe everything you read....you can Guido.

Would you artificially limit your creditcard use if it meant that your kids would go hungry? That's what's going on here.

Is the Debt Ceiling Unconstitutional?
"Senate Democrats are proposing that the terrorist Republican blackmail, holding the good faith and credit of the United States hostage to their demands to legalize more class warfare against the the American people, violates the US Constitution. On further study, I agree. While there is no evidence that this notion has gained traction in the White House, it could rightly be used to defang the Republican Party over the debt ceiling." http://www.politicsplus.org/blog/?p=5247


This whole "crisis" is being manufactured by the GOP and the reason that their backers haven't hauled them up short is that they are "in on the game".

[Red Arrow]

18% came from a note I saw (I thought it was here) that talked about the average rate for the really rich - that is their average percentage.  So, instead of using mine, yes, higher than that, I took the richest people rate just to minimize the shock to their psyche.  (And you never go by brackets - you just look up the table number.  Like I do.)  Only guido does the bracket thing.

The brackets are built into the tables.  How do you think the tables are made?  Take you last year's tax, add $20,000 to your taxable income, look up your new tax in the tables and see how much you get to keep.  Then remember I file as a single person.

[guido911]

The Journal may be a little off as my insiders say it's referred to as "jet set owners".....don't believe everything you read....you can Guido.

Would you artificially limit your creditcard use if it meant that your kids would go hungry? That's what's going on here.

Is the Debt Ceiling Unconstitutional?
"Senate Democrats are proposing that the terrorist Republican blackmail, holding the good faith and credit of the United States hostage to their demands to legalize more class warfare against the the American people, violates the US Constitution. On further study, I agree. While there is no evidence that this notion has gained traction in the White House, it could rightly be used to defang the Republican Party over the debt ceiling." http://www.politicsplus.org/blog/?p=5247


This whole "crisis" is being manufactured by the GOP and the reason that their backers haven't hauled them up short is that they are "in on the game".

Suddenly the debt ceiling is unconstitutional? Okay. I especially like the part in the completely unbiased article of yours where Obama could arbitrarily declare something unconstitutional, as if he is a member of the judiciary. This guy hasn't the guts to argue that the War Powers Act is unconstitutional.

And stop with the we have to borrow to "save the children" crap. That is not remotely close to what is happening now. We can cut spending on, yes, the military, the EPA, education, transportation, entitlements, and all the stupid projects that were unveiled after stimulus was unleashed.

[Breadburner]

The Journal may be a little off as my insiders say it's referred to as "jet set owners".....don't believe everything you read....you can Guido.

Would you artificially limit your creditcard use if it meant that your kids would go hungry? That's what's going on here.

Is the Debt Ceiling Unconstitutional?
"Senate Democrats are proposing that the terrorist Republican blackmail, holding the good faith and credit of the United States hostage to their demands to legalize more class warfare against the the American people, violates the US Constitution. On further study, I agree. While there is no evidence that this notion has gained traction in the White House, it could rightly be used to defang the Republican Party over the debt ceiling." http://www.politicsplus.org/blog/?p=5247


This whole "crisis" is being manufactured by the GOP and the reason that their backers haven't hauled them up short is that they are "in on the game".

You must be the only person that survived Bovine Spongioform Encephalitis....We can refer to you as Sponge Brain from here on out....

[Conan71]

Back on topic:

Here's another good reason we need to reign in runaway spending and debt: In August alone, we must make $500 Billion in interest payments.  That's in addition to the $30 billion due in debt payments on Aug. 4 which S & P is saying a default on that could result in a drop in our debt rating from AAA to D virtually overnight.  As I've already mentioned, think what even 1/2 that money could do to raise the human condition within our borders with free college tuition or other programs which actually produce productivity.

I'm not going to bother to post it, it's on the CBS news site if you want to read it, but now the threat is that food inspections may take a hit with a reduction in the FDA budget.

All these government agencies need to quit saying: "We can't..." and start figuring out ways to say: "Here's how we can..." with reduced budgets.  No one wants to give up anything to help reign in run away spending.  Instead of correcting deficiencies in existing agencies the solution is to simply create a new agency and leave the deficient old agencies intact.

"We're not going to default. But that's irrelevant," Mark Zandi tells CBS News chief economic correspondent Anthony Mason. Zandi, chief economist at Moody's Analytics says, "At the end of the day if we don't raise the debt ceiling, the economy's going to go back into recession. Interest rates are going to spike."

Zandi, who's advised candidates in both parties, says the recession would be deep.

The Treasury would immediately have to cut & prioritize its spending. Debt & interest payments would be made first. $500 billion is due in August alone. Social Security and Medicare would be next on the list."

http://www.cbsnews.com/stories/2011/06/28/eveningnews/main20075228.shtml?tag=contentMain;contentBody

"Standard & Poors is warning that if the U.S. defaults on a $30 billion debt payment on August 4, the nation's credit rating will be downgraded severely from its long-held AAA to a D ranking.

S&P managing director John Chambers tells Reuters news agency that, while it's an extremely unlikely outcome, such an unprecedented default on U.S. Treasuries could lead to the complete collapse of global financial markets.

"If the U.S. government misses a payment, it goes to D," Chambers told Reuters. "That would happen right after August 4, when the bills mature, because they don't have a grace period."

Chambers, along with the chiefs of the other two primary international credit ratings agencies, Moody's Investors Service and Fitch Ratings, have expressed increasing concern that the failure of Democrats and Republicans in Congress to reach a compromise and raise the U.S. debt limit may have an adverse affect on global confidence in American securities."

http://www.cbsnews.com/8301-503983_162-20075684-503983.html?tag=stack

And the negotiations are for around $2 trillion which will cover our borrowing needs past the 2012 elections.  How convenient!!!

Negotiators have been aiming to increase the limit by over $2 trillion with the same amount in deficit reduction, though there has been talk of a smaller increase. The $2 trillion figure would be expected to cover the country's borrowing needs until after the 2012 elections.

http://www.cbsnews.com/8301-503544_162-20075413-503544.html?tag=contentMain;contentBody