Capital gains & income averaging.

[Toddsterpatriot]

When Capital Gains taxes were cut in 1997, the result was an increased volatility in the stock market that led to the dotcom bubble.

Cutting taxes is just not a smart idea.

LOL!

 

[The Derp]

LOL!

Are you laughing because you are nervous and this is just a tic?

From a joint study between UNC and UT - Austin from March 2008:

We infer from the findings in this study that the volatility left, after controlling for every known determinant, reflects the influence of the 1997 capital gains tax rate cut. Stock return volatility was substantially greater after 1997. Furthermore, firms most affected by the rate reduction showed the greatest change in volatility. Specifically, non-dividend paying firms had a greater increase in volatility than dividend-paying firms and firms with large unrealized capital losses experienced a greater increase in volatility than firms with small unrealized losses.
​

So to put it bluntly; the Capital Gains Tax Cut of 1997 caused the dotcom bubble. So why would cutting Capital Gains taxes today result in anything different?

Theory and reality don't go hand-in-hand when it comes to Conservative fiscal policy. Never have, never will.

 

[Toddsterpatriot]

LOL!

Are you laughing because you are nervous and this is just a tic?

From a joint study between UNC and UT - Austin from March 2008:

We infer from the findings in this study that the volatility left, after controlling for every known determinant, reflects the influence of the 1997 capital gains tax rate cut. Stock return volatility was substantially greater after 1997. Furthermore, firms most affected by the rate reduction showed the greatest change in volatility. Specifically, non-dividend paying firms had a greater increase in volatility than dividend-paying firms and firms with large unrealized capital losses experienced a greater increase in volatility than firms with small unrealized losses.
​

So to put it bluntly; the Capital Gains Tax Cut of 1997 caused the dotcom bubble. So why would cutting Capital Gains taxes today result in anything different?

Theory and reality don't go hand-in-hand when it comes to Conservative fiscal policy. Never have, never will.

I'm laughing at the silly claim that tax cuts caused the Internet Bubble and the stupid claim that cutting taxes isn't smart.

Also the unproven claim that volatility causes bubbles and that cutting long term capital gains rates causes volatility.

 

[The Derp]

I'm laughing at the silly claim that tax cuts caused the Internet Bubble and the stupid claim that cutting taxes isn't smart. Also the unproven claim that volatility causes bubbles and that cutting long term capital gains rates causes volatility.

Did you read the study or the accompanying BI article? I linked to them specifically for you to do so.

Because they address your stupid points therein. Where are your studies that support your argument? Oh right, you have none. All you have is theory which combined with $5 will get you a McDonald's Extra Value meal.

 

[danielpalos]

When Capital Gains taxes were cut in 1997, the result was an increased volatility in the stock market that led to the dotcom bubble.

Cutting taxes is just not a smart idea.

If you don't mind, boom and bust. Taxing the one percent can stabilize our economy.

 

[danielpalos]

LOL!

Are you laughing because you are nervous and this is just a tic?

From a joint study between UNC and UT - Austin from March 2008:

We infer from the findings in this study that the volatility left, after controlling for every known determinant, reflects the influence of the 1997 capital gains tax rate cut. Stock return volatility was substantially greater after 1997. Furthermore, firms most affected by the rate reduction showed the greatest change in volatility. Specifically, non-dividend paying firms had a greater increase in volatility than dividend-paying firms and firms with large unrealized capital losses experienced a greater increase in volatility than firms with small unrealized losses.
​

So to put it bluntly; the Capital Gains Tax Cut of 1997 caused the dotcom bubble. So why would cutting Capital Gains taxes today result in anything different?

Theory and reality don't go hand-in-hand when it comes to Conservative fiscal policy. Never have, never will.

The dot com boom would have happened regardless, simply due to advances in technology; allowing for greater speculation, "merely wasted a lot of capital".

 

[The Derp]

The dot com boom would have happened regardless, simply due to advances in technology; allowing for greater speculation, "merely wasted a lot of capital".

The boom may have happened, but not the bubble. The bubble was driven entirely by the Capital Gains Tax Cut.

 

[danielpalos]

The dot com boom would have happened regardless, simply due to advances in technology; allowing for greater speculation, "merely wasted a lot of capital".

The boom may have happened, but not the bubble. The bubble was driven entirely by the Capital Gains Tax Cut.

allowing for greater speculation, "merely wasted a lot of capital".

 

[EdwardBaiamonte]

The bubble was driven entirely by the Capital Gains Tax Cut.

WOW!!! More utterly insane liberal thinking to encourage the violent collection of even more taxes for more welfare to cripple more people and buy more votes: we need high cap gains taxes to prevent bubbles!! Thank God for taxes!!!

"We still find the greedy hand of government thrusting itself into every corner and crevice of industry, and grasping at the spoil of the multitude. Invention is continually exercised to furnish new pretenses for revenue and taxation. It watches prosperity as its prey and permits none to escape without a tribute."

-- Thomas Paine

 

[danielpalos]

The bubble was driven entirely by the Capital Gains Tax Cut.

WOW!!! More utterly insane liberal thinking to encourage the violent collection of even more taxes for more welfare to cripple more people and buy more votes: we need high cap gains taxes to prevent bubbles!! Thank God for taxes!!!

"We still find the greedy hand of government thrusting itself into every corner and crevice of industry, and grasping at the spoil of the multitude. Invention is continually exercised to furnish new pretenses for revenue and taxation. It watches prosperity as its prey and permits none to escape without a tribute."

-- Thomas Paine

allowing for greater speculation, "merely wasted a lot of capital".

 

[Supposn]

Capital gains & income averaging.

Long term capital gains are not economically more or less beneficial than incomes derived from entrepreneurs’ steadily nurturing and reinvesting into their enterprises. ...

Long-term capital gains deep tax rate reduction purpose (ostensibly) is reducing the tax penalties due to such financial boons. Increased consideration for some tax payers, (in this case increased consideration for the more fortunate taxpayers), increases the proportion of tax burdens upon all other taxpayers.

The capital gains discount is granted only those that deriving their incomes from a particular characteristic of their revenue source; (i.e. government regulation s favoring particular taxpayers).

Unlike the “income tax averaging” method which is now a tax option only available to those with erratic annual agriculture and fishing industry incomes, the long-term capital gains discount is equally available to taxpayers with consistently high annual incomes and those that experience a “once in a life-time” boon. Thus, reduced tax revenues decrease rather than increase tax equitability.

Refer to the first post of this thread. Respectfully, Supposn

 

[danielpalos]

Why bother with a capital gains preference.

 

[Supposn]

Why bother with a capital gains preference.

I fully agree. Respectfully, Supposn

 

[danielpalos]

In the United States of America, individuals and corporations pay U.S. federal income tax on the net total of all their capital gains. The tax rate depends on both the investor's tax bracket and the amount of time the investment was held. Short-term capital gains are taxed at the investor's ordinary income tax rate and are defined as investments held for a year or less before being sold. Long-term capital gains, on dispositions of assets held for more than one year, are taxed at a lower rate.--https://en.wikipedia.org/wiki/Capital_gains_tax_in_the_United_States

Why such time=money stability for the wealthiest?

More speculation is in order, with a variable capital gains preference depending on full employment of capital resources in the market for labor; or fractional reserve, thereof.

 

[Supposn]

In the United States of America, individuals and corporations pay U.S. federal income tax on the net total of all their capital gains. The tax rate depends on both the investor's tax bracket and the amount of time the investment was held. Short-term capital gains are taxed at the investor's ordinary income tax rate and are defined as investments held for a year or less before being sold. Long-term capital gains, on dispositions of assets held for more than one year, are taxed at a lower rate.--https://en.wikipedia.org/wiki/Capital_gains_tax_in_the_United_States

Why such time=money stability for the wealthiest?

More speculation is in order, with a variable capital gains preference depending on full employment of capital resources in the market for labor; or fractional reserve, thereof.

Excerpted from 1st post of this thread:
Capital gains & income averaging.

Long term capital gains are not economically more or less beneficial than incomes derived from entrepreneurs steadily nurturing and reinvesting into their enterprises. ...
... I advocate elimination of the long term capital gains loophole and restoring the income averaging.
Respectfully, Supposn

 

[JonKoch]

wth are talking about. it was the invisible hand of gubermint to interfere with loans and high probability to successfully payoff the loan for the purpose of votes and the cause of liberalism.

Home ownership is not a right.

Zonly1, you’re referring to the mortgage defaults that precipitated the USA and global credit crunch that’s still adversely affecting the economies?

You fault only instances of buyers who had false information submitted on their behalf for their mortgage applications?

There were mortgage brokers who were fully aware of details germane to their entire transactions. Some of these brokers steered the buyers to higher cost loans. Some of these brokers found home assessors willing to over-assess homes values for higher fees or simply to attract future fees.

A bank accepting questionable data from mortgage brokers may be incompetent or acting in collusion with the brokers. Certainly a bank’s at fault if they themselves were participating in the issuing of questionable mortgages.

/////////////////////////////////////////////
There’s also the question as to the proportion of other mortgages and government insured mortgages that defaulted.

A Democratic majority congress which included significant numbers of agreeing Republicans passed an act enabling GSEs to handle non-federally insured mortgages. President Nixon signed that bill and thus he, (more than any other individual) permitted that bill to become federal law.

[In this case I’m not accusing anyone of duplicity. It’s always easier to believe that what’s to our own best advantage is equally to the nation’s best advantage]. Leaders of our greatest financial institutions believed this was a win-win for both private investors and the nation’s economy. The bill was problematic. The axiom of “no free lunch” wasn’t fully recognized in this act or because profits were perceived and the axiom’s application within this act wasn’t fully appreciated].
 

GSE prospectuses presented to investors state no legal requirement for federal financial backing of GSE’s, but influential persons at the highest levels of USA’s federal government and commercial entities winked and assured the entire world this undeclared support was actually the case. These persons creditability and influence was confirmed when the federal government did indeed put federal credit at risk to cover losses due to mortgage defaults. The federal government put itself on the hook for non-federally guaranteed loans.

The government did not direct financial institutions to make insufficiently collateralized loans. Banks better rewarded mortgage brokers who brought them higher interest loans for property of over stated value sold to purchasers with insufficient incomes. It became the accepted policy of no need for diligent government regulation because it was to private entities’ best interests to conduct their businesses in financially sound manners. From the financial institutions’ view point they were doing exactly that. The qualities of mortgages were of no consequences to the lenders if they could immediately sell them to the GSEs.

I’m less mistrustful of explicitly drafted government laws and regulations created and enacted in the sunshine and publicly viewed. I greatly dread any (government or non-government) bureaucratic discretion of policy that directly or indirectly affect me and mine and create or perpetuate inequities that evolve from the exercising of such discretion.

Respectfully, Supposn

Try to recognize the history of Dubya's subprime bubble

GOV'T BACKED LOANS PERFORMED 450%-600% BETTER THAN THE PRIVATE MARKETS

GOV'T LOANS NEEDED TO QUALIFY (UNDERWRITING STANDARDS MET), THE GSE'S DIDN'T BUY THE VAST MAJORITY OF LOANS, OF THE ONES THEY DID, THERE WERE THE BEST TRANCHES


Examining the big lie: How the facts of the economic crisis stack up

•The boom and bust was global. Proponents of the Big Lie ignore the worldwide nature of the housing boom and bust.



•Nonbank mortgage underwriting exploded from 2001 to 2007, along with the private label securitization market, which eclipsed Fannie and Freddie during the boom. Check the mortgage origination data: The vast majority of subprime mortgages — the loans at the heart of the global crisis — were underwritten by unregulated private firms. These were lenders who sold the bulk of their mortgages to Wall Street, not to Fannie or Freddie. Indeed, these firms had no deposits, so they were not under the jurisdiction of the Federal Deposit Insurance Corp or the Office of Thrift Supervision. The relative market share of Fannie Mae and Freddie Mac dropped from a high of 57 percent of all new mortgage originations in 2003, down to 37 percent as the bubble was developing in 2005-06.

Private lenders not subject to congressional regulations collapsed lending standards


WAPO

Examining the big lie: How the facts of the economic crisis stack up





Private sector loans, not Fannie or Freddie, triggered crisis
Private sector loans, not Fannie or Freddie, triggered crisis


"Another form of easing facilitated the rapid rise of mortgages that didn't require borrowers to fully document their incomes. In 2006, these low- or no-doc loans comprised 81 percent of near-prime, 55 percent of jumbo, 50 percent of subprime and 36 percent of prime securitized mortgages."

Q HOLY JESUS! DID YOU JUST PROVE THAT OVER 50 % OF ALL MORTGAGES IN 2006 DIDN'T REQUIRE BORROWERS TO DOCUMENT THEIR INCOME?!?!?!?

A Yes.




Q WHO THE HELL LOANS HUNDREDS OF THOUSANDS OF DOLLARS TO PEOPLE WITHOUT CHECKING THEIR INCOMES?!?!?

A Banks.

Q WHY??!?!!!?!

A Two reasons, greed and Bush's regulators let them.

MY OLD ACCT TOPIC:

FACTS on Dubya's great recession



Competition and Crisis in Mortgage Securitization


U.S. policymakers often treat market competition as a panacea. However, in the case of mortgage securitization, policymakers’ faith in competition is misplaced. Competitive mortgage securitization has been tried three times in U.S. history - during the 1880s, the 1920s, and the 2000s - and every time it has failed. Most recently, competition between mortgage securitizers led to a race to the bottom on mortgage underwriting standards that ended in the late 2000s financial crisis. This article provides original evidence that when competition was less intense and securitizers had more market power, securitizers acted to monitor mortgage originators and to maintain prudent underwriting. However, securitizers’ ability to monitor originators and maintain high standards was undermined as competition shifted market power away from securitizers and toward originators. Although standards declined across the market, the largest and most powerful of the mortgage securitizers, the Government Sponsored Enterprises (“GSEs”), remained more successful than other mortgage securitizers at maintaining prudent underwriting

Competition and Crisis in Mortgage Securitization by Michael Simkovic :: SSRN



GSE Critics Ignore Loan Performance


There is no data anywhere to cast doubt on the vastly superior loan performance of the GSEs. Year after year, decade after decade, before, during and after the housing crash, GSE loan performance has consistently been two-to-six times better than that of any other segment of the market. The numbers are irrefutable, and they show that the entire case against GSE underwriting standards, and their role in the financial crisis, is based on social stereotyping, smoke and mirrors, and little else.


AMERICANBANKER

GSE Critics Ignore Loan Performance

 

[JonKoch]

The market for IPOs would be much less if we punish traders on the secondary market.
Your posts suffer from stage one thinking. I found the cure.

Amazon.com: Applied Economics: Thinking Beyond Stage One (9780465003457): Thomas Sowell: Books

ToddsterPatriot, I can’t know if you’ve “found the cure”. Your link is an advertisement for a book. Your link provides no information but there’s possibly an implication within your message.

Your implying that if there was no reduced tax rate for long term capital gains, (LTCG), there’d be less stocks and bonds sold?
The motivations to buy shares are much more dependent expectation of the shares’ increased values and much less dependent upon the rates of brokerage fees or income taxes.

But you missed the major point of my objection to the reduced tax rate for LTCG Sales profits. The government is replacing the judgment of the market. The market is favoring entrepreneurs selling shares or their entire enterprises rather than existing upon a portion of their incomes while they and nurture and reinvest into their enterprises. This is government’s intervention of their population’s self-determination.

Respectfully, Supposn

You should buy and read the book.
Your "ideas" sound good on the surface, if you ignore all the bad seconday effects.
That book explains how liberals can't think past Stage One. Like you.

"That book explains how liberals can't think past Stage One. Like you"

LMAOROG, From CONservatives who say tax cuts grow revenues and an economy no matter the current rates?

Come on now cupcake, PLEASE give me 3 policies the GOP (today's "non-libs") gave US that worked as promised?

 

[JonKoch]

Really? In what world does that happen?[bankers going bankrupt]


Certainly not in the one you and I are sharing right now.

the liberal has no clue that many of the big banks went bankrupt with owners losing everything. Some were absorbed, like Merryl Lynch, again with owners losing everything. Many that remain are zombie banks, like BOA, whose survival and stock price are questionable.

What world does the liberal live in?

MAYBE THEY SHOULDN'T HAD GIVEN OUT NINA/NINJA LOANS CUPCAKE?

The banks have known for 30 years the risks involved on the loan products they sold. This is why they lobbied so hard to allow them to sell the bad products to investors so they would not be holding the bad paper or the risks. The developed the products like stated income stated assets then bundled them to make it appear they were blended risks and then sold them to multiple investors. Who bought these high risk loans? Mostly pension funds and Insurances seeking higher returns who lost almost half of the pension funds value and the public that depended on those funds for retirement.

Nobody forced the big five investment banks to do what they did; they were not subject to CRA or other regulations common to depository banks. In fact, they mainly bought and sold loans rather than originate them. They did it because they thought they would make money.


FACTS on Dubya's great recession

 

[JonKoch]

GIBSON: So why raise it at all, especially given the fact that 100 million people in this country own stock and would be affected?

OBAMA: Well, Charlie, what I've said is that I would look at raising the capital gains tax for purposes of fairness.

Then again, if the goal is simply revenge against cap. gains receivers, then taxing doesn't make as much sense as say, revolution and mass executions.

ExPat_Panama, I would suppose...

Whoa, let's stick to the real world: rate hikes cut revenue. We've ample supporting data plus a consensus including Obama himself that agrees. We don't have to suppose anything because we've got to know rate cuts increase revenue and that rate hikes are nothing more than misguided expensive wasteful acts of crude vengeance.

CUPCAKE, CUPCAKE, CUPCAKE

Obama huh?

That capital gain tax cut distortion??

Joint Committee on Taxation (JCT) estimated that the 2006 extension of the 2003 cuts on capital-gains taxes would result in decreased revenues of $20 billion over 10 years.


Congressional Budget Office, the Treasury Department, the Joint Committee on Taxation and the White House’s Council of Economic Advisers – all disagreed with that theory, saying that tax cuts may spur economic growth but they lead to revenues that are lower than they would have been if the cuts hadn’t been enacted.

Gregory Mankiw, former chair of the current President Bush’s Council of Economic Advisers, calculated that the growth spurred by capital gains tax cuts pays for about half of lost revenue over a number of years and that payroll tax cuts generate enough growth to pay for about 17 percent of what is lost.

The Impact of Tax Cuts - FactCheck.org


Bush CEA Chair Mankiw: Claim That Broad-Based Income Tax Cuts Increase Revenue Is Not "Credible," Capital Income Tax Cuts Also Don't Pay For Themselves

Bush-Appointed Federal Reserve Chair Bernanke: "I Don't Think That As A General Rule Tax Cuts Pay For Themselves."


Bush Treasury Secretary Paulson: "As A General Rule, I Don't Believe That Tax Cuts Pay For Themselves."

Bush OMB Director Nussle: "Some Say That [The Tax Cut] Was A Total Loss. Some Say They Totally Pay For Themselves. It's Neither Extreme."


Bush CEA Chairman Lazear: "As A General Rule, We Do Not Think Tax Cuts Pay For Themselves."


Bush Economic Adviser Viard: "Federal Revenue Is Lower Today Than It Would Have Been Without The Tax Cuts."


Bush Treasury Official Carroll: "We Do Not Think Tax Cuts Pay For Themselves."


Reagan Chief Economist Feldstein: "It's Not That You Get More Revenue By Lowering Tax Rates, It Is That You Don't Lose As Much."

Feldstein In 1986: "Hyperbole" That Reagan Tax Cut "Would Actually Increase Tax Revenue."

Conservative Economist Holtz-Eakin: "No Serious Research Evidence" Suggests Tax Cuts Pay For Themselves."

Tax Foundation's Prante: "A Stretch" To Claim "Cutting Capital Gains Taxes Raises Tax Revenues."

 

[JonKoch]

Whoa, let's stick to the real world: rate hikes cut revenue. We've ample supporting data plus a consensus including Obama himself that agrees. We don't have to suppose anything because we've got to know rate cuts increase revenue and that rate hikes are nothing more than misguided expensive wasteful acts of crude vengeance.

ToddsterPatriot & ExPat_Panama, general discussion of increased “asking” prices:

Supply side proponents often declare increasing prices will reduce sales to the extent that graphing the asking vs. sales volumes creates essentially straight lines. When considering specifics, there can be multiple possible factors. Their inter relationships and the lines drawn are often much more curved rather than straight line functions.

The extent of elasticity with regard to effective demand or feasible supply comes immediately to mind. These two factors are often if not generally affected by other variables; they do not act simply in the same manner upon all applications. Then there’s the factor of alternatives; necessity and/or human ingenuity at work.
///////////////////////////////////////////////////////

Your contention is that eliminating the tax reduction granted to LTCG incomes will reduce what?
The favoring tax reduction for a particular characteristic of income is justified how? All other incomes are less worthy because?

To the extent that we encourage only the sale of entire or partial enterprise shares, we are discouraging continuous reinvesting and nurturing of existing enterprises. You advocate government intervention and have no regard for the open markets’ decisions? Why are you a proponent of government rather than a market driven economy?

I appreciate the Romney strategy; having insufficiently logical response, he labels the criticism as class warfare due to envy.

Respectfully, Supposn

Your contention is that eliminating the tax reduction granted to LTCG incomes will reduce what?

Government revenues and economic growth.

The favoring tax reduction for a particular characteristic of income is justified how?

Economic growth is good.

All other incomes are less worthy because?

Reality.

STUDY: These Charts Show There's Almost No Correlation Between Tax Rates and GDP
STUDY: These Charts Show There's Almost No Correlation Between Tax Rates and GDP


Capital Gains Tax Rates and Economic Growth (or not)

If you read the editorial page of the Wall Street Journal (or surf around the nether regions of Forbes.com), you may come to the conclusion that no aspect of tax policy is more important for economic growth than the way we tax capital gains. You’d be wrong

Capital Gains Tax Rates and Economic Growth (or not)

Non-Partisan Congressional Tax Report Debunks Core Conservative Economic Theory

The conclusion?

Lowering the tax rates on the wealthy and top earners in America do not appear to have any impact on the nation’s economic growth.

This paragraph from the report says it all—

“The reduction in the top tax rates appears to be uncorrelated with saving, investment and productivity growth. The top tax rates appear to have little or no relation to the size of the economic pie. However, the top tax rate reductions appear to be associated with the increasing concentration of income at the top of the income distribution.”

Non-Partisan Congressional Tax Report Debunks Core Conservative Economic Theory-GOP Suppresses Study