Taxes

[movie zombie]

interesting article:


"The country can do without the tax gimmicks that President Bush and congressional Republicans want to give to their wealthy friends. We can stand with Reagan and demand a tax code that treats the income of workers and wealthy shareholders the same way. "


http://www.tompaine.com/articles/20051205/a_tax_cut_like_its_1986.php


peace, movie zombie

 

[fire&ice]

Any overhaul change in tax code will have a serious impact on something. With the Reagan tax code, it lead directly to the collaspe of the savings and loan.

 

[movie zombie]

f&i, how did the change in the tax code create the s&l collapse? deregulation did that.

peace, movie zombie

 

[fire&ice]

Date: 12/6/2005 2:38:16 PM
Author: movie zombie
f&i, how did the change in the tax code create the s&l collapse? deregulation did that.

peace, movie zombie

Deregulation lead the S&L to make some stupid loans - but even the loans that made sense got caught. It was the "passive" investment change that lead everyone to bail on properties. Prior to that, one always had investors willing to enter to fund. After the collaspe, big banks bought the loans pennies on the dollar & called many of the notes. Many properties couldn''t be saved as people weren''t reaping any tax benefits to invest (no passive). We were caught flat in the middle. It was cause and effect that was missed on many.

At this point, time has adjusted. But, any overhaul will have effects that one really can''t predict unless one is in the business it will affect. Can you imagine what a large decrease in interest deductions on homes will do to the real estate market? On the flip side, people holding rental properties will be given the golden calf.

Who''d a thunk up what a major impact AMT would have on the middle class general population.

 

[movie zombie]

and this administration is actively looking into dropping...or at a minimum, decreasing...the interest deduction on homes! can you imagine not only what that will do to the real estate industry but what it will mean for those that are over their heads with a mortgage and the lenders that might have to take back all those properties?! yikes!!!!

peace, movie zombie

 

[strmrdr]

cutting capital gains tax increases investment in small businesses most of the jobs in the US today are in small businesses.

With the higher taxes they have to make more from each business to turn a profit on the investment that makes business that are going to take time to turn profitable less appealing.

I once thought like that until a VC sat down and explained how it worked.

They want 3x the money back at 5 years if they are going to invest with capital gains tax being low.
When it was high they had to get 4x to make the same amount of money.
Therefore a company that could produce 3x and not 4x went unfunded.
Thats a lot of companies.
There typical investment that works employs between 5 and 50 people at the 3 year point.
Thats a lot of jobs that arent getting created.

 

[strmrdr]

oh yea cant let this pass without a comment about constitutional taxes and duties and how this wouldn''t be an issue if the constitution wasn''t being ignored.

 

[Dancing Fire]

Date: 12/6/2005 6:34:50 PM
Author: movie zombie
and this administration is actively looking into dropping...or at a minimum, decreasing...the interest deduction on homes! can you imagine not only what that will do to the real estate industry but what it will mean for those that are over their heads with a mortgage and the lenders that might have to take back all those properties?! yikes!!!!

peace, movie zombie

that will happen within the next 2 yrs no matter what kind of interest deduction are in the tax code.

 

[movie zombie]

one of the articles i read says one option the administration is exploring is tying the interest deduction to income level. another is to allow merely a percentage of the interest paid. the middle class is going to BLEED.

peace, movie zombie

 

[strmrdr]

Date: 12/6/2005 7:53:00 PM
Author: Dancing Fire

Date: 12/6/2005 6:34:50 PM

Author: movie zombie

and this administration is actively looking into dropping...or at a minimum, decreasing...the interest deduction on homes! can you imagine not only what that will do to the real estate industry but what it will mean for those that are over their heads with a mortgage and the lenders that might have to take back all those properties?! yikes!!!!


peace, movie zombie

that will happen within the next 2 yrs no matter what kind of interest deduction are in the tax code.

new bankruptcy laws the people are going to be sol too with no way out.

 

[movie zombie]

and what''s worse about the change in bankruptcy law is that these people could still owe $$$ on homes that go back to the lenders. of course, one person''s loss is another''s gain: excellent time to buy.



peace, movie zombie

 

[perry]

Yes; the middle class will pay for most of any taxes. They already do - for a very good reason. The middle class actually holds most of the weath and income of the nation. Yes, their are millionairs out their - and even a few billionairs. The problem, is that if you take the combined income and wealth of all the millionairs and above - it is only like 5% of the income and wealth of the nation. The middle class - depending on how you define middle class - makes up at least 80% of the income and wealth in the nation. There are hundreds of people who make 35,000 per year for every one who makes 200,000 per year.

Concerning the personal tax code in general:

Any change will create major changes in the US.

For example; making it very simple will put the tax preparation business out of business (I seem to recall someone''s proposal a couple of decades ago to have a 1040 on one side of a post card. List your income. List 15% of your income. List taxes witheld, pay or refund the difference between 15% and withholding. No deductions, no allowances. That my freind would back when it was proposed fund the US goverment (now they probably need 17.5%).

Very simple. It would produce massive changes in how the US functions.

Guess what. I''d be willing to pay a simple flat tax like that and give up my mortage interest.

Business taxes are by necessity more complex as a business has to offset their expenses from gross income. However, even they could be substaintially simplified.

Perry

 

[Dancing Fire]

Date: 12/6/2005 9:42:56 PM
Author: movie zombie
and what''s worse about the change in bankruptcy law is that these people could still owe $$$ on homes that go back to the lenders. of course, one person''s loss is another''s gain: excellent time to buy.



peace, movie zombie

as they should.why should others paid their debt? its been too easy to file for bankruptcy,people are getting away with murder.

 

[Dancing Fire]

Date: 12/6/2005 9:47:45 PM
Author: perry

For example; making it very simple will put the tax preparation business out of business (I seem to recall someone''s proposal a couple of decades ago to have a 1040 on one side of a post card. List your income. List 15% of your income. List taxes witheld, pay or refund the difference between 15% and withholding. No deductions, no allowances. That my freind would back when it was proposed fund the US goverment (now they probably need 17.5%).

Very simple. It would produce massive changes in how the US functions.

Guess what. I''d be willing to pay a simple flat tax like that and give up my mortage interest.

Business taxes are by necessity more complex as a business has to offset their expenses from gross income. However, even they could be substaintially simplified.

Perry

Perry
me too.

 

[movie zombie]

$35K in california is NOT middle class, especially for a family of 4.

peace,movie zombie

 

[ForteKitty]

I don''t think $35K/ family of 4 is middle class anywhere in the U.S... is it?

 

[perry]

I have found the folowing defiintions of "middle class":

This first one may be a few years old.

"A middle-range income. What is considered "middle range" can be quite broad, especially since most Americans yearn to be known as "middle class". Though an average yearly income in the United States is about $30,000, incomes all the way from $20,000 up to $75,000 a year are generally considered middle class. Around 1980, when asked what level of personal income would qualify as middle class, George H. W. Bush replied, "$50,000". In fact, only 5 per cent of the U.S. population was making that level of income at the time. "

I found another related to a Kerry presidential bid that called the middle class $25,000 - $75000. (Factcheck.org)

Another says $25,000 to $99,000


Here is some information on poverty levels:

The federal poverty threshold varies depending on the size of the family: $18,810 a year for a family of four; $12,015 for two.


Thus, I conclude that $35,000 is a middle class family by any of the commonly accepeted definitions .



Perry

 

[movie zombie]

perry, i still don't find $35K/family of 4 to be middle class.

middle class used to be defined by what one did for a living rather than $$$$$.

geez, can you imagine trying to raise a family based on those federal poverty figures?!

peace, movie zombie

eta: yes, people will say they are middle class when asked but that doesn't mean they are. anyone at $35K and trying to support a household of 4 is deluding themselves.

 

[perry]

Movie Zombie says:

middle class used to be defined by what one did for a living rather than $$$$$.
There are actaully a dozen other things that have been used at time to define middle class. However, those are epheremrial. For example, defining it based on what one did for a living? Would that make a farmer poor, middle class, or rich (it depends on location in the US, crop, and farm size - there are clearly, poor, middle class, and rich farmers). Many jobs no longer pay what they used to as a percentage of cost of living. An example: Doctors in general have taken almost 50% cut in pay from 20 years ago due to "managed health care."

All major studies use income; because income is the biggest factor in determining how well you could actually support yourself. Which leads to your second point.


geez, can you imagine trying to raise a family based on those federal poverty figures?!
I can imagine this very easily because I come from a family of 8 kids who''s family was always well below the federal poverty guidelines (often at 50 - 75%). We lived in town in a small house and not on a farm.

What is the meaning of "raising a family:" If it is the ability to provide basic shelter and food, and basic health care. That actually does not cost that much.

Is it the ability to provide a bunch of "modern" material goods that indicate "status:" I don''t think so. However, I will conceed that many people feel that these modern items are a must. What values are they teaching their kids in that.

The ability to teach people personal values of right, wrong, creativity, the ability to think, humility, etc does not take much money. It takes parents who want to teach their kids those things. As an adult I tend to find that people at the low end of the income scales seem to often do a better job at some of this than people at the higher income levels because they do not have the ability to "buy" a distraction for their kids with the latest electronic devices.

I have also noticed that low income does not mean that the kids do not have use of a computer. Many people just toss away their older computers. All basic functions are available for very little; although they are unlikey to have internet access unless they go to the library or to a freinds (how much internet access do they really need?). I also note that the library computers in this town are usually booked fairly solid.

Perry

 

[fire&ice]

DF - STOP THE CHICKEN LITTLE STUFF! Mortgage lenders can not call notes on one''s personal home at will. As long as you pay, you stay. Laws protect the property owner. The onus is *always* on the bank. In your senerio, the homeowner would welcome the bank to take the devaluated property - the homeowner not oweing a thing. When your house is foreclosed upon, the bank owns the property. You are absolved from debt. The only time that a homeowner would still have to pay is if they sell for less than what they paid. Your option is to just stay in your house. Home devaluation is NOTHING NEW. It''s cyclic. ALWAYS has been.

BTW, home interest deduction IS already limited in the form of ATM or the less and excepts over $150,000. In fact, ALL deductions are limited & relative to income.

 

[Dancing Fire]

Date: 12/7/2005 9:35:26 AM
Author: fire&ice
DF - STOP THE CHICKEN LITTLE STUFF! Mortgage lenders can not call notes on one''s personal home at will. As long as you pay, you stay. Laws protect the property owner. The onus is *always* on the bank. In your senerio, the homeowner would welcome the bank to take the devaluated property - the homeowner not oweing a thing. When your house is foreclosed upon, the bank owns the property. You are absolved from debt. The only time that a homeowner would still have to pay is if they sell for less than what they paid. Your option is to just stay in your house. Home devaluation is NOTHING NEW. It''s cyclic. ALWAYS has been.

BTW, home interest deduction IS already limited in the form of ATM or the less and excepts over $150,000. In fact, ALL deductions are limited & relative to income.

F&I
of course...you pay you stay but,within the next 2 yrs a lot more people will owe the bank more than what their house is worth and when that happens, people just throw their keys back to the bank.you will see a very high default %.like you said... it''s cyclic. the housing market will be on a down cycle for the next 5-6 yrs.

 

[fire&ice]

Date: 12/7/2005 10:08:06 PM
Author: Dancing Fire

Date: 12/7/2005 9:35:26 AM
Author: fire&ice
DF - STOP THE CHICKEN LITTLE STUFF! Mortgage lenders can not call notes on one's personal home at will. As long as you pay, you stay. Laws protect the property owner. The onus is *always* on the bank. In your senerio, the homeowner would welcome the bank to take the devaluated property - the homeowner not oweing a thing. When your house is foreclosed upon, the bank owns the property. You are absolved from debt. The only time that a homeowner would still have to pay is if they sell for less than what they paid. Your option is to just stay in your house. Home devaluation is NOTHING NEW. It's cyclic. ALWAYS has been.

BTW, home interest deduction IS already limited in the form of ATM or the less and excepts over $150,000. In fact, ALL deductions are limited & relative to income.

F&I
of course...you pay you stay but,within the next 2 yrs a lot more people will owe the bank more than what their house is worth and when that happens, people just throw their keys back to the bank.you will see a very high default %.like you said... it's cyclic. the housing market will be on a down cycle for the next 5-6 yrs.

No, that is not what happens - only in the rarest of circumstances. It's not normal course in these cycles. Higher default - sure - but not a mass exodus as you seem to think. These are not commercial properties owned by corporations. These are people who have their credit score to look at for a long long time - not even to mention - their *HOME*.

 

[Dancing Fire]

Date: 12/8/2005 9:47:01 AM
Author: fire&ice

Date: 12/7/2005 10:08:06 PM
Author: Dancing Fire

Date: 12/7/2005 9:35:26 AM
Author: fire&ice
DF - STOP THE CHICKEN LITTLE STUFF! Mortgage lenders can not call notes on one''s personal home at will. As long as you pay, you stay. Laws protect the property owner. The onus is *always* on the bank. In your senerio, the homeowner would welcome the bank to take the devaluated property - the homeowner not oweing a thing. When your house is foreclosed upon, the bank owns the property. You are absolved from debt. The only time that a homeowner would still have to pay is if they sell for less than what they paid. Your option is to just stay in your house. Home devaluation is NOTHING NEW. It''s cyclic. ALWAYS has been.

BTW, home interest deduction IS already limited in the form of ATM or the less and excepts over $150,000. In fact, ALL deductions are limited & relative to income.

F&I
of course...you pay you stay but,within the next 2 yrs a lot more people will owe the bank more than what their house is worth and when that happens, people just throw their keys back to the bank.you will see a very high default %.like you said... it''s cyclic. the housing market will be on a down cycle for the next 5-6 yrs.

No, that is not what happens - only in the rarest of circumstances. It''s not normal course in these cycles. Higher default - sure - but not a mass exodus as you seem to think. These are not commercial properties owned by corporations. These are people who have their credit score to look at for a long long time - not even to mention - their *HOME*.

2 yrs from now,that''s when the S**T hits the fan.

 

[movie zombie]

my husband who often thinks i''m rather paranoid about the economy came home night before last saying he''d read an article that it won''t be two years out.....that the ''bust'' will begin next year.

should we place bets?

peace, movie zombie

 

[Dancing Fire]

Date: 12/8/2005 4:15:15 PM
Author: movie zombie
my husband who often thinks i''m rather paranoid about the economy came home night before last saying he''d read an article that it won''t be two years out.....that the ''bust'' will begin next year.

should we place bets?

peace, movie zombie

the "bust" already begun but in 2 yrs people will really feel it.look at all those people being lay off (i.e GM)

 

[movie zombie]

oh, i agree with you DF, but i think this article he read was meant for those you describe as only just now thinking about it.....and they will notice next year, no mistaking that. GM is the tip of the iceberg.......

peace, movie zombie

 

[fire&ice]

Times like these where I'm glad I don't live in your world.

We are destined for inflation. We are destined for a housing bubble burst. We may have a economic downturn in certain industries. It's called life. I've seen enough of it in our lifetime. We've weathered the storms dealing with it. No one weathers the storm crabbing about it. Running around like chicken little just plain adds to the situation. But then, both of us have started our own business's in a recession. Doesn't make you negative. Makes you work harder.

GM's problems are because they weren't forward thinking. I don't know of one consumer who didn't think the heyday of the gas guzzling big *ss cars were over. Someone was asleep at GM. I'd love for Kenny to jump in here.

 

[movie zombie]

oh, yes, GM was asleep at the wheel....but they are not alone.

gotta love those corporations that haven''t put the $$$ aside for pensions as promised and now want to dump on the taxpayer.

yes, there are cycles for everything....including inflation. what is a concern is how others don''t know or understand those cycles or just want to ignore them. it is these people that are going to be hurt and it is these people. and if the hurt is big enough, it affects all of us.

however, for those that know the cycles and plan accordingly, it can be a chance to get bargains in real estate, stocks, etc.

peace, movie zombie

 

[Rank Amateur]

GM''s main problem is that their cars are ugly and of poor quality. Even Americans won''t buy them.

 

[fire&ice]

Date: 12/9/2005 11:33:54 AM
Author: movie zombie

yes, there are cycles for everything....including inflation. what is a concern is how others don''t know or understand those cycles or just want to ignore them. it is these people that are going to be hurt and it is these people. and if the hurt is big enough, it affects all of us.

however, for those that know the cycles and plan accordingly, it can be a chance to get bargains in real estate, stocks, etc.

peace, movie zombie

Yes, but these cycles are *normal*. They should not be feared. One should not over-react. It seems almost as if a believer points to a non-believer and screams - "you are going to burn in hell".


Cycles shouldn''t be feared. But, agreed - they should be understood. We will always be paying for other people''s stupidity, irresponsiblity or just plain not clued in.

One doesn''t have to go passed this diamond board to know cycles & hype. Do you remember the diamond bubble of the late 70''s/early 80''s? People still bought diamonds for engagement rings. Did they over pay - sure - but many are still wearing them without giving it a second thought. Dealers got caught - but they adjusted & took the loss w/ expectation. The people who got screwed were the people who johnny come lately decided to jump on the bandwagon at the high price thinking of it as a great investment - a commodity to sell.

A house is different in that it is a home.