<p>Revolutions happen because things are bad, not because things are good.</p>
<p>The masses aren’t going to support communism if they are doing well.</p>
<p>So throw the masses some bones, so this great capitalistic system can survive.
SS and medicare are incredibly important to people. Those programs are bones.
Even tea partiers don’t want their medicare touched.</p>
<p>If people that are doing well are pigs, 93 percent of the earnings gains went to 1 percent of the people a year or two ago, and I don’t see anything that has changed, well pigs get slaughtered.</p>
<p>If the govt borrows $100 and builds a bridge that makes 5 bucks a year in adjusted dollars and it’s expected to last 30 years, then that debt is OK. Most successful companies that have debts that do this - they borrow money and build a factory with the expectation that the profits from it over a period of time more than covers the loan. And yes, you can have large debts that are OK as long as it is this kind of debt, where what you make out of it more than covers what is put in.</p>
<p>If you get a $100 today, and in 30 years pay off $200 in today’s value, and repeat this with lots of people, it doesn’t matter how much the economy grows - you’re digging a deeper and deeper hole. The choices if you’re the government, confiscate money from people who have it (such as those of us who’ve saved), print more money making saved assets and debts worth less (again negatively impacting those of us who’ve saved), or do a “haircut” Greek style, which again impacts those who saved. </p>
<p>I guess if you’ve had enough Kool Aid, everything is fine because you can dream of how much more money there’ll be in the future while ignoring the fact that as long as the model is the same, every new dollar comes with a bill that is more than a dollar that has to get paid. It is these items that constitute the bulk of items in the Govt’s balance sheet if they are honest enough to do so.</p>
<p>" The choices if you’re the government, confiscate money from people who have it (such as those of us who’ve saved), print more money making saved assets and debts worth less (again negatively impacting those of us who’ve saved), or do a “haircut” Greek style, which again impacts those who saved. "</p>
<p>Ever since I’ve been alive - almost 62 years - there has been inflation, money has been printed and the value of the dollar is a small percentage of what it was worth and it is still shrinking - this is nothing new and will always continue. People who save and don’t invest have always been screwed.</p>
<p>There is a multlplier effect when the govt spends money. And when the govt spends money, this is a secret, sometimes private industry benefits.</p>
<p>If somebody is given food stamps for example, the grocery store benefits, employees benefit, suppliers of the goods purchased benefit, employees of the supplier of goods benefit, the local community benefits…etc…</p>
<p>The govt may make 5 percent a year on a bridge, but the contractors of the bridge, the engineering company, employees, businesses and people benefit from the bridge, it is a long list that benefit.</p>
<p>And then those that benefit spend money and pay taxes…</p>
<p>You don’t know the future liabilities of the govt for the next 75 years dadof3…
And the same is true for those that come up with the studies.</p>
<p>I don’t like doct’s last post about savers, but it might be true. Definitely looking true now.</p>
<p>Looks to me like Buffett does not ever have to pay taxes on capital gains from the donated stock, and he does not have to pay taxes on any income unrelated to his donations.</p>
<p>Looks to me like Buffett wil never pay federal income taxes again.</p>
<p>Buffett is going to have a sizable deduction every year for the rest of his life.</p>
<p>Am I wrong? How does Buffett hold his shares?</p>
<p>I’m sorry you don’t like my post. I don’t like what I’ve expressed there either but unfortunately its true. I don’t know of any time at least in my lifetime where interest rates kept up with real inflation. My father worked from the 30’s to 1982 and died this year. He never bought a stock or invested in anything other than his primary residence. He had enough to get by and was very tight with his money. Other relatives of mine, had a different mindset, invested, enjoyed their lives more and had significantly more money. Its unfortunate that investing has gone out of style in the market and it is now more like a casino because it feels to me that it is getting harder to sock away a decent some of money to live on in retirement.</p>
<p>Well just look at the price of gold, silver, platinum, copper, nickel, etc.</p>
<br>
<br>
<p>If you’re giving it all away, you probably shouldn’t have to pay taxes.</p>
<br>
<br>
<p>That can work in reverse too when the money is taken away.</p>
<p>There’s also the broken windows effect on the economy. Perhaps we should have the police go around and break the windows of every home and store in the country. We could generate a lot of employment in fixing windows.</p>
<p>Look at what happens when we have a hurricane - lots of economic activity. Is this the kind of activity that we want?</p>
<p>Government spending and growth does tend to be inflationary. What really stinks is when the Central Bank holds down returns. There are far more borrowers than savers so you do the popular thing and screw the savers because there are fewer of them.</p>
<p>What happens when you have a country of savers? Is government less inclined to go into debt?</p>
<p>It takes a lot of effort (or luck) to stumble upon that company that you can hold onto forever. And then they get bought out. Has happened to me a number of times since 2000. Sometimes the company that buys them out is a good company too and you can hold them forever. I only have one company in my portfolio like that at the moment.</p>
<p>I have purchased another company (kind of like a Berkshire for mid-size company) recently and I’m going to do a lot of digging into their operations and holdings. A friend of mine has this in his buy it and hold it forever category and I may wind up doing the same if I like what I see.</p>
<p>I don’t know how that is possible. Isn’t charitable contribution deduction phased out? I also think he would be subject to AMT. AMT will take contribution deductoins away.</p>
<p>While it is true he won’t pay taxes on capital gains, he doesn’t benefit from it, either. It just makes his contributions to Gates Foundation bigger. Anything wrong with that?</p>
<p>I don’t know why we are picking apart Buffet. Don’t we have a better villain to feast on?</p>
<p>Buffett is becoming a tool of the left. Its remarkable. Of course, he doesn’t have to worry about occupy jerks showing up on his street either.</p>
<p>From his original op-ed article (that led to the “buffett rule”.
and
</p>
<p>He knows full well its a spending problem, but now has gone silent about that, since not a single media report ever noted that he thinks entitlements are unaffordable. </p>
<p>Doct, I think it is harder to sock away money for retirement.</p>
<p>I think it is also harder to make the retirement money last.</p>
<p>Looking at interest rates of near zero, a lot of people are going to work their way thru their assets before they die…</p>
<p>So we have the people nearing retirement that did not accumulate enough assets.
Then we have the people that might of accumulated enough assets if the stock market did better over the last 12 years, if housing did better, if interest rates were higher.</p>
<p>I was at the bank with my son this morning and I mentioned to him that he should open a brokerage account. He asked me why. I basically told him that he’s getting a buck a month in interest in his savings account and that he should be getting a better return. He has traded large amounts for me in the past but he’s mostly interested in his job and his graduate program right now. He’s got lots of time though. We still haven’t looked at his retirement options but they don’t look anywhere near as good as mine. It’s pretty hard to beat Fidelity Brokeragelink.</p>
<p>"And it would hit people like me: taxpayers in higher brackets who rely on earned income as opposed to investment income or an inheritance, who give to charity and live in a high-tax state. Assuming a $35,000 limit on itemized deductions, my federal tax last year would have risen to 27 percent of my adjusted gross income, from 22 percent.</p>
<p>I wouldn’t mind paying more as long as people who make vastly more did, too. But limiting the itemized deductions of the top 400 taxpayers with an average adjusted gross income of $202 million in 2009 (the
most recent year available) would have raised their taxable income by an average of $32 million and their average rate to 25 percent from 20 percent, assuming a marginal rate of 35 percent, and even less if they pay a lower marginal rate, as most do.</p>
<p>That’s a lower rate than I paid, because nearly half their income, on average, was from capital gains."</p>
<p>Fidelity Brokeragelink is an option for 401K plans. An employer has to offer it and then they can pick and choose which aspects of Brokeragelink to offer employees. In my BrokerageLink account, I can trade stocks, mutual funds, etfs, bonds, previous metals, and CDs. Probably other stuff too but stocks and bonds are good enough for me. I believe that some may be able to trade options too. This means that I can short the market in my 401K using an inverse ETF or I can buy a bullion fund like CEF.</p>
<p>It’s way better than having a choice of company stock and a dozen mutual funds. Especially when the market is tanking.</p>
<p>I don’t understand how they manage that. If half their income of $202 miliion comes from capital gains, their ordinary income is still $110 million. How is their marginal rate lower than 35%? How do they get around AMT where the capital gains will be taxed at 20%? I am not arguing. I genuinely would like to know.</p>
<p>Igloo, you misread the post. Some of the income may be subject to a marginal rate of 35 percent. Some of the income may be dividends which are taxed lower.</p>
<p>Only a small portion of capital gains are subject to the amt. I mean small. I can’t remember how much…notrichenough will know…</p>
<p>If somebody has capital gains of 100 million, almost all of it will be taxed at the federal level of 15 percent.</p>
<p>Changing rates is not enough to get people to pay more in taxes. There are loopholes that should be looked at …For example, people can participate in tax deferred exchanges and postpone or eliminate the payment of capital gains…</p>
You don’t pay a higher rate for LTCG under AMT, however LTCG eats into the AMT exemption.</p>
<p>So if you are in AMT territory, capital gains are effectively incrementally taxed at 21.5 or 22%, depending on what your income is.</p>
<p>Once your exemption is gone though, LTCG goes back to a 15% incremental rate.</p>
<p>1031 exchanges are pretty complicated and fairly difficult to pull off. And there can be huge risk, and many people found out when a large escrow company went out of business and basically stole the money from thousands of investors.</p>
</p>