What do you think of Obama's proposed Buffett Rule?

Net worth is assets minus liabilities, or net assets.

http://cgi.money.cnn.com/tools/networth/networth.html

If the person gets a loan with the intention of buying a house, or a plant, or more milk suckers, even with some kind of mortgage interest deduction and other stuff big boys get, I assume they still must figure if they can pay the payments with their income.

If income taxes go up they have less assets (cash...income), which means that if they thought they had enough to pay the payments maybe they might not.

I assume the rich want to maintain a lower DTI (debt-to-income ratio) than 36%, I have seen lower figures suggested by accountants, but if their taxes go up, then their DTI goes higher. Mostly the rich have an advantage, as the owners of the principle means of production, which means if their DTI increases due to taxes, they bring in the cold hard efficiency experts, their income increases to pay the extra taxes and maintain their DTI and the worker's income with the underwater Mortgage decreases increasing their DTI. Or the price of milk goes up, to pay the rich man's extra taxes, and the man with the higher DTI cannot feed baby and pay the payments too and they default. Everyone's net worth decreases as their assets ("Value of primary residence") decreases due to the blight. We can wind up with a vicious cycle by raising taxes without the right data.

You could probably increase taxes on a particular type of rich person, and not effect the price of milk or get a layoff at the most common principle means of production...

Just need more data.

 

The middle class family is looking for work and the new plant will give them income to pay the payments stopping the blight, but if you simply increase the DTI of the rich man because it sounds good he does not build the plant and unemployment continues longer maintaining the blight. We must have new plants (jobs), but not necessarily new houses due to the bubble (Greenspan said did not exist) and market correction due to another round of irrational exuberance, because we still are making babies and new babies need new jobs.

We just need more data.

 

I think that it merely shows that people are clueless regarding the differences between the federal income tax, with the highest marginal tax rates at 35%, and the long term capital gains tax, which is capped at 15%. This "Buffett rule" is nothing but class warfare and an exploitation of the ignorant.

 

What I make of this is it's 100% political BS pandering for election votes...

 

In bold above is 100% BS...completely false!

Every person who owns property is subject to capital gains taxes on the profits...this might be about 80-90 million Americans.

Every person with a 401K plan, company stocks, stock pension funds, etc., which is about 80 million Americans are subject to capital gains taxes on profits.

Go ahead and raise capital gains taxes...hecka of a plan!

Try debating with some truths...

 

If you're going to test others then you need to be smarter than others.

It makes zero difference who profits and who does not. All people, poor to rich, have the potential to realize profits.

Lastly, when you withdraw from a 401K, you will pay federal income tax on any contributions that were tax deferred, AND, you will pay capital gains taxes on the profits of the investment...

 

As a person that's owned a small business I can see a devasting effect of this "one-size-fits-all" approach of a 30% tax on anyone earning over $1 million in net income at least as it relates to "small business" that provides 80% of all jobs in America.

I don't know how many know that but business investments are made with after tax income. While some may be deductable based upon depreciation in future years the actual investment is made with net income.

Many small privately owned sole proprietorships and LCC's depend upon the net income of the owner to fund expansion. If 30% is taken off the top then that is less money for expansion and fewer jobs because of it. Considering that the proposed Obama budget for 2013 includes $350 billion in deficit spending for "new investments" to "spur the economy" this proposal is counter-productive. Borrow $350 billion and then a tax increase to take away perhaps $70 billion in private funds often used for the same purpose?

With all of this "tax high income earners" it often forgets that many of these high income earners are the owners of the vast majority of enterprises in the US which are responsible for the vast majority of jobs. People think that a million dollars is a lot of money when, in fact, it's not. $1 million might well represent 15 jobs and a 30% tax would eliminate about 5 of them. Once again, yes, those wages will be deductable... in the following year's tax return. In the meantime they must be paid for "out of pocket" by the enterprise owner and that is done with "net" income.

I would go back to a basic issue and that is that the Bush era tax cuts should never have survived after 9/11 when Bush decided to wage war. While the Clinton era revenue projections supported Bush in creating these tax cuts those revenue projections went into the dumpster after 9/11. Let all of the Bush era tax cuts expire at the end of this year as current law requires. That will increase federal revenues by over $3.7 trillion in the next ten years. It won't balance the budget but it's one hell of a lot better than only generating $700 billion in additional revenues. No one was "hurting" under the Clinton tax rates and no one would be hurting under them today.

 

While perhaps not the answer being desired it's actually the government that makes the most profit off of real estate. They have a zero dollar investment and generally collect more in taxes than any individual profits from it.

Other than that a middle to upper middle income individual that owns a property as a primary residence "profits" the most because of the huge income tax advantages that they wouldn't have as renters.

This, of course, excludes developers that are actually earning income based upon the development of the property as opposed to the property itself. There is virtually no profit related to undeveloped real estate over time and I think almost everyone comes out in the hole after loan interest, property taxes and inflation are accounted for.

The government is the only entity to always "make a profit" off of real estate.

 

It's just that the vast bulk of it is owned by the very rich.

That is the truth.

 

Utter nonsense.

The very rich have *far* more potential to realize investment income. 1) they own the bulk of investements, and 2) they only need to spend a tiny fraction of their income on necessities.

 

Iriemon...100 million Americans are invested in plans that are exposed to capital gains taxes. It makes no difference how much individuals earn as long as it's available to all people...which it is...and 100 million people apply.

The USA can barely keep industry and investments in the USA now so let's raise the capital gains taxes in order to discourage even more investors from investing in the USA. If you want investment in the USA, then STOP worrying how much a 'few' people make on ROI. For every person who earns $20 million in capital gains this makes life great for thousands others...

 

You need to have some wine with your whine...

 

You're argument is that since the tax applies to everyone who owns investment it applies equally to all.

Your argument is fallacious because it is the very wealthy who own the vast bulk of the investments. Thus, special low privileged tax rate of 15% benefits thems *far* more than it benefits, to the extent it benefits thems at all, a middle class family.

You're also wrong as to investments. We have more than enough capital for investments, witnessed by the two recent asset bubbles we've had.

 

You need some cool with your koolaid.

 

That is true today but in the past there was a capital gains tax on 401K plans. The IRS removed that tax so that now it is taxed as income. The "rational" behind this is that a 401K plan is a qualified retirement account and that the income tax rate for a retiree is typically less than the 15% capital gains tax. It also simplified it for those making tax-deferred contibutions which are all subject to the income tax at withdrawal.

 

Taxes in America are unduly put on the middle class. The rich make the rules, the poor have no money. Make it a flat tax, or a flat national sales tax like the fair tax. No special deductions for anyone. No tax breaks for buying this item or using this other item, or for being in the chosen business. Get rid of loop holes.

But again we see that the democrats like to play with the tax code as much as anyone. Special favor for you, tax break for them. When will it stop?

The buffet rule is a joke!

 

A fundamental flaw has been identified with this Obama proposal based upon the so-called Buffett Rule and it is the same basic problem with the Alternative Minimum Tax (AMT). No provisions related to inflation are being imposed. That's the problem with the AMT today and they are both designed to do exactly the same thing. Both are based upon taxing higher income earners. As we've learned from the AMT that was created in 1969 what was once considered "high income" no longer is. Today someone with an income of as little as $70K/yr could get stuck paying the AMT and $70K/yr is not a lot of money.

So we think of $1 million as being a lot of money but in fact it is not. Consider that the average retiree should have over $3 million in their retirement account today. 50 years ago a retirement account of $50K was considered adequate but that will barely pay for a year's living expenses today.

How about this. instead of creating a brand new tax why not fix the AMT instead. I really tire of politicians creating crappy laws and then we find out they don't work as planned Congress simply abandons them and creates another new crappy law.