If you eliminate capital gains.

You don't seem to understand the first thing about Finance or even Economics. Let me just ask you this. Why do people invest their money in the stock market? What does this desire to invest do for the economy?

 

Sure, attack me not the issue, tehy call that an ad hominem. Go back and address my points and I will address your question(s).

 

People invest in the market because it offers higher rates of return.

Where do these companies get the cash your talking about? Where did these companies get the capital they needed to originally grow? Publically traded companies issue new stock all the time.

 

You went way off topic. The discussion is on capital gains. I asked you two questions to better understand what you're trying to get at.

 

I'm not sure what you mean by reinvest vs profit take.

The minute I sell a stock, I owe capital gains taxes on any profit I made, no matter what I do with the money. If by reinvest you mean that shareholders would be less likely to sell stock, that is true. Less stock would be available on the market and prices would rise significantly.

As for reinvestment, every time someone sells a share of stock another person buys that same share. It isn't as if selling stock reduces the number of investors - the same stock is still outstanding.

 

So.... you still refuse to address my issues. See, as adults, we call that acquiescence, IOW's if you fail to dispute it, you agree.

People invest in the market and sell for the 2 known reasons: fear and greed. Yes, they get greedy and want higehr returns and also want to be as tax-free as possible, so we're talking about, "Greed is good" in case you happened to miss the movie, the message was that greed isn't good. If people weren't so greedy they would invest in bonds or other safer places, even simple interest and not be in fear of losing.

Also, a big part of why people invest is that their company has a 401k with a match and they want to enjoy the match so they invest. There are many reasons they invest, but it isn't nearly as good for the economy to invest in the market as it is to invest in businesses that stimulate the economy, this is why market investments should be taxed higher and GDP-enhancing investments taxed lower. But we adore our billionaires, so we keep those lower.

 

Investing in the market is investing in business. The stock market is quite literally a market for investing in businesses. That's why I made my earlier comment about you not understanding. The stock market is a major component of the market for capital.

People invest in the market to get returns. You call it greed...I call it common sense. Bonds don't offer the same rate of return and can be expensive or sometimes impossible for new companies to issue. That's where the stock market is very important.

The stock market allows people to speculate on businesses. In exchange for capital they are granted dividends and the potential for capital gains. Companies compete for that capital by providing a profitable business, or generally the chance of future profits and dividends. The market weeds out the bad companies from the good. Good companies can raise more capital and it's owners (stockholders) profit from capital gains.

 

BS, you want to direct the conversation, I was talking investment, CG and all that, so you fail to address my issues; you lose.

Here's what I posted:

Oh, I have an idea, perhaps, and this is so painfully obvious, THE INVESTORS OR PEOPLE MAKING PROFITS THAT FALL UNDER CAPITAL GAINS WOULD REINVEST TO AVOID THAT WHOLE GAINING PART, causing a reinvestment in America as any true patriot would want, and as we all know, the rich are oh so patriotic .

The same with any tax, PROFITS / INCOME ARE TAXED, NOT BASE MONEY, so it incentivizes people to reinvest, stimulating the economy. That's what cracks me up about people whining that rich people are taxed, not directly true, profits are taxed so if a rich person loses money or doesn't make profit, or, a poor person makes a lot of money then THAT MONEY THAT IS PROFIT IS TAXED. This is a concept many people have a hard time with, money isn't taxed as some inventory tax on company shelved stock items, only profits are taxed, so to avoid that a person making profit to where the taxes may eat them up, they simply buy things, grow their company and write off their reinvestments. In the process, they have reinvested in America, grown the job base, terminated unemployment.

The danger to this is that we can have runaway inflation, as the economy would be doing so well that goods and svs cost more, the way to end that is to increase the interest rate. Clinton did this and I bought my house at 7% interest in 1998. Of course as Clinton entered office the Canadian Dollar was 1.21 of theirs bought 1 USD. As he left 1 USD bought 1.58 Canadian Dollar. So as we reinvest, we shelter profits, create job growth, grown our GDP and then grow our dollar so we can travel around the world and even buy foreign goods at cheap prices. But of course the stupid necks in here and in many places of America are so enamoured with tax cuts they can't look at very available historical data to see what I say is accurate, instead walk around mumbling, "Tax cuts, my friends" like some retarded version of that senile ole war hero who wanted to be president. These same morons actually think Reagan grew jobs at a good clip, when in reality it was quite a bit < even Carter while tripling the debt.

Pull your heads out and shut down Heritage, start looking at gov data and by all means, if you can honestly prove that data to be incorrect, I'd love to see it.


So address those, at least the emboldened text.

 

Profit-taking is a practice that people employ when taxes are low, they pay the tax and take profit versus hold an itme when taxes are high, or sell it and reinvest for the writeoff.

Yes, shareholders would sell or maybe buy a losing stock that they pedict would increase in value later. So if your theiry is right, stock prices would rise, people would want to get in or stay in. BTW, cap gains takes into consideration cap losses for that year.

So who cares about the number of investors or if fewer investors buy more, more investors buy less each. People will play the market, chopping cap gains or any tax incentivizes selling off and pocketing the profits; AKA profit-taking.

Not real hard and that concept translates to income tax, too.

 

Many/most traded companies don't need the capital that the market brings. Many people who invest are day trading or short-term buyers, so they are essentially parasitic just as a sports bettor is to a football team; the team doesn't play beytter just because person X bets on them. It may change the point spread, but it won't make them better on the field.

It's greed because investors aren't happy with a guaranteed 2% return.

The market, as in free market would weed out the bad companies anyway, so we don't need the rich boys playground, AKA the stock market.

 

Okay I will. In post #54, you state, &#8220;Do you have evidence that many people are receiving more benefit from SS, medicare, unemployment, and lower tax rates than they are putting in?&#8221; Since then, we&#8217;ve been going back-and-forth regarding this very issue.

Are you remembering now?

I have proof: In post #54, you claimed this.

This is a strawman argument because I never said spending on social programs make up 100% of our budget (that would be impossible). However, as you have nicely shown in your CBO graphs, Medicare and Social Security alone were 43% of the 2010 budget. Discretionary spending, which some social programs are a large part of, made up 19% of the 2010 budget. So without even breaking a sweat, we have a very significant portion of spending (well over 50%) going towards social programs. Your own graphs prove this.

Well, actually they are a non-partisan group (not very different than the CBO in that sense). I guess it&#8217;s much easier to attack the group supplying the data than to actually critique the data, right?

You are understating the facts. The bottom 1/5rd gets over $8.20 in federal benefits alone for each dollar that they pay in taxes. The middle 2/5ths gets $1.30 in federal benefits for each dollar paid in taxes. Thus, the bottom SIXTY PERCENT, get more in federal benefits than they pay in taxes. Only the top 40% pay more in taxes than they receive in benefits. Essentially, the top 40% are paying for the bottom 60%.

Again, the bottom 60% RECEIVE more in benefits than they pay in taxes. How is this not a handout? Please answer this one for me.

These stats have nothing to do with the argument. The fact of the matter is, these programs will are not sustainable ( http://money.cnn.com/2010/08/05/news/economy/social_security_trustees_report/index.htm ), and well before the time that I retire, both of them will be bankrupt. http://www.businessweek.com/news/2...security-funds-expiring-sooner-u-s-says.html

I never said that funds weren&#8217;t going into Medicare (another strawman argument). My argument has always been that a very substantial percentage of Americans are getting more money than they are putting in. Hence, these federal programs are not sustainable. Bloomberg agrees (see above link). How is this not sinking in yet?

Clearly it is not &#8220;their money&#8221; because many are getting MORE benefits than they put into the system. I am also paying into Medicare and Social Security, and yet these programs are projected to both be bankrupt before I retire. Thus, what about people in MY generation? We will be also paying into the system our whole lives and will be left with NOTHING. Essentially, what you have now is MY generation paying for services going towards the older generations.

Certainly there is a problem here, and there are only a few logical solutions: Either we cut the full benefits for everyone immediately (this will keep both systems solvent for future generations), or we systematically cut benefits over time and simultaneously tax younger workers at lower rates (this will phase both SS and Medicare out over time, and at the same time allow younger workers to save for their own future).

You tell me, because that&#8217;s what will happen to people like me if serious changes are not made (i.e. cuts on benefits or phasing out these systems). Also, what do you propose we do with the Baby Boom generation now entering retirement? Do you think the fact that this generation is significantly larger than the younger generations may play a role in speeding up the insolvency of these social programs?

So if someone pays $500 into Medicare or Social Security and receives $2,000,000 worth of services, you don&#8217;t see any aspect of a &#8220;handout&#8221; here because he paid a little money into the system? Then answer this: Where is the difference ($1,999,500) coming from?

But I have already proven that 60% of the system get more in benefits than they pay in taxes. Clearly they are getting some type of handout.

Are you joking? This time frame is well before the time that I retire, and thus will affect me and my wife, along with essentially everyone from age 18 to age 40 (over a generation of individuals). To me a mere 25 years is VERY near future.

And if the economy does not get back on track?

You are repeating yourself. We have already established that Medicare and Social Security are giving more money than they are taking in (hence their complete insolvency in less than 13 and 25 years respectively). By &#8220;unfunded,&#8221; I do not mean that no money is going into these programs: I mean that they are not fiscally solvent (i.e. more money going out than in).

At least we agree on one thing.

 

You call it greed, I call it survival. It is virtually impossible for the average worker to put aside enough money to retire independently if they only get a 2% return on their investments - unless they want to work into their 70s.

 

Not true, but your argument of necessity is lame. My point, which you and the other neo-cons have side stepped is that cutting taxes, CG, income, etc leads to a selloff, profit-taking (please don't ask me to explain this simplistic concept again), depression or at least recession. Profits can be written off by loss, with ultra low taxes, such as now, no need for that. If taxes were very high, you would have to keep your money invested for fear of high taxation if you pulled your profits, perhaps you could take a little at a time, but all of the sudden these rich and (not so) patriotoc folks would be keeping investments put or reinvesting profist taken out (please don't asl me to explain what reinvestments are once again).

Just admit you're a neo-fascist and move on, rather than try to act as tho the market mostly benefits the working man, such as in this post, when most of the market is owned by the rich and what is owned by the working man is thru 401K's which have huge penalties if withdrawn, so what you're saying is penalty for the poor selling stock, not for the rich.

 

The ability to trade stocks aggressively and at will adds efficiency to the market. A heavy capital gains tax will discourage investment period, and make the market less efficient. People will be hesitant to buy or sell stocks and stock values won't reflect equilibrium value at all. People sell stocks to take advantage of better opportunities or because they need the money. Do you want to capitalize on that middle class family that needs to sell 50k in stock for an emergency? The government already discourages short term investments with a higher capital gains tax on gains under 1 year. You're reasoning won't work.

And more than "base money" (whatever that is? Do you mean principal?) is taxed. The government doesn't consider inflation. You can actually get taxed on nominal gains that are real losses. That's silly.

 

The idea that publically traded companies don't need investors capital is 100% contradictory. Public companies are public because at one point in their existence they issued equity to raise capital. I can't believe you don't understand this.

These short term buyers and sellers are institutional investors who take advantage of short-term economic gains. They drive market efficency and increase/decrease the value of a companies stock based on economic forecasts or market trends.

The stock market isn't gambling, its speculation.

Why should an investor be stuck with a 2% return? That's silly and in most years doesn't even cover inflation. Who the hell are you to tell people how much money they can make?

 

You keep saying rich which clearly shows this is class issue for you and not a common sense economic one. Tens of millions of investors in the market are middle class Americans. You're hurting them by raising capital gains taxes. Also, what do you think the "rich" do with the profits they make in the market? Most of them instantly reinvest them back into the market. When you have lower transaction costs you get higher efficiency in the market, period.

Stop with the 'neo-facist" stuff. You're making yourself look silly. This is an economic discussion. Facism in all its forms had various types of economic theory; none of which were particularly favorable towards capitalism/open markets. So quit the name calling and get back on topic.

 

Yes, to the stock market, not the job market, the GDP, etc. I fully understand you're not worried about main street, unemployment, working people, all people having healthcare, poverty, etc. and you have made to misconceptions about that, you are all for the rich, F everyone else; at least you're honest about that.

http://www.taxpolicycenter.org/taxfacts/displayafact.cfm?Docid=161

It appears that investment and taxes paid have a lot more to do with the economic conditions than they do the actual CG tax rate. You can find example after another of this. The economy makes the market more or less efficient.

What you're saying is that day trading might subisde, people will tend to keep money in the market longterm, creating stability in the market, just like the 1970's. Of course you won't have massive bull or bear markets, no 500pt climbs or crashes and that's how you and day traders make money. So you're now talking about what's good for the market or the country, just the boys trading stocks. In case ya can't tell, I don't care about the boys.

What a joke, try to act as tho the middle calss family has money other than in their 401k and wants it for an emergency. In 401k form it can usually be used for mediccal w/o penalty, so there ya go, I doubt Jack and Jill Jones have money in the market other than 401K's, so yours is both dishonesty and an obscure argument. And if it's an emergency, the couple thousand dollars they would pay more in taxes is minimal, esp as compared to the 100's of thousands the rich would pay, or the fact that teh rich would then just keep it invested, creating jobs and stability.

OK, so who's the government that you talk about? Is that like, 'studies say?' An increase in capital gains will incentivize longer investment, stability, etc. You can't make big returns unless you have big activity, both bull and bear. The rich benefit from bubbles, bursts and everywhere inbetween as long as the market is moving up and down and not simply gaining modestly such the 1970's.

Prinicpal, base capital, yes. Principal is not taxed, only profits. Before you get hit with whatever interest earned that keeps your base capital up to par with inflation, you would have to earn a buttload of interest, meaning you're stinking rich and whatever tiny interest gained to maintain inflation would be so miniscule in comparison to your worth it would be negligible to your net or gross worth. I don't think you're worried about that, you're just seeking obscure arguments so the uber rich can keep spreading the disparity in welth distribution, as any good Communist country would.

 

At one point, yes; amazing you don't understand it and you wrote it. Companies IPO as they need the cash, either they tank or they make it and then don't really need the cash to operate becuase they have surpluses or they have a smoking credit rating.

Yea, and I used to speculate on a lot of football games; the juice will kill ya. I talked with a very savy inverstor at work then, in the late 90's and he had the same attitude until the 2000 crash, then he agreed with me. Your assertion is elitism, nothing more.

Who the hell are you to tell people they can't have healthcare insurance if they're poor. Catch up princess, this is the class war between the neo-fascists (you) and the citizens who are sick of it, we ae here to represent our positions and you have had it your way for too long, fascist Ronnie started this mess 30 years ago, now it's time to fix it. Unfortunatley "Tax cuts, my friends" didn't win the election, as he would have done a Hoover all the way, we would be in a Great Depression and have Dems for 5+ terms again. Your tax cutting is great for teh few, you have to package and sell it to the stupid proletariat and you/yours do a great job, but there is a waking point when you collecctively get too greedy; I realize you can't help yourself.

 

You keep saying 'common sense' as you want to detract it from being a tax issue for the welfare of the nation; nice misdirection attempt. And how do you separate massive trillions in teh stock market, the taxes imposed and class? What a ridiculous thing to say.

Really, but most are grouped into the top 10%, in fact the top 10% hold 81% of all stocks...... what was that sound? Oh, the wind leaving your lame argument: http://www.endgame.org/primer-wealth.html

The top ten percent of the U.S. population owns 81.8 percent of the real estate, 81.2 percent of the stock, and 88 percent of the bonds. (Federal Reserve Bank data in Left Business Observer, No. 72, Apr. 3, 1996, p. 5).

One percent of the U.S. population owns sixty percent of the stock and forty percent of the total wealth. (Hawken, Paul, The Ecology of Commerce: A Declaration of Sustainability. New York: HarperBusiness, 1993).

But you act as tho we all own a share, huh. Joke.

http://www.gallup.com/poll/147206/stock-market-investments-lowest-1999.aspx

Altho that may be true, the people who you refer to, mainstream America, hold a puny amount of stocks in 401K's, so their investments aren't subject to the same taxation as the day trader whom you now defend, or the uber rich person. Of course you have to make it a mainstream thing.

No, they take it out in small bits as in retirement and any tax is negligible, theone who gets hurt are the very rich and the day traders.

When taxes are low, they may profit take all or part of their gains. When taxes high, they leave it in or move it around, but it stays in (reinvests). That's my point, high taxes incentivize reinvestment and stability versus anarchy as seen under Reagan and GWB.

Transactions costs are so minimal anymore, that may have worked in the 70's, now it's easy and (*)(*)(*)(*) near free.

This explains neo fascism: http://www.informationclearinghouse.info/article7553.htm

Under neo fascism is corporatism: http://en.wikipedia.org/wiki/Corporatism

 

In the IPO, but not after that. IPOs are an infinitessimal part of the stock trade. 99% of trades don't involve capitialization of the firms; they are side bets in rich people's portfolios. While we loosely talk about investing in companies, in fact, the stock market isn't an investment in the captalization sense, which is the only one that counts here, since it is a secondary market.

In addition IPOs really aren't about capitalization in any case. If you are in a position to make an IPO, the company is already capable of obtaining all the capital it wants. IPOs are designed merely to make the originators rich. Nothing wrong with that; they have usually taken a small firm and made it successful. But don't pretend an IPO is about capitalizing a struggling company so that it can do great things. If it's at the IPO stage, it's so successful already that it's probably flush with cash and can borrow as much as it wants anyway to expand any way it wants.

Now, secondary market certainly affect the value of primary markets. But that's not the issue.

 

The 99% help determine price and set market value for IPOs. They also pay out dividends to many different type of investors. You're assertion about the rich is also wrong. Many middle class investors use the stock market. Many pension funds, 401k plans, university endowments, and various other institutions use the market too. All of these trades are an integral part of the market. Without the 99% of trades you wouldn't be able to capitalize nearly as well.

IPOs are absolutely about capitalization. Look at Linkedin and various other IPOs. They raised tremendous amounts of capital. The owners become rich because the company all of sudden has a ton of new capital. Many companies that go public aren't flush with cash....that's why they go public. Many have a great concept but lack the capital to really be profitable. A lot of companies go public even with negative income projections for years to come.

Also, financing purely with debt virtually never offers you the best WACC (Weighted Average Cost of Capital). The majority of companies find a nice mix between debt and equity the best way to maximize value. The market plays a very important role in determining how much equity they can get and for how much. The ability to trade with little in the way of transaction costs ensures that money flows to those companies most likely to make the best of it.

 

only if capital gains taxes rise again!