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ucodegen
Participant[quote briansd1]
That’s true. That’s a why a simple system with a substantially higher marginal tax rates for the high earners is a progressive system.
[/quote]Shouldn’t be ‘punitive’, but there is an ‘economy of scale’ relative to disposable income. The more you make, the less is allocated to basic living expenses, emphasis on ‘basic’.
I have no problem with adding in another bracket.. ie a 30 to 35% bracket on very high earners on the fed form.. I would need to dig through the bracket to locate a good #.. but it would probably be over $2Mil/yr. The % should not be higher than the corporate tax rate (35%) because it would push people to ‘game the system’.
With CA state.. probably something around 11%.. on a very high income… again watching out for state corporate tax rates.
http://www.ftb.ca.gov/businesses/faq/717.shtml
I gotta look into S-corporations.. 8-PTaking all the above into consideration though, I do think that the gov has to watch out for abuse of its citizenry through taxes.
Participant[quote briansd1]
That’s true. That’s a why a simple system with a substantially higher marginal tax rates for the high earners is a progressive system.
[/quote]Shouldn’t be ‘punitive’, but there is an ‘economy of scale’ relative to disposable income. The more you make, the less is allocated to basic living expenses, emphasis on ‘basic’.
I have no problem with adding in another bracket.. ie a 30 to 35% bracket on very high earners on the fed form.. I would need to dig through the bracket to locate a good #.. but it would probably be over $2Mil/yr. The % should not be higher than the corporate tax rate (35%) because it would push people to ‘game the system’.
With CA state.. probably something around 11%.. on a very high income… again watching out for state corporate tax rates.
http://www.ftb.ca.gov/businesses/faq/717.shtml
I gotta look into S-corporations.. 8-PTaking all the above into consideration though, I do think that the gov has to watch out for abuse of its citizenry through taxes.
ParticipantWe just need to close loopholes to prevent prevent the “expensing” of private corporate residences/retreats, private cars, and the like.
Thats harder than it looks.
A CEO could use a mechanism where the company pays the mortgage on a property with a lease-back to himself. The company then covers the cost of the lease back as part of the pay package … and covers the tax as well. The company can then use the interest deduction. The company could also buy the property with cash, but take out a loan on other business property.. and deduct that interest..
The more convoluted you make the tax system, the more the wealthy profit.. they can have full-time people dedicated to working out the nuances in the code, finding holes that the authors didn’t intend, or pushing congressional members to put exceptions in the code.
ParticipantWe just need to close loopholes to prevent prevent the “expensing” of private corporate residences/retreats, private cars, and the like.
Thats harder than it looks.
A CEO could use a mechanism where the company pays the mortgage on a property with a lease-back to himself. The company then covers the cost of the lease back as part of the pay package … and covers the tax as well. The company can then use the interest deduction. The company could also buy the property with cash, but take out a loan on other business property.. and deduct that interest..
The more convoluted you make the tax system, the more the wealthy profit.. they can have full-time people dedicated to working out the nuances in the code, finding holes that the authors didn’t intend, or pushing congressional members to put exceptions in the code.
ParticipantWe just need to close loopholes to prevent prevent the “expensing” of private corporate residences/retreats, private cars, and the like.
Thats harder than it looks.
A CEO could use a mechanism where the company pays the mortgage on a property with a lease-back to himself. The company then covers the cost of the lease back as part of the pay package … and covers the tax as well. The company can then use the interest deduction. The company could also buy the property with cash, but take out a loan on other business property.. and deduct that interest..
The more convoluted you make the tax system, the more the wealthy profit.. they can have full-time people dedicated to working out the nuances in the code, finding holes that the authors didn’t intend, or pushing congressional members to put exceptions in the code.
ParticipantWe just need to close loopholes to prevent prevent the “expensing” of private corporate residences/retreats, private cars, and the like.
Thats harder than it looks.
A CEO could use a mechanism where the company pays the mortgage on a property with a lease-back to himself. The company then covers the cost of the lease back as part of the pay package … and covers the tax as well. The company can then use the interest deduction. The company could also buy the property with cash, but take out a loan on other business property.. and deduct that interest..
The more convoluted you make the tax system, the more the wealthy profit.. they can have full-time people dedicated to working out the nuances in the code, finding holes that the authors didn’t intend, or pushing congressional members to put exceptions in the code.
ParticipantWe just need to close loopholes to prevent prevent the “expensing” of private corporate residences/retreats, private cars, and the like.
Thats harder than it looks.
A CEO could use a mechanism where the company pays the mortgage on a property with a lease-back to himself. The company then covers the cost of the lease back as part of the pay package … and covers the tax as well. The company can then use the interest deduction. The company could also buy the property with cash, but take out a loan on other business property.. and deduct that interest..
The more convoluted you make the tax system, the more the wealthy profit.. they can have full-time people dedicated to working out the nuances in the code, finding holes that the authors didn’t intend, or pushing congressional members to put exceptions in the code.
Participant[quote briansd1]
* High down payment required.
* Stricter regulations.
* No “ownership society” agenda.
* No mortgage interest deduction.
* Prepayment penalty to discourage endless refinancing.
* Much less subprime.
* Less securitization.
[/quote]
Many of these I agree with, but I do see problems with some.* High down payment required.
No brainer here. This could also be considered ‘margin of safety’ on a mortgage.
* Stricter regulations.
I would be careful of what is meant by ‘stricter regulations’. See my comments on securitization below.
* No “ownership society” agenda.
Definitely. This only plays to the advantage of existing landowners, particularly those with large blocks of undeveloped land.
* No mortgage interest deduction.
This is a much bigger issue to deal with. The reason why we have mortgage interest deductions, is that previous to the deduction, wealthy people were incorporating the property within a business shell and then could ‘expense’ the interest (oversimplified explanation). If we dis-allow mortgage interest deduction, we also need to look at dis-allowing other forms of interest deduction.
* Prepayment penalty to discourage endless refinancing.
The problem is that this will penalize those who do pay-off the mortgage early w/o refinancing. The better way to handle this would be related to ‘high down payment’ by limiting the LTV ratio to 80% or below (must have 20% equity when financing).
* Much less subprime.
Sub-prime has a place. It also allows people to establish credit. The problem wasn’t limited to sub-prime, and in retrospect, sub-prime was the smaller part of the problem. Where things went wrong with sub-prime, was in the ‘teaser rates’ that had no bearing on what the eventual rate would be. The whole idea of these ‘teaser rates’ was to ‘hook the fish’.. before ‘filleting the fish’… The concept was that the banks would be good because the property would appreciate in the meantime. The bank would end up with the interest payments and use the foreclosure to close out the financing the bank took out to originate the loan… effectively getting interest on money they did not own.
* Less securitization.
Securitization has a part to play. It prevents the domination of the mortgage market by a small group of large players. That said, how securitization is accomplished has to be looked at. Something along the lines of requiring that any organization securitizing mortgages has to hold back 20% of that issue(like the LTV ratios) for 10 years and the holdback has to be capitalized at a minimum of a 50% capitalization ratio(50% of the money they are using to finance the hold back has to be out of their own pocket).
The other thing to look at is CDSs. These are essentially insurance policies, but are not regulated as such. They insure the underlying mortgage and are what took out AIG and Bear Stearns(if memory serves me right) There is no capitalization ratio when you are the ‘underwriting’ party of a CDS, even though if the mortgage goes bad, you are responsible for paying out the difference. Nobody seems to be looking at CDSs as an issue these days.
Participant[quote briansd1]
* High down payment required.
* Stricter regulations.
* No “ownership society” agenda.
* No mortgage interest deduction.
* Prepayment penalty to discourage endless refinancing.
* Much less subprime.
* Less securitization.
[/quote]
Many of these I agree with, but I do see problems with some.* High down payment required.
No brainer here. This could also be considered ‘margin of safety’ on a mortgage.
* Stricter regulations.
I would be careful of what is meant by ‘stricter regulations’. See my comments on securitization below.
* No “ownership society” agenda.
Definitely. This only plays to the advantage of existing landowners, particularly those with large blocks of undeveloped land.
* No mortgage interest deduction.
This is a much bigger issue to deal with. The reason why we have mortgage interest deductions, is that previous to the deduction, wealthy people were incorporating the property within a business shell and then could ‘expense’ the interest (oversimplified explanation). If we dis-allow mortgage interest deduction, we also need to look at dis-allowing other forms of interest deduction.
* Prepayment penalty to discourage endless refinancing.
The problem is that this will penalize those who do pay-off the mortgage early w/o refinancing. The better way to handle this would be related to ‘high down payment’ by limiting the LTV ratio to 80% or below (must have 20% equity when financing).
* Much less subprime.
Sub-prime has a place. It also allows people to establish credit. The problem wasn’t limited to sub-prime, and in retrospect, sub-prime was the smaller part of the problem. Where things went wrong with sub-prime, was in the ‘teaser rates’ that had no bearing on what the eventual rate would be. The whole idea of these ‘teaser rates’ was to ‘hook the fish’.. before ‘filleting the fish’… The concept was that the banks would be good because the property would appreciate in the meantime. The bank would end up with the interest payments and use the foreclosure to close out the financing the bank took out to originate the loan… effectively getting interest on money they did not own.
* Less securitization.
Securitization has a part to play. It prevents the domination of the mortgage market by a small group of large players. That said, how securitization is accomplished has to be looked at. Something along the lines of requiring that any organization securitizing mortgages has to hold back 20% of that issue(like the LTV ratios) for 10 years and the holdback has to be capitalized at a minimum of a 50% capitalization ratio(50% of the money they are using to finance the hold back has to be out of their own pocket).
The other thing to look at is CDSs. These are essentially insurance policies, but are not regulated as such. They insure the underlying mortgage and are what took out AIG and Bear Stearns(if memory serves me right) There is no capitalization ratio when you are the ‘underwriting’ party of a CDS, even though if the mortgage goes bad, you are responsible for paying out the difference. Nobody seems to be looking at CDSs as an issue these days.
Participant[quote briansd1]
* High down payment required.
* Stricter regulations.
* No “ownership society” agenda.
* No mortgage interest deduction.
* Prepayment penalty to discourage endless refinancing.
* Much less subprime.
* Less securitization.
[/quote]
Many of these I agree with, but I do see problems with some.* High down payment required.
No brainer here. This could also be considered ‘margin of safety’ on a mortgage.
* Stricter regulations.
I would be careful of what is meant by ‘stricter regulations’. See my comments on securitization below.
* No “ownership society” agenda.
Definitely. This only plays to the advantage of existing landowners, particularly those with large blocks of undeveloped land.
* No mortgage interest deduction.
This is a much bigger issue to deal with. The reason why we have mortgage interest deductions, is that previous to the deduction, wealthy people were incorporating the property within a business shell and then could ‘expense’ the interest (oversimplified explanation). If we dis-allow mortgage interest deduction, we also need to look at dis-allowing other forms of interest deduction.
* Prepayment penalty to discourage endless refinancing.
The problem is that this will penalize those who do pay-off the mortgage early w/o refinancing. The better way to handle this would be related to ‘high down payment’ by limiting the LTV ratio to 80% or below (must have 20% equity when financing).
* Much less subprime.
Sub-prime has a place. It also allows people to establish credit. The problem wasn’t limited to sub-prime, and in retrospect, sub-prime was the smaller part of the problem. Where things went wrong with sub-prime, was in the ‘teaser rates’ that had no bearing on what the eventual rate would be. The whole idea of these ‘teaser rates’ was to ‘hook the fish’.. before ‘filleting the fish’… The concept was that the banks would be good because the property would appreciate in the meantime. The bank would end up with the interest payments and use the foreclosure to close out the financing the bank took out to originate the loan… effectively getting interest on money they did not own.
* Less securitization.
Securitization has a part to play. It prevents the domination of the mortgage market by a small group of large players. That said, how securitization is accomplished has to be looked at. Something along the lines of requiring that any organization securitizing mortgages has to hold back 20% of that issue(like the LTV ratios) for 10 years and the holdback has to be capitalized at a minimum of a 50% capitalization ratio(50% of the money they are using to finance the hold back has to be out of their own pocket).
The other thing to look at is CDSs. These are essentially insurance policies, but are not regulated as such. They insure the underlying mortgage and are what took out AIG and Bear Stearns(if memory serves me right) There is no capitalization ratio when you are the ‘underwriting’ party of a CDS, even though if the mortgage goes bad, you are responsible for paying out the difference. Nobody seems to be looking at CDSs as an issue these days.
Participant[quote briansd1]
* High down payment required.
* Stricter regulations.
* No “ownership society” agenda.
* No mortgage interest deduction.
* Prepayment penalty to discourage endless refinancing.
* Much less subprime.
* Less securitization.
[/quote]
Many of these I agree with, but I do see problems with some.* High down payment required.
No brainer here. This could also be considered ‘margin of safety’ on a mortgage.
* Stricter regulations.
I would be careful of what is meant by ‘stricter regulations’. See my comments on securitization below.
* No “ownership society” agenda.
Definitely. This only plays to the advantage of existing landowners, particularly those with large blocks of undeveloped land.
* No mortgage interest deduction.
This is a much bigger issue to deal with. The reason why we have mortgage interest deductions, is that previous to the deduction, wealthy people were incorporating the property within a business shell and then could ‘expense’ the interest (oversimplified explanation). If we dis-allow mortgage interest deduction, we also need to look at dis-allowing other forms of interest deduction.
* Prepayment penalty to discourage endless refinancing.
The problem is that this will penalize those who do pay-off the mortgage early w/o refinancing. The better way to handle this would be related to ‘high down payment’ by limiting the LTV ratio to 80% or below (must have 20% equity when financing).
* Much less subprime.
Sub-prime has a place. It also allows people to establish credit. The problem wasn’t limited to sub-prime, and in retrospect, sub-prime was the smaller part of the problem. Where things went wrong with sub-prime, was in the ‘teaser rates’ that had no bearing on what the eventual rate would be. The whole idea of these ‘teaser rates’ was to ‘hook the fish’.. before ‘filleting the fish’… The concept was that the banks would be good because the property would appreciate in the meantime. The bank would end up with the interest payments and use the foreclosure to close out the financing the bank took out to originate the loan… effectively getting interest on money they did not own.
* Less securitization.
Securitization has a part to play. It prevents the domination of the mortgage market by a small group of large players. That said, how securitization is accomplished has to be looked at. Something along the lines of requiring that any organization securitizing mortgages has to hold back 20% of that issue(like the LTV ratios) for 10 years and the holdback has to be capitalized at a minimum of a 50% capitalization ratio(50% of the money they are using to finance the hold back has to be out of their own pocket).
The other thing to look at is CDSs. These are essentially insurance policies, but are not regulated as such. They insure the underlying mortgage and are what took out AIG and Bear Stearns(if memory serves me right) There is no capitalization ratio when you are the ‘underwriting’ party of a CDS, even though if the mortgage goes bad, you are responsible for paying out the difference. Nobody seems to be looking at CDSs as an issue these days.
Participant[quote briansd1]
* High down payment required.
* Stricter regulations.
* No “ownership society” agenda.
* No mortgage interest deduction.
* Prepayment penalty to discourage endless refinancing.
* Much less subprime.
* Less securitization.
[/quote]
Many of these I agree with, but I do see problems with some.* High down payment required.
No brainer here. This could also be considered ‘margin of safety’ on a mortgage.
* Stricter regulations.
I would be careful of what is meant by ‘stricter regulations’. See my comments on securitization below.
* No “ownership society” agenda.
Definitely. This only plays to the advantage of existing landowners, particularly those with large blocks of undeveloped land.
* No mortgage interest deduction.
This is a much bigger issue to deal with. The reason why we have mortgage interest deductions, is that previous to the deduction, wealthy people were incorporating the property within a business shell and then could ‘expense’ the interest (oversimplified explanation). If we dis-allow mortgage interest deduction, we also need to look at dis-allowing other forms of interest deduction.
* Prepayment penalty to discourage endless refinancing.
The problem is that this will penalize those who do pay-off the mortgage early w/o refinancing. The better way to handle this would be related to ‘high down payment’ by limiting the LTV ratio to 80% or below (must have 20% equity when financing).
* Much less subprime.
Sub-prime has a place. It also allows people to establish credit. The problem wasn’t limited to sub-prime, and in retrospect, sub-prime was the smaller part of the problem. Where things went wrong with sub-prime, was in the ‘teaser rates’ that had no bearing on what the eventual rate would be. The whole idea of these ‘teaser rates’ was to ‘hook the fish’.. before ‘filleting the fish’… The concept was that the banks would be good because the property would appreciate in the meantime. The bank would end up with the interest payments and use the foreclosure to close out the financing the bank took out to originate the loan… effectively getting interest on money they did not own.
* Less securitization.
Securitization has a part to play. It prevents the domination of the mortgage market by a small group of large players. That said, how securitization is accomplished has to be looked at. Something along the lines of requiring that any organization securitizing mortgages has to hold back 20% of that issue(like the LTV ratios) for 10 years and the holdback has to be capitalized at a minimum of a 50% capitalization ratio(50% of the money they are using to finance the hold back has to be out of their own pocket).
The other thing to look at is CDSs. These are essentially insurance policies, but are not regulated as such. They insure the underlying mortgage and are what took out AIG and Bear Stearns(if memory serves me right) There is no capitalization ratio when you are the ‘underwriting’ party of a CDS, even though if the mortgage goes bad, you are responsible for paying out the difference. Nobody seems to be looking at CDSs as an issue these days.
ParticipantAbout the only guy I respect now on the semi big stage is Doug Kass who out predicted them all and I’ve never heard him mentioned here.
I was looking at some of his predictions done in Dec 2009.. kind of interesting. Many which did come true.
http://wallstreetpit.com/13213-doug-kass-predictions-for-2010
1. Corporate profits soar 100% in the first quarter of 2010 from a year ago, while GDP jumps 4.5%. closer to to half right. GDP increase so far 2.7 2010Q1, 5.44 2009Q4 %
2. Housing and jobs fail to revive.
3. The U.S. dollar explodes higher. Did with respect to EU/Pound Sterling
7. Stocks drop by 10% in the first half of next year. – maybe off by a bit.. since it happened towards the end of the first half
7. Kass predicts that Goldman Sachs (GS) goes private. wouldn’t be surprised if this does occur, considering ‘financial reform’ bill will limit the hedging that GS can do. Most banks currently do less than the limit.. except GSSo far didn’t happen:
4. The price of gold topples. He said it was going to break down from $900.. it went up.. now around $1250
5. Central banks tighten earlier than expected. – TBD
6. A Middle East peace is upended due to an attack by Israel on Iran. TBD
9. Second-half 2010 GDP growth turns flat. TBD
10. Rate-sensitive stocks outperform; metals underperform…. TBD – Traditionally, rate sensitive stocks tend to be dividend stocks – because investors look primarily at return rates. The correlation is usually negative – so I do have a slight problem with this prediction.ParticipantAbout the only guy I respect now on the semi big stage is Doug Kass who out predicted them all and I’ve never heard him mentioned here.
I was looking at some of his predictions done in Dec 2009.. kind of interesting. Many which did come true.
http://wallstreetpit.com/13213-doug-kass-predictions-for-2010
1. Corporate profits soar 100% in the first quarter of 2010 from a year ago, while GDP jumps 4.5%. closer to to half right. GDP increase so far 2.7 2010Q1, 5.44 2009Q4 %
2. Housing and jobs fail to revive.
3. The U.S. dollar explodes higher. Did with respect to EU/Pound Sterling
7. Stocks drop by 10% in the first half of next year. – maybe off by a bit.. since it happened towards the end of the first half
7. Kass predicts that Goldman Sachs (GS) goes private. wouldn’t be surprised if this does occur, considering ‘financial reform’ bill will limit the hedging that GS can do. Most banks currently do less than the limit.. except GSSo far didn’t happen:
4. The price of gold topples. He said it was going to break down from $900.. it went up.. now around $1250
5. Central banks tighten earlier than expected. – TBD
6. A Middle East peace is upended due to an attack by Israel on Iran. TBD
9. Second-half 2010 GDP growth turns flat. TBD
10. Rate-sensitive stocks outperform; metals underperform…. TBD – Traditionally, rate sensitive stocks tend to be dividend stocks – because investors look primarily at return rates. The correlation is usually negative – so I do have a slight problem with this prediction. -
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