Oh Wilbur...

[dwy000]

What I hear in this thread is a bunch of malarkey from would-be elite blowhards. Real America is hurting and Donald Trump is the only man who can save us now.

 

I am officially endorsing Donald Trump for President.

 

https://www.youtube.com/watch?v=kLt-0vLPZ3Q

 

I still can't figure out if this is supposed to be a joke.  Highly entertaining though.  In a tin-hat, kill me last kind of way.

[ScottHall]

Eight years of Obama have brought us to the brink of national bankruptcy. The Fed is required to manipulate interest rates and keep them low in order to stave off a national default, which will only lead to China foreclosing on the White House. Is it possible that Ben Bernanke has become a secret agent of the CIA to orchestrate Brexit and keep bond yields low?

 

Donald Trump is the only man in the race to have navigated bankruptcy four times in his business enterprises. He knows the laws like the back of his hand, and he is the man we need to help navigate America's Chapter 11 filing.Having spent decades working as a restructuring advisor and distressed debt investor, it is no wonder Wilbur Ross is supporting Donald Trump. He sees what I see: a man with unparalleled experience in business restructuring when America needs restructuring the most in its history.

 

Perhaps Donald will hire Wilbur on as the official advisor to the United States when the bankruptcy begins. Who else but he and Eddie Lampert have the bankruptcy qualifications to match Donald?

[dwy000]

Eight years of Obama have brought us to the brink of national bankruptcy. The Fed is required to manipulate interest rates and keep them low in order to stave off a national default, which will only lead to China foreclosing on the White House. Is it possible that Ben Bernanke has become a secret agent of the CIA to orchestrate Brexit and keep bond yields low?

 

Donald Trump is the only man in the race to have navigated bankruptcy four times in his business enterprises. He knows the laws like the back of his hand, and he is the man we need to help navigate America's Chapter 11 filing.Having spent decades working as a restructuring advisor and distressed debt investor, it is no wonder Wilbur Ross is supporting Donald Trump. He sees what I see: a man with unparalleled experience in business restructuring when America needs restructuring the most in its history.

 

Perhaps Donald will hire Wilbur on as the official advisor to the United States when the bankruptcy begins. Who else but he and Eddie Lampert have the bankruptcy qualifications to match Donald?

Ummmmm.  Okaaaaay.

[ERICOPOLY]

Eight years of Obama have brought us to the brink of national bankruptcy. The Fed is required to manipulate interest rates and keep them low in order to stave off a national default, which will only lead to China foreclosing on the White House. Is it possible that Ben Bernanke has become a secret agent of the CIA to orchestrate Brexit and keep bond yields low?

 

Donald Trump is the only man in the race to have navigated bankruptcy four times in his business enterprises. He knows the laws like the back of his hand, and he is the man we need to help navigate America's Chapter 11 filing.Having spent decades working as a restructuring advisor and distressed debt investor, it is no wonder Wilbur Ross is supporting Donald Trump. He sees what I see: a man with unparalleled experience in business restructuring when America needs restructuring the most in its history.

 

Perhaps Donald will hire Wilbur on as the official advisor to the United States when the bankruptcy begins. Who else but he and Eddie Lampert have the bankruptcy qualifications to match Donald?

Ummmmm.  Okaaaaay.

 

Well, I think he is joking, parodying Trump because Trump is into these conspiracy theories (the Chinese climate change hoax, for example).  I think that's why there's the part about Bernanke being a covert CIA operative behind Brexit.

[tombgrt]

Perhaps Donald will hire Wilbur on as the official advisor to the United States when the bankruptcy begins. Who else but he and Eddie Lampert have the bankruptcy qualifications to match Donald?

 

Haha! Ok, that last post made it too obvious.  ;D

 

Shit Scott, I believe you had a few doubting your sanity for a second. Good job.  8)

[ERICOPOLY]

Further, tax rates are at historical lows while deficit and debt are at historic highs.

 

Tax rates vary.  I was thinking about what the tax rate would be on one of the most common types of investments that ordinary Americans make.

 

Housing.

 

Suppose you rent out a single family home for a 4% gross rental yield in California.  That's not all that terribly strange in California.

 

Well, you might get $40,000 in rent for a $1,000,000 home near the coast.

 

Further, let's say you have a 4% loan with a $500,000 mortgage.

 

Okay, now assuming there are no other expenses (fixes to appliances, etc...) then you have a $20,000 mortgage interest expense.

 

So you have $20,000 in profit before taxes.

 

Okay, your first tax is going to be the roughly $12,000 you'll need to pay called a "property tax".

 

So the property tax eliminates 60% of your income.

 

So your tax rate begins at 60%.  Now you then pay state Income tax and Federal income tax.  Combined, those taxes can easily be 40%. 

 

So that leaves you with 24% that you can keep for yourself.

 

You paid out 76% of your pre-tax income in taxes! 

 

And that's a relatively common type of investment.

[EliG]

Trump asked why US can't use nukes

 

Donald Trump asked a foreign policy expert advising him why the U.S. can't use nuclear weapons, MSNBC's Joe Scarborough said on the air Wednesday, citing an unnamed source who claimed he had spoken with the GOP presidential nominee.

 

"Several months ago, a foreign policy expert on the international level went to advise Donald Trump. And three times [Trump] asked about the use of nuclear weapons. Three times he asked at one point if we had them why can't we use them," Scarborough said on his "Morning Joe" program.

 

Scarborough made the Trump comments 52 seconds into an interview with former Director of Central Intelligence and ex-National Security Agency Director Michael Hayden.

 

Scarborough then asked a hypothetical question to Hayden about how quickly nuclear weapons could be deployed if a president were to give approval.

 

"It's scenario dependent, but the system is designed for speed and decisiveness. It's not designed to debate the decision," Hayden said.

 

 

[DonFanucci]

Trump asked why US can't use nukes

 

Donald Trump asked a foreign policy expert advising him why the U.S. can't use nuclear weapons, MSNBC's Joe Scarborough said on the air Wednesday, citing an unnamed source who claimed he had spoken with the GOP presidential nominee.

 

"Several months ago, a foreign policy expert on the international level went to advise Donald Trump. And three times [Trump] asked about the use of nuclear weapons. Three times he asked at one point if we had them why can't we use them," Scarborough said on his "Morning Joe" program.

 

Scarborough made the Trump comments 52 seconds into an interview with former Director of Central Intelligence and ex-National Security Agency Director Michael Hayden.

 

Scarborough then asked a hypothetical question to Hayden about how quickly nuclear weapons could be deployed if a president were to give approval.

 

"It's scenario dependent, but the system is designed for speed and decisiveness. It's not designed to debate the decision," Hayden said.

 

What's the answer?

[Jurgis]

Perhaps Donald will hire Wilbur on as the official advisor to the United States when the bankruptcy begins. Who else but he and Eddie Lampert have the bankruptcy qualifications to match Donald?

 

Haha! Ok, that last post made it too obvious.  ;D

 

Shit Scott, I believe you had a few doubting your sanity for a second. Good job.  8)

 

The problem is that there are people who will watch Scott's video and become even more convinced to vote for Trump.  :-\

[TwoCitiesCapital]

Further, tax rates are at historical lows while deficit and debt are at historic highs.

 

Tax rates vary.  I was thinking about what the tax rate would be on one of the most common types of investments that ordinary Americans make.

 

Housing.

 

Suppose you rent out a single family home for a 4% gross rental yield in California.  That's not all that terribly strange in California.

 

Well, you might get $40,000 in rent for a $1,000,000 home near the coast.

 

Further, let's say you have a 4% loan with a $500,000 mortgage.

 

Okay, now assuming there are no other expenses (fixes to appliances, etc...) then you have a $20,000 mortgage interest expense.

 

So you have $20,000 in profit before taxes.

 

Okay, your first tax is going to be the roughly $12,000 you'll need to pay called a "property tax".

 

So the property tax eliminates 60% of your income.

 

So your tax rate begins at 60%.  Now you then pay state Income tax and Federal income tax.  Combined, those taxes can easily be 40%. 

 

So that leaves you with 24% that you can keep for yourself.

 

You paid out 76% of your pre-tax income in taxes! 

 

And that's a relatively common type of investment.

 

Sure, but that's in CA which is recognized as being one of the highest tax districts. Same with NYC where I'm at. But that's not representative of the cash return on real estate or the taxes charged for 90% of the people who live in this country. I know for a fact that I can buy small commercial buildings with triple net lease tenants at 6-8% cap rates and that leaves the tenant on the hook for most everything maintenance related. Residential houses where you're covering maintenance expenses and have short-term leases (riskier) probably get a higher cap rate. Call it 7-9%.

 

But, the real crux of this is that the majority of the country also isn't defined by landlords, but rather by tenants (either paying rent or the own mortgage, not collecting rents). Of the 50% of people who do pay a positive net income tax rate, the largest tax liabilities for most are income taxes which are historically low and further reduced by additional credits and deductions that can be taken against them. Also, I don't have the statistics on this, but I'd also hazard a guess that 50% of the population paying net income tax may also be a historic low.

 

 

 

 

 

 

[vinod1]

http://www.wsj.com/articles/new-rough-patch-for-trump-campaign-roils-republicans-as-defections-grow-1470184353

 

Mr. Trump, speaking at a rally here Tuesday, said voters would stick with him over Mrs. Clinton because of his vow to appoint conservative justices to the Supreme Court.

 

“They have no choice,” Mr. Trump said. “Even if you can’t stand Donald Trump, you think Donald Trump is the worst, you’re going to vote for me. You know why? Justices of the Supreme Court.”

 

Unbelievable.

 

Vinod

[rb]

http://www.wsj.com/articles/new-rough-patch-for-trump-campaign-roils-republicans-as-defections-grow-1470184353

 

Mr. Trump, speaking at a rally here Tuesday, said voters would stick with him over Mrs. Clinton because of his vow to appoint conservative justices to the Supreme Court.

 

“They have no choice,” Mr. Trump said. “Even if you can’t stand Donald Trump, you think Donald Trump is the worst, you’re going to vote for me. You know why? Justices of the Supreme Court.”

 

Unbelievable.

 

Vinod

I don't think that's unbelievable at all. It's actually quite a good point for him.

 

The way I see it, there's not much that Trump can do as president that the Democrats can't fix when they come in to clean up the mess after 4 years. Though there are some things that would be unfixable:

 

1. Any use of nuclear weapons.

2. Undermining/Breakup of NATO or any similar foreign policy blunder.

3. Supreme Court Appointees. He gets at least 1, maybe 2, remember Ruth Bader Ginsburg is 83.

 

Now I think that the first two terrify (as they should) most republicans who are not die hard Trump supporters. But keeping Hillary from appointing those justices is appealing to all republicans. Just as keeping Trump from appointing a couple of coo-coos to the supreme court is to the other side. So republicans may take they're chances with 1 and 2 to get 3 done.

[Jurgis]

Of course there is zero guarantee that Trump will appoint die-hard conservatives into Supreme Court. Once he's POTUS, he may appoint whoever he wants. But if judges are the killer issue, then, yes, republicans have no choice but to vote for Trump and hope that he does more "good" for republicans than damage. And expect continued temper-tantrums and blackmail on any policy issue where Trump clashes with Republican held (??) congress and (?? ?? ??) senate. I fully expect that if Trump wins (looking unlikelier every day, but who knows), he will say "F**K you GOP, you did not support my campaign, now I hit you basterds. Putin for Supreme Court haha".

 

If it wasn't for racist, nationalist and misogynist rhetoric + risk of unstable narcissistic guy at the helm of US, I'd like to see Trump as a president just to see republicans squirm when he does things that are completely Trumpian and not the GOP-party-line. Oh wait, they are already squirming. Perhaps that's enough of the show and we can skip the part where they squirm even more.

[rb]

Tax rates vary.  I was thinking about what the tax rate would be on one of the most common types of investments that ordinary Americans make.

 

Housing.

 

Suppose you rent out a single family home for a 4% gross rental yield in California.  That's not all that terribly strange in California.

 

Well, you might get $40,000 in rent for a $1,000,000 home near the coast.

 

Further, let's say you have a 4% loan with a $500,000 mortgage.

 

Okay, now assuming there are no other expenses (fixes to appliances, etc...) then you have a $20,000 mortgage interest expense.

 

So you have $20,000 in profit before taxes.

 

Okay, your first tax is going to be the roughly $12,000 you'll need to pay called a "property tax".

 

So the property tax eliminates 60% of your income.

 

So your tax rate begins at 60%.  Now you then pay state Income tax and Federal income tax.  Combined, those taxes can easily be 40%. 

 

So that leaves you with 24% that you can keep for yourself.

 

You paid out 76% of your pre-tax income in taxes! 

 

And that's a relatively common type of investment.

I'm with 2 cities here. It looks like you're taking a particular example to make a general point.

 

Firstly, prop taxes at 1.2% of value seem very high even for California, but I don't know enough about the property market there to speak too  much about it.

Secondly, in the context of Real Estate I'd look at property tax as a fixed cost not as a tax to be applied to profit before tax. For the investment you described I'd say that the 1,000,000 price for it is too high and not make it.

Thirdly, in your example the bulk of the taxes you mention are local and state which are a different can of worms and don't really have anything to do with the federal election issues.

Fourthly, as two cities said your example is not at all representative for America as a whole. Even if you include all taxes (federal, state, local) the ratio of total tax to GDP for the US is among the lowest in industrialized nations. Are taxes higher in certain jurisdictions and lower in others? Oh yea. But to say that it's highly taxed is a stretch.

[misterkrusty]

it never ceases to amaze me that there are seemingly intelligent people who would hand the nuclear launch codes to Donald Trump - a man who clearly lacks any emotional self-control  ... and/or let him default on our government debt, allow the spread of nuclear weapons to places like Saudi Arabia, turn a blind-eye to Russian military aggression, etc.  Good Lord - think, think, think about what you are saying.

 

Here's a mental model that might help some people on this thread: remember Buffett saying there is no payoff that could entice him into a game of Russian roulette?  It makes sense: even a small chance of a catastrophic outcome is not worth the risk. 

 

Despite Hillary's flaws, there simply is no rational argument that she is less qualified to be President than Donald Trump. 

 

This American has not lost his mind and will not be voting for the race-baiting Oompaloompa...

 

 

 

[ERICOPOLY]

I'm with 2 cities here. It looks like you're taking a particular example to make a general point.

 

Was actually pointing out that taxes are high for some assets.  You can't see how high they are by looking at only the Federal tax level.

 

Another example would be bond income.  You get a 2% yield and with 1% inflation.

 

To meet you eye to eye, I'll only discuss the Federal tax this time.  It's pretty close to 40% for the top tax bracket.

 

Thant's an 80% tax on your real bond income.

 

80% is extremely fucking high!

 

I think you get to roughly 100% tax rate if you include the California top tax rate -- may even be over 100%.

 

[ERICOPOLY]

So my general point is that the Federal rate isn't necessarily indicative of your actual tax rate because it is applied improperly sometimes.

 

Like if your Federal rate were to be raised to 50%, then in my example you would be left with zero net gain in wealth because you'd give up 100% of your real income. 

 

The "improper" application is that the taxes need to be applied to your real income. 

 

Things aren't what they seem.  Depending on your asset.

 

Thus, you can't generalize that tax rates are low.  It depends on the type of income. 

 

The low interest rates are raising the real tax rate on these bonds.  Anyways, trying to stimulate some thinking because the tax rate alone doesn't tell the story given that it isn't applied to real income.

 

The fix is painfully easy to apply -- just allow us to write-off the decline of real value in the bond principle during the holding period (the CPI is published regularly).

[rb]

So should the government change its taxation policy in order to ensure that people in certain tax brackets are insured a certain real yield on all or specific classes of assets?

 

Should taxation policy change with the price level of assets? For example, I liked the return prospects of GOOG when it was in the 400s. Now it's in the 700s and the return is not as attractive. Should the government decrease in my tax rate of GOOG investments in order to increase my return?

[DonFanucci]

So should the government change its taxation policy in order to ensure that people in certain tax brackets are insured a certain real yield on all or specific classes of assets?

 

You can't ensure a yield with a tax rate, but you can ensure that taxes aren't in excess of your yield.

[rb]

So should the government change its taxation policy in order to ensure that people in certain tax brackets are insured a certain real yield on all or specific classes of assets?

 

You can't ensure a yield with a tax rate, but you can ensure that taxes aren't in excess of your yield.

Market forces be damned!

[KJP]

 

Tax rates vary.  I was thinking about what the tax rate would be on one of the most common types of investments that ordinary Americans make.

 

Housing.

 

Suppose you rent out a single family home for a 4% gross rental yield in California.  That's not all that terribly strange in California.

 

Well, you might get $40,000 in rent for a $1,000,000 home near the coast.

 

 

"Ordinary Americans" have barely any investments; they certainly don't buy $1,000,000 investment properties at 4% cap rates. 

 

Your position seems to be that tax rates on investment assets, i.e., the tax rates that rich people pay, should be cut to protect the rich from current low yields, even though the rich have already benefited from the rise in asset prices that occurred as yields plummeted. 

 

What would be the policy justification for cutting taxes as you suggest?  And who would pay more to make up for the lower taxes that asset owners would pay?

[ERICOPOLY]

 

Tax rates vary.  I was thinking about what the tax rate would be on one of the most common types of investments that ordinary Americans make.

 

Housing.

 

Suppose you rent out a single family home for a 4% gross rental yield in California.  That's not all that terribly strange in California.

 

Well, you might get $40,000 in rent for a $1,000,000 home near the coast.

 

 

"Ordinary Americans" have barely any investments; they certainly don't buy $1,000,000 investment properties at 4% cap rates. 

 

Your position seems to be that tax rates on investment assets, i.e., the tax rates that rich people pay, should be cut to protect the rich from current low yields, even though the rich have already benefited from the rise in asset prices that occurred as yields plummeted. 

 

What would be the policy justification for cutting taxes as you suggest?  And who would pay more to make up for the lower taxes that asset owners would pay?

 

The significant contributor to the total tax burden is the property tax, not the income tax.

 

Therefore even if you are talking about a $200,000 property, the property tax still amounts to 60%.

 

So like, why are ordinary Americans in a 0% tax bracket actually paying a 60% tax rate (people love real estate because you can kick the tires).  Isn't that a heck of a lot higher of a tax rate than people commonly realize?

 

 

[ERICOPOLY]

Oh yeah, a property tax isn't a tax, it is a fixed expense.

 

Well then, perhaps Ted Cruz's camp is right -- we can pretty much eliminate all the taxes.

 

We can levy a 1% property tax on all financial assets.  It won't even be a tax increase!  It will just be a fixed expense.  Lovely.

[rb]

Eric,

 

When I was referring to the prop tax as a fixed cost I meant it just as how I would use it when i would model a real estate deal. I think I mentioned that. Of course it is a tax but it is mean as a resident tax. As in whomever lives there has to pay it. When I lived in England it fell on the tenant to pay that on top of the rent. Over here the owner pays it. But really in a markets system the rents adjust for that. So in England the tenant pays rent+prop tax. Here the tenant pays just tax so you figure that the rents would adjust upward to include the property tax. That's why it should be accounted as an expense. If you can't collect rents high enough to accommodate for that and provide a decent return on capital maybe the underlying asset is overvalued.

 

I haven't done the calculation, but in the situation you've described, if everything stayed the same but the house price would be 200,000 as you said instead of 1,000,000 you'd be making a very decent yield on your investment.

 

I'd be happy to go into this deeper in another thread if you want. But we're debating about local taxes in a thread about the general election. Plus as i've said before local+state+federal taxes as a % of GDP in the US are among the lowest in the industrial world. America is far from overtaxed.

[ERICOPOLY]

he calculation, but in the situation you've described, if everything stayed the same but the house price would be 200,000 as you said instead of 1,000,000 you'd be making a very decent yield on your investment.

 

How could it all stay the same?  500,000 mortgage on a 200,000 investment?  Clearly I meant something different than you thought.

 

I shrank the house price by 1/5 when somebody argued that examples that favor the rich don't matter. 

 

So now it matters based on their argument  :D

 

You need to scale down the mortgage as well by 1/5.  But the interest rate and gross rental yield both remain 4%.

 

1.2% of $200,000 home is 2,400 in property tax.

50% debt to equity is $100,000 mortgage. So $4,000 in interest expense on 4% mortgage.

4% gross rental yield is $8,000.

 

$8,000 less the interest expense is only $4,000 pre-tax profit.

 

Property tax of $2,400 is 60% of pre-tax profit.

 

Very, very high tax relative to the pre-tax profit.

 

And that is assuming 0% income tax!