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Mitt Romney 2012

Races for the Senate, U.S. House, etc. and other issues of national importance.

Re: Mitt Romney 2012

Postby rabble » Wed Aug 15, 2012 5:37 pm

So, let me see if I can follow the logic here.

Rich people have been accused of using their wealth to pay lower taxes.

Some people can be classified as rich because the value of their holdings is over the amount needed to be called rich.

Some of these people have incomes lower than the amount one would expect from someone who is rich.

Therefore, rich people don't use their wealth to pay lower taxes.
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Re: Mitt Romney 2012

Postby snoqueen » Wed Aug 15, 2012 5:51 pm

...going to the link you gave I find a table with breakdown of farms by sales. In the 2 largest categories there are 5500 with an average size of 473 acres or, using your average value per acre, a value of about $1.5mm...


In a sale, usually if not always there's a mortgage on the property. You are not considering this in your calculations (and are disregarding the last paragraph of what I wrote previously where I said the same thing).

If the landowner has a mortgage for 80% of the value of his land (and that's not crazy, since land holds its value relatively well) you can only consider 20% of the land value as an asset of the landowner. 20% of $1.5 million is $300K, right? Not multi-millions.

Pick your own percentage if you don't like the 20/80 split.

If you can find "lots" of farmers in that largest-farm category who own their land free and clear, post a link giving the evidence. Usually a business today wouldn't tie up that much of its assets even if it could.

And $1.5 mil is not "multi-millions" in my book, for what that's worth. I suppose it's 1.5 multiplied by a million, but that's a stretch.
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Re: Mitt Romney 2012

Postby jman111 » Wed Aug 15, 2012 6:00 pm

snoqueen wrote:And $1.5 mil is not "multi-millions" in my book, for what that's worth. I suppose it's 1.5 multiplied by a million, but that's a stretch.

So, if I have 0.05 multiplied by a million....
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Re: Mitt Romney 2012

Postby pjbogart » Wed Aug 15, 2012 6:33 pm

johnfajardohenry wrote:We may be in agreement on capital gains taxes. I have mixed feelings about them. In the first place, I feel pretty strongly that the holding period should be substantial. Say 10-15 years. (Buffet's share sales would still qualify as all his B-H shares go back to the 70s)

I could even live with doing away with them entirely and taxing all income at the same rate providing there was some way to index capital gains for inflation. If you bought a house in 1970 for $20,000 and sell it now for $300,000, should you really have to pay income tax on $280,000? Some, yes, but a lot of that was inflation. Ditto any other asset. There needs to be some way of adjusting out inflation effects.


That doesn't make sense, John. If you bought your home for $20k and sold it for $300k then you have $280k in inflation, also known as capital gains. You can deduct the cost of improvements, but the bulk of your profit is simply inflation. I admit this causes problems for retirees downsizing their homes, but we already have an exemption for that.

Sometimes the tax code is complicated because it tries to take those scenarios into account. That's not to say the tax code isn't overly complicated with hundred if not thousands of sweetheart exemptions written into law, but at least some of the complication is necessary to avoid unintended consequences such as a huge tax bill becoming due when you retire and buy a condo unit so that you don't need to shovel anymore.

I would propose a "douche tax" and you could even call it "pjbogart's douche tax" if you want. Basically, if you're a douche and doing douchey shit, you can't write off those expenses. Now I know that "douchey" is kind of vague, but like pornography, we know it when we see it. Like training a dancing fucking horse. Douchey. Pimping out your 1994 Honda Civic. Douchey. Sending your kid to a professional wrestling camp. Douchey. Competing in tractor pulls. Douchey. Putting a helicopter pad on your yacht. Douchey.

Well, you get the idea.
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Re: Mitt Romney 2012

Postby snoqueen » Thu Aug 16, 2012 9:16 am

Don't forget you no longer pay capital gains on the sale of a primary residence of that size at all, even if you pimped it out really, really douchey.
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Re: Mitt Romney 2012

Postby HawkHead » Thu Aug 16, 2012 9:53 am

snoqueen wrote:Don't forget you no longer pay capital gains on the sale of a primary residence of that size at all, even if you pimped it out really, really douchey.


Not quite Sno.

You get a $250,000 exemption if single and a $500,000 exemption if married filing joint on the gain on the sale of your primary residence.

In the current real estate market it isn't an issue unless you have held your house for a very long time. Years ago when my wife sold her CA property she got caught because of the large appreciation of her OC property.

Also, the residence must be your primary residence for 2 of the last 5 years.

There is a famous court case regarding a Wisconsin resident and this rule. They had thier house in WI, a place in AZ and a condo in FL. The IRS ruled and the courts supported that because they didn't live in any of the residence for more than 188 days they had no primary residence and had to pick up all of the gain on the sale of their WI home.
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Re: Mitt Romney 2012

Postby johnfajardohenry » Thu Aug 16, 2012 10:44 am

pjbogart wrote:That doesn't make sense, John. If you bought your home for $20k and sold it for $300k then you have $280k in inflation, also known as capital gains. You can deduct the cost of improvements, but the bulk of your profit is simply inflation. I admit this causes problems for retirees downsizing their homes, but we already have an exemption for that.


I was talking about a house, which might or might not be a home. As Snoqueen points out, you do not pay tax on the gain from the sale of a house provided that:

1) It is your primary residence

2) you purchase another primary residence of equal or greater value

or

3) You are over 65 years old (60?)

However let's ignore primary residences and speak of investments, which is what this thread is about.

So you pay taxes on the $280,000 gain (ignore improvements etc to keep it simple) You pay at a reduced, capital gains, rate but you still pay. A large part of that $280,000, though perhaps not all, is inflation and doesn't really represent any gain at all.

Why should one have to pay any taxes at on the increase due to inflation?

I agree that our tax code is overly complex and I would not want to try to write in some COLA adjustment on gains.

Perhaps it could be a sliding scale. Investments held for 5-10 years taxed at one cap gains rate, 10-15 at a lower rate and over 15 no tax at all on the gains.


pjbogart wrote:I would propose a "douche tax" and you could even call it "pjbogart's douche tax" if you want. Basically, if you're a douche and doing douchey shit, you can't write off those expenses. Now I know that "douchey" is kind of vague, but like pornography, we know it when we see it. Like training a dancing fucking horse. Douchey. Pimping out your 1994 Honda Civic. Douchey. Sending your kid to a professional wrestling camp. Douchey. Competing in tractor pulls. Douchey. Putting a helicopter pad on your yacht. Douchey.



But the IRS already has that covered. See the link I posted the other day to the IRS bulletin. Anne Romney can't deduct the expenses of her horse from any Romney family income. She can only deduct the expenses of the horse from earnings that come from that horse. If she spent $100,000 to win a $10,000 prize, she will not owe on the $10,000 but the other $90m can't be deducted against anything else.

Ditto the Honda or the helocopter etc.

The only way these expenses can be deducted against other income is if they can prove to the IRS satisfaction that she is running her dancing horses as a business with the intention of making a profit. See the IRS brochure for info on how to prove that. While it may be theoretically possible to run the business at a loss for 7 years and still prove you are trying to make a profit, I suspect that she would have a very, very, tough time convincing the IRS. Unless she can, she has to eat the losses over and above winnings/earnings.

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Re: Mitt Romney 2012

Postby wack wack » Thu Aug 16, 2012 10:55 am

johnfajardohenry wrote:So you pay taxes on the $280,000 gain (ignore improvements etc to keep it simple) You pay at a reduced, capital gains, rate but you still pay. A large part of that $280,000, though perhaps not all, is inflation and doesn't really represent any gain at all.

Why should one have to pay any taxes at on the increase due to inflation?

John Henry


It was ridiculous the first time you suggested it, and it is still ridiculous.

Does one get to enjoy the full benefit of the increase due to inflation?
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Re: Mitt Romney 2012

Postby rabble » Thu Aug 16, 2012 10:55 am

Okay, so we don't care anymore if Romney paid twenty seven cents in taxes on his last six returns? We'd rather discuss tax laws now?

Not that there's anything wrong with that.
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Re: Mitt Romney 2012

Postby jman111 » Thu Aug 16, 2012 11:08 am

rabble wrote:Okay, so we don't care anymore if Romney paid twenty seven cents in taxes on his last six returns? We'd rather discuss tax laws now?

Not that there's anything wrong with that.

I think this might help explain:
johnfajardohenry wrote:Look!

A squirrel!

John Henry
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Re: Mitt Romney 2012

Postby Stebben84 » Thu Aug 16, 2012 12:31 pm

johnfajardohenry wrote:A large part of that $280,000, though perhaps not all, is inflation and doesn't really represent any gain at all.


What are you talking about? Of course it's gain. It's $280,000 more dollars that you have in your pocket before you started. Also, none of this takes into account remodeling, changes in the neighborhood, changes in the city, or a host of other issues.

One could argue that anything appreciating over time(sports memorabilia, antiques, art, etc.) is only gaining because of inflation. That would be stupid.

Or course, John, you could tell us about some class you took, or seminar, or some book that makes you an apparent expert on everything. I believe you think you're a lot smarter than you really are.
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Re: Mitt Romney 2012

Postby jman111 » Thu Aug 16, 2012 12:39 pm

I wonder if JH thinks we should be able to deduct "losses" on our cash assets due to inflation.
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Re: Mitt Romney 2012

Postby DCB » Thu Aug 16, 2012 12:41 pm

johnfajardohenry wrote:
DCB wrote:So, here we have a very rich person (one of the richest!) who pays a lower tax rate than people who are less wealthy.
QED

see also: Mitt Romney.


You say that you are not confused but then go on to sound like you are still confusing wealth and income. "pays a lower tax rate than people who are less wealthy"

I suppose it makes you feel clever to point out that wealth != income, but I heard you the first time.
johnfajardohenry wrote:Buffett pays income taxes on his income. He didn't have a lot of income (relatively speaking) though he does have a lot of wealth.
Define "a lot". Or better yet, don't.
You seem to be confusing 'salary' with 'income'. As if somehow his massive investments don't generate any income.
johnfajardohenry wrote:I would bet that he paid about the same tax rate as anyone else with similar salary income. His wealth has nothing to do with his tax rate.
If you read the Politifact link I highlighted, you'd know that he pays 17%, while other people in his office pay a higher rate, around 30-35%.

Do those people have 'similar salary income'? I'm guess if anything, their salary is less than his.

johnfajardohenry wrote:Of course you and anyone else had the same opportunity to buy B-H stock and pay cap gains when you sold them. So why are you saying that his wealth gets him any special benefits on taxes that you yourself don't have?

Because I don't have billions of spare dollars to invest in B-H. Duh.
johnfajardohenry wrote:this discussion seems fruitless.

Well, we agree on something.
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Re: Mitt Romney 2012

Postby Henry Vilas » Thu Aug 16, 2012 1:22 pm

Romney: I never paid less that 13% in taxes during the last ten years.

Me: Prove it.


(I never paid less than twice that rate during the last ten years.)
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Re: Mitt Romney 2012

Postby fisticuffs » Thu Aug 16, 2012 1:30 pm

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