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Post by aztec70 on Apr 21, 2011 14:34:36 GMT -8
Please explain why the income of capital should be taxed at a preferred rate compared to the income of land and labor? Nationally, we have a pathetic savings rate. I think the idea behind it was theoretically to spur savings and investment. I just don't think that that's a very good way to do that. Yoda out... First, saving and investing are not the same thing. They are not interchangeable. Capital gain rates have nothing to do with saving. It only has to do with investing. Perhaps the savings rate is so poor because after the taxes are paid on wages and rents there is not enough left to save. Perhaps is capital was paying at the same rate, the rate would be lower. There might be enough left after taxes to save and invest. Just saying.  If one really believes in the market system there is no good reason for government to reward capital over land and labor. It is only done because those with capital have more influence over government than labor and land do. If conservatives don't think that government should be involved in making market decisions then why do want the government to give incentives to capital? It seems like hypocrisy to me. |
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Post by aztecwin on Apr 21, 2011 16:11:38 GMT -8
Nationally, we have a pathetic savings rate. I think the idea behind it was theoretically to spur savings and investment. I just don't think that that's a very good way to do that. Yoda out... First, saving and investing are not the same thing. They are not interchangeable. Capital gain rates have nothing to do with saving. It only has to do with investing. Perhaps the savings rate is so poor because after the taxes are paid on wages and rents there is not enough left to save. Perhaps is capital was paying at the same rate, the rate would be lower. There might be enough left after taxes to save and invest. Just saying. If one really believes in the market system there is no good reason for government to reward capital over land and labor. It is only done because those with capital have more influence over government than labor and land do. If conservatives don't think that government should be involved in making market decisions then why do want the government to give incentives to capital? It seems like hypocrisy to me. Saving and investing are not the same thing as you say. Saving and investing should be very closely related. You save for many reasons and one of those reasons should be investing for your future. Individual saving is a huge part of capital formation and as such is good for the economic growth of our country. Congress wants to encourage this activity and therefore shapes tax policy to encourage saving and investing. You can argue about the fairness, but not about the wisdom of both the saver/investor and the policy makers who encourage them by providing favorable tax treatment. It becomes only a matter of time before smarter folks figure out that their own financial struggles are made easier by being able to spend money that has been earned at a lower tax rate than the rate on wages. Think of how you would be better off if you were making your car payment out of dividend income from a Roth than from your wages. Better yet, if your house payment and taxes were paid for from a Roth. You use tax free money to make a payment that is largely deductable. As a "tax professional", that is what you should be telling your clients.  |
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Post by aztec70 on Apr 21, 2011 19:51:56 GMT -8
I give much better advice to my clients. I explain to them that investing means owning shares. With ownership comes risk and hopefully rewards. Saving is riskless from a the point of view of capital loss. The risk comes from inflation. When you save you are a lender, when you invest you are an owner. Very different.
If you like, I can explain the holes in your knowledge of Roth accounts. Let me know.
I believe this might be my post that started this discussion. I am sorry I said investing means owning stock. Bonds should be there as well. Sometimes when you post in haste you leave things out.
Notice how I refer to capital loss as being what is riskless. I tell you that there is inflation risk. This is two pronged risk. One, lose of purchasing power, secondly, rising interest rates when yours is fixed, interest rate risk, if you will. I believe I have already covered your point, Yoda.
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Post by aztecwin on Apr 22, 2011 11:04:18 GMT -8
Saving and investing are not the same thing as you say. Saving and investing should be very closely related. You save for many reasons and one of those reasons should be investing for your future. Individual saving is a huge part of capital formation and as such is good for the economic growth of our country. Congress wants to encourage this activity and therefore shapes tax policy to encourage saving and investing. You can argue about the fairness, but not about the wisdom of both the saver/investor and the policy makers who encourage them by providing favorable tax treatment. It becomes only a matter of time before smarter folks figure out that their own financial struggles are made easier by being able to spend money that has been earned at a lower tax rate than the rate on wages. Think of how you would be better off if you were making your car payment out of dividend income from a Roth than from your wages. Better yet, if your house payment and taxes were paid for from a Roth. You use tax free money to make a payment that is largely deductable. As a "tax professional", that is what you should be telling your clients. I give much better advice to my clients. I explain to them that investing means owning shares. With ownership comes risk and hopefully rewards. Saving is riskless from a the point of view of capital loss. The risk comes from inflation. When you save you are a lender, when you invest you are an owner. Very different. If you like, I can explain the holes in your knowledge of Roth accounts. Let me know. No holes in my understanding of Roth or any other program. I know what ages you must be and about the minimum holding periods. Now you tell me why taking a tax free distribution from your Roth to pay your Mortgage and Taxes is a bad idea. |
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Post by aztec70 on Apr 22, 2011 15:26:21 GMT -8
I give much better advice to my clients. I explain to them that investing means owning shares. With ownership comes risk and hopefully rewards. Saving is riskless from a the point of view of capital loss. The risk comes from inflation. When you save you are a lender, when you invest you are an owner. Very different. If you like, I can explain the holes in your knowledge of Roth accounts. Let me know. No holes in my understanding of Roth or any other program. I know what ages you must be and about the minimum holding periods. Now you tell me why taking a tax free distribution from your Roth to pay your Mortgage and Taxes is a bad idea. How did your money get into the Roth? |
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Post by Yoda on Apr 22, 2011 16:42:12 GMT -8
Nationally, we have a pathetic savings rate. I think the idea behind it was theoretically to spur savings and investment. I just don't think that that's a very good way to do that. Yoda out... First, saving and investing are not the same thing. They are not interchangeable. Capital gain rates have nothing to do with saving. It only has to do with investing. Perhaps the savings rate is so poor because after the taxes are paid on wages and rents there is not enough left to save. Perhaps is capital was paying at the same rate, the rate would be lower. There might be enough left after taxes to save and invest. Just saying. If one really believes in the market system there is no good reason for government to reward capital over land and labor. It is only done because those with capital have more influence over government than labor and land do. If conservatives don't think that government should be involved in making market decisions then why do want the government to give incentives to capital? It seems like hypocrisy to me. Saving and investing probably have a few differences but they are pretty much the same thing. Whether you save $100 a month in a savings account or $100 a month in a mutual fund -- either way, it is an investment. Per Investopedia... What Does National Savings Rate Mean? An estimate from the U.S. Commerce Department's Bureau of Economic Analysis (BEA) of the amount of income left over after subtracting consumption costs and expenditures. The National Savings Rate, though it is referred to as a "savings rate," does not actually measure the amount of money Americans are saving or investing for the long-term. National savings include savings left over from personal, business and government. Yoda out... |
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Post by aztecwin on Apr 22, 2011 16:47:01 GMT -8
No holes in my understanding of Roth or any other program. I know what ages you must be and about the minimum holding periods. Now you tell me why taking a tax free distribution from your Roth to pay your Mortgage and Taxes is a bad idea. How did your money get into the Roth? You make a taxable contribution in return for tax free growth and distributions for your lifetime. Small tax up front and huge tax saving over the life of the account. Pretty simple except to the simple. |
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Post by aztec70 on Apr 22, 2011 18:07:36 GMT -8
How did your money get into the Roth? You make a taxable contribution in return for tax free growth and distributions for your lifetime. Small tax up front and huge tax saving over the life of the account. Pretty simple except to the simple. So the money that you put in has already been taxed? After tax money, if you will? You can claim that when you take money out that has already been taxed it is tax free, but that is really a misnomer. Can you understand the concept that when you take back your after tax contribution it is not a tax free distribution, but a return of capital? |
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Post by aztec70 on Apr 22, 2011 18:09:45 GMT -8
First, saving and investing are not the same thing. They are not interchangeable. Capital gain rates have nothing to do with saving. It only has to do with investing. Perhaps the savings rate is so poor because after the taxes are paid on wages and rents there is not enough left to save. Perhaps is capital was paying at the same rate, the rate would be lower. There might be enough left after taxes to save and invest. Just saying. If one really believes in the market system there is no good reason for government to reward capital over land and labor. It is only done because those with capital have more influence over government than labor and land do. If conservatives don't think that government should be involved in making market decisions then why do want the government to give incentives to capital? It seems like hypocrisy to me. Saving and investing probably have a few differences but they are pretty much the same thing. Whether you save $100 a month in a savings account or $100 a month in a mutual fund -- either way, it is an investment. Per Investopedia... What Does National Savings Rate Mean? An estimate from the U.S. Commerce Department's Bureau of Economic Analysis (BEA) of the amount of income left over after subtracting consumption costs and expenditures. The National Savings Rate, though it is referred to as a "savings rate," does not actually measure the amount of money Americans are saving or investing for the long-term. National savings include savings left over from personal, business and government. Yoda out... Please think again. Owning and lending are not "pretty much the same thing". |
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Post by aztec70 on Apr 22, 2011 18:11:09 GMT -8
I give much better advice to my clients. I explain to them that investing means owning shares. With ownership comes risk and hopefully rewards. Saving is riskless from a the point of view of capital loss. The risk comes from inflation. When you save you are a lender, when you invest you are an owner. Very different. If you like, I can explain the holes in your knowledge of Roth accounts. Let me know. No holes in my understanding of Roth or any other program. I know what ages you must be and about the minimum holding periods. Now you tell me why taking a tax free distribution from your Roth to pay your Mortgage and Taxes is a bad idea. I would guess you confuse tactics and strategy too. |
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Post by aztecwin on Apr 23, 2011 6:33:56 GMT -8
You make a taxable contribution in return for tax free growth and distributions for your lifetime. Small tax up front and huge tax saving over the life of the account. Pretty simple except to the simple. So the money that you put in has already been taxed? After tax money, if you will? You can claim that when you take money out that has already been taxed it is tax free, but that is really a misnomer. Can you understand the concept that when you take back your after tax contribution it is not a tax free distribution, but a return of capital? Do you want to quibble about semantics or discuss the wisdom in using the Roth IRA and the freedom it gives you when you can take distributions. Do you understand the additional leverage you get when you pay your tax deductible mortgage with a Roth distribution that is derived from dividends on issues within your Roth? The idea of distributions being characterized as "return of capital" is one of the reasons tax code was changed to give us the Alternative Minimum Tax. When I get my K-1 from some partnerships, I simply enter the data on my tax forms. When those partnerships are within a IRA, you forward that form to your broker and they handle it for you and as long as the figure is under 1000 per IRA account, it is tax free. Above that and you have to worry about AMT. Are you sure that you are a tax expert? Seems like you lack an understanding of the way things are and how to take advantage of the existing code. |
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Post by aztecwin on Apr 23, 2011 6:37:14 GMT -8
Saving and investing probably have a few differences but they are pretty much the same thing. Whether you save $100 a month in a savings account or $100 a month in a mutual fund -- either way, it is an investment. Per Investopedia... What Does National Savings Rate Mean? An estimate from the U.S. Commerce Department's Bureau of Economic Analysis (BEA) of the amount of income left over after subtracting consumption costs and expenditures. The National Savings Rate, though it is referred to as a "savings rate," does not actually measure the amount of money Americans are saving or investing for the long-term. National savings include savings left over from personal, business and government. Yoda out... Please think again. Owning and lending are not "pretty much the same thing". Again, you show a lack of understanding of investment basics. An investment in debt (bonds or savings accounts to earn interest) or an investment in equity (stock or MLPs for dividends or cap gains) are still investments. |
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Post by aztecwin on Apr 23, 2011 6:39:07 GMT -8
No holes in my understanding of Roth or any other program. I know what ages you must be and about the minimum holding periods. Now you tell me why taking a tax free distribution from your Roth to pay your Mortgage and Taxes is a bad idea. I would guess you confuse tactics and strategy too. Oh! Brother! |
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Post by aztec70 on Apr 23, 2011 6:57:58 GMT -8
So the money that you put in has already been taxed? After tax money, if you will? You can claim that when you take money out that has already been taxed it is tax free, but that is really a misnomer. Can you understand the concept that when you take back your after tax contribution it is not a tax free distribution, but a return of capital? Do you want to quibble about semantics or discuss the wisdom in using the Roth IRA and the freedom it gives you when you can take distributions. Do you understand the additional leverage you get when you pay your tax deductible mortgage with a Roth distribution that is derived from dividends on issues within your Roth? The idea of distributions being characterized as "return of capital" is one of the reasons tax code was changed to give us the Alternative Minimum Tax. When I get my K-1 from some partnerships, I simply enter the data on my tax forms. When those partnerships are within a IRA, you forward that form to your broker and they handle it for you and as long as the figure is under 1000 per IRA account, it is tax free. Above that and you have to worry about AMT. Are you sure that you are a tax expert? Seems like you lack an understanding of the way things are and how to take advantage of the existing code. LOL I have to guess that when you take money out of a money market fund that currently pays no interest you are so happy that you are getting a tax free distribution!! ;D |
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Post by aztec70 on Apr 23, 2011 7:02:02 GMT -8
Please think again. Owning and lending are not "pretty much the same thing". Again, you show a lack of understanding of investment basics. An investment in debt (bonds or savings accounts to earn interest) or an investment in equity (stock or MLPs for dividends or cap gains) are still investments. I'm sorry, but you are so ignorant.  |
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Post by aztecwin on Apr 23, 2011 7:07:59 GMT -8
Do you want to quibble about semantics or discuss the wisdom in using the Roth IRA and the freedom it gives you when you can take distributions. Do you understand the additional leverage you get when you pay your tax deductible mortgage with a Roth distribution that is derived from dividends on issues within your Roth? The idea of distributions being characterized as "return of capital" is one of the reasons tax code was changed to give us the Alternative Minimum Tax. When I get my K-1 from some partnerships, I simply enter the data on my tax forms. When those partnerships are within a IRA, you forward that form to your broker and they handle it for you and as long as the figure is under 1000 per IRA account, it is tax free. Above that and you have to worry about AMT. Are you sure that you are a tax expert? Seems like you lack an understanding of the way things are and how to take advantage of the existing code. LOL I have to guess that when you take money out of a money market fund that currently pays no interest you are so happy that you are getting a tax free distribution!! ;D Where did you get that idea? It appears more and more that you have chosen the wrong profession and you may have only fools for clients. |
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Post by Yoda on Apr 23, 2011 8:29:46 GMT -8
Again, you show a lack of understanding of investment basics. An investment in debt (bonds or savings accounts to earn interest) or an investment in equity (stock or MLPs for dividends or cap gains) are still investments. I'm sorry, but you are so ignorant. I don't understand what you are trying to prove. To be sure there are differences among the various asset classes -- such as differences in tax treatment -- but that doesn't mean that putting money into one or more of them isn't investing. And just for fun, what is a convertible bond -- the purchase of debt or an investment in equity? Yoda out... |
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Post by aztecwin on Apr 23, 2011 14:21:33 GMT -8
Again, you show a lack of understanding of investment basics. An investment in debt (bonds or savings accounts to earn interest) or an investment in equity (stock or MLPs for dividends or cap gains) are still investments. I'm sorry, but you are so ignorant. You show one more thing that is beyond you and resort to name calling?  A purchase of debt or equity are both investments. |
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Post by aztecwin on Apr 23, 2011 14:23:34 GMT -8
I'm sorry, but you are so ignorant. I don't understand what you are trying to prove. To be sure there are differences among the various asset classes -- but that doesn't mean that putting money into one or more of them isn't investing. There are differences in the tax treatments of many of them -- be they interest income or dividends or whatever. And just for fun, what is a convertible bond -- an investment in debt or an investment in equity? Yoda out... Do you think he knows? Instruments that have characteristics of both will make him trip a breaker. |
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Post by aztec70 on Apr 24, 2011 8:01:34 GMT -8
I'm sorry, but you are so ignorant. I don't understand what you are trying to prove. To be sure there are differences among the various asset classes -- such as differences in tax treatment -- but that doesn't mean that putting money into one or more of them isn't investing. And just for fun, what is a convertible bond -- the purchase of debt or an investment in equity? Yoda out... The diference between saving and investment is risk, Yoda. When you save you should not be taking risk. When you invest you are taking risk. |
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A purchase of debt or equity are both investments.