Join Early Retirement Today
Reply
 
Thread Tools Search this Thread Display Modes
Old 09-16-2012, 07:29 PM   #61
Recycles dryer sheets
 
Join Date: Dec 2011
Posts: 388
Quote:
Originally Posted by audreyh1 View Post
On the doctor thing - we DO have a huge influx of foreign doctors from foreign medical schools due to the AMA restricting the number of doctors graduating form US medical schools. These doctors fill open residency positions and go on to become board certified in their specialty in the US. Where I live only a tiny percentage of doctors went to US medical schools.
But not enough to reduce the shortage in primary care doctors, in rural areas generally, or to put a dent in the high cost of doctor time in the US:

__________________

__________________
Khufu is offline   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Old 09-17-2012, 04:41 AM   #62
Thinks s/he gets paid by the post
teejayevans's Avatar
 
Join Date: Sep 2006
Posts: 1,222
Quote:
Originally Posted by Khufu View Post
At the end of WWII the US national debt was about 120% of GDP. Twenty years later it had dropped to 40%. How did the US manage to pay off so much of the cost of the war in twenty years? It never did. The economy grew. The stimulus from the war spending lasted a very long time.

When the govt borrows money and spends it, the effect on the economy is the same as when a company does. The "profit" to the govt comes from higher tax collections on an economy that grows.
At the end of WWII, we had the advantage that our country wasn't destroyed and we were a manufacturing leader.

Affect on the economy is not the same, when govt spends tax dollars, it's not a profit that we only get a percentage of it back.
TJ
__________________

__________________
teejayevans is offline   Reply With Quote
Old 09-17-2012, 07:15 AM   #63
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
pb4uski's Avatar
 
Join Date: Nov 2010
Location: Vermont & Sarasota, FL
Posts: 16,439
Quote:
Originally Posted by Khufu View Post
Historically capital gains tax rates have varied significantly without a noticeable effect on the willingness of entrepeneurs to start businesses.

While the first part of your statement is factual the second part is pure speculation though I would concede that capital gains tax rates are not likely a significant factor in the minds of entrepreneurs. However, capital gains are a significant factor to investors who provide capital that businesses need to grow and prosper.

My interest in equities would be much lower if maximum capital gains tax rate was 40%. Why take on such risk if the rewards are subject to up to 40% tax (plus state taxes on top of that where applicable)?
__________________
pb4uski is offline   Reply With Quote
Old 09-17-2012, 08:35 AM   #64
Thinks s/he gets paid by the post
 
Join Date: Aug 2006
Posts: 1,361
What is an investor going to do with their money instead?

If regular interest is taxed at the same rate, it really doesn't change the equation much.

You either invest or you will have to go back to work (which will get taxed as well).


Quote:
Originally Posted by pb4uski View Post
My interest in equities would be much lower if maximum capital gains tax rate was 40%. Why take on such risk if the rewards are subject to up to 40% tax (plus state taxes on top of that where applicable)?
__________________
Hamlet is offline   Reply With Quote
Old 09-17-2012, 09:03 AM   #65
Moderator
ziggy29's Avatar
 
Join Date: Oct 2005
Location: Texas
Posts: 15,612
Quote:
Originally Posted by Nemo2 View Post
You cannot just 'make jobs up', regardless of the need for them; there has to be a demand, and there has to be a profit...other than pork barreling with taxpayer's money who's going to knowingly invest in losing propositions?
Perhaps, but on the flip side there will be no demand as long as economic forces and technology displacing labor with machines continue to cause jobs to shrivel up. In order to keep an economy and an industry strong, you have to have a broad base of consumers who can afford to buy your products. That means they need decent jobs with decent pay. This isn't new stuff. Henry Ford got that 100 years ago.
__________________
"Hey, for every ten dollars, that's another hour that I have to be in the work place. That's an hour of my life. And my life is a very finite thing. I have only 'x' number of hours left before I'm dead. So how do I want to use these hours of my life? Do I want to use them just spending it on more crap and more stuff, or do I want to start getting a handle on it and using my life more intelligently?" -- Joe Dominguez (1938 - 1997)

RIP to Reemy, my avatar dog (2003 - 9/16/2017)
ziggy29 is offline   Reply With Quote
Old 09-17-2012, 09:46 AM   #66
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Midpack's Avatar
 
Join Date: Jan 2008
Location: Chicagoland
Posts: 11,977
Quote:
Originally Posted by ziggy29 View Post
Perhaps, but on the flip side there will be no demand as long as economic forces and technology displacing labor with machines continue to cause jobs to shrivel up. In order to keep an economy and an industry strong, you have to have a broad base of consumers who can afford to buy your products. That means they need decent jobs with decent pay. This isn't new stuff. Henry Ford got that 100 years ago.
Interesting, I've been wondering about Henry Ford's "bold move" lately. In that vein DEAR AMERICAN COMPANIES: Here's How To Fix The Economy - Business Insider. It was an interesting read, though IMO it will NEVER happen in today's world.
Quote:
Henry Ford's story is highly relevant today. Because we are facing a very similar economic problem as the country did in the early 20th century. A glut of labor was allowing companies to pay a pittance for a day's work, leaving most of their dedicated employees destitute. Business owners and executives (the equivalent of today's 1%) did fine, but most rank-and-file workers did not. And this lack of spending power in the middle class crimped overall economic growth.
Interesting thread...
__________________
No one agrees with other people's opinions; they merely agree with their own opinions -- expressed by somebody else. Sydney Tremayne
Retired Jun 2011 at age 57

Target AA: 60% equity funds / 35% bond funds / 5% cash
Target WR: Approx 2.5% Approx 20% SI (secure income, SS only)
Midpack is online now   Reply With Quote
Old 09-17-2012, 09:50 AM   #67
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
pb4uski's Avatar
 
Join Date: Nov 2010
Location: Vermont & Sarasota, FL
Posts: 16,439
Quote:
Originally Posted by Hamlet View Post
What is an investor going to do with their money instead?
If tax rates were that high, muni bonds would be attractive again.
__________________
pb4uski is offline   Reply With Quote
Old 09-17-2012, 10:14 AM   #68
Thinks s/he gets paid by the post
Nemo2's Avatar
 
Join Date: May 2011
Location: Belleville, ONT
Posts: 4,320
Henry Ford also had a product for which he envisioned 'local' production and the strong potential for high demand, for both personal and business usage.

I was talking with my neighbor recently, (a guy in his early 70s, German born, came to Canada some 50 odd years ago; like me he was born during WWII), he suggested that we were fortunate enough to be born during the 'best of times' (in a non Dickensian context), and it struck me that the post-war boom and its corresponding, multi decade long follow through, was an anomaly that morphed into an unsustainable 'standard'.......it looks as if we might be heading back to the 'norm'.
__________________
"Exit, pursued by a bear."

The Winter's Tale, William Shakespeare
Nemo2 is online now   Reply With Quote
Old 09-17-2012, 10:27 AM   #69
Full time employment: Posting here.
EvrClrx311's Avatar
 
Join Date: Feb 2012
Posts: 524
how much longer until machines are capable of improving (evolving) themselves without any human interaction? Then we'll have nothing to worry about...

or will we?

Quote:
Originally Posted by Wiki
The technological singularity is the hypothetical future emergence of greater-than-human superintelligence through technological means.[1] Since the capabilities of such intelligence would be difficult for an unaided human mind to comprehend, the occurrence of a technological singularity is seen as an intellectual event horizon, beyond which events cannot be predicted or understood.

Proponents of the singularity typically state that an "intelligence explosion",[2][3] where superintelligences design successive generations of increasingly powerful minds, might occur very quickly and might not stop until the agent's cognitive abilities greatly surpass that of any human.
__________________
EvrClrx311 is offline   Reply With Quote
Old 09-17-2012, 10:28 AM   #70
Moderator
ziggy29's Avatar
 
Join Date: Oct 2005
Location: Texas
Posts: 15,612
Quote:
Originally Posted by Nemo2 View Post
I was talking with my neighbor recently, (a guy in his early 70s, German born, came to Canada some 50 odd years ago; like me he was born during WWII), he suggested that we were fortunate enough to be born during the 'best of times' (in a non Dickensian context), and it struck me that the post-war boom and its corresponding, multi decade long follow through, was an anomaly that morphed into an unsustainable 'standard'.......it looks as if we might be heading back to the 'norm'.
*Strictly* in terms of the economic deal they got, I consider my parents' generation (born 1935) as among the most fortunate the world has ever produced -- and probably the most fortunate we'll ever see in my lifetime (particularly in the US economy). It does seem like the planets all aligned in a way that shone brightly on them as a whole. By the time they entered the work force, the postwar economy was booming and middle class opportunity seemed almost limitless (at least for white folks). They came to work in an era of job security, pensions and secure health insurance. By the time that was starting to unravel badly, they were able to retire and were old enough to be exempted from any takeaways, both from corporate employers and government.

I have been saying for years that the first 25-30 years of the post WW2 economy were an almost magical confluence of factors that could not possibly be sustained, and we've seen increasing evidence in the last few years of this. In reality we started losing it by the late 1970s but kept the illusion alive for 2-3 decades with debt. But now we've racked up so much debt that we can't keep the house of cards from tumbling down on the next generation.

Compare the public attitude about prosperity today as compared to, say, 50-60 years ago. Back then we felt so strong after WW2, that hope, prosperity and upward mobility were so abundant, that society (with some struggles) nevertheless made a value judgment to expand that opportunity to minorities (especially blacks) and allowed more career options for women not much later. Today, IMO, the feeling is that prosperity is contracting, not expanding, and we have a tendency to be more protective of what we have. When we felt like there would be more and more pie over the years, we were more willing to share it. When we feel like the pie is shrinking, there is less willingness to give others a slice and we become much more protective of the pie we *do* have.

Am I saying they lived in the best time to ever live? No; there are plenty of reasons why living today is preferable even if the economic prospects are much tougher. I'm just speaking of the economic aspects.
__________________
"Hey, for every ten dollars, that's another hour that I have to be in the work place. That's an hour of my life. And my life is a very finite thing. I have only 'x' number of hours left before I'm dead. So how do I want to use these hours of my life? Do I want to use them just spending it on more crap and more stuff, or do I want to start getting a handle on it and using my life more intelligently?" -- Joe Dominguez (1938 - 1997)

RIP to Reemy, my avatar dog (2003 - 9/16/2017)
ziggy29 is offline   Reply With Quote
Old 09-17-2012, 10:34 AM   #71
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
FinanceDude's Avatar
 
Join Date: Aug 2006
Posts: 12,484
Quote:
Originally Posted by Khufu View Post
At the end of WWII the US national debt was about 120% of GDP. Twenty years later it had dropped to 40%. How did the US manage to pay off so much of the cost of the war in twenty years? It never did. The economy grew. The stimulus from the war spending lasted a very long time.
Not to mention the 3% VA loans the vets got to buy those $5,000 homes being built.........

Quote:
When the govt borrows money and spends it, the effect on the economy is the same as when a company does. The "profit" to the govt comes from higher tax collections on an economy that grows.
Really? Then explain how the trillion dollar stimulus stimulated the economy as you suggest?
__________________
Consult with your own advisor or representative. My thoughts should not be construed as investment advice. Past performance is no guarantee of future results (love that one).......:)


This Thread is USELESS without pics.........:)
FinanceDude is offline   Reply With Quote
Old 09-17-2012, 10:38 AM   #72
Thinks s/he gets paid by the post
Nemo2's Avatar
 
Join Date: May 2011
Location: Belleville, ONT
Posts: 4,320
Quote:
Originally Posted by ziggy29 View Post
Am I saying they lived in the best time to ever live? No; there are plenty of reasons why living today is preferable even if the economic prospects are much tougher. I'm just speaking of the economic aspects.
Yes, I should have clarified, we were talking solely from an economic perspective.
__________________
"Exit, pursued by a bear."

The Winter's Tale, William Shakespeare
Nemo2 is online now   Reply With Quote
Old 09-17-2012, 12:14 PM   #73
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
HFWR's Avatar
 
Join Date: May 2005
Location: Lawn chair in Texas
Posts: 12,964
Quote:
Originally Posted by FinanceDude

Not to mention the 3% VA loans the vets got to buy those $5,000 homes being built.........

Really? Then explain how the trillion dollar stimulus stimulated the economy as you suggest?
Not necessarily disagreeing, but we don't really know what the economy would be like without the stimulus.
__________________
Have Funds, Will Retire

...not doing anything of true substance...
HFWR is offline   Reply With Quote
Old 09-17-2012, 12:20 PM   #74
Thinks s/he gets paid by the post
 
Join Date: Oct 2006
Posts: 3,820
Quote:
Originally Posted by pb4uski View Post
If tax rates were that high, muni bonds would be attractive again.
I'm in favor of setting the dividend and capital gains tax rates equal to the rates on labor income. I'd also eliminate the tax exemption for munis.

Saved money has to go somewhere. I think we should let the market will sort out the risk/reward mix without gov't interference.
__________________
Independent is offline   Reply With Quote
Old 09-17-2012, 12:52 PM   #75
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
pb4uski's Avatar
 
Join Date: Nov 2010
Location: Vermont & Sarasota, FL
Posts: 16,439
Quote:
Originally Posted by Independent View Post
I'm in favor of setting the dividend and capital gains tax rates equal to the rates on labor income.
The problem that I have with applying ordinary rates to dividends and capital gains is that it results in double taxation - once at the corporate level (say 35%) and then again when the shareholder receives dividends or sells and gets a gain because of retained profits (say at 15%). So if a company has $100 of profit and pays $35 in tax then dividends the remaining $65 and that dividend gets taxed again at 28% the government gets $53 of the $100 of pre-tax profit. ($35 from the company + $18 from the shareholder). It seems excessive to me that the feds might get over half of the profit.

Taxation on labor seems to me to be a bit of a ruse in that the recipient pays taxes and the company gets a tax deduction so depending on the relative marginal tax rates it could actually be a net loss to the government if the corporate tax benefit exceeds the individual tax incurred. So if the employee pays 28% and the company gets a 35% benefit then the net effect is -7%.
__________________
pb4uski is offline   Reply With Quote
Old 09-17-2012, 02:05 PM   #76
Moderator
ziggy29's Avatar
 
Join Date: Oct 2005
Location: Texas
Posts: 15,612
Quote:
Originally Posted by Independent View Post
I'm in favor of setting the dividend and capital gains tax rates equal to the rates on labor income.
I could probably convince myself to agree on two conditions:

1) The double taxation of dividends was eliminated by allowing businesses to pass dividends to shareholders before tax (i.e. treat all dividends more like REIT dividends);

2) The cost basis on long term capital gains was adjusted for inflation. If you sell an asset you held for 20 years where 75% of the "gain" was due to inflation, it would be punitive to apply ordinary income tax rates to all the nominal "gain".

Do those two things, and I might be on board.
__________________
"Hey, for every ten dollars, that's another hour that I have to be in the work place. That's an hour of my life. And my life is a very finite thing. I have only 'x' number of hours left before I'm dead. So how do I want to use these hours of my life? Do I want to use them just spending it on more crap and more stuff, or do I want to start getting a handle on it and using my life more intelligently?" -- Joe Dominguez (1938 - 1997)

RIP to Reemy, my avatar dog (2003 - 9/16/2017)
ziggy29 is offline   Reply With Quote
Old 09-17-2012, 03:23 PM   #77
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
clifp's Avatar
 
Join Date: Oct 2006
Posts: 7,450
Quote:
Originally Posted by Khufu View Post
At the end of WWII the US national debt was about 120% of GDP. Twenty years later it had dropped to 40%. How did the US manage to pay off so much of the cost of the war in twenty years? It never did. The economy grew. The stimulus from the war spending lasted a very long time.

When the govt borrows money and spends it, the effect on the economy is the same as when a company does. The "profit" to the govt comes from higher tax collections on an economy that grows.

Japan's spending during their two lost decades has produced a national debt greater than their GDP, either 120% or 200% depending on how you count. The interest rate on 10 year Japanese Treasury bonds is currently less than 1%. If their is a level of debt that the Japanese economy cannot support, they haven't found it yet.
The situation was vastly different after WWII than today. There was a huge pent up demand for consumer goods since virtually all production of consumer goods from autos to nylons was stopped during the war. Unlike today where as society, we have tons of things and I'd argue that ubiquitous internet reduces demand for many products, like entertainment.

Second consumer were flush with cash, much of in the form of War bonds. In WWII almost all debt was held domestically, same thing is true today in Japan, today 1/2 the US debt is owed to oversea investor and 1/2 of that is Chinese. So government interest payments provided twice the stimulus to the economy than today. Today US consumer are heavily in debt.

Finally, US companies had virtually no competition domestically, with everybody else factories destroyed during the war. Today we live in a global economy, and much of the money spent by either tax cuts or government programs will be spent overseas.

Re Japan, John Maudlin's recent newsletter had some interesting observations.
Quote:
Japan, as I am wont to say, is a bug in search of a windshield. They have transmuted the savings of two generations into the largest debt ever for a country that I am aware of (in terms of GDP). It is now approaching 220% and rising at a prodigious pace, about 10% in 2011. They have gone from a savings rate of 16% to around 1%, largely due to an aging population that is now living off its savings.
When that savings rates goes negative, and it is a demographic certainty that it will, Japan will either be forced to pay higher interest rates or print massive amounts of yen or cut government spending by equally massive amounts. All of those options are ugly in the short term. If interest rates rose by a mere 2% for Japan, they would be spending more than 70% of their budget on just interest expense within a few years. That is not a workable business model. .
__________________
clifp is offline   Reply With Quote
Old 09-17-2012, 03:30 PM   #78
Thinks s/he gets paid by the post
 
Join Date: Aug 2006
Posts: 1,361
I think that this is a sensible reform to make. I would advocate getting rid of the corporate income tax almost entirely. The only exception would be that I think that we would need a nominal tax on cash and other low-risk assets to prevent the creation of corporations that serve only as a tax-avoidance vehicle for interest.

Tax all capital gains and dividends at ordinary income rates, indexing long-term cap gains for inflation.

One big advantage of this system would be that it would remove the incentive for our big multinational companies to hoard cash overseas. It would also put non-international companies on an equal footing with the multinationals. Currently, the multinationals can game the system so much that their effective tax rate is really low.

I'm not clear on whether this would result in more or less revenue over the long term though.

Quote:
Originally Posted by ziggy29 View Post
I could probably convince myself to agree on two conditions:

1) The double taxation of dividends was eliminated by allowing businesses to pass dividends to shareholders before tax (i.e. treat all dividends more like REIT dividends);

2) The cost basis on long term capital gains was adjusted for inflation. If you sell an asset you held for 20 years where 75% of the "gain" was due to inflation, it would be punitive to apply ordinary income tax rates to all the nominal "gain".

Do those two things, and I might be on board.
__________________
Hamlet is offline   Reply With Quote
Old 09-17-2012, 05:52 PM   #79
Administrator
Gumby's Avatar
 
Join Date: Apr 2006
Posts: 10,147
Quote:
Originally Posted by pb4uski View Post
. . . capital gains are a significant factor to investors who provide capital that businesses need to grow and prosper.

My interest in equities would be much lower if maximum capital gains tax rate was 40%. Why take on such risk if the rewards are subject to up to 40% tax (plus state taxes on top of that where applicable)?
Maybe you are an outlier:

Study: Tax Cuts for the Rich Don

Quote:
A study* from the Congressional Research Service — the non-partisan research office for Congress — shows that “there is little evidence over the past 65 years that tax cuts for the highest earners are associated with savings, investment or productivity growth."


* looking for the actual study now. And here it is http://graphics8.nytimes.com/news/bu...andeconomy.pdf
__________________
Living an analog life in the Digital Age.
Gumby is online now   Reply With Quote
Old 09-17-2012, 06:48 PM   #80
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
pb4uski's Avatar
 
Join Date: Nov 2010
Location: Vermont & Sarasota, FL
Posts: 16,439
Quote:
Originally Posted by Gumby View Post
Maybe you are an outlier
Wouldn't be the first time. Nor the last I'm guessin'.
__________________

__________________
pb4uski is offline   Reply With Quote
Reply


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


 

 
All times are GMT -6. The time now is 07:45 PM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2017, vBulletin Solutions, Inc.