Conference nyoss1::market_investing

I'm guessing (with fingers crossed) it'll be business as usual.

A good number of the "institutions" are mutual funds, many of which are chartered 
to maintain at least x% of their assets in stocks. If any of these funds do sell 
off a lot of stuff, they'll be looking to replace with new purchases. Also, these 
players don't typically give any consideration to the tax implications of their 
transactions. I wouldn't be surprised to see a related small sell-off prior to 
year-end as various investors (possibly including yours truly) sell in order to 
realize a capital loss, which may or may not be possible next year.

>     WHY, because I think the reason why the stock market is shooting up is
>     bacause the sellers of stocks are waiting til 1/96 to sell stocks if
>     the capitol gains tax cut takes effect ( assuming this actually
>     happens).
>  
>     DO you think starting 1/96, the markets are going to collapse since
>     alot of instituions and investors are going to sell MOST of there
>     95 profits to reap the savings from the tax cut ?

    
    	I think the market will have a difficult time in '96; but for
    entirely different reasons than .0.
    
    	I tend to look for market tops in the charts with such documented
    sidebars as: number and strength of IPOs is increasing rapidly
    		 some sector of the market is truly "frothy" - can you
    		 spell internet stocks?
    		 Big daily gains with no offsetting pullbacks
    		 seemly neverending index highs (like 59 so far this year)
    		 age of bull market (now the longest in recorded history)
    
    	Add to that both a high CRB, low interest rates, and heavy daily
    volume on all exchanges, and 1987 starts looking like reality. I am
    now nearly 40% cash with intentions to go to 60% by yearend. Taking
    profits bigtime.
    
    	And as my Grand-daddy always said, "Nobody ever went broke making
    a profit". It has been one hell of a run this year. One of the very
    best in market history. I really do not need that last 5%-10% when I've
    done over 40% this year. Thank you markets, but this cowboy is now
    taking the money and running...
    
    		the Greyhawk

    	I read somewhere that historically there is initial selling
    	pressure whenever tax codes inprove long-term cap gains tax
    	treatment.
    
    	I also heard today that the day before thanksgiving has seen
    	the stock market rise 80% of the time.  (Not related to the 
    	topic question, I know, but it seemed worth mentioning...)

>     WHY, because I think the reason why the stock market is shooting up is
>     bacause the sellers of stocks are waiting til 1/96 to sell stocks if
>     the capitol gains tax cut takes effect ( assuming this actually
>     happens).

	Let me ask you this; if all the sellers were holding til Jan.,
	then were are all the shares coming from that the buyers are
	buying? (someones got to be selling :-)

    
    So, then based on this, do you think it would be wise to move all my
    retirement funds out of growth funds and into cash or fixed interest
    vehicles?  What about money in international funds?  Or is retirement
    funds needed so far down the road (I'm 37) that I shouldn't be
    concerned if the market turns down.
    
    

    I think the capital gains tax cut will actually be favorable for
    stocks.
    
    1. Stock ownership will be more attractive (relative to other
    investment alternatives) because of favorable tax treatment of profits.
    
    2. Even if I sell stock XYZ because I have a profit in it (seems like a
    silly reason to me), I need to do something with the proceeds-- such as
    re-investing in company ABC.  So that while the value of XYZ shares may
    be under some negative pressure, the value of ABC shares would be under
    positive pressure.
    
    3. Most mutual funds pass the tax liability on to their shareholders,
    so they don't see any tax advantage (on the share price of their fund)
    whether they sell or not.
    
    Don
                              

    Historically a capital gains cut has resulted in an immediate reduction
    in market averages, as people sell profitable investments. This results
    in X dollars being available for future investment. Approximately 1/5
    of the gains immediately goes to Uncle Sam's wallet so not all proceeds 
    could be reinvested immediately.
    
    In addition a certain amount of money is invested in non-stock assets
    such as computer stores and fast-food franchises. (Can't you just see
    Greyhawk telling his employees "Remember to ask them if they want fries
    with that" :-)?
    
    But over the longer term the market averages recover. Cutting capital
    gains results in more efficient capital allocation, which improves the
    economy and creates wealth faster than capital artificially tied up in
    suboptimal investments. ZERO capital gains would be even better, but
    American politics isn't yet ready for that.
    
      John

    > I read somewhere that historically there is initial selling
    > pressure whenever tax codes improve long-term cap gains tax
    > treatment.
    
    Those who favor cuts in capital gains taxes count on it. The argument
    goes that such a tax cut is actually good for government revenues
    because, historically, Federal revenue from capital gains taxes goes up
    the year after a cut is enacted. If the tax rate is cut, then an
    increase in revenue can only be attributed to volume. I.e., lotsa folks
    realize their gains once it becomes more advantageous to do so, because
    you never know what next year will bring.
    
    As much as I personally would like a cut in my capital gains tax, I
    can't buy the "cut the rates and you increase the revenue" argument.
    It just doesn't add up. And if we're so gung ho (finally) to balance
    the budget, can we afford any cut in revenue? But that's another
    topic in another conference...
    			Jim
    

>   As much as I personally would like a cut in my capital gains tax, I
>   can't buy the "cut the rates and you increase the revenue" argument.
>   It just doesn't add up. 
    
    Your intuition is in error. Or, at least, in disagreement with history.
    
    Every time capital gains tax rates have been cut, capital gains
    revenues have increased. Every time capital gains tax rates have
    been raised, capital gains revenues have decreased. It has been
    100% reliable.
    
    People change their investing (and other) behavior based on tax policy.
    That's why you can't just crunch numbers and get the predicted result.
    
      John

    
>    People change their investing (and other) behavior based on tax policy.

Governments would like you to believe that, and it's probably true in a
small way, but nowhere near as much as advertised.

>    Every time capital gains tax rates have been cut, capital gains
>    revenues have increased. Every time capital gains tax rates have
>    been raised, capital gains revenues have decreased.

Of course they do, in the first year after the tax cut/increase, because people
take advantage of it to realize profits they might otherwise have held.
Or decide to hold them a bit longer in the hope of a change back. In the
long run, though, people will probably revert to their old investing habits
Their are too many other factors (risk, need for ready cash, broker's
commissions) which go into investing to expect tax policy alone
to dramatically change the behavior of investors.

So if we had a drop in the tax rate from (e.g.) 28% to 19%, then you'd need
a 50% increase in gross capital gains to keep the revenue flat. Would the
tax cut, of itself, be enough to get that increase in a *sustained* way,
year after year?

> It has been 100% reliable.

Another question to ask yourself: when do capital gains tax cuts become a
particularly hot issue in Congress? Why, when a lot of voters (and
Congressmen as well) can expect to realize substantial capital gains!
This year, with its "raging bull" stock market, definitely qualifies.
So it's no coincidence that a CGTC is being pushed strongly; if it passes,
next year will add another "reliable" data point.

A CGTC might be useful for stimulating investment (again, in a small way),
but what is our goal here? Everyone finally seems to agree that eliminating
the deficit is an important goal; cutting substantially into your revenue
stream is not a good way to start.
    			IMHO,
			Enjoying the debate,
			Jim B.

    What specifically is in the current budget proposal ?  I knew that the
    house and senate had slightly different proposals.  I assume it went to
    a joint committee for resolution before being sent to the president.
    
    So, does anyone know what the latest budget proposal contains in the
    way of Capital Gains ?
    
    Thanks

So who *is* selling? I can understand buying now in anticipation of
lower gains taxes, but the gain will be lower if prices drop because
of the pressure to sell to realize profit in '96.

Right now (esp. with Digital up over 4 today) I can't see selling now
- higher gains profit and higher tax versus lower gains in 1/96 taxed
at a lower rate. The questions are

1. What will the real tax impact really be to me?
2. What will market pressure do to prices?

Does anyone *know* the answer to (1)?

Pete

> 1. What will the real tax impact really be to me?
> Does anyone *know* the answer to (1)?

	It will depend on your particular situation.  Depending
	on the gain, and whether its long term (you've held it
	for more than a year) or not, and whether if & any cap.
	gains tax cut (on long-term gains) is made retroactive
	to before the date you sold on.

	Also if you currently have a net realized loss, you can safely
	sell the same amount to offset that loss which would cancel
	each other out (but that would still increase your taxes as
	now you've got to deduction, however if your net realized
	loss was more than the max you can deduct a year [ie. $3k]
	then if you only sold enough to offset the overage that you
	would of had to carry over to the next tax year, then you'd
	still have the deduction).

	And of course it depends on where you live.  In NH there is
	no State or local taxes on capital gains.  However if you live
	in MA ........

> So who *is* selling? I can understand buying now in anticipation of
> lower gains taxes, but the gain will be lower if prices drop because
> of the pressure to sell to realize profit in '96.

    As is typically the case, the bill before Congress is retroactive to,
    ohh, October 15th I think. You should, for planing purposes, assume
    any sales after that date are covered at the lower rate. While it is
    possible for Congress to change the effective date, it is not likely.
    Best to worry about the bill becoming law in the first place.
    
    The date comes from when the bill is first referred to committee, or
    some similar step in the process.
    
      John

> The date comes from when the bill is first referred to committee, or
> some similar step in the process.

	Or a date choosen that's before the sale date of stocks that were
	sold by the legislators or their coofers :-)

	(and of course in this case a date such that voters will see it
	when they fill out their taxes next election year :-)

.15>  As is typically the case, the bill before Congress is retroactive to,
.15>  ohh, October 15th I think. You should, for planing purposes, assume
.15>  any sales after that date are covered at the lower rate. While it is
.15>  possible for Congress to change the effective date, it is not likely.
    
    My Washington newsletter is now saying there is a possibility that the
    lower rate may NOT be retroactive, and Jan. 1, 1996 could be the point
    where it takes effect.
    
    The good news, if you can call it that, is that you can still sell
    those capital losses in 1995 and get full writeoff value for them.
    Once lower gains rates go into effect, so will lower LOSS rates.
    
      John

> The good news, if you can call it that, is that you can still sell
> those capital losses in 1995 and get full writeoff value for them.
> Once lower gains rates go into effect, so will lower LOSS rates.

	Exactly what I've been doing!  So far I've cut my realized
	net gain in half (and I'm still got some more losses to
	realize :-(( ).

	Just to clarify though, what do you mean by lower loss rates?
	Does that mean long term losses will then only be able to
	offset long term gains, and/or an overall net loss for the
	year will not be able to offset ordinary income?

>	Does that mean long term losses will then only be able to
>	offset long term gains, and/or an overall net loss for the
>	year will not be able to offset ordinary income?

    Word on the Hill is that the new tax law will only allow capital losses
    to offset ordinary income at a 50% rate, with the usual $3000/yr max.
    
    Meaning it would take $6000 of capital losses to create $3000 deduction.
    Additional losses would carry forward, as they do today.
    
    Again, this is only scuttlebut and subject to change as committees
    wheel and deal. But it's a serious proposal on the table, not a rumor.
    
      John

> Word on the Hill is that the new tax law will only allow capital losses
> to offset ordinary income at a 50% rate, with the usual $3000/yr max.

	Hmm, this would be very interesting coming from the Republicans!
	[Short-term] capital gains would continue to be taxed as ordinary
	income, but capital losses at 50 cents on the dollar!

> Again, this is only scuttlebut and subject to change as committees
> wheel and deal. But it's a serious proposal on the table, not a rumor.

	Is inflation indexing of investments still on the table?
	That's one I'd like to see (assuming they don't write the law
	such that it's a paperwork nightmare).

.20>	Is inflation indexing of investments still on the table?
.20>	That's one I'd like to see (assuming they don't write the law
.20>	such that it's a paperwork nightmare).

Knowing that these are politicians we are talking about, it probably will be a 
nightmare.   :-)

What I'd like to see is a flat tax with no tax on investment income. Or... a 
consumption tax only is even better! 

Mike

> What I'd like to see is a flat tax with no tax on investment income.

	That would certainly be nice for those with no earned income!
	But guess who that tax burden would then be picked up by ....
	.... we'd all have to quit Digital and without taxes on investment
	income we could easily live off of it ....

>	That would certainly be nice for those with no earned income!
>	But guess who that tax burden would then be picked up by ....

It will be picked up by people who do have earned income. However, here are 
some food for thoughts for you...

  (1)	Who says we should pay the same amount of tax to keep our government 
	growing or even to keep it at the present level??? The goal is to 
	reduce our government and to keep it at a minimal level. Therefore, 
	we will not need as much tax revenue as we do now. 

  (2)	People who worked all their lives and saved should be rewarded for 
	their frugality and self-responsibility. These people had already 
	paid their share of taxes when they made their income. Why should the 
	government tax them again when they try to use their after-tax money 
	to build up a nest-egg for their retirement (or already are in their 
	retirement and trying to live off of their nest eggs). 

  (3)	If investment income are not taxed, we can also reduce social security 
	payments. Therefore, reduce federal spending and reduce needed tax 
	revenue. I do not have the numbers right now. But, one thing I am sure 
	of is that for every dollar we pay the federal government in taxes, 
	only a fraction of it comes back to the people for its original 
	intended purposes. Why don't we cut the bureaucracy and put the whole 
	dollar to work for us?

  (4)	There are many places in the world that don't have tax on investment 
	income. And yet, these places also have lower income (and over all) 
	taxes than the U.S.. (BTW, many of these places have very prosperous 
	economies.) If these places can do it, why can't we? Sure, we are not 
	the most heavily taxed country on earth. But, should we be? Why don't 
	we try to be the *least* taxed country on earth?!!! 

  (5)	More tax revenue can also be generated by more high paying jobs. The 
	U.S. has lost some grounds in that area. This is a very complex 
	problem. However, the right government policies (especially its tax 
	policies) combined with a stable political climate and a superior 
	education system can certainly help to put us back on the right track.

>	.... we'd all have to quit Digital and without taxes on investment
>	income we could easily live off of it ....

That's what most (if not all) of us in this Notes file is working on, isn't 
it? We are all hoping that when we reach retirement age, we will have enough 
savings that we do not have to depend on social security (if it's still there 
by that time) to sustain our lives. Our government should encourage (and 
reward) more for individual savings and self-responsibility. People who are 
responsible for their futures and saved all their lives for their retirements 
should NOT be punished for it. But now, we have everything backwards. I am 
sure you understand what I mean by that.

Mike

>> food for thoughts for you..
>>  (1)	Who says we should pay the same amount of tax to keep our government 
>>    	growing or even to keep it at the present level??? The goal is to 
>>	reduce our government and to keep it at a minimal level. Therefore, 
>>	we will not need as much tax revenue as we do now. 

    How very Republican of you.  I tend to agree, but if you were
    to poll the nation, I'm not sure we would be very popular.
    
    
>>  (2)	People who worked all their lives and saved should be rewarded for 
>>	their frugality and self-responsibility. These people had already 
>>	paid their share of taxes when they made their income. Why should the 
>>	government tax them again when they try to use their after-tax money 
>>    	to build up a nest-egg for their retirement (or already are in their 
>>	retirement and trying to live off of their nest eggs). 
    
    Where would you cut them off?  Age 65?  59 1/2?  Would I be
    able to give my after-tax money to my dad, and have him 
    invest tax-free?  Would these people get less Social Security
    benefits (to make up for the lost revenue to the country?)
    What would happen to tax-free securities?  Why would you EVER
    buy a Muni-bond?
    

>>  (3)	If investment income are not taxed, we can also reduce social security 
>>	payments. Therefore, reduce federal spending and reduce needed tax 
>>	revenue. I do not have the numbers right now. But, one thing I am sure 
>>	of is that for every dollar we pay the federal government in taxes, 
>>	only a fraction of it comes back to the people for its original 
>>	intended purposes. Why don't we cut the bureaucracy and put the whole 
>>	dollar to work for us?

    I assume you're never going to run for office.  As I understand it,
    Social Security is actually running a surplus these days.  And I'm
    not willing to label Social Security (What is it, 6.xx %) as tax
    revenue.
    
>>  (4)	There are many places in the world that don't have tax on investment 
>>	income. And yet, these places also have lower income (and over all) 
>>	taxes than the U.S.. (BTW, many of these places have very prosperous 
>>	economies.) If these places can do it, why can't we? Sure, we are not 
>>	the most heavily taxed country on earth. But, should we be? Why don't 
>>	we try to be the *least* taxed country on earth?!!! 

    I think we're pretty close to being the least taxed country on earth.
    
    
    
>>  (5)	More tax revenue can also be generated by more high paying jobs. The 
>>	U.S. has lost some grounds in that area. This is a very complex 
>>	problem. However, the right government policies (especially its tax 
>>	policies) combined with a stable political climate and a superior 
>>	education system can certainly help to put us back on the right track.

    I would say that salaries are pretty much determined by the market.
    If you're saying that to help the country we should give the Rich
    more money, then again, I hope you're not planning to run for office.
    
    
    
    
    The last point, I do agree with though.  I would be willing to
    decrease my Social Security to have my 401(k) benefits be
    totally tax free.  I think that would give the incentive for
    people to really save for their retirement, as well as reward
    them for doing it well.
    
    
    
    Bart
    

>   (1)	Who says we should pay the same amount of tax to keep our government 
> 	growing or even to keep it at the present level??? The goal is to 
> 	reduce our government and to keep it at a minimal level. Therefore, 
> 	we will not need as much tax revenue as we do now. 

	This is a *completely* seperate issue (for the most part :-).
	Reduce government and spending, and even with our current tax
	system, our taxes would go down.

>   (2)	People who worked all their lives and saved should be rewarded for 
> 	their frugality and self-responsibility. These people had already 
> 	paid their share of taxes when they made their income. Why should the 
> 	government tax them again when they try to use their after-tax money 
> 	to build up a nest-egg for their retirement (or already are in their 
> 	retirement and trying to live off of their nest eggs). 

	Keep in mind that as the baby boomer generation goes into retirement,
	the taxpayer base will then dwindle, and the flat tax rate on that
	taxpayer base (ie. the ones with earned income) will just keep going up.

	Plus just because you retire (ie. no more earned income), does not
	mean you then also stop using government services (and probably just
	the opposite).  With lifespans/logevity on the rise, it's selfish
	to place this burden on our children.

>   (3)	If investment income are not taxed, we can also reduce social security 
> 	payments.

	I'm not following you here.  Why can we also reduce SS payments if
	investment income is not taxed?  And why can't we reduce SS payments
	today for higher income retirees under the current tax system?

>   (4)	There are many places in the world that don't have tax on investment 
> 	income. And yet, these places also have lower income (and over all) 
> 	taxes than the U.S.. (BTW, many of these places have very prosperous 
> 	economies.) If these places can do it, why can't we? Sure, we are not 
> 	the most heavily taxed country on earth. But, should we be? Why don't 
> 	we try to be the *least* taxed country on earth?!!! 

	I'm pretty sure we already *are* the least taxed (per capita) country
	(at least as far as the Western world goes, I don't think I want to
	be living in a 3rd world country).  Taxes in other countries are
	outragous compared to what we pay.

>   (5)	More tax revenue can also be generated by more high paying jobs. The 
> 	U.S. has lost some grounds in that area. This is a very complex 
> 	problem. However, the right government policies (especially its tax 
> 	policies) combined with a stable political climate and a superior 
> 	education system can certainly help to put us back on the right track.

	Again, this does not require a flat tax.  This is something that
	we can do under the current tax system.

>     What would happen to tax-free securities?  Why would you EVER
>     buy a Muni-bond?

	in yesterdays paper in the business section under the regular
	column "Investors Notebook" (author: Brendan Boyd) he addresses
	just this (muni-bonds under a flat tax).  he believes just
	the threat of a flat tax will wreck havoc with muni's.

re: .24 

>    How very Republican of you.  I tend to agree, but if you were
>    to poll the nation, I'm not sure we would be very popular.

To tell you the truth, I was not a Republican and I am not one now. However, 
by the time the next primary election comes around, I will be one. I am 
totally discouraged by what the Dem. has to offer to this country and I am 
quite impressed by what the freshmen Republicans are trying to do in congress. 
I did not see anything (actually VERY little) I want from the offerings from 
the Democrats. 
    
>    Where would you cut them off?  Age 65?  59 1/2?  Would I be
>    able to give my after-tax money to my dad, and have him 
>    invest tax-free?  Would these people get less Social Security
>    benefits (to make up for the lost revenue to the country?)
>    What would happen to tax-free securities?  Why would you EVER
>    buy a Muni-bond?

I don't think you understood what I said. Where would I cut whom off??? You 
can be 100 years old, as long as you have an earned income, you pay taxes on 
that income. It has nothing to do with your age. And furthermore, if we do not 
tax investment income, all securities will become "tax-free securities". Why 
would I ever want to buy a muni bond? For all the reasons I want to invest in 
anything - but, NOT for the reason that it's tax free.    

>    I assume you're never going to run for office.  As I understand it,
>    Social Security is actually running a surplus these days.  And I'm
>    not willing to label Social Security (What is it, 6.xx %) as tax
>    revenue.

No, I do not have that ambition for running for office. Yes, you are right, 
social security is *supposedly* running a surplus since day-one when it 
started. But, that is one of the biggest hoax running today. What we do have 
is a bunch of IOU's. The money that is supposed to be there are spent, gone - 
by our very own elected government officials. Please enlighten me if you will, 
why wouldn't you label social security a tax? After all, it *IS* called 
"Social Security Tax". Am I wrong?
    
>    I think we're pretty close to being the least taxed country on earth.

Not by a long shot! But anyway, what's wrong for us to shoot for becoming 
*THE* least taxed country?
    
>    I would say that salaries are pretty much determined by the market.
>    If you're saying that to help the country we should give the Rich
>    more money, then again, I hope you're not planning to run for office.

You are absolutely right! But, which segment of the market we want to be in? 
Let's face it. There are high paying type of jobs in the world and there are 
low paying type of jobs in the world. Generally, more high-tech, automotive or 
similar type of industries bring higher paying jobs. And, more McDonald, 
Burger King or retail type of industries bring lower paying jobs.

You sounded like Dick Gephart(sp?). Can you please point out to me where I 
said I want to give the rich more money? However, I do believe what is fair 
has to be fair. It's not right to rob the poor to give to the rich. Neither is 
it right to rob the rich to give it to the poor. (Is the Democrat playing 
Robbinhood here?) The rich (the overwhelming majority of them anyway) did not 
get rich by killing somebody or by robbing some old poor lady of her life 
savings. They get there by working hard and working smart. Why aren't they 
entitled to what they earn? Besides, do any of the participants in this Notes 
file consider himself/herself rich? However, since we all invest, we all can 
benefit from this. How can you say we are giving money to the rich?
    

re: .25

>	This is a *completely* seperate issue (for the most part :-).
>	Reduce government and spending, and even with our current tax
>	system, our taxes would go down.

You asked how we can keep our current tax revenue stream. I was just 
responding to your question. 

>	Keep in mind that as the baby boomer generation goes into retirement,
>	the taxpayer base will then dwindle, and the flat tax rate on that
>	taxpayer base (ie. the ones with earned income) will just keep going up.
>
>	Plus just because you retire (ie. no more earned income), does not
>	mean you then also stop using government services (and probably just
>	the opposite).  With lifespans/logevity on the rise, it's selfish
>	to place this burden on our children.

You are assuming that we are only reducing the income of tax revenue. But, 
neglecting that if the government allows people to save more by themselves, it 
will not have to hand-out as much as social security payments. Why you assume 
that the tax "will just keep going up"? When our government is going to stop 
to be responsible for other people's inresponsibility? And, when are we 
going to hold people to be responsible for themselves?

I resent your accusing me of being selfish. A lower tax will not only benefit 
me, it will also benefit my child (and I do have one, thank you). As a matter 
of fact, most people in this country will benefit. The real burden of this 
proposal is on those who live on public support for generations without any 
intention of getting off of it, and those who spend every penny they make 
today and expecting to spend someone else's money when they retire. That, to 
me, is selfish. 

>	I'm not following you here.  Why can we also reduce SS payments if
>	investment income is not taxed?  And why can't we reduce SS payments
>	today for higher income retirees under the current tax system?

Sure, it is not difficult. I'll explain again.

If investment income is not taxed, it allows the investors to reinvest all of 
their income from investments. This allows a faster wealth accumulation while 
they are trying to build their retirement funds. Also, part of the tax on your 
investment income (today) goes to SS. If there is no tax on investment income, 
there will be less $$ going into the SS fund. So, what we'll have is less need 
for the money and less money to spend. 

Under the current tax system, people who are trying hard to save for their 
retirement, any capital gains & dividents are being taxed. This will result in 
less money to be reinvested. Through the power of compounding, this means a 
much smaller pie at the end. For some people, this may mean they'll HAVE TO 
depend on some other sources of income (eg. SS) for supplement. Therefore, the 
NEED for a larger SS fund is present. 

>	I'm pretty sure we already *are* the least taxed (per capita) country
>	(at least as far as the Western world goes, I don't think I want to
>	be living in a 3rd world country).  Taxes in other countries are
>	outragous compared to what we pay.

I suggest you check your information again. And, please keep in mind that the 
"Western World" does not even make up 1/3 of the globe. hint, hint...  :-)

>	Again, this does not require a flat tax.  This is something that
>	we can do under the current tax system.

No, it does not *require* a flat tax. But, a better tax system is definitely 
desperately needed to accomplish this. The current tax system is not working. 
There are too many holes in it, and those "holes" do mostly only benefit a 
privileged few. Let's get a system system that every can understand and 
everyone can follow. Let's plug all those "holes" and make it treat everyone 
equally. That is a fair tax system. 

Mike

    Now that we've all had our chance to flame, can we cut the political
    arguing and confine ourselves to the topic at hand?
    
      John (Moderator)

>>	I'm pretty sure we already *are* the least taxed (per capita) country
>>	(at least as far as the Western world goes, I don't think I want to
>>	be living in a 3rd world country).  Taxes in other countries are
>>	outragous compared to what we pay.
> I suggest you check your information again. And, please keep in mind that the 
> "Western World" does not even make up 1/3 of the globe. hint, hint...  :-)

	Why are you playing games?  Just tell us!  And comparing us to
	countries that most of us would *not* want to live in makes
	your argument hogwash.

>>	Again, this does not require a flat tax.  This is something that
>>	we can do under the current tax system.
> No, it does not *require* a flat tax. But, a better tax system is definitely 
> desperately needed to accomplish this. The current tax system is not working. 

	What makes you think the "flat tax" is a better system?  And what
	makes you think it's the current tax system itself that's to blame?
	Maybe it's the polititions itself and the old attage that power
	corrupts.....

> There are too many holes in it, and those "holes" do mostly only benefit a 
> privileged few. Let's get a system system that every can understand and 
> everyone can follow. Let's plug all those "holes" and make it treat everyone 
> equally. That is a fair tax system. 

	By treating everyone equally you mean by making the rich richer and
	the poor poorer then give me inequality anyday!

> I am 
> totally discouraged by what the Dem. has to offer to this country and I am 
> quite impressed by what the freshmen Republicans are trying to do in congress.
> I did not see anything (actually VERY little) I want from the offerings from 
> the Democrats. 

	I'm neither a Democrat or a Republican.  I am however a fiscal
	conservative, while on the other hand a social liberal.

	While the Republicans are fiscally conservative (compared to
	Democrats), today's Republicans are also extremely socially
	conservative to the point of taking away individual freedoms,
	and legislating their personal religious beliefs on all.

	I personally feel individual freedoms are more important than
	a few extra dollars in my paycheck.  I'd like to have both
	in a perfect world, but I can't be bought by money (unlike the
	polititions themselves).

ps: if you really think it's the Freshmen Republicans that are behind this
    "reform", then next election let's "clean the house" once again, this
    time getting rid of the ancient old Republicans and replace them with
    more Freshmen ...... (in reality, it's the senior Republicans who run
    the show, and like good little brown nosers, the Freshmen kiss their butts)

>	Why are you playing games?  Just tell us!  And comparing us to
>	countries that most of us would *not* want to live in makes
>	your argument hogwash.

Nobody is playing games with you. Neither do you have to be so narrow minded. 
Just because it may be a country you don't want to live in, it doesn't mean it 
has nothing good for you to learn from. A tax policy that encourages savings 
and investment is good for the economy. You may have also conveniently forgot 
that the United States has one of the lowest savings rate in the world. 

>	What makes you think the "flat tax" is a better system?  And what
>	makes you think it's the current tax system itself that's to blame?
>	Maybe it's the polititions itself and the old attage that power
>	corrupts.....

For one thing, I don't have to go crazy trying to figure out how to do my 
taxes every year. If we had a flat tax, alot of discussions in this Notes file 
be totally eliminated. That's alot of man-hour saved. But of course, these are 
just two VERY SMALL examples. There are many others I can think of (but, I am 
not going to discuss it here. It doesn't belong in this Notes file).

>	By treating everyone equally you mean by making the rich richer and
>	the poor poorer then give me inequality anyday!

Get real! How does a flat tax make "the rich richer and the poor poorer"? This 
is the kind of crap fed to us by some politicians and you think it is 
chocolate ice cream. With a flat tax, everyone pays the same percentage of tax 
on their income (of course, income under certain level will be exempted from 
paying any income tax). How is this not fair???

I'll take the moderator's advise and take the fifth on this discussion (in 
this Notes file) from this point on. Thank you for your participation.

Mike

>>	Why are you playing games?  Just tell us!  And comparing us to
>>	countries that most of us would *not* want to live in makes
>>	your argument hogwash.
> Nobody is playing games with you.

	You certainly are playing games.  You say there are other countries
	with lower taxes, but then want us to play the "guessing game" when
	you could save us all alot of time and just name them.

> Neither do you have to be so narrow minded.
> Just because it may be a country you don't want to live in, it doesn't mean it
> has nothing good for you to learn from. A tax policy that encourages savings 
> and investment is good for the economy. You may have also conveniently forgot 
> that the United States has one of the lowest savings rate in the world. 

	I'm not being narrow minded.  I'm being fair.  You are being unfair
	if you want to compare tax rates in the US against countries where
	the standard of living, etc doesn't compare.  This is common sense.
	Fair comparisions are against other countries where people would
	like to live, and it's a fair fact to compare us against the rest of
	the Western world (in which case our tax burden is the lowest).

	I did not say our tax burden couldn't be even lower, just that trying
	to reduce our tax burden to that of a country that doesn't compare
	is Apples & Oranges.

> For one thing, I don't have to go crazy trying to figure out how to do my 
> taxes every year.If we had a flat tax, alot of discussions in this Notes file 
> be totally eliminated.

	I wouldn't be so sure.  Then we'd be discussing to death what kind
	of income should and shouldn't be taxed, what kind of items
	should and shouldn't be tax deductable (charities come to mind here),
	and what mount of income should be exempted (anything I forget?)

> That's alot of man-hour saved. But of course, these are
> just two VERY SMALL examples. There are many others I can think of (but, I am 
> not going to discuss it here. It doesn't belong in this Notes file).

	If you want to discuss the flat tax, then they certainly belong here.

	Also note, I never said I was against a flat tax, and I'm not against
	a flat tax.  But it's the job of the proponents of such a radical
	change in the tax system to prove to me and the rest of America
	that such a change isn't going to create more or bigger problems
	than it solves.

>>	By treating everyone equally you mean by making the rich richer and
>>	the poor poorer then give me inequality anyday!
> Get real! How does a flat tax make "the rich richer and the poor poorer"?

	I am being real (though maybe the doctor should take some of their
	own medicine :-).

	It's common sense that if you cut taxes for the rich, but leave
	spending the same, that somethings got to be done or happen as
	a result of that tax cut to make up for the lost revenue.

	I'd have to figure it out again, but last time I figured it out,
	I believe with a 17% flat tax I'd be paying MORE in taxes.  While
	Steve Forbes, one of the proponents of a flat tax, will pay alot
	less in taxes.

> This is the kind of crap fed to us by some politicians and you think it is
> chocolate ice cream.

	I do like chocolate.  However no one is feeding me this stuff.
	Even though you probably don't agree, I have a brain, and I use it.

> With a flat tax, everyone pays the same percentage of tax 
> on their income (of course, income under certain level will be exempted from 
> paying any income tax). How is this not fair???

	Do I have to answer the same question more than once, since you
	asked this already and I answered.  If you want to take fair to
	an extreme then we'd be living in a socialist country.

ps: was it fair that we, the American tax payers, paid for the S&L bailout,
    or fair that NH pays more in Federal income taxes than we get in return,
    or that everytime a bunch of homes for people stupid enough to build
    in flood plains, mud slide zones, on top of earthquake fault lines, etc
    etc that we, the American tax payers, have to pay?

    I'm sure this should be in it's own note, but a discussion
    of the flat tax would probably be relevant here.  I think
    my average tax rate is around 17%, I'm not going to say that
    I'm exact, but I'm within +- 3%.  There are people in the country
    who's average tax is ~12%, as well as those with ~25%.  How do
    we reconcile this?  Do we cut spending by huge amounts?  It seems
    that a 10% cut is impossibly large.
    
    And let's say, for argument, the first $7500 isn't taxable.
    And the flat tax is 17%. So if you make < $30,000 your avg 
    tax rate is 3-5% below 17%.  But if you make $30,000,000 your
    rate approaches 17%.  The rich will then have A LOT more money
    than they would currently have.
    
    Any thoughts?
    
    
    Bart
     

    	Much of this wrangling over the budget and taxes really
    comes down to how big we want the "safety net" to be.  If you
    want a huge net, encompassing health care, food, shelter, old
    age, and all the trappings, you need to find a way to pay for
    it - OR you have to make it so that individuals will be able
    to provide for themselves.  If you don't care about the size
    of the net, you can eliminate the government programs entirely,
    possibly allowing people to go cold, hungry, and without health
    care.  This is partially a matter of where you draw the line(s)
    and how you raise the money to cover the things you want the
    government to provide.
    
    	What we are seeing is a tremendous backlash, perhaps long
    overdue, where the working class is demanding a better deal
    for themselves.  They are tired of providing for the non-working
    class.  As the unions crumbled in the face of cheap foreign
    labor, and low-skilled high-paying jobs disappeared, those
    getting squeezed figured out that some of the loss might be
    regained by reducing taxes.  Socialist (er, perhaps I should
    say liberal - must be politically correct, you know) policies
    are now coming under intense scrutiny by those who pay for them.
    
    	I don't have strong feelings about the shape that taxes should
    take (flat, graduated, other), but I DO care a great deal about the
    amount in the aggregate.  I vote smaller is better.  And I vote.
    I also save, because I can't count on the government for anything
    in the long term.  Saving and voting, how old-fashioned.  With the
    Republicans in power, these might just come back into fashion.
    
    Cheers!
    Dave Eklund
           

    I'm setting this note /NOWRITE and suggest the political discussion
    be taken elsewhere.
    
      John (moderator)