Conference nyoss1::market_investing

    It's actually very simple.
    
    Dividend is paid to stockholders out of earnings. Say, you own
    $100 of stock. It pays you $5 every year. You have a dividend of 5%.
    
     Capital Gains are made when you sell the $100 stock for $120 and
    the gain = $20.  In the case of a fund, they pass on the dividends
    and capital gains for tax purposes.

	From the persepctive of owning a mutual fund it's hard to see
	the difference (except that you should see two types of gains
	on your statement, short-term and long-term).

	If you own an individual stock, you buy the stock at a given
	price.  Down the road when you sell the stock you'll realize
	a capital gain (or loss).  The gain or loss is based on the
	difference between your cost basis, and your sale basis (for
	example, ignoring commisions, if you paid $10, then later sold
	it for $15, you'd have a gain of $5).  This also applies to
	other things (like bonds, baseball trading cards, etc) as well.
	The difference between short-term and long-term is that anything
	you've owned for less than a year is short-term and is taxed
	as if it was ordinary income.  Long-term gains on the other hand
	are currently taxed as ordinary income unless you have crossed
	over into a tax bracket higher than 28%, in which case long-term
	gains are only taxed at 28%.

	Dividends on the other hand are paid to you while you are considered
	the owner of the stock (they are paid to whoever is the registered
	owner on what's known as the ex-dividend date).  There are actually
	two types of dividends as well.  Cash dividends, which are usually
	paid quarterly, and stock dividends which gives you additional shares
	of the same stock.

	Now if you live in NH then the difference is even more important.
	While NH doesn't have an income tax, NH does have a tax on interest
	and dividends, but no tax on capital gains .......

div.i.dend \'div-*-.dend, -*d-*nd\ n [ME divident, fr. L dividendus,
   gerundive of dividere] 1: an individual share of something distributed : as
   1a: a share of profits distributed to stockholders 1b: a share of surplus
   allocated to a policyholder in a participating insurance policy 1c: a
   proportional payment to a creditor of a bankrupt estate 2: BONUS 3a: a
   number to be divided 3b: a sum or fund to be divided and distributed

Cross references:
  1. get                    2. reach                

1. gain \'ga-n\ n [ME gayne, fr. MF gaigne, gain, fr. OF gaaigne, gaai]ng,
   fr. gaaignier to till, earn, gain, of Gmc origin; akin to OHG weidano-n to
   hunt for food, L vis power - more at VIM 1: INCREASE, PROFIT 2: the
   obtaining of profit or possessions 3: an increase in amount, magnitude, or
   degree; specif : the ratio of increase of output over input in an amplifier
2. gain vt 1a: to get possession of : EARN 1b: to win in competition or
   conflict 1c: to get by a natural development or process : ACHIEVE {~
   strength} 1d: MAKE {~ a friend} 1e1: to arrive at {~ed the river that
   night} 1e2: TRAVERSE, COVER {~ed 10 yards on the play} 2: to win to one's
   side : PERSUADE 3: ATTRACT {~ attention} 4: to increase in {~ momentum} of
   a timepiece  5: to run fast by the amount of {~s a minute a day} 1: to get
   advantage : PROFIT 2a: INCREASE 2b: to increase in weight 2c: to improve in
   health of a timepiece  3: to run fast : to make progress - gain ground
3. gain n [origin unknown] 1: a beveled shoulder above a tenon 2: a notch
   or mortise for insertion of a girder or joist

Re .2

>	Dividends on the other hand are paid to you while you are considered
>	the owner of the stock (they are paid to whoever is the registered
>	owner on what's known as the ex-dividend date).

Dividends are paid to whoever is the registered owner on the record date --
that is, the date on which they look down the list of owners at the end of
the day, and pay the dividend to those owners.  If you own the stock at the
close of business on the record date, you get the dividend even if that's 
the only day you owned it.

The day you "buy" the stock is not the day you own it -- you don't own
it until the settlement date** three business days from the date you put 
through your purchase transaction, when you actually pay for the stock
you committed to buy (and the seller to sell).

The ex-dividend date is the date on which, if you bought the stock, the
settlement date would be the day *after* the record date -- you would
be a day too late to get the dividend.

-- Andrew

** It is possible for large institutional buyers to make special arrangements
to have a transaction settled the same day, and therefore get the dividend
even if they buy a day or two after the ex-dividend date, though they have
to pay a premium for this (more than the amount of the dividend, certainly)
and find a seller willing to forego the dividend and transfer the stock 
the same day.  This isn't practical for retail buyers.

    Do stocks which pay dividends drop by the expected amount of the
    dividend on the ex-dividend date.  If a $100/per share stock is
    expected to pay a $2/share dividend, after it does so, does its price
    generally drop to $98 to offset the dividend it just payed.
    
                                            August

re: .5

I don't think the stock price drops, since one of the 
contributors to the stock price is the expectation of the 
dividend payout.  This is why stock prices drop when dividends 
are cut, and why they plunge when an expected dividend is not 
paid.

Mutual funds, on the other hand, distribute dividends and capital 
gains out of their net assets, so the NAV drops by the amount of 
the distribution.  This is why NAVs tend to drop on certain 
quarter-end dates.

Wes

>     Do stocks which pay dividends drop by the expected amount of the
>     dividend on the ex-dividend date.  If a $100/per share stock is
>     expected to pay a $2/share dividend, after it does so, does its price
>     generally drop to $98 to offset the dividend it just payed.

	This effect is what NBR refers to as a "dividend play" and
	most definitly exists.

	With mutual funds the NAV is adjusted when gains/dividends are
	payed out to people in the fund.

Re: .4

	Yup, thanks for the correction.  I often mix up those two dates.
	Here's what Waterhouse says about Dividends in there "Do You
	Know About ...." series:

Dividends are payments to shareholders which are declared by the Board of
Directors of the corporation.  On common shares, the dividend can vary and may
be omitted if earnings are low of the directors determine to reinvest earnings
back into the corporation.  On preferred shares, dividends are usually fixed by
the terms of the issue and can only be omitted if earnings do not cover the
dividend.

RECORD DATE - The date on which you must be registered as a shareholder of a
company in order to receive a declared dividend.

EX-DIVIDEND DATE - Date by which a given stock wil begin trading in the
marketplace without the value of a pending dividend included in the price of
the stock.  It is synonymous for "without dividend."  Therefore if you purchase
your shares on or after the ex-date, you are purchasing shares
"ex-the-dividend" (without the dividend).  If you purchase shares prior to the
ex-date, you are entitled to receive the upcoming dividend.  Conversely if you
sell your shares before the ex-date, you will not be entitled to the dividend.
On trades made on or after the ex-dividend date, the dividend is retrained by
the seller of the stock.

When a corporation announces that a dividend has been declared, the stock
exchanges and the NASD will establish an ex-dividend date.  For most cash and
stock distributions, the ex-date is four business days before the record date
established by the company.

After the close of trading on the day before the ex-dividend date, the closing
price is reduced by the approximate amount of the dividend.  When stocks go
ex-dividend, the stock tables include the symbol "x" to indicate that the stock
is trading without the dividend.

PAYABLE DATE - Every dividend is payable on a fixed date to all shareholders
recorded on the books of the company as of the previous record date.  In most
cases your brokerage account will be credited on the payable date.

Dividends will either be retained in your account or sent to you at the end of
the month according to the instruction you have given on your brokerage
application.  To simplify your tax reporting, you will receive a year-end tax
summary of all dividends and interest received.

If the stock was registered in your name and address on the record date, you
will receive a dividend check directly from the company on or close to the
payable date.

DIVIDEND CHARGE - The time interval between the ex-dividend date and the record
date is supposed to give the transfer agent sufficient time to record all
changes of ownership prior to the record date.  Sometimes the transfer may be
delayed and the dividend is remitted to the former owner.  If you receive a
dividend under such circumstances, your brokerage account will be charged for
the amount of the dividend you were not entitled to receive.  It is your
broker's obligation to pay the new owner the dividend he or she is entitled to
receive and, therefore, you must remit to the broker the amount of the
dividend.

Re .8

> When a corporation announces that a dividend has been declared, the stock
> exchanges and the NASD will establish an ex-dividend date.  For most cash
> and stock distributions, the ex-date is four business days before the 
> record date established by the company.

Just a reminder that with the new T+3 rules (transactions closing on the 
third business day after the trade), the ex-date is now two business days 
before the record date, not the four days that used to apply with T+5.
(The document you took this from is clearly from before last summer.)

> (The document you took this from is clearly from before last summer.)

	I wouldn't call it a document, but yes, it was before T+3.
	Let's hope T+1 or T+0 is not in the near future .....

       I have a tax question related to mutual fund capital gains
    distribution.  If I have mutual funds in a 401k plan (like SAVE) then
    I never see capital gains distributions and I never pay any taxes on
    them, correct?  Every penny taken out after age 59 1/2 will just be
    taxed as normal income (this includes reinvested dividends), but I
    won't pay any taxes on any capital gains distributions by the Mutual
    funds?
       Now, for mutual funds in taxable accounts, the capital gains
    distributions are taxable.  Are these distributions somehow figured
    into the cost basis when I sell the fund shares?  If not, it would
    appear that holding mutual funds in a 401k plan would have a large
    advantage to holding them in a taxable account.  This seems too
    inequitable so I must be missing something.  Can anyone explain?
    
    Tom

    Re: .11
    
    I don't think there's a "large advantage", although, if I understand
    things correctly there is an advantage.  Assuming you do all the right
    stuff about not doing anything that invokes a penalty, here's what
    I understand happens:
    
    401K: capital gains taken out after retirement are taxed as income.
    
    taxable account: cap gains are taxed as cap gains, and do not
    affect the cost basis.
    
    In the 401K the not-yet-taxed part of the cap gains will be
    around earning more profit until you retire, while in the
    taxable account this money is history every year.
    
    The relative tax hit of cap gains vs income rate will vary
    depending on your total income, which is presumably lower
    once you retire.
    
    As a side note, one thing that makes me nervous about annuities
    is that cap gains get hit with the income rate after retirement,
    I think.  Being in a very high state income tax state, that
    makes them look not so hot.
                                    

>     The relative tax hit of cap gains vs income rate will vary
>     depending on your total income, which is presumably lower
>     once you retire.

	Not to mention that because any form of tax on the gains is defered
	until you do withdraw the money, you get compounding on money that
	would of otherwise would of gone to taxes, which at current cap.
	gains tax rates, the compounding more than makes up for any difference
	between the cap. gains tax rates vs. ordinary income tax rate by
	the time you retire.

	If they do cut the [long-term] cap. gains tax rate to 50% of the
	applicable ordinary graduated income tax rate, then you'll have
	to do some number crunching based on the # of years to retirement,
	and the long term average annual return you expect from your
	tax-defered investments, to see how you make out (and this also
	depends on what kind of investments you are in, some agressive
	funds have most of their gains as short-term gains because of their
	high portfolio turnover rates, in which case if not tax-defered,
	those gains would mostly be taxed as ordinary income).  However even
	if such a long-term cap. gains reduction was passed today, four years
	down the road it could be changed back, .......

in non-retirement funds - reinvested capital gains and dividend distributions on
which you pay tax annually definitely do increase the cost basis.  For example,
you initially invest $10,000.  After 10 years the value of the fund is $25,000. 
Now over the 10 years, there was $9000 in capital gains/dividend distributions
on which you paid taxes.  So the cost basis is now $19,000 and if you sold the
fund, the taxable gain would be $6000. 

    Re: .14
    
    Right, but it doesn't affect the cost of the original shares.
    

that's correct - when your distributions are reinvested you are essentially
purchasing new shares at some new cost per share - the sum of the cost of each
of the shares is your cost basis

Re: .14 and .15

Just to clarify a little.

For the regular taxable mutual fund accounts (*not* IRA, 401k, 403b, etc):

The IRS treats the re-investment of dividends and cap gains just as if the
distribution was really paid to you in cash and then you bought *new*
shares with that money.

Hence, you pay taxes on the distributions every year, and the cost basis of
the shares you buy with the re-invested money is equal to the distribution.
The tax basis of the original shares is not affected.  That is why you need to
keep records of all the re-invested distributions so that when you sell the
shares you know their cost basis.  (It's a pain since with 4 distributions
per year in 10 years you would have 40 more purchases all with their different
number of shares and cost basis).

Don

> The IRS treats the re-investment of dividends and cap gains just as if the
> distribution was really paid to you in cash and then you bought *new*
> shares with that money.

	And what is also important (to the investor, the IRS could give
	sqat :-) is that the *new* shares should be purchased at the
	price of the NAV *after* it has been adjusted (ie. lowered) by
	the amount of the distribution.

> That is why you need to
> keep records of all the re-invested distributions so that when you sell the
> shares you know their cost basis.

	I don't know about other mutual fund companies, but with Fidelity
	for all shares bought after some date (at least 1986 but i'm
	really not sure) the computers keep track of all that info and
	as long as you are selling the default method (ie. not specifying
	specific shares to sell) which is average cost method i believe,
	they compute the gain/loss automatically.  see the irs publication
	specifically amout mutual funds for info on the different accounting
	methods (and once you use one method on a sale, you can't switch
	methods unless you completely sell all shares in the fund and then
	start a new).

> > That is why you need to
> > keep records of all the re-invested distributions so that when you sell the
> > shares you know their cost basis.
> 
>         I don't know about other mutual fund companies, but with Fidelity
>         for all shares bought after some date (at least 1986 but i'm
>         really not sure) the computers keep track of all that info and
>         as long as you are selling the default method (ie. not specifying
>         specific shares to sell) which is average cost method i believe,
>         they compute the gain/loss automatically.  see the irs publication
>         specifically amout mutual funds for info on the different accounting
>         methods (and once you use one method on a sale, you can't switch
>         methods unless you completely sell all shares in the fund and then
>         start a new).

If you are not selling your entire mutual fund holding the
the average cost method is guaranteed not to be the lowest
tax method. For that reason, I always use the specified shares
method.  

Gim

    I seem to remember hearing this in the news that the SEC is requiring
    all mutual fund companies to provide investors with their *average*
    share cost information on their statements starting at some cut-off
    date. If my memory still works, that date seems to be Jan. 1st of 1996. 
    
    Mike 

re>                        <<< Note 956.19 by SLOAN::HOM >>>
>If you are not selling your entire mutual fund holding the
>the average cost method is guaranteed not to be the lowest
>tax method. For that reason, I always use the specified shares
>method.  

There are "guarantees" and there are guarantees.....

When I sell shares, I do not specify dates to the MF company.  The IRS
presumption, then, is that they were sold using FIFO.  I can use either FIFO or
Average Cost method.  Each year I "run the numbers" to elect the method that is
best for me.  So far, Average Cost, using the numbers provided by the MF
company, is far ahead of the FIFO method. 

Of course, others may have different results, but my point is that you should 
not take one person's experiences as a guarantee.  

Dave

    regarding .20 and .21
    
    I think guarantee is a pretty safe word.  The poster wasn't
    suggesting using FIFO, but using the specific share method.
    For there to be an average there must be some price higher
    than the average (unless the share price never flucutated {right})
    and thus, the specified share method will always be the best
    for tax purposes, provided that you always specify the shares that
    you bought at the highest price.  
    
    Although, I'm not sure how this would work.  If your cost average was,
    say $25, and you have already sold off all of your shares > $25, then
    can you still use the average method?   Or is it the average of the
    shares that you currently own?   If this is true, then I recant the
    above.  Otherwise, I'll stick with it.
    
    
    Bart
    

    re: .21
    
>Each year I "run the numbers" to elect the method that is
>best for me.
    
    As .18 stated, once you elect a method for a particular fund, you
    _do_not_ have the option of changing it in future years.

>> Each year I "run the numbers" to elect the method that is
>> best for me.
>     As .18 stated, once you elect a method for a particular fund, you
>     _do_not_ have the option of changing it in future years.

	I also just pulled out the copy of the IRS publication I was
	refering to (which is publication 564) and it may even be more
	restrictive than "for a particular fund".  pub564 says, under
	the paragraph heading "Average Basis" (on p. 6 of the 1993 version):

	    "Once you elect to use an average basis, you must continue to use
	    it for all accounts in the same regulated investment company."

	I'm guessing this means for all funds you own from the same fund
	family?  I don't understand why they would impose this restriction
	across to other seperate funds you own ...

	There is also two different methods of using the average basis
	choice.  The Single and the Double catagory methods.  The double
	catagory method makes a distinction between long & short term
	holding periods for the shares sold.

re>                       <<< Note 956.23 by NOTAPC::LEVY >>>
>                       -< it's an irrevocable election >-
>
>    re: .21
>    
>>Each year I "run the numbers" to elect the method that is
>>best for me.
>    
>    As .18 stated, once you elect a method for a particular fund, you
>    _do_not_ have the option of changing it in future years.

That, of course, is correct. In trying to be uncharacteristically brief, I was
unclear.  My intention was to encourage investors to look at alternatives, even 
when one appears the best choice up front.  For some reason (likely 
intelligent, but foggy to me), different MF companies seem to have different 
ways of calculating Average Cost.  The first time you do taxes based on 
activities with that company, "run the numbers" and decide which of the IRS
approved methods best serves your pocketbook. 

It is that time of year when I tend to like "Flat Taxes".

However, if we eliminated ALL income taxes and went to a purely value-added-
consumption tax, even the guy next door who "works under the table" will start 
paying his fair share (an oxymoronic phrase).

Dave 

> It is that time of year when I tend to like "Flat Taxes".

	Which "flat tax"?  This batch of Republican canidates each
	have their own flavor ... (and all the ones below 20% BTW
	depend on even more spending be cut from the budget itself,
	changing just the method of taxation is no magic cure).

> However, if we eliminated ALL income taxes and went to a purely value-added-
> consumption tax, even the guy next door who "works under the table" will start
> paying his fair share (an oxymoronic phrase).

	how about the guy next door who works under the table in exchange
	for consumerables (ie. barter, which today mostly goes unreported
	and results in lots of lost revenue)?  and will it be fair to those
	who live below the poverty line today who rightfuly don't pay
	federal taxes today, but will be paying the VAT (assuming food,
	housing, utilties, and other basic necessities are not exempt
	from the tax)?

    re: .25 
    
    OK, here we go again...  But, anyhow...
    
    Dave, do you have any plans for running for office? Tell me where I
    should sign up for you.    :-) 

>    Dave, do you have any plans for running for office? Tell me where I
>    should sign up for you.    :-) 

Editorial comment coming......

To paraphrase LBJ, the most worthless US President of my lifetime.....

"If asked, I will decline (and question the sanity of the asker), if nominated
I will not run (except away), if elected, I will not serve (anything other than 
Pizza and HomeBrew)."

:-)

>> It is that time of year when I tend to like "Flat Taxes".
> 	Which "flat tax"?  This batch of Republican canidates each
> 	have their own flavor ... (and all the ones below 20% BTW
> 	depend on even more spending be cut from the budget itself,
> 	changing just the method of taxation is no magic cure).

	And speaking of "a" flat tax, yet another choice has been
	placed on the table by some congressional republican commitee
	yesterday.  They don't actually call this one a "flat tax",
	right now (seeing they haven't actually given any details yet)
	but a "single tax rate" system.

	I've seen some sound bites from at least one of the flat tax
	Republican canidates that details of their proposal is on
	the WWW somewhere.  Anyone have URL's for any of them?  I'd
	like to see how their proposal would really affect me if
	it became reality (all you ever hear is how much a "family of
	four" would save, but I've yet to hear how it will affect
	individuals or families with *out* dependent children).

>	And speaking of "a" flat tax, yet another choice has been
>	placed on the table by some congressional republican commitee
>	yesterday.  They don't actually call this one a "flat tax",
>	right now (seeing they haven't actually given any details yet)
>	but a "single tax rate" system.
    
    You must be referring to Jack Kemp's Tax REform Commission, a 
    private effort which did not cost you any tax money. Overview 
    and final report are at:
    
    		http://www.townhall.com/taxcom
    		http://www.townhall.com/taxcom/reptoc.html
    
    The report appears to be fully HTML-ized, a good job of presentation.
    BTW, Jack Kemp is on the Board of Directors of Oracle!
    
      John
    
    p.s., please, let's keep the politics out of the discussion.

re: .26

>	Which "flat tax"?  This batch of Republican canidates each
>	have their own flavor ... (and all the ones below 20% BTW
>	depend on even more spending be cut from the budget itself,
>	changing just the method of taxation is no magic cure).

What's wrong with more spending cuts? I say lets go for it!!!!! If I lost (or 
reduced) my income, I have to cut my spending to balance my budget. Why can't 
the government do the same?

>	and results in lots of lost revenue)?  and will it be fair to those
>	who live below the poverty line today who rightfuly don't pay
>	federal taxes today, but will be paying the VAT (assuming food,
>	housing, utilties, and other basic necessities are not exempt
>	from the tax)?

Why you have to demand absolute "fair"? Is there absolute fair in this world? 
Besides, what is "fair"? What you think is fair, may not mean the same thing to 
me. If you really want to talk about fair, how about talking about fairness to 
those poor working slobs who are working hard trying to get ahead, or to 
support his or her family with a better life? The government forcefully takes 
their hard earned money away from their families, from their kinds and give it 
to someone else who may not be (and in alot of cases, they are not) as 
productive. Is your idea fair to these people. Is it fair to their kids??? 
Whether you admit it or not, this whole idea of taking money from the "rich" 
(ie, those who worked hard and EARNED it) and give it to the poor is pure 
socialist. The last I checked, this country wasn't built on those ideals.

A second question for you, where did you read that a consumption tax *will 
not* exempt those life's basic necessities? The ones I have heard, they all 
have some kind of exemptions in there for people who are below a certain level 
of income. NOBODY IS GOING TO GET STARVED WITH A FLAT OR CONSUMPTION TAX!!!

    >To paraphrase LBJ, the most worthless US President of my lifetime.....
    >
    >"If asked, I will decline (and question the sanity of the asker), if
    >nominated I will not run (except away), if elected, I will not serve 
    >(anything other than Pizza and HomeBrew)."
    
    Don't tell me LBJ tried to take credit for that one.  It was well
    before his time and I believe it was during Harding's time but possibly
    later.
    
    Since I'm here what the IRS should do is provide a "discount" to those
    who simply work salary and have everything they are declaring and
    earning on electronic file available to it can all be done at a key
    stroke allowing all the complex returns to be manually done.

re                      <<< Note 956.32 by AKOCOA::BREEN >>>
>                         -< LBJ - he was plagiarizing >-
>    Don't tell me LBJ tried to take credit for that one.  It was well
>    before his time and I believe it was during Harding's time but possibly
>    later.

That which LBJ could not take, he took credit for. :-)

    
    	Actually the quote is from Gen. William T. Sherman of Civil War
    fame. The Republicans then turned to Gen. US Grant for the
    nomination in 1868.
    
    		the Greyhawk

    "If nominated, I will not run. If elected, I will not serve."
    
    He didn't get nominated.
    
    
    
    2nd warning: please keep the politics OUT of this conference. I would 
    hate to have to start deleting messages (hint, hint), but will not 
    hesitate if it comes to that.
    
      John (moderator)

    On the 1099 form we get from a mutual fund, the short-term gains
    are counted as dividend income. This income is normally reported
    on schedule B.

    Are we permitted to look at our year-end statements and report
    the short-term gains part of this on schedule D instead of schedule B?

    						Ed

Re: .36

	I don't know the answer to that, as far as the federal tax forms go.

	For NH Interest and Dividends tax, though, the capital gains portion
isn't taxed, if that was why you were asking.  I was reading the NH instructions
yesterday, and they indicated that capital gains reported on schedule B had to
be included in the total dividends section, but that it was also included in the
section of income not subject to NH I&D tax, which was subtracted out before the
tax calculation was made.

Mark

    
    Mark,
    
    Yea...I knew that about New Hampshire.
    
    The reason I ask about the federal return is that I have a short-term
    loss. I would like to use the mutual fund distributed short-term
    gains against this loss. 
    
    					Ed
    
    

> What's wrong with more spending cuts?

	That's debatable.  For example like the "much more than requested
	by the Pentagon itself" amount the Republican budget would add to
	the defense budget (the amount over what the Pentagon asked for
	BTW is equal to half the difference between the original Republican
	and White House budgets).  The problem is polititions are politions
	regardless which party they are.  The Republicans are getting rid
	of "Democtractic Pork" and replacing it with "Republican Pork"
	(no different than the Democrats when in Power cutting defense and
	adding more social programs).

	In any case, back to the discussion about flat tax (and how that
	will affect's "investing"/"investments").  As I've said before,
	there is nothing *magic* about a flat tax.  A flat tax is *not*
	needed in order to implement "more spending cuts".

> Why you have to demand absolute "fair"? Is there absolute fair in this world? 

	Who said anything about "absolute" fair?  In any case, at least it's
	nice to see you've changed your tune as last time you were touting
	the flat tax as "fair" and I was the one saying "fair" is relative :-)

	The real magic of the "so called" flat-tax is that it's really another
	call for "simplify'ing" the tax system.  That saves in overhead (ie.
	at the IRS and for taxpayers) which saves money.  And there is really
	no need for a "flat" (ala "single rate") tax.  You could for instance
	take Forbes plan and still have a "graduated" tax.  The graduated part
	is *not* complex.  The graduated part is already described at the end
	of the tax tables in your 1040 in less than 1/2 a page.  It's the rest
	of the damn tax code that's a mess (complex, cumbersome, and full
	of loopholes, which BTW, do not go away in Forbes plan if you read
	the fine print).

> The last I checked, this country wasn't built on those ideals.

	The last I checked this country wasn't founded with an income tax
	(income tax wasn't added til this century)

> A second question for you, where did you read that a consumption tax *will 
> not* exempt those life's basic necessities?

	Me thinks you skim my notes too quickly or read them with a biased
	mind-set.  If you reread .26 you'll see I was asking a question (notice
	the `?' at the end of the sentence, and also that I cleary stated
	what was an "assumption" given the limited news and/or campain
	coverage has been given any canidates VAT proposal).

re       <<< Note 956.39 by 2155::michaud "Jeff Michaud - ObjectBroker" >>>

>	The real magic of the "so called" flat-tax is that it's really another
>	call for "simplify'ing" the tax system.  That saves in overhead (ie.
>	at the IRS and for taxpayers) which saves money.  And there is really
>	no need for a "flat" (ala "single rate") tax.  You could for instance
>	take Forbes plan and still have a "graduated" tax.  The graduated part
?	is *not* complex.  The graduated part is already described at the end
>	of the tax tables in your 1040 in less than 1/2 a page.  It's the rest
>	of the damn tax code that's a mess (complex, cumbersome, and full
>	of loopholes, which BTW, do not go away in Forbes plan if you read
>	the fine print).


this, i feel, is what the media would like for you to believe: that it is
going to make your taxes easier.  that's what the flat-taxers sell to the 
public because
the public will buy it: just about everyone hates the I.R.S.  the flat
tax is just another attempt at supply-side economics.  don't be fooled.
c'mon now, just how hard is the **typical** american's taxes?  and, if your
taxes are really that difficult, you probably have enough $$ to shell out $200
to have your taxes done by a professional.

    The flat tax is not just another attempt at supply-side economics.  A
    flat tax is a concept about how one should tax income.  Are the rules
    complicated or simple?  
    
    Compare the income tax to the social security tax.  How much time do
    you spend calculating your income tax?  How much time do spend
    calculating your social security tax?  If a flat tax is such a bad
    idea, why do we allow the social security tax to continue?  For many
    people, this tax is bigger than their income tax.
    
    If one agrees on the method of taxation (flat versus complicated) then
    one can discuss the tax rates.  Here's where one can argue about supply
    side versus confiscatory taxation.  But, the argument about rates is
    different than the argument about how taxing occurs.
    
                                            August