Six months to go until largest tax hikes in history

• Manhattan Buckeye

  Footwedge;414432 wrote:I an actulity, we did make less as a joint filer. But, i also compared the tax tables with that of the previous year, and it showed that I paid quite a bit less eve if we had made the exact same amount. I have 2 kids i9n college...the past 2 years have reflected a nice little chaching coming back given the far that we shelled out aout 20 g's and 20 g's respectively.
  
  Secondly, apparently you missed the $100 tax credit that I posted because we purchase a new furnace/AC that cost over v5 K, giving us an additional tax credit...not deduction..but credit. And you cited the standard rate increase....but you failed to mentioned the addition rate per deduction taken....bith of which reduced taxes over and above the Bush Tax years.
  
  All in all, had our income been the sme as last year, we would have paid about 2K less.
  
  If anyone wants me to prove it, then PM me and I'll show you my my 1040 from last year my 1040 this year with the added tax credits on this year's form.
  I live in southeastern ohio, and I'll meet you on the weekend.

  
  I'm not even going to start to be a grammar/spelling nazi, but this is simply not true. Although I'm not particularly opposed to tax cuts, as LJ points out in post #91, for most folks 1040 income tax cuts don't make a meaningful difference in their liability, it is closer to a $3 difference than it is a $2,000 difference.
  
  If you are shelling out 40G's of educational expenses, presumedly you aren't using tax tables but are reading the computation chart. The tax rates haven't changed, they've just been adjusted for inflation...as it always has.
• IggyPride00

  

  Writerbuckeye;414429 wrote:Don't mind Iggy, he has bought into the populist rhetoric that's being played on Capitol Hill.

  
  I'm just going by the numbers.
  
  We can agree that taxes for the decade were the lowest they have been in recent history.
  
  Statistics also show the decade as a whole saw non-existent job growth even in the face of favorable business conditions.
  
  I am merely wondering out loud why it will suddenly start working when it didn't work or produce the desired result last decade?
  
  Exactly how does that equate to buying into rhetoric?
• QuakerOats

  We had decent job growth under Bush; we have had severe job losses in the last 20 months which apparently gives you free reign to state that the decade as a whole saw no growth ???? If that isn't parsing and taking out of context what really happened to support an 'argument' I don't know what is.
• Footwedge

  Manhattan Buckeye;414454 wrote:I'm not even going to start to be a grammar/spelling nazi, but this is simply not true. Although I'm not particularly opposed to tax cuts, as LJ points out in post #91, for most folks 1040 income tax cuts don't make a meaningful difference in their liability, it is closer to a $3 difference than it is a $2,000 difference.
  
  If you are shelling out 40G's of educational expenses, presumably you aren't using tax tables but are reading the computation chart. The tax rates haven't changed, they've just been adjusted for inflation...as it always has.

  
  The tax rates did change. The tax per exemption went up and so the the standard exemption. I don't use schedule A anymore because my house is bought and paid off,...so the standard deduction is cheaper, given the fact that I can no longer claim a whopping tax deduction for interest expense on my mortgage.
  
  Secondly, you and LJ apparently did not read...not one of my posts...but 2 of my posts whereby I took a $1500 tax credit that was instituted by Obama for energy savings. Now there are several ways to qualify for this credit (not a deduction..but off the tax bill top)...and the way I did it was by purchasing a 95% efficiency gas furnace with a 16 seer AC attached system. This tax credit was implemented by the Obama administration, and is a huge tax deduction...for those that were smart enough to take advantage of it. As of right now, the consumer energy tax savings credit is scheduled to expire at the end of this year.
  
  As for your inflation comment...What inflation? There was virtually no inflation over the past few years. Inflation is a bi product of a hot economy. The last 2.5 years have seen depression type numbers...with this year's tax revenues hitting rock bottom levels of 14.7% of GDP.
• IggyPride00

  

  QuakerOats;414488 wrote:We had decent job growth under Bush; we have had severe job losses in the last 20 months which apparently gives you free reign to state that the decade as a whole saw no growth ???? If that isn't parsing and taking out of context what really happened to support an 'argument' I don't know what is.

  
  If I weighed 500 pounds 10 years ago, got down to 200 mid decade, and gained it all back so I weigh 500 again this year, was what I did really effective if the goal was to lose weight?
  
  The recession was at the end of the decade, but if you want to accept the good you have to take the bad.
  
  The duration of the Bush tax cuts was 10 years, and then they go away.
  
  I am just judging them as a whole, not parsing to fit an argument.
  
  How can you say they were effective if there was no net job growth during the duration of them as whatever gains they made were clearly unsustainable otherwise the jobs wouldn't have disappeared.
  
  I am a conservative guy, not an ideologue, and on their merits the tax cuts failed. I am not advocating raising taxes per-say, but I am not of the school that just cutting taxes more will solve the problem as clearly it didn't when it was tried last time.
• Manhattan Buckeye

  The tax rates didn't change, they are:
  
  10, 15, 25, 28, 33, 35, they have adjusted accordingly with respect to the qualifying income, but not anything that would be that noticeable. Deductions are also indexed but again not noticeable. At most even a high tax-paying citizen would see a few dozen dollars difference.
• LJ

  

  Footwedge;414493 wrote:The tax rates did change. The tax per exemption went up and so the the standard exemption. I don't use schedule A anymore because my house is bought and paid off,...so the standard deduction is cheaper, given the fact that I can no longer claim a whopping tax deduction for interest expense on my mortgage.
  
  Secondly, you and LJ apparently did not read...not one of my posts...but 2 of my posts whereby I took a $1500 tax credit that was instituted by Obama for energy savings. Now there are several ways to qualify for this credit (not a deduction..but off the tax bill top)...and the way I did it was by purchasing a 95% efficiency gas furnace with a 16 seer AC attached system. This tax credit was implemented by the Obama administration, and is a huge tax deduction...for those that were smart enough to take advantage of it. As of right now, the consumer energy tax savings credit is scheduled to expire at the end of this year.
  
  As for your inflation comment...What inflation? There was virtually no inflation over the past few years. Inflation is a bi product of a hot economy. The last 2.5 years have seen depression type numbers...with this year's tax revenues hitting rock bottom levels of 14.7% of GDP.

  
  You obviously didn't read my post, nor do you understand what a tax rate is. Your deductions affect your AGI. If your AGI was 65,000 in 2009 and 65,000 in 2003, the tax rate would be exactly the same. Changes in deductions can affect your AGI, but that does not change the actual tax rates. Just because your AGI changed, does not mean the actual tax rate did. That being said, if every tax bracket went up by 5%, you would feel a 5% increase no matter what your AGI is. Get it?
• Footwedge

  QuakerOats;414053 wrote:Karlgaard obviously says it better than I can ..................
  
  
  America's $1.2 Trillion Constipation ProblemJune 21, 2010 - 1:01 pm
  There were two--and arguably three--buttons that engaged the supply side revolution that, in turn, set up America’s long economic boom from 1983-2007.
  
  One is well understood and is found on America’s P&L sheet, as it were. Reduce income taxes at the margin, and you’ll get more income. People and companies will be more motivated to produce. The simple thought experiment is to imagine your tax rates for a week’s work: 0% on Monday, 25% on Tuesday, 50% on Wednesday, 75% on Thursday and 100% on Friday. Would you work Friday? Not many would.
  
  The second supply side button is less understood but just as crucial. It is found on America’s balance sheet. Start with this question: What is the wealth of America? You’ll get estimates that vary from $60 trillion net of debt to $150 trillion when you include everything, including federal land. Now ask: Is America’s wealth generating new wealth, or is it just sitting there like a dead weight? If the wealth is "dead," then what tax and regulatory barriers might be standing in the way of it becoming alive and productive? I would argue that Treasury Bills, gold holdings and an ANWR that is off limits to drilling are examples of dead wealth--that is, stored wealth that could create more wealth if put to proper use.
  
  A current example of relatively dead wealth is the $1.2 trillion of cash and cash equivalents held by American publicly traded companies. In aggregate, the balance sheets of these companies have never been stronger. But that wealth is relatively dead. It is not being deployed for growth as aggressively as you might expect in the early days of an economic recovery. To bluntly switch metaphors, American corporations have a $1.2 trillion constipation problem.
  
  The third (and more controversial) supply side button has to do with public spending. It’s controversial because many libertarian supply siders would dispute that supply side policy and government spending could ever coexist. Not true. President Eisenhower’s interstate highway program had positive multiplier effects for the American economy. So did the Defense Department’s Advanced Research Project Agency, which gave us both military superiority over the Soviets and the Internet.
  
  America’s economic recovery looks fragile and is fragile. Good supply side policies would quickly set things right. Here are three:
  
  1. Congress should make permanent the 2003 Bush tax cuts on income and capital gains. The result would be immediate. Stocks would quickly go up 20%. Dead capital would go into M&As, IPOs and new venture funding.
  
  2. Obama should stop his war on business, which is the chief cause of the $1.2 trillion constipation problem. Even Obama supporters have had enough of this. As Michael Barone wrote on Monday, quoting The Economist (which is pro-Obama):
  
  "If he sees any impropriety in politicians ordering executives about, upstaging the courts and threatening confiscation, he has not said so," write the editors of The Economist, who then suggest that markets see Obama as "an American version of Vladimir Putin." Except that Putin is an effective thug.
  
  3. Declare Keynesianism dead, once and for all. Spend taxpayer dollars--if you’re going to spend them at all--not to create bogus jobs or reward failed companies, but to advance America’s competitive interests. Military R&D has proven the best lever.
  
  http://blogs.forbes.com/digitalrules/

  This post from some blogger is hilarious. What exactly is he smoking? LOL.
  
  The quote "Declare Keynesianisn dead" is the biggest guffaw. Between 1983 and 2007, Keynesian policies were responsible for the vast majority of this so called "boom" period. Let's examine. In 1983, the national debt was a quaint 1.3 trillion dollars. Now..fast forward to 2007, and voila..you have a national debt that has quintupled to approximately 7.5 trillion. Is that really something that conservatives want to trumpet? Really? And all this after stating "Delare Keynesianism dead".
  
  Who are these bloggers and what do they smoke at night?
  
  And more. Government spending although for the most part is highly a non contributor to our tangible wealth and prosperity, is added back to the overall GDP figures when determining the unemployment rates and GDP. Now how distorted is that?
  
  But there's more. Not only does irresponsible Keynesian policies artificially inflate raw economic numbers in GDP, they do so in other ways as well. Back in 1983, the US was a net trade winner...taking in higher number of imports than exports. That has changed dramatically. Over the past 8 years or longer, the US is now not only a net debtor nation, but the biggest debtor nation in the entire world as it relate to trade imbalance. Somehow the voodooists that calculate the GDP, add back the trade deficit numbers into our GDP Thus further distorting any "real growth" that we supposedly enjoyed. This GDP accounting/engineering would make Enron and Arthur Anderson blush.
  
  In summary..we have right winged so called economic gurus complaining about the use of unbridled Keyensianism....whereby the facts clearly show that this is what caused the inflated numbers over the past 25 years.
  
  As Pal Harvey would say..."now you know the rest of the story.......good day"
• Footwedge

  LJ;414510 wrote:You obviously didn't read my post, nor do you understand what a tax rate is. Your deductions affect your AGI. If your AGI was 65,000 in 2009 and 65,000 in 2003, the tax rate would be exactly the same. Changes in deductions can affect your AGI, but that does not change the actual tax rates. Just because your AGI changed, does not mean the actual tax rate did. That being said, if every tax bracket went up by 5%, you would feel a 5% increase no matter what your AGI is. Get it?

  
  No...you don't get it. The thread title has to do with Obama's "biggest tax increase in history"...and I've clearly stated the whys and whereto fores as to why that is patently false. Period. If my total gross income (2009) had been identical to 2008, then I would have paid about 2 K less because of Obamas tax cuts. Period. And our total income for 2008 was well over 100K.
  
  If you want to see my tax returns for 08 and 09 with the appropriated tax tables and allowed deductions, then come to southeat ohio and I will show them to you personally.
  
  PS. What exactly do you not understand about getting an off the top tax credit of $1500 that Obama passed?
• LJ

  

  Footwedge;414569 wrote:No...you don't get it. The thread title has to do with Obama's "biggest tax increase in history"...and I've clearly stated the whys and whereto fores as to why that is patently false. Period. If my total gross income (2009) had been identical to 2008, then I would have paid about 2 K less because of Obamas tax cuts. Period. And our total income for 2008 was well over 100K.
  
  If you want to see my tax returns for 08 and 09 with the appropriated tax tables and allowed deductions, then come to southeat ohio and I will show them to you personally.
  
  PS. What exactly do you not understand about getting an off the top tax credit of $1500 that Obama passed?

  
  Sigh, you have no idea what you are talking about. Deductions are increased yearly to keep up with inflation, whether there is inflation or not. The deduction per dependant as well as the standard deduction incrases every year. Those are not "Obama's tax cuts". Your credits do not change what your tax rate is PERIOD. All you are doing is jumping tax brackets and taking gift cards from the .gov.
• I Wear Pants

  IggyPride00;414501 wrote:If I weighed 500 pounds 10 years ago, got down to 200 mid decade, and gained it all back so I weigh 500 again this year, was what I did really effective if the goal was to lose weight?
  
  The recession was at the end of the decade, but if you want to accept the good you have to take the bad.
  
  The duration of the Bush tax cuts was 10 years, and then they go away.
  
  I am just judging them as a whole, not parsing to fit an argument.
  
  How can you say they were effective if there was no net job growth during the duration of them as whatever gains they made were clearly unsustainable otherwise the jobs wouldn't have disappeared.
  
  I am a conservative guy, not an ideologue, and on their merits the tax cuts failed. I am not advocating raising taxes per-say, but I am not of the school that just cutting taxes more will solve the problem as clearly it didn't when it was tried last time.

  
  I agree with this.
  
  Simply cutting tax rates doesn't necessarily help anything. Especially without cutting spending which isn't going to happen with either party anytime soon.
  
  All the tax cuts in the world wouldn't have helped if we didn't take care of the housing crisis and the investment industry (which we obviously didn't).
• Footwedge

  LJ;414586 wrote:Sigh, you have no idea what you are talking about. Deductions are increased yearly to keep up with inflation, whether there is inflation or not. The deduction per dependant as well as the standard deduction incrases every year. Those are not "Obama's tax cuts". Your credits do not change what your tax rate is PERIOD. All you are doing is jumping tax brackets and taking gift cards from the .gov.

  Muddy the waters all you want with somantics. Tax cuts are tax cuts. Tax brackets are tax brackets. The bottom line...a simple concept...my tax bill was 2000 less because of Obamas tax rules. PERIOD. Somehow my specific tax credit of $1500 that was a direct result of Obamas initiative, you can't seem to understand that this equates to "LESS TAXES".
  
  Thread/
• LJ

  

  Footwedge;414632 wrote:Muddy the waters all you want with somantics. Tax cuts are tax cuts. Tax brackets are tax brackets. The bottom line...a simple concept...my tax bill was 2000 less because of Obamas tax rules. PERIOD. Somehow my specific tax credit of $1500 that was a direct result of Obamas initiative, you can't seem to understand that this equates to "LESS TAXES".
  
  Thread/

  
  Yes, I do 100's of personal and corporate tax returns a year, yet the great Footwedge has stumped me. Seems reasonable, right?
• Footwedge

  LOL..I'm not claiming to stump anyone...nor I'm not claiming to be great. You like to complain about me "flexing my intellectual muscles" and how annoying it is. I'm not all that smart in real life...got shitty grades in college in fact. But I like to read a lot of books from reliable, and from non biased people.
  
  If that upsets those that are set in their ways...not you per se, but others, then so be it.
  
  Here is the tax credit that I am referring to. A tax credit that encompasses millions of dollars aggregately for those that have chosen to utilize Obama's tax slashing. Since you do 100's of personal and corporate tax returns a year, surely you were well aware of this HUGE tax credit, right?
  
  http://www.energystar.gov/index.cfm?c=windows_doors.pr_taxcredits
• LJ

  

  Footwedge;414691 wrote:LOL..I'm not claiming to stump anyone...nor I'm not claiming to be great. You like to complain about me "flexing my intellectual muscles" and how annoying it is. I'm not all that smart in real life...got shitty grades in college in fact. But I like to read a lot of books from reliable, and from non biased people.
  
  If that upsets those that are set in their ways...not you per se, but others, then so be it.
  
  Here is the tax credit that I am referring to. A tax credit that encompasses millions of dollars aggregately for those that have chosen to utilize Obama's tax slashing. Since you do 100's of personal and corporate tax returns a year, surely you were well aware of this HUGE tax credit, right?
  
  http://www.energystar.gov/index.cfm?c=windows_doors.pr_taxcredits

  
  Most certainly am. You do realize all that was done was an expansion of an existing credit right? Back in 2006 when I worked at my first tax prep job tons of people were getting $1000 and $500 credits for doors, windows, solar panels, siding, roofing etc that qualified.
  
  still didn't change your tax rate.
• Writerbuckeye

  

  IggyPride00;414458 wrote:I'm just going by the numbers.
  
  We can agree that taxes for the decade were the lowest they have been in recent history.
  
  Statistics also show the decade as a whole saw non-existent job growth even in the face of favorable business conditions.
  
  I am merely wondering out loud why it will suddenly start working when it didn't work or produce the desired result last decade?
  
  Exactly how does that equate to buying into rhetoric?

  
  So we're going to simply ignore the biggest housing meltdown in our history and its effect on tanking the entire economy -- but attribute all that negative effect to tax cuts in some de facto way?
  
  Okay, then.
  
  UNTIL the housing bubble burst, the economy was chugging along just fine and the tax cuts did what tax cuts tend to do: be a positive impact on business, job growth and the economy overall.
  
  If you want to fairly look at what those cuts did, you cannot include one of the biggest meltdowns in our history that had ZERO to do with the cuts -- but were, in fact, the result of over-reaching social programs interfering in the financial structure that finally came home to roost (didn't think I'd let that go now, did ya?)
• Manhattan Buckeye

  Yahoo! is our friend:
  
  http://finance.yahoo.com/taxes/article/110005/how-the-expiring-bush-tax-cuts-affect-you?mod=taxes-advice_strategy
  
  Of note:
  
  "The current six rate brackets of 10%, 15%, 25%, 28%, 33% and 35% will be replaced by five new brackets with the higher rates of 15%, 28%, 31%, 36% and 39.6%."
  
  When people talk about tax rates, this is what they are talking about.
  
  "Right now, an unbeatable 0% rate applies to long-term gains and dividends collected by folks in lowest two rate brackets of 10% and 15%. Starting next year, those folks will pay 10% on long-term gains and 15% and 28% on dividends (compared with 0% now) unless a change is made"
  
  In other words those taxpayers will likely pay more taxes on money at risk, as opposed to money not at risk.
  
  "Right now, the standard deduction for married joint-filing couples is double the amount for singles. For this, we can thank the Bush tax cuts, which included several provisions to ease the so-called marriage penalty. The penalty can force a married couple to pay more in taxes than when they were single. Starting next year, the joint-filer standard deduction will fall back to about 167% of the amount for singles unless Congress takes action and the president approves. We don't know if that will happen. If not, lots of lower and middle-income couples will face higher tax bills."
  
  This grinds my gears a bit, as the AMT still has a marriage penalty.
  
  "Before the Bush tax cuts, a nasty phase-out rule could eliminate up to 80% of a higher-income individual's itemized deductions for mortgage interest, state and local taxes, and charitable donations. The rule was gradually eased and finally eliminated this year."
  
  The term gradual is apt, 80% seems incredibly high, one would have to be a very high earner to be phased out that much, but even we had our itemized deductions reduced last year.
• believer

  

  Manhattan Buckeye;414739 wrote:"Before the Bush tax cuts, a nasty phase-out rule could eliminate up to 80% of a higher-income individual's itemized deductions for mortgage interest, state and local taxes, and charitable donations. The rule was gradually eased and finally eliminated this year."
  
  The term gradual is apt, 80% seems incredibly high, one would have to be a very high earner to be phased out that much, but even we had our itemized deductions reduced last year.

  If the Feds eliminate this deduction I'll be in a world of hurt. This deduction alone saved my ass in taxes last year. It could very easily be enough to sink me financially if they eliminate or even severely curtail the mortgage interest deduction. If so, I'll have to sell my home (if it will sell at all). And if it doesn't sell, I'll have to take draconian measures (IE: foreclose).
  
  I have a hunch there are hundreds of thousands of other Americans in the some boat. Could easily be the catalyst for a second housing crisis.
• IggyPride00

  

  So we're going to simply ignore the biggest housing meltdown in our history and its effect on tanking the entire economy -- but attribute all that negative effect to tax cuts in some de facto way?

  No, that would be attributed to the complete lack of regulation as to what was going on in the derivatives market.
  
  One can blame Fannie and Freddie all they want, but the fact is if it hadn't been for the crazy securitized instruments Wallstreet made up the housing crisis would have been rather simple to deal with rather than bring down the world economy.
  
  Allowing 35 and 40 to 1 leverage ratios, no transparency into financial firms real liabilities or counter party risks, things like that brought the market down. More regulation and more transparency would have negated all that stuff, but then it would have been harder to generate profits if banks had to do this stuff in the light of day and people could see what a scam alot of it is.
  
  Its all a classic chicken or egg argument. Some people like to blame the problem on Fannie/Freddie and the governments role in the mortgage market as the root of the problem, while others argue that it wasn't so much the bad loans that caused the problem as much as what all of the "financial innovation" Wallstreet used once they got their hands on the loans. Fannie and Freddie were losing market share in the mortgage market at the turn of the century, and their shareholders kicked management's ass to lower lending standards because of the money Wallstreet was raking in hand over fist because of subprime. That had as much or more to do with the drop in lending standards as government did.
  
  The final point I would make on that is the Community Reinvestment Act of 77 worked just fine for more than 20 years. Do you think it is any coincidence that the housing market only really got out of control starting at the turn of the century when the Gramm-Leach-Bliley Act (gutting Glass Steagal and a host of other regulations) was passed?
  
  I am sure it is just coincidence, but it is weird to me that things were stable for so long (over 20 years), and only once Wallstreet was given a green light to go wild by changing the regulatory structure that the market went to hell in a hand basket (the housing market topped in 2005 so a little over 5 years after GLB).
• Footwedge

  Manhattan Buckeye;414739 wrote:Yahoo! is our friend:
  
  http://finance.yahoo.com/taxes/article/110005/how-the-expiring-bush-tax-cuts-affect-you?mod=taxes-advice_strategy
  
  Of note:
  
  "The current six rate brackets of 10%, 15%, 25%, 28%, 33% and 35% will be replaced by five new brackets with the higher rates of 15%, 28%, 31%, 36% and 39.6%."
  
  When people talk about tax rates, this is what they are talking about.
  
  "Right now, an unbeatable 0% rate applies to long-term gains and dividends collected by folks in lowest two rate brackets of 10% and 15%. Starting next year, those folks will pay 10% on long-term gains and 15% and 28% on dividends (compared with 0% now) unless a change is made"
  
  In other words those taxpayers will likely pay more taxes on money at risk, as opposed to money not at risk.
  
  "Right now, the standard deduction for married joint-filing couples is double the amount for singles. For this, we can thank the Bush tax cuts, which included several provisions to ease the so-called marriage penalty. The penalty can force a married couple to pay more in taxes than when they were single. Starting next year, the joint-filer standard deduction will fall back to about 167% of the amount for singles unless Congress takes action and the president approves. We don't know if that will happen. If not, lots of lower and middle-income couples will face higher tax bills."
  
  This grinds my gears a bit, as the AMT still has a marriage penalty.
  
  "Before the Bush tax cuts, a nasty phase-out rule could eliminate up to 80% of a higher-income individual's itemized deductions for mortgage interest, state and local taxes, and charitable donations. The rule was gradually eased and finally eliminated this year."
  
  The term gradual is apt, 80% seems incredibly high, one would have to be a very high earner to be phased out that much, but even we had our itemized deductions reduced last year.

  
  Those notes are oh so nice and interesting. Where's the one that states that this will amount to the "greatest tax hike in history"....as the thread title stated?
  
  And as a sidebar....over the past 50 years or so, the actual tax revenues has been pretty consistent at 18-20% as a direct ratio to GDP......no matter what the marginal tax brackets were. Why is it....that during 2009, with the lowest tax rates in a long, long time, has the tax revenues dropped to an unprecedented rate of 14% as a ratio to GDP? I thought dropping taxes was such a wonderful thing.
• believer

  

  IggyPride00;414797 wrote:No, that would be attributed to the complete lack of regulation as to what was going on in the derivatives market.
  
  One can blame Fannie and Freddie all they want, but the fact is if it hadn't been for the crazy securitized instruments Wallstreet made up the housing crisis would have been rather simple to deal with rather than bring down the world economy.
  
  Allowing 35 and 40 to 1 leverage ratios, no transparency into financial firms real liabilities or counter party risks, things like that brought the market down. More regulation and more transparency would have negated all that stuff, but then it would have been harder to generate profits if banks had to do this stuff in the light of day and people could see what a scam alot of it is.
  
  Its all a classic chicken or egg argument. Some people like to blame the problem on Fannie/Freddie and the governments role in the mortgage market as the root of the problem, while others argue that it wasn't so much the bad loans that caused the problem as much as what all of the "financial innovation" Wallstreet used once they got their hands on the loans. Fannie and Freddie were losing market share in the mortgage market at the turn of the century, and their shareholders kicked management's ass to lower lending standards because of the money Wallstreet was raking in hand over fist because of subprime. That had as much or more to do with the drop in lending standards as government did.
  
  The final point I would make on that is the Community Reinvestment Act of 77 worked just fine for more than 20 years. Do you think it is any coincidence that the housing market only really got out of control starting at the turn of the century when the Gramm-Leach-Bliley Act (gutting Glass Steagal and a host of other regulations) was passed?
  
  I am sure it is just coincidence, but it is weird to me that things were stable for so long (over 20 years), and only once Wallstreet was given a green light to go wild by changing the regulatory structure that the market went to hell in a hand basket (the housing market topped in 2005 so a little over 5 years after GLB).

  
  No reasonable person denies Wall Street's excesses and abuses in the housing meltdown, but what drives me crazy is that the folks pointing the accusatory finger at Wall Street in the Federal government refuse to acknowledge their own hands in the meltdown cookie jar. Suffice to say there's plenty of blame to go around.
• Thread Bomber

  

  Yes... as long as it points left......
• believer

  

  Thread Bomber;414822 wrote:Yes... as long as it points left......

  That goes without saying.
• BoatShoes

  Writerbuckeye;414732 wrote:So we're going to simply ignore the biggest housing meltdown in our history and its effect on tanking the entire economy -- but attribute all that negative effect to tax cuts in some de facto way?
  
  Okay, then.
  
  UNTIL the housing bubble burst, the economy was chugging along just fine and the tax cuts did what tax cuts tend to do: be a positive impact on business, job growth and the economy overall.
  
  If you want to fairly look at what those cuts did, you cannot include one of the biggest meltdowns in our history that had ZERO to do with the cuts -- but were, in fact, the result of over-reaching social programs interfering in the financial structure that finally came home to roost (didn't think I'd let that go now, did ya?)

  
  The financial crisis is integrally related to low capital gains rates and the subsequent lack of creation of jobs. I know compared to most on here I'm the socialist/commie/pinko but I've generally advocated that however broad or progressive tax rates are going to be....there should not be significant arbitrage between capital gains and ordinary income rates...especially in the upper income/job creating brackets like there has been since the 90's.
  
  Income has exponentially increased for the top 5% and even more so for the top 1% since 1990 but has not outpaced inflation for the rest of us. These job creators (CEOs and upper management incontrol of corporations that hire us) have not raised our wages nor increased hiring us for nearly 20 years now. Why?
  
  Let's suppose you're a sole proprietor and you manufacture widgets. Suppose you have $50,000 cold hard cash that's already been taxed.
  
  -You could hire another widget maker at a good wage of $50,000. Suppose He makes enough widgets to generate $65,000 of income from ordinary sales of the widgets and hence an ordinary profit of $15,000 taxed at 35% = a tax due of $5,250.
  
  -Or, you could Invest it in something that will generate capital gains such as these exotic derivatives that Iggey is referencing (that emerged to meet the demand of higher income earners to generate low tax capital gain) and get a short term capital gain of $15,000 taxed at 15% = a tax due of $2,250.
  
  What is Homo Economicus going to do? And in reality, these capital investments crafted by goldman sachs and the like yielded better and faster returns because of all the value adjusted risk methods and such than an inefficient human being. And that's just for tax reasons and before you consider the lack of demand out there because of two decades of stagnant wages by the middle and lower classes. If you're the CEO of a company, are you going to plow your profits into people or are you going to call up Goldman Sachs?
  
  So ultimately, I don't think these bush tax cuts expiring will help much but harm the HENRY's (High Earners Not Rich Yet) because the people sucking up the economic growth of the last two decades aren't getting ordinary income and the Henry's are just another group of wage earners who's wages haven't grown since the 90's.
  
  Increasing the Capital Gains Rate to the same rate as the top marginal ordinary rate is the way to go IMO....JMHO.
• I Wear Pants

  IggyPride00;414797 wrote:No, that would be attributed to the complete lack of regulation as to what was going on in the derivatives market.
  
  One can blame Fannie and Freddie all they want, but the fact is if it hadn't been for the crazy securitized instruments Wallstreet made up the housing crisis would have been rather simple to deal with rather than bring down the world economy.
  
  Allowing 35 and 40 to 1 leverage ratios, no transparency into financial firms real liabilities or counter party risks, things like that brought the market down. More regulation and more transparency would have negated all that stuff, but then it would have been harder to generate profits if banks had to do this stuff in the light of day and people could see what a scam alot of it is.
  
  Its all a classic chicken or egg argument. Some people like to blame the problem on Fannie/Freddie and the governments role in the mortgage market as the root of the problem, while others argue that it wasn't so much the bad loans that caused the problem as much as what all of the "financial innovation" Wallstreet used once they got their hands on the loans. Fannie and Freddie were losing market share in the mortgage market at the turn of the century, and their shareholders kicked management's ass to lower lending standards because of the money Wallstreet was raking in hand over fist because of subprime. That had as much or more to do with the drop in lending standards as government did.
  
  The final point I would make on that is the Community Reinvestment Act of 77 worked just fine for more than 20 years. Do you think it is any coincidence that the housing market only really got out of control starting at the turn of the century when the Gramm-Leach-Bliley Act (gutting Glass Steagal and a host of other regulations) was passed?
  
  I am sure it is just coincidence, but it is weird to me that things were stable for so long (over 20 years), and only once Wallstreet was given a green light to go wild by changing the regulatory structure that the market went to hell in a hand basket (the housing market topped in 2005 so a little over 5 years after GLB).

  Nice post.