Obama's Tax Plan and the Law of Unintended Consequences

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  1. Quote Originally Posted by Kruger View Post
    It sounded as if greed preceded government in your statement. (Greed + Government). If that wasn't representing a time frame of events, then you're correct...it would be similar.
    Oh, no; it was a 'no present order' statement. Merely showing all the events which precipitated our current cluster-****.


  2. Quote Originally Posted by Kruger View Post
    The RTC actually made money during the S&L crisis....and is the basis of the current bailout.
    Interesting. Looks like a decent program. Do they use the money they make on the sales to pay off the bankrupt bank's debt?
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  3. Quote Originally Posted by Kruger View Post
    Yes, quite. The annual percentage increase from 2002-2005 was double and almost triple that of the 90's. In 2004 it was 9.3%

    The majority of the increases in house values, especially in the most hardest hit (Florida, Arizona, Nevada and California) peaked from 2002-2005 and it was in the double digits.

    The average median house price from 2000-2004 jumped 50k. 4 years. It took less half the time then was seen earlier (1990-2000).

    Your price range was the least effected.
    Never meant to claim particular victim status, nor to pretend I have it worse than others. Then again, I have a modest little bungalow in a shabbily genteel 'hood, and only meant to point out that it wasn't *just* the high-flyers, speculators & advantage-takers that got bit, and that the rise began well before 2002.

  4. Quote Originally Posted by Mulletsoldier View Post
    In terms of Military, I believe that is simply factually incorrect: In 1999 Clinton called for a 110-billion increase in Military spending over six years; disassemble - or even attempt to disassemble - the Military he did not. While this is a common misconception about the Clinton administration it is simple factually inaccurate. And, in fact, Republicans at the time lauded that particular portion of the Clinton Act (though disliked others, naturally).
    Really....
    http://query.nytimes.com/gst/fullpag...260&sec=&spon=

    One of these Naval training centers were closed in my hometown.

  5. Being that I'm a HR Compensation Professional, I can answer a few of these...

    Quote Originally Posted by RobInKuwait View Post
    -Anyone making under $300,000 but over $250,000 will ask their employer to lower their salary to $249,000 as after taxes it will probably be around the same number.
    Beyond the fact that taxes don't work like that, you will never see this happen. I've only see one case where someone asked not to receive a yearly increase and it was an extreme situation where the employee needed to stay under a certain threshold to stay eligible for a federal program that was paying tens of thousands of dollars in medical fees.

    Quote Originally Posted by RobInKuwait View Post
    -Anyone making significantly more money than $249,000 will probably look into getting a portion of their income in stock options, benefits, and other forms of compensation to skirt around taxes.
    This isn't an option for 99.9% of people in the workforce. The plans that companies set forth aren't negotiable by individual employees. Stock options aren't attractive to companies anymore because of expensing rules, not to mention stocks are so far underwater that executive compensation has dropped dramatically this year because of the stock market. Benefits are typically negotiated at a company wide level so it's not like many people have the option to negotiate that aspect. Generally speaking, people prefer cash compensation over most forms compensation.

    Joe
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  6. Quote Originally Posted by badfish51581 View Post
    This isn't an option for 99.9% of people in the workforce.
    right, but the people who make over 250k a year are in that top 5% of the workforce, so they have a bit different clout than the janitor does

  7. I was watching Huckabee this weekend and he had an economist on that said the actual cutoff was 200k....has anyone else heard this?

  8. Quote Originally Posted by badfish51581 View Post
    Being that I'm a HR Compensation Professional, I can answer a few of these...
    Beyond the fact that taxes don't work like that, you will never see this happen. I've only see one case where someone asked not to receive a yearly increase and it was an extreme situation where the employee needed to stay under a certain threshold to stay eligible for a federal program that was paying tens of thousands of dollars in medical fees.
    But isn't it more likely to happen if you there's a stiffer difference between the tax brackets?

    Quote Originally Posted by badfish51581 View Post
    This isn't an option for 99.9% of people in the workforce. The plans that companies set forth aren't negotiable by individual employees. Stock options aren't attractive to companies anymore because of expensing rules, not to mention stocks are so far underwater that executive compensation has dropped dramatically this year because of the stock market. Benefits are typically negotiated at a company wide level so it's not like many people have the option to negotiate that aspect. Generally speaking, people prefer cash compensation over most forms compensation.
    Right, but benefits could come in the form of a company car, perks...basically anything that can get around taxes.

    I'm obviously not a tax attorney. My point was that raising taxes encourages people to find creative ways in getting around taxes.

    What will happen to Obama's plan when the rich people he's relying on to pay for everything find a way around his hikes? Will he push 250k down to 150k? Will he raise it even more on the rich? Will he just eat the loss and jack up the national debt that much more?

  9. Quote Originally Posted by Kruger View Post
    The RTC actually made money during the S&L crisis....and is the basis of the current bailout.
    RTC received its assets for free.

  10. Quote Originally Posted by DougMan View Post
    RTC received its assets for free.

    ..but liquidated them for more than they were initially worth at the time of insolvency (most of them)...which is the point of the current bailout. The sole purpose is the remove them from the books, establish values and resell them.
    For answers to board issues, read the Suggestion and News forum at the bottom of the main page.

  11. Quote Originally Posted by EasyEJL View Post
    right, but the people who make over 250k a year are in that top 5% of the workforce, so they have a bit different clout than the janitor does
    You're welcome to your opinion, but 95% of executives ($250k plus) don't have control to alter the offerings of their compensation packages as they see fit. More so, anything that does change needs to be approved by the Board of Directors and is not at the whim of even a CEO.

    Quote Originally Posted by RobInKuwait View Post
    But isn't it more likely to happen if you there's a stiffer difference between the tax brackets?
    It doesn't make sense to do that. They'll make more money paying the taxes, then not because it's a progressive system.
    Not to mention, they'll limit their future increases. Most raises are calculated as percent of base salary.

    3% increase of $250,000 = $7,500
    3% increase of $275,000 = $8,250
    (Losing out on $750 of base income)

    Most bonuses are caluclated as a percentage of base salary, so they'll also limit their overall bonus potential.

    35% of $250,000 = 87,500
    35% of $275,000 = 96,250
    (Losing out on $8,750 of bonus)

    By my calculations that works out to about $9,500 less gross earnings. Even when they pay marignally more on that extra $25,000 of earnings, the difference doesn't come out more than about $1,000. Not to mention it still won't make up that difference in lost income that will become compounded over years of avoiding paying the extra taxes.

    Quote Originally Posted by RobInKuwait View Post
    Right, but benefits could come in the form of a company car, perks...basically anything that can get around taxes.
    Companies won't agree to increase their operating costs to save employees from paying personal income taxes. The economy sucks for everyone and most comapnies can't burden that. As it is, they're continually passing off more costs to employees because they can't shoulder then burdens anymore - like health care and pention plans.

    Quote Originally Posted by RobInKuwait View Post
    I'm obviously not a tax attorney. My point was that raising taxes encourages people to find creative ways in getting around taxes.

    What will happen to Obama's plan when the rich people he's relying on to pay for everything find a way around his hikes? Will he push 250k down to 150k? Will he raise it even more on the rich? Will he just eat the loss and jack up the national debt that much more?
    I have no comment on this...just answering questions I have an expertise on.

    Joe

  12. Quote Originally Posted by Kruger View Post
    ..but liquidated them for more than they were initially worth at the time of insolvency (most of them)...which is the point of the current bailout. The sole purpose is the remove them from the books, establish values and resell them.
    Pretty important distinction. RTC liquidated failed institutions, which I would assume means their share holders/debt holders were wiped out. The TARP will pay above market prices while requiring little in the way of pain to the current shareholders/debt holders or management. There is potential risk of a downside in the current bailout that did not exist with the RTC in terms of direct cost to taxpayers. The banks won't sell this stuff at market prices, else they would not be holding onto it. The government is going to have to pay a "hold to maturity price", meaning much of the upside will be paid for, making it a potentially terrible deal for the taxpayer.

    The current bailout should be the like the RTC. Get rid of insolvent banks and liquidate their assets.

  13. Quote Originally Posted by DougMan View Post
    Pretty important distinction. RTC liquidated failed institutions, which I would assume means their share holders/debt holders were wiped out.
    The RTC mainly liquidated real estate assets.

    THe majority of banks that failed this time around also had their share holders wiped out. Ask people who own Leyman, Bear Sterns, Fannie and Freddie, etc....


    The TARP will pay above market prices while requiring little in the way of pain to the current shareholders/debt holders or management.
    The shareholders have already got nailed. They faced the most pain of all not to mention the provisions made to eliminate compensation for management.

    There is potential risk of a downside in the current bailout that did not exist with the RTC in terms of direct cost to taxpayers.
    Sure it did. They didn't make money off of all assets..some got pennies on the dollar...other did not.

    The banks won't sell this stuff at market prices, else they would not be holding onto it.
    Actually, there is no market price. That's the problem...you don't even know most of the real values of these mortgage pools. Its mainly estimates but most investors say, over the long haul you should make a decent profit on many of them.

    The government is going to have to pay a "hold to maturity price", meaning much of the upside will be paid for, making it a potentially terrible deal for the taxpayer.
    Not form what I've heard. Many people are itching to get at them.
    The current bailout should be the like the RTC. Get rid of insolvent banks and liquidate their assets.
    The RTC liquidated assets of already insolvent banks...and most of it was real estate and mortgages.

    If you just want these banks to fail, then your not in a minority here.
    For answers to board issues, read the Suggestion and News forum at the bottom of the main page.
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