Please help me...

[volinbham]

Sorry didn't read through whole thread so this may have been addressed - WRT to corporate taxation and profits.

1) Profits are necessary for investment. Growth requires investment. If an investment offers little or no hope of return then it doesn't justify the risk. Would you lend a company your life savings if they told you that in 10 years you'd likely get your original investment back? Hell no.

2) So, without return on investment; investment doesn't occur. Growth requires investment.

3) Profits are growth capital and generally not that high as a percentage of revenues - many industries labor along at average profitability rates in the single digits. If you've ever been involved financially in a business you know that a little slop here or bad luck there turns zero or negative profits.

4) Corporate taxes reduce (effectively) profits and return to investors.

5) Given that sufficient returns are necessary to attract investment and that competition exists, corporate taxes ultimately get built into pricing so that net profits after tax justify investment.

6) Corporate taxation is essentially a pass through to the consumer and is a highly inefficient method of redistribution.

 

[volinbham]

Did you ask Vince what the hell happened with him and Jennifer? That's a damn good thing to go to waste! haha! No, in all honesty, you make good points, but I still wonder about the whole "market will dictate the market" argument I've seen on here. That is, consumers will dictate what is best for the market, and the market will abide. I just watched 60 Minutes, and they had a segment on the Lehman Brothers fiasco. Maybe that doesn't work exactly for the argument you provide, but it seems to suggest to me that there are things that go on in big business that are far beyond the cognizance of the consumer, or even the market for that matter.

What mechanism besides the market do you think would do a better job?

 

[NEO]

Oil companies and their profits are grossly misconstrued. Yes, the are posting huge profits. However, this is due to scale/volume not profit margin. Almost everything all over the world needs energy. Therefore, the scale of their companies are absolutely huge. In reality, they have somewhere near a six percent profit margin which is actually pretty small for most businesses.

Oil is also not a good example of free market. It could be if we opened up drilling but rght now its bellsouth on roids times ten.

 

[KentheOrange]

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[PKT_VOL]

Did you ask Vince what the hell happened with him and Jennifer? That's a damn good thing to go to waste! haha!

Ha. Nope. I wish I would have stayed and met him. He was in the middle of shooting a scene as an intern at Google's headquarters. They turned the student center at Georgia Tech into "Google Headquarters". I might add they did a convincing job.

No, in all honesty, you make good points, but I still wonder about the whole "market will dictate the market" argument I've seen on here. That is, consumers will dictate what is best for the market, and the market will abide. I just watched 60 Minutes, and they had a segment on the Lehman Brothers fiasco. Maybe that doesn't work exactly for the argument you provide, but it seems to suggest to me that there are things that go on in big business that are far beyond the cognizance of the consumer, or even the market for that matter.

In a free market, there is a buyer and a seller who act on their own accord. With Lehman Brothers, as well as other financial institutions which were caught up in the sub-prime mortgage fiasco, the government was forcing the seller (the banks) to sell mortgages to buyers who were not qualified. The government was doing this in order to perpetuate the "American Dream" via "affordable home ownership"; especially for those who are considered disfranchised, particularly minorities.

It would be analogous to me going down to my local BMW dealer and buying a BMW at a crazy low (but variable interest rate) via fear of government penalty; all in the name of living the American Dream. Of course, I am only 24 and cannot even begin to afford a brand new top of the line BMW once those interest rates and principal spring back to what is considered normal payment. That was one half of the equation.

On the other half of the equation was the investment banks (aka Wall Street). By 2008, most banks were a mixture of traditional banking with investment banking. This was caused by the passage of the Gramm–Leach–Bliley Act in 1999 which repealed the Glass–Steagall Act of 1933. This deregulated the banking industry and allowed a single bank to turn into the equivalent of a one-stop-get-all Wal-Mart bank. Two problems emerged from this. First, the banks became "too big to fail." Secondly, each of the different branches within the bank did a piss poor job of communicating effectively with one another. The investment branch of banks, in most (not all) cases, were taking mortgages from the traditional side of the bank which they had no reason to suspect of being a bad investment, and selling them as mortgage backed securities on the open market as a triple A rated security to investors interested in a stable long-term investment. *Disclaimer* It can get more complicated with allegations of fraud in many different ways, but it seems most transactions were not overtly fraudulent.

In short, Lehman Brothers is bad example of the what you are trying to say. The buy and seller were not acting in accordance to their own unobstructed free will.

 

[BigPapaVol]

Well, that's the impression I've got on here. I have other posts in this thread if that works better.

seriously? That the consensus wants corp taxes to go away? That statutory rates on the middle class are higher than higher earners? Regular folks taxed more than the super wealthy? See, wealth doesn't get taxed, income does.

Nobody on this forum is arguing very hard against our progressive system, which is unabashedly unfair. Very few are arguing against corporate taxation or people paying taxes on income.

Your oil example is just a lack of understanding. The profits are rising on a gross basis and only minimally on margin expansion, which one would expect.

Be realistic about this. You don't have large swaths of the high earners griping about their already high tax rates while half of the country pays none at all. What you have is one side demanding some approach to spending that assures any incremental income will go somewhere toward righting the ship rather than buying votes. I don't know how many earners you spend time around, but I can assure you that it isn't a group of people bent on hoarding cash at the expense of the US.

 

[BigPapaVol]

OP, this is what the GOP says whenever you point out that tax cuts for the investment class, and particularly the lower capital gains tax, is not working to spur real investment, jobs, or growth. They just say "too much spending caused the debt."

Sure, spending is a huge problem. But so are obscene tax breaks that were adopted under the guise of causing investment, but clearly do not.

I am all for curbing spending and sensible entitlement reform. I think everyone is. But the other side of the equation is to end the charade of trickle down.

so we built the most powerful economic engine in the history of the world via redistro?

The idea of causing investment is silly, but expecting you to know better is insanity.

You have yet to ever tell me of any other system, save trickle down, that defines how economics, micro or macro, works. This is about the 25th opportunity you've had and your lone response has been some silliness about demand, which you can't seem to support. Help a brother out.

 

[lawgator1]

so we built the most powerful economic engine in the history of the world via redistro?

The idea of causing investment is silly, but expecting you to know better is insanity.

You have yet to ever tell me of any other system, save trickle down, that defines how economics, micro or macro, works. This is about the 25th opportunity you've had and your lone response has been some silliness about demand, which you can't seem to support. Help a brother out.

For the upteenth time, my position is that .....




Things have changed.



See my original post on this in the thread about the differences between spurring investment 70 years ago and doing it now. Whole different ballgame, imo, and explains why capital gains tax cuts do not produce investment of the sort we'd all like to see at this point.

If you want to incentivize such growth in industry, we might be able to come to terms. But reduced taxes for forex trading? For futures trading on commodities over the course of a few weeks? For buying and selling of options, where none of the money in the secondary markets actually goes to investing in production of goods or services?

That's just a shell game that doesn't trickle down, except to the traders and the brokerage houses that concoct them and service the trades.

 

[BigPapaVol]

For the upteenth time, my position is that .....




Things have changed.



See my original post on this in the thread about the differences between spurring investment 70 years ago and doing it now. Whole different ballgame, imo, and explains why capital gains tax cuts do not produce investment of the sort we'd all like to see at this point.

If you want to incentivize such growth in industry, we might be able to come to terms. But reduced taxes for forex trading? For futures trading on commodities over the course of a few weeks? For buying and selling of options, where none of the money in the secondary markets actually goes to investing in production of goods or services?

That's just a shell game that doesn't trickle down, except to the traders and the brokerage houses that concoct them and service the trades.

Oh, that crap was serious? My bad.

What does the secondary market have to do with this? Commodities? Options? You're talking about crap available to every level of investor. I'm talking about accredited investors.

What in the hell was the trickle down comment about? Seems you don't understand the difference in public market investing and principal investing in companies. That surprises me greatly.

Creating companies is the lone long term solution to the problem, yet you keep jabbering on about something else. How are we going to get people to start businesses and address the future economy? This idea that we don't tax enough doesn't remotely begin to address the question.

 

[vols4sure]

For the upteenth time, my position is that .....




Things have changed.



See my original post on this in the thread about the differences between spurring investment 70 years ago and doing it now. Whole different ballgame, imo, and explains why capital gains tax cuts do not produce investment of the sort we'd all like to see at this point.

If you want to incentivize such growth in industry, we might be able to come to terms. But reduced taxes for forex trading? For futures trading on commodities over the course of a few weeks? For buying and selling of options, where none of the money in the secondary markets actually goes to investing in production of goods or services?

That's just a shell game that doesn't trickle down, except to the traders and the brokerage houses that concoct them and service the trades.

You do realize anything held for less than a year is taxed as ordinary income don't you? Further, one can only deduct losses of $3000 per year even if they lost millions of dollars in a year "day trading."

 

[lawgator1]

Oh, that crap was serious? My bad.

What does the secondary market have to do with this? Commodities? Options? You're talking about crap available to every level of investor. I'm talking about accredited investors.

What in the hell was the trickle down comment about? Seems you don't understand the difference in public market investing and principal investing in companies. That surprises me greatly.

Creating companies is the lone long term solution to the problem, yet you keep jabbering on about something else. How are we going to get people to start businesses and address the future economy? This idea that we don't tax enough doesn't remotely begin to address the question.

Ok, well now that is a different issue, I would agree with that.

Investing in a company long term, so that it can grow, I think I'd talk turkey in terms of special tax treatment for gains on that kind of investment.

 

[BigPapaVol]

Ok, well now that is a different issue, I would agree with that.

Investing in a company long term, so that it can grow, I think I'd talk turkey in terms of special tax treatment for gains on that kind of investment.

When that investor talks hurdle rates, he's impounding taxes and inflation. Both are frictional expense and enormously problematic. If you don't have a feel for either, you hedge high and hurdle rates go through the ceiling. Then, you get no investment. Wonder where we might find a lab to test this...

 

[TennxxVol]

FWIW:

Shhhh…It’s Even Worse Than The Great Depression « Across the Street

Velocity of money is the frequency with which a unit of money is spent on new goods and services. It is a far better indicator of economic activity than GDP, consumer prices, the stock market, or sales of men’s underwear (which Greenspan was fond of ogling). In a healthy economy, the same dollar is collected as payment and subsequently spent many times over. In a depression, the velocity of money goes catatonic. Velocity of money is calculated by simply dividing GDP by a given money supply. This VoM chart using monetary base should end any discussion of what ”this” is and whether or not anybody should be using the word “recovery” with a straight face:

In just four short years, our “enlightened” policy-makers have slowed money velocity to depths never seen in the Great Depression.
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In 2011, every dollar of GDP growth created $2.08 in debt. In real life, that’s 108% interest plus the nominal rate, and our twisted leaders want you say, “Thank you sir, may I have another!”
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That never happened in the U.S. during Great Depression/WWII era. One place where it did happen was in the Weimar Republic (which shortly thereafter became known as Nazi Germany) . No one’s ever done a better job of explaining how quickly things unraveled there than Art Cashin (this is an absolute MUST read):

By any and all reasonable measures, it’s worse than the Great Depression, and still deteriorating.