We all know how homesteading works, except for jmski, whom my comment was addressed. The burden of higher taxes is on the new owner, not the present owner.
And my point was that the higher tax burden is also on the seller because after selling his house that was at a lower property tax rate he has to buy a new home which will put him in the same "new assessment" boat as the person that bought his house.
Who said you had to buy a new house.....maybe the big guy upstairs cashed in your chips.
Who said you had to buy a similar house?
Who said you had to buy in the same neighborhood, or state?
Who said you had to "buy" anything?
Stop assuming things.
My mistake was assuming you read (and comprehended) the post above that started this property tax discussion
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
@ricko said:
Just remember, there will be a fiscal judgement day.....Logically, it cannot continue unabated. When or how the crash will occur remains to be seen. Cheers, RickO
@bigjpst said:
Most of the time I have a hard time wrapping my head around the posts and theories here and this is no exception.
If the 15% tax is real, then how is the 85% remaining profit not just as real. Sure the value of the dollar may be reduced, but that is still a gain in todays dollar. I and most of the ignorant in this world are worried about whether or not my paycheck and gains from the sale of my home or equities will pay my cost of living now. I don't see the value of trying to compare my pay to my great grandfather's .
What is being discussed are fictitious profits due to currency depreciation versus real profits ultimately due to productive work. Fictitious profits harm people who save as the controller of the currency and the constituency it serves benefits. Take, for example, the following scenario.
Let us assume that gold is $2,000 per troy ounce (31.1 grams). The Federal Reserve and federal government run highly inflationary monetary and fiscal policies for an extended period of time. One day, you find out that gold is $3,000 per troy ounce so you decide to sell it. You have $3,000 in cash of which $1,000 is a capital gain on which you'll pay, say, 20% in taxes. You have a net profit, after taxes, of $800, and now have a total of $2,800.
Looks like you made out well, right? Not quite. Let's say that the price of gold is still $3,000 per troy ounce and you want to buy that one ounce of gold back. You spend your $2,800 and are only able to purchase 0.93 troy ounces (29 grams) of gold. You have essentially lost money. The $1,000 in capital gains was a fictitious profit because nothing about the gold you possessed and then sold has changed. It did not increase in quantity nor was not improved in some way. Its price increased due to the debauchment of the currency and the tax authority took its due on the fictitious profits. This is what is meant by inflation being a silent confiscation of wealth.
If we take the same scenario but travel back in time to 1920 when currency depreciation is quite difficult due to the U.S. being on a redeemable gold standard , the price of the gold would not change. You could buy it and sell it back and forth and still have the same quantity of gold you started with.
The above is one criticism about paying taxes on the full amount of interest earned on savings or even profit from productive work. If you have $100 in a savings account and earn 5% in interest, a portion of the $5 earned in interest is due to inflation, the depreciation of the currency. If you believe the self-interested government statistics that inflation is only 2%, $2 of your $5 in earned interest is due to currency depreciation and only $3 of the $5 in earned interest should be taxable. Of course, the reality is that inflation is greater than 5% and all of the $5 in earned interest is fictitious profits. On a purchasing power basis, you have less than the $100 you started with as your principal has also lost purchasing power!
But the gold scenario above, the loss of the ficticious capital gain is not due to the inflationary monetary policy, but the taxation of the profits. If I did not have to pay the tax on the gain, then in theory, couldn't I just buy it back at the current market price assuming it has not changed from time of purchase? And if the gold standard theory held true, would the cash I recieved also purchase the same amount of goods?
I'm not advocating for the tax, but that is a different argument. The tax on the gain seems to be the drain on my purchasing power. But again in theory, it pays for the roads I use to get to work in a car that I don't have to crank a handle to start, so that I can get on the internet coin forum and look at cool stuff on a small little computer that I hold in my hand.
@bigjpst said:
But the gold scenario above, the loss of the ficticious capital gain is not due to the inflationary monetary policy, but the taxation of the profits. If I did not have to pay the tax on the gain, then in theory, couldn't I just buy it back at the current market price assuming it has not changed from time of purchase? And if the gold standard theory held true, would the cash I recieved also purchase the same amount of goods?
You are absolutely correct. So long as you do not sell the gold, there is no taxation. However, you will have to eventually sell that gold to convert it to a transactable currency (such as U.S. dollars) or trade it (barter). In all of those scenarios the fictitious profit on that gold will be taxed unless you flout certain laws.
Being that the profits are fictitious (they are an artifact of currency depreciation and are not a genuine increase in wealth), they should not be taxed. If that were true, then even in an environment of a depreciating currency, you should be able to buy and sell the gold back and forth and end up with the same quantity of gold. The reality is a bit more complicated because of short term volatility and irrational human behavior (animal spirits) but, assuming the depreciation is steady, you should end up with the same amount of gold after a relatively long period of time, assuming no transaction costs (commissions).
Under the gold standard, the U.S. dollar was defined as a quantum of gold. One troy ounce was equivalent to $20.67. If you had $20 of paper money, you could receive redeem it for gold bullion from the U.S. Treasury at the price of $20.67 per troy ounce. So, yes, your cash, whether in paper money or gold, would purchase the same amount of goods. Again, the reality is more complicated because there may be a dearth or surfeit of the goods you want to buy so prices will still fluctuate. However, prices will not fluctuate due to the incompetence or malfeasance of the issuer of the currency.
I'm not advocating for the tax, but that is a different argument. The tax on the gain seems to be the drain on my purchasing power. But again in theory, it pays for the roads I use to get to work in a car that I don't have to crank a handle to start, so that I can get on the internet coin forum and look at cool stuff on a small little computer that I hold in my hand.
Taxes on your earned income and on bona fide capital gains as well as usage taxes pay for those things. A lot of the price of gasoline is taxes that are supposed to pay for roads; the property taxes you pay should be funding the public schools, the water authority, and the infrastructure; the sales taxes you pay fund the general governmental administration.
Not taxing saved money is merely eliminating a system means of impoverishing people. Imagine it this way. Let us say you have one million dollars and intend to retire in 20 years. You put that money into a safe where it earns no interest. Is it proper that when you retire the one million dollars doesn't buy nearly as much as it did today? People used to be able to do that under a strict gold standard.
And, no, it is not right to force people to speculate in various assets nor is it right to force people to lose purchasing power with bank accounts that do not pay enough in interest to fully compensate for inflation (currency depreciation).
The currency is a unit of account and it should be very constant. Look at it as a yardstick. We do not measure our height or do carpentry work using a yardstick whose length varies with time. Why should we accept this chicanery with our currency?
@MWK said:
The above is one criticism about paying taxes on the full amount of interest earned on savings or even profit from productive work. If you have $100 in a savings account and earn 5% in interest, a portion of the $5 earned in interest is due to inflation, the depreciation of the currency. If you believe the self-interested government statistics that inflation is only 2%, $2 of your $5 in earned interest is due to currency depreciation and only $3 of the $5 in earned interest should be taxable. Of course, the reality is that inflation is greater than 5% and all of the $5 in earned interest is fictitious profits. On a purchasing power basis, you have less than the $100 you started with as your principal has also lost purchasing power!
Biggest complaint I've heard the last 2 months is folk saying they had to pay more in taxes....because they are making $10s of thousands in interest income...which is more than offsetting increases in goods and services prices.
when i was a kid and didn't know better i heard my mom passingon ops because it'd put us into a higher tax bracket (really!) my dad did the taxes but used the tables. oh the ill informed afraid of paying even a penny in taxes
Biggest complaint I've heard the last 2 months is folk saying they had to pay more in taxes....because they are making $10s of thousands in interest income...which is more than offsetting increases in goods and services prices.
All taxpayers are paying more in taxes because TAX RATES have increased.
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
I will never buy into the fact that somehow our debt( deficit) is a benefit for the people. The only real viable solution is reducing the size of government and to let the people run their own affairs in business.
Monetary madness theory.
@TwoSides2aCoin said:
I will never buy into the fact that somehow our debt( deficit) is a benefit for the people. The only real viable solution is reducing the size of government and to let the people run their own affairs in business.
Monetary madness theory.
The debt and the deficit are not the same thing. The government could easily create the same amount of money without issuing bonds to "back" this money. The inflationary effects would be similar, but we and our grandchildren would be spared from paying interest on an ever-increasing national debt.
Biggest complaint I've heard the last 2 months is folk saying they had to pay more in taxes....because they are making $10s of thousands in interest income...which is more than offsetting increases in goods and services prices.
All taxpayers are paying more in taxes because TAX RATES have increased.
There has been no change in the federal income tax rate.
@jmski52 said: All taxpayers are paying more in taxes because TAX RATES have increased.
And spending is so far out of control that it's truly crazy. Worse, it's by design and the endpoint isn't pretty.
Indeed. Restaurants are packed. Airports are packed. Cruise ships packed. Folk spending all kinds of money!! They just won't let prices drop, they just keep buying and buying.
@cohodk, do you pay additional Medicare tax? Do you pay net income investment tax? Both of these 2013 laws increased the effective tax rates on income and were aimed at "wealthy" Americans to help support ACA. But they have never been adjusted for inflation, and with each new tax year another million or more taxpayers "learn" about the taxes.
@RobM said: @cohodk, do you pay additional Medicare tax? Do you pay net income investment tax? Both of these 2013 laws increased the effective tax rates on income and were aimed at "wealthy" Americans to help support ACA. But they have never been adjusted for inflation, and with each new tax year another million or more taxpayers "learn" about the taxes.
The way our tax system is structured, every time you get a pay increase, you are paying a higher nominal tax rate. That is not the same as stating tax rates are increasing.
And the argument that more people every year now make more money that they are subject to additional Medicare tax IMO is no different than investment income rising and causing higher capital gains rates.
I agree that these taxes should be adjusted for inflation, but it’s not like the additional Medicare thresholds are anywhere close to the median income in the US.
Biggest complaint I've heard the last 2 months is folk saying they had to pay more in taxes....because they are making $10s of thousands in interest income...which is more than offsetting increases in goods and services prices.
All taxpayers are paying more in taxes because TAX RATES have increased.
There has been no change in the federal income tax rate.
Income tax is not the only tax. And let's not overlook the inflation tax.
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
@jmski52 said: All taxpayers are paying more in taxes because TAX RATES have increased.
And spending is so far out of control that it's truly crazy. Worse, it's by design and the endpoint isn't pretty.
Indeed. Restaurants are packed. Airports are packed. Cruise ships packed. Folk spending all kinds of money!! They just won't let prices drop, they just keep buying and buying.
and building personal debt and building personal debt.
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
hmm. 49th highest rated state for the hidden inflation tax.
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
@RobM said: @cohodk, do you pay additional Medicare tax? Do you pay net income investment tax? Both of these 2013 laws increased the effective tax rates on income and were aimed at "wealthy" Americans to help support ACA. But they have never been adjusted for inflation, and with each new tax year another million or more taxpayers "learn" about the taxes.
There are still lots of investments one can make to earn zero interest or take losses if they wish to pay less tax.
Biggest complaint I've heard the last 2 months is folk saying they had to pay more in taxes....because they are making $10s of thousands in interest income...which is more than offsetting increases in goods and services prices.
All taxpayers are paying more in taxes because TAX RATES have increased.
There has been no change in the federal income tax rate.
Income tax is not the only tax. And let's not overlook the inflation tax.
My original comment was regarding income tax. If you want to take that other places that's up to you. But here are more examples.... sunshine tax, snow tax and beach tax. Maybe even proximity and privacy tax.
@jmski52 said: All taxpayers are paying more in taxes because TAX RATES have increased.
And spending is so far out of control that it's truly crazy. Worse, it's by design and the endpoint isn't pretty.
Indeed. Restaurants are packed. Airports are packed. Cruise ships packed. Folk spending all kinds of money!! They just won't let prices drop, they just keep buying and buying.
and building personal debt and building personal debt.
@jmski52 said: All taxpayers are paying more in taxes because TAX RATES have increased.
And spending is so far out of control that it's truly crazy. Worse, it's by design and the endpoint isn't pretty.
Indeed. Restaurants are packed. Airports are packed. Cruise ships packed. Folk spending all kinds of money!! They just won't let prices drop, they just keep buying and buying.
and building personal debt and building personal debt.
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
One of my favorite taxes to grumble about (there are so many!!) is the extra taxes they put on a hotel room, that is called by various names. But then airlines and everywhere else they tack on those extra taxes and fees. Just a fact of life I guess...
@jmski52 said: All taxpayers are paying more in taxes because TAX RATES have increased.
And spending is so far out of control that it's truly crazy. Worse, it's by design and the endpoint isn't pretty.
Indeed. Restaurants are packed. Airports are packed. Cruise ships packed. Folk spending all kinds of money!! They just won't let prices drop, they just keep buying and buying.
and building personal debt and building personal debt.
@jmski52 said: and building personal debt and building personal debt.
78% living paycheck to paycheck, up from 65% just a couple of months ago.
Your numbers are inflated, but to play along, this only illustrates lack of personal responsibility, ie, weakness. Imports from China are up year over year and folk spent 15% more on food delivery services. If things are so bad, then why are folk spend so much on crap they don't need?
Savers last year made $315.4 billion in interest in their deposit accounts, which was a whopping four times the $78.7 billion Americans made in 2022, LendingTree found
why are folk spend so much on crap they don't need?
Take a look at the chart that derryb posted. What do you think it means? It's a reflection of what the banking system has foisted onto the American Public. More and more debt = slaves to the banking & political systems. Very easy to see.
You blame the people for things that they have zero control over. You blame the people who go into debt because they simply don't want to change their habits, like smoking cigarettes, or ordering food delivery for example.
I blame the ones in control, and the bankers (and their bought politicians) are at the top of that heap. That's who dictate the rules - i.e. no mark to market on bad debts, tbtf banks & bank bailouts, no transparency on gov.com spending - you name it.
Need a loan to support your bad habits? Here! We will create money out of nothing to support your bad habits and charge you interest for locking you into a debt spiral.
Look at disposable income...
I'm looking at the numbers. Have you? It's not rocket science. Let's do a little basic analysis...
What does it mean to you that 78% are living paycheck to paycheck? "the numbers" reveal that 300 million x 78% = 234 million people in the US are paycheck to paycheck. What does that mean to you and your family? Anything?
Let's look at the other 22%. 300 million x 22% = 66 million
$21,000,000,000 of quarterly disposable income / 66,000,000 = $318 per person of quarterly disposable income
The 66,000,000 people in the US who DO have disposable income, have a disposable income of a little more than $100/month.
The Mo' Money Tree.....
Now, let's consider this "huge" increase in savings in the light of "spending so much on crap they don't need". Who do you think is doing this spending, while making an extra $500/year on a high yield account having a balance of $10,000? It's not the 78%. Do you think that this might be an itsy bitsy bit of a problem? If there are so many new deposits, why are the banks in trouble?
Do you think that these are good numbers, coho? Do you think you're going to be fine in your cocoon when 3 out of 4 people you see on the street are struggling to buy groceries and a percentage of them are from places that have no idea what the Constitution or civil society is? It's already at your doorstep.
Q: Are You Printing Money? Bernanke: Not Literally
Corrections: it’s 21 trillion not 21 billion; also, even if one believes the 78 % paycheck to paycheck thing, this does not mean that 78 % have zero disposable income, it means they have nothing left to save after using their disposable income to cover necessities.
Question: do we have a link to the source of the 78 % stat?
PS: I believe those Fed numbers are annualized, but reported quarterly.
Correction: The $21 trillion refers to debt, not disposable income. My mistake.
So let's process that number. $21 trillion divided by 300 million or so = $210,000 or so in debt (per person). Not good if you are living paycheck to paycheck and lose your job in an economy that reports multiple part time gig jobs as full employment.
Answer to the Question: 78% are working paycheck to paycheck, as reported in Forbes.
So, Higashiyama - you say that disposable income comes before necessities. I disagree. That's not disposable income - that's gross income. Maybe you meant after-tax income. Disposable income is what's left after covering necessities, and if you have no disposable income, you have no savings, no recreation, no fishing vacations and plenty of debt in an attempt to finance your desired standard of living.
What's your point? Everything is rosy for most people. I disagree.
Q: Are You Printing Money? Bernanke: Not Literally
@jmski52 said: and building personal debt and building personal debt.
78% living paycheck to paycheck, up from 65% just a couple of months ago.
Your numbers are inflated, but to play along, this only illustrates lack of personal responsibility, ie, weakness. Imports from China are up year over year and folk spent 15% more on food delivery services. If things are so bad, then why are folk spend so much on crap they don't need?
@jmski52 said: All taxpayers are paying more in taxes because TAX RATES have increased.
And spending is so far out of control that it's truly crazy. Worse, it's by design and the endpoint isn't pretty.
Indeed. Restaurants are packed. Airports are packed. Cruise ships packed. Folk spending all kinds of money!! They just won't let prices drop, they just keep buying and buying.
and building personal debt and building personal debt.
Those packing the cruise ships and airplanes and restaurants ain't loading up their credit cards.
When your chart starts to turn down then worry about a crappy economy.
post was simply to point out that you are totally wrong when you say personal debt is not growing. Changing the subject to cruise ships and airplanes does not change the fact that you were once again spewing misinformation.
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
Savers last year made $315.4 billion in interest in their deposit accounts, which was a whopping four times the $78.7 billion Americans made in 2022, LendingTree found
Yep the billionaires' money in the bank is making them a bunch of interest. When the money supply has been tripled there's three times as much cash in the pockets (bank accounts) of those who receive it. Does not change the fact that the non-billionaires are going deeper in debt.
You need to realize that when money supply is so greatly increased, all of those money charts are going to jump. Doesn't mean things are better, it means there's more money. Well, maybe better for the top 1% who get most of the new money.
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
Savers last year made $315.4 billion in interest in their deposit accounts, which was a whopping four times the $78.7 billion Americans made in 2022, LendingTree found
Does not change the fact that the non-billionaires are going deeper in debt.
I'm no billionaire and currently I have a grand total of $40K owed to others. It's mortgage debt at 2.75% and it resides at the same bank that is paying my savings account 4.33%. At this point, and for several years now it appears they are paying me as my savings account interest far exceeds my mortgage interest payment. You're statement isn't exactly accurate. RGDS!
Savers last year made $315.4 billion in interest in their deposit accounts, which was a whopping four times the $78.7 billion Americans made in 2022, LendingTree found
Does not change the fact that the non-billionaires are going deeper in debt.
I'm no billionaire and currently I have a grand total of $40K owed to others. It's mortgage debt at 2.75% and it resides at the same bank that is paying my savings account 4.33%. At this point, and for several years now it appears they are paying me as my savings account interest far exceeds my mortgage interest payment. You're statement isn't exactly accurate. RGDS!
The fact that housing debt and non-housing debt have both doubled for most Americans since 2004 (while wages have not doubled) proves that my statement is entirely accurate. The worrisome aspect of this chart is the much higher interest non-housing debt (autos, credit cards?).
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
@jmski52 said: and building personal debt and building personal debt.
78% living paycheck to paycheck, up from 65% just a couple of months ago.
Your numbers are inflated, but to play along, this only illustrates lack of personal responsibility, ie, weakness. Imports from China are up year over year and folk spent 15% more on food delivery services. If things are so bad, then why are folk spend so much on crap they don't need?
@jmski52 said: All taxpayers are paying more in taxes because TAX RATES have increased.
And spending is so far out of control that it's truly crazy. Worse, it's by design and the endpoint isn't pretty.
Indeed. Restaurants are packed. Airports are packed. Cruise ships packed. Folk spending all kinds of money!! They just won't let prices drop, they just keep buying and buying.
and building personal debt and building personal debt.
Those packing the cruise ships and airplanes and restaurants ain't loading up their credit cards.
When your chart starts to turn down then worry about a crappy economy.
post was simply to point out that you are totally wrong when you say personal debt is not growing. Changing the subject to cruise ships and airplanes does not change the fact that you were once again spewing misinformation.
You are totally wrong to say I said personal debt isn't growing. In fact it's been growing since you were just a twinkle in your Daddy's eye.
I said the economy is strong as evidenced by packed cruise lines, airports and restaurants. I furthered that by showing (as I said would happen) the massive stimulus that interest payments will have on the economy.
Personal has always grown and just a function of a growing society. It does not indicate folk borrowing to buy groceries or depends.
Savers last year made $315.4 billion in interest in their deposit accounts, which was a whopping four times the $78.7 billion Americans made in 2022, LendingTree found
Yep the billionaires' money in the bank is making them a bunch of interest. When the money supply has been tripled there's three times as much cash in the pockets (bank accounts) of those who receive it. Does not change the fact that the non-billionaires are going deeper in debt.
No they ain't. Many, many folk have seen their net worth and income increase over the last few years. Equities at highs, gold at highs, home values at highs, tens of thousands of dollars in interest payments into their bank accounts. Yeah, for some times ain't great--just like always--but for some it's a great time. Just like always.
Even someone with just a few hundred grand are making $10s of thousands in interest. It's not just billionaires on those cruise ships, airports and restaurants.
You need to realize that not everyone lives in your doom and gloom.
Savers last year made $315.4 billion in interest in their deposit accounts, which was a whopping four times the $78.7 billion Americans made in 2022, LendingTree found
Does not change the fact that the non-billionaires are going deeper in debt.
I'm no billionaire and currently I have a grand total of $40K owed to others. It's mortgage debt at 2.75% and it resides at the same bank that is paying my savings account 4.33%. At this point, and for several years now it appears they are paying me as my savings account interest far exceeds my mortgage interest payment. You're statement isn't exactly accurate. RGDS!
The fact that housing debt and non-housing debt have both doubled for most Americans since 2004 (while wages have not doubled) proves that my statement is entirely accurate. The worrisome aspect of this chart is the much higher interest non-housing debt (autos, credit cards?).
Your charts show wages tripling while debt doubles. Your thesis was just debunked. Well done.
Show those drowning in personal debt, which is documented as having doubled in the last twenty years, your "GDP" chart and ask if it provides them comfort.
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
Your charts show wages tripling while debt doubles. Your thesis was just debunked. Well done.
Yes, since 1979. The period in question in the first chart is debt since 2004 (which has doubled). As shown in the chart you referenced wages, since 2004, have not kept up with this debt. Read, comprehend then spew the BS.
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
Yep the billionaires' money in the bank is making them a bunch of interest. When the money supply has been tripled there's three times as much cash in the pockets (bank accounts) of those who receive it. Does not change the fact that the non-billionaires are going deeper in debt.
No they ain't. Many, many folk have seen their net worth and income increase over the last few years. Equities at highs, gold at highs, home values at highs, tens of thousands of dollars in interest payments into their bank accounts. Yeah, for some times ain't great--just like always--but for some it's a great time. Just like always.
Even someone with just a few hundred grand are making $10s of thousands in interest. It's not just billionaires on those cruise ships, airports and restaurants.
You need to realize that not everyone lives in your doom and gloom.
Yep, everything going up and up and up.... house equity prices, inflation, net worth, bank interest.... some may think they are riding high along with it. But just like one of those tornados we have had recently in the heartland... everyone is being sucked up in the vacuum. And plenty of destruction all around.
While there are certainly some who may be doing very well in this environment and making lots of 'profit' at least on paper.... there are plenty more who are not.
Comments
My mistake was assuming you read (and comprehended) the post above that started this property tax discussion
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
memorable words
Yawn. RGDS!
The whole worlds off its rocker, buy Gold™.
What is being discussed are fictitious profits due to currency depreciation versus real profits ultimately due to productive work. Fictitious profits harm people who save as the controller of the currency and the constituency it serves benefits. Take, for example, the following scenario.
Let us assume that gold is $2,000 per troy ounce (31.1 grams). The Federal Reserve and federal government run highly inflationary monetary and fiscal policies for an extended period of time. One day, you find out that gold is $3,000 per troy ounce so you decide to sell it. You have $3,000 in cash of which $1,000 is a capital gain on which you'll pay, say, 20% in taxes. You have a net profit, after taxes, of $800, and now have a total of $2,800.
Looks like you made out well, right? Not quite. Let's say that the price of gold is still $3,000 per troy ounce and you want to buy that one ounce of gold back. You spend your $2,800 and are only able to purchase 0.93 troy ounces (29 grams) of gold. You have essentially lost money. The $1,000 in capital gains was a fictitious profit because nothing about the gold you possessed and then sold has changed. It did not increase in quantity nor was not improved in some way. Its price increased due to the debauchment of the currency and the tax authority took its due on the fictitious profits. This is what is meant by inflation being a silent confiscation of wealth.
If we take the same scenario but travel back in time to 1920 when currency depreciation is quite difficult due to the U.S. being on a redeemable gold standard , the price of the gold would not change. You could buy it and sell it back and forth and still have the same quantity of gold you started with.
The above is one criticism about paying taxes on the full amount of interest earned on savings or even profit from productive work. If you have $100 in a savings account and earn 5% in interest, a portion of the $5 earned in interest is due to inflation, the depreciation of the currency. If you believe the self-interested government statistics that inflation is only 2%, $2 of your $5 in earned interest is due to currency depreciation and only $3 of the $5 in earned interest should be taxable. Of course, the reality is that inflation is greater than 5% and all of the $5 in earned interest is fictitious profits. On a purchasing power basis, you have less than the $100 you started with as your principal has also lost purchasing power!
Excellent observations & explanation, MWK.
They are now proposing an increase in the confiscatory cap gains to 44%.
I knew it would happen.
But the gold scenario above, the loss of the ficticious capital gain is not due to the inflationary monetary policy, but the taxation of the profits. If I did not have to pay the tax on the gain, then in theory, couldn't I just buy it back at the current market price assuming it has not changed from time of purchase? And if the gold standard theory held true, would the cash I recieved also purchase the same amount of goods?
I'm not advocating for the tax, but that is a different argument. The tax on the gain seems to be the drain on my purchasing power. But again in theory, it pays for the roads I use to get to work in a car that I don't have to crank a handle to start, so that I can get on the internet coin forum and look at cool stuff on a small little computer that I hold in my hand.
My Ebay Store
You are absolutely correct. So long as you do not sell the gold, there is no taxation. However, you will have to eventually sell that gold to convert it to a transactable currency (such as U.S. dollars) or trade it (barter). In all of those scenarios the fictitious profit on that gold will be taxed unless you flout certain laws.
Being that the profits are fictitious (they are an artifact of currency depreciation and are not a genuine increase in wealth), they should not be taxed. If that were true, then even in an environment of a depreciating currency, you should be able to buy and sell the gold back and forth and end up with the same quantity of gold. The reality is a bit more complicated because of short term volatility and irrational human behavior (animal spirits) but, assuming the depreciation is steady, you should end up with the same amount of gold after a relatively long period of time, assuming no transaction costs (commissions).
Under the gold standard, the U.S. dollar was defined as a quantum of gold. One troy ounce was equivalent to $20.67. If you had $20 of paper money, you could receive redeem it for gold bullion from the U.S. Treasury at the price of $20.67 per troy ounce. So, yes, your cash, whether in paper money or gold, would purchase the same amount of goods. Again, the reality is more complicated because there may be a dearth or surfeit of the goods you want to buy so prices will still fluctuate. However, prices will not fluctuate due to the incompetence or malfeasance of the issuer of the currency.
Taxes on your earned income and on bona fide capital gains as well as usage taxes pay for those things. A lot of the price of gasoline is taxes that are supposed to pay for roads; the property taxes you pay should be funding the public schools, the water authority, and the infrastructure; the sales taxes you pay fund the general governmental administration.
Not taxing saved money is merely eliminating a system means of impoverishing people. Imagine it this way. Let us say you have one million dollars and intend to retire in 20 years. You put that money into a safe where it earns no interest. Is it proper that when you retire the one million dollars doesn't buy nearly as much as it did today? People used to be able to do that under a strict gold standard.
And, no, it is not right to force people to speculate in various assets nor is it right to force people to lose purchasing power with bank accounts that do not pay enough in interest to fully compensate for inflation (currency depreciation).
The currency is a unit of account and it should be very constant. Look at it as a yardstick. We do not measure our height or do carpentry work using a yardstick whose length varies with time. Why should we accept this chicanery with our currency?
Biggest complaint I've heard the last 2 months is folk saying they had to pay more in taxes....because they are making $10s of thousands in interest income...which is more than offsetting increases in goods and services prices.
Knowledge is the enemy of fear
when i was a kid and didn't know better i heard my mom passingon ops because it'd put us into a higher tax bracket (really!) my dad did the taxes but used the tables. oh the ill informed afraid of paying even a penny in taxes
,
All taxpayers are paying more in taxes because TAX RATES have increased.
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
I will never buy into the fact that somehow our debt( deficit) is a benefit for the people. The only real viable solution is reducing the size of government and to let the people run their own affairs in business.
Monetary madness theory.
All taxpayers are paying more in taxes because TAX RATES have increased.
And spending is so far out of control that it's truly crazy. Worse, it's by design and the endpoint isn't pretty.
I knew it would happen.
The debt and the deficit are not the same thing. The government could easily create the same amount of money without issuing bonds to "back" this money. The inflationary effects would be similar, but we and our grandchildren would be spared from paying interest on an ever-increasing national debt.
My Adolph A. Weinman signature
There has been no change in the federal income tax rate.
Knowledge is the enemy of fear
Indeed. Restaurants are packed. Airports are packed. Cruise ships packed. Folk spending all kinds of money!! They just won't let prices drop, they just keep buying and buying.
Knowledge is the enemy of fear
@cohodk, do you pay additional Medicare tax? Do you pay net income investment tax? Both of these 2013 laws increased the effective tax rates on income and were aimed at "wealthy" Americans to help support ACA. But they have never been adjusted for inflation, and with each new tax year another million or more taxpayers "learn" about the taxes.
Low taxes in The Commonwealth, God Bless the Commonwealth. RGDS!
The whole worlds off its rocker, buy Gold™.
no comment no comment aca no taxes, no comment no comment, yes we had to pay additional medicare tax no comment no comment
The way our tax system is structured, every time you get a pay increase, you are paying a higher nominal tax rate. That is not the same as stating tax rates are increasing.
And the argument that more people every year now make more money that they are subject to additional Medicare tax IMO is no different than investment income rising and causing higher capital gains rates.
I agree that these taxes should be adjusted for inflation, but it’s not like the additional Medicare thresholds are anywhere close to the median income in the US.
My Ebay Store
.
Massachusetts is in the middle of the pack for total tax burdens in a state.
But various reports indicate that Massachusetts is one of the HIGHEST cost of living states.
This Forbes report lists it second only to Hawaii in total cost of living:
https://forbes.com/advisor/mortgages/cost-of-living-by-state/
.
I wasn't sure but my guess was PA
Income tax is not the only tax. And let's not overlook the inflation tax.
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
and building personal debt and building personal debt.
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
hmm. 49th highest rated state for the hidden inflation tax.
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
There are still lots of investments one can make to earn zero interest or take losses if they wish to pay less tax.
Knowledge is the enemy of fear
My original comment was regarding income tax. If you want to take that other places that's up to you. But here are more examples.... sunshine tax, snow tax and beach tax. Maybe even proximity and privacy tax.
Knowledge is the enemy of fear
Or KY or VA.
Knowledge is the enemy of fear
No they ain't.
Knowledge is the enemy of fear
and building personal debt and building personal debt.
78% living paycheck to paycheck, up from 65% just a couple of months ago.
I knew it would happen.
Yes they is.
"Total household debt rose by $212 billion to reach $17.5 trillion in the fourth quarter of 2023, according to the latest Quarterly Report on Household Debt and Credit. Credit card balances increased by $50 billion to $1.13 trillion over the quarter, while mortgage balances rose by $112 billion to $12.25 trillion. Auto loan balances rose by $12 billion to $1.61 trillion, continuing an upward trajectory seen since 2011. Delinquency transition rates increased for all debt types except for student loans."
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
One of my favorite taxes to grumble about (there are so many!!) is the extra taxes they put on a hotel room, that is called by various names. But then airlines and everywhere else they tack on those extra taxes and fees. Just a fact of life I guess...
Those packing the cruise ships and airplanes and restaurants ain't loading up their credit cards.
When your chart starts to turn down then worry about a crappy economy.
Knowledge is the enemy of fear
Your numbers are inflated, but to play along, this only illustrates lack of personal responsibility, ie, weakness. Imports from China are up year over year and folk spent 15% more on food delivery services. If things are so bad, then why are folk spend so much on crap they don't need?
Look at disposable income...
https://fred.stlouisfed.org/series/DPI#
Knowledge is the enemy of fear
The Mo' Money Tree.....
https://www.newsweek.com/americans-bank-account-rise-fed-decision-interest-rate-update-1896337
Savers last year made $315.4 billion in interest in their deposit accounts, which was a whopping four times the $78.7 billion Americans made in 2022, LendingTree found
Knowledge is the enemy of fear
why are folk spend so much on crap they don't need?
Take a look at the chart that derryb posted. What do you think it means? It's a reflection of what the banking system has foisted onto the American Public. More and more debt = slaves to the banking & political systems. Very easy to see.
You blame the people for things that they have zero control over. You blame the people who go into debt because they simply don't want to change their habits, like smoking cigarettes, or ordering food delivery for example.
I blame the ones in control, and the bankers (and their bought politicians) are at the top of that heap. That's who dictate the rules - i.e. no mark to market on bad debts, tbtf banks & bank bailouts, no transparency on gov.com spending - you name it.
Need a loan to support your bad habits? Here! We will create money out of nothing to support your bad habits and charge you interest for locking you into a debt spiral.
Look at disposable income...
I'm looking at the numbers. Have you? It's not rocket science. Let's do a little basic analysis...
What does it mean to you that 78% are living paycheck to paycheck? "the numbers" reveal that 300 million x 78% = 234 million people in the US are paycheck to paycheck. What does that mean to you and your family? Anything?
Let's look at the other 22%. 300 million x 22% = 66 million
$21,000,000,000 of quarterly disposable income / 66,000,000 = $318 per person of quarterly disposable income
The 66,000,000 people in the US who DO have disposable income, have a disposable income of a little more than $100/month.
The Mo' Money Tree.....
Now, let's consider this "huge" increase in savings in the light of "spending so much on crap they don't need". Who do you think is doing this spending, while making an extra $500/year on a high yield account having a balance of $10,000? It's not the 78%. Do you think that this might be an itsy bitsy bit of a problem? If there are so many new deposits, why are the banks in trouble?
Do you think that these are good numbers, coho? Do you think you're going to be fine in your cocoon when 3 out of 4 people you see on the street are struggling to buy groceries and a percentage of them are from places that have no idea what the Constitution or civil society is? It's already at your doorstep.
I knew it would happen.
Corrections and question:
Corrections: it’s 21 trillion not 21 billion; also, even if one believes the 78 % paycheck to paycheck thing, this does not mean that 78 % have zero disposable income, it means they have nothing left to save after using their disposable income to cover necessities.
Question: do we have a link to the source of the 78 % stat?
PS: I believe those Fed numbers are annualized, but reported quarterly.
Correction: The $21 trillion refers to debt, not disposable income. My mistake.
So let's process that number. $21 trillion divided by 300 million or so = $210,000 or so in debt (per person). Not good if you are living paycheck to paycheck and lose your job in an economy that reports multiple part time gig jobs as full employment.
Answer to the Question: 78% are working paycheck to paycheck, as reported in Forbes.
So, Higashiyama - you say that disposable income comes before necessities. I disagree. That's not disposable income - that's gross income. Maybe you meant after-tax income. Disposable income is what's left after covering necessities, and if you have no disposable income, you have no savings, no recreation, no fishing vacations and plenty of debt in an attempt to finance your desired standard of living.
What's your point? Everything is rosy for most people. I disagree.
I knew it would happen.
lest we forget> @cohodk said:
post was simply to point out that you are totally wrong when you say personal debt is not growing. Changing the subject to cruise ships and airplanes does not change the fact that you were once again spewing misinformation.
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
Yep the billionaires' money in the bank is making them a bunch of interest. When the money supply has been tripled there's three times as much cash in the pockets (bank accounts) of those who receive it. Does not change the fact that the non-billionaires are going deeper in debt.
You need to realize that when money supply is so greatly increased, all of those money charts are going to jump. Doesn't mean things are better, it means there's more money. Well, maybe better for the top 1% who get most of the new money.
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
Does not change the fact that the non-billionaires are going deeper in debt.
I'm no billionaire and currently I have a grand total of $40K owed to others. It's mortgage debt at 2.75% and it resides at the same bank that is paying my savings account 4.33%. At this point, and for several years now it appears they are paying me as my savings account interest far exceeds my mortgage interest payment. You're statement isn't exactly accurate. RGDS!
The whole worlds off its rocker, buy Gold™.
The fact that housing debt and non-housing debt have both doubled for most Americans since 2004 (while wages have not doubled) proves that my statement is entirely accurate. The worrisome aspect of this chart is the much higher interest non-housing debt (autos, credit cards?).
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
You are totally wrong to say I said personal debt isn't growing. In fact it's been growing since you were just a twinkle in your Daddy's eye.
I said the economy is strong as evidenced by packed cruise lines, airports and restaurants. I furthered that by showing (as I said would happen) the massive stimulus that interest payments will have on the economy.
Personal has always grown and just a function of a growing society. It does not indicate folk borrowing to buy groceries or depends.
How do you interpret this chart?
Knowledge is the enemy of fear
No they ain't. Many, many folk have seen their net worth and income increase over the last few years. Equities at highs, gold at highs, home values at highs, tens of thousands of dollars in interest payments into their bank accounts. Yeah, for some times ain't great--just like always--but for some it's a great time. Just like always.
Even someone with just a few hundred grand are making $10s of thousands in interest. It's not just billionaires on those cruise ships, airports and restaurants.
You need to realize that not everyone lives in your doom and gloom.
Knowledge is the enemy of fear
Your charts show wages tripling while debt doubles. Your thesis was just debunked. Well done.
Knowledge is the enemy of fear
Double post
Knowledge is the enemy of fear
78% as reported by Forbes. Paycheck to paycheck. Nice, eh coho? Keep'em borrowing and in debt.
I knew it would happen.
.
Show those drowning in personal debt, which is documented as having doubled in the last twenty years, your "GDP" chart and ask if it provides them comfort.
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
Yes, since 1979. The period in question in the first chart is debt since 2004 (which has doubled). As shown in the chart you referenced wages, since 2004, have not kept up with this debt. Read, comprehend then spew the BS.
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
proof of inflation. lol
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
Yep, everything going up and up and up.... house equity prices, inflation, net worth, bank interest.... some may think they are riding high along with it. But just like one of those tornados we have had recently in the heartland... everyone is being sucked up in the vacuum. And plenty of destruction all around.
While there are certainly some who may be doing very well in this environment and making lots of 'profit' at least on paper.... there are plenty more who are not.