Tax Bill

[panamaican]

What it's going to do is cause me to move my money around a lot less. That's the issue. A lot more investors are going to hold positions on certain companies in order to avoid paying higher capital gains tax. So equity is going to stay put, and when money doesn't move around, young/rising companies won't get as much investment capital for them to put back into their companies/products. That's the whole point of being a publicly traded company. When you increase taxes like that, you are essentially stagnating the market via government constraints.

Exactly, it hurts the part of the market that makes regular short term trades. Day traders and people who trade off the earnings reports and other short term strategies because they won't be willing to jeopardize their long term holdings over this.

 

[panamaican]

I can reinvest, but I'm paying more taxes because I'm having to sell my highest value stocks first. So I less to reinvest. That's the issue here. I think the best way to promote growth is to reduce the capital gains tax, incentivizing people to move their money around more frequently. But that's not what this bill does.

This I disagree with because the money you're trading, with the exception of IPO's, isn't benefiting any part of the economy except your broker and yourself.

In all honesty, if you wanted to promote growth you'd tax stocks purchased via IPO at capital gains rates and everything else as regular income.

 

[JDragon]

Give the man his 4 years and ideas to make America better.

That's the magic of the u.s.

If it's a failure or you don't like results you can vote again.

Let's check back in 3 years

'my guy is failing hard, but I'd rather not talk about it for the next years and hope things get better'?

 

[panamaican]

So I buy shares at $10/share and then I buy the amount of shares later at $70/share. I decide to sell half my shares at $100/share. In FIFO, I have to sell the oldest ones first, so I am paying capital gains tax on the profit of $90/share. But if I wanted to sell the newer ones first because I wanted that money to buy a home or reinvest it into another company, I’d only be paying capital gains tax on the profit of $30/share. So much less tax. As such, I am incentivized to leave my money where it is for as long as possible so that I pay less tax.

Just as importantly, imagine if the stock dropped to $65/share.

Now, instead of being able to take the loss on the recent purchase, you're forced to sell off all of the $10/share shares and pay taxes on it before you can divest yourself of the lost money at the $70/share price. And while you're doing that, that stock price might fall even further. By the time you're able to sell the $70share stocks, the price might have dropped all the way to $60/share. So you've lost even more money.

 

[sub_thug]

This I disagree with because the money you're trading, with the exception of IPO's, isn't benefiting any part of the economy except your broker and yourself.

In all honesty, if you wanted to promote growth you'd tax stocks purchased via IPO at capital gains rates and everything else as regular income.

That’s not necessarily true. Plenty of companies use investment capital to fund R&D, grow the business, etc. Berkshire Hathaway and Tesla are both famous for it.

 

[panamaican]

That’s not necessarily true. Plenty of companies use investment capital to fund R&D, grow the business, etc. Berkshire Hathaway and Tesla are both famous for it.

Investment capital, yes. But what most people are doing at the stock market level isn't investment capital into the corporations anymore after the initial offering.

Very few investors are going to the Corporation and saying "Can I buy some of your shares directly from you at $X price point?" They are buying on the secondary market and the corporation isn't seeing any of that.

 

[sub_thug]

Investment capital, yes. But what most people are doing at the stock market level isn't investment capital into the corporations anymore after the initial offering.

Very few investors are going to the Corporation and saying "Can I buy some of your shares directly from you at $X price point?" They are buying on the secondary market and the corporation isn't seeing any of that.

This assumes that companies don’t buy back shares of stock and then resell them as the stock prices fluctuate. But they do.

 

[Jack V Savage]

This assumes that companies don’t buy back shares of stock and then resell them as the stock prices fluctuate. But they do.

Yeah, you can nitpick on Pan's claim, but it's close enough. The vast majority of post-IPO sales don't put any more money in the hands of the company.

I think the bill is terrible in general, but I'm not sure about this aspect. The idea sounds OK, but I need to know more about the precise language.

 

[panamaican]

This assumes that companies don’t buy back shares of stock and then resell them as the stock prices fluctuate. But they do.

Which has nothing to do with tax bill's FIFO requirement.

You're conflating things. The thread was about the problem with a FIFO requirement. That's only going to affect retail investors on the secondary market. It has almost no impact on capital investment into share issuing entities.

 

[Bloodworth]

'my guy is failing hard, but I'd rather not talk about it for the next years and hope things get better'?

Economy and stock market seen strong?

 

[sub_thug]

Which has nothing to do with tax bill's FIFO requirement.

You're conflating things. The thread was about the problem with a FIFO requirement. That's only going to affect retail investors on the secondary market. It has almost no impact on capital investment into share issuing entities.

I understand that the secondary market will be most affected, but if you think that the valuation of stock prices won’t also be affected, impacting selling of shares into the market place, then you’re crazy. There will certainly be effects upstream as a result.

 

[Seano]

No tax plan is going to receive universal support. Lets give it a try and see how it goes. If its a disaster, then the left will just raise taxes on the rich in 2020. You guys are making this a lot more dramatic than it is. None of you are going to be hurt that badly by this.

 

[kpt018]

No tax plan is going to receive universal support. Lets give it a try and see how it goes. If its a disaster, then the left will just raise taxes on the rich in 2020. You guys are making this a lot more dramatic than it is. None of you are going to be hurt that badly by this.

And if the right is in power they'll cut entitlements and other programs that actually help people. Shit, they're going to try next year.

And yes, regular people can very easily get hurt. The plan includes repeal of the mandate on the ACA and it's estimated over 10 million will opt out of insurance or lose it (priced out) along with medicare cuts on this bill. That means people who want insurance and decide to keep it will see their premiums go up, and possibly sky rocket. I'd bet most people will see any savings in taxes get gobbled up by insurance premium increases.

The other problem is in the long term people actually do see tax increases.

 

[Seano]

And if the right is in power they'll cut entitlements and other programs that actually help people. Shit, they're going to try next year.

And yes, regular people can very easily get hurt. The plan includes repeal of the mandate on the ACA and it's estimated over 10 million will opt out of insurance or lose it (priced out) along with medicare cuts on this bill. That means people who want insurance and decide to keep it will see their premiums go up, and possibly sky rocket. I'd bet most people will see any savings in taxes get gobbled up by insurance premium increases.

The other problem is in the long term people actually do see tax increases.

The tax plan is pretty good for me. Lessens my tax rate and increases my income that can't be taxed.

I don't get why so many people don't want me and people like me to have some relief but to be honest, I don't care anymore. I'm tired of being told that deadbeats deserve more than me.

 

[kpt018]

The tax plan is pretty good for me. Lessens my tax rate and increases my income that can't be taxed.

I don't get why so many people don't want me and people like me to have some relief but to be honest, I don't care anymore. I'm tired of being told that deadbeats deserve more than me.

No one is saying that. I am saying the timing for a tax cut is bad but if the right was insistent on tax cuts the majority should have gone to people like us, but that's not what happened.

I'm also saying that while people like you will see a tax cut in the short term you could very well see an increase in the long term. And people like you are going to see your insurance premiums rise.

Please read that again if you don't understand it. I am saying in the short run you won't make out as well as you think (could even be a net negative) and in the long run you definitely won't make out well.

 

[jeffk]

The obvious thing people will do to get around fifo is set up accounts at different brokerage accounts and buy shares in the the different accounts at different times.

 

[jeffk]

The tax bill has so many things wrong with it.

It basically is Taking out a loan to give the shareholder class a break.

With unemployment rates where they are it does not make sense to run up the deficit.

 

[jeffk]

The impact on municipal bonds was something I did not hear much talk about until this past weekend. The tax plans can screw up the municipal bond markets.

If you live in a state with high income taxes I would expect to see a lot of cuts to in local and state services in the coming years.

 

[kpt018]

The tax bill has so many things wrong with it.

It basically is Taking out a loan to give the shareholder class a break.

With unemployment rates where they are it does not make sense to run up the deficit.

Yeah, and (not if but) when we have a recession we'll lose one more way to combat it. The timing is bad on top of the thing just being bad policy all around.

 

[jeffk]

The tax plan is pretty good for me. Lessens my tax rate and increases my income that can't be taxed.

I don't get why so many people don't want me and people like me to have some relief but to be honest, I don't care anymore. I'm tired of being told that deadbeats deserve more than me.