Massive Overreach
President Biden wants people to believe he is a moderate. The plan he presented to Congress and the nation Wednesday evening was more like a Progressive wish list.
In case you missed it, here is the Transcript of Biden’s Speech.
I discussed pre-disclosed details yesterday in Biden to Propose a $1.8 Trillion “Family Plan” in a Prime Time Address
Wednesday evening Biden added climate change, a $15 minimum wage, right to organize, gun control, paycheck fairness, defense spending, charging stations, even a goal to cure cancer.
He kicked things off with a catchy phrase “My fellow Americans, trickle-down economics has never worked. It’s time to grow the economy from the bottom and middle-out.”
The Big Lie
Biden jumped from that catch phrase immediately to a big lie: “A broad consensus of economists – left, right, center – agree that what I’m proposing will help create millions of jobs and generate historic economic growth.”
There is no “broad consensus”.
His plan cannot possibly pass the Senate as is, and I rather doubt it can even make its way unscathed through the House.
Dead on Arrival
Biden cannot afford to lose a single Democrat Senator but many have already expressed Reservations Over Tax Hikes.
- Sen. Joe Manchin (D., W.Va.), a pivotal centrist lawmaker, said Congress should focus on raising revenue by enhancing enforcement for existing tax levels. “It intrigues me to understand that we have 400 billion to a trillion dollars that people have stated that we haven’t collected; don’t you think we ought to look at that first?” he said. “I’ve been very clear on 25% corporate, but I want to see basically where our loopholes are and why we’re not collecting and why the IRS has been eviscerated.”
- Sen. Bob Menendez (D., N.J.): “For me, it is what you’re doing, the totality of the package, and how does it affect the ability of growth to continue to take place. That’s how I’m judging it. Right now it seems like a rather high rate to me,” said Sen. Menendez, a member of the Senate Finance Committee, of the proposed capital-gains rate. New Jersey has one of the highest median household incomes in the U.S.
- Sen. Ron Wyden (D., Ore.) chairman of the Senate Finance Committee, has put forward an alternative to the president’s proposal for the capital-gains tax. Under his approach, unrealized gains for wealthy people would be taxed annually, which would limit the tax benefits for people waiting to realize their gains even more than the president’s plan would.
- Sen. Angus King (I., Maine), who caucuses with Democrats. “I want to understand what it would raise in the way of revenues. I want to have some research on what, if any, impact it would have on stock ownership. But fundamentally I’ve always had a hard time explaining to somebody who pays straight taxes when they work 40 hours a week, why they pay twice as much as somebody who gets a check in the mail.”
- Sen. Jon Tester (D., Mont.) said that he didn’t want the spending to contribute to deficits, which have piled up during the pandemic. “My answer to that would be hell, I don’t want to raise any taxes, but I don’t want to put stuff on the debt, either,” he said. “But if we’re going to build infrastructure we have to pay for it somehow. I’m open to all ideas.”
Consensus?
Biden cannot even corral the Democrats. The above quotes are from the WSJ.
Two Keys
At a minimum there are at least two keys to the lock. In addition to Manchin (as usual) we can now safely add Menendez.
Wyden’s idea to tax gains annually is the worst of the lot. About all that will do is sow confusion because it’s going nowhere.
The non-budget items will not stand up to a filibuster. But the whole plan is so overreaching that it’s possible nothing passes.
Call For Unity
Biden finished with a plea to be united. But kowtowing to the Progressives is a sure way to go it alone.
Ultimately, I expect Biden to rally the troops and settle for whatever Manchin, Menendez, and Senator Krysten Sinema (D, AZ) will go along with, but it will be a huge struggle.
Mish
Ah but the fact that at least 70% of Americans WANT and approve of the economic plans Biden is laying down means that come election day they are going to vote out the same fascist Nazi cult that is blocking progress in this nation. And republicans are irrelevant now anyway with that party so divided they are never winning federal office again.
And speaking of Nazis, stuff it From Brussels.
Do not assume that any politician has integrity. All votes can be bought and sold.
So? What if Forbes is owned by the Chinese? It has the same kind of crony capitalist system as well, with a nominally Communist government.
Well, prices also rise accordingly. If your share goes down, then your purchasing power goes down along with it.
LOL. The average rate for the top 1% in the 50s was in 40-45% range. Now? The latest figures, looking at all federal taxes, the Congressional Budget Office shows that the top 1% pay an average federal tax rate of 32%. If an increase from 32% to 42% means the same to you, let’s have it then!
One problem of the left is that they hate the rich more than they love the poor.
So, the tax rates we had in the 1940s, 50s and 60s were not “excessive”? OK!
Yikes, someone else who doesn’t understand that 1. the incomes on which the highest rates were applied were 10x higher then, 2. that allowable deductions were vastly broader than today (all depreciation, all interest expense for an unlimited number of homes or real estate – all deductible against ordinary income, no ‘at risk’ rules, credit card/auto debt) etc… such that 3. the total tax to GDP isn’t different from the days of those high rates to today. In fact, it’s higher today. (I can’t tell you how many times I have to repost this in various forums (fora?) in response to similarly misguided comments.)
Somehow, the new norm of fiscal responsibility has become proposing revenue measures that ostensibly offset new spending proposals (although likely to be partial in practice) without attempting to reduce the ongoing > $1T deficit + off balance Fed. spending
Comment Outage for 2 Hours Friday Afternoon
The site is migrating tomorrow. After the migration it will be possible edit comments with lots of other nice comment controls.
There will be some small layout changes as well.
The new comment system is NOT Disqus as I mentioned before. That would have required another login.
You will have to login after the change but the problem with random logouts is supposed to be fixed.
You are just describing a Cooperative company, a Co-op. They have been around for a long time. You can quit your job and work for one of them or even make one yourself. I worked in a bank that was a co-ops and that didn’t keep it from being one of the biggest in Europe. We did get a “participation” which is profit-sharing. Nevertheless they had to pay competitive salaries to attract good people.
Excellent comments by@TexasTim65 @dbannist @threeblindmice @Eddie_T
Thanks
Wow, the level of vitriol and name-calling has really ramped up on this board lately! I think it’s a much more useful exchange of ideas if we stick to the issues…will try to focus on doing that myself.
Here’s some loop holes almost no one knows anything about.
26 USC § 3401(c) Employee – For purposes of this chapter, the term “employee” includes an officer, employee, or elected official of the United States, a State, or any political subdivision thereof, or the District of Columbia, or any agency or instrumentality of any one or more of the foregoing. The term “employee” also includes an officer of a corporation.
26 USC § 7701) (26) Trade or business – The term ”trade or business” includes the performance of the functions of a public office.
26 USC §7701(c):(c) Includes and including – The terms “includes” and “including” when used in a definition contained in this title shall not be deemed to exclude other things otherwise within the meaning of the term defined.
Under this rule, the term “includes” provides for what courts have described as a “calculated indefiniteness”. This is the expand-ability of the meaning of a statutory term to things not listed in the definition (indefiniteness), but only things of the same character as those listed(calculated).
These definitions have been used to redefine ’employee’ and ‘trade or business’ to fool almost everyone into believing they are subject to the excise (privilege) tax that is the federal income tax. Almost everyone in the private sector doesn’t owe them because they do not work for the government or execute the functions of a public office. A W-2 is an affidavit stating you have received a benefit from the government, whereas most people should be issued a 1099 MISC instead, where the IRS instructions state ‘personal payments are not reportable.’
Oh good, a troll who doesn’t believe in the constitutionality of the federal income tax! Please go away and leave the adults in the room alone, OK?
It is fully constitutional and lawful. The problem is the government has used a dirty trick to get people who don’t owe it to pay it.
“But the whole plan is so overreaching that it’s possible nothing passes.”
You know the MO — they will pass something. It may be a minimal, face-saving bill, but they will pass something.
Heck, that’s our best-case scenario, that there’s no consensus so they vote on a mostly do-nothing bill.
This is all better than insurrection.
Fundamentally changing America is insurrection. It’s the Democrat Party’s goal.
Keep up Ron–it’s the French guy and the dentist that are talking about starting a revolution.
You think that your insurrection has already won. It hasn’t.
Actually, it is the Democrat Party that is keeping it up. They plan to fundamentally change America. It’s why they want to pack the Supreme Court as well as make commoners dependent on Big Government.
Speaking of the French- Martin Armstrong: “Now a group of generals in France has banded together and publicly called for the overthrow of Macron. Twenty retired generals have called for a military takeover if President Macron fails to halt the “disintegration” of the country at the hands of Islamists. These policies being directed from Geneva and Schwab’s World Economic Forum are at the core of the destruction of Europe.”
I don’t like to use hyperbole, so I avoid hot-button words. I’d ask, have we travelled very far from the notion that “to secure these rights, governments are instituted among men”? Did we take steps away from that core goal under FDR, again under Johnson, and under nearly every president since? Did we move even further from it via trillion-dollar federal initiatives over the past several months?
I see where the blind thing comes in.
Democrats acting on their ideals…. the horror!
Acting isn’t horror. The ideas are the horrors!
“Sen. Ron Wyden (D., Ore.) chairman of the Senate Finance Committee, has put forward an alternative to the president’s proposal for the capital-gains tax. Under his approach, unrealized gains for wealthy people would be taxed annually, which would limit the tax benefits for people waiting to realize their gains even more than the president’s plan would.”
There’s a socialist thug for you. He wants to tax gains that might not even exist. Did he ever consider that unrealized capital gains are merely an estimate of value based on a future that might not even happen?
What could possibly go wrong.
What does “socialist thug” even mean?
I’m sorry you’re feeling under threat, but be better.
It’s not just me that’s under threat. It’s you too, you just don’t feel it yet.
Let me give you a visual example of how socialism really works.
Typical house in Cuba.
Che Gueverra’s house in Cuba.
Gee, thanks for your illustration of concentration of wealth and power and the disparity ofwelath and influence.
I could show you similar pictures for any city in America taken within 10 miles of each other.
And your pictures prove what, exactly?
The difference between here and Cuba is that here you can be born in a house like the first one and invest your way to one like the second one. I know, because I didi it. In Cuba, all the nice houses are occupied by party bosses and powerful bureaucrats.
I put up Che’s house because he is such a hero to the morons of the American Left, and the fact is that a bigger socialist thug never lived. He happily murdered people to redistribute the wealth of the rich….and somehow ended up doing very well for himself even though he died young.
Daniel Ortega is another good example, When I was in college, he was a guerrilla fighter in the jungle, taking up arms against the corrupt capitalist running dog Noriega. Now he is said to be worth 40 million US dollars, and his “people” had their social security cut…..but he has crushed the dissent, and happily disappears people just like Noriega did.
You asked me what I meant by socialist thug. This is what I meant. Ron Wyden is no better than Che and Daniel O.
The above was to you, not the blind mouse
Have you ever driven outside your enclave in TX?
I’m sure you’ll find the same disparity within miles of your house.
Yes, do compare Che who helped impoverish the fourth wealthiest nation in the hemisphere in 1957 with a corporate executive, lawyer or doctor in the US who creates is required to add value for their income. Or compare lowest quintile US income of $18K with average cuban income of $300/year. Just the same.
We’re talking apparent economic disparity.
We’d look at Eddie’s house and then drive 10 minutes and see the shit-boxes that people live in, and yes, there would be a discernable difference.
Showing me a picture of a fancy house and a hovel and says that proves what socialism is is a very silly argument.
…Ron Wyden is no better than Che and Daniel O…
Do you think Wyden is plotting to overthown the government and install his version of authoritarianism? Do you think he hates America, Americans and the American way? Should we send CIA hit-squads and hunt him down?
You apparently have no sense of perspective and history if you’re making those kinds of comparisons.
No, I think Wyden wants to vote for socialism because it will keep him in congress for many years, where he can easily get rich off a thousand kids of quasi-legal graft.
That’s what I think about Wyden, and others like him. Wake up and smell the coffee, or let your tax slavery support idiots like that. See that his district includes some of Portland. That doesn’t surprise me. Portland is Cuba-in-training.
kinds, not kids
Since you seem to want to make it personal, let me tell you something, friend.
I grew up living in a trailer. All I ever wanted was a comfortable life and to be able to give my kids an education they didn’t have to struggle to get the way I did. I got there through hard work, a modest intelligence, and a certain amount of good luck…..and through the generosity of people who were willing to help me help myself when I was young.
I’m guessing you grew up in a suburban middle-class bungalow, and watched a lot of TV, which is how you’ve been hypnotized into believing that the government raising taxes on the last decent breaks that exist is a good thing.
Sorry Eddie, I grew up poorer than you. I had a mentally ill mother who had no source of income and depended on handouts (not welfare, because, reasons). There were weeks where there was only a bag of flour and sugar in the house to eat. I lived in unheated abandoned houses multiple years in Minnesota when I was a child and was entirely on my own after I graduated high school. I am very aware of how difficult it is to make the climb from extreme destitution.
I’ve also been in Texas and have listened to you right about your neighborhood and real-estate investments and practice. You’ve done well, and seem to generally have a level head. But your frothing about Ron Wyden and the proposal on the table is off the hook.
What Eddie doesn’t realize is real estate investments is the government picking winners and losers. Real estate is not a productive asset from a productivity growth standpoint. We found this out the hard way in the 2000s and at some point we will find out again when the government takes the punch bowl away.
“What Eddie doesn’t realize”
Eddie might realize far more than you give him credit for.
Of course the government picks winners and losers. So does the Fed.
That’s WHY I chose RE and that’s why it was a good idea. I’ve accumulated a few millions in equity, and it might surprise you but it wasn’t because I fell off the turnip truck. It was a conscious decision, not an accident. I learned about RE from two very good teachers, Robert Kiyosaki and Dan Amerman. I paid money to learn this shit.
“Real estate is not a productive asset from a productivity growth standpoint.”
Oh really?
It looks to me like housing has been between 15 and 20% of GDP for hell of a long time.
Bonus question.
Do live in your car, or do you have a roof over your head?
I had a mentally ill mother too. My heart goes out to you on that one. But that’s no excuse for your bad thinking .
I was lucky to have two parents, and we didn’t have a lot but I never went hungry, nor did I need to squat in some empty house. I did live in conditions that were very definitely suboptimal.
I often have bad dreams about houses I lived in. You?
Generally, people who start out very poor eventually figure out that the only person who will ever really care about their financial status is THEM. In Texas, we have a saying. “Root hog, or die”. I got that one well learned.
I have friends who share your politics…..they have all ended up old, broke, sick and alone. I hope you do better.
I’m guessing you would be affected by this plan which is why even the thought makes you lash out. Your a nice guy and successful but you don’t realize that your wealth is because of system and not in spite of it. Government supports the entire real estate industry. Because 1 person wants to even propose something different you get upset. Understandable. You understand the system and have leveraged it to your benefit. Congratulations. Why are you so bothered by a single proposal ?
I am not lashing out. I’m making a cry for common sense. You are being sold a bill of goods. Sometime in your future you’ll find out, if you ever happen to. accumulate a modest portfolio and need to sell it. They are lying to you and appealing to this class envy and false narrative that “the rich” are taking advantage of you.
Yes, it bothers me that my system of wealth accumulation is being fucked with…but it also bothers me that if this passes that younger guys will have even less chance than they do now to rise above a level where TPTB think you should be happy.
I think the tax perks of RE investing help people who are smart enough to take advantage of them, regardless of net worth, make their lives better. 1031 Exchange has been around since 1921. It survived FDR and it survived every liberal congress and presidency until now. That’s because it’s a good thing, not a bad thing. Most of the people who take advantage of it don’t start out rich, but it is a way to end up rich. What is your goal for society. For yourself?
Communism says each of us should contribute according to our ability and receive support according to our need. Is that your idea of political utopia? Never mind that it doesn’t even work. It works exactly like Cuba. Somebody still lives I the big house, they just get there by a different path. A corrupt path.
I’m in favor of a system that offers a way to make more of yourself.
Making it harder to get rich means it’s easier to stay poor. A society that does that shouldn’t be surprised when they create more poor people.
I want disparity. Disparity creates a desire to be better than you are. A society where everyone is equal isnt’ one I want to live in.
The extreme disparity we see today is possible only because the government subsidizes the poor massively. Remove those subsidies and you’ll see discontent but you’ll also see some rise to the top from the newfound motivation.
Back on topic. The Senators plan will never happen. The IRS would have to hire a million appraisers and it would force people to sell if it was the only way to cover the tax. It would be extremely unpopular once implemented.
Exactly. All of these “ideas” will never see the light of day because we live in a constitutional government where a large chunk of 538 representatives have to come to agreement on anything.
I don’t think the wealth tax is really targeted for the mom and pop investors. But as usual they are the ones who end up getting hit the hardest. The very wealthy, over 10 million to billions in wealth have all kinds of loop holes to get out of paying taxes. I think they are the target.
A few years ago, Kansas, to promote new business, removed the income tax on an LLC. Guess what, Kansas University Basketball coach Bill Self became an LLC and thus did not have to pay his 6% personal income tax. That is $300k in tax savings.
He is an employee of Kansas University. Did they let all the Kansas University employee become an LLC to avoid paying 6% of the income in taxes per year.
Nope.
I am with you Eddie as I own real estate too. It is not as easy as it sounds. The past 4 years I have had a tenant that has pretty much destroyed one of my houses. I think at the end of the day, I will break barely even on cash flow but all the time I put into managing the house means I was paid zero per hour.
So hopefully the wealth tax will be levied on accounts or assets that are at a minimum millions of dollars and does not effect the mom and pops middle class.
Should have voted for Trump. You get what you deserve!!!
Trickle down economics doesn’t work and its been proven over and over. It isn’t just a catchy phrase.
Unfortunately “trickle down economics doesn’t work” is about the most oversimplified description of a very complex problem…..no, a complex predicament, that I can possibly imagine.
Sound bites are for dummies. You are not a dummy.
We live in the late stage of the biggest empire that ever existed, at the tail end of 500 years of rapacious strip mining. Through technology, we have managed to seriously overpopulate the plant….
The basic unsustainability of of our system has been understood since Malthus, but we keep making stick saves by learning new ways to feed people, but they’re all dependent on fossil fuels, and no amount of green anything is going to change that.
Now we’re finally near the end of our rope, more or less. The pie is not very likely to get much bigger, and the only way to raise anybody up is to redistribute from the “haves” to the “have nots”.
Biden is a fool. He is living in a dream of the past. Unions, green boondoggles, and heavy taxation of the most productive people in society isn’t going to fix anything. It just locks people in wherever they are, because it takes away the possibility of upward mobility.
….heavy taxation of the most productive people….
Really now, who are “the most productive people” in your mind?
That is another way of saying the “rich”. Right-winger lingo. Another term they use is “job creator”. Like in, “This chocolate bar is so creamy and job creator” LOL
I’m am referring to people like me, People who own small businesses and employ 47.3 percent of the people in this country, including people who are not able to participate in the lofty world of tech, because they lack the intellectual acumen to do so.
Many of us started without a lot, and we built something. Yeah, we did.
We pay a ton of tax, both on the expense side of our business, as well as on our net….and we work hard and accumulate assets so that we can achieve financial freedom in our lifetime.
njbr is a high intellectual who works tirelessly to organize the formless proletariat in order that his class, the high intellectuals, take their rightful place at the top of the hierarchy because only they have the mental capacity to follow scientific socialism as set forth by Karl Marx.
….njbr is a high intellectual….
AHAHAHAAA
Are you saying you are a low intellectual or perhaps not an intellectual at all? I could believe that. One thing I do know is that you are a marxist.
Depends on your definition of trickle down.
If by trickle down you mean the lowest income people have accumulated financial assets then yes, I’d agree with you.
However, no one ever believed that trickle down meant that, not even Reagan.
If you believe “trickle down” means a better life for the lower income people, then trickle down has blown away every expectation that it would work.
The lowest income people in America do better than the lowest income people of any other nation on earth when you eliminate sound bites and actually look at how they are doing.
The lowest quartile of income earners in the country would be the 9th richest country on earth were they a country.
People tend to look at how the lowest income Americans don’t have health insurance and how other nations do….but that’s only one piece of the puzzle. The overall picture, based on consumption, indicates that the American poor are doing far better than the poor of other rich nations.
Here is a nice graphic on what trickle down has done to peoples earnings
Worthless graph if it doesn’t also account for improvement in quality of life, made possible by those with money to invest.
Take a look at the median square foot of a home today vs 50 years ago, the number of calories eaten per person, the amount of recreational time available today vs. 50 years ago etc. etc. etc.
Quality of life today is much much better for all, even the poorest. Especially for the poorest.
If you measure only income to determine the effects of “trickle down” you aren’t going to get an accurate picture.
Yeah yeah yeah. The poor are in seventh heaven – all because of the rich people. Har har har.
“63% Of Americans Don’t Have Enough Savings To Cover A $500 Emergency” – Forbes magazine (which, as we all know, is a communist rag LOL)
That stat of 63 percent don’t have enough savings is also a worthless stat.
How much people have saved is completely irrelevant to their quality of life today vs 50 years ago.
Rrrrrright. The car breaks down and they can’t pay $1000 to get it fixed. Wow! What a great quality of life that is! ROTFL
The joke is on you. Forbes is 51% owned by a Chinese conglomerate so dense you’’d have trouble figuring out who the principals are. So are most other US print magazines.
Are you disputing that a large chunk of the country has less than $2000 in their bank account and no other liquid assets ?
How much a person has in their accounts has to do with what exactly?
I know people making 200k who have nothing in their accounts and I know people making less than 30k who have over 200k in their accounts.
By the way, I’m that 30k guy. I’ve averaged less than 30k in income annually and have over 300k in assets. I’ve never inherited a thing.
I’m 43.
Higher income certainly allows you to save more, but your personal choices dictate much of that.
I work with poor people for a living as a housing provider\financial counselor. The poor I work with are horrible money managers and need mentoring. I’ve had tenants spend 10k tax refunds on eating out in 2 months (this is actually common). I’ve had them blow it on clothes. I evicted a tenant who got an 11k tax refund (she only earns 15k a year) and spent it all on clothes which I tossed out when I evicted her.
This is extremely common.
So how much a person has in their bank account isn’t the full story. You can indeed make a good life on a low income, usually.
What I’m disputing it the REASON a large chunk of people have no cash savings.
These same people, btw, seem to be able to pay me to do braces on their kids. This runs about 5K, and we let them make payments.
One reason working people don’t have cash savings is that we don’t run on cash anymore. We run on credit. Most people have enough credit to squeak by, if they can work and make monthly payments.
Another is that hoarding cash involves discipline and sacrifice, and generally can only be accomplished by people who have a strong purpose in doing it.
I have seen immigrants who arrive here dead broke do better at building up cash than anyone I ever met who was born here, regardless of race or ethnicity or anything else. They’ll work in a restaurant and eat other people’s left-over food and sleep in a broom closet….and in five years they own the place.
Many of the things you’ve been taught to view as “wealth inequality”…have a lot to do with culture, expectations, sense of dignity, sense of entitlement, and so forth.
Exactly right!
When I was a student, I was a bit jealous of other students always eating take out in the dorms. I ate the cafeteria food. If I missed the cafeteria food I’d have to go to the laundry room, move the machines around until I found enough quarters to buy dinner at the vending machine. I’d go to the grocery store but it was a couple miles away and I had to walk.
Then, when I graduated totally debt free and my close friends were moaning about their payments I realized something….they didn’t have the cash to do take out anymore than I did. They just borrowed it all and now had to pay the piper.
Thats’ exactly how I saved half my income on a 18k salary for several years.
I make much more now, around 50k and am adding 6k a year to my income from rentals. I save 25k out of a 50k income. I buy one rental a year and each one adds 5k to my annual income. In 6 years I should pass 100k a year as at some point I’ll be able to buy two a year.
You can build wealth incredibly fast, even on a lower salary if you have the determination to do so.
It is my great pleasure to read your posts. You’re the poster child for my entire belief system about how to invest.
First you make a surplus, some way, somehow.
Then you save it, for as long as it takes to get the money you need for the investment you’ve identified.
Then you buy the asset and manage it, and you stick with it for the long haul. Too many people make decent decisions but then don’t stay the course. This is a big problem with liquid assets like stocks, fwiw.
Two things I actually like about RE are that a mortgage means you’re forced to never miss a monthly contribution to your increasing net worth. I also like that RE is NOT really liquid, because that means you can’t cash it in for your next impulse buy.
At your age, you will eclipse my modest success in a few more years. I should have started sooner…and the truth is that I am not as disciplined as you are either.
I don’t know about passing you. You have a much higher income (I’ve gathered you are a dentist) and have way more rental properties than I do. I’ll finish this year with 4 rentals, maybe.
I am absolutely determined to buy at least one a year for forever however. I’ll do whatever I need to do to get the capital to do that, short of illegal activity.
It helps to have a 100% supportive wife who also takes extra jobs, tutors, etc. to get additional capital.
But yes, philosophically, I agree with your belief system on financial wellness: The problem facing America isn’t the presence of disparity, it’s a lack of a backbone to do whatever it takes to get ahead.
People just do not want to work hard. They don’t want to be told the problem is with them, they’d rather blame it on the “system” or “racism”. Sure, there are problems there, but there’s nothing keeping anyone from attaining wealth in America, unless you are physically disabled.
You’re young and have lots of time
I could have been more aggressive on taking 1031’s.
I didn’t do my first one until my 1st property was nearly paid for. In those days I used even less leverage than I do now. My first property was a duplex and I had it on a 15 year mortgage. I did not understand the math very well back then….but I had a young family and lots of expenses and my practice was not that lucrative in the early years…so it was good to keep leverage low.
In general, it’s good to keep leverage low, especially in these times with the specter of a depression always there. If debt service is a struggle in good times, you’re going to get wiped out in bad times.
But not TOO low. Mortgage leverage is safer imho than buying paper assets on margin, for several reasons…and 30 year mortgages, locked in at todays rates, are EXCELLENT liabilities to have, if one must have liabilities.
I usually only do a swap now after a minimum of five years of ownership, waiting until I’m very comfortable that we’re easily making our debt service and have some decent equity. I only do one swap at a time, and let the dust settle before doing another, even though I might have multiple properties that are eligible to exchange.
On your point about why more people don’t manage to bootstrap themselves, my view is that most people just have the deck stacked against them from the get-go……because they completely lack education around money.
I read all the lay press money magazines back in my early days and never learned much of anything of value from any of them. They’re designed to perpetuate the standard narratives of putting money into tax deferred vehicles and expecting an 8-10% return from the stock market, and “the miracle of compounding” to work out……in other words, the old school Benjamin Graham/Warren Buffett approach….which I now regard as dangerous and even stupid.
It might work out over some time periods, but I’ve seen two big crashes in stocks n my time and expect to see a third one within a few years, perhaps very soon. I think more like a trader now when it comes to stocks. I like to have an idea where I’ll take profits, and how much downside I’ll tolerate, the first day I buy a stock. Before I buy it.
Today people are sitting on great gains in equities that have been easy to come by for a few years now, but I expect that most people will not find the exits when it’s time to do so. Right now lots of very rich people are cutting their exposure to stocks by 70% or more. It pays to watch what those people do.
If the 1031 gets gutted, I’ll just hold, hoping to see it brought back. My goal was always cash flow anyway, not capital appreciation. Appreciations is icing. Cash flow is cake. As Robert K. taught me (in 1990) “Assets feed you, and liabilities eat you.”
I’ll also put the properties into a trust so that my kids won’t have to pay gains until such time as they might wish to liquidate my little portfolio, even if Biden is successful in his efforts to tax CG’s as regular income.
Culturally, we are programmed by our public schools to be good little corporate worker bees…..don’t try too hard, don’t expect too much. Go to college and get a useless degree. Go to work for whatever company is hiring. Suit up and show up, and do what you’re told.
I think most people, even smart people who should know better, tend to think it’s impossible to accumulate substantial wealth, starting from scratch. Or that it’s all luck. It’s not easy, true….but it is not impossible.
And luck is good to have, but it doesn’t take the place of good planning and good habits.
And yet, the middle income people somehow think the lower income people are the problem!
How was that achieved? Well, as the saying goes- “Rich people pay Fox people to get middle-class people to blame poor people.”
I’ve never watched Fox, and I don’t blame poor people. I blame politicians flogging false narratives designed primarily to get them elected in perpetuity by people who are motivated by handouts.
Looks like lower, middle and upper income people have all gained ground in income. Right?
… only if you think 9 is more than 10!
Is there any number there that shows anyone did not increase their incomes? Why are you looking at income shares? Shares don’t pay rent.
Trickle down is based on the idea that a rising tide lifts all boats. And it does lift them all, just not all to the same degree.
I have no idea how Biden or anyone expects to grow the economy from the bottom out. Poor people at the bottom don’t start businesses or produce much of anything (most are on welfare/assistance). Some middle class people do start businesses but the amount of regulations / taxes / fees strangle most small businesses before they can get started or become profitable (hence so much cash only stuff is done like how I pay my lawn guy). There is nothing he’s proposing that would help alleviate any of that. All he’s proposing to do is drop money in the hands of the poor and lower middle class via give aways and expect the economy to grow. But that doesn’t grow anything unless they produce something of value.
Trickle down economics works and it’s the only thing that has worked. You have to have wealth and income disparity for an economy to work. If you disagree, give me an example of a successful economy that didn’t have wealth disparity.
My answers to the 4 Democratic senators quotes above:
“The investor class is not a ruling class. They are making money off the backs off working people without doing very much work. If they had shared more of the wealth with workers over the years, we wouldn’t be in the situation we are.”
This is another sound bite. It is true that we have a tiny percentage of people who fit the description you’re making, and they do control far more wealth than anybody else, But that is not the whole story.
That doesn’t mean that investing is ONLY done by the Four Hundred Families, the people who got rich selling boots to the Union army, and never looked back. The wormy looking children of privilege who take the easy majors at Yale.
Investing is what ALL thinking people do to try to provide for themselves in their old age. Not all of us have a cushy 401K paid for by a tech company that has a 20% profit margin. Some of us are paying our own way, and successful investing is the difference between a comfortable retirement or a dodgy old age dependent on the largesse of government.
We are not the corporate economy. We are the mom and pops who work long hour and already pay far more tax than our share.The ones who hire the people who can’t do what you do.
They harder we try, the more some Biden type wants to get in our wallet. The real rich don’t have to take capital gains, with their 10M plus nest eggs. They can wait for the next Trump to roll all their problems back. Those of us who need to use the money we’ve first saved and then invested successfully don’t always have that kind of flexibility. And the Trumps NEVER roll our problems back, because we re not in the donor class.
I strongly suggest you take a look at the Dominic Frisbee book on taxation that Mish reviewed…..and one other, and that is How the Irish Saved Civilization, which details how onerous taxation destroyed the Roman Empire.
Real estate investments right ? Try being part of productivity growth Eddie. You stand on the shoulders of it everyday whether you know it or not.
You are so incredibly wrong. I’ve made all kinds of investments. I’ve made and (and probably also lost from time to time) more money than you’ll ever see, with your class envy attitude.
I’ve invested, over the years, in commodities, real estate, stocks, bonds, insurance products, and even crypto. I’ve even loaned investment capital, although never in a big way.
I made 100K in my spare time trading pot stocks in 2017. I spent 2019 learning all I ever needed to know about crypto. I’ve spent my whole adult life trying to figure out how to invest my way to a better life for myself and my family…… and I’ve had a ton of fun. I’ve occasionally made serious mistakes, but I tried to always learn from them. I’ve paid some six figure dues. Until you’ve done that, in my book, you’re a rookie.
I’ve read dozens of books on investing and trading. I’ve learned fa lot rom a long list good mentors. Some are famous. One lived in a shack in Vietnam and traded options for a living. I threw all the books away more than a decade ago. I do what works for me, and I don’t get too greedy.
I also try to mentor other people, but they have to want help. You can’t fix stupid.
The biggest investment I made was in my own education, which I mostly paid for, with some small (but very needed) inputs from my parents, my mother-in-law, and my dear wife, who is btw, the very best asset I ever found.
There seems to be some misapprehension among you young socialists that being a landlord somehow makes you a “rentier”. In fact a good landlord is FAR from being a rentier, because he provides an asset for a needed and wanted exchange that’s fair, between two people who have different needs.
Maybe you should enlighten us to what your job is and in what company so we can judge it’s social utility?
Maybe you should enlighten us to what your job is and in what company so we can judge it’s social utility?
I read “How the Irish Saved Civilization”. Great book!
“Trump eviscerated the IRS”
Not exactly true. The funding of enforcement at the IRS really started to go down in the 80’s under Reagan. Pursing the complex tax obligations is expensive and the one of the easiest ways to increase the wealth of the rich was to deprive the IRS of the funds to audit them.
I was hoping this might get mentioned. Thanks.
The problem is that most of what you call the investor class is just middle class people’s 401Ks and pension funds. That group owns WAY more of the stock market than those with a net worth of 100+ million dollars.
You could take every last dollar from the top 400-500 families in the US and it might get to 1 trillion dollars. Biden wants 7.8 trillion. The math doesn’t work. You can’t get to 7.8 trillion dollars without taxing the middle class either directly (raising their tax rates) or indirectly (hidden taxes like a VAT on goods, carbon taxes etc) or just piling on more debt.
“They can afford to pay more in taxes and still do well.” It’s interesting that people on the Left constantly repeat phrases of this kind. They take the liberty to tell others what they think they should be happy with; to impose their morality on others. ‘Because it’s right’ ‘Because it’s fair’ ‘Because it’s just’ are common refrains…based on what and by what right do you get to tell other people what “do well” even means?
Biden knows its all a negotiation. Proposals are proposals. He probably knows more about this than anyone that is currently governed in recent times.
Here’s a crazy idea. Why not have an infrastructure plan that actually addresses infrastructure issues? Things like roads, bridges and airports. I would imagine almost everyone would be on board with that.
He did in his 2nd plan. But it was only for 275 billion and Joe wants to spend 7 trillion so he has to call all of it infrastructure.
If he had just proposed 275 billion for actual infrastructure roads/bridges/rail/electric/pipelines/water etc it would likely sail though.
Because tax and spend liberals always talk about lofty goals when they ask you for the money they are going to squander.
Take California – one of the highest tax burdens in the nation. They always talk about roads and infrastructure and yet the only new highways being built are by various private toll road companies. You get to pay high taxes for roads and then get to pay again if you use the private road system.
Do I even need to mention the high speed rail boondoggle?
Let’s drop the name “The United States of America” and just call it “Greater Illinois”.
Don’t let the door hit you on the way out.
The door’s already shut on you.
Doug lives in France and likes to comment on the US.
No door to hit him.
I am American. I live in France because my wife is French.
Instead of “Illinois”, why not call it “France”….
BURN.
I guess you are calling your friends to go burn down your own town………again.
France is already Illinois. When Mitterrand came in 1980 he did exactly the same as Biden the Menshevik just did. After fourteen years of his reign France never recovered it’s dynamism. We have the highest taxes with less and less services. It’s a downward spiral.
Nice Blog, Also thank you US for medical help.
Election regrets
nice also check https://gardendeco.in/
My answer to all election regrets: This is better than insurrection.
LOL
You forget this nation is a Federal system. Go ahead and slam through everything-you’ll get your insurrection, but it will be States defying the Federal government and if you push hard enough and far enough-you’ll be the cause of it.
Silly Mish thinking we are in normal political times and the Senators will stop it.
They have 2 years to slam through whatever they want and cement their power. The only question is whether they slam it through now or play for 22 and then slam it through.
This leads to insurrection.
People get what they deserve. If one couldn’t see through all the crap thrown at Trump during the election cycle to understand what was REALLY going on, they deserve what they voted for-good and hard.
But Trump SAid MeAN THings and Biden is just a nice guy. Yeah well; there was a lot at stake in 2020 and the Dems have everything lined up to completely undo everything in this country; and Biden laid out all of those things.
DC Statehood, HR-1, Gun Control, Supreme Court packing, etc. etc. ect.
And the stupid thing is Trump called out all of this! Trump told everyone, “this is what the commies will do once in power!”. But Trump said mean things on twitter so of course he’s the bad guy.
There is only one thing preventing the Commies from utterly remaking this entire country; and it’s not Manchin. It’s the Senate filibuster.
If they go for the power play (and depending on how ballsy they are they just might). Within 6-12 months they could, get rid of the filibuster, and then slam through all crazy leftist bills past in the House and the Right would never again be able to effect any change at the national level.
And so what about Manchin or any of the others. If the Commies go for the power-play to cement themselves in power, I guarantee they will be richly rewarded and if they don’t go along with it-they will be taken out back.
Insurrection?
Rabble rouse much? Can’t have a discussion without implying violence?
For a guy who lives in France, you certainly comment on the policies in the US.
Why?
I am American that’s why. I have also lived in many different places in the world and seen a lot of things and can compare systems and results. What I see I don’t like. I used to vote Democrat but I don’t like what happened to the party. It lost common sense. I pay taxes to the US government also. I have a right to call Biden a piece of socialist shit.
Punitive taxation leads either to serfdom or to insurrection. What is your choice njbr?
If there was serfdom or insurrection during the “punitive taxation” of the 1930s, 40s, 50s, 60s and 70s, all the historians must have missed it! LOL
Excessive taxation has been at the root of virtually all revolts and revolutions since the Mesopotamian civilizations first started thousands of years ago. Maybe you should learn a little history. LOL
You’re well on your way to the Dunning-Kruger Award for Most Profound Ignorance and Compleat Certitude.
There is a lot more to the story than comparing the marginal rates over time.
The above is just one example of your erroneous thinking. There are many others. You just really don’t know much about taxation or it’s history.
Gosh, if I look at your graph, as the total tax rate on the top income earners has decreased, the country has become more of a place to be bitched about because it’s not the same as the good ol’ days.
Isn’t that argument enough that the tax rates should be increased to make it like the good ol’days?
Or does it become a new “socialist hell-hole” like the 50’s?
Doug, you fail to realize that it is the underclass that revolts in revolutions, not the masters.
njbr, the underclass furnishes the troops. The leaders just about always from the higher classes. Read a bit about revolutions. It’s a salient feature.
Sure, tell me how mobs of poor, inspired Americans will eager to fight other Americans because of a higher capital gains tax.
Maybe if I were drunk, I’d believe that.
Stuck on the capital gains tax as if that is the only tax I see. Have you heard of the concept of the total tax burden? You might not be hit by the capital gains tax but you will be hit by a another tax and you will.
Tell me story Uncle Doug, of the time the plutocrats started a revolution of the people, for the the people, by the people brcause of the evil capital gains tax.
Boston Tea Party little njbr. One day when you grow up you will understand these complicated things.
Doug, doug, doug…
I know taxes, I pay a lot of different taxes.
The majority of people you want to be the soldiers (cannon fodder?) of your revolution do not pay the taxes you want them to fight to not pay….
Sure you know about taxes. Your father pays a lot of them and you heard him talk about it.
For just being an honorary frog you sure croak about things you don’t know about.
Why don’t you ask your wife about French taxes and talk to Macron about it.
Interesting. I live in France and and pay French taxes and yet I know nothing about French taxes. As an American living overseas I pay taxes to the US also (it’s in the tax code) and yet I know nothing about the American tax environment. Since I am not a French citizen I can’t vote here so talking to Macron is not in sight. I must say that I am not impressed with your ability to think logically.
You go on and on about America when you live in a foreign country and yet you provide no valuable information that compares and contrasts your experiences as an American in France. What do you think of their taxes as opposed to the US?
Is it a socialist hell-hole?
And why are you asking me to talk to my dead father about taxes?
Strange fellow…..
Taxes are high here, the highest in Europe. The state overall takes 54%. Services are at an acceptable level but there are notable degradations in the health system, security and the political environment. Roads are great, trains are great, the food is extraordinary but if you have been here you know that things are not cheap. A better idea would be what you see people doing. There is considerable emigration of the highly-educated in the sciences and engineering often to the US and also of young people who want to build a business be it a restaurant or farming. My two children grew up here and decided to go to the university in the states and they do not want to come back. Most of their friends emigrated also and the ones who didn’t are not very prosperous. I am not a citizen and I see myself as a guest here so I will not trash France because it is still a nice place which is why I stay. If you think things are tumultuous in the states you should take a look at Europe and it is not better . Dirty weather is coming. If you are going to talk about taxes with authority you should be able to take examples from your own experience and not use wide generalisations which often give the impression that you actually have little knowledge of taxes and thus have no idea what you are saying. Perhaps giving us what type of business you are in and so forth to give us a framework.
The whole plan is so overreaching that it’s possible nothing passes. https://basketball-legends.io/