OT: Tax the Rich Rev A

A paperwork nightmare, let's say I buy 10,000 shares of XYZ company at $72.15.

100 of those were from Mildred she bought them in 62" at $3.25. the company split 3 for 2 in 74.I bought all of her shares, 150.So adjust her cost for the split. Lamont had 300 ahares he bought at $6.50 in 70" adjust his cost for the split. Mary recently bought 200 shares at $91.48, she took a loss, What do we do? John's father died and left Bill 500 shares, John bought these at $30. Does Bill inherit them at John's cost or todays price of $70.12. So Bill sells his 500 at $72.15. I don't know what to subtract from the $72.15. Now you don't really get your shares directly from Mildred, Lamont and Bill, a broker has to buy them and place them in his account until I want them. Is there a tax a that point too? This goes on until we hit 10,000 shares. It is a mess. This is getting right in the middle of the free flow of finances, there is already to much thought about the tax consequences of an investment. We need less not more. If you must, tax short term holders, not gramma's retirement fund.

Rich, at this point I have to wonder has someone stolen you nym? None of this sounds like the old Rich. Mikek

Now your going to get Jim started !!!

He'll want to shoot you.

hamilton

Not particularly. I like a flat sales/purchase tax.

However, If you apply it only to the "rich", I would oppose it.

BTW... We here in the USA tax our "rich" MORE than any other developed country in the world...

...Jim Thompson

--
| James E.Thompson, CTO                            |    mens     |
| Analog Innovations, Inc.                         |     et      |
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      Remember: Once you go over the hill, you pick up speed

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There's no need to tax Wall Street transactions, and it's harmful. Just tax the actual sales of actual finished goods. That captures all the same money, and takes the reporting burden off all the intermediate people (who'd just pass the cost to you anyhow).

-- Cheers, James Arthur

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It's a tax accountant's dream. More paperwork, more time, more details, more profits, etc.

And the market will adjust to factor in the new rules, so grandma can still make 3% or whatever after all the taxes.

-Bill

How about, for debate purposes, eliminating tax on gain of value of physical goods and shares of corporations held for at least 2 years?

As for selling shortly after buying and derivative securities - I propose taxing gain at full wage-salary-and-tips rate.

--
 - Don Klipstein (don@misty.com)

And the Income tax isn't?

OK, that's $721,500.00 total, right?

So Mildred bought 100 shares XYZ at $3.25. That's $325.00. You paid Mildred $7215.00 for 100 shares at $72.15, am I with you so far? The difference between what Mildred paid (3.25) and what you paid (72.15) is $68.90/share, the Value Added. 68.90 times 100 is 6890.00 total. That's the value added. You'd pay purchase tax on $6890.00, whatever percent is decided on by the Powers That Be.

cost for the

Does that mean that each of her shares increased in value by 50%, or that two shares suddenly became three? If (B), then 1/3 of the shares are _new_, subject to the full purchase tax. If (A), then it's irrelevant how they got there.

You're just obfuscating here. He bought 300 at $6.50. Did the split increase the value of each share, or did he suddenly find himself in possession of

450 shares?

She took a loss. Tough bounsky; that's the nature of gambling. You don't get a break for "value subtracted." Or, look at it this way - the value added was actually value sutracted, and it's a little hard to tax that.

Of course, all this is assuming that each of those people paid the tax on their shares.

If Dad "left them" to him, to whom did he pay the $30.00?

$70.12, of course.

No, but the broker gets a commission for doing all the numbers for you and figuring out the tax, just like a retail storekeeper does with state and local taxes today.

Well, isn't "the free flow of finances" one of the primary things that get the liberals' panties all in a bunch?

No, it would, in fact, be less because the reason for all the paperwork, red tape, and other gobbledy-gook is because of trying to track down income, instead of simply figuring out what you paid.

Now, how did Gramma's retirement fund get into it? More obfuscation?

That would be the _POINT_ of the outgo tax. Nobody would touch her retirement fund, unlike the commies are doing today. She probably either owns her home outright or pays rent, which would be exempt. How often does she go to the restaurant and get filet mignon? If she's on meals- on-wheels, the volunteers would take care of the taxes on the food, but that's what volunteers do; and there's no tax on groceries anyway. There's also no tax on medicine. If Gramma buys a flat screen tv out of her retirement fund, well, duh! ;-)

No, it's me; I'm just getting more politically active as I see the catastrophe that's coming if somebody doesn't stop that Kenyan bastard and his platoons of communist minions.

Thanks, Rich

But, with the outgo tax, there wouldn't BE any taxes! She'd receive all the interest that she's entitled to. The only taxes she would pay _AT ALL_ would be on luxuries she buys for herself, or if she enjoys going golfing or taking cruises or whatever.

See? It's too simple for the political mind to grasp!

Cheers! Rich

Actually, you make a whole lot of sense here - I guess I was trying to attract the attention of the liberals who yell and scream and wave their arms and jump up and down whining about all the evil thieves on Wall Street.

But, you're right - they'd pay tax on their ill-gotten gains at the big-screen TV store. (and the golf course, the cruise tickets, the big cars, etc.) ;-)

Thanks! Rich

No, no, no!!! That's just the God-Damned income tax all over again! Like Dagmar said, they'll be taxed on it when they buy stuff.

And there should be _some_ way of taxing Wall Street transactions where the buyer pays. After all, the point is to REPLACE the income tax with an outgo tax. Maybe base it on the broker's commission?

Hope This Helps! Rich

You are as bad as the greedy bastards you think you are shying away from.

Looks good, only 9900 shares to go.

The split she now has 150 shares. But the value is the same as the 100 shares.

He suddenly owns 450 shares.

But I bought shares at $72.15 that cost $91.48 so I have no value added. So I pay no taxes. The will ruin gramma's retirement, she has held GM for 35 years but no one will buy her stock. She has a $60 gain, the market is only interested in purchasing stocks that have low gains to avoid the tax. At this point my purchase order says buy only stocks where the seller is taking a loss. I don't want to pay tax on my purchase. And gramma's $60.00 gain just went down, in fact the market has a lot of stock with $2.00 in gain, purchasers are buying those not gramma's. She finally sold hers but she had to match the market, she managed a $2.10 gain after 35 years. And she is pissed at Rich Grise! Mikek

Bill Inherited the 500 shares.

So he inherits them at $70.12 That eliminates the tax. So The loophole is buy the stocks and leave them to your kids tax free. Ther was no tax from $30 to $70.12.

How is that obfuscation?? Gramma's retire fund is invested in stocks, I have to wonder if you have any understanding about stocks and the market after that comment. Everytime she made an investment in her mutual fund you taxed it.

35 years of saving, and every time she saved her money for her retiement you took some of it.

Sales tax I agree on, but to start taxing stock purchases at buyers cost minus sellers cost is ridiculous, it is a paerwork nightmare and it will lower the price of gramma's long held shares.

That sales tax works for me.

USA's Schedule D allows for capital gain to be what you sold the shares for, minus what they were purchased for.

If that gets into a longer story, attach a page behind Schedule D explaining how the split affects purchase price and number of shares sold.

Keep it short, keep it simple, and in short-simple way explain that this explains additional info needed to put "Truth" into your figures in Schedule D.

Also, put your name and SS# on this additional statement, and brief mention as to what tax form or schedule (Schedule D) that this is adding explaining to.

--
 - Don Klipstein (don@misty.com)

I think you missed the jist of Rich's plan to tax the purchase depending on the different in the sellers sale price and purchase price. I'm buying 10,000 shares, from possibly 25 people, their costs range from $3.25 to $72.25. I was trying convince him it was an unworkable plan. I decided all my purchases would be from people who are selling at a loss, so I avoid the tax.

The relevant lines from Rich's site; "So if I buy, say, 1,000 shares of International Widget at its IPO, clearly, that's a new product. Say it's $1.00/share, that's $1,000.00 in sales, and my outgo tax would be $100.00. Now, assume they're a hit, and I find my shares worth, say, $2.00. I decide to cash out, so I sell my 1,000 shares to Joe Schmo for $2,000.00. It's not really fair that Joe should have to pay the full tax on the $2,000.00 price, since I've already paid the tax on the initial $1,000.00. The "Value Added" would amount to the difference between its price today, $2,000.00, and the $1,000.00 that I initially paid, or $1000.00. So Joe should only have to pay $100.00 tax on the "Value Added" That is, the "Value Added" would be the difference between the price today and its price the last time it was traded."

So as you can see my buy order says " buy only stocks sold at a loss or less than $1.00 profit.. This tax law would also lower the demand for grandma's GM stock she bought in 63". She bought a $3.00, today's price of $72.12, that's a $69.12 value added for me to pay tax on. I'm buying Bill's stock he bought at a much higher price last month. Mikek

Use 25 lines of the Schedule D, one for each different purchase price.

Attach an extra sheet if you need it to list all 25 sets of shares.

In USA, your tax is on your selling price minus your purchase price. Gains and losses incurred by those selling to you affect their taxes, not yours.

--
 - Don Klipstein (don@misty.com)

Ok Don, Your very knowledgeable on most of your posts, but this one got away from you. Thanks, Mikek

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What happens when gramma's CDs expire and she has to buy more? How much is the outgo tax on the money she spends to buy the new CDs?

And how about 401K (IRA) retirement accounts? Do you tax those too?

-Bill

Thanks - but the difference between the income tax and the outgo tax is that with the income tax, the tax is paid by the seller, but the outgo tax would be paid by the buyer.

Cheers! Rich

Well, isn't "buy low, sell high" kind of a mantra either way around? If you buy the cheaper stock and it goes up and you make a windfall, you'd pay the tax on the windfall when you spent it on toys or other stocks or whatever. :-)

Cheers! Rich