Happy tax day

[Fjd]

You seem to scapegoating all the regular Joes as a cover for criminals. Massive crimes were committed on Wall street. Just because The DOJ refused to prosecute, doesn't mean these weren't serious crimes of theft and fraud.

Individual Joes may surely have made judgment errors. But those joes did not create the fraud schemes, they did not create systemic theft. With any normal DOJ, such as what existed in 1980, hundreds of the Wall Street thieves would be in prison. To even suggest all this is the fault of dumb or greedy Joes ignores all the crucial facts. All 50 states were also defrauded by illegal robo signing and illegal title transfers.

Having poor judgment is in no way comparable to committing theft and fraud.

 

 

 

Exactly, I seem to remember another thread where you had provided links as a few in that thread did not want to believe it.

 

 

 

"I’m thinking more of the Americans that lost an estimated 25% or more of their collective net worth during 2007 and 2008. So many 401K plans took huge hits and have not recovered."

Again this is the only point that's simply not accurate. The markets and investors who left their 401k's alone have recovered and gained a substantial amount over 2007 levels. It will drop again - it will rise again.

I go back to behavior ( a gross oversimplification) as the core of the issue. How many people wouldn't have lost their homes if they weren't in debt up to their eyes having the car loan, toy loan, those credit cards balances (but they got those great miles) with a mortgage to the max the banks would give them? Bottom line (to America) get over the perceived need for a good debt (sorry credit) score and pay off the bills. 100% of the foreclosures in America happened on homes with mortgages. What if we glorified paying them off? That's heresy in America right now because "I work hard, I deserve" or "I need to be payed for my education", etc.

There are genuine hard luck stories out there but they are the minority. Most people have the ability to budget, almost no one does. I cannot control what men in dark suits, the puppeteers, do behind closed doors - even if they gave me a written agenda detailing their methods. I cannot control those who abuse government subsidies on the corporate or low income scales.

I can control that I stay out of debt and live below my means. It's a yawner but the fiscal stress level is dramatically reduced. Now when I hear stories of how slanted the system is toward either wall st or toward the federal govt, I lose less sleep knowing that I've got some pennies in my bank and I don't owe people my paycheck.

If it all comes crashing down so be it. I'm not losing sleep over that either because I can't control that. I will have to adapt with everyone else if that comes to pass.

 

 

 

I tried to present actual numbers from various surveys as support in other part of my overall post in relation to an overall wealth shift. I fully understand the various releases in the press and the typical message sent such as the U.S. National Bureau of Economic Research indicating that the recession ended in 2009; and the 2009 TIME magazine issue that indicated "More Quickly Than It Began, The Banking Crisis Is Over." 

 

Even President Barack Obama indicated in early 2010 that, "the markets are now stabilized, and we've recovered most of the money we spent on the banks." 

 

Why did we need to even help them pay off the bad derivative bets, the bad credit default swap bets, the bad reps and warranties instead of letting them just take it up the *** and lose their companies for poor choices?  Why didn't we let the bankruptcy courts do their job and maybe the DOJ would have got to several earlier?  

 

I suspect that too big to fail may have more to do with not upsetting the remaining derivative bets that total over 4 quadrillion dollars. The statistics below will show how these bailouts were not targeted to help the vast majority of the US citizens in any way.

 

Of course, who can forget the news during March 2009 where the New York Times new headlines indicated that "Most stock markets around the world are at least 75 percent higher than they were then. Financial stocks, which led the markets down, have also led them up."

 

I’m pleased that you know a multitude of people that have 401Ks that completely rebounded and are better off today than before the crash.  However, the studies do not support that assertion for the significant majority of the population, not only in the US but around the world.

 

Rather than attempt to work with the high-level impact again, I’ll try something at the household level.

 

Note that the distribution of household incomes in the United States has become more unequal during the post-2008 economic recovery.

 

The link below shows that income inequality in the United States has grown from 2005 to 2012 in more than 2 out of 3 metropolitan areas.

 

The article in the link below also indicates that in 248 of the 357 metro areas examined in the report study released by the U.S. Conference of Mayors, average (per household) incomes rose more quickly than median (point where half are below and half are above) incomes from 2005 to 2012. Among the key findings is that the jobs gained in the recovery paid an average of 23 percent less than those lost. And in most metro areas, income inequality appears to have worsened.

 

In four metro areas — Albany, Ga., Ithaca, N.Y., Dalton, Ga., and Pascagoula, Miss. — the gap between growth in average incomes and growth in median incomes was greater than 15 percentage points. Albany led the list, posting a 2 percent rise in average incomes and a 16.4 percent decline in median incomes. The trend, the report estimates, are likely to continue.

 

http://www.washingtonpost.com/blogs/govbeat/wp/2014/08/11/income-inequality-seems-to-be-rising-in-more-than-2-in-3-metro-areas/

 

 

A new US Census Bureau report that focuses on changes in household wealth shows that the median household's net worth fell from $106,591 in 2005 to $68,839 in 2011 for the third quintile of the US population.  Note that the third quintile would also be the median point for the entire population.  In addition, the chart below breaks out the data into 5 quintiles.

 

 

 

 

 

 

If you look at the chart above, you will notice that the median net worth of the top 20% divided by the median of the second 20% was 39.8 in 2000. Today, the calculation shows 86.8.

 

In addition, the latter group lost practically 56% of its wealth and the overall wealth of the bottom 20% fell from negative $915 (net debt position) to negative $6,029 (net debt position). Or, think about it this way, the median American in that poorest group saw their debt increase more than 6 and a half times.

 

While it is clearly evident that people in the top 20% lost a fair-sized portion of assets in the downturn, they are currently above where they were in 2000.

 

However, the median household in the middle quintile is still worse off than they were in 2000. In the second quintile, the median household only has half the wealth it did in 2000.

 

There again, the bottom quintile's median household is far deeper in debt. 

 

Well, all I can say is shame on all quintiles for such behavior, except we apparently should applaud the fifth quintile and maybe the fourth quintile, as quintiles one through three all should have made better decisions and learned how to break with societal conventions and ignore the system.

 

I would hope that this US Census data better shows my earlier point that many US citizens have not recovered from the credit crisis and probably never will.

 

I guess those running our higher education systems are now in the same boat grabbing at the capital that investment banks and private equity are dangling in front of them.

 

Another point, however, please note the lack of fundamental changes in banking and financial markets.  Some have noticed and it worries many market participants while the hedge funds salivate.  Mark is correct as derivative bets total 4 quadrillion dollars and continue to rise. 

 

What is the solution?  Should we let Wall Street continue to run amok and scold the lower quintiles of the population for being swayed and making poor decisions again?  Or, should be re-implement reasonable underwriting standards and unwind all of these high-stakes Wall Street bets?  Or, something else?  

Edited April 19, 2015 by Fjd

[akdave]

You seem to scapegoating all the regular Joes as a cover for criminals. Massive crimes were committed on Wall street. Just because The DOJ refused to prosecute, doesn't mean these weren't serious crimes of theft and fraud.

Individual Joes may surely have made judgment errors. But those joes did not create the fraud schemes, they did not create systemic theft. With any normal DOJ, such as what existed in 1980, hundreds of the Wall Street thieves would be in prison. To even suggest all this is the fault of dumb or greedy Joes ignores all the crucial facts. All 50 states were also defrauded by illegal robo signing and illegal title transfers.

Having poor judgment is in no way comparable to committing theft and fraud.

I understand your point and I assure you that is not my intent at all. Those who committed crimes should be prosecuted to the fullest and at any points possible restitution made.

I do put the onus of responsibility on the average Joe. (Not for the criminal behavior but for Joe) In my opinion that's what ultimately gives power to average Joe. If people don't look at their financial picture and figure out how long they can survive if the income faucet is turned off for whatever reason for 3-6 months, then they aren't looking adequately at their own big picture. The odds of becoming a victim increase. Most average Joes have negligible savings, most average Joes have a car payment. Most average Joes could live without the car payment, drive a slightly older car and save some money so when 2008 rolls around again they aren't losing the house. Just one ex but I think you get my point.

I don't condone the criminal acts of Wall St, those in govt or anywhere else. Wrong will always be done by someone at all levels, in every field, it's up to us to do what we can to prepare. I appreciate the civil dialogue, you guys are great!

Edited April 19, 2015 by akdave

[Travis In Austin]

Tax rates are at historic lows. The problem which causes all the complaints isn't really the tax rate, it's the low wage rates. Wages and salaries have been falling steadily since the 1970s, because workers are not getting the productivity gains. If wages had kept pace FAIRLY with productivity, the average income today would be $110,000, not the lousy $49,000 it is. The minimum wage would be around $20. If you had essentially TWICE as much pay today as you have, you would not hear so many complaints about "taxes." There's a simple reason why wages have steadily fallen over the past 50 years. Sadly, nothing is being done to reverse it.

I thought the average American made about 26 to 27K and the average HOUSEHOLD income was 49 to 50K?

2/3 of the US make less than 41K.

I agree with what you are saying Mark, but I thought it was even worse when it come to individual wages.

[akdave]

Tax rates are at historic lows. The problem which causes all the complaints isn't really the tax rate, it's the low wage rates. Wages and salaries have been falling steadily since the 1970s, because workers are not getting the productivity gains. If wages had kept pace FAIRLY with productivity, the average income today would be $110,000, not the lousy $49,000 it is. The minimum wage would be around $20. If you had essentially TWICE as much pay today as you have, you would not hear so many complaints about "taxes." There's a simple reason why wages have steadily fallen over the past 50 years. Sadly, nothing is being done to reverse it.

I thought the average American made about 26 to 27K and the average HOUSEHOLD income was 49 to 50K?

2/3 of the US make less than 41K.

I agree with what you are saying Mark, but I thought it was even worse when it come to individual wages.

Lots of numbers out there but here's one set.

http://money.cnn.com/2014/08/20/news/economy/median-income/

[Travis In Austin]

You need to find some deductions!

I had all kinds of them.

You are being a poor business man....

You need a tax attorney like my little brother to teach you the ropes, not an accountant!

My best friend farms over 4,300 acres, is worth 7 figures, and his wife is eligible for government assistance for college.

You NEED to buy some new toys for your business and depreciate them instead of giving Uncle Sam ANYTHING!

Another buddy of mine is a micro biologist, owns his own lab and also raises and sells 40,000 Day Lilly's a year. He had a 1,400 horsepower 1969 Z-28 Pro Streeter that was on the cover of Hot Rod twice and the cover of Hot Chevy's once. He set up as a distributor with Wax Shop Products and incorporated his Wax Shop business with his others. He would set up a little cardboard stand of the Wax Shop products next to his Camaro at shows and wrote off the Camaro as a business loss for advertising.

You need to start working SMART, not working Hard!!!

Roger

Great point. But what if you do not enjoy toys anymore? Seriosuly. If I buy a $50,000 car it will cost about $30 or $35K as a business expense, which is great, but that same $50,000, which nets $30K put into a piece of land will have massive growth and with 1031's it will grow tax free. A freind of mine as I are seeing a professional about this next week. If you have someone good let me know.

As to the possessions and toys. Pick something to buy that you truely enjoy because it makes you happy, and is very inexpensive relative to your income, but do not buy toys to impress others. Who cares what they think? A useless quest if there ever was one.

My other favorite is restaurants where you are put under enormous pressure to buy a $200 bottle of wine of a bunch of $15 martinis to impress the waiter. Who gives a crap what he thinks? He is a 27 year old kid husseling you. End of rant.

With a 1031 it will grow tax deferred, but I know what you meant.

I did several 1031 exchanges in Las Vegas on lots in Section 10 and 11 (Rainbow and Sahara).

Buying is the easy part, when you sell is when all of the deadlines trigger. You have 45 days to identify the replacement property, it must be like kind, and you have 180 days from sale to complete the transaction. Otherwise, capital gains tax, plus depreciation recapture. In addition, the basis in the new property will be what your basis was in the original property, it does not step up, so in some cases it may not make sense to to a 1031 exchange.

I had to teach the title company there how to do my first one, by the end all of the major title companies had all of the forms on how to do it, etc.

Is the original Andre's still on 6th Street? They never acted snooty about the wine, nor did Pamplemouse.

Travis

[Travis In Austin]

Tax rates are at historic lows. The problem which causes all the complaints isn't really the tax rate, it's the low wage rates. Wages and salaries have been falling steadily since the 1970s, because workers are not getting the productivity gains. If wages had kept pace FAIRLY with productivity, the average income today would be $110,000, not the lousy $49,000 it is. The minimum wage would be around $20. If you had essentially TWICE as much pay today as you have, you would not hear so many complaints about "taxes." There's a simple reason why wages have steadily fallen over the past 50 years. Sadly, nothing is being done to reverse it.

I thought the average American made about 26 to 27K and the average HOUSEHOLD income was 49 to 50K?

2/3 of the US make less than 41K.

I agree with what you are saying Mark, but I thought it was even worse when it come to individual wages.

Lots of numbers out there but here's one set.

http://money.cnn.com/2014/08/20/news/economy/median-income/

That is what I was thinking, it was showing household income around 50K, this article explains how that number gets skewed by the 200 or so household in the US that earn in excess of 50 million a year.

http://www.mybudget360.com/how-much-do-americans-earn-what-is-the-average-us-income/

[akdave]

Tax rates are at historic lows. The problem which causes all the complaints isn't really the tax rate, it's the low wage rates. Wages and salaries have been falling steadily since the 1970s, because workers are not getting the productivity gains. If wages had kept pace FAIRLY with productivity, the average income today would be $110,000, not the lousy $49,000 it is. The minimum wage would be around $20. If you had essentially TWICE as much pay today as you have, you would not hear so many complaints about "taxes." There's a simple reason why wages have steadily fallen over the past 50 years. Sadly, nothing is being done to reverse it.

I thought the average American made about 26 to 27K and the average HOUSEHOLD income was 49 to 50K?

2/3 of the US make less than 41K.

I agree with what you are saying Mark, but I thought it was even worse when it come to individual wages.

Lots of numbers out there but here's one set.http://money.cnn.com/2014/08/20/news/economy/median-income/

That is what I was thinking, it was showing household income around 50K, this article explains how that number gets skewed by the 200 or so household in the US that earn in excess of 50 million a year.http://www.mybudget360.com/how-much-do-americans-earn-what-is-the-average-us-income/

Interesting link - I believe the cnn was saying avg income is 50kish (dated 2014) this is saying HOUSEHOLD is 50k ish (dated 2011?). Pretty big difference. I found this quote very compelling in this last link "Given all the ads you see on network TV you would think that every other US household was pulling in $200,000 a year given the kind of products that are pushed. Of course most of the goods bought in the last decade were financed with massive debt and not actual saved wealth."

[Fjd]

 

 

 

 

Tax rates are at historic lows. The problem which causes all the complaints isn't really the tax rate, it's the low wage rates. Wages and salaries have been falling steadily since the 1970s, because workers are not getting the productivity gains. If wages had kept pace FAIRLY with productivity, the average income today would be $110,000, not the lousy $49,000 it is. The minimum wage would be around $20. If you had essentially TWICE as much pay today as you have, you would not hear so many complaints about "taxes." There's a simple reason why wages have steadily fallen over the past 50 years. Sadly, nothing is being done to reverse it.

I thought the average American made about 26 to 27K and the average HOUSEHOLD income was 49 to 50K?

2/3 of the US make less than 41K.

I agree with what you are saying Mark, but I thought it was even worse when it come to individual wages.

Lots of numbers out there but here's one set.http://money.cnn.com/2014/08/20/news/economy/median-income/

That is what I was thinking, it was showing household income around 50K, this article explains how that number gets skewed by the 200 or so household in the US that earn in excess of 50 million a year.http://www.mybudget360.com/how-much-do-americans-earn-what-is-the-average-us-income/

Interesting link - I believe the cnn was saying avg income is 50kish (dated 2014) this is saying HOUSEHOLD is 50k ish (dated 2011?). Pretty big difference. I found this quote very compelling in this last link "Given all the ads you see on network TV you would think that every other US household was pulling in $200,000 a year given the kind of products that are pushed. Of course most of the goods bought in the last decade were financed with massive debt and not actual saved wealth."

 

 

 

When I read the CNN article I noticed that the CNN link states "Median household income has been on the rise for the past three years, climbing 3.8% to $53,891 in June, according to newly released data by Sentier Research."  The 3.8% increase is from 2011 to June 2014 and seems consistent with other various studies that I've read. 

 

I believe that a key aspect to remember is that "median" is the point where one half of the households are below this amount and one half of the households are above this amount. The "mean" would be the same as average.

 

In the study of the 357 individual metro areas I linked in a previous post, among the key findings is that the jobs gained in the recovery through 2012 paid an average of 23 percent less than those lost. It would not be uncommon in this situation where the median household income could rise by June 2014 while the average income of the half below the median demarcation point could be lower.

[Fjd]

1. The housing bubble and corresponding mortgage collapse, and subsequent foreclosure of millions of homes, was 100% the creation of financial criminals on Wall street. Without the criminal ring inventing the bubble structure these losses to millions of families would not have occurred.

2. The net net result was a multi trillion dollar transfer of wealth UPWARDS from the lowest 4 quintiles into the top 1/10th%. The loss represents many years of wealth accumulation.

3. Because there was no prosecution, and no penalty, and in fact huge rewards, the same thing will be engineered again once this class of people have accumulated some wealth again.

4. In spite of this obvious intentional ripoff, the establishment is still telling people they should take out mortgages, buy stocks, open 401k, and get jobs. Fatten up the sheep!

 

 

Almost everywhere you look at specific actions of these companies a person can find troubling data. I’m not sure how long it will take to sort through everything or even if that is remotely possible; however, the last couple of years various investigations into “servicer” foreclosure activities has revealed extensive loan servicing misconduct. 

 

The misconduct includes (among many other things); “robosigning” where foreclosure documents were signed by people who had no knowledge about whether the information contained in the documents was correct; charging improper fees to the home owners; providing false or misleading reasons for denying loan modifications that were available at the time of crisis; and failing to honor in-process loan modifications agreed to by prior servicers as the “servicing” aspect of a loan can be bought and sold many times by financial institutions.

 

There are so many disparate clauses that are now coming out of the wood work.  Many of these financial institutions are trying to invoke very lopsided hidden clauses that were clearly designed to where the consumer "waived" their rights to sue in courts while leaving the option open for the financial institution.

 

While there are several class-action civil suits in various stages, I suspect that in most instances any amounts awarded will fall short of making those individuals whole that were displaced from their homes due to the illegal issues above.

[Ski Bum]

I agree w/ Mark and fjd, but also sympathize w/ akdave.  I feel kind of powerless and cynical and simply try to focus on what I actually can control.  My hedge against all this is heavy weighting in health care mutual funds and more cash than usual (and lots of good music, family, friends, good food, and fun in the present).

 

Cheers and happy Sunday.

[tigerwoodKhorns]

 

 

 

 

You need to find some deductions!

I had all kinds of them.

You are being a poor business man....

You need a tax attorney like my little brother to teach you the ropes, not an accountant!

My best friend farms over 4,300 acres, is worth 7 figures, and his wife is eligible for government assistance for college.

You NEED to buy some new toys for your business and depreciate them instead of giving Uncle Sam ANYTHING!

Another buddy of mine is a micro biologist, owns his own lab and also raises and sells 40,000 Day Lilly's a year. He had a 1,400 horsepower 1969 Z-28 Pro Streeter that was on the cover of Hot Rod twice and the cover of Hot Chevy's once. He set up as a distributor with Wax Shop Products and incorporated his Wax Shop business with his others. He would set up a little cardboard stand of the Wax Shop products next to his Camaro at shows and wrote off the Camaro as a business loss for advertising.

You need to start working SMART, not working Hard!!!

Roger

Great point. But what if you do not enjoy toys anymore? Seriosuly. If I buy a $50,000 car it will cost about $30 or $35K as a business expense, which is great, but that same $50,000, which nets $30K put into a piece of land will have massive growth and with 1031's it will grow tax free. A freind of mine as I are seeing a professional about this next week. If you have someone good let me know.

As to the possessions and toys. Pick something to buy that you truely enjoy because it makes you happy, and is very inexpensive relative to your income, but do not buy toys to impress others. Who cares what they think? A useless quest if there ever was one.

My other favorite is restaurants where you are put under enormous pressure to buy a $200 bottle of wine of a bunch of $15 martinis to impress the waiter. Who gives a crap what he thinks? He is a 27 year old kid husseling you. End of rant.

With a 1031 it will grow tax deferred, but I know what you meant.

I did several 1031 exchanges in Las Vegas on lots in Section 10 and 11 (Rainbow and Sahara).

Buying is the easy part, when you sell is when all of the deadlines trigger. You have 45 days to identify the replacement property, it must be like kind, and you have 180 days from sale to complete the transaction. Otherwise, capital gains tax, plus depreciation recapture. In addition, the basis in the new property will be what your basis was in the original property, it does not step up, so in some cases it may not make sense to to a 1031 exchange.

I had to teach the title company there how to do my first one, by the end all of the major title companies had all of the forms on how to do it, etc.

Is the original Andre's still on 6th Street? They never acted snooty about the wine, nor did Pamplemouse.

Travis

 

 

Of course I know where Section 10 is.  Still a very nice area but the sorroundign area is kind of rough. 

 

Yes, the deadlines in a 1031 are horrible.  First American has a ton on info online and a local office that only handles exchanges. 

 

Don't know about Andres.  I do not go to fancy restaurants.  Rich food really upsets my stomach.  It has been a while since I have had the high pressure sales experience.  But I find it really annoying that the person who I am tipping (and I do tip well as I worked in restaurants for many years) is trying to outsmart me.  I have been out with people with huge egos who love the hussle because they get to prove that they can afford it and impress the waiter.   What they don't know if that after work, when the waiter to doing coke or bong hits with the busboy, he is bragging on how stupid the people are that he is hussling. 

[mungkiman]

If you want to impress anyone, it's spelled "Hustle."

[tigerwoodKhorns]

If you want to impress anyone, it's spelled "Hustle."

 

LOL.  I am a math and science guy and I can't spell or type.  I was really worried about this when I was in law school.  I also hate golf.  I was worried that this was going to handicap me.  Things actually turned out OK in spite of this. 

 

EDIT:  I just realized that the only reason that you can spell "Hustle" is that you copied it fromt he magazien sittign next to your computer. 

Edited April 19, 2015 by tigerwoodKhorns

[mungkiman]

I type with 3 fingers and one thumb, but still recognize a good golf joke. 

[garyrc]

 

I believe that a key aspect to remember is that "median" is the point where one half of the households are below this amount and one half of the households are above this amount. The "mean" would be the same as average.

 

Yes.  The "mean" (arithmetical average) is inflated by the presence of some very high incomes.  The "mean" makes Americans look much richer than they actually are, as a group.  The "median" is the preferred measure of central tendency in depicting income.  Some textbooks now define the "median" as the "dimensionless point" at or below which 1/2 of the instances lie.  Since it is dimensionless, it is also the point at or above which 1/2 of the instances lie.  Textbooks like this often make students cross their eyes.

 

Popular articles often promise to talk about "average income."   IMO, they should neither promise this, nor actually talk about it (unless it is in a footnote).   Typically they will talk about the "median" instead, which is good, but it should be so labeled.

 

For instance, the median household income in the US is about 50K, while the arithmetical average (mean) is about a misleading 69K. 

Edited April 19, 2015 by garyrc