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Nebrfarmr
Veteran Advisor

Re: Infrastructure rebuilding with bonds


@kraft-t wrote:

Borrowed money has to be repaid no matter who it is borrowed from.

 

But are bonds the best rate you can get?  My understanding is they will have to pay at or above 'going' rate, for people to buy the bonds, again benefiting the rich, who have more 'mad' money because they can spare it, and get a higher rate of return than the guy just scraping by.  By default, the poor do not benefit as much, because they don't have that money, that they can just forget about for 10-20 years.

 

Taxing the rich is about tax fairness. You run your operation and work hard to make a buck and you get taxed on it at ahigher rate than those taxed on capital gains. Are you somehow more able to pay because your income is earned by working and is capital gains income more sacred?

 

Nope, I never understood that.  Capital gains are actually 'free' money, you got by not even working, just by having something that increased in value.  I don't see why they get special treatment.  By the same token, if I have a bin full of corn, which was worth about $4.50 when I put the corn in it, and I sold the corn for over $6, by all rights I should have been able to call the $1.50/bushel a capital gain, and pay less tax on it, but I couldn't.  But take Steve Jobs, who had a $1 a year 'income' on his taxes, but had his stock gain in value to the tune of millions of dollars, didn't have to pay the normal income taxes on his 'gain', but I did.  A good tax shelter for the rich.

 

I didn't lobby for such a disticntion in the tax code. Did you?

 

Nope

 

 Do you suppose wall street did? I didn't lobby for businesses to take !00% fast write off on machinery instead of depreciating it as the depreciation actually occurs. Who did lobby for that?

 

I sure didn't either.  It just lets the rich BTOs run me off ground by paying rent rates that I can't, because I don't have the money for a new combine.  On the bright side, at least my kids know what I look like.

 

And then they wonder why people are taking to the streets in our cities to protest the outrageous political influence that corporate amercia buys in our government.

 

WE have had a war on working folks since 1980 and the Reagan revolution. REpub after repub are fighting against unions and minimum wage laws in a direct effrort to keep labor cheap.

 

I can't think of anyone with any kind of job skills, out of high school, that doesn't get more than minimum wage.  Can you?  I think for this reason, minimum wage is kind of moot, but I guess it gives a good starting point.

 

Plus the rig the tax code toi benefit business and the stock holders while labor works with stagnant pay scales and the "players" are accumulating vast wealth.

 

Yeah it is time for people to take to the streets.


 

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highyields
Senior Contributor

Re: Infrastructure rebuilding with bonds

You mention something about taxing the rich and capital gains.   Warren Buffet always said tax the rich, but he doesn't have an "Income" for income tax.  All the money he gets is from Dividends on his stock.  Which I believe is taxed at 15%.    That was according to an article I was reading.  

That is an interesting point about the price of corn.   

 

My point was that way not use the "riches" of the wealthy vs.  borrowing from a bank.  If they want to put their money to use. 

 

The comment on run your machine until it breaks,  Yeah I DO do that.  I've seen nearly new augers replaced by dealers in combines.  I've run things that would make a mechanic cry.   I use used parts when they are better then what I am replacing.   It isn't always nice and maybe I dont' get done as fast as the next guy, but since my banker told me my net profit was more then the guy who was farming twice as much as i was I guess I'll keep it up. 

 

The unions are the reason that new pickups are $45,000, 

 

 

 

 

Did you catch the Big Red on Saturday night!?!?!

 

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Nebrfarmr
Veteran Advisor

Re: Infrastructure rebuilding with bonds


@highyields wrote:

You mention something about taxing the rich and capital gains.   Warren Buffet always said tax the rich, but he doesn't have an "Income" for income tax.  All the money he gets is from Dividends on his stock.  Which I believe is taxed at 15%.    That was according to an article I was reading.  

 

I used Steve Jobs, to make the same point.  His net worth increased by something like 6 million or 60 million dollars last year (can't remember how many zeros, but it doesn't matter to make my point).  However, he took a salary of $1, so on his income taxes, he had $1 of taxable income.  The rest of his income won't even be taxed at all until his stock gets cashed out, or his tax-shelter trust gets disbursed.  This could be interesting, with the estate tax re-instated this year.

 

That is an interesting point about the price of corn.   

 

Again, I would like to know why corn that gains $1 a bushel from harvest, when you bin it, until you sell it the next spring, can't have that $1 a bushel as capital gains.  If it were stock, or real estate, or a pickup, or a tractor, or even the bin itself the corn is sitting in that gained in value, it would be a capital gain when sold.  Why do us working stiffs not get the breaks?

 

My point was that way not use the "riches" of the wealthy vs.  borrowing from a bank.  If they want to put their money to use. 

 

My response was, if this is the FEDERAL government doing this, they already are borrowing money, at a rate cheaper than people would be willing to invest their money long-term.  Why should the government not go with the lowest interest rate for borrowed funds?  The bonds will be bought by people who feel they can spare the money for 10 or 20 years, which doesn't usually mean the lower to mid working class.  In order to get enough money raised, they will have to pay a better rate than other 'safe' places, so the higher return will go to the people who won't need the money for 20 years. 
Now, if a town needs to repair a water tower, by all means go with a bond, instead of a bank.  I just assumed it was a Federal thing.

 

The comment on run your machine until it breaks,  Yeah I DO do that.  I've seen nearly new augers replaced by dealers in combines.  I've run things that would make a mechanic cry.   I use used parts when they are better then what I am replacing.   It isn't always nice and maybe I dont' get done as fast as the next guy, but since my banker told me my net profit was more then the guy who was farming twice as much as i was I guess I'll keep it up. 

 

More than once, I have taken stuff out of the dealer's 'junk' pile.  Everything from auger flighting & tubes, to irons I used for some project or another.   Fortunately, they either like me, feel sorry for me, or hope that one day I'll have enough money to buy a new machine, and remember their kindness (they let me have the stuff for weigh-up price).  Fortunately, I am a good mechanic and welder (got 3rd nationwide in the national FFA ag mechanics contest).  I've welded patches on my clean grain elevator, that have held for 6-7 years without leaking.  The local salvage yard knows me by sight. 

However, when I unload the corn I picked with my 30+ year old combine, I seem to get the same price as everyone else.  I don't need to cover so many acres to pay my machinery costs, and I get more time with my kids than most.

 

The unions are the reason that new pickups are $45,000, 

 

I say part of it is the unions, and part of it is government regulations for things that drive the prices up.  Not to mention, the idea that farmers need a picup with more electronics and switches in it than a jet from the Vietnam era.  I have been told that to meet new emissions, the diesel engines have emission control systems that cost more to overhaul than the engine itself. 

 

 

 

 

Did you catch the Big Red on Saturday night!?!?!

 

Yes, I did.  I was pretty worried at halftime, but in the end they pulled it off.  I have a feeling that if the OSU starting QB wouldn't have gotten banged up, the outcome would have been different.


 

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Kay/NC
Honored Advisor

The US has been " extracted"

I don't know if you saw the video clip of this rant, but a month or two ago, Dylan Ratogan of MSNBC launched a good analysis of what has happened to our nation. he said he saw essentially what I have been seeing is true of our poor area in the southeast for decades now. Everything of value is " extracted", and nothing of value is returned.

Look at the mortgage meltdown and it's immediate consequences...twenty perCent pf,our accumulated net worth as a people was sucked out of us overnight. Pensions, portfolios, property values...POOF!
Granted, that was at least in part inflated values of homes, based upon the systemic corruption of appraisals and loans that NE er should have been written, coupled with lackadaisical oversight by the Mac couple, Fannie and Freddie.
I watch a lot of unsustainable practices, reflected in the truck traffic that passes our farm on the highway every day. Our pulp logs and mills have shifted largely from making paper, which is cheaper to mill overseas with national subsidies, to diaper fluff. We used to harvest logs for lumber to build houses...so, now we are down to Huggies.

Start looking at things with this sense of extraction in mind. It will start to pop out at you from every side, and it is a startling sensation when you start to take notice.
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k-289
Senior Advisor

Re: The US has been " extracted"

Kay---I never imagined the short sightedness  of our policy makers would accelerate into this financial wringing out we are witnessing as we speak---political ambitions have left the working class in the dust---the demonstrations at Wall street and other  places  being addressed by the "golden spoon folks" in Washington  as mobs and thugs might soon reevaluate  the goings on ---  for a lot of folks  "NAFTA"        Not A Fun Time in America   

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smokeyjay
Advisor

Re: The US has been " extracted"

Don't forget the ultimate extraction..... Casinos on every major highway and urban population center. 

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k-289
Senior Advisor

Re: Infrastructure rebuilding with bonds

I know a lot of "private " business that have "debt" and don't discontinue repair and upgrades to their assets ---2 billion spent per day in a war that isn't winable after 10 years is a good investment ? ? 

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kraft-t
Senior Advisor

Re: Infrastructure rebuilding with bonds

 The middle class and seniors are good candidates for secure bonds. They need a place to sash their meager savings where their rpincipal is protected and a decent yield is available. Interest rates are kept artificially low by fed action ansd it has been a huge negative forthe small timers that have $100K saved up. Unfortunately those folks have nbeen forced into higher risk ventures to get any reasonable return. Return they need to supplement their incomes.

 

Ironically capital investors can buy property or stock and let the gains grow exponentially without any tax obligations. Just like have a huge tax free IRA that is only taxed after a sale. Then if they do sell they get hammered a measily 15% while workers pay that much in fica taxes alone. And they think they are over taxed at that rate. Then if they never sell it and keep it until they die they may or may not be required to pay some inheritance tax. Currently after $5 million of exempt assets. Thus it is possible to avoid $4 million or more in capital gains. I have one farm bought a $105 K that would bring at least $750 K in todays market or CG of $645 K not taxed and will pass in my estate for zero taxes. And that is only one farm.

 

You might be able to sell your grain and replace them with grain contracts and hold them for 6 months or a year and take capital gains rates on those gains. You cannot do that with physical grains.

 

If everyone is getting more than minimum wage then their should be little oipposition to raising it. But there are plenty of opponents to such ans plan and they are against it for a reason. Gotta keep those peasants down.

 

NOw I don't think badly of folks tha make good money. We should want most people to be successful in life and inprove their standard of living. What I rejsct is a unified effort to keep people down and in some cases to lower their wages. And those quite successful folks that use their money to rig the tax code to favor themselves. There is no way that Warren Buffet should be paying lower tax rates than his secretary. But that is what the corporate dollar has done to buy our senators and representatives.

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Kay/NC
Honored Advisor

Re: The US has been " extracted"

Not to mentiion the drug dealers on nearlyevery corner. I drive by a particularly brazen bunch in the town where our postal office address is located.
About 95% of the time, I elect to drive the opposite direction for things we need, especially if it means getting out of my vehicle. When we lose this post office, I won't really miss it.
There are examples of extraction everywhere you look. Chinese theft of intellectual property, pirating our patents, then selling back cheap imitations. Oil company windfall profits in this economy. Healthcare costs that accrue to provide astronomical profits to pharmaceutical companies...I can rant for an hour or more on that one alone, after.a few months in nursing homes and hospitals as a nursing student.

Was it Lly Tomlin who said, " Even if you win the rat race, you are still a rat"?
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Nebrfarmr
Veteran Advisor

Re: Infrastructure rebuilding with bonds

I never said not to fix anything. 
What I am saying, is if we don't have the money now, how will borrowing more, at a higher interest rate than we are paying now, cause us to be able to afford it in the future.

I heard the argument that it gets the rich to 'pay their share' but a bond does no such thing.  A bond REWARDS the people who pay into it, by giving them all their money back, with interest.  That interest comes from........TAX MONEY....and that tax money comes from.....YOU AND ME.  The rich, who many think aren't paying enough in taxes already, will be getting interest on their money, paid for with tax money, from the working class.


All I am saying, is that on the Federal level at least, I don't think floating a bond is the way to go about it. 

A business with 'debt' should by all means make necessary repairs & upgrades.  However, if that business not only had 'debt' but had a negative cash flow for 34 of the last 35 years, who do you think would be lining up to lend them more money?

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