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Nebrfarmr
Veteran Advisor

Re: Infrastructure rebuilding with bonds


@kraft-t wrote:

 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.

 

As I understand it, many bonds don't pay the interest until maturity.  I think this might make it not the best investment for a senior citizen with meager savings.  Suppose the bond is on a 20 year term.  Grandpa retires, say at age 68, and puts some of the money he got from his machinery sale in bonds.  If he is 86 years old, and needs some of the money, the bonds will give him a net return of 0%, if he cashes them in early.  It would really only benefit those who were financially secure enough to know they would never need the money for that period of time.   Now, if the bonds paid interest out every year, that would be a different story, but most of the ones I have seen, don't do that.

 

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.

 

I see your point exactly, they can get the gains tax-free if they play their cards right.  I always thought that in SOME cases, capital gains should be taxed MORE than regular income, because they are not gains from working, they are just gains that are made on the increase in value of an asset.  Millionaire tax-shelter style annuities come to mind, especially those that are set up so they are guaranteed to grow faster than the rate of inflation.  Any gain above inflation should be 'income' in my mind, because the investor is protected from any long-term loss of any kind, over time.

 

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.

 

I think you are right, but why do the traders in Chicago have to get their cut of it, for it to be able to work that way?  Political connections, perhaps?  Lobbyists?

 

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.

 

I'm not against raising the minimum wage, per se, but what do you raise it to?  If you raise it too high, there are pimple-faced high-school kids who won't be getting hired at all.  Also, there are some people whose work just isn't worth minimum wage, either.  What scares me, are the people who want minimum wage raised high enough so someone can 'raise a family' on minimum wage.  I don't feel minimum wage was designed for that.  It is so that someone who might not have enough life experience to not be taken advantage of, such as high school kids, can know they will be getting at least a minimum amount of work for thier time.  Maybe if Congress could agree on a number, and then have it automatically index every few years, to inflation, so that minimum wage has pretty much the same buying power over time, I'd not be against that.  In the little bit of research I did on it so far, I can't say I was in favor of the way some want to do it.

 

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.

 

The reason Warren Buffet pays lower tax rates than his secretary, is because his salary is lower.  The rest of his income is either in capital gains, or in tax-shelter trusts.  He is a prime example of someone who is under-taxed.  While he is very good at investing, and creating wealth, he actually doesn't PRODUCE anything.  He buys into companies, who have other people do the producing for him, and then reaps the benefits of their work.  He is an absolute GENIUS at what he does, probably better at it than anyone else in the world, but as far as personally producing a product, I don't think he does.


 

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bruce MN
Advisor

I believe this is what you are referring to

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k-289
Senior Advisor

Re: Infrastructure rebuilding with bonds

Found it interesting when the wife renewed her nursing licesne that the fee for renewal went up @ 50% in 2 years although I live in a state that has the Governor saying I haven't  raised  taxes---Nebrfarmr probably has also heard this same statement and with the reports of the nursing shortage why raise the fee's or isn't a fee to the state a tax?

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k-289
Senior Advisor

Re: Infrastructure rebuilding with bonds

Priced a new Toyota Tundra crew cab limited and it was "$46000 plus"---"no union" labor involved except for the shippments made on the UP and BN track in and out of the plant---business news will confirm these numbers on several fronts although the state of Texas granted the company $134 million in concessions when built---"was there and helped" with the bridge installation on the RR track into the facility --- so where is the cheap on a none union pickup and all of the business of paying your own way? ? 

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Nebrfarmr
Veteran Advisor

Re: Infrastructure rebuilding with bonds

I agree, I keep hearing that 'taxes didn't go up', and we need to 'raise' taxes first, and cut spending later.  I think cut spending first, close loopholes for the bigwigs, and well connected, and raise taxes only if absolutely necessary.


And don't forget Real Estate taxes.  They claim around here, that they haven't 'raised' real estate taxes for a few years.  What that means is they haven't raised the LEVY.  With farmground going up and up, they leave the levy alone, every farmer and rancher sends in a bigger check than the year before, and they find a way to spend it.  I just wonder, if prices drop, and land values drop with them, if they won't be addicted to the new spending, and raise the levy, in order to keep the money there for all their pet projects.

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k-289
Senior Advisor

Re: Infrastructure rebuilding with bonds

Nebrfarmr--What about the price of a non-union built pickup and tax incentives of the non-union truck plant in Texas ? I compare the Tundra with the Ford 150  or Chevy 1500 --level playing field O.K. 

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wt510151
Senior Contributor

Re: Infrastructure rebuilding with bonds

Do you honestly believe that the county assessor (or state assessor for those without one) will really reduce property values? For one, it will take at a minimum 3 years of dropping values of land sales to be included. They can also say that the reduced values are flukes and kick them out. Can you imagine if everyone protested their valuation? That would be a mob.

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Kay/NC
Honored Advisor

Re: I believe this is what you are referring to

Yes...everyone should take five minutes to watch it. 

 

Then we can all shout, AMEN!

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k-289
Senior Advisor

Re: I believe this is what you are referring to

Whether it's at the "state capital" or the "beltway in DC" they just act like "what a surprise" people are out there asking questions and holding signs ---

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Nebrfarmr
Veteran Advisor

Re: Infrastructure rebuilding with bonds

Oh, don't get me wrong, I fully agree that the Union labor makes a pickup more expensive.  But the question was why a new pickup is so expensive, not why a F-150 is pricier than a Tundra.

If you could build a pickup, that didn't need to meet every regulation out there, it could be quite a bit cheaper, as well.  I can remember when you could get a car with or without 'California Emissions', which added about 10% to the price of the car, depending on the model.  That tells me, that the cars without it, could be built 10% cheaper. 
Now, I'm not railing for getting rid of emissions equipment, I'm merely pointing out, it adds to the cost of a car or truck.

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