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Discussion: (47 comments)

  1. Che is dead

    Wait a minute, I thought that Bush only cut taxes for the rich. That’s what the Democrats and their sycophants in the media kept saying when they were enacted. Someone was lying.

  2. Per David Kotok at Cumberland:

    “Fiscal cliff is another fiction. We do not need to have expiration dates on legislation, tax policy, or spending mechanisms. Congress designs them to mature immediately following a national election. Again, this is a charade created by the scoundrels that we elect to serve us in Washington. In fact, Democrats and Republicans agree on this one. They coalesce into a common threat to us by purposefully choosing termination dates that follow hard on the heels of elections. They exploit the short memory span of the distracted American electorate. Shame on us for having such short memories.

    Now, we will witness both the debt-limit and fiscal-cliff debates; both charades are in play.”

  3. Che is dead

    Alice Rivlin worries that going over the fiscal cliff would demonstrate to the world that the U.S. cannot manage it’s fiscal affairs. Too late.

  4. Ah, just raise the top marginal tax to 91% already!

    I have no discipline at all when it comes to taking time off, so I could do with a huge disincentive to encourage me to chill out on St. Barth’s instead of chaining myself to my computer daily.

    Let those bleating for this crap get what’s coming good and hard. By the time they lose their religion and lower tax rates again, I’ll be ready to come back to work (rested) and the horror of the consequences of confiscatory taxes will be fresh in people’s minds.

    1. Che is dead

      “Let those bleating for this crap get what’s coming good and hard.” — Methinks

      “Nearly 6 in 10 young voters support bigger government — a worrisome statistic for conservatives who want to increase their presence on college campuses and among the under-30 crowd. According to the Pew Research Center, 59 percent of young voters think the government should do more — “The rise in young people embracing paternalistic government comes as no shock,” said Gabriella Hoffman, a field coordinator for the Leadership Institute, in an email to The Daily Caller News Foundation. “Most have developed contempt for free enterprise and limited government from their college professors who inject anti-free market, socialist and even Marxist views into their lectures.” — Daily Caller

      Agreed. Let ‘em have it, good and hard.

      1. morganovich

        see ya’ll in the Caribbean.

        grouper anyone?

      2. 59 percent of young voters think the government should do more..

        They better hope it does because I’m not doing a damn thing (that can be taxed). These idiots really think Obama will wipe their asses using Morgan’s and my hands. Fat chance.

        And thanks for providing yet another good reason not to send so many kids to the communist re-education camps…I mean, college.

    2. You can all head off to Galt’s Gulch if you like. My belief in markets is strong enough to to make me think we will survive the blow quite easily. You will find you are not as essential as you think.

      1. My belief in markets is strong enough to to make me think we will survive the blow quite easily.

        Nah. Your imbecilic belief is that the world is full of morons willing to slave for the state. You believe the world is full of altruistic idiots eager to be robbed.

        If I’m not essential, so much the better. The government will be less aggressive in trying to trap me in the United States and expropriate my property.

        1. OK, Methinks then do it. Go on strike in St. Barth’s. Deprive us of your services…or just keep endlessly threatening to do that. I wait in suspense to see which it will be.

          1. Incentives have always been a nut too tough for your meager tool to crack.

          2. If you can get all the enjoyment of threatening to do something without incurring any of the costs of actually doing that thing, then you have an incentive to just keep making empty threats, Methinks.

            Che, I hope you are able to escape to a freer land.

          3. Only an internet knucklehead like you would think he knows what I may or may not have already done.

          4. OK Methinks, I accept the possibility that you are now chilling on St. Barth’s and that the only thing keeping you chained to your computer is carpet bombing the blogs with pissy insults.

          5. LOL! What I love about you, Greg G, is that you have the imagination, the wit and the appeal of a mouldy prune.

          6. Incentives have always been a nut too tough for your meager tool to crack.

            “Meager tool”? Why are you discussing Greg’s manhood?

          7. Greg

            OK, Methinks then do it. Go on strike in St. Barth’s. Deprive us of your services…

            You are missing the point. Methinks and morganovich can provide their services from anywhere in the world. It is the taxes they pay that will be missed.

            If “the rich” aren’t important to the US economy, why is there so much incessant yammering about taxing them more?

          8. OK Methinks, I accept the possibility that you are now chilling on St. Barth’s and that the only thing keeping you chained to your computer is carpet bombing the blogs with pissy insults.

            Carpet bombing? I see nothing but precision strikes from here.

          9. “Meager tool”? Why are you discussing Greg’s manhood?

            thanks for that mental image, Ron H. I should unfriend you just for that. No, I was talking about the slop between his ears.

          10. You are missing the point. Methinks and morganovich can provide their services from anywhere in the world. It is the taxes they pay that will be missed.

            You’re right, Ron. However, I can easily work a lot less and earn a lot less without it effecting my consumption. I can (and have) also re-arranged some of my income to reduce the tax burden. So, I’ll spend more time in St. Barth’s (that’s not random either. I just rented a house there) and less time in the office next year. Everyone I know – and I know mostly business owners – is doing the same.

          11. In other words, you don’t have to immigrate out of the U.S. to lower your tax burden and still live the good life. I can actually lower my tax burden to as little as 4% with little effort. Taxes will factor a little but are not the reason I’ll leave if I go.

          12. Part of me is really glad that Methinks is taking the actions she’s taking, because she is someone I admire greatly. Another part of me is afraid of this action, because if all of the “Methinks” in the US take her actions, I will then become one of “the rich”, the State’s target is moved to my back, and I don’t have her ability to escape as relatively easy or unscathed.

            Overall, though, I am glad Methinks can take those actions, because I WILL find a way out, and I’ll chortle with glee that Greg G, Yasafi Balella, and the rest of the upper middle class Regressive scum will also become part of the Eeeevil Rich and we’ll see if they will really work as hard for total strangers as they will for themselves, or if they are the muirpocrites I believe them to be.

          13. thanks for that mental image, Ron H. I should unfriend you just for that. No, I was talking about the slop between his ears.

            Oh THAT tool. OK. Got it. :)

          14. morganovich

            this is actually quite a straightforward calculation greg.

            for those of us with a portable skill set and significant resources, we face some choices.

            i like living in the US. i suspect that you do too.

            however, there is a price at which i will leave. like any product or service one enjoys, there is a point where you would deem it too expensive.

            perhaps you like porterhouse steaks. so do i. but at $100 a pound, i’m not going to eat them.

            neither, i suspect, would you.

            i also suspect there is a price at which you would willingly leave the US. what would you need to be paid?

            $50k a year? 100k? $1million?

            we both know you have a price, it’s just a question of what it is. i suspect it is far lower than mine.

            for all your posturing and pretense, you seem to be utterly unaware of what you are talking about. many of us have already taken steps toward such strategies.

            i have dual citizenship. i am giving serious thought to giving up my us passport and just never paying income tax again. i suspect that you could be paid to leave the us for far less than the annual benefit this would provide me.

            i am also structuring assets to be more tax efficient here and moving to strategies that generate lower taxable income or at least defer it for extended periods.

            previously, this was not worth the time and expense. now it is. increase the price of a parking ticket, and i am more likely to park in a garage, right?

            why would this be any different?

            you seem to be looking at this the wrong way. at subsistence level, maybe i would need to work more hours if my take home pay dropped. but that is not how the 1% works. i could retire right now. my decision is about reservation wage. how much take home pay do i need to be bothered with work as opposed to drinking rum punch with methinks on flamands beach?

            with 1% of taxpayers paying 40%+ of tax, it would not take much of a change in behavior to generate a big drop in revenues.

            based on your commentary i am willing to bet that you do not pay much in taxes. i suspect that this is why your perspective on this is so off and you think in terms of subsistence instead of reservation wage.

            note that even good old warren, the lying through his teeth sage of higher taxes is a bald faced liar on this issue.

            WB is just talking his book. he wants higher cap gains taxes and taxes on the rich to make life insurance look more attractive as a wealth planning tool (which is how it is primarily used, especially around inheritance tax).

            as the old adage goes, watch what i do, not what i say:

            http://www.forbes.com/sites/realspin/2012/11/30/buffetts-billions-cant-buy-him-exemption-from-his-tax-averse-past/

            buffet has about as much credibility on these tax claims as elliot spitzer had cracking down on hookers.

          15. morganovich

            also worth noting:

            this is not all about a “i don’t want to pay such high taxes” issue, even thought the rich in the US already pay a higher % of tax relative to income than any nation in the oecd.

            it goes past this and past the annoyance of being consistently vilified and accuse of not paying a fair share despite paying more than anyone in the oecd.

            some of this is about not wanting to be on a ship that looks determined to hit an iceberg.

            the US is dangerously close to the point of no return on fiscal irresponsibility. stop looking at the reported deficit and try looking at the GAAP deficit that includes liabilities not yet incurred. it’s somehting like $5 trillion.

            no ask yourself: do you see the political and fiscal fortitude and sense anywhere in the us government that is going to take the pain needed to reverse this?

            then ask: is that someplace to which you would like to tie your next 40-50 years of economic fortune?

            do you feel like tax dollars are well spent here? do you feel like we have a fiscally responsible government? do you see anyhting likely to change this absent a severe crisis?

            the dollar has lost about half its value vs stable currencies (like the swiss franc) over the last 12 years.

            ready to do it again and again?

            giving up us citizenship is a pretty thermonuclear choice and certainly not one i would take lightly, but everyone has a point.

            what i can tell you is this: try getting an appointment with a lawyer that handles citizenship right now. they are booked solid with folks looking at ways out. whether and if the actual exodus will take place is anybody’s guess, but when the smart folks on a ship are all putting on life preservers, it’s worth paying attention.

          16. morganovich,

            So why then didn’t you guys leave years ago when rates were much higher than those being discussed today?

          17. Ditto for me. I’m only a little older than Morganovich and my story mimics his – although I have a very profitable business that is taxed at the much higher income tax rate. I’m having a very hard time justifying paying that tax when I can do the same thing anywhere else in the world and all of my family is in Canada, Africa and Europe. Plus, it’s really difficult to trade in Asia from here because of the time difference. Europe is perfect for that (and no, we will not be paying higher taxes in Europe since we won’t be citizens).

            Like Morganovich, I have a highly portable business which I have worked to make more portable (I can now literally connect to my office and trade from a beach in St. Barth’s, a moving car, or anywhere else). I could just move the whole thing to the USVI and reduce my tax burden by more than 90%, pay zero on my investment income and remain in the U.S. I’m sure Morganovich knows what I’m talking about since hedgies have been doing that for years.

            And, btw, stuff like this explains why higher top marginal tax rates don’t increase tax revenue. But it does mean that I have to think about avoiding taxes rather than building my business and that’s not the game I enjoy playing (I prefer “ole” with Morganovich’s orders. Sorry, man, I just couldn’t resist).

            Taxes aren’t the deciding factor. Regime uncertainty is a far bigger problem for me, as is the trajectory of government spending and the changing culture. This thing is going to get very nasty and when it blows (likely in my lifetime) it’s going to be uglier than Americans can imagine.

            Before, the price I paid to be in the USA – distance from family and taxes higher than what I would otherwise have to pay – used to be worth it. Now, there’s a very slim chance I’ll remain.

        2. morganovich

          greg-

          i started working in 1994. back then, my income level was lower and i had far fewer options anyway.

          now my income is much higher, i own the businesses that i work with, and i am very portable.

          i make most of my income as long term capital gains.

          at no point in my career in which i had any cap gains income to speak of have rates been anyhting like as high as they will be next year. the jump from 15% to 24% will increase my tax bill by 64%.

          so you tell me greg, how would you feel about paying 2/3 more tax next year? you excited to do so?

          ple4ase feel free to join me if you like. the treasury does accept donations you know.

          of course, i am not going to pay that much. i will use more tax efficient strategies. i will avoid actually realizing gains and push the bill forward. i am seriously considering leaving.

          so, you never answered my question: how much would you need to be paid annually to live outside the us for 260 days a year? i continue to suspect that your answer is less than my tax savings.

          further, this time is a bit different. the last time we had a 20% cap gains tax was in the 90’s and it was dropping. US finances seemed to be improving if not becoming truly reasonable.

          now we sit on the precipice of fiscal insolvency. been watching the debt load? how about the fed balance sheet? seen the deficits? seen how punk the economy is?

          i’m just less and less sure this is going to be a stable place to live and earn. the US was, for decade upon decade, the best place in the world to get rich. i’m far less clear this is true anymore.

          the US regulatory and fiscal regime are heading in the wrong direction. we are painted into a corner from a monetary standpoint. just what am i getting for all this tax? surely you do not believe that 25 years from now when i become eligible, all this social security and medicare i have paid for will look anything like what was promised, and next year i will be paying FAR more into it.

          4% on cap gains will wildly exceed even my maxed out payments on normal income to pay into systems that will be defunct before i can use them.

          should i be excited about that deal?

          so, the simple answer to your question is this:
          rates have never been so high for guys like me. the last time they were even close, i was not earning at anyhting like this level nor did i posses the ability to move easily and the cash to buy foreign citizenship, which is not cheap.

          the us was not going of the rails fiscally and monetarily. we did not have a fed and federal government that have mistaken the brake for the gas. greenspan was a disaster as a fed chair. bernanke is much, much worse.

          we have lurched from bubble to bubble for 15 years. the current federal debt bubble is going to make the last 2 look like walks in the park when it bursts.

          so that’s what’s different.

          the promise is not here, and i am getting asked to pay more to prop up the polices that are causing the problem.

          it feels surreal to talk about leaving the us to go find some economic freedom, but there you are. at a certain point, you just say “why i am doing this” and you leave.

          i have several friends already doing so.

          i probably need to be in the US for 2013 to get some stuff closed out and handled, but in 2014, i’m not so sure i’ll stay.

          there are lots of nice places to live in timezones where you can trade US markets.

          at some point, it’s just cost benefit, which brings me back to my question:

          what would you need to be paid to leave the US?

          1. morganovich

            I know you are not going to believe this but there is no amount of money you could pay me to leave the U.S. I am retired and have enough savings and investments to easily meet my needs for the rest of my life. The marginal value of a lot more money to me just doesn’t compare with the benefits of staying here. I expect if I was living in poverty I would feel differently. Then being paid a lot to leave would be more appealing.

            I have no trouble believing that not everyone shares my values. Why do you have so much trouble believing that not everyone shares yours? We all value different things differently and that includes money.

            I don’t doubt that some rich people will leave if taxes are raised and I don’t doubt you may be among them. Of course you should be free to make that choice. I wish you well. I just don’t think it will be as catastrophic for the rest of us as you do. The rich have always been the most free to go where they want. I don’t have a problem with that.

          2. Greg G,

            You have a remarkable gift for transparently changing the argument so that you can slay a straw man.

            Neither Morgan, nor I nor anybody else on this blog argued that we as individuals are “essential” to the U.S. That’s your straw man. Unless, of course, you buy the idiotic political argument that it is essential that high earners subside the consumption of the middle and lower class. In that case, the high earners are by definition essential.

            I very much hope the government doesn’t start eying me as “essential” because when governments do that, they tend to imprison those “essential” people to keep the slaves from running away from the plantation.

            Our criticism of you is that you don’t understand incentives. You cannot imagine why somebody wouldn’t want to leave just because your beloved state wants to rob them.

            You made that argument on Econ Log, where you insisted that all these firms that are reducing full-time workers in order to avoid the avalanche of Obamacare costs are merely trying to blame the poor, innocent government for doing what they would have done anyway. Your arguments are consistently ridiculous.

          3. morganovich

            also:

            we founded our hedge fund in 2003. since that time, the only cap gains rate we have experienced has been 15%. that makes next year 64% higher than anything we have experienced over the life of the fund. if you think a 64% increase in costs is somehting not worth reacting to, then best of luck to you.

            this means paying out an additional 9% of income every year. that’s no joke.

            the difference gets really dramatic when you compound over a decade or so as you pull out money to pay taxes.

            keep in mind:

            keep in mind – the only other time cap gains were hiked in the US was long before the internet era. in the 70’s, people were still very much tied to locations in a way that is simply not true anymore. capital and individuals are far more mobile than ever before.

          4. morganovich

            greg-

            you’re right. i do not believe you. for a billion dollars, you’d go, and we both know it.

            i never said we did not all have different prices/values. you are just jousting at straw men there. sure, we all have different prices. we value different things. we may call different incomes “comfortable”.

            that’s my whole point.

            but believe me when i tell you, lots of people are thinking about this the way i do. i know them. i talk to them about it. i know an enormous number of people looking into foreign citizenship. we all talk all the time about how to respond to minimize the effects of this tax hike. i am shifting ownership of assets i suspect i will sell next year to new entities to pay the tax on gains NOW and reset my basis price. that’s going to come out of future tax.

            there are a number of other strategies that will not detail here, but i’m going to a lot of trouble over it. it all comes down to how much trouble are you willing to go through to shield income. at 15%, the amount of trouble is X. at 24%, that number goes up considerably. there is no shortage of clever tax lawyers. i am now willing to hire more of them because the price for not doing so goes up.

            bottom line: methinks is correct. you lack even a basic understanding of incentives. this is not about being “essential” it’s about being a milchcow to fund an increasingly ricketly looking government and having to pay more to get less. at a certain point, it’s cost benefit.

            oh, and FWIW, i am not “free” to make that choice. giving up your US citizenship is VERY expensive. even leaving aside the costs of acquiring a second citizenship, the act of renouncing US citizenship is a taxable event. every asset you own is treated as sold and taxed before you are allowed to leave.

            perhaps the US does not feel i am essential, but it sure seems to feel like my money is.

          5. morganovich

            greg-

            let’s use a really simple example:

            imagine a bottle of chateau morganovich Cabernet.

            this is a fine bottle of wine and one we both like.

            perhaps you would be willing to pay $50 for it. perhaps i would pay $100. that is the difference we place in value.

            let us say the wine changes. the new vintage is not nearly as good.

            neither of us likes it as much.

            then let us say, that in its infinite wisdom, chateau morganovich increases its prices.

            so, does that make it more or less likely we will want to consume it?

            to make matters worse, many other wineries had a great year, improved quality, AND dropped their prices.

            now what are we likely to do?

            no go back and replace “chateau morganovich” with “the us”, the prices with tax rates, and “other wineries” with “other countries”.

            perhaps now you see what we are driving at.

          6. Methinks

            Interesting that you mention straw men. My claim was not that you thought you were essential “as individuals.” That is your straw man. That is why I said “You can ALL head off to Galt’s Gulch if you like.” The word all signified that I realized it was a collective effect that you were talking about.

            As for the Econlog argument you were talking about, it was not about the effect of Obamacare on “all” firms. That is your straw man. It was about one firm in particular. That was a firm that was at 75% part timers before Obamacare and was looking to blame that on Obamacare. It was an argument about whether or not the effect could have come before its cause.

            And by the way, what’s the big deal if it is so easy for you to reduce your tax bill to 4% while staying in the U.S.? How much lower than that could it be? Will we need some kind of earned income tax credit for the rich to make you stay?

          7. Greg G concludes: “You will find you are not as essential as you think.”

            Did you not realize it’s pretty easy to fact-check, tiresome old geezer?

            I’m not going to continue your Econ Log foolishness because I have learned long ago that once you dig in and insist black is white, it’s pointless to talk to you. For those who might be foolish enough to take you at your word, the argument was about incremental, not total part-time workers. Incremental as a result of obamacare. It was you who, having lost the argument, decided to redefine to try to fool yourself.

            You have no capacity to think at the margin and you cannot understand incentives.

            And by the way, what’s the big deal if it is so easy for you to reduce your tax bill to 4% while staying in the U.S.?

            Did you really just ask me that after I explained to you. Repeatedly? Holy shit.

          8. morganovich

            greg-

            as methinks pointed out, you now seem to have veered off into outright lying and in a very provable way.

            “You will find you are not as essential as you think.”

            was part of your opening salvo here. it’s in print man. did you seriously think we would not scroll up the page?

            at this point, i join mehtinks in wishing you happy trolling. it’s clear you are now trying to wiggle out of all the foolish things you said by lying and trying to misdirect the discussion down some rabbit hole.

          9. In English the pronoun “you” can be singular or plural. When the speaker says “you can ALL” in the same context, you can tell from context the intent was plural.

            If only your scrolling up skills could have taken you up one more sentence that would have been obvious.

      2. Che is dead

        “You can all head off to Galt’s Gulch if you like … we will survive the blow quite easily … you are not as essential as you think.” — Greg G.

        “The Senate Budget Committee reported that in 2011, state and federal government spending on 83 means-tested welfare programs, not including Social Security or Medicare, cost $1.03 trillion. And these expenditures are burgeoning. The Congressional Research Service found that between 2008 and 2011, federal spending on welfare programs increased by 32 percent. The Heritage Foundation has reported that over the next ten years, the U.S. will spend twice as much on welfare as national defense.” — National Review

        I think that you’ll find that productive people are, in fact, essential to this scheme. The communists weren’t building walls simply as a works project.

        Nothing so encourages the slaver as the chattel who wears his chains with a smile.

        1. Che is dead

          With regard to the U.S. spending twice as much on welfare as national defense over the next decade, isn’t it interesting that welfare spending didn’t make it onto the WSJ’s whiteboard?

          1. Spending more on being able to help people than being able to kill people? That sounds awful.

          2. Greg G, your heartfelt concern for the Taliban and Al Qaeda is touching.

          3. Che is dead

            “Spending more on being able to help people than being able to kill people? That sounds awful.” — Greg G

            The average U.S. soldier helps more people on his day off than you will in your entire miserable life.

            Having said that, I’m perfectly willing to see the defense budget cut as long as those who advocate for it are not allowed to escape responsibility for the result.

            You want to spend less on military R&D, equipment, staffing and training, fine, by all means cut away. And when inevitably conflict arises, and Americans must engage in combat we will impose a draft and send you and/or your children to fight without the benefit of that investment.

          4. Paul says:

            Greg G, your heartfelt concern for the Taliban and Al Qaeda is touching.

            That brings to mind an interesting thought. I seems the Talliban and al Queda are able to resist Us military efforts, but would no doubt be destroyed in a generation if allowed to “benefit” from the level of welfare spending provided to US citizens.

          5. Che is dead,

            I mostly agree with you. The government could take defense spending to zero and it would still be spending more than it confiscates. “Entitlements” must be cut. I have yet to hear a Regressive agree to return to Clinton-era tax rates AND Clinton-era spending.

            However, there is room to cut defense spending without affecting preparedness. We have a multitude of bases in Europe that could be consolidated to Malaga, Spain and/or Naples. Similar consolidations could be made in the Indian and Pacific Ocean theaters.

      3. I think the “rich” will have a strong belief in markets too. Foreign markets!!

        http://www.telegraph.co.uk/news/politics/9707029/Two-thirds-of-millionaires-left-Britain-to-avoid-50p-tax-rate.html

  5. “In other words, you don’t have to immigrate out of the U.S. to lower your tax burden and still live the good life. I can actually lower my tax burden to as little as 4% with little effort. ”

    So then this 4% rate is too oppressive? Too funny. This is like something from The Onion. We can only imagine the levels of insanity that paying middle class tax rates would drive you to Methinks.

    1. Moron, are you afflicted with dementia or is just stupidity? I told you in that same very short post that taxes are not THE deciding factor for me.

      To bang out the above response you are either 1.) an imbecile or 2.) an unskilled liar to dumb to realize that the comment from which you quote is still published on the same thread. You’re one or the other. Which is it?

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