The New Economy

With the Elimination of Federal Income Tax, inequities in the Capital Gains Tax will have to be addressed. The best thing for the economy is to discourage short term speculation. this is what led to the 1929 crash. This can be best accomplished by punitively taxing short term (flipping a stock within 30 days) capital gains at 75%. Before all you day traders jump down my throut, consider for sec why this is important. The worst crashes have always happened when new money which has no idea how the market works, enters in a short term, speculative manner, quickly inflating then poping the bubble. Punitive short and medium rates would go a long way towards combating this constant danger. Medium term (30 days to 6 monthes) would be taxed at 50%, Long Medium term (6 monthes to a year) at 33%. Long Term (at least one year) would stay at 20%, with the addition of Long Long term (at least five years) rate of 10%, a Decade(at least 10 years) rate of 5%, and a Freedom rate of 1% after holding an equity for at least 20 years (All these rates starting from 2001). Rampant speculation would be chilled and the long term safety of the economy would be encouraged. :0) [This message has been edited by renots (edited 08-19-2000).] __________________ Do you ever get out of the house? j/k __________________ Ay, ay, ay, can't wait for wireless broadband ;0) __________________ How is it that in one breath, you support an article which blames stock market crashes on Alan Greenspan's speeches - yet in another breath, you blame stock market crashes on rampant speculation?? If you remember, in the article you posted to start the Greenspan thread, blame was placed on Greenspan's comment on "irrational exuberance" (I could go much further into the basis for that comment, but I would be typing forever, and I really have no desire to do that, so I won't . . . but the question remains . . . )- What is it that you blame??? Is it Greenspan?? Or is it what Greenspan has commented on and is trying to correct??? (And if I do say so, has done a very commendable job of correcting and landing the economy safely) It seems you're VERY quick to blame things on TPB (as you put it) even if it's not their fault, yet you're unwilling to admit their successes. Please keep a straight story if you're going to continue. __________________ I can understand how those who are presently profiting from short term speculation would not like this idea. All I can say is the 20th century is quickly drawing to a close and I think we might be in for a few changes for the better in the 21st. ;0) __________________ What's "broadband" mean? __________________ quote: Originally posted by reagancajun: What's "broadband" mean? DSL or T1 type access over a wireless connection __________________ Yeah, that's what I thought. Ummm. What's all that other stuff. Nevermind. I'll never understand computer stuff. Thanks anyway. __________________ The glaring inconsistencies betwixt this and the Greenspan thread aside, I wholeheartedly agree that short term speculation is a dangerous activity. That said, I think using taxation to legislate acceptable behavior has always been and will always be unacceptable. In this case, in particular, you are attempting to tell a supposedly free market what an acceptable investment strategy is and is not. I don't think most investors, whether they agree with you or not, would rationally support such a measure. I know in previous posts you've attempted to defend acceptable means for an acceptable end. I see this as an unneccessary infringement upon financial freedom/right, re: unacceptable means for a positive end. __________________ quote: Originally posted by pennypinch: I see this as an unneccessary infringement upon financial freedom/right, re: unacceptable means for a positive end. I see your point , but I would also see punitive short term taxation as a necessary step towards eliminating most forms of Federal Taxation which tend to take more from the average person than they give back. Or is this debatable? We also must consider the delicate balance between Casino and National store of wealth that the Financial Markets play. A 75%(or even 66%) punitive short term rate would not prevent short term trading, just take most of the incentive out. Do you deny that most of the 'Robber Barons' of the modern age like Soros have made their Billions from very short term hedging and speculation that have transferred wealth from the very many to the very few? This is what the current rules encourage and reward. Seems to me we should be encouraging more people to buy and hold(for at least a year) stocks rather than pushing the very destructive perception that the Stock Market is a Casino. This would allow the markets to grow at a more steady rate with less destructive massive short term movements like we all to often see today. At the same time people that invested in or worked for good, innovative companies that would create new non-inflationary wealth would not see their good efforts wiped out by a bunch of unprincipled speculators, people with no vision (like visualGONAD) except to make a quick buck. :0) __________________ The fact remains that its an overtly paternalistic approach to investors. Frankly, those ugly market shifts we see from time to time are definitely temporary, the 1929 and 1982 crashes notwithstanding. These massive shifts are their own deterrents to short term investors, who can get wiped out in a real hurry if they jump in at the wrong time. Another, more problematic, outgrowth of your proposal is that it throws the baby out with the bathwater. For an investment plan that has a short-horizon component, the quick trades and speculation is something to subsidize the "riding out" of rough patches. For the sound investor that plunks a large amount into a low-beta stock that might have some "turbulence" and then moves the rest of his capital in and out, it penalizes the short term investments, which may be very well researched. Imagine a situation where you saw the opportunity for a nice return in a short period. Now most of that return is taken by the government. That means you have to draw on your long term investment (assuming a finite pool of assets ) in order to make the return you would have made sans tax. It actually promotes short-term investing, in a diabolical way! __________________ quote: Originally posted by pennypinch: That means you have to draw on your long term investment (assuming a finite pool of assets Not if long term rates were attractive as in my proposal. I see room for adjustments (perhaps a 50% rate for trades within 14 days, 33% from 15 days to 365 days, etc.) Yes, Short Term Investing is fashionable and profitable but so was the chattel slave trade. In the end I think the American People want an economy based on fair principles where those with more are not constantly rustling up and exploiting those with less. :0) __________________ Just because SOME people have made fortunes daytrading does not mean that it is a mechanism for "slavery" (which, by the way, is an abysmal comparison). You're making the exception the rule. Additionally, the stock market is not the one-winner game you portray it to be. An individual running on a stock needs other investors to make it happen. So long as these investors are playing it less aggressively than the big fish, they win too. The fact of the matter is that having less does not entitle one to less intelligence. Getting "rustled up" is more a function of being stupid than having fewer assets. You're trying to kill a rat with a sledgehammer, and taking out all the ants too. __________________ quote: Originally posted by pennypinch: Getting "rustled up" is more a function of being stupid than having fewer assets. It is a function of Listening to the Media and not Thinking for Yourself, but then I guess that is a prime example of Stupidity in action. :0)