Here come the tax hikes

[Unique_Carpenter]

Similar to nyse, cobt has gone computer. Even though the floors are open, most goes through machines. So the sidewalk foot traffic is thin. But, it will come back.
The Kansas City Board of Trade sold out to the cbot parent at a good time. It was fun back then figuring out which floor agent(s) were buying Kansas wheat for foreign govts.

Btw, Midnight, reading the sanitized fed reports that are put together by folks that report to politicians is amusing most of the time. Their data is usually several months late, full of disclaimers, is full of barely connected historical events, and does not reflect current week reality. The phrase reflation is their excuse as to why prices dropped a few months ago. It's like they spin the wheel on a board game. My point is that when buying a zillion tons of metal, I want today's price. Not last months, not last years, etc. When it gets delivered is the fun part. One of my guys is in Chicago today and tomorrow. We're dealing with what gets delivered this fall. There's no Fed report that even remotely presents this activity, except in hindsight.

[Tiny]

Originally Posted by CaptainMidnight

Check the track divergence between the 5-year breakeven and the 5-year, 5-year forward:

https://fred.stlouisfed.org/series/T5YIE

https://fred.stlouisfed.org/series/T5YIFR

Notice something interesting?

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The WTI crude oil NYMEX strip at the end of June, 2003 indicated the front month futures contract would close at around $24 per barrel five years later. It actually closed on June 30, 2008 at $140 per barrel.

That said I'm not going to bet against Pimco, the Fed, Bridgewater, CaptainMidnight, and whoever else is setting prices in markets for Treasury Securities. They're a hell of a lot smarter than I am.

[bf0082]

Originally Posted by Tiny

The WTI crude oil NYMEX strip at the end of June, 2003 indicated the front month futures contract would close at around $24 per barrel five years later. It actually closed on June 30, 2008 at $140 per barrel.

That said I'm not going to bet against Pimco, the Fed, Bridgewater, CaptainMidnight, and whoever else is setting prices in markets for Treasury Securities. They're a hell of a lot smarter than I am.

I took a World Geography class in 2001 and our professor wouldn't stop mentioning the impact of the Chinese on the World Market for their huge population and growing economy, he kept talking about high wheat and gas prices due to the Chinese Demand,....

How on earth would a company predict worthless petroleum when China was such a force on the World Market, the only thing that saved oil from $200 a barrel was Fracking became profitable while oil sells for over $80.

I'm blown away on a $24 prediction while war was going on since March 2003, did they think the USA was going to steal the Iraq oil ?

[rexdutchman]

Got my check , NOW sending back + a lot some in TAX"S brilliant

[Texas Contrarian]

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Originally Posted by Unique_Carpenter

Btw, Midnight, reading the sanitized fed reports that are put together by folks that report to politicians is amusing most of the time. Their data is usually several months late, full of disclaimers, is full of barely connected historical events, and does not reflect current week reality. The phrase reflation is their excuse as to why prices dropped a few months ago. It's like they spin the wheel on a board game. My point is that when buying a zillion tons of metal, I want today's price. Not last months, not last years, etc. When it gets delivered is the fun part. One of my guys is in Chicago today and tomorrow. We're dealing with what gets delivered this fall. There's no Fed report that even remotely presents this activity, except in hindsight.

Whoa, Nellie! What in the wide world of sports are you talking about? In your last post, you stated that reflation is a "disregarded" term. As I pointed out, that's laughably ridiculous. The term is used all the time in the investing/trading world, as well as in macroeconomic policy discussions. If you didn't know that, you haven't been paying much attention. Then, in your post from this thread, you babbled about how the "phrase" [sic] reflation is somehow a Fed "excuse" for past irresponsibility or malfeasance. Huh?? How does that remotely make sense? (Hint: it clearly doesn't.) Maybe you're just hell-bent on finding some argument, no matter how fatuous it may be, as to why the word "reflation" is inappropriate in any context. Keep searching!

In the rest of that confused, word-salad-style non sequitur, you mused about how you find "sanitized," bullshit Fed reports "amusing." Truth be told, I do too! But that's not remotely what I posted, is it? (Of course not.) If you had been paying attention, that would have been rather obvious to you.

In fact, my earlier link was to data compilations of the breakeven and the 5-year, 5-year forward. In other words, a report of data taken directly from Treasury -- facts, not some Fed lackey's opinion. If you wish to gain a better understanding of economics, finance, or markets, you need to learn the difference.

Maybe I'm just being a little too picky. Aside from those little details, your post was spot on!

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[Texas Contrarian]

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As the $1.9 trillion "everything bill" has been signed and sealed, soon enough we will see a few more details of progressives' new tax proposals. And they will surely be as unserious as everyone expects.

Biden backed himself into a corner, of course, by promising that no household earning less than $400K/year will see a tax increase. Only someone suffering from an extreme case of innumeracy could possibly fail to see that income tax increases limited to high income earners would cover no more than a very tiny fraction of every deficit dollar.

Then there is the Sanders/Warren "wealth tax," a great favorite of Saez and Zucman, who also think an 80% marginal income tax rate is just fine and dandy. Also in their ideological camp is Professor Piketty, who apparently failed to notice that the idea didn't work so well in his native France and was jettisoned a couple of years ago. But empirical evidence never seems to stop some of these IYI economists from charging straight ahead.

Additionally, one thing almost all finance journalists fail to note about the "wealth tax" is that it would almost certainly chase a trillion dollars or so out of the publicly-traded equity markets and into private equity, which isn't so easy to value by IRS agents. Policymakers might want to have a huddle with themselves before undertaking action that would disincentivize investment in the public markets and thereby nick their valuations by a couple of percentage points or so, since these assets undergird many public-sector pension plans.

Other than those on the far left, almost no serious policy analyst thinks the wealth tax is a good idea, since it wouldn't raise more than a small fraction of the revenue estimate claimed by its supporters, and at the cost of imposing a significant amount of deadweight loss on the economy.

The corporate income tax will likely be raised at least a few percentage points, although not nearly to its previous level of 35%. Manchin is on record saying he wouldn't like to see it raised to higher than 25%, as he understands that if we move it out of the range within which we're close to the OECD average, we'll only hamper our global competitiveness. But this won't raise much revenue as a percentage of our projected deficit, either.

Then there's the capital gains tax, one of the favorite targets of progressives, who seem never to remember that selling assets is in the great majority of cases completely optional. Look at a long-term graph of realizations plotted against the capital gains tax rate, and that becomes perfectly clear.

Of course, the whole discussion will be completely ideological and have nothing to do with any serious discussion of getting back to some semblance of a sustainable debt accumulation trajectory. The 500-pound gorilla sitting right in the middle of the living room is the simple fact that if policymakers want to make any headway on future deficit reduction, they'll have to soak the middle class -- big time!

Who cares whether trend deficit spending levels a couple of years from now are $2.0 trillion, say, or "only" $1.9 trillion?

There are midterm elections to be won in 2022 and another big prize at stake in 2024!

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[oeb11]

CM - thank You for very good/concise economic instruction on the folly of teh foolish DPST tax and spenders (habitual and pathologic Liars all) .

Lizzie and her marxist economic advisors are total idiot marxists - who care only for their ideology (idiotology).

They look to take America down teh same path as Venezuela and every failed marixst tyrannical government ever.


I would hope that the DPST minions - 'w' , 'r', 'a', 't', and the lot - would read and learn - but the idiotology of 'free stuff' is far too strong for those minions to resist.

[WTF]

Why are the Democrats proposing a tax hike?

Voters do not care about the debt and deficits.

They should vote for another stimulus bill before the 2022 election.

That's what Trump tried to do!

The American voters are not economically savy.

[Texas Contrarian]

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Originally Posted by WTF

Why are the Democrats proposing a tax hike?

Voters do not care about the debt and deficits.

They should vote for another stimulus bill before the 2022 election.

That's what Trump tried to do!

The American voters are not economically savy.

As I recall, you have noted a couple of times over the years that deficit spending trend rates seem to have a tendency to careen out of control much less when there's a Democratic president and a Republican House. The history of the last 30 years certainly seems to bear out that notion.

There seems little doubt that if Republicans had held the House after the 2018 midterms, they would have shoved through as much spending as possible leading up to the 2020 election. (And maybe additional tax cuts as well.)

Not that the pre-pandemic fiscal record was anything to boast about, of course. The debt accumulation run rate was already about $1.25 trillion (roughly 6% of GDP) on an annualized basis during the 12 months ending in February 2020.

From strictly a fiscal responsibility standpoint, handing all the levers of power to either of our dysfunctional political parties is about like handing an overtestosteroned 18-year-old the keys to a Ferrari 812 GTS for high school graduation!

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[Tiny]

Originally Posted by CaptainMidnight

Then there is the Sanders/Warren "wealth tax," a great favorite of Saez and Zucman, who also think an 80% marginal income tax rate is just fine and dandy. Also in their ideological camp is Professor Piketty, who apparently failed to notice that the idea didn't work so well in his native France and was jettisoned a couple of years ago. But empirical evidence never seems to stop some of these IYI economists from charging straight ahead.

Additionally, one thing almost all finance journalists fail to note about the "wealth tax" is that it would almost certainly chase a trillion dollars or so out of the publicly-traded equity markets and into private equity, which isn't so easy to value by IRS agents. Policymakers might want to have a huddle with themselves before undertaking action that would disincentivize investment in the public markets and thereby nick their valuations by a couple of percentage points or so, since these assets undergird many public-sector pension plans.

Warren/Sanders et al would couple the wealth tax with a huge increase in the IRS budget, and a requirement that 30% of wealth tax returns be audited annually. If you're willing to play audit roulette, maybe a switch to private equity makes sense. But if there's a 1 in 3 chance you'll get audited, maybe it doesn't make sense.

I was involved in the valuation of the estate of a relative who had pretty simple assets, which barely met the minimum total value for the death tax to be imposed. And the estate tax return was audited. It took a lot of time and expense and overall was a hellish experience. We had to put together maybe 2000 pages of documentation just for the auditor.

Complying with wealth tax would require the same effort, to value all of a person's assets, EVERY YEAR. It's a fate worth than death, IMHO. I'm only half joking.

While you correctly note that right now a wealth tax doesn't have much of a chance of passing, a mark-to-market capital gains tax, which would require the same compliance effort as the death tax or a wealth tax, does. In fact, it's Ron Wyden's pet project. And Wyden is chairman of the Senate Finance Committee, which is responsible for tax legislation.

If I were a wealthy person and thought I were going to be subject to a wealth tax or a mark-to-market capital gains tax regime, I'd be looking at leaving the USA now. If you leave later you may be screwed, as the Warren/Sanders plan would take 40% of everything you own if you expatriate.

Originally Posted by CaptainMidnight

Then there's the capital gains tax, one of the favorite targets of progressives, who seem never to remember that selling assets is in the great majority of cases completely optional. Look at a long-term graph of realizations plotted against the capital gains tax rate, and that becomes perfectly clear.

The Tax Foundation looked at the effect of Biden's plan to imposes a 43.4% tax on all capital gains of high income earners. They concluded the move would raise less revenues, because people don't sell assets and incur the tax when the rate is too high. Now how much sense does that make? It's a lose-lose proposition. The wealthy end up with a higher tax rate. And the government ends up with less revenues.

Originally Posted by CaptainMidnight

Who cares whether trend deficit spending levels a couple of years from now are $2.0 trillion, say, or "only" $1.9 trillion?

There are midterm elections to be won in 2022 and another big prize at stake in 2024!

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Yes, much of the $1.9 trillion bill was to buy votes. Seventy-five percent of Americans approved of it. The deficit and the national debt be damned - Biden et al have elections to win.

[Texas Contrarian]

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Excellent post, Tiny. I forgot to mention mark-to-market capital gains taxation, which I regard as every bit as bad an idea as the Sanders/Warren asset seizure plan ... er, "wealth tax." Reminds me of a similar discussion we had way back in 2016:

https://eccie.net/showpost.php?p=105...1&postcount=94

And it might now be apropos to repeat my last statement in that post from almost five years ago:

"But why try to fix anything when it's so much more fun to keep the issue alive, so you can demagogue it and blame everything on what you claim to be obstinacy on the part of your political opponents? There are voters to be wooed and elections to be won!"

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[WTF]

Originally Posted by CaptainMidnight

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As I recall, you have noted a couple of times over the years that deficit spending trend rates seem to have a tendency to careen out of control much less when there's a Democratic president and a Republican House. The history of the last 30 years certainly seems to bear out that notion.

There seems little doubt that if Republicans had held the House after the 2018 midterms, they would have shoved through as much spending as possible leading up to the 2020 election. (And maybe additional tax cuts as well.)

Not that the pre-pandemic fiscal record was anything to boast about, of course. The debt accumulation run rate was already about $1.25 trillion (roughly 6% of GDP) on an annualized basis during the 12 months ending in February 2020.

From strictly a fiscal responsibility standpoint, handing all the levers of power to either of our dysfunctional political parties is about like handing an overtestosteroned 18-year-old the keys to a Ferrari 812 GTS for high school graduation!

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Our government has turned into a version of Ferris Buller's Day Off no matter who is in power.

All I was saying were that if the DNC paid me a whole bunch of money.....that would be my recommendation to try and hold onto the House and Senate.

Is it fiscally responsible? Nope

Carter and Bush Sr tried to be fiscally responsible and you see where that got them!

[oeb11]

Originally Posted by WTF
So balancing the checkbook is not a good thing in Republican circles anymore?




'w' - it was not republicans who voted $1.9T for DPST wet dream projects, or voted HR-1 to forever institutionalize DPST control of every election in their favor by legalizing voter fraud methods they use every election. .
Nor is it Republicans who plan $ 3Trillion in further spending ( it is your fiden - the senile puppet head of his criminal DPSTcabal.)

https://www.nytimes.com/2021/03/22/b...-spending.html


But - as a loyal minion of comrade Xi - you don't care.

[WTF]

Originally Posted by oeb11

Originally Posted by WTF
So balancing the checkbook is not a good thing in Republican circles anymore?




'w' - it was not republicans who voted $1.9T

How much in stimulus money did Trump sign off on?

[royamcr]

Originally Posted by WTF

How much in stimulus money did Trump sign off on?

And how much went into his and his fellow criminals pockets?