Mortgage interest deduction on the table

[Fletch]

That's a sound idea, except that many people will not drop off the check and it will cost them a fortune to collect. Then what?

Problem solved

 

[Classic]

It's really not a whole lot different than the govt. giving you $7,000 to buy an electric car. They promote what they want to promote and try to disincentivize what they don't want to promote. It isn't as if we have a say in any of it.

 

[Zoub]

I wonder if the answers would be the same if there was a tax break for gay couples.

If they give a tax break for "Gay" I am going to have to seriously consider my options. I guess that would be considered sexual engineering?

31 years of checking off "Other" on the race card didn't get me squat. Not even a Xmas card. Why even have it as an option if all it does is get you on 3 Letter watch list?..........................Whoa, now I get it.

 

[griffin]

And as long as the government picks you as the winner, it's all good. If I'm the beneficiary, it's not social engineering.

Who said it's not social engineering? I'm just giving you the rationale behind the tax law.

The .gov gives tax breaks (deferred taxes) for 401Ks and all manner of things.

Personally, I'm all for a flat tax, one percentage for everyone, rich or poor.

 

[downzero]

Problem solved

That's what Reagan thought, that by starving the beast, we'd shrink the national government. Let me know how that's working the next time you check.

The government seems to grow regardless of revenue. So that wouldn't fix the problem. And it'd be perceived as even more unfair than the system we have.

 

[INMIline]

I think this deduction currently benefits RV buyers. So it could slow down the RV industry that Northern Indiana relies on if it gets changed.

 

[Harmi01]

No more deductions

Personally I would love to see this country stop rewarding debt. Why do I deserve a tax deduction for interest paid? It is past due time for a flat tax. no deductions at all...a flat rate that treats ALL Americans equally. No deduction for taxes paid, for interst paid, for anything.....just a flat rate.....and a rate that applies TO ALL!!

 

[downzero]

Personally I would love to see this country stop rewarding debt. Why do I deserve a tax deduction for interest paid? It is past due time for a flat tax. no deductions at all...a flat rate that treats ALL Americans equally. No deduction for taxes paid, for interst paid, for anything.....just a flat rate.....and a rate that applies TO ALL!!

Yeah, let's have corporations not being able to deduct interest and see how that works for our economy.

Posts like this indicate why democracy just cannot work.

 

[hornadylnl]

Yeah, let's have corporations not being able to deduct interest and see how that works for our economy.

Posts like this indicate why democracy just cannot work.

Again, why are corporations are drug through the tax charade?

 

[kludge]

The Obama administration has ratched up spending exponentially. The Senate has refused to pass any budget in almost 4 years.

... and why Romney didn't finish every sentence in every debate with, "oh, and after four years we still don't have a budget" is beyond my comprehension.

I don't remember him mentioning it once.

 

[Fletch]

... and why Romney didn't finish every sentence in every debate with, "oh, and after four years we still don't have a budget" is beyond my comprehension.

it makes sense if you abandon the belief that he was trying to win.

 

[foszoe]

Alright, here's a more clear example for those who don't understand the difference.

A manufacturer hires an IT consultant to keep the computers running smoothly. They transfer money to the consultant in exchange for his services. His services result in greater productivity for the manufacturer and therefore more of their product being produced. Net wealth is increased.

A manufacturer hires a tax accountant to handle their taxes. They transfer money to the accountant in exchange for his services. His services do not result in greater productivity and net wealth is not increased because nothing tangible is created as a result of the effort that he expends.

This is not an argument against accountants. They serve a purpose that is of value to the people who hire them. It's a very legitimate type of employment. This is an argument of economics. The fact that a person's services are valuable to someone does not mean that it creates wealth overall. It transfers wealth from one person to the next.

What if the accountant invests in an IT company startup with the money you pay?

I understand the create wealth portion but it seems the explanation is still incomplete. Is there such a thing as indirect wealth creation?

 

[steveh_131]

What if the accountant invests in an IT company startup with the money you pay?

I understand the create wealth portion but it seems the explanation is still incomplete. Is there such a thing as indirect wealth creation?

It doesn't matter what the accountant does with the money. He can use the money to create wealth, but then the company that paid him also could have used that same money to create wealth.

The point is that human effort is a finite resource. If it is expended to produce a tangible item then that is a creation of wealth. If it is expended to combat government inefficiencies then it not a creation of wealth.

 

[ATOMonkey]

Don't confuse what Steve is saying.

Wealth does not have to be tangible, but it must be the creation of something useful.

I am an engineer. I create intellectual property. That IP can be sold, or used to create something tangible.

At any rate, if you are creating wealth, you should end up with more than you started.

Rocks - Steel - parts - car

Thinking - Design - product

Each step results in something more than when the process began.

Regulation - Accounting - Compliance

Some overhead is necessary to run a business, that does not mean that it creates wealth.

 

[foszoe]

Don't confuse what Steve is saying.

Wealth does not have to be tangible, but it must be the creation of something useful.

I am an engineer. I create intellectual property. That IP can be sold, or used to create something tangible.

At any rate, if you are creating wealth, you should end up with more than you started.

Rocks - Steel - parts - car

Thinking - Design - product

Each step results in something more than when the process began.

Regulation - Accounting - Compliance

Some overhead is necessary to run a business, that does not mean that it creates wealth.

So if there is tangible wealth that would imply intangible wealth. Tangible wealth is a commodity where the price is set by a market? What are the distinguishing characteristics between the two?

 

[hooky]

Good God! What's so hard about understanding that dollars spent on non-value add activities are dollars wasted? Every dollar inefficiently spent on complying with gov't regulations with no return, could have been spent efficiently to add value to the company's operations. That equals real wealth. The same holds true for an individual. How does spending time filing your taxes make you wealthier? You're spending that time and money to keep more of the money you've already made, not spending that time and money to make more money.

The government is not smarter than the market when it comes to creating wealth. The examples of this are everywhere and nearly endless.

Mises in One Lesson - Mises Media

 

[ATOMonkey]

So if there is tangible wealth that would imply intangible wealth. Tangible wealth is a commodity where the price is set by a market? What are the distinguishing characteristics between the two?

I'm not sure what you're trying to say here.

Intangible wealth is something you can't touch with your hands, but can still be used to create or produce something.

In order for something to be wealth generating, it must be a net producer.

Some labor is not a net producer, but is a cost saver. For instance, machine repair.

For the sake of round numbers, let's say that you're making widgets for $10/part profit.

The machine that you're using breaks. You're now making $0 profit on your widgets, because no widgets = no money. So, you pay to have the machine fixed. After you write that check and the machine is up and running, you're only making $9/part profit.

Is $9/part more than $0/part? Yes. Is $9/part more than $10/part? No.

So, was the repair labor valuable? Yes. Did the repair labor add to your profit? No. No wealth was generated by repairing the machine. The only thing that happened was the mitigation of a LOSS of wealth.

At the end of the day, the business owner is making less money than he was yesterday, but it's better than no money.

Any type of overhead works this way. Accounting, management, administration, record keeping, etc. None of it makes you any more money, but it helps you to lose less money. Without those services, your business may only be 40% efficient. With those services, your business can be 90% efficient. So, instead of losing 60% of available profit, you only lose 10% of available profit. Therefore, the labor still has value, but it doesn't generate wealth.

 

[foszoe]

I'm not sure what you're trying to say here.

Intangible wealth is something you can't touch with your hands, but can still be used to create or produce something.

In order for something to be wealth generating, it must be a net producer.

Some labor is not a net producer, but is a cost saver. For instance, machine repair.

For the sake of round numbers, let's say that you're making widgets for $10/part profit.

The machine that you're using breaks. You're now making $0 profit on your widgets, because no widgets = no money. So, you pay to have the machine fixed. After you write that check and the machine is up and running, you're only making $9/part profit.

Is $9/part more than $0/part? Yes. Is $9/part more than $10/part? No.

So, was the repair labor valuable? Yes. Did the repair labor add to your profit? No. No wealth was generated by repairing the machine. The only thing that happened was the mitigation of a LOSS of wealth.

At the end of the day, the business owner is making less money than he was yesterday, but it's better than no money.

Any type of overhead works this way. Accounting, management, administration, record keeping, etc. None of it makes you any more money, but it helps you to lose less money. Without those services, your business may only be 40% efficient. With those services, your business can be 90% efficient. So, instead of losing 60% of available profit, you only lose 10% of available profit. Therefore, the labor still has value, but it doesn't generate wealth.

Thanks for the detailed response. I am not sure what I am asking so I understand your confusion.

I am just trying to understand/define the terms in the thread.

1. Wealth--somewhat vague depending on personal point of view but then
2. Tangible Wealth--Well an adjective could imply a negation is also a proper term thus in trying to understand tangible wealth I asked about intangible wealth.

I have a feeling there is an underlying economic theory/concept that others know about and I don't. I never took economics so don't really know the different theories or philosophical schools except I have heard the term Keynesian.

 

[ATOMonkey]

Thanks for the detailed response. I am not sure what I am asking so I understand your confusion.

I am just trying to understand/define the terms in the thread.

1. Wealth--somewhat vague depending on personal point of view but then
2. Tangible Wealth--Well an adjective could imply a negation is also a proper term thus in trying to understand tangible wealth I asked about intangible wealth.

I have a feeling there is an underlying economic theory/concept that others know about and I don't. I never took economics so don't really know the different theories or philosophical schools except I have heard the term Keynesian.

Ok, easy enough. Wealth is the creation of something to give you more than you had before.

A farmer creates wealth by buying $10 worth of seeds, applying his labor to plant and harvest his crop, which is then worth $100.

The direct costs to create this wealth are seeds and labor.

Because there was a net addition of value, wealth was generated.

Now, there are also indirect costs associated with farming, such as pulling weeds. Pulling weeds won't grow anymore plants than are already in the ground, but it will make the plants that are there grow better. The labor of pulling weeds has the value of the COST of not pulling weeds.

Say the farmer gets a 50% yield if he doesn't pull any weeds. If he does pull weeds, then his yield is 90%. Therefore, the value of his indirect labor of pulling weeds is 40% of his total possible yield.

Now, let's say he pays someone to pull the weeds. That person can generate wealth for themselves by turning their labor into currency or some other remuneration, but their activity does not create OVERALL wealth to the economy, because they have not produced anything. Their pay is basically equal to the amount of crops that would grow, if there were no weeds.

So, if there were no weeds the farmer could possibly make $100.

Since there are weeds, the farmer has to pay part of his $100 to someone to pull weeds. Say $20.

The farmer pockets a total of $80. The weed puller gets $20. Total economic wealth generation is still just $100.

 

[steveh_131]

Thanks for the detailed response. I am not sure what I am asking so I understand your confusion.

I am just trying to understand/define the terms in the thread.

1. Wealth--somewhat vague depending on personal point of view but then
2. Tangible Wealth--Well an adjective could imply a negation is also a proper term thus in trying to understand tangible wealth I asked about intangible wealth.

I have a feeling there is an underlying economic theory/concept that others know about and I don't. I never took economics so don't really know the different theories or philosophical schools except I have heard the term Keynesian.

In using the term 'tangible', I was simply trying to point out that something of inherent value must be ultimately produced as a result of the labor that is invested in it. It probably wasn't the best word to use, and I think has resulted in some confusion.

The real question being debated here is whether or not a complicated tax code creates 'wealth' by creating jobs for accountants. That is how all of this began.

So let's imagine an economy based solely on growing apples. Everyone's goal is more apples. Some people grow the apples. Some people build tools for harvesting the apples. Some people repair the tools used for harvesting apples. Some people study the biology surrounding orchards. All of these activities ultimately result in more apples. More apples = more wealth.

Now imagine another guy, we'll call him 'Sam'. He's an older gent, so we'll call him 'Uncle Sam'. Uncle Sam's only goal in life is to go around taking peoples apples away and letting them rot. As a result, some people decide to stop farming apples and instead spend their career trying to protect people's apples from Uncle Sam. This ultimately results in a net decrease in apple production. Less apples = less wealth. This is still a necessary career...after all, we sure don't want that scumbag Uncle Sam to take any more apples than necessary.

Nevertheless, there are now fewer apples to go around than there would have been had Uncle Sam minded his own business to begin with.