Obama wants to tax muni bonds

M

msdw24

1,000+ Posts
Is he really this stupid?
So as part of his huge "budget", and I put it in quotes because a budget should not be more than your spending, Obama wants to tax interest on muni (municipal) bonds.

I know the Obama supporters on here will say it's time the "rich" pay their fair share, etc, etc. But have you all, or Obama, even stopped to think about what it will do to the cost cities and states will occur to borrow money?

All he is doing by this is screwing the american people in more ways than one. By taxing muni bond interest, cities and states will have to increase local taxes (or cut services) to pay for the increase in borrowing costs. This in turn will cost everyone, EVERYONE, not just the people who invest in muni bonds more money!
 
to answer your question
yes he is stupid

I wonder if anyone's 401k has any muni binds in the package
I wonder if any teachers unions retirement funds have any muni bonds
 
The only thing worse than an ideologue is a stupid ideologue.
pukey.gif
 
I don't really think he's that stupid. Here's what happens:

1) Obama says he wants to make muni-bonds taxable
2) Obama hails this as a way to make the "rich" pay their fair share
3) Republicans, justifiably, point out how stupid this is, a) it increases the cost of borrowing to municipalities...you know, like schools, and b) it literally would rock everyone that owns muni-bonds (which literally is almost everyone through their savings, 401k, etc.) and throw their entire portfolio and investing plan end over end.
4) Obama paints the GOP as protecting the rich and out of touch
5) The Obamatons, despite the huge negative impact on themselves, believe Obama because he's The One and this singular ridiculous class warfare theme he's on.
6) Obama craftily caves in at the right time saying the GOP blocked this piece of "fair share" legislation
7) He gets more brownie points and the GOP looks like the Big Bad Wolf

Wash, Rinse, Repeat
 
So he's talking about closing the loophole and not increasing taxes.
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if he cuts the loophole, he is raising taxes. municipal bonds in many places are **** anyway. the main reason people invested in them in the past is because they are tax free. they have been a staple for many retired people because of the tax free income. i guess obama hates old people.

thye are also critical fir municipalities who have in some cases, worse debt problems than the federal government. yep, this is a good plan all around.
 
whenever you allow the government to raise taxes, that money then becomes a fixture in federal spending and is dependant upon future budgets (of course, we dont really have a budget anymore but that is another issue). Taxing the rich more isnt going to increase tax revenue in the long term. taxing municipal bonds hurts the guy trying to retire, not the rich. it is a bandaid on a much larger problem. if you took everything from the rich, we wouldnt put a dent in the deficit. see the current recession as an example. the goverment depends on a certain amount of income based upon a roaring economy. when that economy doesnt produce like it used to, the country runs record deficits. not only does the government not cut back, they increase spending. why anyone would trust these folks to increase taxes further is beyond my comprehension. im taxed enough as it is. the government should learn to cut back.
 
My "loophole" has been closed for mortgage interest and charitable contributions and it completely sucks. When muni bonds are no longer as attractive the cities that use them will get hurt like the housing industry and charities are being hurt today.
He's simply in way over his head, which should have been obvious to anyone paying attention to his resume.
 
For a guy that hates entitlements, you sure treat loop holes as if they are your entitlements if you think that removing them is a tax increase. It's only a tax increase if the loop hole is your entitlement. Otherwise, to everyone else who understands basic finance, its called 'removing a loop hole.'

You and the other kids yell at him for this, and then you yell at him for having a deficit. You never make it so he can win unless you want to entirely gut govt. of everything it is and does, which is not the route we prefer unless we want to be like Haiti.
 
For a guy that hates entitlements, you sure treat loop holes as if they are your entitlements if you think that removing them is a tax increase. It's only a tax increase if the loop hole is your entitlement. Otherwise, to everyone else who understands basic finance, its called 'removing a loop hole.'
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It may technically be a loophole but municipal bonds have always been tax exempt. they were created that way so cities could raise money to pay off debt. if a tax has never existed, you may call it a loophole, but ill call it creating or raising a tax. if you understood anything about our countries history, you would understand that municipal bonds have played an important part of it and its because they were tax exempt. this isnt like the bush tax cuts in which taxes were lowered. the supreme court ruled in 1895 that the federal government could not tax municipal bonds. that changed in 1988 but the law remained the same and they kept their tax-exempt status. a tax exemption isnt an entitlement, but it is the law and part of the tax code. it doesnt matter anyway, even the democrats in congress wont go for it. its doa. the fact that you are defending the decision, however, makes you a moron.
 
I wonder a couple of things:

How many of the "1 percent" actually buy muni bonds? I can't imagine they are the best investments out there even with the tax shelter, but then I'm not an expert on that side of it.

Two: how much will this hurt the sale of muni bonds? I would think the current law is one reason (maybe the main one) that people buy them. I guess the states can go get loans from those banks we all hate?

But remember, this is about fairness - even if this hurts the economy and costs us money and slows growth, the main thing is that we get the "1 percent" to start paying all the bills. If we can accomplish that, then really we've created the perfect version of America...
 
You know this topic is the perfect illustration of the people Obama is focusing on to get re-elected. It's amazing how some here are on the same level as Obama when it comes to not understanding the most simplist of things in economics.

Do you freaks not understand that any investment has to be made worthwhile to invest? How can you not understand this? It's like trying to explain to a 4 year old why it's dangerous to cross the street without mommy and daddy. Unbelievable.

Obama is counting on 51% of the people to be stupid to get re-elected. I have lots of faith in America that will not only vote against him, but take pleasure in telling him he's fired.
 
McBrett - As others have already pointed out, capital gains and muni-bonds are not tax loopholes. They've been around forever and every investor knows the pluses (tax exempt) and minuses (low yield) for these securities. Generation after generation of Congress has kept these rules.

You have to ask yourself, why is that? Why all of a sudden do we need to change this? If it was so visibly unjust, how come this wasn't corrected in the past? Seems like it would be a pretty astute political move.

Unlike income tax, where a raise or decrease in the rate has debatable effects on the economy, capital gains and to a lesser degree muni-bonds, has a 1st order effect on investment in the economy. A change in investors required IRR of something like 15-20% (the effective capital gains tax bump to align with high income tax bracket) destroys investment and kills the economy.

The "A fair tax is just on all income, regardless of source," is a designing and insincere spin on what will effectively be a capital gains tax. Unless you're a pro-athlete or entertainer, the way the majority of people become wealthy is through assets, not income. And if the majority of your total cash flow is from capital gains or investments, that tax is effectively a capital gains tax increase and you have to treat your investment decisions accordingly (which will be bad for companies and business hoping to raise capital).

One other point...income has little to no risk. You go to work, you're gonna get paid a certain amount. Unless you get fired, you know how much you'll make. That's not the case with capital gains. There's significant risk that you could lose your money. Bearing that added risk means you demand a higher return. I wouldn't be surprised that a risk-adjusted 15% capital gains tax rate would be ballpark 35% income tax rate. Raising the capital gains would punish people for taking that risk. And the venture industries (alternative energy, biotech, etc.) that offer risk and are essential to the evolution of the economy will be killed.

That's why Congress after Congress has restrained themselves from increasing, whether directly or effectively, the capital gains tax rate.
 
As far as 401K, IRAs and the like, muni bonds don't figure into it much. Not much point putting a tax exempt investmet into an investment where the growth is tax exempt up until it is withdrawn. Muni bond low interest rates do influence investment in infrastructure, utilities, stadiums and the like -- which I think should be encouraged in municipalities that can see their way forward to pay them back. Borrowing to build is honorable. Borrowing to meet current expenses is where government and individuals get started on a course to failure.
 
The "system" has been gamed in all different ways because that is what the government wanted to do with the system. Mortgages interest was deductible to boost the home industry. Munit's were tax free to encourage infrastructure investment. The government can certainly change the rules midstream like this but it sure sounds like something Hugo Chavez would do.
 
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