The Debate 9/30

“That's often the case, but it's a good diversion if there's nothing else going on at work, although I've suddenly become addicted to internet solitaire.”

“SO it's all agreed? Wealthy people see more benefit from the tax cuts that are helping to drive the deficit into the stratosphere?”

“Now you want to start a whole new argument Phaed, should we not be running a deficit, does the economy not need this, have we reached or past potential output? (obviously not looking at the unemployment rate)

...........

I'm stickin with solitaire for the rest of the day.”

“I'm stickin' with the union!”

“Is there a soothing effect to solitaire after getting spanked in a debate?

I wonder if W is playing a little?”

“W playin' with himself?”

“Lee, I have a question. Do salary bonuses that CEO's get qualify for the tax cut category you're speaking of? Also what about bonuses given in stock? Thanks”

“Bonuses are taxed at their own higher rate. Of course, there are deferrments that are commonly used to alleviate a good deal of the burden.”

“Tango .

I saw this earier but forgot to respond.


Bonuses paid in cash as salary are taxed in the year they are received as income

E.G. at year end all the secretarys in the firm get one week's salary as a bonus. It is taxed to them as extra income. So instead of making $52,000 in 2004, they make $53,000.

Or. My friend who is an investment guy gets a performance bonus. It isn't paid until March of 2005.

So his salary this year ($200,000 plus LAST year's bonus) goes into the hopper for 2004, and the bonus on this year's performance will go into the hopper for 2005.

The taxaation of Stock options is a little trickier. The are qualified and non-qualified stock options. the tax treatment depends on the type we're talking aboutt. A stock option is the right to buy stock at a fixed price at some time in the future. This "right" or option, is generally not taxable when it is received.

In the case of a qualified, incentive stock options, let's say I work for XYZ company. The stock is trading at $75 a share. My boss wants to reward me for doing a good job, plus give me incentive to do better.

So he gives me an option to purchase 1000 shares of XYZ company at $100 a share. NOw today, that option is worthless, or "out of the money". Who would want to exercise an option to buy 1000 shares of a company for $100 when it is trading at $75 a share?


However, maybe if I do I really good job, or, lie the folks at Enron, I lie, cheat and cook the books, then maybe the share price will go to $125 a share. If the price toehte stock goes to $125, then my option is "in the money". I can buy the shares for $100 and either a) hang onto them or b) sell them for $125/share and pocket a profit of $25/share. THis is where it gets a little complicated. The gain on that sale ($25) is treated as capital gain. It is taxed as long term capital gain if I hung onto the stock for at least a year, and as short term gain (at income tax rates) if I hung onto it less than a year.


There are wrinkles in that scenario too.

If you have real life questions, your human resource department might be able to help you, and a CPA shold be able to.

Looking back to your question .. .many companies set up deferrred compensation plans for their CEOs. Deferred compensation is just what it sounds like . ..the right to receive compensation (salary) at some point in the future. By delaying the receipt of the compensation, the tax is also delayed.


Companies often also will compensate CEOs for the tax conequenses of exercising options. That way the company takes the tax hit, not the CEO.



And yes, because CEOs are often large shareholders of the company they run, and presumably receive dividend income from teh stock (if it pays a dividend) then the dividend income they receive would be treated at a lower tax rate.”

“Any reputable investment/debt counselor will tell you that in general you should keep debts very low or non-existant. The few exceptions include debts to buy things that (usually) will not depreciate or can increase in value over time - houses for example. Otherwise any existing debts should be paid down and eliminated so when "hard times" come along you are in a much stronger financial position to weather it.

The same should apply to our national debt load. It is way beyond reasonable at this point. Sure, some of it exists as investments to help spur growth, that would be equivalent to holding a mortgage for a house. But the rest? We gotta pay it down!”

“Just for the fun of it, I looked up Bill Gates and a recent Microsoft transaction.


This year Microsoft increased it dividend (for years it never paid one). From Forbes magazine : "Gates, who will also take home an extra $180 million per year from the increased dividends"

So Bill Gates is going to take home an extra $180 million a YEAR taxed at 15%. Under the old rates this would have been taxed at 38.6% or $69,480,000. At 15% the tax on this dividend will be 27,000,000. A savings to Bill of 42,480,000 or 61.14%.


For that mattter Microsoft (this is just one company folks) declared a special one time dividend this year of $32 billion.

Taxed at 38.6% this dividend would have generated taxes of $12.352 billion. At 15% the dividend will generate $480million.”

“That's gotta be 4.8 billion, not 480million.

Sorry.”

“Article on the renewal of some tax breaks. Signed today. Directly related to some discussions above.”

“OH, Bison....What do you have to say to that!!!!!??????”

“Nice photo of our Dear Leader, Violink.”

“You are attempting to pose a false premise Tango, 2% of 200,000 results in a larger number, but neither benefits more than the other, they both get 2%."
Bison
09:36:29 PM
10/01/04

After reading this, my stance on forced labotomies has changed.

"I'm sticking to my conviction of forced labotomies. It's hard to take that stance, it's tough, it's hard work, it's a challange, but my opinion on forced labotomies will perservere!"

---GWB”

“What do I say to what Tango? We have already worked this out.

"Empirically you are right (as I have said a bazillion gazillion times) at the lower end ot he rate tables for BOTH dividends and earned income the percent cuts were greater. On an individual basis."

lee
10:50:04 AM
10/04/04

As stated before I was not arguing that in the aggregate the rich do not benefit more, which is Lee's point.

Buddha Bear your failure to grasp the point explains alot. Perhaps a trip back to elementary school will help you to understand that 2% = 2%.”

“I should clarify - Lee's point (and mine for those of you who can't distinguish between the two different arguments) is that the rich do benefit more in the aggregate.”

“And in the specific. You just refuse to admit that.”

“"And in the specific. You just refuse to admit that."

DeadRush
06:11:36 PM
10/04/04

No Phaedrus I'm afraid not, Lee has already conceded that please see his post above (copied in my previous post).”

“If I didn't know better, I'd be betting that bison was a carnie.”

“So Bill Gates is going to take home an extra $180 million a YEAR taxed at 15%. Under the old rates this would have been taxed at 38.6% or $69,480,000. At 15% the tax on this dividend will be 27,000,000. A savings to Bill of 42,480,000 or 61.14%
lee
01:52:26 PM
10/04/04
That's gotta be 4.8 billion, not 480million
lee
01:53:05 PM
10/04/04

See that tax savings of 61.14% it does NOT come close to the percentage nor the amount of money a middle class or lower wage earner would save.”

“Tango,

Again, if you had the same income distribution as Bill gates, you would, at a lower income, be getting a higher percentage.”

“WOW! That is all that I can say. WOW! Is persistence a virtue?”

“I find it funny that the debate over the debate has lasted about 60 times longer than the actual debate.”

“LZ, with all due respect, this obsessive, compulsive rant to make a moot point has outshadowed the real debate for about 4 days now..”

“And he's wrong to boot.”

“LOL.”

“Dammit, tech! You're supposed to let him launch into another ten-page denial and "nuanced" explanation of the tax system. Party pooper!”

“Hey, I tried to feed the fire when I linked to the article about the signing of the tax law extensions! I tried.”

“with all due respect, this obsessive, compulsive rant to make a moot point has outshadowed the real debate for about 4 days now.."
Treebleeding
08:18:13 AM
10/05/04


treebeard, this just shows you how boring the so called debate was. That whole discussion took 5 minutes.”

“You're right, Ewker. But, I think it was more because the 'other side' had no leg to stand on when we exemplified how the stumbler in chief got trounced that night!”

“Now, I hear he's giving a speech about terrorism tomorrow.

WHOOP, WHOOP, WHOOP!!

DAMAGE CONTROL ALERT! DAMAGE CONTROL ALERT!!

WHOOP, WHOOP!!!”

“

Channeling Karl?”

“Wow, talk about quid pro quo. That's a much better accusation than the Kerry notecard ordeal! LOL! Wouldn't surprise me a bit.”

“It would explain why he would ask for 30 seconds and then stare blankly for 10.”

“To completely stir the bees nest that has been dormant for a few days...

Anyone see the article on CBS Evening News Wed night, about how Bush's tax breaks so completely favored the rich? I was hearing echos of this thread in my head while watching it, LOL!”

“Did anybody ask what the buldge was or are we just starting more unsubstantiated Bush rumors?”

“I do remember GW gesturing out to the audience and saying, "No, let me respond", as if he were communicating to someone we couldn't see. That's when I wondered if he was wired. Sure didn't do him any good.”

“I don't know if this is a subscription only article or not. To answer your question, NoProb:

Repeated calls to the White House and the Bush national campaign office over a period of three days, inquiring about what the president may have been wearing on his back during the debate, and whether he had used an audio device at other events, went unreturned.”

“Did anybody ask what the buldge was or are we just starting more unsubstantiated Bush rumors?”
NoProb
11:25:49 AM

Maybe he was just glad to see ya! :)”

“Maybe the Bush people just don't want to talk to the people at Salon. Just a thought.”

“Don't strain yourself there NoProb. Dave Lindorff is an independent journalist. He wrote a similar piece for CounterPunch.”

“Oh, well it MUST have been a bug then.”

“YIKES!!! Hope somebody pats him down tonight! I am going to change my name Bush is the devil and I sure don't want to have anything to do with him.

Shame on you Techntrek!!! You know we've all changed our minds to bison's way of thinking. I am getting a raise at work, 4% and it is the same as Bill Gates gets!”

“< big smile >”

“Anti-depressants and alcohol don't mix.”

“I guess there aren't that many people out there who see people wearing vests under suits on a regular basis, they bulge where the velcro connects on the back, if you pay close attention to the photo you can see where the vest comes over his shoulders also. Do we have a back shot of Kerry? I'd expect that he was wearing one as well.”

“Bison, yeah but then they couldn't have started all this.”