A fair tax would be to require capital gains be paid each year just like income tax and at the same rate.

[bave]

That was with a $100000 trading accounts.

Yea, well we can't verify that can we? Even so, you churned that much? Must not have a high income to justify that risk relative to tax liability.

Either way, 2014 was a ~15% year for the S&P, not hard to have a good year.

 

[AARguy]

Well.. its a gamble when you could go through a downsizing of the military and lose your job. What if your MOS became obsolete? Heck.. depending on your MOS.. you could LOSE YOUR LIFE. So yes.. you could lose your salary. Just as millions of americans found out in the pandemic. The jobs they picked.. suddenly became jobs that weren;t there anymore.
Frankly.. if they were invested in the stock market in an index fund.. they would have done better.
Frankly.. why are you paying MORE on your salary.. when the country is getting a better value for your service..
than when you make that same income on an investment that really didn;t benefit anyone? Basically trading stocks.. if not an initial ipo or other public offering.. is simply a gambling exchange between two individuals and that money really isn;t doing anything.
Yet you think that the money you earned in defense of the country.. should be taxed at a higher rate?
Please explain how the value of your military service was much less than the value of your trading in stocks.. and thus should be taxed higher.

I'm not sure I understand the question. Serving the country versus investing.... apples and space shuttles. Usually, when one's MOS is eliminated, you get a new MOS. I was Field Artillery, so my MOS was pretty secure. I never even considered "THE KING OF BATTLE" going away. During a RIF (Reduction in Force), if there is a need to downsize, the military provides a healthy monetary package on the way out. I feel it is only right to pay less tax on money won in a gamble (investment) because you might lose your shirt. The steady, reliable salary has little or no gamble associated with it. I should be compensated for taking the risk of an investment, not for the security of a salary.

 

[craig]

Yea, well we can't verify that can we? Even so, you churned that much? Must not have a high income to justify that risk relative to tax liability.

Either way, 2014 was a ~15% year for the S&P, not hard to have a good year.

Doubling the S&P is pretty good. My best year was a 65% gain and I never have more than $100,000 at risk in short term trades at a time. Most of my investments are longer term in tax deferred accounts. I keep the $100,000 trading account for fun, trim the profits to buy toys. I retired at 52 and just turned 67.
I have 11 pages of transactions if you want to see them. Don't like to be called a liar. Show me yours.

 

[Mulefoot]

Doubling the S&P is pretty good. My best year was a 65% gain and I never have more than $100,000 at risk in short term trades at a time. Most of my investments are longer term in tax deferred accounts. I keep the $100,000 trading account for fun, trim the profits to buy toys. I retired at 52 and just turned 67.
I have 11 pages of transactions if you want to see them. Don't like to be called a liar. Show me yours.
View attachment 67337030

I don't think that's a 100k account. On 02/03 for example, you're simultaneously holding ProShare funds totalling over 200k in assets. That doesn't even consider the Vanguard index fund that purchased at various dates.

 

[iguanaman]

Why?

Because income is income silly. We made capital gains different in an effort to increase investment and it worked far too well. It got out of hand and now the world is awash with capital looking for gains. It is time to correct this. We are now subsidizing hedge funds and savings accounts.

A world awash in money: capital trends through 2020​

Since the start of the crisis in 2008, says the report, we have seen a ‘superabundance’ of capital develop and this will remain as the decade progresses toward 2020. Meanwhile, the intervention of central banks has depressed benchmark interest rates in many markets to record lows. This new reality of superabundance and low interest rates will continue to pose questions and challenges to the markets for years to come.

https://www.financierworldwide.com/a-world-awash-in-money-capital-trends-through-2020#.YMDz1flKgXY

 

[craig]

I don't think that's a 100k account. On 02/03 for example, you're simultaneously holding ProShare funds totalling over 200k in assets. That doesn't even consider the Vanguard index fund that purchased at various dates.

I always try to start the year with about $100000 but it grows and shrinks during the year and I only occasionally take out or add cash to balance it back. It is a margin account so that I don't have to wait for the trades to settle so some can appear to overlap. That is also why you see the occasional wash sale adjustment. Also this is only 1 of 11 pages of transactions and they are not date sorted.

 

[bave]

Doubling the S&P is pretty good. My best year was a 65% gain and I never have more than $100,000 at risk in short term trades at a time. Most of my investments are longer term in tax deferred accounts. I keep the $100,000 trading account for fun, trim the profits to buy toys. I retired at 52 and just turned 67.
I have 11 pages of transactions if you want to see them. Don't like to be called a liar. Show me yours.

Holy.crap.

You just proved you don't know a damned thing about investing and you don't even know why.

So, let me explain a few things to you.

First, you are doing your day-to-day trading in a brokerage account rather than a qualified account? No intelligent person would do this. Because of the nature of your trades (ie: frequency) you are paying short term capital gains. If you were trading in a qualified account like this you wouldn't have that issue. You could very easily make a $100M qualified account, do your play trading there, and keep longer term investments in the brokerage account so as to not generate taxable events. The way you did it was just rookie stupid. I probably only sell one or two things a year in my brokerage account, largely because I don't want to incur the tax implications of a sale and pay 23.8% on it. As a result, a large portion of my holdings in the brokerage account are either ETFs designed for long term holds, long term individual positions, or K1 related securities so I can capture the pass thru advantage.

Second, you are trading in 3x leveraged ETNs. No educated/sophisticated investor would do that, none. I can't see precisely what index those are based on, but there is generally no reason to deal with it via an ETN. If you wanted the leverage, buy the derivative directly, don't play a game with an unsecured ETN that is rife with premium/discount/contango problems.

Third, you didn't even manage your wash transactions properly.

Fourth, you doubled the S&P 500 returns, great. However you did it taking 2x/3x unsecured derivative positions to do it. No portfolio manager on the planet calls that alpha.

Lastly, I note you posted 2014, odd year to pick for someone so successful. Most people would have chosen the most recent years of 2020 or 2019. More accurately, they would show a complete analysis of brokerage statements to show the entirety of the activity over a several year window. Taking a snapshot in time to make yourself feel good, if you think that is what this did, isn't hard.

My personal 1040 is pretty boring honestly, like I said, it is a lot of holding, not a lot of transactions. The bulk of my assets are held in trust and don't report on a 1040.

 

[bave]

I always try to start the year with about $100000 but it grows and shrinks during the year and I only occasionally take out or add cash to balance it back. It is a margin account so that I don't have to wait for the trades to settle so some can appear to overlap. That is also why you see the occasional wash sale adjustment. Also this is only 1 of 11 pages of transactions and they are not date sorted.

As Mulefoot said, your accounting is as consistently poor as your logic. You can't say you had a ~34% return and beat the S&P when you are injecting capital to the point you have doubled your initial capital account. Suddenly it looks like you performed in line with the S&P while taking on dramatically more risk than the S&P, aka: gross underperformance.

 

[craig]

Holy.crap.

You just proved you don't know a damned thing about investing and you don't even know why.

So, let me explain a few things to you.

First, you are doing your day-to-day trading in a brokerage account rather than a qualified account? No intelligent person would do this. Because of the nature of your trades (ie: frequency) you are paying short term capital gains. If you were trading in a qualified account like this you wouldn't have that issue. You could very easily make a $100M qualified account, do your play trading there, and keep longer term investments in the brokerage account so as to not generate taxable events. The way you did it was just rookie stupid. I probably only sell one or two things a year in my brokerage account, largely because I don't want to incur the tax implications of a sale and pay 23.8% on it. As a result, a large portion of my holdings in the brokerage account are either ETFs designed for long term holds, long term individual positions, or K1 related securities so I can capture the pass thru advantage.

Second, you are trading in 3x leveraged ETNs. No educated/sophisticated investor would do that, none. I can't see precisely what index those are based on, but there is generally no reason to deal with it via an ETN. If you wanted the leverage, buy the derivative directly, don't play a game with an unsecured ETN that is rife with premium/discount/contango problems.

Third, you didn't even manage your wash transactions properly.

Fourth, you doubled the S&P 500 returns, great. However you did it taking 2x/3x unsecured derivative positions to do it. No portfolio manager on the planet calls that alpha.

Lastly, I note you posted 2014, odd year to pick for someone so successful. Most people would have chosen the most recent years of 2020 or 2019. More accurately, they would show a complete analysis of brokerage statements to show the entirety of the activity over a several year window. Taking a snapshot in time to make yourself feel good, if you think that is what this did, isn't hard.

My personal 1040 is pretty boring honestly, like I said, it is a lot of holding, not a lot of transactions. The bulk of my assets are held in trust and don't report on a 1040.

As I said most of my investments are in tax deferred accounts, which I guess you are calling qualified. The $100,000 is liquid and I am making a great return on it and it stays liquid. Otherwise it would be making 1% in a savings account.

 

[craig]

As Mulefoot said, your accounting is as consistently poor as your logic. You can't say you had a ~34% return and beat the S&P when you are injecting capital to the point you have doubled your initial capital account. Suddenly it looks like you performed in line with the S&P while taking on dramatically more risk than the S&P, aka: gross underperformance.

No. I know my gains from the year end Fidelity statement that tracks in and out flow of cash into the account. You are being ridiculous.

 

[bave]

No. I know my gains from the year end Fidelity statement that tracks in and out flow of cash into the account. You are being ridiculous.

You can't say you had a 30% return on a $100M account when you added another $100M to the account mid year to invest more. You have to adjust the returns for a money/time weighting. Basic accounting.

As I said most of my investments are in tax deferred accounts, which I guess you are calling qualified. The $100,000 is liquid and I am making a great return on it and it stays liquid. Otherwise it would be making 1% in a savings account.

I'm not calling them qualified, the IRS is.

It also isn't 100M, it is 100M plus additional flows you are adding as you see opportunities, that's fine, but you can't use your starting account value and ignore contributions to principal. My point is that no intelligent person would be investing in those investments, in that structure, calculating a return in that matter, while all doing in a brokerage account rather than within a qualified account.

None.of.it.is.smart.

None.

 

[jaeger19]

I'm not sure I understand the question. Serving the country versus investing.... apples and space shuttles. Usually, when one's MOS is eliminated, you get a new MOS. I was Field Artillery, so my MOS was pretty secure. I never even considered "THE KING OF BATTLE" going away. During a RIF (Reduction in Force), if there is a need to downsize, the military provides a healthy monetary package on the way out. I feel it is only right to pay less tax on money won in a gamble (investment) because you might lose your shirt. The steady, reliable salary has little or no gamble associated with it. I should be compensated for taking the risk of an investment, not for the security of a salary.

Not really.
You said that there was risk in investing.. and thus being taxed at income levels was too much risk for you to invest.
Yet.. I pointed out.. there is also risk in working. You especially had a risk of potential death if you were in a combat zone. You could have been sent to a combat zone. You or others in the military could literally die. Not just be downsized.
So thats pretty darn big risk.. And its also a pretty darn important job that you did.. defending the country. So.. please explain why we should tax your service to your country.. and taking all that risk.. at 37%... (apples to apples comparing top rates)

Where as we should tax that dude that sat home.. played on his computer and earned the same money you did while selling a stock.. at 20%?

Think about it for more than a minute. You said it was a disincentive for you to invest in a stock.. because of a 20% tax..

Well.. how much of a disincentive is it to join the military.. where you may die.. where your chances of earning a lot of money are low.. and on top of that.. you have to 37% on that money you earned?

Why should we place a higher value on the investment in a stock.. than on the investment in protecting the country?

 

[bave]

Well.. how much of a disincentive is it to join the military.. where you may die.. where your chances of earning a lot of money are low.. and on top of that.. you have to 37% on that money you earned?

I don't think you understand how servicemen are paid, or taxed, or the total compensation picture. It is rather different than most any other occupation, especially for someone in a field deployable combat unit.

 

[craig]

You can't say you had a 30% return on a $100M account when you added another $100M to the account mid year to invest more. You have to adjust the returns for a money/time weighting. Basic accounting.



I'm not calling them qualified, the IRS is.

It also isn't 100M, it is 100M plus additional flows you are adding as you see opportunities, that's fine, but you can't use your starting account value and ignore contributions to principal. My point is that no intelligent person would be investing in those investments, in that structure, calculating a return in that matter, while all doing in a brokerage account rather than within a qualified account.

None.of.it.is.smart.

None.

You are wrong. Just checked and I added no funds that year. I already explained how settle time can make it appear that I am holding more securities that I actually am. Are you still calling me a liar?

 

[jaeger19]

I don't think you understand how servicemen are paid, or taxed, or the total compensation picture. It is rather different than most any other occupation, especially for someone in a field deployable combat unit.

Yes I do.
Doesn;t matter for the discussion though..
Its the question of why say a fireman.. who risks his life to save someone
Or a teacher that teaches children how to read
Or the small businessman who starts a business and hires people.. and provides a valuable service or commodity in the community.
Why their income should be taxed at a higher rate...

Than the same income of a dude that sat in his Pajamas and hit a computer button selling a stock he's had for a year.. when that sale basically does nothing for anyone.

Explain why the results of hard work is taxed at a higher rate than the result of gambling?

 

[bave]

You are wrong. Just checked and I added no funds that year. I already explained how settle time can make it appear that I am holding more securities that I actually am.

That might be true, we can't tell based on the information provided. Assuming it is true, you still have a number of pretty awful and basic mistakes getting made.

 

[bave]

Yes I do.
Doesn;t matter for the discussion though..
Its the question of why say a fireman.. who risks his life to save someone
Or a teacher that teaches children how to read
Or the small businessman who starts a business and hires people.. and provides a valuable service or commodity in the community.
Why their income should be taxed at a higher rate...

Well, first off, a huge part of their income is in the form of allowances and non-tax income. Fine, we can ignore that for a moment.

Let's say he was an E-7 who did his 20. He was making ~$60M/yr. Assuming he was married, with no kids, taking a standard deduction, he was running a ~6% FIT rate.

 

[craig]

That might be true, we can't tell based on the information provided. Assuming it is true, you still have a number of pretty awful and basic mistakes getting made.

And I think you are wrong and have shown nothing. Just another trust fund drone?

 

[AARguy]

Not really.
You said that there was risk in investing.. and thus being taxed at income levels was too much risk for you to invest.
Yet.. I pointed out.. there is also risk in working. You especially had a risk of potential death if you were in a combat zone. You could have been sent to a combat zone. You or others in the military could literally die. Not just be downsized.
So thats pretty darn big risk.. And its also a pretty darn important job that you did.. defending the country. So.. please explain why we should tax your service to your country.. and taking all that risk.. at 37%... (apples to apples comparing top rates)

Where as we should tax that dude that sat home.. played on his computer and earned the same money you did while selling a stock.. at 20%?

Think about it for more than a minute. You said it was a disincentive for you to invest in a stock.. because of a 20% tax..

Well.. how much of a disincentive is it to join the military.. where you may die.. where your chances of earning a lot of money are low.. and on top of that.. you have to 37% on that money you earned?

Why should we place a higher value on the investment in a stock.. than on the investment in protecting the country?

Don't complicate this. It isn't complicated at at all. I get taxed at "x" on my salary. No risk involved. No money going anywhere but exactly where I want it... home... food... shoes for the kids. Now I think about investing. There is risk. Why would I take such a risk without some consideration? I wouldn't... I need an incentive to take a risk. Hence... a lower tax rate. Its really quite simple.

 

[bave]

And I think you are wrong and have shown nothing.

There is no think here, there is no debate.

1) You are failing to manage wash rules.
2) You are day trading in a brokerage account when you, allegedly, have sufficient assets in a qualified account.
3) You are running material leverage, via ETNs, and through unsecured collateral structures

No one who has even a basic understand of investing would make these mistakes, no one. This isn't a debatable point

 

[jaeger19]

Don't complicate this. It isn't complicated at at all. I get taxed at "x" on my salary. No risk involved. No money going anywhere but exactly where I want it... home... food... shoes for the kids. Now I think about investing. There is risk. Why would I take such a risk without some consideration? I wouldn't... I need an incentive to take a risk. Hence... a lower tax rate. Its really quite simple.

No it is more complicated. You do have risk. You could get hurt. you could be unemployed, etc. You have all sorts of risk as an employee and as a businessman. . And employees and businessman contribute and risk a lot more in society.. than a fellow who buys a stock and then sells it a year later at a profit.

Why should your income as a military person be taxed at a higher marginal rate.. than the income of a fellow who made the same in his pajamas selling a stock he had a year ago?

Think about that. Because basically that is what happens.. is that business people make a decisions of whether its more beneficial to invest by expanding or starting a business.. and all the real risk that entails.
Or whether its more beneficial to simply invest in a stock and hold it a year.

Would you not think that society would value hard work more and thus incentivize making income through hard work?

 

[jaeger19]

Well, first off, a huge part of their income is in the form of allowances and non-tax income. Fine, we can ignore that for a moment.

Let's say he was an E-7 who did his 20. He was making ~$60M/yr. Assuming he was married, with no kids, taking a standard deduction, he was running a ~6% FIT rate.

And if you assume that.. his likely capital gains rate would be 0%.

Look.. the point is.. the marginal rates on earned income..from peoples hard work.. are higher than the
marginal rates on capital gains which is largely the result of gambling.

As a conservative.. I don't think the government should be picking winners and losers. Which its basically doing by giving a special rate depending on the type of income.

 

[AARguy]

No it is more complicated. You do have risk. You could get hurt. you could be unemployed, etc. You have all sorts of risk as an employee and as a businessman. . And employees and businessman contribute and risk a lot more in society.. than a fellow who buys a stock and then sells it a year later at a profit.

Why should your income as a military person be taxed at a higher marginal rate.. than the income of a fellow who made the same in his pajamas selling a stock he had a year ago?

Think about that. Because basically that is what happens.. is that business people make a decisions of whether its more beneficial to invest by expanding or starting a business.. and all the real risk that entails.
Or whether its more beneficial to simply invest in a stock and hold it a year.

Would you not think that society would value hard work more and thus incentivize making income through hard work?

Everything has risk, but my salary has always been rock steady. I was SOME incentive to take a risk I do not currently have by investing. A lower tax rate on any gains is that incentive.

 

[AARguy]

Everything has risk, but my salary has always been rock steady. I was SOME incentive to take a risk I do not currently have by investing. A lower tax rate on any gains is that incentive.

My Bottom Line: My wife is a CPA/EA Tax Attorney and her dad was a broker for Merrill Lynch after he retired from the Marines. She figures out everything financial here from investments to taxes to bills ad infinitum. I don't tell her about money and she doesn't tell me about weapons.

 

[craig]

There is no think here, there is no debate.

1) You are failing to manage wash rules.
2) You are day trading in a brokerage account when you, allegedly, have sufficient assets in a qualified account.
3) You are running material leverage, via ETNs, and through unsecured collateral structures

No one who has even a basic understand of investing would make these mistakes, no one. This isn't a debatable point

And annoying. But that is not the first time you have heard that.