Senate to end preferential tax for commodities?

[AAAintheBeltway]

Comparing traders to those in the oil and gas business obscures several very important points. They do not necessarily pay ordinary income rates. They could pay corporate rates, or they could be organized so that they are taxed as individuals. They could take most of the income as dividends at 15%. Moreover, they get a lot of tax deduction unavailable to traders, plus they can deduct losses from their other income.

In short, this is just more "bash the speculators" from the usual suspects, liberal democrats and one of the dumbest republicans in the senate, who also champions all kinds of ridiculous handouts and subsidies for farmers.

 

[TraderZones]

This thread is based on a lot of fallacies. The listed article said:

Institutional investors such as hedge and pension funds speculating in commodity markets could face higher tax rates on their trading profits if a new proposal in the Senate gains momentum.

It does NOT say private traders

 

[Jayford]

Quote from TraderZones:

This thread is based on a lot of fallacies. The listed article said:

Institutional investors such as hedge and pension funds speculating in commodity markets could face higher tax rates on their trading profits if a new proposal in the Senate gains momentum.

It does NOT say private traders

That is why I put the question marks in there. Parts of the article alluded to all 1256 contracts. I was wondering if anyone knew if all futures traders would be affected.

 

[Jayford]

Quote from Dr. Zhivodka:

60/40 is a legacy from Rostenkowski when he chair of Ways amd Means. I'm surprised it lasted this long after he was booted from office in shame in 1994.

Yeah, I forgot how it came to be in the first place. Enlighten me?

I have seen members of congress try to kill it off a few times, only to have the exchanges start screaming with their Illinois representatives in tow. Something about how they would lose biz to foreign exchanges. I'm not so sure about that, but I have always been happy the argument worked.

 

[smilingsynic]

Quote from AAAintheBeltway:

Comparing traders to those in the oil and gas business obscures several very important points. They do not necessarily pay ordinary income rates. They could pay corporate rates, or they could be organized so that they are taxed as individuals. They could take most of the income as dividends at 15%. Moreover, they get a lot of tax deduction unavailable to traders, plus they can deduct losses from their other income.

In short, this is just more "bash the speculators" from the usual suspects, liberal democrats and one of the dumbest republicans in the senate, who also champions all kinds of ridiculous handouts and subsidies for farmers.

Your response does not really address the question at hand; Why do futures traders deserve preferential tax treatment?

A trader who buys and sells a futures contract the same day gets to count some of the gains as "long term". This makes no sense.

One does not have to be a liberal democrat to see the illogic in that.

 

[Pa(b)st Prime]

Quote from smilingsynic:

Your response does not really address the question at hand; Why do futures traders deserve preferential tax treatment?

A trader who buys and sells a futures contract the same day gets to count some of the gains as "long term". This makes no sense.

One does not have to be a liberal democrat to see the illogic in that.

How are losses "treated"?

That's your answer.

 

[AAAintheBeltway]

Quote from smilingsynic:

Your response does not really address the question at hand; Why do futures traders deserve preferential tax treatment?

A trader who buys and sells a futures contract the same day gets to count some of the gains as "long term". This makes no sense.

One does not have to be a liberal democrat to see the illogic in that.

I think you're looking in the wrong end of the telescope. Why should cap gains be taxed at all and particularly at ordinary income rates? The money that is invested has already been taxed at least once, probably at high ordinary income rates.

Dynamic economies like Hong Kong and Dubai recognize that taxing cap gains is counterproductive. Are the poor of chicago worse off because of the success of the CBOT and MERC? Of course, if your focus is class warfare rather than growing the economy, you might have a different viewpoint.

 

[Jayford]

Actually many countries no longer tax cap gains, or have very low rates. As you state, it is double taxation and counter productive.

At least leave the rates low. Since the 80's, when ever rates were raised, revenue dropped. Significantly, and at a rate that could not be explained away by changes in GDP, etc. Same thing in reverse for when they were lowered.

raising cap gains to 20% or more (28%?), as Barak wishes to do, is so beyond retarded its mind boggling. Obama is one smart guy most of the time, but he obviously doesn't know shit about economics. He understands that you need revenue to offset spending (which is going to be forced anyway eventually), but he obviously doesn't get the detrimental revenue effect of raising cap gains.

 

[smilingsynic]

Quote from AAAintheBeltway:

I think you're looking in the wrong end of the telescope. Why should cap gains be taxed at all and particularly at ordinary income rates? The money that is invested has already been taxed at least once, probably at high ordinary income rates.

Dynamic economies like Hong Kong and Dubai recognize that taxing cap gains is counterproductive. Are the poor of chicago worse off because of the success of the CBOT and MERC? Of course, if your focus is class warfare rather than growing the economy, you might have a different viewpoint.

You have not answered the question and instead are trying to start a new one.

Once again, why should futures be given preferential tax treatment? Why should short-term gains be taxed in part at long-term rates? Where is the logic in that?

 

[Pa(b)st Prime]

Quote from smilingsynic:

You have not answered the question and instead are trying to start a new one.

Once again, why should futures be given preferential tax treatment? Why should short-term gains be taxed in part at long-term rates? Where is the logic in that?

Did you read my post?

Futures losses are treated as capital losses. They're capped at 3k a year. In a world where most stock trading is already taking place in tax exempt retirement accounts the reasoning behind the dichotomy should be obvious.

When i traded on the floor the tax code was a joke. Here's an example.

Brokerage income: 200k
Trading losses: (100k)

In a normal world one would think their income based on those numbers was net 100k. Not in Tax World. Under this code ones income would be $197,000. You'd be taxed on 200k minus a 3k trading loss.