Common-Sense Fix for Economic Issue....

[TnTWalter]

http://www.daveramsey.com/media/pdf/the_common_sense_fix.pdf

 

[Golf4food]

Sounds good to me... but when did Washington ever do anything based on common sense?

 

[becca-becca]

Sounds good to me. Maybe they should ask someone who is not in politics for a solution this time instead of continually messing up our country.

 

[RitaE]

Cut the Capital Gains tax?

OMG, Dave Ramsey is definitely on the side of those evil rich people.

 

[Chicago526]

I don't know about the rest (because I know less than zero about how the markets work) but I'm not sure how lowering the CG tax would help. Do investors really stay out of the market just because of a 15% tax? "Gee, I'd love to invest in this company that I think can make me some real money, but I just can't stomach paying that tax. I'd rather make nothing than 85% of something".

If someone can show me some non-partisan data on how eliminating CGT will increase investment, great. But on the surface it doesn't make any sense to me. Taxes isn't what is keeping me from investing in the stock market (other than my 401k), not having spare cash is!

 

[Stitch And Friends]

I'm not so sure about this part:
"b. Cancel all prepayment penalties to encourage refinancing or
the sale of the property to pay off the bad loan. In the event of
foreclosure or short sale, the borrower will not be held liable
for any deficit balance. FHA does this now, and that
encourages mortgage companies to go the extra mile while
working with the borrower—again limiting foreclosures and
ruined lives."

Getting rid of pre-payment penalties is not going to help a lot of people refinance their current mortgages. The problem is property values are down and a lot of people owe more than the house is worth. In this market no bank is going to give someone a loan if they have no equity (or worse negative equity) in the property. I'm in no way saying the goverment bailout is the best solution, but I don't agree with this one either. Unfortunetly I don't think any one knows what the best solution to this problem is.

 

[peggster]

I'm not sure what to think about this. I'm glad to see a new proposal. But I'm wondering about a couple of things:

"1. Rewrite any mortgage that is more than three months delinquent to a 6% fixed-rate mortgage."
So what about the other borrowers who aren't delinquent but have a higher rate? Why should they be excluded from getting a better rate even though they've kept up with their mortgage payments?

"a. Remove the capital gains tax completely. Investors will flood the real estate and stock market in search of tax-free profits, creating tremendous—and immediate—liquidity in the markets. Again, this costs the taxpayer nothing. [emphasis mine]"
I would disagree that this costs the taxpayer nothing. Ultimately it means less tax revenue, and that means one of two things: either spending cuts somewhere to account for the decreased revenue, or a higher budget deficit and national debt. So in my opinion, it does cost us all something.

Anyway, just my two cents.

 

[mikehn]

Its obvious Americans dont like the idea of bailing out wall street. Instead of the top down bailout approach, Americans might have more sympathy for a bottom up bailout approach of rewriting troubled mortgages. I agree with everything except eliminating mark to market.

 

[julie2818]

I don't know about the rest (because I know less than zero about how the markets work) but I'm not sure how lowering the CG tax would help. Do investors really stay out of the market just because of a 15% tax? "Gee, I'd love to invest in this company that I think can make me some real money, but I just can't stomach paying that tax. I'd rather make nothing than 85% of something".

If someone can show me some non-partisan data on how eliminating CGT will increase investment, great. But on the surface it doesn't make any sense to me. Taxes isn't what is keeping me from investing in the stock market (other than my 401k), not having spare cash is!

From my understanding, Capital Gains tax is not just on stocks. It is also a tax on profits from real estate. Therefore, if the CG tax was eliminated, I do believe that those that could afford to do so, would buy a lot of the real estate out there on the market; therefore, reducing the over-abundance of real estate available and with that, the prices of housing would stabilize and might actually turn upward again.

Yes, this does benefit the rich to start with as Dave Ramsey's article says. But it is the rich that would put money back into the economy, and they are the ones that ultimately provide jobs.

Just my 2 cents ...

 

[Chicago526]

From my understanding, Capital Gains tax is not just on stocks. It is also a tax on profits from real estate. Therefore, if the CG tax was eliminated, I do believe that those that could afford to do so, would buy a lot of the real estate out there on the market; therefore, reducing the over-abundance of real estate available and with that, the prices of housing would stabilize and might actually turn upward again.

Yes, this does benefit the rich to start with as Dave Ramsey's article says. But it is the rich that would put money back into the economy, and they are the ones that ultimately provide jobs.

Just my 2 cents ...

Well, I see it as the same thing (stock vs real estate). If an investor is confident they'll make a good return, a 15% tax shouldn't be a deterant. You don't pay the tax until you sell the investment, so it's not as if you're having to pay taxes while not earning off your investment. Plus with real estate there is already an exemption for $250,000 of profit as long as you've lived there for 2 out of the last 5 years, so the average homeowner isn't paying it either.

My issue isn't with a "tax cut on the rich", if I honestly thought it would help I'd be okay with it, at least short term. It's that I just don't see how it would help. Anyone with the money and inclination to invest in real estate, stocks, etc. is already doing so, with or with out a capitol gaines tax.

 

[mmouse1239]

I still don't get why people assume that rich people are going to fix the economy....they take their big tax breaks and help only themselves. This trickle down notion is just another example of the rich getting richer and the poor getting poorer. That's why the rich are rich...they have all of the breaks while the rest of us struggle to make ends meet on a day to day basis. Big corporate bosses get huge paychecks while their workers are laid off and their pensions are lost. It's about time somebody in Washington looks out for us!

 

[HeatherC]

Have to disagree with the last poster. Hope you don't take offense, but it's NOT time for Washington to look out for us little folks. IT'S TIME FOR LITTLE FOLKS TO LEARN TO TAKE CARE OF THEMSELVES and realize that they can't always have instant gratification.

We live in a capitalist society. If the government keeps stepping in and making everyone pay, that is becoming a socialist society. I, for one, don't want that to happen.

Don't get me wrong, the whole financial mess is a complete disaster. But the problem is that now everyone wants to be bailed out. Businessess, banks, airlines, people. When does it stop?

I certainly realize that there are many people out there who desperately need help. But...we ....not the government should be the ones stepping in to help our fellow citizens.

There are also an awful lot of people out there who don't want to help themselves or can even be bothered learning to help themselves. It's easier for someone else to do it for them.

Just my opinion.

I personally like the post that said give the $700 billion back to every adult. We all pay tax on what we get which immediately goes back to the govt. and cuts that from 700 to 500 billion pretty quickly. The rest would then probably for the most part wind up right back in the marketplace....because we all know that most people would still continue to spend. Problem with that is they would all be broke again 6 months down the road.

What a mess!

 

[Mickeyistheman]

Have to disagree with the last poster. Hope you don't take offense, but it's NOT time for Washington to look out for us little folks. IT'S TIME FOR LITTLE FOLKS TO LEARN TO TAKE CARE OF THEMSELVES and realize that they can't always have instant gratification.

We live in a capitalist society. If the government keeps stepping in and making everyone pay, that is becoming a socialist society. I, for one, don't want that to happen.

Don't get me wrong, the whole financial mess is a complete disaster. But the problem is that now everyone wants to be bailed out. Businessess, banks, airlines, people. When does it stop?

I certainly realize that there are many people out there who desperately need help. But...we ....not the government should be the ones stepping in to help our fellow citizens.

There are also an awful lot of people out there who don't want to help themselves or can even be bothered learning to help themselves. It's easier for someone else to do it for them.

Just my opinion.

I personally like the post that said give the $700 billion back to every adult. We all pay tax on what we get which immediately goes back to the govt. and cuts that from 700 to 500 billion pretty quickly. The rest would then probably for the most part wind up right back in the marketplace....because we all know that most people would still continue to spend. Problem with that is they would all be broke again 6 months down the road.
What a mess!

I agree with you on what I bolded there. I don't think the big though is what is needed it might be less but we will never know that. I mean do we need a scare to help us save more? I don't know? I am in debt and it was an issue but now things are very bad and not getting better. I don't spend above my means but I didn't have Health Insurance for a year - so all of those expenses are on my CC I need the medication and the Dr. Visits but dont' have the cash. Was that me being irresponsible? I needed medication and I needed a procedure done or else I could have had a bigger issue.

 

[HeatherC]

Mickeyistheman - Definitely not irresponsible. That is what I mean when I say there are a lot of people in real need. Unfortunately, a lot of people just messed up and so did a lot of companies. Now we all have to pay for it.

I wish you the best. Medical issues are a nightmare. People certainly don't need the added stress of how to pay for it or have it wiping them out completely.

That's not what I'm talking about. I'm angry about all the others who just love to overspend because they think they deserve a certain lifestyle. Makes me furious.

 

[mm_ja]

Want to fix things.

1. Take $700 Billion and buy every vacant house in America.
2. Tear all of them down
3. Start over minus sub prime loans

 

[wendy46001]

Guess i see things a little differently
in my area it is the investors that ruined the housing market
Creating artificially high demand and prices for thearea ….so why would we surrender the whole market to them??

these lets buy and flip homes people are not creating communities, just empty shell homes changing hands as their value went up and up

and now that the bubble has popped ....they are walking away from homes that no longer hold their value

So no lowering of interest rates will keep these people in a bad investment
so that 6% idea is out

Not to mention and what about all us folks who have 6.5 and are paying our bills, do we get reset???

Also killing the capital gains will start the cycle over again, and we'll have more people jumping in to make a quick buck....what happens when the tax comes back??? Will they walk again?

 

[jimmiej]

"a. Remove the capital gains tax completely. Investors will flood the real estate and stock market in search of tax-free profits, creating tremendous—and immediate—liquidity in the markets. Again, this costs the taxpayer nothing. [emphasis mine]"
I would disagree that this costs the taxpayer nothing. Ultimately it means less tax revenue, and that means one of two things: either spending cuts somewhere to account for the decreased revenue, or a higher budget deficit and national debt. So in my opinion, it does cost us all something.

Anyway, just my two cents.

Reagan showed that cutting CG taxes actually increases govt. receipts.

 

[Master Mason]

I personally like the post that said give the $700 billion back to every adult. We all pay tax on what we get which immediately goes back to the govt. and cuts that from 700 to 500 billion pretty quickly. The rest would then probably for the most part wind up right back in the marketplace....because we all know that most people would still continue to spend. Problem with that is they would all be broke again 6 months down the road.

What a mess!

that extra $500 or so bucks every adult gets is not going to make a difference.

 

[peggster]

Reagan showed that cutting CG taxes actually increases govt. receipts.

I would be curious to learn more about how this worked. Can you point me to somewhere I could read more?

Thanks!

 

[ead79]

I'm not sure what to think about this. I'm glad to see a new proposal. But I'm wondering about a couple of things:

"1. Rewrite any mortgage that is more than three months delinquent to a 6% fixed-rate mortgage."
So what about the other borrowers who aren't delinquent but have a higher rate? Why should they be excluded from getting a better rate even though they've kept up with their mortgage payments?

When I read Dave Ramsey's plan, that exact same thing crossed my mind as well. My mortgage rate is above 6% due to the mortgage product we chose, but we make our payments on time and in full. It seems like an unfair idea to me to set up a system where those who are behind in their payments get a better rate than those who are on time. It seems risky to me to essentially set up an incentive for people to be late in order to get a more attractive mortage rate.