Jim Rickards nails it again

[verdo]

Re: EJ on gold tax

I agree, money is a motivator for the government, but not the main motivator this case.

The windfall tax would serves two purposes: 1) Bring in money, 2) Crush gold as a competing currency.
The latter is the main reason for the tax . . . because the government can always print as much money as they want

How much money would they realistically bring in from it though? A tiny population holding gold, and of that population, some fraction of them may not even sell their gold to them if such a tax were made. This may be a case for owning silver and other precious metals. Even if they put that much attention on gold, I think other precious metals and commodities could slip under the radar. This is partly why I was saying why it made sense for Jim rickards to suggest not going all in on gold. With those risks in mind, it is good to diversify because its unlikely that they would windfall profit tax everything

[NCR85]

Re: Jim Rickards nails it again

The last part of the interview made be raise an eyebrow: he talks about how there are winners and losers in a currency war and the winners are those that hold tangible assets whereas the losers are "everyday Americans". Real estate is included in "tangible assets". So the vast majority of people, who have most of their net worth invested in housing, on borrowed money no less, have nothing to worry about??

It seems to me that the main loser in an inflationary scenario is the counterparty to all that mortgage debt: the banking system.

Have to correct one of my own mistakes here. Just that inflation takes off does not mean that incomes rise at a commensurate pace. So the inflationary end-game scenario is likely one in which individuals' real wages get squeezed as a means of rebalancing the finance system, especially on a global level. This means their mortgages get no easier to pay down.

[raja]

Re: Jim Rickards nails it again

Just to clarify.

A windfall tax on gold: would this tax be applied when the gold is actually sold? what if you just do not sell it? or will it tax gold property?

It's hard to say what the government would do . . . .
Just guessing, but I would say that the tax would only be applied when the gold is sold. The reason I say this is that it would be difficult to verify gold transactions that happened in the past, while new transactions could more easily be checked.

So, I think if you don't sell the gold, you won't get the tax.

There is one question I have . . . .
If you hang on to the gold, and you are retired with a very small income from Soc. Sec or whatever, you could cash in an ounce of gold every year. If your total income, including the gold, was in a low bracket, how would the IRS treat it?
Would the IRS say, "You don't have to pay any tax for your other income because it doesn't meet the taxable threshhold, but you must pay the full tax on your gold profits." Or would they treat any gold profit below a certain amount as ordinary income?

and would not this tax destroy gold paper market?

To answer this question, ask yourself whether you would buy any asset for which you would have to pay a 90% profits tax. I wouldn't. So I think a big windfall tax would destroy both the paper and physical market in the US. If other countries enact similar taxes, it would affect the world market.

By the way, some people think that the government will not tax gold at a high rate because it fears people will go to the black market. I just read this, "Collectibles tax rates (which apply to gold) could be going up substantially in 2013 because the 28% tax rate on gains from the sale of these collectibles could be as high as 33-39.6%." In the 50s, the tax on the wealthy was 90%.

[Polish_Silver]

Gold taxes

. . .
Would the IRS say, "You don't have to pay any tax for your other income because it doesn't meet the taxable threshhold, but you must pay the full tax on your gold profits." Or would they treat any gold profit below a certain amount as ordinary income?

My understanding is that the "tax brackets" only apply to "ordinary income", that is "little people". Which means, the low rate for capital gains applies to people getting millions each year, and the high "collectibles" rate applies if you sell a single oz, and have a minimum wage income.


Tax accountants, please check that!

A major tax reform would be to tax people on total income, rather than giving tax preference to capital gains and dividends--as though those were the people who needed help!

[verdo]

Re: Gold taxes

The tax system here in Canada on capital gains is a beautiful thing. Basically, whatever gains you make (on gold for example), you take that profit and you divide it in half. Then you pay your personal income tax rate on just half of the gains. For me, since I'm just a student and dont make a huge amount, I fall under the lower end of the tax bracket so I pay something like 20% on half the gains whenever I sell, which is pretty fair imo. The fact that gold is treated as a collectable in the USA is ridiculous. As if you guys are buying it as a lifelong keepsake or something...