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Archive for February, 2012

The tax proposal included in the Simpson Bowles proposal is an excellent effort, clearly in the right direction for America.

http://www.fiscalcommission.gov/sites/fiscalcommission.gov/files/documents/TheMomentofTruth12_1_2010.pdf

Relative to the tax code, the report describes its goals as:

“Reform and simplify the tax code. The tax code is rife with inefficiencies, loopholes, incentives, tax earmarks, and baffling complexity. We need to lower tax rates, broaden the base, simplify the tax code, and bring down the deficit. We need to reform the corporate tax system to make America the best place to start and grow a business and create jobs.”

The fundamental features of their proposal that I like are the elimination of the alternative minimum tax (a non-functional dinosaur that does not serve its originally intended purpose as currently defined), elimination of itemized deductions (replacing with tax credits), moderate parity of corporate with top individual rates, unification of tax rates for all forms of earned and unearned income.

I feel that the size of the credit that they propose for home mortgage interest and charitable contributions is much too large, 12% as a non-refundable credit. As a non-refundable credit, low-income taxpayers would not receive any benefit, while middle income people would. And, a 12% credit means that the federal government is paying 1/8th of people’s mortgage interest and charitable contributions. I don’t believe that the federal government should subsidize either. I would propose that all itemized deductions and most above the line deductions be eliminated. (Employee expenses are an exception and they should be deductible before the line.)

The emphasis on reducing the corporate and individual income tax rates are the obvious republican “contribution” to the effort. I think that the tax rate necessary to levy to fund legislated governmental commitments (law at that point), should be a following metric, rather than the first thing committed.

Simpson-Bowles proposes as maximum long-term individual tax rate of 28% (higher than what old wealth pays on average today, but lower than what the new working and enterprising rich pay). That represents a 7% decrease from current 2012 maximum rates, and 11% decrease from sunsetted Clintion era top rates. They propose a maximum corporate tax of 29%, 1% greater than the maximum individual rate (a good feature for being at a higher rate than individual and for near parity with individual rates), but the number itself is likely too low to adequately fund governance.

The one gross and negligent (or political) ommission from the report is clarification of whether social security is an income insurance or a federal pension program, and any consideration of the fairness and affects of that additional 15.3% tax on all work (performed by sole proprietors and employees).

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The Estate Tax

There are three methods by which Americans are taxed currently:

1. Income tax – Federal and many states

2. Property tax – State and municipal real estate taxes (Florida has a small net worth tax)

3. Consumption tax – Federal fuels and use taxes, state and municipal sales taxes

All have passed court muster as valid forms of taxation.

In taxing income, property or consumption, taxes can either be levied immediately (sales and use taxes, and most income taxation), deferred (pensions and other qualified retirement accounts, installment sales, capital gains/losses),  or eliminated (Roth IRA income, step up basis of assets at death – many potential deductions are lost to the wind, eliminated).

My own assessment of the estate tax (unified with the gift tax system), is that the estate tax is a one-time (deferred) property tax. As real estate and other net worth taxes have passed judicial muster, the estate tax as a one-time tax of property, is clearly constitutional.

The only relevant questions relative to the estate tax is whether it is useful in constructing a coherent integrated tax regimen that minimally discourages work, enterprise, charity and development of public assets, or another complement of tax components is more useful and more fair.

Usefulness:

The formation of a tax policy is a design process.

Currently, the design of the tax system significantly discourages work (through usually three income related taxes – regular tax, self-employment tax, and state regular tax), discourages small business enterprise somewhat (through flow-through regular tax, some subject to self employment tax and state regular tax), slightly discourages at-risk investment in new enterprise, slightly discourages at-risk speculation in pre-existing  securities, and incidentally discourages the formation of legacies through an estate tax that functionally only affects those with net worth over $10,000,000 currently (though up to 35% – less than the total tax on the income of a self-employed middle class entrepreneur).

The estate tax serves two critical functions, that are implicit in American culture.

1. To fund needed government expenditures.

The estate tax is significant enough for those with large estates to definitely contribute to the federal budget, but insignificant enough to not be a current operational burden on any existing family or enterprise. 

The statistics on estate/gift tax revenues is very interesting.

http://www.cbo.gov/ftpdocs/108xx/doc10841/Estate_GiftTax_Brief.shtml

In 2007 -2009, the estate/gift tax generated an average of $25 billion in revenues annually, down by half from 2001 (from memory, not statistics). In 2010 – 11, the estate/gift tax generated 15 billion annually, actually down, as the estate tax (but not the gift tax) had been phased out, then reinstated. If the Bush law sunsets, revenues will return to $40-50 billion annually.

In 2012, $5,000,000 of transferred assets are exempt from the estate tax. In 2013, the sunsetting of the Bush/republican tax cuts, will decrease that exempt amount to $1,000,000, with an allowed tax-free spousal transfer, amounting to $2,000,000 without much involved planning. Additional features like funding term life insurance policies, shield a larger amount from tax, with not incidental risk of opportunity costs (if someone dies too late, paying high premiums for an extended period).

2. Preventing the establishment of an “aristocracy”

There is a natural tendency towards concentration of wealth in the society, resulting from the universal assumption that net worth has a right to a return on investment, beyond wealth preservation. If everyone with net assets realizes 2% return on investment above inflation, and does so over a 20 year period, they will have increased their real net worth by 48.5%. To pay a maximum 50% tax on assets beyond $5,000,000 (or $2,000,000 even) is a wash.

If there were no estate tax or inheritance tax, then wealth would centralize in the hands of an elite network of families, common in all other unmediated economies. In a relatively short time, old wealth would become the prominent source of wealth in the society (rather than enterprise), and stay in the same families.

Its a southern vision of “right”, that property is what is meant by the term liberty, rather than the northern vision of work and citizenship comprising liberty.

Fairness:

Aside from the unfairness of unfettered centralization of wealth and formation of an aristocracy, there is another element of unfairness to a tax system that only taxes income and consumption, and not also property.

That is that a very large proportion of the purpose and function of government, is the protection of property. All of the institutions of law, courts, governmental regulations as formalization of judicial decision – agencies – and role of defense, is prominently for the protection of property (not only the protection of person). A large component of property is “going concern value”, which is a mix of protection of enterprise and interests, and of out and out non-productive property.

For those with property adjudicated and defended, to not contribute to the function of federal governance is unfair at the least.

So, to summarize, an effective estate tax is both useful and fair, a good thing, a socially necessary thing. Our ancestors did fight a revolution to distinguish the US from an aristocracy, no?

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There are a few tax principles that guide consistency and congruity over political pandering.

One such principle is that insurance proceeds are immune from taxation. There is a distinction between insurance premiums (life, disability, health, employment, social security) that are paid with before tax dollars (deducted immediately from gross income) and those that are paid with after-tax dollars.

There is strong substantation for regarding proceeds of insurance purchased with after-tax dollars, whether paid by employee or employer, as not subject to tax. An example is the purchase of a pure term life insurance contract by an individual from his/her cash resources. The convention is that the insurance contract is purchased with after-tax money and proceeds are not taxed to any beneficiary.

Much insurance is purchased with before tax dollars, but the proceeds are still immune to taxation. An example. An individual may purchase up to $50,000 in term life insurance coverage through a section 125 employee benefit plan, in which the premiums are deducted from his/her pre-tax income. The payment of proceeds to beneficiary is not taxed.

Similarly, health insurance and disability insurance paid either by the employer and/or contributed to by an employee can come from before tax dollars, but benefits are not taxed.

When an employer purchases a life insurance contract on the life of a key individual (often required by banks as a condition of a considerable term loan), the premiums are not tax deductible, and the proceeds from the contract are also not taxed.

There are exceptions to these rules.

The two most prominent, and most contreversial, are that proceeds from unemployment insurance is taxable income, and that proceeds from social security (a mongrol insurance and investment program) are taxed depending on one’s income.

Unemployment insurance is taxed at a taxpayer’s marginal tax rate. Although many that receive unemployment insurance are low income and are not taxed considerably (or at all if income is low enough), the income does affect eligibility and extent of other tax benefits like the earned income credit in particular.

If there is any tax on an insurance proceed that is onerous to the taxpayer, it is taxation of unemployment benefits. The individuals uniquely don’t have the ability to pay the tax, and even to withold from unemployment benefits causes great and unnecessary hardship.

As other insurance programs are allowable when paid by employer or paid with pre-tax dollars, there is precedent for similar treatment for unemployment insurance proceeds. In fact it is a RARE instance in which insurance proceeds are taxed. I expect that the inclusion of a tax on unemployment insurance benefits is the result of an effort to punish those that are “morally deficient” to be unemployed.

I’ve been unemployed, and received unemployment insurance proceeds, and been taxed on them.

The most significant area in which insurance may be considered to be taxed is with social security.

The nature of what social security benefits are, are itself a subject of great contreversy. They are not purely a state managed pension, nor are they purely a state managed income insurance program. Social security is a bit of both.

Social security is funded equally by employee (withheld from paychecks) and by employer. (Self-employed contribute both the employer and employee portion.) Social security taxes paid by the employer are tax deductible to the employer. Social security taxes paid by the employee are not tax deductible. Employees are taxed on their gross income, not on the net after social security taxes are taken out.

Currently, all social security proceeds are subject to tax, with quite generous income exclusions.

In effect, taxation of social security is the current method of means-testing social security benefits.

Should social security benefits be taxed at all?

I don’t know. Certainly at least the one half that comes from after tax contributions should not be, by both the principles of taxation of investments (only gain is taxed), and the principles of insurance (insurance proceeds are not taxed).

Of the remaining one half, its an open question. If social security is considered an insurance, then it should not be. If social security is considered a pension from employers’ contributions, then it should be.

My own personal feeling is that social security is primarily an income insurance program, paying out (at normal retirement age) 90% of the first $12,000 in average annual income, 30% of the next $30,000 in average annual income, then 10% of the next $68,000 in average annual income.

As such, it should not be taxed to anyone, means-testing or not. Hopefully, the republicans will get past their confusion as to whether taxation of social security is a tax (which they abhore) or is means-testing (which they support). A rose by any other name?

The taxation of social security benefits, is one area in which there truly is a progressive tax structure, at least for those that earned an average of less than $110,000/year per individual. Above that amount, there is no social security tax assessed (though there is a medicare tax indefinitely).

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According to Karl Marx, the term “class” does not refer to the amount of money that you earn, but refers to the relationship to the means of production.

So, in that light, the very favored tax treatment afforded to old wealth of income from long-term capital gains and dividends over income from work and small business enterprise is in fact a class issue, in fact almost by definition.

There is also a very strong correlation between amount and form of income, in that most that don’t have sufficient assets to live off one’s wealth, must work for a living.

Itemized deductions are a class issue as well.

Until 2010, those with adjusted gross income above a certain amount were not eligible to use itemized deductions. There was a treshold income level in which itemized deductions phased out.

Currently, through 2012, there is no disallowance of itemized deductions at any income level.

How do itemized deductions work?

From adjusted gross income, a taxpayer may deduct the greater of total allowed itemized deductions or a standard deduction. The standard deduction for a single individual is $5,800, $11,600 for a married couple filing jointly.

So, if the total of allowed medical expenses, state and municipal taxes, home mortgage interest, charitable contributions, casualty and theft losses, job related expenses, and other expenses (gambling losses, etc.), exceeded the standard deduction, the taxpayer would deduct itemized deductions.

The deductions applied against the taxpayer’s marginal tax rate (the % of the income due in tax on the next dollar of income).

Class issues:

1. Most low income individuals don’t itemize. They don’t have the extent of expenses in which total itemized deductions would exceed the standard deduction.

2. Because of the progressive tax rate structure of the US tax law, a $1,000 spent on charity by a person that does not itemize would not reduce their tax at all, but a $1000 spent on charity by a taxpayer in the 35% tax bracket would reduce their tax by $3,500.

As itemized deductions are in fact a federal subsidy, the federal government does not subsidize the charitable contributions of a poor person at all, while the federal government does subsidize over a 1/3 of the charitable contribution of a wealthy person.

Why is that?

Medical expenses – There are now relatively few allowed deductions for medical expenses, as most poor working class and elderly do not itemize. Some elderly that require extensive nursing care, do itemize for medical expenses.

Those without significant assets don’t itemize. Those with moderate assets often do itemize but at lower tax rates. Those with moderate to considerable assets itemize, but have the ability to adequately fund long-term term care insurance (deductible when paid for each year, and proceeds are not income if they do not exceed $3oo/day).

State and municipal taxes – The federal subsidy at progressive tax rates apply. Those that live in high-tax states and are affluent (New York, California, New Jersey, Massachusetts) are subsidized fairly significantly. In effect, the federal government makes a subsidy to the affected state and municipal governments. Wealthy cities that can get by with low real estate tax rates are subsidized the most. Poor cities that must charge high tax rates to cover their costs are subsidized the least. (Poor cities have higher expenses for education and police, and home valuations are also lower.)

“Them’s that got shall get.”

Home mortgage interest – Again, the wealthiest get subsidized the most. Even if the wealthy don’t need a mortgage, a 4.5% mortgage in which the federal government pays 1/3 of the interest, translates to a 3% interest rate, relatively free money that can then be used for investment purposes and return greater than 3%.

As the poor don’t itemize, the federal subsidy for home mortgages does NOT get more people into homes. Even for those with incomes up to $90,000, the federal government subsidy for mortgage interest is only 15%. As such, the home mortgage interest deduction primarily helps those with income of over $90,000. In some communities, that is really middle class. In my community, someone making $90,000/year is doing well.

Another affect of all itemized deductions is increase the market value of the assets affected. So, rather than help get people into homes, or help people buy up, the market affect is to increase the cost of homes. It helps those that already own homes, and hurts those that do not yet own homes.

Charitable contributions – Again, the federal government subsidizes the charitable contributions of the wealthy much much more than the charitable contributions of the poor.

To my mind, the contribution of $1,000 by a poor person (say 1/30th of their annual income, and reducing their funds for necessities) is worth MORE than the contribution of a wealthy person (1/200th of their annual income, and only coming from funds for superfluities).

So, in the recent past, most poor working people, AND most very wealthy did not benefit from itemized deductions. Only the mid upper middle class benefitted.

Now, the upper class is subsidized without limit and at a rate of 35% of upper class expenditures on itemizable deductions.

The Simpson Bowles proposal includes the elimination of itemized deductions in favor of parallel tax credits (at 12% of the expenditure). House Republicans propose to eliminate itemized deductions for state and municipal taxes, but not for charitable contributions (primarily to religious institutions).

I think the House republican proposal is loopy and an effort at “establishment of religion” through innovative means.

I like the idea of tax credits rather than itemized deductions, however I think a subsidy of 12% of home mortgage interest for example is too juicy, and should be reduced to 3%, if at all.

In all cases, as significant economic decisions were made on the basis of incorporating existing tax law into the decisions, any change should be gradual.

So, for example, I propose the elimination of all tax deductions, replaced by small tax credits, but phased in over a 10-year period. So, for example, I propose that mortgage interest be 100% deductible in 2013,(with a $300,000/year itemized deduction phaseout), 90% in 2014, 80% in 2013, etc. until entirely phased out.

But, itemized deductions are a CLASS issue, and they are a FAIRNESS issue.

 

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There are so many problems with itemized deductions that its difficult to know where to start.

Lets start with the problem associated with legislative process.

With most Congressional authorization of specific expenditures, whether through the direct earmark process or through the funding of agenices (acting within legislative guidelines), there is a direct legislative path of authorization for federal spending (taxpayers).

In contrast, itemized deductions amount to a federal subsidy of particular expenditures. So, for example, when an individual takes a deduction for medical expenses, the federal government is in effect paying for those expenditures to the extent of the tax affect of those deductions. But, there was no Congressional authorization for the specific expenditure, and no way for the legislature to even determine how much will be spent on authorized medical expenditures in any legislative year.

Similarly for other items of itemized deductions. So, itemized deductions for real estate taxes paid to municipalities and income taxes paid to states are an unlegislated authorization of federal subsidy to those governmental entities that tax. States and municipalities vary in their rate of taxation, so itemized deductions amount to a federal subsidy of high tax states.

Home mortgage interest similarly. The federal government functionally subsidizes all in the real estate supply chain (pre-existing homeowners, brokers, mortgage providers) by the home mortgage itemized deduction. Again, there is no Congressional authorization for the specific subsidy, but individual taxpayer determined.

Casualty losses similarly, though there is no side beneficiary of the subsidy. Noone hopes for an uninsured casualty loss. It doesn’t enter into individuals’ deliberate tax planning, and then does not unduly affect public behavior.

Job related expenses. To my mind, that is a cost of earning income, and should be directly deducted from taxable income above the line. That it is in itemized deductions at all is a mistake.

The worst example though of implied legislative authorization is in the area of charitable contributions. Again, the logic of itemized deductions (or credits for that matter) amounts to a non-legislated expenditure of otherwise federal funds, determined not by legislative authorization, but but by individual taxpayer strategy.

Charitable contributions are made to social welfare organizations, scientific research organizations, educational institutions. Each of those are also recipients of federal and state funding, and individual contributions to those organizations may be considered as reducing the otherwise federal obligation.

The problem occurs with contributions to religious organizations. Religious organizations have expedited approval of 501(c)3 status, and are subject to quite lenient regulation and tax treatment of clergy compensation for example.

Most importantly, as all itemized deductions amount to a federal subsidy of the institution and activity, the allowance of an itemized deduction to religious institutions amounts to federal funding of those religious institutions. If such funding appeared directly in legislation, the legislation would be unconstitutional as a violation of the first amendment establishment of religious clause, now translated as separation of church and state.

I’ve been reading the Simpson Bowles tax proposal. I like most of it. I like that the Simpson Bowles proposal suggests transforming tax deductions into tax credits (so that all taxpayers benefit equally, and that the federal government subsidizes activities proportional to the activity itself). I dislike that the subsidies exist at all, long-term.

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People save for a rainy day, for a major purchase, to fund an enterprise, for children’s education, for other dependents’ needs, for retirement, for charity, to pass on to heirs.

Saving for a rainy day, dependents’ needs, and for retirement are minimum necessities. Unless one has family that is severely ill, the saving for retirement is almost always the most significant purpose of saving for the 99% that work for a living.

For generations, conservative republicans and democrats alike have emphasized the importance of personal saving for retirement, noted that most aren’t aware of how significant a task that is, and have sought to encourage and even compel retirement saving through favored tax treatment for qualified retirement vehicles.

The most conservative (libertarians) regard that encouragement as misguided, an example of intrusive governmental paternalism, an abdication of personal responsibility, and an enabling of personal irresponsibility.

Assuming that personal saving is a good, something that everyone should do individually, and something that the society has a vested interest in ensuring that everyone has resources to live on during retirement, the federal government has enacted social insurance (social security and medicare), and created what used to be favored tax treatment of qualified retirement saving.

I’ts much much more confusing than that.

Currently, individuals can save outside of a qualified retirement account, without limits as to how much to save and/or invest, or in what vehicle. The tax law does incongruously favor investment in stock of corporations or interests in partnerships and other enterprise over debt or real estate, and certainly over sole proprietorships.

For those that work, we experience the forced savings/insurance of social security, at 15.3% of their gross income. (Less than that in practice), but only up to $110,000 of gross income. (For others, it’s not a “virtue” to save?)

The oddity of the current law is that in contrast to dividends (taxed in the year after receipt) and long-term capital gains (taxed following the year of sale – could be after retirement age), which are taxed at a maximum of 15%, and not at all for most that are retired, distributions from a qualified retirement plan are taxed at one’s marginal tax rate.

IRA’s (not Roth IRA’s), SEP’s, SIMPLE’s, 401(k)’s, 403(b)’s, profit sharing, defined benefit pensions, great and effective idea when enacted. Less so now.

Married filing joint

 Income                                       Capital gain                    Distribution IRA

– 10,000                                            0%                                     0%
– 20,000                                            0%                                     .5%
– 30,000                                            0%                                   3.7%
– 40,000                                            0%                                   6.3%
– 50,000                                            0%                                   8.0%
– 60,000                                            0%                                   9.2%

Someone that makes $60,000 in a year should pay tax, even $5,500.

But, the sad logic of the current tax regimen, is that employees are often better off saving outside of a retirement plan, if they have the option.

Counter to conventional wisdom, counter to what is intended.

If people don’t put money away in a defined contribution plan would they still save? Hard to know. The penalty for early withdrawals from most defined contribution plans (IRA’s, SEP’s, SIMPLE’s, etc.) keeps most retirement money saved.

So, if people had the cash lying around, liquid or convertible to cash, would they spend it rather than save. I don’t know. Ask a sugar addict if they are more successful at dieting if there is candy in the house, or if candy is innaccessible.

So, maybe we should just sock the money away in our IRA’s anyway, take the current tax deduction, keep the money in the IRA (actually saving), and accept the slightly higher tax rate at redemption.

But, the tax law used to encourage it. Now its a convoluted lifestyle and math decision.

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People work individually and enterprise at what they feel called to do. People pursue paid corporate careers based on status and income that they can realize over their lives.

Capital however is more machine-like and tends to be channeled to the highest total return.

The poor have no capital, no savings, very very limited retirement plan assets. Working trades people and middle management can make ends meet, have some savings, but limited capital that they can put at risk. Professionals, successful entrepreneurs, and old wealth have money that they can put at risk.

The tax law does change the math of where people invest.

Total return on investments is comprised of income received over the life of an investment plus the gain (or loss), on the principle amount invested.

Different investments spin off different combinations of return.

1. A passbook account or CD pays interest (either distributed or reinvested) and then you get the balance out when you choose (no gain).

Outside of a qualified retirement plan, passbook interest is taxed at your marginal tax rate. So, for a taxpayer in the 10% tax bracket, a CD that pays 3% interest, realizes 2.7% after taxes. For a taxpayer in the 33% bracket, the 3% CD realizes 2% after taxes. As there is no gain on a CD or passbook, only the interest realized is relevant.

2. A bond pays interest and then you get the face value of the bond at maturity.

Outside of a qualified retirement plan, non-municial bond interest is taxed at your marginal tax rate, and the gain or loss that you realized on the difference between what you paid for the bond originally and its face value (if held to maturity), or what you sell it for on the open market, is taxed at a maximum of 15% (if held longer than one year, a favored tax rate) or your marginal tax rate if held for less than one year.

Interest on municipal bonds are not taxed at all, but the gain or loss at the sale or maturity of the bond is taxed at capital gains rates.

For a taxpayer in the 10% bracket, a non-municipal bond paying 4% interest, will realize 3.6% return. The gain/loss is largely determined on the basis of prevailing interest rates. If interest rates increase, bond market prices will decline. If decreasing, bond market prices will increase. A taxpayer in the 10% bracket currently pays 0% tax on gains held more than year (but can only deduct up to $3,000/year on losses).

A taxpayer in the 33% bracket would realize 2.67% on the 4% interest, and pay 15% on any long-term gain.

3. Preferred or common stock paying dividends

A shareholder in a C corporation that pays dividends is taxed on the dividends received, and ultimately on the capital gain on the sale of the stock in the marketplace or liquidation. Dividends are taxed at a maximum of 15%, and long-term capital gains are taxed at a maximum of 15%.

Both dividends and long-term capital gains are not taxed at all for individuals in the 10 and 15% brackets, and are both taxed at a maximum of 15% for taxpayers in higher brackets. Again short-term capital gains are taxed at one’s marginal tax rate.

4. Preferred or common stock in corporations not paying dividends. Assuming that the corporation will not pay dividends in the future, the only economic transaction anticipated is the sale of the stock. Short-term gains are taxed at marginal tax rates. Long-term gains are taxed at a maximum of 15%.

5. Distributions from a qualified retirement plan (pensions, IRA’s, 401(k)’s, etc.). Except for a Roth IRA, investments made within a qualified retirement plan are taxed at the taxpayers marginal tax rate, regardless of what investments are made within the plan. Even though dividends are taxed at either 0 or 15% outside of a retirement plan (reduced rates), they are taxed at one’s marginal rates (higher) when withdrawn.

So, we have a few quandries, incongruities.

1. Some unearned income is taxed at one’s marginal tax rate, while other unearned income is taxed at reduced rates, while some is not taxed at all ever. So, where would capital go? For those in the very top marginal tax brackets, it goes to state and municipal bond interest (not taxed), then to preferred stock (like interest but taxed as tax favored dividend), then to common stock, then to interest.

State/municipal bond interest incurs little risk (little risk and no tax).CD’s incur very little risk (FDIC protection, but fairly high tax). Preferred stock incurs some risk, more than corporate bond interest, but less than common stock (little risk and favored tax rates). Common stock incurs more risk. (more risk and favored tax rates).

A taxpayer could invest in preferred stock in a utility (and pay a maximum of 15% tax), or in bonds from the utility (and pay 33% tax), even though the actual economic substance of the investment is very similar.

2. Retirement account incongruity (tomorrow)

All unnecessary oddities.

The money goes where it is channeled, even if one tax feature conflicts with another.

Stocks are favored in the tax code, and that in itself creates a bubble, with lots of gas in what should be liquid flows.

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