The Shadow, Author at The Shadow Banker

A little over a decade ago, I decided to take a very close look at the personal tax return that my accountant prepared for me. After scrutinizing it very thoroughly, what stuck out most in my mind was the recalculated dividend and capital gain rates after they went through the Alternative Minimum Tax (AMT) meat grinder. Having worked in money management for many years, and incorporating the trade off between selling a security or not based on its being classified as a short term versus long term gain, as well as stressing to individuals the importance of the latter in their total net returns, I was disheartened to see that the “advertised” number of 20% or 15%, really did not apply to many individuals previously categorized as High-Net-Worth(HNW). Back in the early 90’s, if you had a million dollars in liquid net worth, you were considered wealthy. Though that number is laughable today, security sale decisions were based on the assumption that an individual was in the highest income tax bracket of 39%. Thus having to pay only a 20% rate, or even better 15%, was a huge incentive to wait it out. But the reality is that the advertised and politically trumpeted number of 15 or 20, is only applicable to the extremely wealthy. At the lower end, the poor and middle class have minimal savings outside of their pensions and 401k’s. Let’s be realistic: how much is a family of four making $100,000 a year, or even $150,000, going to save after taxes??? Thus they are not really subject to capital gains/dividend taxes, whatever they be.1 At the lowest income levels, there are no cap gains taxes, nor are there likely any cap gains, or capital for that matter. But just when you squeeze into the upper middle class, and finally are able to accumulate some discretionary income, that is when the government throws you a curve ball to keep you in line. [Read more…] about TAXES: “A SPECIAL PLACE IN HELL”

One of the great things about being a blog, as opposed to a reporter, is one doesn’t have to hunt down the data on a statement like this. It’s kinda like porn, when you see it you know it. I know and you know there’s no way a family of four making $150,000 a year is going to sock away more than 5 to 10 grand after taxes …a pittance. [↩]

Hunters Point South is thirty acres of prime waterfront property directly across the East River from Manhattan in Queens, New York. Until a year ago, it arguably could have been considered the most valuable piece of land in America1. In addition to unparallelled views of all five boroughs, especially the iconic Manhattan skyline, it provides easier access to Midtown(New York’s largest central business district, the busiest single commercial district in the United States, and among the most intensely used pieces of real estate in the world)2 than most places within Manhattan, whether by car or subway. When combined with the ability to create new construction containing all the features desired by Chinese tycoons, Russian oligarchs, private equity titans, and others of that uber-wealthy ilk; this extraordinary once in a lifetime property could demand top dollar. Instead, it is owned by the City of New York, which has decided to use this choice parcel to develop something they have termed “affordable housing.”

‘Hmm,’ you’re thinking, ‘that seems to be a very benevolent thing to do, maybe the politicians finally got it right?’ They did not. They completely missed, or intentionally utilized, the sleight of hand that takes from one middle class strata and gives to another. [Read more…] about THE CRUSHING OF THE UPPER MIDDLE CLASS

Here’s the math and thesis: http://bit.ly/1dilVay [↩]
http://en.wikipedia.org/wiki/Midtown_Manhattan [↩]