16 Feb 2018


Contra Krugman, Potpourri 3 Comments

==> In the latest Contra Krugman, I’m a hot little tamale when it comes to Big Spending Republicans.

==> I am quoted in this Daily Caller article about Scott Pruitt’s claims that global warming could have benefits.

==> The Idaho State House has passed a bill that would exempt capital gains on gold or silver from state income taxes. However, there are some claims in this enthusiastic blog post that don’t sound right to me. Do people know more about this?

For example, consider this introductory paragraph: “The House of Delegates Revenue and Taxation Committee Committee introduced House Bill 449 (H449) on Jan. 30. The legislation would exclude gains and/or losses on the sale of precious metals coins and bullion reported for federal tax purposes from an Idaho taxpayer’s taxable income. In effect, H449 would allow Idaho taxpayers to offset federal capital gains/losses reported to the IRS on their state taxes.”

It’s that last part (in bold) that doesn’t sound right to me. It’s one thing to say that the State of Idaho won’t charge you income tax on your capital gain if the market value of your gold coins goes up from when you buy/sell them, but that’s not the same thing as saying you can offset the capital gains tax you pay to the federal government, right? And surely the bill just means the Idaho government is doing the former?

Also, this didn’t sound right to me: “H449 would be a revenue neutral policy over the long run. That’s because both precious metals gains and losses are backed out of the calculation of taxable income for Idahoans.”

Is the author saying he expects gold and silver to have a constant price (on average) in terms of dollars over the next century? In that case, what’s the harm in using fiat notes as money?

To be clear, I’m totally on board with H449. Indeed, it’s precisely because I want to write on this, that I’m pausing to make sure I understand the situation, and this particular write-up doesn’t match up with my prior views.

3 Responses to “Potpourri”

  1. Matt M says:

    “precious metals gains and losses are backed out of the calculation of taxable income for Idahoans”

    I believe in most cases (state and federal), positive capital gains are taxed as income, but capital losses can be deducted from your taxable income (thereby reducing your tax burden). I think all they’re intending to suggest here is that the ability to deduct losses will also be eliminated with this program.

    Now you’re right that the only way that can really be revenue neutral is if average capital gains were to equal average capital losses, but I don’t think they are intending to specifically forecast that. Whether they should try or not is probably up for debate.

  2. Tel says:

    Seems some sort of California council climate conundrum is underway.


    The are completely sure they will be wiped out by floods, sea level, hurricanes, and even King Neptune himself rising from the deep to punish the puny arrogant humans. Except strangely they issued bonds without disclosing these extreme risks to poor innocent investors. It’s almost like they believe this stuff when it suits them and stop believing it at other times.

  3. Tel says:

    I’m a hot little tamale when it comes to Big Spending Republicans.

    Here’s why I’m reluctant to go full “superbear” on the US economy, along with Peter Schiff and company…


    After the huge “stimulus” burst of government spending in 2009, the overall spending to GDP ratio has done down (i.e. GDP has gone up faster than government spending has gone up, but there’s been monetary inflation in the process too). So policies such as “the Sequester” a.k.a. “Fiscal Doomsday Machine” were only small potatoes … but you can still eat small potatoes, better than no potato at all, and indeed the Sequester did bring government spending down… a bit.

    Not at all time lows by any means. It’s roughly equal to the middle of the Reagan years, like 1985 for example. I know Reagan promised small government, but never managed to deliver, but he wasn’t a complete disaster either.

    As I’ve been saying for a while, the real crunch comes when rising interest rates bite the government budgets with higher interest payments on existing debts … that time is soon but it could be possible that government reduces spending and actually pays the interest on that debt. It’s going to be a discussion between the President of the day and the Fed committee, but the outcome of such a discussion is far from pre-determined.

    If you think the USA is in trouble, just look at the EU in comparison … it’s coming apart, as the government in Brussels is almost universally disliked by national populations across the continent (admittedly, each group hates Brussels for different reasons, but that’s the problem with highly centralized decision making).

    The Australian government’s debt-to-gdp ratio is only about 44% which sounds OK until you realize it was almost zero only a decade ago, and we ran up that debt during the height of a mining boom, which is now over, and the upwards trajectory hasn’t even remotely turned around since we switched to a nominally “conservative” government a few years ago. That means in another decade we will probably be at 88% and we aren’t even going to get a bailout like Greece did.

    Let me say to the entire world who will listen: if you lend money to the Australian government, you are throwing money away, because those morons have neither the intention, nor the capability of paying it back. We very likely will hit either outright default or crazy currency devaluation.

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