DIY dividend tax cut
(Is it appropriate to discuss finance on this mailing list? If not, perhaps someone can point me to a more appropriate forum.) It annoys me that the dividend tax has been cut for stocks, but not bonds. So here's a way that you can (legally, I think, but I'm not a lawyer) cut your own tax on bond dividends. The trick is to first convert those dividends into short-term capital gains, and then convert the short-term capital gains into long-term capital gains. This trick also works with stock dividends so keep it in mind in case the stock dividend tax cut is ever rescinded. (For those not familiar with the US tax system, the simplified version is that for most people, bond dividends and short-term capital gains are taxed at 25-33%, while stock dividends and long-term capital gains are taxed at 15%.) The first part is pretty easy. Just sell your bonds before the ex-dividend dates, and buy them back afterwards. This will be easier if you hold your bonds in an exchanged traded mutual fund. For the second part, construct two non-overlapping baskets of stocks, both of which will track the stock market as a whole. Then short one basket and use the proceeds to long the other one. Finally close all positions that have lost money just before one year expires (so they count as short-term capital loses) and close all positions that have gained just after one year expires (so they count as long-term capital gains). The loses and gains should be approximately equal. Now the short-term loses in stocks will cancel out the short-term gains in bonds, and you're left with an overall long-term gain approximately equal to the dividends you would have received. Besides the obvious one of trading costs, does anyone see a problem with this strategy?
Re: Regulating Positional Goods
Wouldn't it make more sense to tax or "punish" the people who don't enhance their kids to be taller or better? In the same way that it makes more sense to tax poor people and give their money to rich people in that the rich have shown that they know how to use the money to produce more valuable goods and services that feed, clothe and shelter people (including the "poor") and provide and create jobs? (and the poor have demonstrated that they don't know how to use or produce money & value). The point being that this reasoning makes as much sense or more than the counter argument. Though, being a libertarian I actually do not advocate either and instead advocate that the government/taxation be kept out of the matter(s). - Original Message - From: "Wei Dai" <[EMAIL PROTECTED]> To: <[EMAIL PROTECTED]> Sent: Sunday, November 28, 2004 2:00 PM Subject: Re: Regulating Positional Goods On Sun, Nov 21, 2004 at 07:27:32AM -0500, Robin Hanson wrote: I was at a workshop this weekend where we discussed the possibility of regulating human genetic enhancements, and it was suggested that positional goods were a valid reason for regulation. It might make sense, for example, to tax the act of enhancing your kids to be taller than other folks' kids. That seems similar to wearing high heels, which according to this page: http://podiatry.curtin.edu.au/sump.html, was regulated in 1430 Venice but in the modern age only during national emergencies. Some schools do have dress codes that forbid high heels. I think dress codes are enacted at least partly for positional reasons. Many positional goods are positional because they are used to attract mates. Perhaps banning polygamy was done partly for positional reasons? I can't think of anything else besides these rather weak examples. It's a bit puzzling why positional goods are not more heavily regulated.
Re: Regulating Positional Goods
On Sun, Nov 21, 2004 at 07:27:32AM -0500, Robin Hanson wrote: > I was at a workshop this weekend where we discussed the possibility of > regulating human genetic enhancements, and it was suggested that positional > goods were a valid reason for regulation. It might make sense, for > example, to tax the act of enhancing your kids to be taller than other > folks' kids. That seems similar to wearing high heels, which according to this page: http://podiatry.curtin.edu.au/sump.html, was regulated in 1430 Venice but in the modern age only during national emergencies. Some schools do have dress codes that forbid high heels. I think dress codes are enacted at least partly for positional reasons. Many positional goods are positional because they are used to attract mates. Perhaps banning polygamy was done partly for positional reasons? I can't think of anything else besides these rather weak examples. It's a bit puzzling why positional goods are not more heavily regulated.
