How wil we fund health care, wellfare, etc when there are no people left to tax?

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Posted 11/16/2012 by old pea new name in NSBR Board
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TeachOne
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Posted: 11/18/2012 2:15:11 PM
Yep my dear friend and her hubby who haven't paid their taxes in 2 years were big Romney supporters and love to argue about "those people (I.e., brown folks) who are scamming the system. Of course, she doesn't take from the government in her eyes.

Meanwhile my church is full of hardworking black people who just pledged 4 million dollars to build a community center for youth in the surrounding working class community. Yep we're a bunch of welfare queens and freeloaders despite the fact that this is the 4th church building we've built in 10 years and all of our loans have been paid off ahead of schedule and on time. Some of you need to step away from the television.
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hendersn
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Posted: 11/18/2012 2:15:55 PM
Mariah2 -

Are you sure that your federal tax rate is 28%? I think that you mean that your marginal tax rate is 28%, which means that only some of your income is taxed at 28%, not all of it.

My family also has a marginal tax rate of 28%, but our effective tax rate, that is federal tax paid divided by taxable income, was about 19%.

The reason that Mitt Romney has a low effective rate is because much of his income is not wages or salary, it is investment income which receives favorable tax treatment. Take it up with Congress, which writes the tax laws. You and I receive the same favorable tax treatment on our investment income.


Sue


CnBsmommy
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Posted: 11/18/2012 4:03:35 PM
Does anyone know what is considered the top 1% that is considered wealthy make? It's about 350,000. That is a large amount of money but its not lower than what politicians wanted people to believe. When politicians make tax law, the people with AGI of 250,000 + are who are effected. Yes, still quite a bit of money in most areas but not all. People need to stop talking about evil corporations & get real & get informed!!!! Think about the small business owner, the electrician with a few employees, the contractor, the teacher married to a lawyer with a small practice, the accountant or payroll company. The small car dealership/used car lot. That business with 8 employees that you dont really know what they do. that small bakery. Those people are saving more because they want to keep their business open & still be able to pat taxes, not go into debt, etc...


If you don't want jobs shipped overseas or to support those evil corporations who provide goods, services, jobs, & benefits, etc... YOU choose with your wallet: shop somewhere else. Don't eat at Olive Garden or McDonald's, eat at the mom & pop a few doors down (it's probably fresher & better food anyway). Go to the farmers market instead of Walmart. Forgo Starbucks for the local coffee shop. Buy from a local person who makes candy instead of Hershey's. oh but wait, if we quit buying from those corporations, it would put people out of work, just like we saw with hostess. Was that the greedy corporation or the greedy union that put 18,000 out of work?

peapermint
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Posted: 11/18/2012 5:25:52 PM
I have a lot of friends who own businesses and are Democrats and strongly supported Obama. From some of the threads on here, you'd think all business owners are
Republicans.


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Mariah2
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Posted: 11/18/2012 5:44:27 PM

In Fiscal 2012, Defense was 19.2 % of the federal budget. Maybe you should heed your own advice.


Excuse me, but I look up stuff on authorized sources only - .gov sites. Not .org.

MY pie chart has it at 613.9 billion for FY 2013 and that figure is from The Green Book.



mamato1
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Posted: 11/18/2012 6:00:47 PM

I still don't see the problem here, or what exactly you are complaining about.


Stupid people annoy me? That's pretty much my complaint. I think being completely short sighted about what help you're willingly taking is stupid. Completely. DO I care if people who are eligible take benefits? Of course not. Totally for it. Do I think it's stupid to argue against socialized health care when you're using socialized healthcare? Yes. It's beyond dumb. You can do what you like and say what you like, but you're the one who looks like a flat out idiot. That's okay with you? Then you don't mind me sitting here saying "well, there's a dumb one for you."


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hendersn
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Posted: 11/18/2012 6:01:46 PM
Mariah2 wrote:


In Fiscal 2012, Defense was 19.2 % of the federal budget. Maybe you should heed your own advice.



Excuse me, but I look up stuff on authorized sources only - .gov sites. Not .org.

MY pie chart has it at 613.9 billion for FY 2013 and that figure is from The Green Book.



You said that Defense was 60% of the budget, now you are saying it is 613.9 billion. There is no way Defense is 60% of the federal budget.

The 2013 total federal budget is estimated at 3.803 trillion and defense spending is approximately $700 billion. Thus military spending would equal way less than 60%, using those figures it is 18.4% . Do you know how to do math or percentages? I question your math understanding.

Is the White House budget for 2013 good enough for you?

2013 White House Budget

Charts and tables start on page 204.



Sue

desertpea
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Posted: 11/18/2012 6:36:41 PM

Do I think it's stupid to argue against socialized health care when you're using socialized healthcare? Yes. It's beyond dumb. You can do what you like and say what you like, but you're the one who looks like a flat out idiot. That's okay with you? Then you don't mind me sitting here saying "well, there's a dumb one for you."


You think people forced onto Medicaid because of job loss, or their employer eliminates their health insurance because of Obamacare have no right to complain about government policies that contributed to their personal situation. Especially after Democrats said free health insurance is a right.

Alright there comrade.

MochasMom
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Posted: 11/18/2012 6:52:52 PM

The chart is correct in the figures, but the problem is that it's the discretionary budget, which is only one third (1/3) of the entire budget.




I covered that in the paragraph I copied below from my original post. The person that originally quoted was combining the national security budget and the non-national security budget to arrive at what she said was the defense budget. She did not explain the discretionary budget vs the total federal budget and that distinction should have been made rather than misleading readers.


It may be helpful for one to state which "budget" they are referring to when discussing percentages. For example; the percentage claimed for the national security budget is from the Federal Discretionary Budget not the total federal budget. If one were to take the amount claimed in one section of the "image from amazon" it claims that national security is 1.242 trillion dollars for 2012. It one were to use that dollar amount to find the percentage of the federal outlay for 2012 which they are saying is 3.699 trillion; you can see it is not 64%.


mamato1
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Posted: 11/18/2012 7:45:48 PM
You think people forced onto Medicaid because of job loss, or their employer eliminates their health insurance because of Obamacare have no right to complain about government policies that contributed to their personal situation. Especially after Democrats said free health insurance is a right.

Alright there comrade.

-------------

And the commie card gets played. Mark it, ladies. I was first.

You're not obligated to take any aid. Why you(generally) feel its fine for you to use socialized medicine for whatever reason but not okay for anyone else to have it is hypocritical. Period. And stupid. I'm perfectly fine with that.

You lost your job and your kids are on Medicaid? I'm so glad it's there for you. Seriously. With no complaint or judgement. Now, how's about you be glad that someone's 24 year old kid that can't find a job still has insurance.

We want to present ourselves as a world power and we can't give our citizens basic medical care? Yeah. Stupid.

But, really. Crawl on the hill and die on the idea that you're not already paying for this because you have been. All along.


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jacqab
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Posted: 11/18/2012 8:03:45 PM

In Fiscal 2012, Defense was 19.2 % of the federal budget. Maybe you should heed your own advice.
------------------------------------


Excuse me, but I look up stuff on authorized sources only - .gov sites. Not .org.

MY pie chart has it at 613.9 billion for FY 2013 and that figure is from The Green Book.

Yep, and that's out of a $3800 billion (or $3.8 trillion) budget. Defense spending for 2013 is only 18% of the budget.

While entitlement spending is 46% - 62% of the budget depending on what you define as entitlements. Even the lowest percentage is over twice that of defense spending.

Entitlement spending is what the US taxpayer pays for the most out of the federal budget.



______________________________________________________________________________

Before voting, read Thomas Sowell's Basic Economics: A Common Sense Guide to the Economy

Global warming brings prosperity, population growth, and relatively good health, as disasters go, it's the one we should pray for.
What is the worst that could happen? 1. It might end. 2. The ice caps might melt entirely.
But the True Believers would have us plunge ourselves into global poverty by breaking down the great world economic system in order to prevent a "disaster" that people in 1500 would have prayed for.

There are actual disasters that deserve far more of our time and attention.




Jane71
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Posted: 11/18/2012 8:13:37 PM

My tax rate is 28%. I'm not giving you my patky stub do you will just have to take my word. Any other middle class people care to share their percent?


Sorry, but this just makes you look dumb. Romneys effective federal tax rate was 14%, which is higher than middle class. Our effective federal tax rate is typically 8-10%. Romney paid a hell of a lot more tax than anyone on this board. He consistently gives millions to charity. Hate the mans politics if you must, but he pays beyond his fair share in taxes.

Also, capital gains should be taxed less. The money that created that income was already taxed.

MochasMom
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Posted: 11/18/2012 8:39:05 PM


My tax rate is 28%. I'm not giving you my patky stub do you will just have to take my word. Any other middle class people care to share their percent?





Sorry, but this just makes you look dumb. Romneys effective federal tax rate was 14%, which is higher than middle class. Our effective federal tax rate is typically 8-10%. Romney paid a hell of a lot more tax than anyone on this board. He consistently gives millions to charity. Hate the mans politics if you must, but he pays beyond his fair share in taxes.

Also, capital gains should be taxed less. The money that created that income was already taxed.
The above bears repeating.

jacqab
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Posted: 11/18/2012 9:52:24 PM

Romneys effective federal tax rate was 14%, which is higher than middle class. Our effective federal tax rate is typically 8-10%. Romney paid a hell of a lot more tax than anyone on this board. He consistently gives millions to charity. Hate the mans politics if you must, but he pays beyond his fair share in taxes.

Also, capital gains should be taxed less. The money that created that income was already taxed.

Yep.

It's really annoying that people keep comparing tax rate to effective tax rate and assume it is the same thing.

Romney paid 14% effective tax rate because he had itemized deductions which lowered his taxable income and then paid 15% on income earned from investments, and the marginal tax rate (10% - 35% ) on income earned from employment (wages from speaking fees, etc). Add all that together and it equals an effective rate of 14% on his income.

Interesting fact is that those in a 28% marginal rate tax bracket average an effective income and payroll tax rate of 15.7%


Effective income tax rate

ETA:It's funny to me that those in the 28% tax bracket get their average effective rate down to 15.7%, but someone paying 15% capital gains can only get his rate down to 14% effective.



______________________________________________________________________________

Before voting, read Thomas Sowell's Basic Economics: A Common Sense Guide to the Economy

Global warming brings prosperity, population growth, and relatively good health, as disasters go, it's the one we should pray for.
What is the worst that could happen? 1. It might end. 2. The ice caps might melt entirely.
But the True Believers would have us plunge ourselves into global poverty by breaking down the great world economic system in order to prevent a "disaster" that people in 1500 would have prayed for.

There are actual disasters that deserve far more of our time and attention.




desertpea
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Posted: 11/18/2012 10:11:38 PM

You're not obligated to take any aid. Why you(generally) feel its fine for you to use socialized medicine for whatever reason but not okay for anyone else to have it is hypocritical. Period. And stupid. I'm perfectly fine with that.

You lost your job and your kids are on Medicaid? I'm so glad it's there for you. Seriously. With no complaint or judgement. Now, how's about you be glad that someone's 24 year old kid that can't find a job still has insurance.


You really, really ought to read the ACA. Medicaid will eventually be the only health insurance option for many non-senior Americans; that is what Obamacare is designed to do. You are saying no one who is forced via no other option be on Medicaid when they previously had amazing health insurance through their employer is allowed to criticize Obamacare is what deservedly got the comrade comment. We're supposed to just shut up and swallow it.

HHS.gov


We want to present ourselves as a world power and we can't give our citizens basic medical care? Yeah. Stupid.


This is a huge misconception. The ACA has nothing to do with lowering the cost of health care. It doesn't address the root cause of increased medical care costs, which is tort. It is a phased federal takeover of the health insurance industry, with exceptions for members of unions and Congress.

You should know what you are defending before saying others have no right to talk against it. We know that is the next step because we've seen this happen time and time again in history. We know what comes next.

Epeanymous
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Posted: 11/18/2012 10:28:45 PM
No, tort is not the root cause of rising health care costs.

MochasMom
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Posted: 11/18/2012 10:41:01 PM

No, tort is not the root cause of rising health care costs.
Care to enlighten us as to what is or are we just supposed to believe your statement?

look4angel
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Posted: 11/18/2012 11:03:51 PM

Also, capital gains should be taxed less. The money that created that income was already taxed.


Oh, yeah that's right it was taxed before, when the workers added it to their pension funds, that later Romney raided, that's right I remember now!


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leftturnonly
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Posted: 11/18/2012 11:12:01 PM

Do I think it's stupid to argue against socialized health care when you're using socialized healthcare? Yes. It's beyond dumb. You can do what you like and say what you like, but you're the one who looks like a flat out idiot. That's okay with you? Then you don't mind me sitting here saying "well, there's a dumb one for you."


Hold up there a minute.

You've completely ignored all those who are losing the battle of maintaining their own health insurance and are being driven onto the federal rolls through lack of options.

You act like taking the only option you have available to you means you have to shut up about any disagreements you may have.

Disagreement with the system doesn't make someone dumb or a hypocrite even if they are on the system.

To say otherwise is to say that all those on assistance should vote for the guy promising more assistance because that's what they really want. They're part of the 47% and they will vote for the guy who will give them more.... because that would be the smart thing for them to do (no matter what the economic cost will be to our nation).

In other words, you just agreed with Lynlam.





If PC is the way to get to Heaven, I'm going straight to Hell.



mamato1
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Posted: 11/19/2012 6:16:16 AM
No. I don't think Lynlam and I agree on very much. Well, her daughter is very cute. We can agree on that, I'm sure.

I don't think you should vote for Obama merely because you're taking government aid. I think you need to be cognizant that other people need help like you do.

Of course, I'm one of those pinko commies that wants the best for everyone. And, my best includes health care. Because that's so very basic. It isn't about redistribution. I have no desire to wait in hours long bread lines or pay a thousand dollars for a new pair of Levi's. I've realized that helping others do better may cost me a little, but it's the right thing to do and I'm okay with that.

It's realizing that I was already paying for the uninsured, so why not have them be comfortable? Isn't that what's kind?

I believe we all draw from the benefits if this country and we all should join in paying for it. If that makes me a commie, so be it.



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twinsmom-fla99
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Posted: 11/19/2012 8:58:58 AM

Also, capital gains should be taxed less. The money that created that income was already taxed.
Oh for the love of Pete! Can we drop this argument already?

The "principal", i.e. the money that was invested, was taxed. The "income", the money earned off of the principal or the "profit", has NOT been taxed already and should be subject to income taxes. That investment income currently qualifies for a lower tax rate than earned income, and many of us don't believe there should be such a big distinction.

Suppose I buy a run-down car with money I have earned and have already been taxed on. I fix it up and sell it for a $1000 profit. I will be taxed on the profit, even though I was already taxed on the money I "invested" in the car. That's the way the income tax code works. I am taxed on my "labor" of getting the car into a saleable condition, minus any expenses incurred in doing so. The same thing applies to anyone who buys supplies to create a product for sale.

So why should someone who is putting forth so much effort to earn his or her income be taxed at a higher rate than someone who is wealthy enough to sit back and do nothing but watch their invested money grow? Yeah, I know, we want to encourage them to create jobs, and we've even given them tax incentives to do so, but some peas have linked to studies that show that the "trickle down" theory doesn't really hold up.


Sorry, but this just makes you look dumb. Romneys effective federal tax rate was 14%, which is higher than middle class. Our effective federal tax rate is typically 8-10%. Romney paid a hell of a lot more tax than anyone on this board.
Dumb? Pot meet kettle. Let's put it in terms you can understand a little better.

For every dollar Romney earns in capital gains (the bulk of his income?), he pays the lower rate ($0.15 I think). Once that middle income family reaches the 28% bracket, they pay $0.28 for every additional dollar earned. Now because they don't have as much income, the lower tax rate on the first tier of their income and their deductions/exemptions have a much stronger effect on their "effective tax rate", bringing it down to the lower percentage range that you posted.

But make no mistake--they are paying 28% on every dollar they earn over the threshold, while Romney continues to pay only 15% on his earned income.

And so what if he paid more taxes overall? He also recieves more benefits overall. Don't underestimate the amount of benefit that the super wealthy get from having a stable financial system (one that is propped up by a government that adopted a "too big to fail" policy for financial institutions) and a regulated stock market. That all costs money, and the government pays for it.

Those who have more, have more to lose, and they benefit from the stability of a country in which they don't have to resort to "private armies" for security (i.e. Mexico and many third world countries). They don't have to bribe anyone to do business. They have a court system available to enforce their contracts. They have a executive branch to enforce the laws regarding fair business practices such as intellectual property laws.

So while Mitt Romney may pay more in taxes than middle income families, I would submit that he also gets many times more benefit for those taxes than most families do.

*Edited for spelling.

desertpea
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Posted: 11/19/2012 9:36:03 AM

It's realizing that I was already paying for the uninsured, so why not have them be comfortable? Isn't that what's kind?


No. What is kind is to put forth legislation that actually lower the costs of health CARE and not a federal takeover of health INSURANCE -- forcing people with employer paid health INSURANCE to lose their health INSURANCE and go on MEDICAID.

My comrade point was about you wanting to deny people's complaints about a system they are forced onto by the policies you support. You put something like WIC in place and liberalize access to it, then there is no reason for private companies to offer a similar program at employer's expense.

You effectively support the regulator (government) to be the provider (health insurance). Who is going to regulate the regulator? What happens when the government denies your claim? Good luck with that.

And people will still go to the ER for flu symptoms and not real emergencies. Plus, congratulations for supporting policy that makes the cost of medical devices increase. I guess it is kind to charge fixed income seniors more money for their necessary medical devices.

We warned you since 2009 how this was going to work, and suddenly it is news to some people that people would lose wages, lose their jobs, the cost of health insurance would go up, and a good chunk of people would lose their private health insurance. No one cares -- they want to "feel good" instead.

desertpea
StuckOnPeas

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Posted: 11/19/2012 9:56:26 AM
Look4angel, are you one of those silly people who think wealth is like a static pie chart and people get doled out slices that take from the poor and give to the rich?

Wealth is created -- it is not zero sum.

I also don't support economic segregation in the form of progressive tax structures. Everyone should pay the same percentage of income tax with no deductions or tax credits. Why are you so against people paying an equally fair share?


Krazyscrapper
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Posted: 11/19/2012 11:27:07 AM

We warned you since 2009 how this was going to work, and suddenly it is news to some people that people would lose wages, lose their jobs, the cost of health insurance would go up, and a good chunk of people would lose their private health insurance. No one cares -- they want to "feel good" instead.


The main reason the cost of health insurance is going up because of losses/claims. The cost of Obamacare is part of the increase but most of it is due to losses or claims at this time.

I know this because after no increases in our premiums for the last three years we have an increase this year. I happen to work for insurance broker who happens to write benefit insurance. At our ESOP meeting they dragged in our #1 benefits guy to explain why, after three years of no increases, we were getting an increase.

Its because this past year the number of claims in the $25,000 - $100,000 range increased dramatically. Yes part of the increase was do to the costs assoicated with Obamacare but the majority was due to losses. If the cost of Obamacare had been the main reason for the increase we would have been told that.

The attached article is a Benefit's broker view on what is going to happen when Obamacare is fully in place. There are also a couple of other articles by other brokers about what they think will happen. There are some intersting points made in these articles.



Obamacare

tenacious *e*
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Posted: 11/19/2012 12:04:16 PM

Plus, congratulations for supporting policy that makes the cost of medical devices increase. I guess it is kind to charge fixed income seniors more money for their necessary medical devices.


and significantly slow the advancement in medical device technology, as well. venture capital in this field is drying up.

erin

not2peased
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Posted: 11/19/2012 12:39:46 PM

Plus, congratulations for supporting policy that makes the cost of medical devices increase. I guess it is kind to charge fixed income seniors more money for their necessary medical devices


I'd love to see an alternative plan that doesn't cause pain to some folks/sectors



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Posted: 11/19/2012 1:25:16 PM

So while Mitt Romney may pay more in taxes than middle income families, I would submit that he also gets many times more benefit for those taxes than most families do.


You've made some very strong points.

If the left made those points instead of the constant and insulting "fair share" drumbeat, more conservative people would listen.





The new Obamacare legislation REQUIRES employers to ask each employee their total income. That means that your employer will be asking you how much your husband makes, so they can determine the portion of your health insurance that they are required to pay.

Who knows about this?

Yet.






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MochasMom
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Posted: 11/19/2012 5:08:53 PM

For every dollar Romney earns in capital gains (the bulk of his income?), he pays the lower rate ($0.15 I think). Once that middle income family reaches the 28% bracket, they pay $0.28 for every additional dollar earned. Now because they don't have as much income, the lower tax rate on the first tier of their income and their deductions/exemptions have a much stronger effect on their "effective tax rate", bringing it down to the lower percentage range that you posted.

But make no mistake--they are paying 28% on every dollar they earn over the threshold, while Romney continues to pay only 15% on his earned income.

Twinsmom; forget about spelling and go read the tax code; starting with Pub 17 is a good start.

desertpea
StuckOnPeas

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Posted: 11/20/2012 8:27:24 AM

and significantly slow the advancement in medical device technology, as well. venture capital in this field is drying up.


That sucks.

Well, every time I see that law firm TV ad looking for members for their class action against pacemakers, I do the tort reform fist bump in silent solidarity.

Krazyscrapper
StuckOnPeas

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Posted: 11/20/2012 9:06:06 AM
So you're saying venture capitalist won't want to invest in start up bio tech companies because of the medical device tax?

That is so silly. There are so many variables that face a company inventing a new medical device that this tax is minor blip. They can't tax the device until its sold. And it takes years and years before it even gets to the clinical trial stage. Then it has to get FDA approval. And if the device looks promising more likely than not a large medical device company will buy the start up and their technology. And that is how most venture capitalist make their money from the sale of the start up before the product goes to market and is subject to the tax.

tenacious *e*
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Posted: 11/20/2012 10:45:23 AM
i am not 'saying it,' it is already happening.


The Mountain View, Calif., company hopes to get FDA approval by mid-2013. In the meantime, the company just leased a new facility where it plans to manufacture the devices. Health-care reform could hurt the company, Mr. Fischer acknowledges, because the device tax may damp financial projections, potentially making the firm less attractive to investors at a time when it will need more financing to launch manufacturing operations and establish a sales and marketing team. "If we were trying to start the company today, I don't believe we'd be able to fund it," he said. "[With] the length of time the regulatory process has been taking over [the] last several years, and this additional issue of the tax on top of that, I believe many companies if they weren't in the later stages of approval wouldn't get the funding to get there."


The tax is also forcing start-ups with marketed products to make difficult choices. Entellus Medical Inc., whose devices enable minimally invasive treatment of sinusitis, or inflammation of the tissue lining the sinuses, will consider various measures to offset the new expense, such as raising prices, making fewer new hires, or investing less in research and development, said CEO Brian Farley. The Plymouth, Minn., company has less than $30 million in revenue and isn't profitable yet, he said.

Start-ups already face a difficult climb, given that they often need 10 years and $100 million to develop and launch a medical device, said Mr. Farley, whose company has raised $92 million in venture capital since forming in 2006.


Medical Start-Ups Challenged by Health-Care Reform

also, i believe the tax is on the sale price, not on profit, so, that has a much bigger impact on sales and profit projections.

i would hardly call their concerns 'silly.'

edited to add another article

medical device industry sees waning venture capital

erin

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Posted: 11/20/2012 12:00:19 PM

would hardly call their concerns 'silly.'


I stand by what I said. IF the venture capitalist are not investing in biotech start ups its not because of the device tax. There are other reasons.

The company I work for writes the commercial insurance for venture capitalist and start ups in the San Francisco Bay Area that includes Silicon Valley for both technology and biotechnology business.

Very few start ups actually make it to where they are selling the product. As I said in my other post, most postion themselves so at some point they are purchased by a big medical device company. And that is where the venture capitalist make their money. And like I also said before, there are so many variables that a company has to resolve before the device even gets to the clinical trial stage, never mind selling the product, that this tax is just not an issue for start ups. It might be for the larger companies that actually sell product but not for start ups.

If the start ups are complaining about the tax its more of wishful thinking on their part that they actually get a chance to pay it.

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Posted: 11/20/2012 12:29:22 PM

The company I work for writes the commercial insurance for venture capitalist and start ups in the San Francisco Bay Area that includes Silicon Valley for both technology and biotechnology business.


and, is policy writing for VCs up? or down? because if it is up, then congratulations! you are bucking the national trend as per the study in the second article i linked:


Venture capitalists are finding the medical device industry less and less lucrative, according to a recent MoneyTree Report, published by PricewaterhouseCoopers LLP (PwC) in conjunction with the National Venture Capital Association (NVCA).

Report findings show venture capital (VC) for the Life Sciences sector, which includes biotechnolgy and the medical device industry, dipped 30 percent in VC funding dollars and 22 percent in deals for Q2 compared to the same quarter last year.

According to the report, venture capitalists invested a total of $1.4 billion during the second quarter, the lowest level since Q4 of 2010. Deal volume also saw a decline, dropping 6 percent from Q1 to 174 deals. When compared to a year ago, funds invested into life sciences companies during Q2 of 2012 decreased 39 percent while the number of deals declined 22 percent from the $2.3 billion invested in 223 deals during the second quarter of 2011.



I stand by what I said. IF the venture capitalist are not investing in biotech start ups its not because of the device tax. There are other reasons.


right. there are other reasons.


"Given the regulatory challenges currently impacting the life sciences industry and the amount of capital required to fund these companies, it's no surprise that investments in this industry have declined for the fourth consecutive quarter," said Tracy T. Lefteroff, global managing partner of the venture capital practice at PwC US, in a PwC press release.


and, then there is the whole 'straw that broke the camel's back.' why do we think it is wise to further burden an industry that is already heavily burdened?

there is a direct line from rising taxes (costs) to the financial projections that a company can make that will attract VCs AND potential buyers. you think VCs don't look at the bottom line of the company and the potential for a profitable sale as part of the overall risk? they know that if they don't see it as a profitable company, then a buyer won't, either. no sale, no payout, no investment money.

erin

ETA-my goodness. even liberal darling elizabeth warren, the originator of the 'you didn't build that' mindset knows that the medical device tax is not a good idea.

EW calls for repeal of the medical device tax

not2peased
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Posted: 11/20/2012 12:47:21 PM
I agree with Krazyscrapper with respect to medical device companies

there are NUMEROUS headwinds all companies face during the start up phase-particularly those in life sciences

if you cant get the money you need it almost always means your product or business model has serious issues. a potential tax down the road-assuming your product makes it to market is not one of the reasons a company cant get VC funds.


-Kerry


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Posted: 11/20/2012 1:00:02 PM

Look4angel, are you one of those silly people who think wealth is like a static pie chart and people get doled out slices that take from the poor and give to the rich?

Wealth is created -- it is not zero sum.

I also don't support economic segregation in the form of progressive tax structures. Everyone should pay the same percentage of income tax with no deductions or tax credits. Why are you so against people paying an equally fair share?


No I don't think wealth is a static pie chart, I also don't think people like Romney should be commended for raiding employee pension funds and then "claiming" HE did such a fantastic job running businesses. Oh and that "silly little pie chart" I linked to was from "Business Weekly"! I guess they don't know what they are talking about.

You also forget the tax payers had to go behind him and bail out those funds after he destroyed them, leaving employees who actually EARNED those funds without any.
For those of you now complaining how the Healthcare Act is causing medical companies to stop or downgrade R & D, you need to read this article where Romney bankrupt a Medical company so bad they had to also drastically decrease or stop their R & D on said same medical equipment.

So I guess it's OK if a Republican does it! And let's not forget all the people who lost their jobs in the process! And all of this was done to get a few people mega rich, not to provide healthcare for those that don't have any! Pot meet Kettle!

Mitt Romneys Bain Capital was very good at making money for Mitt Romney.

At the same time, it loaded companies Bain bought with debt, borrowed even more money to pay dividends to Mitt Romney and destroyed or outsourced lots of jobs. It even raided pension funds. Then Romney turns around and holds himself up as a "successful businessman".

Sure, he was successful in terms of making money for himself. But this was at the expense of workers who lost their jobs at previously successful companies when they went bankrupt on debt loaded on them by bank-borrowed money that went directly into Romney's pocket.

Here's how a private equity fund such as Bain Capital works: It picks a successful company and then takes it over with a leveraged buyout (LBO). The money borrowed from a bank to pay off the owner or stockholders does not become the debt of Bain Capital. It becomes the debt of the company that was taken over.

You might ask, "Why would a bank even loan money to place a company in debt for the purposes of being taken over by Bain Capital which does not even assume the debt?" Well, it's for the same reason that so many subprime loans were available. The bank does not continue to hold the debt. It offloads it to investors such as pension funds so the bank doesn't really care. They have no skin in the game.

Why not loan Mitt Romney money to take over companies? There's good money in those commissions.

Pension funds show up again and again as the fall guys in Wall Street machinations. They are the dumb clucks who keep trying to make up for the fact they are 50% underfunded by entering into sucker bets and losing even more money. And since Romney and Bain do not assume the debt themselves, they don't care if the overleveraged company goes bankrupt since, if it does, they lose nothing. That company is just a money conduit for Romney since, as soon as they take it over, they have the company borrow even more money in order to pay Romney a dividend.

You might ask, "Why would the owners of a company or the shareholders sell out to Bain Capital?" Because Bain offers them a really good deal, that's why. After all they don't care if they overpay. They're using OPM, other people's money. It's all based on a loan to the company they intend to take over, not a loan to Bain itself. Bain takes hardly any risk at all. So much for the risk takers that Romney eulogizes.

Romney pioneered the strategy of having a company Bain took over in a leveraged buyout borrow even more money to pay himself a dividend. So now the company is staggering under a huge load of debt and in many cases they can not keep up with the payments. In 1994, Bain bought medical equipment manufacturer Baxter International. After a merger with another company, it became known as Dade Behring. Bain then reduced R&D investment because Bain's game plan was to only hold the company for five years or so. So why invest for the long haul? The money borrowed from banks for the LBO was usually for five to eight years with small monthly payments and a big balloon payment at the end. About five years after Bain had acquired Dade, it was looking to get out. But not before it drained even more money from Dade and placed the company and its workers in even more jeopardy.

Bain froze the workers pension benefits and converted them from a defined benefit plan, in which employees were entitled to 75% of the average of their last three years salaries, to a cash-balance plan in which they would get a lump sum equal to what they were owed in 1999. Workers were furious. They threatened to sue, but never went through with the lawsuit because they were fearful of losing their jobs. Dade saved $10 to $40 million with this stratagem. The very month Dade did the conversion, it used the projected savings as the basis to borrow $421 million placing Dade in even more debt.

The result was that Dade paid Bain and its partner, Goldman Sachs, the entire amount as a dividend. Bain and Goldman had only put down $81 million to buy the company in the first place. Yet, in June 1999 they received $365 million from the dividend gain of 4.3 times their initial investment. Consequently, Dade's debt more then doubled to $871 million in order to make this huge payment to Bain and Goldman.

Romney had left operational management of Bain that year, though his disclosures show that he owned 16.5 percent of the Bain partnership responsible for the Dade investment until at least 2001. In order to make their loan payments,Dade had to cut not only R&D but also the core of the company. It sold off assets and fired workers. Nevertheless, the whole thing came crashing down in 2002 when Dade filed for bankruptcy protection. It was the end of Bain's and Goldmans involvement with Dade. They had looted the entire company, raided the pension fund, albeit indirectly, and caused mega job losses. They had ruined a previously successful company.

Nevertheless, Romney could turn around calmly, face the cameras and proclaim himself a "successful businessman" for having made hundreds of millions of dollars for himself and his investors. Bain and Goldman had made a $280 million profit on an investment of only $85 million. Is this what America is all about? Is this what freedom consists of? Romney seems to think so.

Later, Dade emerged from bankruptcy and, after increasing its investment in R&D, went on to become a successful company probably because Romney and Bain were no longer in the picture.

Bain used the same playbook with several other companies: invest in a small down payment; get a bank loan (which the bank resells to other investors) for a leveraged buyout (in which the company, not Bain, assumes the debt); and then, after taking ownership, get another bank loan to pay Bain a huge dividend while saddling the company with even more debt.

As a result of these tactics at least six companies filed for bankruptcy between 1992 when Romney took over Bain Capital and 2004. The reason that Romney wants us to believe that he had nothing to do with Bain after 1999 is that most of these companies filed for bankruptcy between 2000 and 2004.

Nevertheless, according to SEC filings Romney was sole owner and operational manager of Bain until 2001. During this period there were several multimillion-dollar investment deals, bankruptcies and a spate of layoffs and overseas job shifts at Bain-owned companies.

No wonder Romney doesn't want to release his tax returns. They would show that Romney took dividends from several companies that went bankrupt during this period including Stage Stores, Ampad, GS Industries, Dade Behring, DDi and KB Toys. Mitt Romney, the successful businessman, doesn't want you to know how he profited from driving companies bankrupt and destroying jobs. In any event, Bain made more than 20 percent of its money in its 1987 to 1995 funds from five companies that borrowed money to pay Bain dividends or buy back shares that later collapsed.

Since balloon payments on many of the loans taken out by private equity funds are due in the next few years, the eventual collapse of those companies could trigger the next big financial crisis. If Mitt Romney is elected President, it will be just in time to deal with that.
In 1994, Bain bought medical equipment manufacturer Baxter International. After a merger with another company, it became known as Dade Behring. Bain then reduced R&D investment because Bain's game plan was to only hold the company for five years or so.

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Posted: 11/20/2012 1:43:16 PM

if you cant get the money you need it almost always means your product or business model has serious issues. a potential tax down the road-assuming your product makes it to market is not one of the reasons a company cant get VC funds.


i really don't even know how to respond to the POV that a 2.3% tax on GROSS REVENUE does not affect a business overall. Especially when the tax is can be levied even if the company is not profitable.

for companies with slim profit margins, 2.3% of gross revenue will equal a much larger percentage of overall earnings...overall earnings. profitability. all things that are scrutinized by VCs and larger companies looking to buyout smaller companies and their technology.

taxes like this are a part of the business model, and they cause the very problems that prevent what would otherwise be good and viable products from ever getting to market.

do we want more choices with our medical care, or fewer?

erin


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Posted: 11/20/2012 1:52:33 PM

and, is policy writing for VCs up? or down? because if it is up, then congratulations! you are bucking the national trend as per the study in the second article i linked:


Well we now have one person to work soley on venture capitalist risks. He is busy. When I first started we didn't have enough accounts to assign just one person to work on them.

We write a lot of the start ups these guys invest in and put those accounts in our "emerging business" department. They are super busy.

When the account gets to the point where they need clinical trials insurance or other specfic insurance they come into my department.

San Francisco and Silicon Valley are doing better then the rest of the country so we are lucky. Having said that. A lot of start ups never make it out of emerging business to my department as they just go out of business. And once they get into my department a lot either end up being bought or just hang on trying to get that one device or drug approved by the FDA and out to market. Its such a long battle and so many don't make it. That tax is just not an issue to these folks.


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Posted: 11/20/2012 1:57:13 PM

i really don't even know how to respond to the POV that a 2.3% tax on GROSS REVENUE does not affect a business overall. Especially when the tax is can be levied even if the company is not profitable.

for companies with slim profit margins, 2.3% of gross revenue will equal a much larger percentage of overall earnings...overall earnings. profitability. all things that are scrutinized by VCs and larger companies looking to buyout smaller companies and their technology.

taxes like this are a part of the business model, and they cause the very problems that prevent what would otherwise be good and viable products from ever getting to market.




where did I say it had no effect? my point is that there are numerous headwinds for ANY company, a tax is another bump in the road. If a company has a compelling product, and a compelling business model, they will get the funds they need. not every company succeeds. in fact, MANY do not. that was the case BEFORE obamacare was even a blip on the screen.

here's the thing though-I am not "stuck" on this tax-if someone has a better way to get the revenue needed to help fund obama care I am all ears. I dont deny it makes things more difficult for medical device companies, but again, if ANYONE can show me a scenario where there are NO losers when significant legislation is passed, I'd be happy to listen







-Kerry


Let the refining and improving of your own life keep you so busy that you have little time to criticize others.

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Posted: 11/20/2012 2:23:34 PM

I dont deny it makes things more difficult for medical device companies, but again, if ANYONE can show me a scenario where there are NO losers when significant legislation is passed, I'd be happy to listen


i get this.

if we were talking about hostess, then i would say 'eh, i don't like to lose choices, but, sometimes there are casualties...' that is a part of free market principles.

but, we are talking about devices that save peoples' lives. as someone who just sat in the waiting room for 4 hours while my father had 2 emergency stents put into his heart....even though he was not able to pull through, i have comfort in knowing that everything possible was done for him, and, i am grateful for those who took risks with their technology and $$$ in order to make these devices possible.

erin


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Posted: 11/20/2012 2:38:46 PM

if we were talking about hostess, then i would say 'eh, i don't like to lose choices, but, sometimes there are casualties...' that is a part of free market principles.

but, we are talking about devices that save peoples' lives. as someone who just sat in the waiting room for 4 hours while my father had 2 emergency stents put into his heart....even though he was not able to pull through, i have comfort in knowing that everything possible was done for him, and, i am grateful for those who took risks with their technology and $$$ in order to make these devices possible.




these companies are not charitable organizations-they are businesses. businesses that are run with the intention of making a profit and providing significant value to their shareholders.

they face financial headwinds just like every other business. different companies in different industries face their own unique challenges-just as medical device companies do/will. Good companies with sound business models will survive and weak companies with flawed business models will fail.

again, if there is a better way to help fund obamacare that doesnt hurt anyone, I'd love to hear it


-Kerry


Let the refining and improving of your own life keep you so busy that you have little time to criticize others.

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Posted: 11/20/2012 2:54:17 PM

The reason that Mitt Romney has a low effective rate is because much of his income is not wages or salary, it is investment income which receives favorable tax treatment. Take it up with Congress, which writes the tax laws. You and I receive the same favorable tax treatment on our investment income.

yep. But many out there (and here) believe what BO tells them - like Trump is a SMALL BZ OWNER. ha! or that Buffet's sec pays more than he does.

Trump is NOT a small bz ower and Buffet's sec does NOT pay more than he does. She might pay at a higher rate BUT then she is paying on wages from her job. Buffet is NOT. NOR is Romney.

If people can't understand the differences then I'm not believing anything they say or post here.

If BO said the moon is made of green cheese, they'd believe it.


Do I think it's stupid to argue against socialized health care when you're using socialized healthcare? Yes.

yeah? and you think those who AREN'T on it know more about what it's like to BE on it? which is stupid?


I dont deny it makes things more difficult for medical device companies

in the end WHO will this tax increase hit the hardest? Those who work for the companies being taxed and those who need the products the companies make. It won't be those who are 'rich'. It's those workers who will lose their company insurance or be laid off or not hired to expand the bz.

The gov gets more revenue when more people ARE working and paying income tax.

If the goal was to get more revenue then this admin would be doing anything and everything to get the businesses going and jobs growing.
That isn't their goal.

How many new regulations are they rolling out each day?







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look4angel
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Posted: 11/20/2012 3:33:56 PM

in the end WHO will this tax increase hit the hardest? Those who work for the companies being taxed and those who need the products the companies make. It won't be those who are 'rich'. It's those workers who will lose their company insurance or be laid off or not hired to expand the bz.

AND who will this Healthcare Act help, those people who are dying without it. Money over lives, I'll take lives any day.


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