Presidential Candidates on Capital Gains Tax Plans

Presidential Candidates on Capital Gains Tax Plans

Jason Hartman chats with George Gammon about creative real estate investing. They discuss the relationship between real estate, the Colombian Peso, and oil. At the second half of the show, Jason brings on in-house economist Thomas Young, as they discuss our Presidential Candidates Capital Gains Tax Plans.

Investor 0:00
What attracted me to Jason is really that he’s a successful investor. He’s a successful businessman. But if you really listen to him, he’s a teacher at heart. And what he teaches makes so much sense. And it makes sense and that it helps us grow our wealth, and serve the community by providing housing, helping others, and really creating a nest egg, and a place where we can build wealth in a very healthy, productive way. And he offers us a way of doing that unique among anything I’ve ever explored. I mean, I’ve invested in equities, I’ve done other real estate investments, but the model that Jason has given with income property, lower priced properties that rent out at the right ratios, which you listened to Jason and can learn is really almost a unique and extraordinary way. So once I discovered that and learn more about it from Jason’s teaching, I was just hooked on it and and it’s been a it’s been a wonderful journey.

Announcer 0:56
Welcome to the creating wealth show with Jason Hartman. Your We’re about to learn a new slant on investing some exciting techniques and fresh new approaches to the world’s most historically proven asset class that will enable you to create more wealth and freedom than you ever thought possible. Jason is a genuine self made multi millionaire who’s actually been there and done it. He’s a successful investor, lender, developer and entrepreneur who’s owned properties in 11 states had hundreds of tenants and been involved in thousands of real estate transactions. This program will help you follow in Jason’s footsteps on the road to your financial independence day. You really can do it. And now here’s your host, Jason Hartman with the complete solution for real estate investors.

Jason Hartman 1:46
Welcome to Episode 1395. And guess where in the world I am today, greetings from metagame or meta gene Columbia. First time here and this is country number 87 for me, 87 countries. So I’m getting close to that 100 country mark, and I’m here with a guest who’s been on the show before. He is a YouTube Rockstar. And that is my buddy George gammon. And he’s been showing me around metazine since I arrived last night, and this morning, and George, thanks so much for being such a great host. And it’s, it’s just really fun to see metazine

George Gammon 2:26
Yeah, I’m glad you could come down, Jason. It’s always a pleasure to have a fellow real estate guy. And I think means a great market. And it’s booming. There’s tons of opportunity here, not only from a standpoint of building equity through remodels, but also cash flow as well. Probably not as good as estates not as good as those linear markets back home. But it’s a lot of fun here and there’s some good opportunity. Good stuff,

Jason Hartman 2:50
George. So what prompted you to move here? I mean, you’re an American. You’ve lived in Phoenix, Las Vegas, Portland. Why did you come here? You Got out of your you had a really big business in the States. And then you got out of that retired. And you came here to do real estate stuff mostly right?

George Gammon 3:09
Yeah, to a certain extent, I’ve actually had a few places all over the world, a lot of places in the States. And I retired in 2012. And that’s when I got into real estate investing happened to be a good time. And I went to the Midwest, I started remodeling properties there keeping them in a rental portfolio or selling them. And as an entrepreneur, I made a lot of money overseas. So when I started to understand the real estate game better, I thought, well, maybe I could just take this overseas, I love to travel. And maybe I could just combine the best of both worlds so I could explore, but I could still make money and something that I knew well, which at that point was real estate. So back in 2014 15 oil had gone down under $30 a barrel.

Jason Hartman 3:55
This is an interesting strategy you’re about to hear folks. He told me this last night And

George Gammon 4:01
I wanted a way to go long oil because I knew it was cheap. And I didn’t know anything about oil. So I thought to myself, okay, well Colombia is a country that has a large portion of their GDP is oil. So that means that their currency is going to be more tied to the price of oil, not directly. But so I thought, okay, the currency is cheap. It’s tied to oil. I know real estate. So if I can buy real estate denominated in their currency, I’m basically going long oil.

Jason Hartman 4:36
So by buying properties, in the Colombian peso, you’re basically also investing in the oil commodity that you thought was really cheap at the time at about 30 bucks a barrel. Now it’s at about $52 a barrel, I believe. And you know, it’s gone up a lot higher than that in the past. So how did that strategy worked out? That’s a really interesting that you would you would talk If you would sort of look down the waterfall like that, to tie those things in I that’s an interesting idea. And how did it work out for you?

George Gammon 5:08
Well, I want to stress that the main reason I was willing to do that is because I was able to invest in something that I know, if it would have been just going in and buying like oil futures, I would not have done that, right. So you got to be very familiar with the investment process and the underlying asset, so I want to make sure that I’m clear there. But as far as the investment, I figured it, I’d have upside two different ways. Number one, the currency, we talked about soil, and number two, going in taking an old property and remodeling it and then just get that forced appreciation. And so I figured, instead of both things go my way you kind of get a double whammy, and have the currency goes against me. Why not? I’ve got the I’m kind of hedging my downside with building that equity to the remodel. So at certain points Since 2015, the peso has appreciated dramatically. We’re on paper, I made a ton of money as a result, but now the pesos pretty much breakeven where it was in 2015. So I haven’t made much money there. But I made a ton of money on the real estate, the forced appreciation, and also the properties that I kept. I’ve kept and rented out.

Jason Hartman 6:24
Excellent. So of course, we’ve talked a lot about how the US is a really unique real estate market, because the financing for properties is subsidized by the government through Fannie Mae and Freddie Mac, here in Columbia, there’s really no financing almost. So the market is very illiquid, and the property sit on the market for a long time here. And you you actually became a reality TV show star here, right. So tell us about your show. And then let’s talk about that liquidity and how you take advantage of that as an investor that

George Gammon 6:59
illiquidity I mean, what’s the show you hosted and and you were showing people your property investments on this TV show here in meta gene, right? Kind of it was just like a normal house flipping show that you’d see back in the United States like fixer upper, or Flip or Flop something like that. It was at the beginning of 2019. And we were doing all these projects, all these remodel projects. And I thought, well, these shows are really popular back in the States. I’m sure they would be popular here. And so it just, that’s when my entrepreneurial spirits kind of kicked back in from being retired. It’s hard to argue that George’s actually retired but okay. But I kind of remember those days I thought, well, this is make it happen. So I didn’t know the first thing about producing a TV show. But that’s what we do as entrepreneurs, we kind of shoot first and ask questions later, right.

Jason Hartman 7:55
Ready, fire aim one of my favorite books by Michael Masterson. Hey, K Mark Ford. He’s been on the show before, but yeah, good.

George Gammon 8:04
So I went to the local station, which is called telematic. And I kind of pitched them on the show. And they really liked the idea. And they said, Okay, what we’ll do is we’ll put it on air. Well, first, what they said is they said, Give us a demo, like a five minute demo. Let us take a look at it. we’ll reconvene and maybe two weeks, and then we’ll kind of play it by ear. And so for that second meeting, they brought in some of their executives and more people that were decision makers. And we just worked our butts off for two weeks straight on trying to get five minute clip and I was watching just hours of reality TV show, which was a nightmare, but just trying to structurally figure out how it’s done. So the five minute clip was quite a bit of work. Oh, yeah. Yeah, tremendous amount of work. And I took it in there and the executive saw and they loved it, and so they said, Well, we were going to hold off and just have more meetings. But we’ve decided, let’s just do it. This is fantastic. That’s great. By the way,

Jason Hartman 9:10
our guest today is our in house economist, Thomas young. And we’re going to talk about the presidential candidates and their capital gains tax proposals. So we’ll get to that in a few minutes here. I didn’t mention that at the beginning. But George, so you did the TV show. And that was great. And then you’re buying these properties. Tell us about, you know, some of those deals and how they came down. And you know, kind of what you’re doing here. Are they all flips? Have you done any buying holds here? I know you’re doing buying holds in the US and the Midwest. But are you doing any iron holds here in Columbia? Are they all flipping? You know, buy, renovate flip.

George Gammon 9:46
Yeah, so I’ve got a couple buy and holds here. But generally, the goal is to flip them as fast as I can. And it all starts with what you’re saying earlier, and the inefficiency of the market. So it’s good, and it’s bad. It’s bad. sense that if you have a finished property, even if it’s in the Premier location, it’s most likely going to take you at least six months to sell it, sometimes even longer. Generally, if you’ve got the right product at the right price, then you’re going to sell it within that six months, but you never know. So the way that works to your advantage is that there’s very little liquidity in the market. I read a statistic the other day that only 3% of Colombians have mortgages.

Jason Hartman 10:29
Wow. Wow. Wow.

George Gammon 10:31
Yeah. So if you find a motivated seller, and they’re far and few between because most people own their properties outright, but I’ve actually found motivated sellers that do own their property. As an example, one deal I got the other day that was just incredible. The couple owns the property here, but they lived in Miami, they’re Colombian, and they got into debt problems in the United States. So this was their only asset they could liquidate and so I could negotiate and basically give them any price I wanted because they were just desperate for the money. And it’s just like the state’s you make money on the buy side. And so I got that it’s such a steep discount that even if that property takes me six months or a year to sell the returns that I’ll make on that without any leverage would far exceed what I can get back home.

Jason Hartman 11:22
That’s fantastic. Very interesting. Okay. I want to ask your thoughts on the broader economy for just a moment. We got a few minutes left before we got to get to our guests. But you interview a lot of great people on your show on your YouTube channel, including Jason Hartman, by the way, that’s right all the time. And I know you discovered my podcast back in 2012. And that was one of the things that sparked your interest. I feel honored to be part of that. But what’s the vibe you’re getting? What are some of your overall impressions from the many, many interviews you’ve done, and the masterful whiteboard videos you do on your YouTube channel, and by the way, I also want I give another shout out to our client clay Slocum, who, who saw your YouTube channel and you were talking about me and he said, You got to talk to this guy, George. And so that’s how we connected. So thank you clay for that. But your overall impressions, your overall thoughts about where things are going, any strategies people listening should use for their investment portfolio. Okay, kind of a very general broad question here.

George Gammon 12:22
Yeah, from the experts that I talked to. And these are guys like Jeff Snyder, Luke grohmann, Brent Johnson, Rick Rule, there’s the consensus that the economy in the United States is very precarious and more so even the stock market. But now, unfortunately, we’ve financialized the economy so much in the United States, that if the stock market goes down, the economy most likely will go down with it. It’s not supposed to happen. That’s the tail wagging the dog. But on the flip side, a lot of the Professional money managers know that they still need to be in the market because although they hate the fundamentals, right, you can’t fight the Fed. And if the Fed is printing all this money and injecting all this liquidity into the market, it’s most likely going to continue to go up even though the fundamentals stink. And everyone knows the markets extremely expensive. I look at the Cape ratio, I think we’re at 30. Right now, it’s only been at 30, maybe two or three times, what is the cape ratio? Okay, so the cape ratio is the Schiller PE index, it’s also called the cape ratio on that looks at the broad PE ratios for the s&p, I believe it’s the s&p. And so you can look at 1929 as an example, and see what the investors back then were paying as far as a PE or multiple for businesses. You can see what they’re paying in 2000 actually got to its high. 2000, which is about 44. But it’s at 30. Now, roughly, and it’s only been at 30 or above twice in history that was 1929 and 2000. So you look at both of those periods. And I think everyone would agree that we were in huge stock market bubbles then. So if we’re in bubbles, then why are we not in a bubble? Now?

Jason Hartman 14:25
That’s a very good question. Couple. A couple things I want to point out and bring up some talking points on this. Number one, of course, those PE ratios that are so out of whack. You always have to ask yourself compared to what? And when you inject a ton of money into the economy. How do we know what the P ratio should be? Certainly, if I was buying a small business, right, and just think of it from this perspective, would you pay a price to earnings ratio for that small business of 44 or even 30? My God, that’d be insanity. Right? Now of course. There’s a couple Exceptions we see like Facebook buying WhatsApp or Facebook buying Instagram or, you know, Google buying YouTube, where these companies have like zero revenue sometimes, you know, look at wework. What a frickin disaster. That is right. And those are just illogical speculative deals. So if we throw those out, you know, nobody buying a traditional business on a smaller scale would pay those kinds of price to earnings ratios. They did be absolutely insane to do that. But when you financial eyes, the economy and inject so much money into it, that’s what happens and how we all know that they won’t just keep financial and printing more. And maybe in the future. I’m just playing devil’s advocate here. Maybe in the future, those ratios will look cheap. I don’t know. You know, what should the ratio be when you have this distorted market of money printing? Maybe the P ratio should be 70. Maybe it should be 126. I don’t know. Nobody. knows, right?

George Gammon 16:01
Right? I think you bring up some great points there. What I would counter with is number one, Japan. So everyone says, well, the United States just can keep rates at zero or maybe even negative forever. They can do quantitative easing. Japan has been doing it since the mid 90s. Why can’t we be like Japan? But then they forget that the Japanese stock market has gone down 50 60% from its highs in 1990, and has never recovered. They leave out that component number one, but I think it goes back to what the first question should be. When you look at an investment 99.9% of the people even in real estate, I think this is a flaw that people make. The first question they ask themselves is, is the price going up? Or is it going down? And they try to debate and do all the research to figure that out whether it’s tops down, bottoms up. I don’t like to ask that question. First, I like to ask the question, is it cheap? Or is it expensive? If it’s cheap, I sell it. If it’s, excuse me, if it’s cheap, I buy it. If it’s expensive, I sell it. And as long as you focus on that question first, I think over the long run, you’re going to make money. So going back to the United States, is the stock market going up or down? Who knows? To your point, it could triple quadruple. But I do know that it’s not cheap. And if it’s not cheap, I don’t want to buy it. So what is cheap in the United States, in my opinion, really only two things denominated in dollars. Number one, our 30 year fixed rate mortgages. That is probably the cheapest thing right now in the United States. Viewing that 30 year fixed rate mortgage as an asset, not a liability, and that’s the way you should view it as an asset. And it’s super cheap. By the way, I just want to mention if you have not listened to the episode, we did with Rabbi Evan mafic, last week, I believe it was just eight days ago, possibly it was last week, I think was last Wednesday, where we analyzed a short term rental property that he purchased through our network. And he’s literally if he never, if he never rents it out, and it’s already rented for several months in advance, if he never rents it out, he’s literally getting paid to borrow that money. If the property is vacant, no income, like he’s still getting paid to borrow the money with inflation and tax benefits. Absolutely incredible, cheap and subsidized. Even more with tax benefits. Yeah, yeah. So the second thing that I think is cheap, if you can find it, and it’s not as easy to find now as it was in 2012, but that would be the cash flow from a rental property. In a linear market. I like to go into B or A neighborhoods, I’d rather get a little bit lower return and not have to deal with

George Gammon 18:53
sketchy tension tenants. Right, right.

George Gammon 18:55
So I think those are the two things probably the only two things in the us right now that are quote unquote cheap. If you look at them, historically speaking, or compared to what, then going back to the mortgages, if you are someone that believes that this quantitative easing the Fed taking their balance sheet to its boards back to over $4 trillion. Now, if you think that those chickens at some point in time have to come home to roost now, then you’ve got to look at a 30 year fixed rate mortgage as an opportunity to get paid to short the US dollar. With that, George, that is excellent, excellent insight. And we gotta wrap it up to get to our second half of today’s episode, where we talked about the presidential candidates and their tax benefits. But well, I’m down here for the next five days. We’re going to record a whole bunch of stuff. So we’ll have George back a lot more on the show. But George, just give out your website or YouTube channel or whatever you want to share before we go to part two here. Sure. It’s really easy the YouTube channels My name George tickle spelling, gammon, GA and m o n. And the website is George gammon.

Jason Hartman 20:08
com. Excellent. Thank you, George. Let’s get to part two of today’s show. Let’s talk about the presidential candidates. We’re going to be doing a bunch of shows, reviewing their tax policies and their housing policies and so forth. Today we’re talking about capital gains with our in house economist, Thomas young, be sure to go to Jason For more or call us at one 800 Hartman and here we go with part two. I know a lot of you are paying attention to our presidential campaign. It is an election year, and all the candidates have different and Shall I dare say crazy tax plans. One of the big parts that affects real estate investors is capital gains tax, not only real estate investors, but any type of investor and anybody who’s interested in the economy as a whole. Because capital gains taxation and the taxation of dividends on investments affects whether or not people will invest, how much they will invest, when they will invest. And that, of course, has wide ranging implications on the entire economy. I’ve got our in house economist with us, Thomas young Thomas, welcome back. Good to be with you. Thank you for putting together some research on this topic. And what do you want to start with? We’ve got a little CNBC clip, we want to play for our listeners about this. And then we’re going to compare six presidential candidates and see what they think. Okay, Thomas, how about if we go to the sound clip first.

George Gammon 21:42
Sounds good. Okay.

George Gammon 21:44
Candidates are all pushing for different taxes on the wealthy, but they are united on one front or Robert Frank joins us now with a look at proposals to raise capital gains taxes, Robert, good morning, Sarah. Well, Joe Biden, Bernie Sanders, Cory Booker, Beto O’Rourke, and a Klobuchar are all saying that the capital gains tax should be higher by last week saying is 750 billion dollar a year healthcare plan would be paid for, in part with an increase in the capital gains tax. So what would a higher cap cap cap canes rack rate due to the economy to that guy, he has more verbal stumbles than I do. revenues in the stock market? Well, right now, the top capital gains rate on long term gains is 20%. The top income rate of course, at 37%. Many of the candidates want those two rates to be equal.

Jason Hartman 22:34
So what they’re saying is that the top income tax rate 37%, and then of course, add your state taxes to that. So if you live in California, you’re paying 50%, potentially 50% half of everything you make goes to the Socialist Republic of California, get out of that place, do what I did, folks, get out while you can. And so so the democrats pretty much want this to be equal. Thomas. They don’t. They think that Investment taxes should be the same as income taxes by and large, and Bernie Sanders, of course has a 5 trillion almost $5 trillion spending plan. We review that last week on the podcast. So let’s hear more saying work should not be taxed more than wealth. Now, the lower capital gains rate cost the government about 120 billion dollars a year, the last time the two rates, okay, so that’s a complete misnomer, because it doesn’t necessarily cost to the government that because it’s not a zero sum game. A very important concept to understand is the idea of the zero sum game, raise taxes, get more revenue doesn’t work that way in practice as we as we well know, because sometimes when you raise taxes, you reduce economic activity, and you actually end up with less revenue. If you’re the government. I’m talking from their perspective, because you’ve reduced the amount of economic activity or you’ve simply in Increased cheating and various workarounds and money goes offshore, or money doesn’t invest in this. Thomas, by the way, is that really fundamental old concept, maybe originally popularized by the most influential economist in world history. I hate to say it, but that’s Karl Marx, no economist I don’t think has had more influence, sadly, on the economy. I’m not saying it’s good. I’m just saying it is, then Karl Marx. And he really brought to the fore the idea that labor is as valuable or more valuable than capital. And Thomas, I’d love to get your thinking on this because capital comes from doing labor right here at one point, right. That’s how you amass capital. And so what the CNBC person just said there is that capital should be taxed at the same rate as labor Okay, now, it’s a fair question. And it’s it’s a fair debate. But what they don’t really say is that you already paid tax on your labor as you earn that money before you have the money with which to invest. What are your thoughts? Thomas?

George Gammon 25:18
Yeah, I think it’s generally a good idea not to double tax, you know, income or anything else. Really. You want to tax it at the final point of consumption. And then that’s it. But of course, that’s, that’s not a great selling point outside of economic circles. I think it’s interesting. You brought up Karl Marx, I would sure like to I, when I was reading his history, he used to play chess. And when he’d lose, he’d get angry. And he can he go right, you know, notes on his book. I’d sure like to play chess against him and just pick his brain, if you could. So that’s like,

Jason Hartman 25:56
one of those dinner questions as you’re drinking wine. If you could play chess with Anyone in history? Who would it be Thomas Karl Marx? Well, maybe when he got mad because he was a sore loser, he could be like a modern liberal and have a safe space to have his social justice warrior tantrum. It’s ridiculous. So okay, well, you know, labor or capital, right. So it sounds like you would be really in favor of a national sales tax, then you alluded to that you just gave a hint to your belief on that. Thomas, I think and you would say maybe no income tax, no other taxes at all, just tax at the point of consumption. Is that what you were saying?

George Gammon 26:39
I do like that idea. You’d have to deal with business inputs because businesses purchase a number of consumption herbal items, and I assume that you’d want an exemption for those items. But you know, it’s possible to move towards the national sales tax and eliminate, you know, the income tax.

Jason Hartman 26:56
The fear that I have on a national sales tax is The idea that number one, you’ll get hoarders that don’t spend. And of course, when you have an economy, where 72% of the American economy is based on spending, you really do need people to spend or you’re going to have a disaster, people might just become money collectors. I mean, there are certainly people like that nowadays, the sort of Scrooge mentality if you will collect all the dollars, don’t spend it right. You might, you know, reduce consumption if you had to pay a really high sales tax, right, you’ve really made me think twice about buying things, but also I think it would really incentivize a gray market or a black market where things would be sold to, you know, circumvent the tax, but you know, I don’t know I just I’ve wrestled with that one. I don’t have like a strong opinion either way. But you do agree, Thomas that taxing capital gains is basically double dipping by the government. It’s double taxation, right? Because you earned the money with which to invest you paid taxes as you were earning it. Then you invest it and now you got to pay more taxes on the result of the investment. Is

George Gammon 28:05
that what you think? Yeah, there are at least two main arguments for it. The first is double taxation. And then the second is a lower capital gains tax respects risk. And I don’t know, I think most Americans respect the idea that when you take risk, there’s a benefit to society at large, and that should be acknowledged.

Jason Hartman 28:27
Right, right. So we want to In other words, what you’re saying is, the government’s tax code currently encourages investors to take risk, and that risk sometimes is successful and grows the economy, whether it’s the risk of buying a property and renting it to people and all our real estate investors certainly know that can be a little bit risky with it’s not very risky if you do it right. But you know, everything has risk attached to it, or starting a business or you know, anything that sort of puts capital formation into the economy. That’s a risk it should be rewarded with a lower capital gains tax. Now Trump wants the capital gains tax even lower. Elizabeth Warren, what does she want?

George Gammon 29:14
All they all pretty much say they want a capital gains tax and ordinary. What’s the Trump Trump on the one side wants wants to lower it by inflation indexing the capital gains tax rate, the five Democratic candidates worn by Sanders, buttigieg and Bloomberg, they’ve all mentioned taxing capital gains as ordinary income. Bloomberg is a little different in that he said he would not he wouldn’t do that until someone reached a million in income.

Jason Hartman 29:44
Okay, so in other words, you get either I don’t know if Bloomberg says free capital gains tax if your incomes under a million bucks, or if it’s unchanged, if it’s still 20% and then you jump to ordinary income tax. tax rates on capital gains events when you make over a million dollars, right? Is that what he’s saying?

George Gammon 30:08
Yeah, that’s the idea. The one thing that’s unique about Bloomberg is that he has suggested to get rid of the 1031 exchanges.

Jason Hartman 30:16
Oh, wow, that would really stifle the marketplace. There, there wouldn’t be a lot less activity in terms of refinancing or purchase money loans for, you know, new properties that people buy. Real estate brokers would make a lot less money 1031 exchange companies, title companies, you know, mortgage companies that there’s so much attachment to everything. I think if you got rid of 1031 exchange, that would really, really make the market a lot quieter. And that would be very bad news for the economy. What do you think?

George Gammon 30:51
Yeah, obviously, it’s risky. It’s really risky. That would be a terrible idea.

Jason Hartman 30:56
Bloomberg doesn’t know what he’s talking about. It’s interesting that someone can be that so successful in business and be just so clueless when it comes to tax policy and government policy. But hey, that’s just my opinion. He’s a lot richer than I am. Bloomberg though funny, you know, did you hear about he wears these old shoes. He just likes his old shoes, even though he’s a he’s a billionaire. Okay, let’s listen to a little more of this sound clip Thomas

George Gammon 31:20
are the same, and there was a time was back in 1987, both at 28%. At that time, revenues from capital gains actually doubled in 1986. as investors rush to sell right before that higher tax took effect and then revenues fell by about 50% in 1987. Now, what happened the stock market? Well, it was flat the first year and then up about 25% in the three years after most studies show no strong connection between capital gains rates and the economy and the stock market. But a study from the tax foundation found that if the raid was increased, revenues could fall by 122 billion dollars a year, GDP could fall slightly and unemployment employment would fall by about 1 million jobs. Now, the reason democrats love this tax is that 70% of all capital gains, go to the top 1%. So, Sarah, when you look at all the possible taxes out there, the wealth tax, the estate tax, the income tax, the capital gains rate is the most progressive because again, you would really target the 1%. And even the point 1%, with the capital gains increase. Interesting, Robert, on you have it on that on the left hand, on the right hand, you got the administration continuing to toss out the idea of indexing into inflation. Right. And that’s been an idea that that has has been out there for a couple decades, really, the argument being that, look, if a lot of or part of a capital gain increase is due to inflation, you should take that piece out because that’s not really a material gain to the investor. And of course, those on the left thing well, then then you’re talking about another textbook. For the wealthy, but that’s been an argument and it is there is some basis, in fact by saying, Look, when you have a capital gain a portion of that is due to inflation.

Jason Hartman 33:08
And that’s absolutely right. And that’s what Trump’s plan is. And so I’m going to side with Trump on this one. Absolutely.

George Gammon 33:17
The White House would argue and then we’ve already heard this from some of the White House’s favorite economists like Stephen Moore, that that would be a significant boost into the economy and to November 2020. Well, what would that mean if the democrats go the other way? Yeah. Look, the the argument for capital gains rate being lower than ordinary income is that you need to incentivize capital, you need to incentivize people to invest with a lower rate. But there’s so much capital in the world right now. That that is a harder argument to make. And again, it is tough for most people to say wait a minute, I get, I get taxed higher for working than I do, just making money off money. And that’s an argument that’s working well on the campaign trail, and will be tough in the next election as well. Defend

Jason Hartman 34:00
And that was exactly Karl Marx’s argument. Very interesting how, how these old ideas keep coming back to us, Thomas, I gotta wrap it up. gotta jump to another interview. But thank you for bringing up this topic. It’s a great one. And we want to discuss the rest of the tax plans for the various candidates. on an upcoming episode. We there’s a lot more to it. There’s the idea of a wealth tax tax rates in general estate taxes we discussed today capital gains, we didn’t discuss dividends, but we did discuss capital gains. We got to discuss capital investment, international income, payroll taxes, and real estate, big topic right there and investment income too. So, Thomas, thanks again for joining us, and we will talk to you real soon to finish out the presidential candidates tax plans. How’s that sound?

George Gammon 34:53
Yeah, good to be with you.

George Gammon 34:58
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