Comments on: Madoff Victims Get a Tax Break (or the One Where I Say Things That Make People Mad) http://www.taxgirl.com/madoff-victims-get-a-tax-break-or-the-one-where-i-say-things-that-make-people-mad/ Paying taxes is painful... but reading about them shouldn't be. Sat, 21 Nov 2009 12:33:00 -0500 http://wordpress.org/?v=2.8.6 hourly 1 By: SKIP http://www.taxgirl.com/madoff-victims-get-a-tax-break-or-the-one-where-i-say-things-that-make-people-mad/comment-page-1/#comment-9853 SKIP Thu, 26 Mar 2009 03:42:57 +0000 http://www.taxgirl.com/?p=3007#comment-9853 Yep, Ponzi schemes are terrible - wonder if the tax code will give a break to the folks who are currently investing in the ultimate ponzi scheme (social security) when it finally goes broke. Skip Yep, Ponzi schemes are terrible – wonder if the tax code will give a break to the folks who are currently investing in the ultimate ponzi scheme (social security) when it finally goes broke.
Skip

]]> By: JuliaB http://www.taxgirl.com/madoff-victims-get-a-tax-break-or-the-one-where-i-say-things-that-make-people-mad/comment-page-1/#comment-9824 JuliaB Tue, 24 Mar 2009 23:28:22 +0000 http://www.taxgirl.com/?p=3007#comment-9824 Being able to deduct your losses only helps if you have income to deduct it from. If are retired, lost your life savings and are trying to live on social security you will never recoup your losses. Once again it is a case of the rich get richer and the poor get poorer. Being able to deduct your losses only helps if you have income to deduct it from. If are retired, lost your life savings and are trying to live on social security you will never recoup your losses. Once again it is a case of the rich get richer and the poor get poorer.

]]> By: garagefather http://www.taxgirl.com/madoff-victims-get-a-tax-break-or-the-one-where-i-say-things-that-make-people-mad/comment-page-1/#comment-9820 garagefather Tue, 24 Mar 2009 21:11:20 +0000 http://www.taxgirl.com/?p=3007#comment-9820 When I first started reading this article I thought you were describing social security. Social Security is the exact definition of a Ponzi scheme. Too bad I am a gen x-er and not a baby boomer. The gen x-ers will be too late and the money will be all gone. Who will they throw in jail though? I do agree that it is crazy to write specific tax code for every ill that pops up like the AIG bonuses. It is no different than the targeted tax cuts that always seem to come after you no longer qualify. It is a form a discrimination. Not that different than a progressive income tax code which charges higher and higher percentages based on your income. From what I have read and heard, it is unconstitutional to target tax payers after the fact. I have heard the term: bills of attainder? Not sure what that is but apparently the new tax on AIG bonuses falls within that category or is at least unconstitutional. We have a government that can't cut spending and doesn't really care what the constitution says. Not a good combination. When I first started reading this article I thought you were describing social security. Social Security is the exact definition of a Ponzi scheme. Too bad I am a gen x-er and not a baby boomer. The gen x-ers will be too late and the money will be all gone. Who will they throw in jail though?
I do agree that it is crazy to write specific tax code for every ill that pops up like the AIG bonuses. It is no different than the targeted tax cuts that always seem to come after you no longer qualify. It is a form a discrimination. Not that different than a progressive income tax code which charges higher and higher percentages based on your income.
From what I have read and heard, it is unconstitutional to target tax payers after the fact. I have heard the term: bills of attainder? Not sure what that is but apparently the new tax on AIG bonuses falls within that category or is at least unconstitutional.
We have a government that can’t cut spending and doesn’t really care what the constitution says. Not a good combination.

]]> By: Kelvin Kao http://www.taxgirl.com/madoff-victims-get-a-tax-break-or-the-one-where-i-say-things-that-make-people-mad/comment-page-1/#comment-9816 Kelvin Kao Tue, 24 Mar 2009 18:22:53 +0000 http://www.taxgirl.com/?p=3007#comment-9816 "The worst thing that’s happened to you is still the worst thing that’s happened to you" Haha, that's very true. As for the Madoff victims, well, there's a legal system to deal with frauds and I don't think the government should be compensating for this. I think this is like people arguing that the bail-out is a bad thing, because that's going to be removing the risk and indirectly encourage recklessly risky investments. There's something in common there. “The worst thing that’s happened to you is still the worst thing that’s happened to you” Haha, that’s very true. As for the Madoff victims, well, there’s a legal system to deal with frauds and I don’t think the government should be compensating for this.

I think this is like people arguing that the bail-out is a bad thing, because that’s going to be removing the risk and indirectly encourage recklessly risky investments. There’s something in common there.

]]> By: TaxRascal http://www.taxgirl.com/madoff-victims-get-a-tax-break-or-the-one-where-i-say-things-that-make-people-mad/comment-page-1/#comment-9814 TaxRascal Tue, 24 Mar 2009 17:36:54 +0000 http://www.taxgirl.com/?p=3007#comment-9814 The problem with a rule like this is that it affects incentives. The payoff for investigating a potential Ponzi scheme is now a little less (because of the tax cushion), so in the future, this will lead to Ponzi schemes being a little more common. It was well-meaning, but you can't compensate people for an avoidable error without making that error cheaper to commit. The problem with a rule like this is that it affects incentives. The payoff for investigating a potential Ponzi scheme is now a little less (because of the tax cushion), so in the future, this will lead to Ponzi schemes being a little more common. It was well-meaning, but you can’t compensate people for an avoidable error without making that error cheaper to commit.

]]> By: Kelly http://www.taxgirl.com/madoff-victims-get-a-tax-break-or-the-one-where-i-say-things-that-make-people-mad/comment-page-1/#comment-9813 Kelly Tue, 24 Mar 2009 15:04:15 +0000 http://www.taxgirl.com/?p=3007#comment-9813 I agree re the capital losses. I'm not sure that I believe that you should be able to deduct ALL of them - but the $3k limit is really silly in today's economy. I agree re the capital losses. I’m not sure that I believe that you should be able to deduct ALL of them – but the $3k limit is really silly in today’s economy.

]]> By: JBruce http://www.taxgirl.com/madoff-victims-get-a-tax-break-or-the-one-where-i-say-things-that-make-people-mad/comment-page-1/#comment-9812 JBruce Tue, 24 Mar 2009 14:53:04 +0000 http://www.taxgirl.com/?p=3007#comment-9812 My big beef in all this is the absurd $3,000 annual limitation on allowable net capital losses. If the IRS cheerfully taxes you on all your gains, it should allow you to deducy all your losses. Okay, if the long-term gain rate is only 15% then, maybe, the long-term loss rate should be the same, but that's a detail. This one "fix" would take care of almost everybody, including, especially, the large number of "middle Americans" whose direct investment portfolios have been devastated in the last year. Tax-wise, nothing at all has been done for them. And "they" are US -- not a relative few wealthy people. My big beef in all this is the absurd $3,000 annual limitation on allowable net capital losses. If the IRS cheerfully taxes you on all your gains, it should allow you to deducy all your losses. Okay, if the long-term gain rate is only 15% then, maybe, the long-term loss rate should be the same, but that’s a detail.
This one “fix” would take care of almost everybody, including, especially, the large number of “middle Americans” whose direct investment portfolios have been devastated in the last year. Tax-wise, nothing at all has been done for them. And “they” are US — not a relative few wealthy people.

]]> By: Huma http://www.taxgirl.com/madoff-victims-get-a-tax-break-or-the-one-where-i-say-things-that-make-people-mad/comment-page-1/#comment-9810 Huma Tue, 24 Mar 2009 14:22:38 +0000 http://www.taxgirl.com/?p=3007#comment-9810 An almost identical Ponzi scheme was pulled off in the Muslim community in the US about 4-6 months before the Madoff scheme came to light, I want to say. Investor took money, doled out huge returns, and went down his list of donors, taking more money, doling out more returns, and then finally took in another batch, so to speak, and simply absconded with it. People lost several million dollars each, and there wasn't a mention of it anywhere. So while I feel badly for Madoff investors and anyone who had a similar experience, I agree. I'm glad you said it out loud - that the reason we're seeing this kind of massive reform and relief is because the investors themselves were wealthy (although, cough cough, such was not the case for the Muslim investors who were ALSO incredibly wealthy) - because if you hadn't, I probably would have. And then I'd have ended up on some FBI watchlist. :-P An almost identical Ponzi scheme was pulled off in the Muslim community in the US about 4-6 months before the Madoff scheme came to light, I want to say. Investor took money, doled out huge returns, and went down his list of donors, taking more money, doling out more returns, and then finally took in another batch, so to speak, and simply absconded with it. People lost several million dollars each, and there wasn’t a mention of it anywhere. So while I feel badly for Madoff investors and anyone who had a similar experience, I agree. I’m glad you said it out loud – that the reason we’re seeing this kind of massive reform and relief is because the investors themselves were wealthy (although, cough cough, such was not the case for the Muslim investors who were ALSO incredibly wealthy) – because if you hadn’t, I probably would have. And then I’d have ended up on some FBI watchlist. :-P

]]> By: Urbie http://www.taxgirl.com/madoff-victims-get-a-tax-break-or-the-one-where-i-say-things-that-make-people-mad/comment-page-1/#comment-9809 Urbie Tue, 24 Mar 2009 13:31:19 +0000 http://www.taxgirl.com/?p=3007#comment-9809 Your friend in law school reminds me of my Dad's anecdote about overhearing a conversation in a dining hall at Harvard (he was Class of '50), between a couple of his well-to-do classmates -- one of them complained that his father had cut his spending money down to $150 a week. The other one said that's nothing, my dad cut me down to *$90* a week. Those are 1948 dollars. Oh, the humanity! Urb Your friend in law school reminds me of my Dad’s anecdote about overhearing a conversation in a dining hall at Harvard (he was Class of ‘50), between a couple of his well-to-do classmates — one of them complained that his father had cut his spending money down to $150 a week. The other one said that’s nothing, my dad cut me down to *$90* a week. Those are 1948 dollars. Oh, the humanity!

Urb

]]> By: calvinspalhobbes http://www.taxgirl.com/madoff-victims-get-a-tax-break-or-the-one-where-i-say-things-that-make-people-mad/comment-page-1/#comment-9808 calvinspalhobbes Tue, 24 Mar 2009 13:01:33 +0000 http://www.taxgirl.com/?p=3007#comment-9808 I sympathize with "victims" of investment scams and loss of value in their investments. At the end of the day though, all people must be responsible for their own "Choices" and bear the burden of due diligence, taking responsibility for themselves. Yes, it is sad that greed seems to have prevailed over blind faith. Scarpy is right, it is not the IRS job to compensate for investment risk... and its blatently wrong to offer compensation to selected classes of loss. Further,instead of bailing out banks with toxic assets and hoping that will free them up to make home loans that are later sold to Fannie Mae and Freddie Mac, the Federal Government should create a new investment entity, such as a "Linda Lou" (backed by the the Treasury... with a "clean slate"...or HUD, since they are already in the Home business so to speak and "oh so familiar with fair housing" ) to immediately begin lending to "Qualified Homebuyers," with a more generous than $8,000.00 credit for first time buyers, AND/OR buyers of "foreclosed propertis." This plan would reduce the home inventory, prop up home values, and allow move up buyers the opportunity to sell and possible come out ahead,; and save the taxpayers the risk on the Obama's plan to suppoert 85% of the investment of buying toxic assets, only to have the banks regain their composure.... with NO ASSURANCES they wil make loans again. Hobbes I sympathize with “victims” of investment scams and loss of value in their investments. At the end of the day though, all people must be responsible for their own “Choices” and bear the burden of due diligence, taking responsibility for themselves. Yes, it is sad that greed seems to have prevailed over blind faith. Scarpy is right, it is not the IRS job to compensate for investment risk… and its blatently wrong to offer compensation to selected classes of loss. Further,instead of bailing out banks with toxic assets and hoping that will free them up to make home loans that are later sold to Fannie Mae and Freddie Mac, the Federal Government should create a new investment entity, such as a “Linda Lou” (backed by the the Treasury… with a “clean slate”…or HUD, since they are already in the Home business so to speak and “oh so familiar with fair housing” ) to immediately begin lending to “Qualified Homebuyers,” with a more generous than $8,000.00 credit for first time buyers, AND/OR buyers of “foreclosed propertis.” This plan would reduce the home inventory, prop up home values, and allow move up buyers the opportunity to sell and possible come out ahead,; and save the taxpayers the risk on the Obama’s plan to suppoert 85% of the investment of buying toxic assets, only to have the banks regain their composure…. with NO ASSURANCES they wil make loans again.
Hobbes

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