sailrmac

Darren McCammon

sailrmac’s Activity

Thu Feb 26

NL

Watercooler Post

sailrmac wrote 3:40 PM

The US government should change tax laws allowing all corporations the option to become pass-through entities. Simplified somewhat, pass-through entities (e.g. BDC's, MLP's, REIT's) are those who do not have to pay corporate income tax provided they distribute the majority of their taxable income, usually 90%, to shareholders. These distributions avoid double taxation (corporate taxes + dividend taxes) but the receivers have to pay marginal tax rates on them (typically 28-42%) instead of receiving the lower dividend tax rate status (15-20%). The benefits to our society would be significant: 1.) This would both reduce the machinations companies go through to avoid taxes, and encourage US job formation. Companies hold sizable profits overseas in order to avoid paying US taxes on them. Elimination of the corporate tax allows them to repatriate these funds to the US, returning them to shareholders or using them to fund growth. Shareholders are much more likely to spend or re-invest the funds rather than letting them sit in banks like many companies do. This would jump start the economy by putting the money to work. In economics terms, it would increase the velocity of money. As importantly, companies would no longer have any tax incentives to build factories and transfer patents overseas in order to recognize their profits overseas. This would further encourage US jobs and competitiveness. 2.) In my, and Economist magazine's, opinion pass through entities provide advantages over regular C-corps for the investor. Many studies have shown dividend paying entities outperforming non-dividend payers. Some have even shown higher dividend payers outperform lower dividend payers on both a nominal and risk adjusted basis. Since pass-through entities must distribute 90% of their taxable income they tend to high yield. Furthermore, this effectively means they need to go back to shareholders (or banks) in order to raise funds for large projects. Thus they must be more selective with projects and able to justify large projects to third party stakeholders in order to access funding. 3.) If you believe in a progressive tax system, this would ensure fairness. Warren Buffett for instance would no longer be paying a lower average rate on his taxes than his secretary. This is because 90% of taxable income must be distributed and the distribution from these pass through entities would be subject to the same marginal tax rates as salaried or hourly income. Indeed Warren's average tax rate under this system is very likely to be higher than his secretaries. He would be declaring much more income, so a higher proportion of which would be in the higher brackets. However, it would still likely be close to revenue neutral for the government in the short term. Basically a reduction in corporate taxes, especially those paid by the small business owner, would be offset by an increase in income taxes for the top 10% of earners. Longer term it would actually be revenue positive for the government if you believe, as I do, that the change is very likely to lead to a higher US growth rate. While passing anything through our legislative branch seems to be a stretch nowadays, I think this is a worthwhile proposal that both could actually happen and would have a significant positive effect on our economy. Themes: taxes, economy, growth

NL

Boards Post

sailrmac posted to the Macro Economic Trends and Risks board. 3:05 PM

Proposal -expand pass-through status

The US government should change tax laws allowing all corporations the option to become pass-through entities. Simplified somewhat, pass-through entities (e.g. BDC's, MLP's, REIT's) are those who do not have to pay corporate income tax provided they [more]

NL

Boards Post

sailrmac replied to the Macro Economic Trends and Risks board. 1:59 PM

Re: Shipping woes

Hi unholy,

Ship leasing rates have little to do with the price of the commodity they are transporting. Just like when you cross a toll bridge, the rate you are charged does not change if you are driving a Lamborghini or a Ford. Rather ship [more]

NL

Boards Post

sailrmac replied to the Macro Economic Trends and Risks board. 1:54 PM

Re: Shipping woes

But other companies in the shipping sector, CPLP for instance, are doing just fine.

[more]

NL

Boards Post

sailrmac replied to the Dividend Growth Investing board. 1:46 PM

Re: Dividend/non-dividend stock performance...

Spot on Rayvt. Saying here's a list of dividend growers is no different than saying here is a list of earnings growers. Umh well yah, tell me who is going to grow dividends or earnings the most for the next 25 years and I'll tell you whose stock is [more]

NL

Boards Post

sailrmac replied to the Real Estate Inv. Trusts: REITs board. 1:33 PM

Re: Exchange Trade Notes (ETN) MORL

The article you recommend was written in 2012. Furthermore, it's prediction that the bottom would fall out of mREIT's when the Fed stopped purchasing MBS did not happen. I'm not implying MORL is not very highly leveraged and risky. I am implying that [more]

NL

Boards Post

sailrmac replied to the Real Estate Inv. Trusts: REITs board. 1:21 PM

Re: Exchange Trade Notes (ETN) MORL

I have a collection of UBS 2x ETN's I call the YMBC (You Must Be Crazy) portfolio. You can find posts on it in my blog as well as an article on seeking alpha. The most pertinent part to your question is probably the section of the article entitled [more]

NL

Boards Post

sailrmac replied to the Real Estate Inv. Trusts: REITs board. 1:14 PM

Re: REM - What happened in Aug 2014?

REM is a mREIT ETF. It increased in value in August of 2014. If you mean Q2 2013, that was the taper tantrum.

Tue Feb 10

NL

Boards Post

sailrmac replied to the Mechanical Investing board. 5:34 PM

Re: MI blog on seeking alpha

Wow, I really wasn't expecting all the negativity regarding posting a real life example, my way of using MI, to a blog. Thank you Longhornboy for suggesting I might want to go to the board and read the feedback. I was unpleasantly [more]

Mon Feb 9

NL

Boards Post

sailrmac replied to the Real Estate Inv. Trusts: REITs board. 5:48 PM

Re: Roth 401K

Both the Roth and the regular 401k are excellent choices. The only wrong choice would be to not max them out. So regardless of which way you go, don't worry about it too much. Certainly, don't let confusion prevent you from absolutely maximizing your [more]

NL

Boards Post

sailrmac posted to the Mechanical Investing board. 3:53 PM

MI blog on seeking alpha

I have started publishing a blog following my MI investments located here:
[more]

Tue Dec 30

NL

Boards Post

sailrmac replied to the Macro Economic Trends and Risks board. 7:29 PM

Re: A tale of two shipping sectors

Here's my favorite site for keeping track of oil shipping prices (VLCC and LR tankers). [more]

Mon Dec 22

NL

Boards Post

sailrmac replied to the Macro Economic Trends and Risks board. 4:17 PM

Re: A tale of two shipping sectors

Thanks for the correction Hohum.

NL

Boards Post

sailrmac replied to the Macro Economic Trends and Risks board. 4:12 PM

Re: Well, well, well, well..., well

Three way hedges are not good hedges when the price falls below the third leg (as has happened to most of these hedges). Sell a call at $100 / barrel for $3 premium. Buy a put at $90 paying $5 premium. Sell a put at $70 for $2 premium. You have a 3 [more]

Fri Dec 19

NL

Boards Post

sailrmac replied to the Macro Economic Trends and Risks board. 4:37 PM

Re: A tale of two shipping sectors

This is because the economics of the shipping sector are not driven by the item they ship. Just like the toll taker at your local bridge doesn't get a different toll from those driving a Lamborghini vs. an old Ford, the price one pays for leasing a [more]

Caps Pick

sailrmac made a pick in CAPS. 4:12 PM

CORTS TR J C PENNEY (KTP) will Outperform the S&P 500

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RAIT Financial Trust (RAS) will Outperform the S&P 500

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SPRINGLEAF HLDGS LLC (LEAF) will Outperform the S&P 500

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Strategic Hotels & Resorts, Inc. (BEE) will Outperform the S&P 500

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sailrmac made a pick in CAPS. 4:11 PM

() will Outperform the S&P 500
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Big red star, 1000 posts Old School Fool
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