RS> Soorree, if you realise $250K capital gains every
RS> year, you wont be paying tax on $50K income.

PE> No, I said the same rate.

RS> You are having a brain fart here anyway, the
RS> marginal income tax rate over $50K is constant.

I didn't say marginal rate, I said rate.

Let me simplify it.

I earn $25k per year.  I normally pay $5k per year tax.
I borrow $250k, and pay $25k per year interest.  I make $25k per
year in capital gain.  

Income = $25k - $25k = 0.
Capital gain = $25k
Tax payable = $25k/5 = $5k = 0 = 0 * 5 = 0.  I pay no tax.

PE> Divide capital gain by 5, find out how
PE> much extra tax you pay, then multiply by 5.

RS> Pity that doing that with your numbers produces the SAME tax rate.

Nope.  Same marginal tax rate, not same rate.

PE> This way, you pay 1/3 tax on $250k instead of 1/2 on $250k.

Like I said.

RS> Still cant see how you actually benefit significantly give
RS> the risk you are taking and the chance of you actually being
RS> able to achieve that capital gain every single year.

The ability to achieve the capital gain is a different story.

RS> The most that rule does is ensure that capital gains are a
RS> bit more favorably treated tax wise than other income, but

A lot more favourably if you do it right.

RS> And if it was that simple, dont you think someone
RS> would have already calculated that and done that ?

PE> They may well have done, and realised that with the
PE> volume they require (AMP etc), they can not get into
PE> mining stocks, because they would totally swamp the market.

RS> Pigs might fucking fly too.

PE> That's what they said in "Making Money Made Simple"
PE> or "More Money with Noel Whittaker".

RS> Pigs arse they did, thats YOUR mangling of what they
RS> DID say. That DOESNT apply to an AMP for one very
RS> very simple reason, company tax rates ARENT progressive.

You seriously reckon that it would make sense for AMP to buy say
Sabre Resources, when the entire trading on Sabre for a year is
probably equal to 0.001% of their income?  It's irrelevant to them,
Rod.  They have to buy big stuff like Pacific Dunlop.

BFN.  Paul.
@EOT:

---