u/GodEmperorOfMankind3

Anyone who understands the time value of money recognizes the capitalist is doing something economically valuable.

If you aren't aware, the time value of money is the fact that money today is worth more than money in the future.

The main reasons are:

1. Opportunity cost (the options you give up when choosing one option over another)

2. Inflation (future money tends to have less purchasing power)

3. Risk (future payments might not be received)

4. Liquidity (cash today gives you choices now)

5. Time preferences (people prefer benefits sooner than later)

The capitalist absorbs time delays, uncertainty, opportunity costs, risks, etc. before any revenue is collected.

Marx does mention interest, turnover time, and capital advanced into production, but he still treated profit as a claim on labor's surplus value, rather than also accepting the fact that it is *also* compensation for capital allocation, risk-bearing, and time preference.

In my opinion, Marx's understanding is incomplete.

Money today is not the same as money a year from now.

Capital tied up in production is not neutral.

The capitalist/entrepreneur is fronting the costs, organizing thr system, waiting, and potentially losing.

So my question:

**IF labor creates value, but capital makes the production process possible across time, then why treat the capitalist as merely extracting value, rather than also creating it?**

Wanted to hear from the landlords here, but my wife and I are looking at houses to rent.

We are talking the $6k - $7k/mo. price range mind you, and we have decided we are going to disclose our two dogs, despite the advice from basically everyone else being that we should lie.

There isn't much competition at this price range and we have a pretty immaculate profile otherwise (excellent credit, glowing review from past landlord where we lived in a home and the dogs caused zero damage for several years, make about 10x the rent on a monthly basis and growing, have over 1 year's worth of rent just sitting in cash, etc).

The only possible strikes against us are owning a 30 lb and 45 lb dog.

But when it comes to a full-size house with a backyard, isn't it sort of anticipated you might have dogs? I don't think I know anyone with a home and no dog at this point...

Just curious what landlords renting a home out at that price point think.

Regardless, I am absolutely going to disclose because I cannot stand the idea of having to lie about something like that.

EDIT: can we please keep the comments related to the dog question?

I know this question has been asked before but it always pertains to condos/apartments which is quite different in my opinion.

I am looking to rent a home ($6k - $8k range).

Have a very strong profile (business owner with circa $75k - $100k per month income) - on the personal side I pay myself minimally as it is very tax disadvantaged to extract nearly $100k a month as income.

Excellent credit, glowing reference from last landlord who we've been with for several years.

The fly in the ointment is our rescue dogs. They are all amazing and have been well-trained (after a lot of time and effort, since they were abused rescues initially), never caused one iota of damage, but they are on the bigger side.

Keep in mind, we are looking at homes, not condos.

Realtor has advised us not to disclose the dogs on the application as that's what most people do. We did the same for our last rental and it ended up working out fine, but I don't want to end up with a very dog-opposed landlord and start the relationship off on the wrong foot.

That being said, I don't think there are many people looking to rent at the $6k - $8k range and our profile is excellent aside from the dogs. But there also aren't many options for homes at that price range so I don't want us to be getting denied simply because many dog owners *are* irresponsible whereas we are not.

Should we disclose?

By tax I don't just mean literal taxes, I mean permits, fees, etc. Any cash that some government body is extracting from us.

We're taxed on:

1. Our income

2. Our investments

3. The products & services we consume

4. The cars we drive

5. The gas we fill those cars with

6. The energy we consume

7. The homes we live in

8. The land we live on

9. When we buy a new property (land transfer tax)

10. Business profits are taxed

11. When we pay our employees we are taxed

12. When we form our companies we're taxed

13. Our companies have to pay permits to exist

14. When we die we're taxed

The list seems endless.

Those ludicrous government revenues are then wasted frivolously on wars, hiring inept public workers, granting contracts to the buddies of government representatives, etc.

You get effectively zero say in how your tax dollars are allocated and yet don't seem to care?

The government takes from all of us, yet to the socialist, the business owner is the problem.

Why don't socialists seem to care about the several trillion dollar annual waste made by governments?

Okay, so, I acknowledge I'm in a bit of a strange situation given I'm a business owner and am fortunate to be doing very well, but I can't wrap my head around how buying a home in Toronto would even be worthwhile.

If I buy an OK house, it's going to be at least $2mm.

That means I need to put $400k down.

But in order for me to put $400k down, I actually need to pay myself out $800k because the government will take about half for themselves as tax.

Even if I spread the dividend payments over 2 years, I will still lose half to taxes.

Then there's the mortgage payments. It will be close to $8500/mo., but again, that's before taxes. I actually need to pay myself out $17k a month because again, half goes to taxes.

So year 1, before insurance, property taxes, land transfer tax, any maintenance that comes up, closing costs, etc. I am starting from a position of being down $502k, just lost to the tax man.

I need a minimum of $102k/yr (the mortgage payments lost to taxes) in annual appreciation, plus a one-time gain of $400k (the down payment portion lost to taxes) in appreciation, just to break even. On a $2mm home. Before all the other fees and taxes.

How does that make any sense?

Sure, if I previously owned a home when prices were consistent with tax brackets and sold it for a tax free capital gain, this would make more sense, but for someone who became successful with a business I am HEAVILY incentivized NOT to pull out that amount of cash.

It makes way more sense for me to rent and just keep that cash in my holding company while it purchases various investments for a far lower net tax rate and at a higher return.

Not to mention, I can rent that same $2mm home for just over $6k/mo. (I currently rent a $1.5mm home for less than $5k/mo.).

I don't build equity in this scenario, but it doesn't matter, because the gains I incur by taking that cash NOT lost to taxes and investing in a balanced stock & bond portfolio far outstrips my home equity gains.

So the only options for me are to either: a) have someone gift me hundreds of thousands of $s or b) have already owned a home and sold it at a tax free capital gain?

Neither of those are possible for me.

Has anyone else dealt with this scenario/what did you do?