CU professor calls “BS” on Romney’s 13 percent tax rate claim

[TruthAnalyzed]

56. That is completely different

You are trying to use the instant cash from a short in a way it can't be used. It's like saying, if you just short a stock, did you make money?

No, your position in that stock is net $0 unless it moves in your favor.

If you want to count the money that way, then you have to consider your short A position as being ($150), because you have to be able to cover it. Shorting stock isn't free money.

See, you're not getting money from a hedge. You are getting money from a short. It's no different than just shorting anything, and has nothing to do with eliminating the profit from your real position.

the advantage overall is being able to realize a gain today while deferring the tax liability indefinitely.

There are a couple of problems with that. First, when you have short positions, you have to keep them covered. You can't just short $1 million worth of stock, withdraw that $1 million, and just 'put off' covering those positions indefinitely. You have to maintain the ability to cover.

So all you are doing is basically taking a credit out of a stock, putting it into your trading account, but unless the stock moves in your favor, you can't really use that money.