Tax the Super Wealthy

[YttriumNitrate]

Are you just making things up?
...
Musk, Bezos, Zuck etc all only own 10-20% of their respective companies. They could all be voted out tomorrow if that's what the actual owners of the company decided. None of them own a majority of shares.

Before you go accusing people of "just making things up" please learn about different classes of shares and their respective voting rights.

[Undecided]

Do billionaires divert resources to the construction of their super yachts (or, let’s say ultra-luxury housing) other than by making it more profitable for someone to do that work, compared to building affordable housing?

Yes.

In the case of ultra-luxury housing, it's fairly obvious: one person hording a LOT of land/space inherently impacts the per-capita amount of space available for others, and then supply and demand does its thing.

Or, in a less direct example, it's more lucrative to make stuff for price-insensitive rich people than for middle-class or poor people who are more frugal out of necessity.  If you're producing fewer goods targeted at middle/lower incomes because you're chasing profits by selling stuff to the ultra-rich, you're indirectly driving up prices for people of more average means.

Wealth inequality has all kinds of consequences like this:
-Developers are only building McMansions, not affordable homes
-The car market: Many automakers have simply stopped trying to make affordable cars, because there's WAY more margin in a $50k luxury SUV than a $20k Civic/Corolla, simply because wealthy consumers care less about trying to get the best possible deal than their poorer counterparts
-Inequality in education/infrastructure funding: Rich areas pay more local taxes, which means they get better schools, better roads, cleaner water (Remember Flint?) while poorer areas struggle with these foundational aspects required to build a thriving society.

It's curious that you said "yes," but then describe transactions in which the first step is that someone indeed makes a more profitable choice to deal with the billionaire. I'm not saying you're wrong about the subsequent effects at all, but it's a nice sketch of why you can't pretend that eliminating the top step of the capitalist ladder doesn't also negatively affect people farther down (notwithstanding that you're supposing that it will benefit people perhaps even further down). And maybe you're fine with that, but taking away profit-maximizing decisions clearly makes some people worse off, which is what opens the door to the rational interest of (some) non-billionaires in objecting to structural changes even when they're described as only applying to the billionaires.

[js82]

Do billionaires divert resources to the construction of their super yachts (or, let’s say ultra-luxury housing) other than by making it more profitable for someone to do that work, compared to building affordable housing?

Yes.

In the case of ultra-luxury housing, it's fairly obvious: one person hording a LOT of land/space inherently impacts the per-capita amount of space available for others, and then supply and demand does its thing.

Or, in a less direct example, it's more lucrative to make stuff for price-insensitive rich people than for middle-class or poor people who are more frugal out of necessity.  If you're producing fewer goods targeted at middle/lower incomes because you're chasing profits by selling stuff to the ultra-rich, you're indirectly driving up prices for people of more average means.

Wealth inequality has all kinds of consequences like this:
-Developers are only building McMansions, not affordable homes
-The car market: Many automakers have simply stopped trying to make affordable cars, because there's WAY more margin in a $50k luxury SUV than a $20k Civic/Corolla, simply because wealthy consumers care less about trying to get the best possible deal than their poorer counterparts
-Inequality in education/infrastructure funding: Rich areas pay more local taxes, which means they get better schools, better roads, cleaner water (Remember Flint?) while poorer areas struggle with these foundational aspects required to build a thriving society.

It's curious that you said "yes," but then describe transactions in which the first step is that someone indeed makes a more profitable choice to deal with the billionaire. I'm not saying you're wrong about the subsequent effects at all, but it's a nice sketch of why you can't pretend that eliminating the top step of the capitalist ladder doesn't also negatively affect people farther down (notwithstanding that you're supposing that it will benefit people perhaps even further down). And maybe you're fine with that, but taking away profit-maximizing decisions clearly makes some people worse off, which is what opens the door to the rational interest of (some) non-billionaires in objecting to structural changes even when they're described as only applying to the billionaires.

Oh, it will absolutely make *some* people worse off, and it's intellectually dishonest to pretend otherwise.  But the people that might get hurt indirectly are a very, very small slice of the population, and assuredly are not people making $15/hr - they're largely the management of luxury goods purveyors who - while not ludicrously wealthy, are still extremely well off in comparison with people who are doing physical labor.

People mostly object to policies like this not out of rational interest, but out of astroturfed BS ginned up by special interests - conscious campaigns engineered by the ultra-wealthy designed to put middle class vs. working class, working class vs. the unemployed, and so forth - to redirect attention away from the real, core issue.

That notwithstanding, reducing wealth inequality via tax policy is absolutely not "taking away profit-maximizing decisions" - it's merely restructuring the decision criteria, since rational economic decisions would be dealing with a different presumed wealth distribution as an input.

[FIPurpose]

Are you just making things up?
...
Musk, Bezos, Zuck etc all only own 10-20% of their respective companies. They could all be voted out tomorrow if that's what the actual owners of the company decided. None of them own a majority of shares.

Before you go accusing people of "just making things up" please learn about different classes of shares and their respective voting rights.

K. Zuckerberg is the only one out of the ones listed doing this. So 1/4? He's making up an ad hoc reason as to why Billionaires want to keep their money other than billionaires like money. He didn't quote any billionaires saying that they'd lose voting power.

My guess is that > 90% of CEO's do not hold anything close to a majority voting position. And any Billionaire could simply take out a loan to pay taxes avoiding the sale anyways. It's all a completely moot point.

[LennStar]

Are you just making things up?
...
Musk, Bezos, Zuck etc all only own 10-20% of their respective companies. They could all be voted out tomorrow if that's what the actual owners of the company decided. None of them own a majority of shares.

Before you go accusing people of "just making things up" please learn about different classes of shares and their respective voting rights.

K. Zuckerberg is the only one out of the ones listed doing this. So 1/4? He's making up an ad hoc reason as to why Billionaires want to keep their money other than billionaires like money. He didn't quote any billionaires saying that they'd lose voting power.

My guess is that > 90% of CEO's do not hold anything close to a majority voting position. And any Billionaire could simply take out a loan to pay taxes avoiding the sale anyways. It's all a completely moot point.

Like Elon Musk loaning a few pennies to buy Twitter.
Banks are institutions that loan you money, if you can prove that you don't need it. - Mark Twain, probably. Sounds like him. I love his sarcasm.

[scottish]

Are loans to avoid capital gains tax from selling shares something that started up with the low interest rates since the financial crisis back in 2008?   Or have they been in use for much longer than that?

I'm just thinking that 5% interest payments will add up to more than your capital gains tax over 5-10 years or so....

[dandarc]

Are loans to avoid capital gains tax from selling shares something that started up with the low interest rates since the financial crisis back in 2008?   Or have they been in use for much longer than that?

I'm just thinking that 5% interest payments will add up to more than your capital gains tax over 5-10 years or so....

It is basically the don't payoff your mortgage play on steriods - avoiding the taxes is only part of the equation. If you can borrow at good terms and have good investments, you'll become a lot richer over time if you do that to fund your lifestyle vs. just selling the good investments.

Even if there were no tax differences at all it is a good financial move - if you can get sufficiently good terms on the debt, which the billionaire types tend to have more access to than most of us.

[JGS1980]

Are loans to avoid capital gains tax from selling shares something that started up with the low interest rates since the financial crisis back in 2008?   Or have they been in use for much longer than that?

I'm just thinking that 5% interest payments will add up to more than your capital gains tax over 5-10 years or so....

If you were a bank, would you rather get 2% on 1 Billion dollars, or 5% on 1 Million dollars?

Money talks, and I bet these guys get wonderful rates you and I could only dream of.

[EscapeVelocity2020]

There is also something to be said for the name / brand recognition.  Just as companies compete to give Warren Buffet preferred shares or attractive bond yields that the average investors don’t get, banks want to be able to claim Billionaires as clients.  Companies give the ultra rich free swag in hopes they’ll be photographed using / wearing their products.

I recently watched a TED talk with Musk where he claimed that a 30 minute meeting he attends regularly resulted in $100M extra profit for Tesla.  Thus it would be wasteful for him not to use private jet travel…. The perspective of Billionaires is just to hard for us plebeians to understand I guess, heaven forbid we all have equal wealth and opportunity to shape the future.

[scottish]

Are loans to avoid capital gains tax from selling shares something that started up with the low interest rates since the financial crisis back in 2008?   Or have they been in use for much longer than that?

I'm just thinking that 5% interest payments will add up to more than your capital gains tax over 5-10 years or so....

If you were a bank, would you rather get 2% on 1 Billion dollars, or 5% on 1 Million dollars?

Money talks, and I bet these guys get wonderful rates you and I could only dream of.

If I were a bank I'd want to understand the risk attached to the loan before setting the  interest rate.    If Elon Musk was borrowing money and all his wealth was tied up in Tesla (with a P/E of 120 and lots of competition trying to ramp up), I'd be thinking about other collateral.    I don't actually know where Mr Musk keeps his wealth, this is just an example.   

I was curious about the history -- the bank isn't going to give anyone a rate below the fed's interest rate and that's on its way back up.

[eyesonthehorizon]

There is also something to be said for the name / brand recognition.  Just as companies compete to give Warren Buffet preferred shares or attractive bond yields that the average investors don’t get, banks want to be able to claim Billionaires as clients.  Companies give the ultra rich free swag in hopes they’ll be photographed using / wearing their products.

Not even just the ultra-rich; having a million or more at an institution was enough to get pretty swanky goodies just a decade or so ago. Think promotional iPads, golf equipment.

[markbrynn]

One thing that I didn't see mentioned in this thread (I read pretty much all of it), is that part of this equation is to provide as much happiness to your society as possible. All this talk of wealth here and there sometimes seems to forget about what's the point of all of this. If you were to set up a society from scratch, wouldn't the goal to be to create conditions that improves the lives of as many citizens as possible. So, wealth creation is important, but if all of that wealth is used in the service of a limited number of the citizens, what's the point?

I live in a country (the Netherlands) that doesn't get everything right by any means. However, we seem to have found a way to allow most of the people, even on the lower end of the socioeconomic scale to live comfortably (enough income, reasonable housing, personal safety, etc.). It sounds, from a distance, that a large number of US citizen do not benefit from the great wealth of the country. The lack of caring for the happiness/comfort/safety for other people in your society (city, state, country, etc.) feels like a lacking to me. I don't want to punish the super wealthy. I want them to care about how to improve the lives of others. If they (or anybody else) have that ability, why wouldn't they want to help?

[Undecided]

It sounds, from a distance, that a large number of US citizen do not benefit from the great wealth of the country.

There's certainly some truth to that, but something that I found surprising is that, in recent years, the 20th percentile household income in the US is generally quite close to the median household income of countries like Ireland (a touch higher) and Spain (a touch lower). It seems to me that the lifestyle in the US is just incomparable to our expectations---the composition and priorities are different, but (and I recognize this is just conjecture on my part) I'm not sure that the majority of Americans with below-median incomes would be happier swapping places with the median income earner in the Netherlands, or Ireland, or Spain, or Italy (of course, I think the lower you get in that US distribution, the more likely they'd be happy with the swap). They would probably see decreases in some sources of stress, but they'd get smaller refrigerators and less comfortable climate control, they might have less living space, and be more reliant on public transit. They'd have a less powerful military force supporting them (you may laugh, but they clearly prioritize that). Obviously if you left their lives as they otherwise are, but paid for healthcare and higher education from general revenues, they should be happier, but I'm not sure it's fair or complete to disregard how high American incomes are, which seems to be implicit in thinking they don't benefit from the wealth of the country.

[markbrynn]

I think it would be a fascinating experiment to relocate (with their consent of course) a bunch of Americans on the bottom half of the economic scale and plop them in a neighborhood in the Netherlands (or Spain or England or ...) and see how they like it.

A couple of problems with this:
1. Neither the US nor Europe are monoliths. It's always a bit of comparing apples to oranges.
2. You'd have to control for culture shock issues like language and proximity to family.

As for results, I would be very curious about how many would focus on the smaller houses, refrigerators and salaries. And how many would focus on the more livable (walkable) cities; high level of personal safety; social safety net (medical care, unemployment); affordable social housing of good quality. Remember, that money that we (Europeans) give up in lower salaries/high taxes usually shows up somewhere in better infrastructure or social services.

In the end, it's a lot about personal preference. Do you want more money and more risks or the opposite? I would argue that for the poorer people in society, the answer would be lower risk as they don't have enough money to sufficiently mitigate the higher risk, but that's just me.

Most people say that people wouldn't be happy to have the worst things of the country without mentioning the best things.

[StarBright]

They would probably see decreases in some sources of stress, but they'd get smaller refrigerators and less comfortable climate control, they might have less living space, and be more reliant on public transit. They'd have a less powerful military force supporting them (you may laugh, but they clearly prioritize that).

Interestingly, as an American living in the "cheap" part of the country, these feel like things that I pay a premium for (minus the excellent climate control).

Small houses are more expensive than medium/big houses generally speaking (in a price per square foot way), and I pay a rather extraordinary amount of property and town and school taxes to be in area where I don't need to rely on a car for absolutely everything. I do need good heat and AC a few times a year and I feel like there are very few places in the US that don't? But at our coldest we are in the negatives for weeks at a time, and in the summer we have weeks where we hit a hundred w/ v. high humidity.

But to be fair, until I lived in my own house I spent over a decade not having AC and I didn't die - but I did live in some gross moldy apartments that probably were not legally habitable:).

And yeah - approximately half the county does value a ginormous military, and a fair few question whether it needs be SO ginormous. It's a big country /shrug.

To Markbrynn's point, a huge chunk of Americans (and I would guess a majority under the age of 45) would trade our high incomes for stability. If you make a good salary (say 80k) but more than half of that goes towards crappy housing, student loans, taxes and insurance costs (not to mention actual medical costs), and you still have trouble affording other essentials, and you can never afford to have kids or take more than a couple of days of vacation time . . .

If someone offered me half my pay and said I had to live in an 800 square foot house, but instead I got a 40 hour work week, sick days and medical leave when I had my children, and cheaper childcare, and feeling like I could afford to go to the doctor when something was wrong? Man, at this point in my life I'd take that deal in a heartbeat. Maybe I am an outlier, but I'm guessing there are more and more of us.

[Log]

I think an absolutely horrifying and under-discussed point on American taxation is that expats get double-taxed on their income. From what I’ve read, it seems the US is one of the only nations that does that?

Sure, it’s a valid question to have whether society should be more egalitarian with less luxury for the most wealthy, or to sacrifice egalitarianism to provide greater reward for the most “productive” citizens*. But the US has functionally barred citizens from “voting with their feet” on this issue, because even if they WANT to go live a modest, middle-class life in a more egalitarian nation rather than chasing wealth in the US, their wages still get garnished by a government they’ve rejected.

*My main argument against the current US approach is that wages at the top end are extremely disproportionate to the actual benefit to society created by these extreme earners. I certainly believe people who contribute unique skills and knowledge to society should earn more, but the spike in incomes at the top end is about nepotism and the ultra-privileged scratching each others’ backs at this point. An extreme income tax (over 50%) above 400k seems incredibly warranted to me. That alone doesn’t go far enough to address the problem imo, but we really can’t make any progress until we at least start there. And twiddling with some numbers in an existing tax system is a way easier place to start than implementing a brand new tax.

[FIPurpose]

I think an absolutely horrifying and under-discussed point on American taxation is that expats get double-taxed on their income. From what I’ve read, it seems the US is one of the only nations that does that?

Sure, it’s a valid question to have whether society should be more egalitarian with less luxury for the most wealthy, or to sacrifice egalitarianism to provide greater reward for the most “productive” citizens*. But the US has functionally barred citizens from “voting with their feet” on this issue, because even if they WANT to go live a modest, middle-class life in a more egalitarian nation rather than chasing wealth in the US, their wages still get garnished by a government they’ve rejected.

*My main argument against the current US approach is that wages at the top end are extremely disproportionate to the actual benefit to society created by these extreme earners. I certainly believe people who contribute unique skills and knowledge to society should earn more, but the spike in incomes at the top end is about nepotism and the ultra-privileged scratching each others’ backs at this point. An extreme income tax (over 50%) above 400k seems incredibly warranted to me. That alone doesn’t go far enough to address the problem imo, but we really can’t make any progress until we at least start there. And twiddling with some numbers in an existing tax system is a way easier place to start than implementing a brand new tax.

If they want to reject the US government, they can give up their US citizenship and stop paying the taxes. Married couples can exclude something like 224k while working abroad. This isn't preventing middle-class people from "voting with their feet".

[MoseyingAlong]

I think an absolutely horrifying and under-discussed point on American taxation is that expats get double-taxed on their income. From what I’ve read, it seems the US is one of the only nations that does that?
.....

I have had a change of mind about this and now think it's reasonable for the US to tax expats.

If you really don't want to pay US taxes, give up your citizenship. Yes, it is a complete PITA process.

If you choose to remain a citizen and live overseas, pay the taxes. Why? Because if there is a disaster (natural, war, insurrection, whatever), most US citizens expect the US government to rescue/evacuate them. So you could consider the taxes as paying for insurance.

[Undecided]

I think an absolutely horrifying and under-discussed point on American taxation is that expats get double-taxed on their income. From what I’ve read, it seems the US is one of the only nations that does that?

Sure, it’s a valid question to have whether society should be more egalitarian with less luxury for the most wealthy, or to sacrifice egalitarianism to provide greater reward for the most “productive” citizens*. But the US has functionally barred citizens from “voting with their feet” on this issue, because even if they WANT to go live a modest, middle-class life in a more egalitarian nation rather than chasing wealth in the US, their wages still get garnished by a government they’ve rejected.

*My main argument against the current US approach is that wages at the top end are extremely disproportionate to the actual benefit to society created by these extreme earners. I certainly believe people who contribute unique skills and knowledge to society should earn more, but the spike in incomes at the top end is about nepotism and the ultra-privileged scratching each others’ backs at this point. An extreme income tax (over 50%) above 400k seems incredibly warranted to me. That alone doesn’t go far enough to address the problem imo, but we really can’t make any progress until we at least start there. And twiddling with some numbers in an existing tax system is a way easier place to start than implementing a brand new tax.

If they want to reject the US government, they can give up their US citizenship and stop paying the taxes. Married couples can exclude something like 224k while working abroad. This isn't preventing middle-class people from "voting with their feet".

I don’t fault most Americans for not knowing about this, but none of what you wrote is true, in a literal sense.

I’m a citizen of the country I live in, but also a US citizen. First, for years now, there has been no way to renounce citizenship here. The US just doesn’t offer that service at the consulates. There’s also a $2,350 filing fee and a potential tax that deems all potential income to be realized in the year of renunciation (notwithstanding congressional authority to tax income, not “stuff imagined to be income”). Second, while US citizens can exclude *some* foreign earned income (why should there be a limit on even that?), that does nothing for income from investments, income from pensions, social security, lottery winnings, or days someone might work in the US. (And the US makes it practically impossible for a US citizen to invest in non-US ETFs or mutual funds, subjecting them to the punitive tax system originally created to combat offshore tax shelters (PFICs).)

Of course, I at least have the theoretical potential to abandon US citizenship, since I have another citizenship, but most Americans would have to become citizens elsewhere before they could even do it, since you can’t renounce into statelessness (here, one is eligible to apply after ten years of legal residency, followed by a couple of years for the administrative process).

There’s no reasonable justification for it.

[Undecided]

I think an absolutely horrifying and under-discussed point on American taxation is that expats get double-taxed on their income. From what I’ve read, it seems the US is one of the only nations that does that?
.....

I have had a change of mind about this and now think it's reasonable for the US to tax expats.

If you really don't want to pay US taxes, give up your citizenship. Yes, it is a complete PITA process.

If you choose to remain a citizen and live overseas, pay the taxes. Why? Because if there is a disaster (natural, war, insurrection, whatever), most US citizens expect the US government to rescue/evacuate them. So you could consider the taxes as paying for insurance.

Again, I know that “homelanders” are largely ignorant on this topic, but Americans abroad have no reason to expect that (and I would be shocked to learn that “most” expat Americans expect it; surely tourists aren’t the relevant group for the tax issue?). The State Department is clear about this as a general matter (see below), and in the recent example of Ukraine, the US offered no evacuation to US citizens (and was expressly clear it would not). They explicitly said the same thing to Americans in Ethiopia late last year. The US repeatedly said the evacuation of Afghanistan was unique. There was even a NY Times article titled something like “US Warns Americans Abroad not to Expect a Rescue.”

https://travel.state.gov/content/travel/en/international-travel/emergencies/what-state-dept-can-cant-do-crisis.html

“Will the United States Government always evacuate citizens in crises?”

“Our primary role is to keep the U.S. citizen community informed of safety and security developments and travel options. Regularly scheduled commercial transportation is always the best option when local communications and transportation infrastructure are intact and operating normally. If there are no commercial options available, and if we have consular officers at the embassy or consulate, and if the conditions permit, we *may help U.S. citizens identify possible transportation options.* In some situations, we may encourage you to stay at a safe location and leave as soon as you can do so safely, using transportation you are able to find on your own.”

At a minimum, I see no reason to think the US would offer more to citizens than other countries would (notwithstanding others don’t have citizenship-based taxation).

[Undecided]

but the spike in incomes at the top end is about nepotism and the ultra-privileged scratching each others’ backs at this point. An extreme income tax (over 50%) above 400k seems incredibly warranted to me. That alone doesn’t go far enough to address the problem imo, but we really can’t make any progress until we at least start there. And twiddling with some numbers in an existing tax system is a way easier place to start than implementing a brand new tax.

I take it you’ve no support for this? My marginal tax rate in my last US home was over 50% anyway (including a marginal 10% state tax and marginal 2.35% Medicare tax), but why do you believe people like doctors and associates at large law firms are being laid on the basis of nepotism and the ultra-privileged scratching each other’s back?

[shureShote]

I think an absolutely horrifying and under-discussed point on American taxation is that expats get double-taxed on their income. From what I’ve read, it seems the US is one of the only nations that does that?

I lived abroad in Germany for several years, 2002 - 2010, and was never double taxed. I thought the system was quite fair for someone who not an expat (I had a German employment contract). I paid taxes to Germany, and was able to get a pseudo-credit for those when filing my US tax returns. I say pseudo because I could take credit up to the amount that I would owe in the US with the same income. Since my German taxes were higher than my US taxes would have been, I never had to pay the US government taxes on my salary. I assume I had to pay US tax on US held securities and interest, but I never had a dollar (Euro) get double taxed.

I assume somehow an expat is treated differently based on your post, though not sure how that would be. Or else the last decade has dulled my memory.

[EvenSteven]

I think an absolutely horrifying and under-discussed point on American taxation is that expats get double-taxed on their income. From what I’ve read, it seems the US is one of the only nations that does that?

Sure, it’s a valid question to have whether society should be more egalitarian with less luxury for the most wealthy, or to sacrifice egalitarianism to provide greater reward for the most “productive” citizens*. But the US has functionally barred citizens from “voting with their feet” on this issue, because even if they WANT to go live a modest, middle-class life in a more egalitarian nation rather than chasing wealth in the US, their wages still get garnished by a government they’ve rejected.

*My main argument against the current US approach is that wages at the top end are extremely disproportionate to the actual benefit to society created by these extreme earners. I certainly believe people who contribute unique skills and knowledge to society should earn more, but the spike in incomes at the top end is about nepotism and the ultra-privileged scratching each others’ backs at this point. An extreme income tax (over 50%) above 400k seems incredibly warranted to me. That alone doesn’t go far enough to address the problem imo, but we really can’t make any progress until we at least start there. And twiddling with some numbers in an existing tax system is a way easier place to start than implementing a brand new tax.

If they want to reject the US government, they can give up their US citizenship and stop paying the taxes. Married couples can exclude something like 224k while working abroad. This isn't preventing middle-class people from "voting with their feet".

I don’t fault most Americans for not knowing about this, but none of what you wrote is true, in a literal sense.

I’m a citizen of the country I live in, but also a US citizen. First, for years now, there has been no way to renounce citizenship here. The US just doesn’t offer that service at the consulates. There’s also a $2,350 filing fee and a potential tax that deems all potential income to be realized in the year of renunciation (notwithstanding congressional authority to tax income, not “stuff imagined to be income”). Second, while US citizens can exclude *some* foreign earned income (why should there be a limit on even that?), that does nothing for income from investments, income from pensions, social security, lottery winnings, or days someone might work in the US. (And the US makes it practically impossible for a US citizen to invest in non-US ETFs or mutual funds, subjecting them to the punitive tax system originally created to combat offshore tax shelters (PFICs).)

Of course, I at least have the theoretical potential to abandon US citizenship, since I have another citizenship, but most Americans would have to become citizens elsewhere before they could even do it, since you can’t renounce into statelessness (here, one is eligible to apply after ten years of legal residency, followed by a couple of years for the administrative process).

There’s no reasonable justification for it.

You said that you literally cannot give up your US citizenship, but then immediately outlined the process by which you can give up your citizenship.

[Undecided]

I think an absolutely horrifying and under-discussed point on American taxation is that expats get double-taxed on their income. From what I’ve read, it seems the US is one of the only nations that does that?

Sure, it’s a valid question to have whether society should be more egalitarian with less luxury for the most wealthy, or to sacrifice egalitarianism to provide greater reward for the most “productive” citizens*. But the US has functionally barred citizens from “voting with their feet” on this issue, because even if they WANT to go live a modest, middle-class life in a more egalitarian nation rather than chasing wealth in the US, their wages still get garnished by a government they’ve rejected.

*My main argument against the current US approach is that wages at the top end are extremely disproportionate to the actual benefit to society created by these extreme earners. I certainly believe people who contribute unique skills and knowledge to society should earn more, but the spike in incomes at the top end is about nepotism and the ultra-privileged scratching each others’ backs at this point. An extreme income tax (over 50%) above 400k seems incredibly warranted to me. That alone doesn’t go far enough to address the problem imo, but we really can’t make any progress until we at least start there. And twiddling with some numbers in an existing tax system is a way easier place to start than implementing a brand new tax.

If they want to reject the US government, they can give up their US citizenship and stop paying the taxes. Married couples can exclude something like 224k while working abroad. This isn't preventing middle-class people from "voting with their feet".

I don’t fault most Americans for not knowing about this, but none of what you wrote is true, in a literal sense.

I’m a citizen of the country I live in, but also a US citizen. First, for years now, there has been no way to renounce citizenship here. The US just doesn’t offer that service at the consulates. There’s also a $2,350 filing fee and a potential tax that deems all potential income to be realized in the year of renunciation (notwithstanding congressional authority to tax income, not “stuff imagined to be income”). Second, while US citizens can exclude *some* foreign earned income (why should there be a limit on even that?), that does nothing for income from investments, income from pensions, social security, lottery winnings, or days someone might work in the US. (And the US makes it practically impossible for a US citizen to invest in non-US ETFs or mutual funds, subjecting them to the punitive tax system originally created to combat offshore tax shelters (PFICs).)

Of course, I at least have the theoretical potential to abandon US citizenship, since I have another citizenship, but most Americans would have to become citizens elsewhere before they could even do it, since you can’t renounce into statelessness (here, one is eligible to apply after ten years of legal residency, followed by a couple of years for the administrative process).

There’s no reasonable justification for it.

You said that you literally cannot give up your US citizenship, but then immediately outlined the process by which you can give up your citizenship.

No, like I actually said, I am theoretically eligible (because I have another citizenship), but the US consulates here stopped accepting the filings.

But regardless of your error, do you think Americans legitimately residing abroad (and Americans alone) should be required to face a choice of abandoning citizenship or paying US taxes?

[EvenSteven]

I think an absolutely horrifying and under-discussed point on American taxation is that expats get double-taxed on their income. From what I’ve read, it seems the US is one of the only nations that does that?

Sure, it’s a valid question to have whether society should be more egalitarian with less luxury for the most wealthy, or to sacrifice egalitarianism to provide greater reward for the most “productive” citizens*. But the US has functionally barred citizens from “voting with their feet” on this issue, because even if they WANT to go live a modest, middle-class life in a more egalitarian nation rather than chasing wealth in the US, their wages still get garnished by a government they’ve rejected.

*My main argument against the current US approach is that wages at the top end are extremely disproportionate to the actual benefit to society created by these extreme earners. I certainly believe people who contribute unique skills and knowledge to society should earn more, but the spike in incomes at the top end is about nepotism and the ultra-privileged scratching each others’ backs at this point. An extreme income tax (over 50%) above 400k seems incredibly warranted to me. That alone doesn’t go far enough to address the problem imo, but we really can’t make any progress until we at least start there. And twiddling with some numbers in an existing tax system is a way easier place to start than implementing a brand new tax.

If they want to reject the US government, they can give up their US citizenship and stop paying the taxes. Married couples can exclude something like 224k while working abroad. This isn't preventing middle-class people from "voting with their feet".

I don’t fault most Americans for not knowing about this, but none of what you wrote is true, in a literal sense.

I’m a citizen of the country I live in, but also a US citizen. First, for years now, there has been no way to renounce citizenship here. The US just doesn’t offer that service at the consulates. There’s also a $2,350 filing fee and a potential tax that deems all potential income to be realized in the year of renunciation (notwithstanding congressional authority to tax income, not “stuff imagined to be income”). Second, while US citizens can exclude *some* foreign earned income (why should there be a limit on even that?), that does nothing for income from investments, income from pensions, social security, lottery winnings, or days someone might work in the US. (And the US makes it practically impossible for a US citizen to invest in non-US ETFs or mutual funds, subjecting them to the punitive tax system originally created to combat offshore tax shelters (PFICs).)

Of course, I at least have the theoretical potential to abandon US citizenship, since I have another citizenship, but most Americans would have to become citizens elsewhere before they could even do it, since you can’t renounce into statelessness (here, one is eligible to apply after ten years of legal residency, followed by a couple of years for the administrative process).

There’s no reasonable justification for it.

You said that you literally cannot give up your US citizenship, but then immediately outlined the process by which you can give up your citizenship.

No, like I actually said, I am theoretically eligible (because I have another citizenship), but the US consulates here stopped accepting the filings.

But regardless of your error, do you think Americans legitimately residing abroad (and Americans alone) should be required to face a choice of abandoning citizenship or paying US taxes?

What is the difference between you being eligible and you being "theoretically eligible." You say you cannot make the filling in your current country of residence. OK, so make the filing in the US.

It is literally impossible for anyone to eat at Chili's. If I wanted to eat there, I would have to drive to Chili's and order food.

[GuitarStv]

I think an absolutely horrifying and under-discussed point on American taxation is that expats get double-taxed on their income. From what I’ve read, it seems the US is one of the only nations that does that?

I lived abroad in Germany for several years, 2002 - 2010, and was never double taxed. I thought the system was quite fair for someone who not an expat (I had a German employment contract). I paid taxes to Germany, and was able to get a pseudo-credit for those when filing my US tax returns. I say pseudo because I could take credit up to the amount that I would owe in the US with the same income. Since my German taxes were higher than my US taxes would have been, I never had to pay the US government taxes on my salary. I assume I had to pay US tax on US held securities and interest, but I never had a dollar (Euro) get double taxed.

I assume somehow an expat is treated differently based on your post, though not sure how that would be. Or else the last decade has dulled my memory.

I believe that the taxation rules were recently changed.  Here in Canada we have (had?) many people with dual US/Canada citizenship.  About fiveish years ago there were quite a number of news articles about how it was required to file and pay US taxes, even if you're not earning any money or living in the country at all.

[Undecided]

I think an absolutely horrifying and under-discussed point on American taxation is that expats get double-taxed on their income. From what I’ve read, it seems the US is one of the only nations that does that?

I lived abroad in Germany for several years, 2002 - 2010, and was never double taxed. I thought the system was quite fair for someone who not an expat (I had a German employment contract). I paid taxes to Germany, and was able to get a pseudo-credit for those when filing my US tax returns. I say pseudo because I could take credit up to the amount that I would owe in the US with the same income. Since my German taxes were higher than my US taxes would have been, I never had to pay the US government taxes on my salary. I assume I had to pay US tax on US held securities and interest, but I never had a dollar (Euro) get double taxed.

I assume somehow an expat is treated differently based on your post, though not sure how that would be. Or else the last decade has dulled my memory.

Whether one faces double taxation will depend on one’s specific types and sources of income, whether there is a tax treaty, and the second country’s tax laws. Generally salary income is well-addressed by modern tax and social security treaties; Germany is supposed to have a good treaty (although I think there is some issue with being taxed on Roth withdrawals), but the US doesn’t even have tax treaties with most countries. Paying into two social security systems (but facing the US’s windfall elimination provision) is a common example of double taxation for Americans in countries that haven’t resolved the issue with the US.

[Undecided]

I think an absolutely horrifying and under-discussed point on American taxation is that expats get double-taxed on their income. From what I’ve read, it seems the US is one of the only nations that does that?

Sure, it’s a valid question to have whether society should be more egalitarian with less luxury for the most wealthy, or to sacrifice egalitarianism to provide greater reward for the most “productive” citizens*. But the US has functionally barred citizens from “voting with their feet” on this issue, because even if they WANT to go live a modest, middle-class life in a more egalitarian nation rather than chasing wealth in the US, their wages still get garnished by a government they’ve rejected.

*My main argument against the current US approach is that wages at the top end are extremely disproportionate to the actual benefit to society created by these extreme earners. I certainly believe people who contribute unique skills and knowledge to society should earn more, but the spike in incomes at the top end is about nepotism and the ultra-privileged scratching each others’ backs at this point. An extreme income tax (over 50%) above 400k seems incredibly warranted to me. That alone doesn’t go far enough to address the problem imo, but we really can’t make any progress until we at least start there. And twiddling with some numbers in an existing tax system is a way easier place to start than implementing a brand new tax.

If they want to reject the US government, they can give up their US citizenship and stop paying the taxes. Married couples can exclude something like 224k while working abroad. This isn't preventing middle-class people from "voting with their feet".

I don’t fault most Americans for not knowing about this, but none of what you wrote is true, in a literal sense.

I’m a citizen of the country I live in, but also a US citizen. First, for years now, there has been no way to renounce citizenship here. The US just doesn’t offer that service at the consulates. There’s also a $2,350 filing fee and a potential tax that deems all potential income to be realized in the year of renunciation (notwithstanding congressional authority to tax income, not “stuff imagined to be income”). Second, while US citizens can exclude *some* foreign earned income (why should there be a limit on even that?), that does nothing for income from investments, income from pensions, social security, lottery winnings, or days someone might work in the US. (And the US makes it practically impossible for a US citizen to invest in non-US ETFs or mutual funds, subjecting them to the punitive tax system originally created to combat offshore tax shelters (PFICs).)

Of course, I at least have the theoretical potential to abandon US citizenship, since I have another citizenship, but most Americans would have to become citizens elsewhere before they could even do it, since you can’t renounce into statelessness (here, one is eligible to apply after ten years of legal residency, followed by a couple of years for the administrative process).

There’s no reasonable justification for it.

You said that you literally cannot give up your US citizenship, but then immediately outlined the process by which you can give up your citizenship.

No, like I actually said, I am theoretically eligible (because I have another citizenship), but the US consulates here stopped accepting the filings.

But regardless of your error, do you think Americans legitimately residing abroad (and Americans alone) should be required to face a choice of abandoning citizenship or paying US taxes?

What is the difference between you being eligible and you being "theoretically eligible." You say you cannot make the filling in your current country of residence. OK, so make the filing in the US.

It is literally impossible for anyone to eat at Chili's. If I wanted to eat there, I would have to drive to Chili's and order food.

You cannot make the filing in the US. At all.

8 USC 1481(a)(5)

Personally, I have little interest in renouncing at this point, but as a resident of the other country of which I’m a natural-born citizen, I’m aware of the unique challenges that come with US citizenship and the punitive nature of surrendering it.

[EvenSteven]

I think an absolutely horrifying and under-discussed point on American taxation is that expats get double-taxed on their income. From what I’ve read, it seems the US is one of the only nations that does that?

Sure, it’s a valid question to have whether society should be more egalitarian with less luxury for the most wealthy, or to sacrifice egalitarianism to provide greater reward for the most “productive” citizens*. But the US has functionally barred citizens from “voting with their feet” on this issue, because even if they WANT to go live a modest, middle-class life in a more egalitarian nation rather than chasing wealth in the US, their wages still get garnished by a government they’ve rejected.

*My main argument against the current US approach is that wages at the top end are extremely disproportionate to the actual benefit to society created by these extreme earners. I certainly believe people who contribute unique skills and knowledge to society should earn more, but the spike in incomes at the top end is about nepotism and the ultra-privileged scratching each others’ backs at this point. An extreme income tax (over 50%) above 400k seems incredibly warranted to me. That alone doesn’t go far enough to address the problem imo, but we really can’t make any progress until we at least start there. And twiddling with some numbers in an existing tax system is a way easier place to start than implementing a brand new tax.

If they want to reject the US government, they can give up their US citizenship and stop paying the taxes. Married couples can exclude something like 224k while working abroad. This isn't preventing middle-class people from "voting with their feet".

I don’t fault most Americans for not knowing about this, but none of what you wrote is true, in a literal sense.

I’m a citizen of the country I live in, but also a US citizen. First, for years now, there has been no way to renounce citizenship here. The US just doesn’t offer that service at the consulates. There’s also a $2,350 filing fee and a potential tax that deems all potential income to be realized in the year of renunciation (notwithstanding congressional authority to tax income, not “stuff imagined to be income”). Second, while US citizens can exclude *some* foreign earned income (why should there be a limit on even that?), that does nothing for income from investments, income from pensions, social security, lottery winnings, or days someone might work in the US. (And the US makes it practically impossible for a US citizen to invest in non-US ETFs or mutual funds, subjecting them to the punitive tax system originally created to combat offshore tax shelters (PFICs).)

Of course, I at least have the theoretical potential to abandon US citizenship, since I have another citizenship, but most Americans would have to become citizens elsewhere before they could even do it, since you can’t renounce into statelessness (here, one is eligible to apply after ten years of legal residency, followed by a couple of years for the administrative process).

There’s no reasonable justification for it.

You said that you literally cannot give up your US citizenship, but then immediately outlined the process by which you can give up your citizenship.

No, like I actually said, I am theoretically eligible (because I have another citizenship), but the US consulates here stopped accepting the filings.

But regardless of your error, do you think Americans legitimately residing abroad (and Americans alone) should be required to face a choice of abandoning citizenship or paying US taxes?

What is the difference between you being eligible and you being "theoretically eligible." You say you cannot make the filling in your current country of residence. OK, so make the filing in the US.

It is literally impossible for anyone to eat at Chili's. If I wanted to eat there, I would have to drive to Chili's and order food.

You cannot make the filing in the US. At all.

I agree that it should be much easier to ditch your US citizenship. Would you be able to do it at a consulate in a third country?

[Undecided]

I think an absolutely horrifying and under-discussed point on American taxation is that expats get double-taxed on their income. From what I’ve read, it seems the US is one of the only nations that does that?

Sure, it’s a valid question to have whether society should be more egalitarian with less luxury for the most wealthy, or to sacrifice egalitarianism to provide greater reward for the most “productive” citizens*. But the US has functionally barred citizens from “voting with their feet” on this issue, because even if they WANT to go live a modest, middle-class life in a more egalitarian nation rather than chasing wealth in the US, their wages still get garnished by a government they’ve rejected.

*My main argument against the current US approach is that wages at the top end are extremely disproportionate to the actual benefit to society created by these extreme earners. I certainly believe people who contribute unique skills and knowledge to society should earn more, but the spike in incomes at the top end is about nepotism and the ultra-privileged scratching each others’ backs at this point. An extreme income tax (over 50%) above 400k seems incredibly warranted to me. That alone doesn’t go far enough to address the problem imo, but we really can’t make any progress until we at least start there. And twiddling with some numbers in an existing tax system is a way easier place to start than implementing a brand new tax.

If they want to reject the US government, they can give up their US citizenship and stop paying the taxes. Married couples can exclude something like 224k while working abroad. This isn't preventing middle-class people from "voting with their feet".

I don’t fault most Americans for not knowing about this, but none of what you wrote is true, in a literal sense.

I’m a citizen of the country I live in, but also a US citizen. First, for years now, there has been no way to renounce citizenship here. The US just doesn’t offer that service at the consulates. There’s also a $2,350 filing fee and a potential tax that deems all potential income to be realized in the year of renunciation (notwithstanding congressional authority to tax income, not “stuff imagined to be income”). Second, while US citizens can exclude *some* foreign earned income (why should there be a limit on even that?), that does nothing for income from investments, income from pensions, social security, lottery winnings, or days someone might work in the US. (And the US makes it practically impossible for a US citizen to invest in non-US ETFs or mutual funds, subjecting them to the punitive tax system originally created to combat offshore tax shelters (PFICs).)

Of course, I at least have the theoretical potential to abandon US citizenship, since I have another citizenship, but most Americans would have to become citizens elsewhere before they could even do it, since you can’t renounce into statelessness (here, one is eligible to apply after ten years of legal residency, followed by a couple of years for the administrative process).

There’s no reasonable justification for it.

You said that you literally cannot give up your US citizenship, but then immediately outlined the process by which you can give up your citizenship.

No, like I actually said, I am theoretically eligible (because I have another citizenship), but the US consulates here stopped accepting the filings.

But regardless of your error, do you think Americans legitimately residing abroad (and Americans alone) should be required to face a choice of abandoning citizenship or paying US taxes?

What is the difference between you being eligible and you being "theoretically eligible." You say you cannot make the filling in your current country of residence. OK, so make the filing in the US.

It is literally impossible for anyone to eat at Chili's. If I wanted to eat there, I would have to drive to Chili's and order food.

You cannot make the filing in the US. At all.

I agree that it should be much easier to ditch your US citizenship. Would you be able to do it at a consulate in a third country?

Like I added in, above, I have little interest in renouncing now (but don’t think the US should create such unique burdens on its overseas citizens), but I have heard of people traveling to third countries to do it. The problem they have encountered is that you can’t just “drop off” the form, and the consulates that had resumed accepting the forms wouldn’t make an appointment for someone not resident in their consular jurisdiction. So one would need to travel to another country in hopes of being seen by the specific person who can do the interview, without an appointment.

[OtherJen]

I think an absolutely horrifying and under-discussed point on American taxation is that expats get double-taxed on their income. From what I’ve read, it seems the US is one of the only nations that does that?

Sure, it’s a valid question to have whether society should be more egalitarian with less luxury for the most wealthy, or to sacrifice egalitarianism to provide greater reward for the most “productive” citizens*. But the US has functionally barred citizens from “voting with their feet” on this issue, because even if they WANT to go live a modest, middle-class life in a more egalitarian nation rather than chasing wealth in the US, their wages still get garnished by a government they’ve rejected.

*My main argument against the current US approach is that wages at the top end are extremely disproportionate to the actual benefit to society created by these extreme earners. I certainly believe people who contribute unique skills and knowledge to society should earn more, but the spike in incomes at the top end is about nepotism and the ultra-privileged scratching each others’ backs at this point. An extreme income tax (over 50%) above 400k seems incredibly warranted to me. That alone doesn’t go far enough to address the problem imo, but we really can’t make any progress until we at least start there. And twiddling with some numbers in an existing tax system is a way easier place to start than implementing a brand new tax.

If they want to reject the US government, they can give up their US citizenship and stop paying the taxes. Married couples can exclude something like 224k while working abroad. This isn't preventing middle-class people from "voting with their feet".

I don’t fault most Americans for not knowing about this, but none of what you wrote is true, in a literal sense.

I’m a citizen of the country I live in, but also a US citizen. First, for years now, there has been no way to renounce citizenship here. The US just doesn’t offer that service at the consulates. There’s also a $2,350 filing fee and a potential tax that deems all potential income to be realized in the year of renunciation (notwithstanding congressional authority to tax income, not “stuff imagined to be income”). Second, while US citizens can exclude *some* foreign earned income (why should there be a limit on even that?), that does nothing for income from investments, income from pensions, social security, lottery winnings, or days someone might work in the US. (And the US makes it practically impossible for a US citizen to invest in non-US ETFs or mutual funds, subjecting them to the punitive tax system originally created to combat offshore tax shelters (PFICs).)

Of course, I at least have the theoretical potential to abandon US citizenship, since I have another citizenship, but most Americans would have to become citizens elsewhere before they could even do it, since you can’t renounce into statelessness (here, one is eligible to apply after ten years of legal residency, followed by a couple of years for the administrative process).

There’s no reasonable justification for it.

You said that you literally cannot give up your US citizenship, but then immediately outlined the process by which you can give up your citizenship.

No, like I actually said, I am theoretically eligible (because I have another citizenship), but the US consulates here stopped accepting the filings.

But regardless of your error, do you think Americans legitimately residing abroad (and Americans alone) should be required to face a choice of abandoning citizenship or paying US taxes?

What is the difference between you being eligible and you being "theoretically eligible." You say you cannot make the filling in your current country of residence. OK, so make the filing in the US.

It is literally impossible for anyone to eat at Chili's. If I wanted to eat there, I would have to drive to Chili's and order food.

You cannot make the filing in the US. At all.

I agree that it should be much easier to ditch your US citizenship. Would you be able to do it at a consulate in a third country?

Like I added in, above, I have little interest in renouncing now (but don’t think the US should create such unique burdens on its overseas citizens), but I have heard of people traveling to third countries to do it. The problem they have encountered is that you can’t just “drop off” the form, and the consulates that had resumed accepting the forms wouldn’t make an appointment for someone not resident in their consular jurisdiction. So one would need to travel to another country in hopes of being seen by the specific person who can do the interview, without an appointment.

So as we're being literal today, you can literally renounce your citizenship. You just can't practically or effectively renounce it (which, for most of us, amounts to the same outcome).

[Undecided]

So as we're being literal today, you can literally renounce your citizenship. You just can't practically or effectively renounce it (which, for most of us, amounts to the same outcome).

I was very specific (“I’m a citizen of the country I live in, but also a US citizen. First, for years now, there has been no way to renounce citizenship *here*.”), because inevitably people want to say the US offers a process despite making it unreasonably difficult. But pedants gonna’ pedant.

[FIPurpose]

Looked up the legal code on how to renounce your citizenship:

B. ELEMENTS OF RENUNCIATION

A person wishing to renounce his or her U.S. citizenship must voluntarily and with intent to relinquish U.S. citizenship:

    appear in person before a U.S. consular or diplomatic officer,
    in a foreign country  at a U.S. Embassy or Consulate; and
    sign an oath of renunciation

So based on this, I'm guessing Undecided is living in Guinea-Bissau and would have to travel to a different country to find an embassy.

I've paid way more into SS than I would ever end up paying in taxes while abroad should I end up doing that in the future. I wouldn't want to give up SS payments later in life. Not to mention all of the benefits US citizens abroad receive. It ain't free.

Probably wouldn't be worth renouncing unless you were literally making >500k/year. But even then, those kinds of people tend to like the legal protections the US courts provide their business. All around, the US provides terrific international service and is located in almost every country.

[OtherJen]

So as we're being literal today, you can literally renounce your citizenship. You just can't practically or effectively renounce it (which, for most of us, amounts to the same outcome).

I was very specific (“I’m a citizen of the country I live in, but also a US citizen. First, for years now, there has been no way to renounce citizenship *here*.”), because inevitably people want to say the US offers a process despite making it unreasonably difficult. But pedants gonna’ pedant.

Oh, your explanations were very clear. I've been following the exchange with some amusement. It was beginning to remind me of a few recent conversations I've witnessed regarding the baby formula shortage, e.g.:

"Well, women should just train themselves to lactate so they can feed their babies without formula!"
"Yes, that's technically and theoretically possible, but in practice it isn't possible for all women to do so, and even in possible cases it takes significant resources and weeks to months (and babies can't wait that long). And that's assuming that the kid wasn't on special formula because of a milk protein allergy or metabolic disorder."
"Well, formula wasn't always around. What did those moms do back then?"
"Um, many of their babies died of failure to thrive. Hence the invention of formula."

[Undecided]

Looked up the legal code on how to renounce your citizenship:

B. ELEMENTS OF RENUNCIATION

A person wishing to renounce his or her U.S. citizenship must voluntarily and with intent to relinquish U.S. citizenship:

    appear in person before a U.S. consular or diplomatic officer,
    in a foreign country  at a U.S. Embassy or Consulate; and
    sign an oath of renunciation

So based on this, I'm guessing Undecided is living in Guinea-Bissau and would have to travel to a different country to find an embassy.

The US shut down the renunciation process at embassies and consulates around the world.

https://www.imidaily.com/reasonable-doubt/under-cover-of-covid-the-us-is-preventing-citizens-from-renouncing-on-purpose/#:~:text=Since%20the%20start%20of%20COVID,that%20were%20never%20in%20lockdown.

I saw something recently that some would soon be reopened in France (I don’t know why France, exactly, but I do know there was a lawsuit filed by several dual citizens of France and the US, so maybe it was specifically meant to address their complaint).

Still not sure I understand the apparent support for the choice between renunciation and paying taxes to a country one doesn’t live in, unlike the approach in the rest of the world, but that’s not something I really expect to change.

[Sibley]

It doesn't have to be that hard, the US had a solution in place. We ditched it. Possible new solution:

Step 1 and 2: High corporate tax on net profits AND disallow executive pay deductions that are in excess of whatever multiple of the lowest employee's pay/weighted average nonexecutive pay.

Step 3: High individual income tax for the top bracket(s).

Step 4: Capital gains are taxed as ordinary income.

Of course, it'll never happen because the billionaires would have to pay too much in taxes.

I agree with these steps. Except it should either be 1 or 3 not both. You are already taxing the money twice, once when the corporation earns it and again when they distribute it. No need to raise both sides of the double taxation.  Otherwise you would be close to 75% tax on investments.  It would be hard to justify taking the risk and inflation and taxation vs just spending money when you get it or sitting on cash. We still want people to invest or else you won't see innovation and increases in productivity without capital investment and those things drive the economy. Not to mention business and high networth individual flight to lower tax countries.

Forgot about this thread.... @wageslave23

Double taxation in this case is a feature, not a bug.

I WANT the corporations to limit executive pay in relation to ordinary worker bees. Thus, if they don't, I want the corporation and the executives to be punished via taxes. I want the tax policy to favor less extreme income inequality. I want to take the 1%'s thumb off the scales tilting it in their favor.

England did it via a death tax. After centauries of the landed gentry having outsized wealth and power and influence, the death tax broke their power in just a couple generations. It's time for the US to do the same.

[Arbitrage]

I WANT the corporations to limit executive pay in relation to ordinary worker bees. Thus, if they don't, I want the corporation and the executives to be punished via taxes. I want the tax policy to favor less extreme income inequality. I want to take the 1%'s thumb off the scales tilting it in their favor.

England did it via a death tax. After centauries of the landed gentry having outsized wealth and power and influence, the death tax broke their power in just a couple generations. It's time for the US to do the same.

I can at least listen to arguments about double taxation, though again I agree that we need more active measures to combat wealth disparity.  What I haven't seen is any reasonable justification for step-up in basis at death. 

[Undecided]

I WANT the corporations to limit executive pay in relation to ordinary worker bees. Thus, if they don't, I want the corporation and the executives to be punished via taxes. I want the tax policy to favor less extreme income inequality. I want to take the 1%'s thumb off the scales tilting it in their favor.

England did it via a death tax. After centauries of the landed gentry having outsized wealth and power and influence, the death tax broke their power in just a couple generations. It's time for the US to do the same.

I can at least listen to arguments about double taxation, though again I agree that we need more active measures to combat wealth disparity.  What I haven't seen is any reasonable justification for step-up in basis at death.

But isn’t the argument for stepped up basis itself a double taxation argument? That is, the estate is taxed based on FMV at the time of death, such that to tax the heirs without stepping up the basis is to again tax gain that was already taxed by the estate tax? If you wanted to say that assets that aren’t subject to the estate tax shouldn’t get a stepped-up basis, that would make sense to me.

[Arbitrage]

But estates essentially aren't taxed, so that's no justification at all.  Plus, there is step-up in basis upon death of spouse in some cases. 

Quick google search:
There were 2,570 taxable estate-tax returns filed in 2019. 

That's essentially a 0% rate of estates being taxed.  Okay, it's 0.2%, and I'm sure most of those have only a small percentage of the assets actually being taxed.  My 0.1 percenter friends have laughed off the estate tax.

[Undecided]

But estates essentially aren't taxed, so that's no justification at all.  Plus, there is step-up in basis upon death of spouse in some cases. 

Quick google search:
There were 2,570 taxable estate-tax returns filed in 2019. 

That's essentially a 0% rate of estates being taxed.  Okay, it's 0.2%, and I'm sure most of those have only a small percentage of the assets actually being taxed.  My 0.1 percenter friends have laughed off the estate tax.

For some reason, I thought we were talking about taxing the super wealthy, but if it’s about taxing everybody, then yeah, there’s no double-taxation argument for a typical estate. So, to clarify, do you mean you’re against a stepped-up basis for assets that weren’t subject to the estate tax? Or would you also preserve the decedent’s basis on an asset that was subject to the estate tax, such that the estate would pay the estate tax and upon sale the recipient would pay tax on any gain during the decedent and heir’s lives? What kind of rate structure do you have in mind? Would you let the heirs take the decedent’s primary-home capital gains exclusion? Or would you get rid of that anyway?

[FIPurpose]

But estates essentially aren't taxed, so that's no justification at all.  Plus, there is step-up in basis upon death of spouse in some cases. 

Quick google search:
There were 2,570 taxable estate-tax returns filed in 2019. 

That's essentially a 0% rate of estates being taxed.  Okay, it's 0.2%, and I'm sure most of those have only a small percentage of the assets actually being taxed.  My 0.1 percenter friends have laughed off the estate tax.

I have 1 0.1% percenter friend who has likewise told me that the estate tax is easily avoidable. And he's in the $50-100MM net worth range. Basically said that a careful usage of trusts negates a large amount of estate tax. That whole section of the code needs to be rewritten.

[Sibley]

For the record, I didn't say that the US had to do a death (or estate) tax. I said that England accomplished the goal via a death tax, and the US needs to accomplish the same goal. The means by which the US does it will be different, because England in the 1800s (I think that's roughly when the death tax was instituted but didn't confirm) is very different from the US today.

[Arbitrage]

But estates essentially aren't taxed, so that's no justification at all.  Plus, there is step-up in basis upon death of spouse in some cases. 

Quick google search:
There were 2,570 taxable estate-tax returns filed in 2019. 

That's essentially a 0% rate of estates being taxed.  Okay, it's 0.2%, and I'm sure most of those have only a small percentage of the assets actually being taxed.  My 0.1 percenter friends have laughed off the estate tax.

For some reason, I thought we were talking about taxing the super wealthy, but if it’s about taxing everybody, then yeah, there’s no double-taxation argument for a typical estate. So, to clarify, do you mean you’re against a stepped-up basis for assets that weren’t subject to the estate tax? Or would you also preserve the decedent’s basis on an asset that was subject to the estate tax, such that the estate would pay the estate tax and upon sale the recipient would pay tax on any gain during the decedent and heir’s lives? What kind of rate structure do you have in mind? Would you let the heirs take the decedent’s primary-home capital gains exclusion? Or would you get rid of that anyway?

I consider the estate tax to be a nothing-burger, easily avoidable in its current state even by the ultra-rich with a financial advisor worth his/her salt.  As such, I don't see it as a hamper to eliminating stepped-up basis for everyone.  Now, if we're talking about assets that are actually taxed at an actual rate greater than 0 (i.e. not in trusts, real estate shenanigans, whatever other loopholes or the $11M+ exclusion), maybe I could see some provision.  That's such a tiny fraction of a tiny fraction that I don't find myself worked up at all about the potential, minor double taxation injustice on the heirs of a centimillionaire or billionaire.

[FIPurpose]

But estates essentially aren't taxed, so that's no justification at all.  Plus, there is step-up in basis upon death of spouse in some cases. 

Quick google search:
There were 2,570 taxable estate-tax returns filed in 2019. 

That's essentially a 0% rate of estates being taxed.  Okay, it's 0.2%, and I'm sure most of those have only a small percentage of the assets actually being taxed.  My 0.1 percenter friends have laughed off the estate tax.

For some reason, I thought we were talking about taxing the super wealthy, but if it’s about taxing everybody, then yeah, there’s no double-taxation argument for a typical estate. So, to clarify, do you mean you’re against a stepped-up basis for assets that weren’t subject to the estate tax? Or would you also preserve the decedent’s basis on an asset that was subject to the estate tax, such that the estate would pay the estate tax and upon sale the recipient would pay tax on any gain during the decedent and heir’s lives? What kind of rate structure do you have in mind? Would you let the heirs take the decedent’s primary-home capital gains exclusion? Or would you get rid of that anyway?

I consider the estate tax to be a nothing-burger, easily avoidable in its current state even by the ultra-rich with a financial advisor worth his/her salt.  As such, I don't see it as a hamper to eliminating stepped-up basis for everyone.  Now, if we're talking about assets that are actually taxed at an actual rate greater than 0 (i.e. not in trusts, real estate shenanigans, whatever other loopholes or the $11M+ exclusion), maybe I could see some provision.  That's such a tiny fraction of a tiny fraction that I don't find myself worked up at all about the potential, minor double taxation injustice on the heirs of a centimillionaire or billionaire.

I would say that all claims of "double taxation" are nothing burgers. At the end of the day only the final number matters, not whether the same dollar is affected by 2 different taxes.

No one buying stuff at a store goes: "What?! Why are you charging me sales tax? I already paid income tax on this money." All money has already been taxed and will be taxed again. That's how taxes work. You could basically claim any tax as being a "double tax".

[Undecided]

But estates essentially aren't taxed, so that's no justification at all.  Plus, there is step-up in basis upon death of spouse in some cases. 

Quick google search:
There were 2,570 taxable estate-tax returns filed in 2019. 

That's essentially a 0% rate of estates being taxed.  Okay, it's 0.2%, and I'm sure most of those have only a small percentage of the assets actually being taxed.  My 0.1 percenter friends have laughed off the estate tax.

For some reason, I thought we were talking about taxing the super wealthy, but if it’s about taxing everybody, then yeah, there’s no double-taxation argument for a typical estate. So, to clarify, do you mean you’re against a stepped-up basis for assets that weren’t subject to the estate tax? Or would you also preserve the decedent’s basis on an asset that was subject to the estate tax, such that the estate would pay the estate tax and upon sale the recipient would pay tax on any gain during the decedent and heir’s lives? What kind of rate structure do you have in mind? Would you let the heirs take the decedent’s primary-home capital gains exclusion? Or would you get rid of that anyway?

I consider the estate tax to be a nothing-burger, easily avoidable in its current state even by the ultra-rich with a financial advisor worth his/her salt.  As such, I don't see it as a hamper to eliminating stepped-up basis for everyone.  Now, if we're talking about assets that are actually taxed at an actual rate greater than 0 (i.e. not in trusts, real estate shenanigans, whatever other loopholes or the $11M+ exclusion), maybe I could see some provision.  That's such a tiny fraction of a tiny fraction that I don't find myself worked up at all about the potential, minor double taxation injustice on the heirs of a centimillionaire or billionaire.

I would say that all claims of "double taxation" are nothing burgers. At the end of the day only the final number matters, not whether the same dollar is affected by 2 different taxes.

No one buying stuff at a store goes: "What?! Why are you charging me sales tax? I already paid income tax on this money." All money has already been taxed and will be taxed again. That's how taxes work. You could basically claim any tax as being a "double tax".

I generally agree, but I think that mechanisms affect the transparency of the number (and that voters deserve transparency).

[EscapeVelocity2020]

Maybe the tide is slowly changing toward the super wealthy taking as much as they want -

Intel shareholders rejected the company’s executive pay program—putting the CEO’s promised $180 million pay package on the line

JPMorgan shareholders vote down pay bump for CEO Jamie Dimon

The pay proposal they rejected included a massive $52.6 million retention bonus as part of Dimon’s 2021 compensation package, just months after the bank’s board approved the incentive. With the bonus, Dimon’s total compensation was $84.4 million in 2021, up from $31.7 million in 2020.

But Dimon may yet get that payout. The compensation package is for 2021 and results of the “say on pay” votes are non-binding. Still, this is an embarrassing blow to the bank, not to mention Dimon himself, and JPMorgan’s board said it takes investor feedback “seriously.”

The new compensation package was designed to keep Dimon at the helm of the bank for the next five years by awarding him 1.5 million stock options that vest in 2026. Shareholders also voted down a similar one-time $27.8 million special awards package for JPMorgan Chase COO Daniel Pinto.

Less than a third of shareholders approved Dimon’s pay package at the bank’s annual meeting this week. That’s the first time since 2009, when JPMorgan first began investor votes on executive compensation, that a majority voted against such a measure. Last year 90% of shareholders voted in favor of the bank’s 2020 pay packages.

[Wolfpack Mustachian]

Maybe the tide is slowly changing toward the super wealthy taking as much as they want -

Intel shareholders rejected the company’s executive pay program—putting the CEO’s promised $180 million pay package on the line

JPMorgan shareholders vote down pay bump for CEO Jamie Dimon

The pay proposal they rejected included a massive $52.6 million retention bonus as part of Dimon’s 2021 compensation package, just months after the bank’s board approved the incentive. With the bonus, Dimon’s total compensation was $84.4 million in 2021, up from $31.7 million in 2020.

But Dimon may yet get that payout. The compensation package is for 2021 and results of the “say on pay” votes are non-binding. Still, this is an embarrassing blow to the bank, not to mention Dimon himself, and JPMorgan’s board said it takes investor feedback “seriously.”

The new compensation package was designed to keep Dimon at the helm of the bank for the next five years by awarding him 1.5 million stock options that vest in 2026. Shareholders also voted down a similar one-time $27.8 million special awards package for JPMorgan Chase COO Daniel Pinto.

Less than a third of shareholders approved Dimon’s pay package at the bank’s annual meeting this week. That’s the first time since 2009, when JPMorgan first began investor votes on executive compensation, that a majority voted against such a measure. Last year 90% of shareholders voted in favor of the bank’s 2020 pay packages.

Improvement in that area would be so nice