The Money Mustache Community
Other => Off Topic => Topic started by: EscapeVelocity2020 on March 28, 2022, 06:58:01 AM
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https://www.cnn.com/2022/03/26/politics/white-house-billionaire-minimum-income-tax/index.html
Hopefully this finally comes to pass, that the uber wealthy in the United States actually have to pay taxes and support the country that they live in. If we were in a 'fair' country, the rich would pay a higher tax % of their NW than poor people (e.g. Scandinavia vs. Middle East), but actually paying some tax is at least a start. The rich are hollowing out this country and then paying politicians to obfuscate reality. In fact, if you ask Scandinavians about being taxed, they are proud that their money is being used to provide health care and education.
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Taxing the rich is like treating an illness instead of preventing an illness. If workers who generated the wealth were fairly compensated at every point in the production, transportation and sales cycle, there would be less wealth for individuals at the top to hoard and no need to redistribute that wealth via taxes. The gap between the average worker's pay and the top executive's pay is much greater than it was 40 years ago. Shrinking that gap is what we should be focused on.
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In this board, I would hope people understand what a horrible precedent it would set to tax unrealized wealth.
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Taxing the rich is like treating an illness instead of preventing an illness. If workers who generated the wealth were fairly compensated at every point in the production, transportation and sales cycle, there would be less wealth for individuals at the top to hoard and no need to redistribute that wealth via taxes. The gap between the average worker's pay and the top executive's pay is much greater than it was 40 years ago. Shrinking that gap is what we should be focused on.
We could always limit the C suite compensation to ~200x (or whatever) what the median full-time worker pay is.
https://aflcio.org/executive-paywatch/company-pay-ratios?combine=&industry=All&state=All&sp500=0&page=8
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Taxing the rich is like treating an illness instead of preventing an illness. If workers who generated the wealth were fairly compensated at every point in the production, transportation and sales cycle, there would be less wealth for individuals at the top to hoard and no need to redistribute that wealth via taxes. The gap between the average worker's pay and the top executive's pay is much greater than it was 40 years ago. Shrinking that gap is what we should be focused on.
That's not how capitalism works in practice.
Capitalism concentrates wealth in the hands of the few, which expands their power, which leads to less wealth in the hands of the poor. It's a positive feedback loop - and a very effective optimizer for this. Taxation is one of the few tools that we have to fight this capitalist tendency.
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Wealth taxes in Europe did not work out particularly well.
https://www.businessinsider.com/what-happened-when-the-wealth-tax-was-implemented-in-europe-2019-10 (https://www.businessinsider.com/what-happened-when-the-wealth-tax-was-implemented-in-europe-2019-10)
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Taxing the rich is like treating an illness instead of preventing an illness. If workers who generated the wealth were fairly compensated at every point in the production, transportation and sales cycle, there would be less wealth for individuals at the top to hoard and no need to redistribute that wealth via taxes. The gap between the average worker's pay and the top executive's pay is much greater than it was 40 years ago. Shrinking that gap is what we should be focused on.
We could always limit the C suite compensation to ~200x (or whatever) what the median full-time worker pay is.
https://aflcio.org/executive-paywatch/company-pay-ratios?combine=&industry=All&state=All&sp500=0&page=8
The ultra wealthy (Bezos, Musk, Zuck) got that way by starting companies, which they owned, and then taking them public and owning large chunks of the company. How would you practically limit their comp? If they own 10% of a company worth $200B, how do you take that away from them? Especially when taking it away means you remove their control over the company they started?
Yeah you can make the case that a regular CEO who has been hired on should have a comp ceiling, but that’s a different discussion, and frankly unrelated to the ultra rich that people bitch about.
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Wealth taxes in Europe did not work out particularly well.
https://www.businessinsider.com/what-happened-when-the-wealth-tax-was-implemented-in-europe-2019-10 (https://www.businessinsider.com/what-happened-when-the-wealth-tax-was-implemented-in-europe-2019-10)
Florida got rid of it as well. Don't remember why.
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Yes, tax the super wealthy who can afford to pay hundreds of thousands of dollars to lawyers and accountants to restructure their finances to avoid paying taxes.
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This is a complex issue and politicians know that it's easy and popular to point fingers at this group. As the wealth gap expands, it can eventually cause instability in our society, so we do need to close the gap somehow. We also need to find ways to reduce the income gap in the corporate world. The problem is how to approach it. I find that most people I talk to agree with the idea of 20% tax on the top wealthy individuals. The fundamental reasons is simply because "they can afford it" and "it will never apply to the average person". This may or may not be true, but what if it does? How would the MMM community feel if they had to pay taxes on their unrealized gains? What if the taxes switch from income based to income and wealth based? The 1% would survive either way.
The US debt is over 30 trillion dollars. It's simply mind boggling to think how big it has become. One billion is 1000 million. One trillion is one million million. Even if we taxed the Super Wealthy 50% or 80%, we could never catch up. I don't have any workable solutions for these issues, but I don't think this tax the super wealthy route will solve anything.
As for the idea that capitalism is the cause for the wealth gap. As far as I know, every economic system out there results in a very small percentage of society possessing the majority of the wealth. This is true of capitalism, socialism, communism and certainly a dictatorship. The US is a hybrid of capitalism and socialism (mixed economy), just like most western countries.
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Taxing the rich is like treating an illness instead of preventing an illness. If workers who generated the wealth were fairly compensated at every point in the production, transportation and sales cycle, there would be less wealth for individuals at the top to hoard and no need to redistribute that wealth via taxes. The gap between the average worker's pay and the top executive's pay is much greater than it was 40 years ago. Shrinking that gap is what we should be focused on.
Well, at least you can admit that there is an illness. Many Americans seem to think the status quo (billionaires paying zero income tax while they pay) is 'right'. Maybe it's Stockholm Syndrome - we've been so abused by billionaires bending the system to pay workers as little as possible, have a fleet of lawyers and accountants to skirt taxation, and have lobbyists make the rules favor them that we think that this is what Capitalism will always be...
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How would the MMM community feel if they had to pay taxes on their unrealized gains? What if the taxes switch from income based to income and wealth based? The 1% would survive either way.
The one area where people are already paying taxes on unrealized gains is real estate. Minimizing these taxes is an art form and the system is certainly rigged in some instances. It's no surprise that Michael Madigan, the now disgraced politician that ran the Illinois house of representatives for two decades, was in the business of doing property tax appeals. (http://www.madigetz.com/about-us.html).
Taxing easily movable property that lacks decent comparables would be orders of magnitude more complex (and easier to avoid with good legal assistance).
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As for the idea that capitalism is the cause for the wealth gap. As far as I know, every economic system out there results in a very small percentage of society possessing the majority of the wealth. This is true of capitalism, socialism, communism and certainly a dictatorship. The US is a hybrid of capitalism and socialism (mixed economy), just like most western countries.
A dictatorship isn't an economic system.
Communism sucks as a system because it doesn't seem to be possible to implement in reality. As you mentioned, in practice the socialist aspects of the system are always subverted to concentrate power in the hands of the few. I think it's fundamentally incompatible with the human psyche.
This is different than capitalism. Capitalism is the cause of wealth disparity by design. The person who wins more gets more capital. This capital can be used to increase existing capital. It's a positive feedback loop. Socialism was originally devised as a counter to the wealth concentration that is fundamentally built into capitalist systems. So in capitalist/socialist hybrids, when wealth concentration becomes too great the only solution that can work to fix the problem is to shift balance towards more socialist policy. Whether that's through increased taxation/wealth distribution, more government programs, nationalization/abolition of private property, greater regulation . . . there is no way around it.
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In this board, I would hope people understand what a horrible precedent it would set to tax unrealized wealth.
You would hope. And quite often you would be disappointed. It comes with the territory.
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As for the idea that capitalism is the cause for the wealth gap. As far as I know, every economic system out there results in a very small percentage of society possessing the majority of the wealth. This is true of capitalism, socialism, communism and certainly a dictatorship. The US is a hybrid of capitalism and socialism (mixed economy), just like most western countries.
A dictatorship isn't an economic system.
Communism sucks as a system because it doesn't seem to be possible to implement in reality. As you mentioned, in practice the socialist aspects of the system are always subverted to concentrate power in the hands of the few. I think it's fundamentally incompatible with the human psyche.
This is different than capitalism. Capitalism is the cause of wealth disparity by design. The person who wins more gets more capital. This capital can be used to increase existing capital. It's a positive feedback loop. Socialism was originally devised as a counter to the wealth concentration that is fundamentally built into capitalist systems. So in capitalist/socialist hybrids, when wealth concentration becomes too great the only solution that can work to fix the problem is to shift balance towards more socialist policy. Whether that's through increased taxation/wealth distribution, more government programs, nationalization/abolition of private property, greater regulation . . . there is no way around it.
Except that presumes some sort of closed zero-sum game. In reality, Bezos/Musk/Zuck/etc having lots of money doesn’t cause me to have less money. There isn’t a finite amount of money to go around.
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It's all about closing the Buy, Borrow, Die loophole.
One part of this is taxing a percentage of held stocks (what Biden proposed above)
Another part of this is eliminating the "step up in basis when you die" loophole. This has been loosely proposed as well. Remember that this whole step up basis bullshit is just an arcane part of our tax code that exists because it used to be so damn hard to calculate the tax basis for long held assets to begin with.
https://www.cnet.com/tech/tech-industry/bezos-musk-and-other-billionaires-pay-next-to-nothing-in-income-taxes-report-says/#:~:text=Jeff%20Bezos%2C%20Mark%20Zuckerberg%20and,activity%20was%20illegal%2C%20ProPublica%20said.
https://en.wikipedia.org/wiki/Stepped-up_basis
In the advent of modern digital record keeping, I see no reason why my long held assets in Pretax retirement accounts or Taxable gains in Taxable account shouldn't be taxed at death. Got to pay our fair share.
Meanwhile, remember that only about 50% of US Adults actually own any stock at all (the richer half!). Some folks are benefiting from these loopholes whereas a lot of other folks get absolutely diddly squat.
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This is a complex issue and politicians know that it's easy and popular to point fingers at this group. As the wealth gap expands, it can eventually cause instability in our society, so we do need to close the gap somehow. We also need to find ways to reduce the income gap in the corporate world. The problem is how to approach it. I find that most people I talk to agree with the idea of 20% tax on the top wealthy individuals. The fundamental reasons is simply because "they can afford it" and "it will never apply to the average person". This may or may not be true, but what if it does? How would the MMM community feel if they had to pay taxes on their unrealized gains? What if the taxes switch from income based to income and wealth based? The 1% would survive either way.
The US debt is over 30 trillion dollars. It's simply mind boggling to think how big it has become. One billion is 1000 million. One trillion is one million million. Even if we taxed the Super Wealthy 50% or 80%, we could never catch up. I don't have any workable solutions for these issues, but I don't think this tax the super wealthy route will solve anything.
As for the idea that capitalism is the cause for the wealth gap. As far as I know, every economic system out there results in a very small percentage of society possessing the majority of the wealth. This is true of capitalism, socialism, communism and certainly a dictatorship. The US is a hybrid of capitalism and socialism (mixed economy), just like most western countries.
If you truly think 'there is nothing humans can do' about inequality then you need to move to Norway and live there until you are disabused of this notion. Capitalism is another human system that evolved out of necessity, but has now been purloined and twisted. It worked well, then Laissez Faire was a problem that was fixed, but now we're back here again...
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As for the idea that capitalism is the cause for the wealth gap. As far as I know, every economic system out there results in a very small percentage of society possessing the majority of the wealth. This is true of capitalism, socialism, communism and certainly a dictatorship. The US is a hybrid of capitalism and socialism (mixed economy), just like most western countries.
A dictatorship isn't an economic system.
Communism sucks as a system because it doesn't seem to be possible to implement in reality. As you mentioned, in practice the socialist aspects of the system are always subverted to concentrate power in the hands of the few. I think it's fundamentally incompatible with the human psyche.
This is different than capitalism. Capitalism is the cause of wealth disparity by design. The person who wins more gets more capital. This capital can be used to increase existing capital. It's a positive feedback loop. Socialism was originally devised as a counter to the wealth concentration that is fundamentally built into capitalist systems. So in capitalist/socialist hybrids, when wealth concentration becomes too great the only solution that can work to fix the problem is to shift balance towards more socialist policy. Whether that's through increased taxation/wealth distribution, more government programs, nationalization/abolition of private property, greater regulation . . . there is no way around it.
Except that presumes some sort of closed zero-sum game. In reality, Bezos/Musk/Zuck/etc having lots of money doesn’t cause me to have less money. There isn’t a finite amount of money to go around.
No, it doesn't presume that at all.
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Except that presumes some sort of closed zero-sum game. In reality, Bezos/Musk/Zuck/etc having lots of money doesn’t cause me to have less money. There isn’t a finite amount of money to go around.
Sure it does. If Bezos/Musk/Zuck/etc and their corporations not only have Billions more money than you do, but also happen to use that money to influence politicians (legally, of course), this will lead to the progressive and systematic adjustment of our current system to benefit them and screw everybody else over.
More for them very often leads to a deficit in resources that then obligate every one else to fork over more for Police, Firemen, Roads, Public Schools, etc...
Here's an a brief example about Disney's effect on copyright rules:
https://www.theiplawblog.com/2016/02/articles/copyright-law/disneys-influence-on-united-states-copyright-law/
https://en.wikipedia.org/wiki/Copyright_Term_Extension_Act
Here's a longer read from the NYTimes about Senator Manchin and his relationship with the oil and gas industry.
https://www.nytimes.com/2022/03/27/climate/manchin-coal-climate-conflicts.html?searchResultPosition=2
Finally, we all know about Amazon lobbying various states, counties, cities for tax breaks to create their "East Coast Hub" a few years ago. How did that turn out?
JGS
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As for the idea that capitalism is the cause for the wealth gap. As far as I know, every economic system out there results in a very small percentage of society possessing the majority of the wealth. This is true of capitalism, socialism, communism and certainly a dictatorship. The US is a hybrid of capitalism and socialism (mixed economy), just like most western countries.
A dictatorship isn't an economic system.
Communism sucks as a system because it doesn't seem to be possible to implement in reality. As you mentioned, in practice the socialist aspects of the system are always subverted to concentrate power in the hands of the few. I think it's fundamentally incompatible with the human psyche.
This is different than capitalism. Capitalism is the cause of wealth disparity by design. The person who wins more gets more capital. This capital can be used to increase existing capital. It's a positive feedback loop. Socialism was originally devised as a counter to the wealth concentration that is fundamentally built into capitalist systems. So in capitalist/socialist hybrids, when wealth concentration becomes too great the only solution that can work to fix the problem is to shift balance towards more socialist policy. Whether that's through increased taxation/wealth distribution, more government programs, nationalization/abolition of private property, greater regulation . . . there is no way around it.
I agree with your clarifications. I also suspect you are correct that increasing socialistic policy/regulation will be the solution. I am generally wary when the goal is "fairness." It's an overused and messy qualifier. Unless we do a significantly better job of regulating the healthcare and pharmaceutical industry, I suspect the US will eventually end up having a go to more socialized healthcare. Putting aside the "fairness" issue, I still don't think taxing the super wealthy will fix our healthcare, education or debt issues. I suspect our recent excessive manipulation of interest rates and money supply has also caused unnatural economic conditions that has accelerated the expansion of the wealth gap.
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Except that presumes some sort of closed zero-sum game. In reality, Bezos/Musk/Zuck/etc having lots of money doesn’t cause me to have less money. There isn’t a finite amount of money to go around.
Sure it does. If Bezos/Musk/Zuck/etc and their corporations not only have Billions more money than you do, but also happen to use that money to influence politicians (legally, of course), this will lead to the progressive and systematic adjustment of our current system to benefit them and screw everybody else over.
More for them very often leads to a deficit in resources that then obligate every one else to fork over more for Police, Firemen, Roads, Public Schools, etc...
Here's an a brief example about Disney's effect on copyright rules:
https://www.theiplawblog.com/2016/02/articles/copyright-law/disneys-influence-on-united-states-copyright-law/
https://en.wikipedia.org/wiki/Copyright_Term_Extension_Act
Here's a longer read from the NYTimes about Senator Manchin and his relationship with the oil and gas industry.
https://www.nytimes.com/2022/03/27/climate/manchin-coal-climate-conflicts.html?searchResultPosition=2
Finally, we all know about Amazon lobbying various states, counties, cities for tax breaks to create their "East Coast Hub" a few years ago. How did that turn out?
JGS
Two different issues. One can be against money and influence in politics while also not being against confiscatory taxes. Consider: if the government had fewer touch points on our daily lives, the ability of billionaires to influence government would be greatly reduced. A flat tax would be a great example of this.
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This is a complex issue and politicians know that it's easy and popular to point fingers at this group. As the wealth gap expands, it can eventually cause instability in our society, so we do need to close the gap somehow. We also need to find ways to reduce the income gap in the corporate world. The problem is how to approach it. I find that most people I talk to agree with the idea of 20% tax on the top wealthy individuals. The fundamental reasons is simply because "they can afford it" and "it will never apply to the average person". This may or may not be true, but what if it does? How would the MMM community feel if they had to pay taxes on their unrealized gains? What if the taxes switch from income based to income and wealth based? The 1% would survive either way.
The US debt is over 30 trillion dollars. It's simply mind boggling to think how big it has become. One billion is 1000 million. One trillion is one million million. Even if we taxed the Super Wealthy 50% or 80%, we could never catch up. I don't have any workable solutions for these issues, but I don't think this tax the super wealthy route will solve anything.
As for the idea that capitalism is the cause for the wealth gap. As far as I know, every economic system out there results in a very small percentage of society possessing the majority of the wealth. This is true of capitalism, socialism, communism and certainly a dictatorship. The US is a hybrid of capitalism and socialism (mixed economy), just like most western countries.
If you truly think 'there is nothing humans can do' about inequality then you need to move to Norway and live there until you are disabused of this notion. Capitalism is another human system that evolved out of necessity, but has now been purloined and twisted. It worked well, then Laissez Faire was a problem that was fixed, but now we're back here again...
I don't recall saying there is nothing we can do, but did admit I don't have good solutions. I will have to look into Norway more. Have you live there yourself or are you basing this off things you have read online? I wasn't aware it was the poster child for economic utopia. No matter how good something is, I often find that most things in life have trade-offs, I assume Norway is no exception.
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Speaking as a wealthy person, I'm all in favor of this. Inequality in the U.S. is out of control. If everyone had a place to live, sufficient food, access to affordable medical care and other basic survival needs, I wouldn't mind as much that there were some very rich individuals. As it is, it's egregious that a tiny number of people can hoard billions of dollars while kids go hungry and people with diabetes have to ration insulin.
The most useful thing about a wealth tax is that it would cut down on generational inequality. If capitalism is about merit, about using your skills and innovating to create value, why is there inheritance? Shouldn't everyone get the same fair shake when they start out, rather than some people getting to coast because their parents were rich?
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Two different issues. One can be against money and influence in politics while also not being against confiscatory taxes. Consider: if the government had fewer touch points on our daily lives, the ability of billionaires to influence government would be greatly reduced. A flat tax would be a great example of this.
So, according to you, massive inequality in our current system would be corrected if government, instead of regulating it away, chooses to take the guardrails off entirely???
I think the healthcare point above is a great example of what can happen when the government "keeps its hands off" our daily lives.
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The US debt is over 30 trillion dollars. It's simply mind boggling to think how big it has become. One billion is 1000 million. One trillion is one million million. Even if we taxed the Super Wealthy 50% or 80%, we could never catch up. I don't have any workable solutions for these issues, but I don't think this tax the super wealthy route will solve anything.
Following the historical precedent, the US would print 30 trillion dollars, which would degrade all our dollar savings by a similar proportion. Real assets would be revalued, and everyone would start from scratch. But that would do nothing for inequality, as the wealthy generally have those real assets.
I had a conversation with a tour guide while visiting St. Petersburg in 2013. She said her parents (boomer aged) were quite nostalgic for Soviet times. I asked why. She said they had a good nest egg for retirement; enough to buy a Sachs. (A vacation cottage) But when the 1998 Russian financial crisis hit, that savings became enough to buy a 2 liter of Coke.
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In this board, I would hope people understand what a horrible precedent it would set to tax unrealized wealth.
You would hope. And quite often you would be disappointed. It comes with the territory.
Most people posting here are concerned with bettering the world, even though that comes at personal cost. I'm not disappointed to be part of a group thats willing to pay a little more from their own pocket for the benefit of others.
From a practical standpoint, I don't think anyone here is wealthy enough to be affected by whatever law that may pass.
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Speaking as a wealthy person, I'm all in favor of this. Inequality in the U.S. is out of control. If everyone had a place to live, sufficient food, access to affordable medical care and other basic survival needs, I wouldn't mind as much that there were some very rich individuals. As it is, it's egregious that a tiny number of people can hoard billions of dollars while kids go hungry and people with diabetes have to ration insulin.
The most useful thing about a wealth tax is that it would cut down on generational inequality. If capitalism is about merit, about using your skills and innovating to create value, why is there inheritance? Shouldn't everyone get the same fair shake when they start out, rather than some people getting to coast because their parents were rich?
Capitalism isn't about merit or innovation - this is a common misconception. Capitalism is about capital acquisition.
A skillful and innovative person can often generate capital in a capitalist system (that's one of the biggest pluses of the whole setup). But it's very easy for a not very skillful or innovative person with a huge amount of starting capital to continue to be very wealthy.
Typically, the most skillful/innovative people will generate a huge amount of capital early on in their career . . . but it's very common for the innovation and skill to largely die off after accumulation of capital. Look at Bill Gates or Jeff Bezos. Neither have created anything of value from an innovation perspective for an awful lot time. They don't need to anymore - they already have the capital.
Capital acquisition doesn't have to benefit society either - just to generate more capital. A lot of rich people made their wealth illegally - check out the winners of prohibition. Or look at the Perdue family and their massive capital returns by pushing opioids. As long as you get away with whatever you're doing, the capital acquisition is good.
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Two different issues. One can be against money and influence in politics while also not being against confiscatory taxes. Consider: if the government had fewer touch points on our daily lives, the ability of billionaires to influence government would be greatly reduced. A flat tax would be a great example of this.
So, according to you, massive inequality in our current system would be corrected if government, instead of regulating it away, chooses to take the guardrails off entirely???
I think the healthcare point above is a great example of what can happen when the government "keeps its hands off" our daily lives.
1. I think the massive inequality in our system is looked at incorrectly. I don’t care how far ahead of me Bezos, etc are. We’re better served looking at how far behind others are and trying to fix that. And just taking it from Bezos etc and giving it to others isn’t going to fix that.
2. Yes, government tries to do too much at once and it distorts things. Look at our Byzantine tax code, where wealthy people can use a zillion tax avoidance schemes to lower their burden, schemes that are often not available to the common person. Throw a flat tax out there and top trying to use the tax code to force a zillion other behaviors and there are much less opportunities for fuckery.
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Look at Bill Gates or Jeff Bezos. Neither have created anything of value from an innovation perspective for an awful lot time. They don't need to anymore - they already have the capital.
Imagine having the viewpoint that Gates and Bezos haven’t innovated enough. I’d love to see your CV compared to theirs.
Also, you realize that both have essentially retired correct?
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Two different issues. One can be against money and influence in politics while also not being against confiscatory taxes. Consider: if the government had fewer touch points on our daily lives, the ability of billionaires to influence government would be greatly reduced. A flat tax would be a great example of this.
So, according to you, massive inequality in our current system would be corrected if government, instead of regulating it away, chooses to take the guardrails off entirely???
I think the healthcare point above is a great example of what can happen when the government "keeps its hands off" our daily lives.
1. I think the massive inequality in our system is looked at incorrectly. I don’t care how far ahead of me Bezos, etc are. We’re better served looking at how far behind others are and trying to fix that. And just taking it from Bezos etc and giving it to others isn’t going to fix that.
2. Yes, government tries to do too much at once and it distorts things. Look at our Byzantine tax code, where wealthy people can use a zillion tax avoidance schemes to lower their burden, schemes that are often not available to the common person. Throw a flat tax out there and top trying to use the tax code to force a zillion other behaviors and there are much less opportunities for fuckery.
1. Agree to disagree
2. I'd agree to a flat tax if you place it at 25% and only start it AFTER 300K in income. Deal? Also, bring back inheritance tax of 25% of anything over 2.5 million per individual.
[anyone want to do the math on that one?]
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Two different issues. One can be against money and influence in politics while also not being against confiscatory taxes. Consider: if the government had fewer touch points on our daily lives, the ability of billionaires to influence government would be greatly reduced. A flat tax would be a great example of this.
So, according to you, massive inequality in our current system would be corrected if government, instead of regulating it away, chooses to take the guardrails off entirely???
I think the healthcare point above is a great example of what can happen when the government "keeps its hands off" our daily lives.
1. I think the massive inequality in our system is looked at incorrectly. I don’t care how far ahead of me Bezos, etc are. We’re better served looking at how far behind others are and trying to fix that. And just taking it from Bezos etc and giving it to others isn’t going to fix that.
2. Yes, government tries to do too much at once and it distorts things. Look at our Byzantine tax code, where wealthy people can use a zillion tax avoidance schemes to lower their burden, schemes that are often not available to the common person. Throw a flat tax out there and top trying to use the tax code to force a zillion other behaviors and there are much less opportunities for fuckery.
1. Agree to disagree
2. I'd agree to a flat tax if you place it at 25% and only start it AFTER 300K in income. Deal? Also, bring back inheritance tax of 25% of anything over 2.5 million per individual.
[anyone want to do the math on that one?]
Flat tax is a red herring libertarians and other shills for unregulated capitalism throw out there in an attempt to pretend they are for anything other than zero-tax for the richest.
No amount of "flat tax", of any percentage, on any income, would solve anything! Exactly as the proposed law in the OP points out; because the richest 0.1% don't have any income! The live of unrealized gains, held either in the US, or even in holding companies abroad. They can borrow billions against the value of these shares and pay nothing in tax. And when they finally die of a caviar and champagne overdose their heirs get the shares with a step-up in basis and can pay back the loans for free. Or they can of course always manufacture some stock-loss to offset any gains if they have to sell before.
The stupidity of trying to spread pro-billionaire propaganda opposing these laws to people who save maybe a couple million in 401ks, because "they'll tax you next!" is truly something. No I'm not in the same universe as someone who spends more refueling their yacht than I'll earn in a lifetime..
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Another part of this is eliminating the "step up in basis when you die" loophole. This has been loosely proposed as well. Remember that this whole step up basis bullshit is just an arcane part of our tax code that exists because it used to be so damn hard to calculate the tax basis for long held assets to begin with.
It still is. Suppose your dad passes away, and you find a box of gold coins stuffed under the mattress. The coins could have been bought at any time in the past 50 years, and he didn't save his receipts. What's your cost basis?
The most useful thing about a wealth tax is that it would cut down on generational inequality. If capitalism is about merit, about using your skills and innovating to create value, why is there inheritance? Shouldn't everyone get the same fair shake when they start out, rather than some people getting to coast because their parents were rich?
Yes, I am very much in favor of placing some limits on the intergenerational transfer of wealth. If you start a big company that earns the support of a bunch of customers and you become super wealthy, good for you. Enjoy your yachts and whatever. Your kids didn't do a thing to earn that wealth though. I think it's in the best interest of society to tax most of it away so that we don't develop a hereditary aristocracy.
I'm less than enamored with an annual wealth tax though. Documenting your net worth in a way that would stand up to a tax audit can be an expensive and time-consuming process, especially for the very wealthy who have a bunch of illiquid investments. They already have to do that at death for estate tax purposes. Why not just raise the estate tax then? For whatever X% wealth tax you might want to charge, there's a Y% estate tax you could charge that would raise the same amount of money and prevent the same amount of intergenerational wealth transfer, with less administrative burden.
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Look at Bill Gates or Jeff Bezos. Neither have created anything of value from an innovation perspective for an awful lot time. They don't need to anymore - they already have the capital.
Imagine having the viewpoint that Gates and Bezos haven’t innovated enough. I’d love to see your CV compared to theirs.
Also, you realize that both have essentially retired correct?
Yes, I'm aware that both are now retired. But I'm also aware that both spent many years 'working' as corporate heads but not doing anything particularly innovative. Yet the capital continued to flow in. If you'll recall, my argument was that Capitalism isn't about merit or innovation - it's about capital acquisition.
I did not say that Bezos and Gates didn't 'innovate enough' - both were pretty big tech innovators in their time. It was to draw attention to the fact that while often capitalism is pretty good at initially rewarding good ideas/hard work it's very rare that the innovative people it rewards continue being innovative for very long. Because they don't need to once they've amassed their capital - at that point their capital can do the work for them.
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Interesting that it's okay for this group to suggest; taking money away from, imposing more taxes on another group, limiting their wealth, etc.
What if the folks a couple rungs down the ladder suggested the same kind of financial hits and sacrifices for us? How many here would be willing to give another 10-30% of their income to help a lower class?
If you really feel strongly about evening the playing field, give more of your own money to those less fortunate.
These uber wealthy folks are playing within the rules. And don't forget that they also created shitloads of great jobs which raised the living standards for a lot of their employees, suppliers, vendors, customers, etc. at all levels. Not to mention a lot of great products and services that improved many of our lives and / or allowed us to be more successful and earn more.
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These uber wealthy folks are playing within the rules.
They're playing within the rules, therefore we shouldn't change the rules when we notice that the current rules can lead to undesirable results?
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Two different issues. One can be against money and influence in politics while also not being against confiscatory taxes. Consider: if the government had fewer touch points on our daily lives, the ability of billionaires to influence government would be greatly reduced. A flat tax would be a great example of this.
So, according to you, massive inequality in our current system would be corrected if government, instead of regulating it away, chooses to take the guardrails off entirely???
I think the healthcare point above is a great example of what can happen when the government "keeps its hands off" our daily lives.
1. I think the massive inequality in our system is looked at incorrectly. I don’t care how far ahead of me Bezos, etc are. We’re better served looking at how far behind others are and trying to fix that. And just taking it from Bezos etc and giving it to others isn’t going to fix that.
2. Yes, government tries to do too much at once and it distorts things. Look at our Byzantine tax code, where wealthy people can use a zillion tax avoidance schemes to lower their burden, schemes that are often not available to the common person. Throw a flat tax out there and top trying to use the tax code to force a zillion other behaviors and there are much less opportunities for fuckery.
1. Agree to disagree
2. I'd agree to a flat tax if you place it at 25% and only start it AFTER 300K in income. Deal? Also, bring back inheritance tax of 25% of anything over 2.5 million per individual.
[anyone want to do the math on that one?]
How about everyone pays 10k a year for the right to live in the US regardless of income. If you wat to talk about fairness, that's the most fair. If you go to Disneyland everyone pays the same amount to get in regardless of how much money they make or how many rides they go on. Start with "fair" and then add some generosity.
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This is a complex issue and politicians know that it's easy and popular to point fingers at this group. As the wealth gap expands, it can eventually cause instability in our society, so we do need to close the gap somehow. We also need to find ways to reduce the income gap in the corporate world. The problem is how to approach it. I find that most people I talk to agree with the idea of 20% tax on the top wealthy individuals. The fundamental reasons is simply because "they can afford it" and "it will never apply to the average person". This may or may not be true, but what if it does? How would the MMM community feel if they had to pay taxes on their unrealized gains? What if the taxes switch from income based to income and wealth based? The 1% would survive either way.
The US debt is over 30 trillion dollars. It's simply mind boggling to think how big it has become. One billion is 1000 million. One trillion is one million million. Even if we taxed the Super Wealthy 50% or 80%, we could never catch up. I don't have any workable solutions for these issues, but I don't think this tax the super wealthy route will solve anything.
As for the idea that capitalism is the cause for the wealth gap. As far as I know, every economic system out there results in a very small percentage of society possessing the majority of the wealth. This is true of capitalism, socialism, communism and certainly a dictatorship. The US is a hybrid of capitalism and socialism (mixed economy), just like most western countries.
If you truly think 'there is nothing humans can do' about inequality then you need to move to Norway and live there until you are disabused of this notion. Capitalism is another human system that evolved out of necessity, but has now been purloined and twisted. It worked well, then Laissez Faire was a problem that was fixed, but now we're back here again...
I don't recall saying there is nothing we can do, but did admit I don't have good solutions. I will have to look into Norway more. Have you live there yourself or are you basing this off things you have read online? I wasn't aware it was the poster child for economic utopia. No matter how good something is, I often find that most things in life have trade-offs, I assume Norway is no exception.
Yes, I lived in Norway with our 1 and 3 year old…. Co-workers had children while they were in Norway…. Life was good…. Americans really don’t understand the idea that the government exists because of them…. It’s so weird!
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In my mind, the "fairest" approach would be to have a big enough VAT or consumption tax on all goods and services that are consumed, in order to support the needed level of government spending. Meanwhile, eliminate all of the income tax code. In order to make it progressive, everyone would receive a monthly or annual transfer-payment of some multiple of the poverty rate, to make up for paying any of the consumption taxes on some base-line standard of living.
It's not perfect, but it would eliminate a huge corrupt income-tax-code that has a million different carve-outs for special interests. It would tax anyone who wanted to consume anything. So if a wealthy person wanted to be a saver/investor, they could choose to do that instead of buying yachts.
Of course, this would never happen. Too many businesses and people's jobs depend on having this byzantine federal tax code and the need to earn an income by helping or forcing everyone to comply with it. It would also neuter a lot of the ability for congress/reps to take bribers...
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Seeing as I just read Capital in the 21st Century by Thomas Pikkety, I will try to chime in with his expertise and excellent research and limit my own commentary or bias. Unfortunately I read a copy from the library I don't have on hand anymore, so I will be operating from memory and surely my own interpretations will creep in.
Income inequality and wealth inequality are both much higher in the US than in other countries. Economic policies in other wealthy nations produce less inequality than the US, so policy changes can reduce the problem - we know because they already do in Germany, France, Japan and the Scandinavian countries.
First off, it is harder for wealth inequality to get this extreme if we have a institute a more assertive progression to the income tax. If we returned to top tax brackets above 50% (they have gone as high as 80% in some nations at some times, and those times/places are highly correlated with more egalitarian economies) then companies would be far less incentivized to pay their C-suite executives extravagant salaries. Why pay the CEO $5million a year when that amounts to paying them something like $2.7 million net, and then just sending the other $2.3 million to the federal government? Extreme top tax brackets aren't about revenue, they're about guiding behavior. Top CEOs still get to be the most wealthy people in society, just by a less egregious amount, and the company can put that money towards higher compensation for other employees, or greater returns for shareholders. Reagan/Thatcher tax cuts led directly to skyrocketing inequality in the US and UK.
Secondly, a wealth tax that isn't coordinated by many nations is handicapped by the fact that the rich can just hide their wealth elsewhere. That doesn't mean it isn't worth doing. The federal government did not have the information or infrastructure necessary to institute an income tax before they did it. Once they did, information on incomes became a matter of public record that is preserved for history to study and understand. Obviously many people partake in illicit activities and have significant amounts of unreported income every year. That doesn't mean the income tax doesn't work or shouldn't exist. If we instituted a modest wealth tax, that establishes the precedent of the government having the information and the capacity to tax wealth. Then over time, we can move towards a system where the US, Canada, Japan, and the EU coordinate their wealth records and tax wealth in a harder-to-evade manner. The system could continue to cover more of the world and charge more progressive rates from a basic floor, but we need the infrastructure in place first.
I continued to rant on my own elaborations for another couple paragraphs but it felt excessive so I'll trim that off for now and leave it at the expert economist's thoughts on tax policy, because he's probably more interesting than me. The part I will leave in: if the objection to raising taxes is that America will lose it's "competitive advantage," I don't think that's a reasonable objection. We could raise our taxes to levels significantly lower than the next lowest taxes among wealthy, developed nations (probably the UK or Canada?) and that would be a significant tax increase, while still being the most attractive market for "innovative" CEOs who want to show off their big net worths on their mega-yachts. And for anyone pulling a slippery slope argument to say, "we can't tax millionaries because they'll come for our frugal FIRE fortunes next," I say 1) we're talking about so many orders of magnitudes of difference that it's completely ridiculous. 2) Even if high wealth taxes slippery-sloped their way all the way down to 7-digit fortunes, that's still not bad for society. FIRE is an enormous privilege, and those of you who already have your 7-digit fortunes are already in an elite class of wealth, far above what most Americans will ever see in their lives.
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<snip>
Income inequality and wealth inequality are both much higher in the US than in other countries. Economic policies in other wealthy nations produce less inequality than the US, so policy changes can reduce the problem - we know because they already do in Germany, France, Japan and the Scandinavian countries.
<snip>
I agree that those societies are more equal with regards to wealth... but is that actually desirable?
Is it a coincidence that the most innovative and largest companies in the world come from the USA?
I agree we don't want people starving... but I think giving people "comfortable" lives from the government results in less innovation and therefore less improvement for the world as a whole.
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It's all about closing the Buy, Borrow, Die loophole.
Indeed. But is there a better way to close the loophole?
In particular, is this proposal going to lead more companies to stay private and to undervalue themselves for tax purposes? Because that's bad for the people on this forum.
Perhaps closing the loophole at the "die" step could work better?
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<snip>
Income inequality and wealth inequality are both much higher in the US than in other countries. Economic policies in other wealthy nations produce less inequality than the US, so policy changes can reduce the problem - we know because they already do in Germany, France, Japan and the Scandinavian countries.
<snip>
I agree that those societies are more equal with regards to wealth... but is that actually desirable?
Is it a coincidence that the most innovative and largest companies in the world come from the USA?
I agree we don't want people starving... but I think giving people "comfortable" lives from the government results in less innovation and therefore less improvement for the world as a whole.
But are these people/companies motivated only by extravagant hundred billion dollar fortunes, or if these extreme fortunes were taxed out of existence, would these people still be motivated by 9 or 10 digits of wealth? At that point the money doesn’t really make a difference, but solely because we’ve allowed the precent of 12-digit fortunes to exist, that’s what they anchor to. Through different policies, Bezos or Musk could still be the richest people on Earth with much smaller absolute fortunes.
In our current system where tax policies in wealthy, developed nations differ so wildly, when people want to start giant multinational corporations of course they will take their business to the nation with the lowest taxes, because “number go up more.” But it’s a pretty bleak vision of humanity to think that ambitious people with innovative ideas just wouldn’t bother to work hard if it didn’t buy them the privilege to ride phallic rockets to the edge of space while commissioning the most extravagant yacht ever built by mankind.
Again: the US could raise taxes to levels just below Canada’s or the UK’s rates, completely maintaining its competitive advantage in attracting businessmen and entrepreneurship, and still get benefits of less extreme inequality. It’s not a binary choice between 1) our current level of extreme inequality or 2) completely flat distribution where no one is financially incentivized to do anything. We can move slowly in the direction of a more egalitarian economy, and then adjust as needed if we don’t like any of the consequences. To present a slippery slope and then say we can’t take any action at all is just a little too pessimistic to my sensibilities. Scandinavian countries still have wealth inequality, just less. Then France, Germany, and Japan have slightly more than them, then Canada and the UK. Then the US is way out in extreme territories. We’re moving past levels of inequality that have never been seen before in developed democracies.
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I agree that those societies are more equal with regards to wealth... but is that actually desirable?
Is it a coincidence that the most innovative and largest companies in the world come from the USA?
I agree we don't want people starving... but I think giving people "comfortable" lives from the government results in less innovation and therefore less improvement for the world as a whole.
Is it "desirable" for the downtrodden of society to come out with pitchforks and baseball bats? What's the point of having more innovative and larger companies if the average family doesn't get any benefit from it? In fact, the average family tends to subsidize companies like Amazon, Nike, Fedex, or Apple, who pay virtually ZERO federal taxes.
Speaking of the world as a whole -> the world may benefit, but it is US policy, stability, and infrastructure that allow these companies to thrive. Thus, they should pay adequate tax to support that structure.
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In my mind, the "fairest" approach would be to have a big enough VAT or consumption tax on all goods and services that are consumed, in order to support the needed level of government spending. Meanwhile, eliminate all of the income tax code. In order to make it progressive, everyone would receive a monthly or annual transfer-payment of some multiple of the poverty rate, to make up for paying any of the consumption taxes on some base-line standard of living.
It's not perfect, but it would eliminate a huge corrupt income-tax-code that has a million different carve-outs for special interests. It would tax anyone who wanted to consume anything. So if a wealthy person wanted to be a saver/investor, they could choose to do that instead of buying yachts.
Of course, this would never happen. Too many businesses and people's jobs depend on having this byzantine federal tax code and the need to earn an income by helping or forcing everyone to comply with it. It would also neuter a lot of the ability for congress/reps to take bribers...
You've got two guys. A has 1,000$ to his name, and B is worth 1,000,000,000.
They both have to eat. So A buys a bag of rice and a bag of beans . . . and incredibly manages to get the total cost of his meals down to 1$ per day. B only eats sushi off naked women, so he's spending about 10,000$ a day on food.
They both have to live somewhere. So A has rented a cockroach infested place with five other guys and only has to pay 500$ a month. B has three mansions that he bought in the past that he jets to and from. He's paying 30,000$ each month in property taxes on the mansions.
They both need clothing. So A will occasionally buy used stuff from Goodwill. Let's say 5$ a month, because this shit is already pretty worn so it wears out. B likes to buy clothes that he'll never wear and then burn them for fun. So 15,000$ a month.
They both need to get around. A has a monthly bus pass for 120$. B likes to travel by helicopter . . . so let's say 50,000$ a month all in.
So let's add up monthly taxes, assuming a flat rate of 5% for purchases:
A
Food - 1.5
Rent - 25
Clothes - .25
Transportation - 6
Total - 32.75
Which gives a yearly total of - 393$
B
Food - 15,000
Rent Property Tax - 30,000 (yeah, it's not a consumption tax . . . but rich people always own property, so let's just count it that way)
Clothes - 1,500$
Transportation - 2,500$
Total - 49,000$
Which gives a yearly total of 588,000$
Looks good so far right? The extravagant B is paying way more in taxes! Well . . . when you look at how much they're paying based upon net worth (ignoring all frivolous spending - just looking at the essentials necessary to survive here) . . . A is spending 39.3% of his net worth in taxes each year just to survive and B is spending 0.0588% of his while being a wasteful dick.
Consumption taxes tend to be rather regressive. They're great if you're rich enough that the cost of survival is so low you can choose to consume or not to. But most people dismiss them outright because of how unfairly they penalize the poorest folks in society.
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I agree that those societies are more equal with regards to wealth... but is that actually desirable?
Is it a coincidence that the most innovative and largest companies in the world come from the USA?
I agree we don't want people starving... but I think giving people "comfortable" lives from the government results in less innovation and therefore less improvement for the world as a whole.
Is it "desirable" for the downtrodden of society to come out with pitchforks and baseball bats? What's the point of having more innovative and larger companies if the average family doesn't get any benefit from it? In fact, the average family tends to subsidize companies like Amazon, Nike, Fedex, or Apple, who pay virtually ZERO federal taxes.
Speaking of the world as a whole -> the world may benefit, but it is US policy, stability, and infrastructure that allow these companies to thrive. Thus, they should pay adequate tax to support that structure.
That’s an extremely narrow way of looking at it. All of those companies have thousands of employees, which all pay taxes on their income and consumption. And generally, corporate taxes are just a pass through to consumers anyways.
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In my mind, the "fairest" approach would be to have a big enough VAT or consumption tax on all goods and services that are consumed, in order to support the needed level of government spending. Meanwhile, eliminate all of the income tax code. In order to make it progressive, everyone would receive a monthly or annual transfer-payment of some multiple of the poverty rate, to make up for paying any of the consumption taxes on some base-line standard of living.
You've got two guys. A has 1,000$ to his name, and B is worth 1,000,000,000.
They both have to eat. So A buys a bag of rice and a bag of beans . . . and incredibly manages to get the total cost of his meals down to 1$ per day. B only eats sushi off naked women, so he's spending about 10,000$ a day on food.
They both have to live somewhere. So A has rented a cockroach infested place with five other guys and only has to pay 500$ a month. B has three mansions that he bought in the past that he jets to and from. He's paying 30,000$ each month in property taxes on the mansions.
They both need clothing. So A will occasionally buy used stuff from Goodwill. Let's say 5$ a month, because this shit is already pretty worn so it wears out. B likes to buy clothes that he'll never wear and then burn them for fun. So 15,000$ a month.
They both need to get around. A has a monthly bus pass for 120$. B likes to travel by helicopter . . . so let's say 50,000$ a month all in.
<snip>
Looks good so far right? The extravagant B is paying way more in taxes! Well . . . when you look at how much they're paying based upon net worth (ignoring all frivolous spending - just looking at the essentials necessary to survive here) . . . A is spending 39.3% of his net worth in taxes each year just to survive and B is spending 0.0588% of his while being a wasteful dick.
Consumption taxes tend to be rather regressive. They're great if you're rich enough that the cost of survival is so low you can choose to consume or not to. But most people dismiss them outright because of how unfairly they penalize the poorest folks in society.
Person A then gets a monthly payment of $32.70 so that they both spend about 0.0588% of their income on living expenses.
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I know it would be impossible to regulate but I think people over a certain wealth should pay income taxes on what they spend in addition to sales tax. You pay no income tax so how could you afford a $40mil yacht? I think a 10% on every penny they spend would be fair. I know a lot of their income is not sitting in their savings account but if you have it to spend it then you should be taxed on it.
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I agree that those societies are more equal with regards to wealth... but is that actually desirable?
Is it a coincidence that the most innovative and largest companies in the world come from the USA?
I agree we don't want people starving... but I think giving people "comfortable" lives from the government results in less innovation and therefore less improvement for the world as a whole.
Is it "desirable" for the downtrodden of society to come out with pitchforks and baseball bats? What's the point of having more innovative and larger companies if the average family doesn't get any benefit from it? In fact, the average family tends to subsidize companies like Amazon, Nike, Fedex, or Apple, who pay virtually ZERO federal taxes.
Speaking of the world as a whole -> the world may benefit, but it is US policy, stability, and infrastructure that allow these companies to thrive. Thus, they should pay adequate tax to support that structure.
That’s an extremely narrow way of looking at it. All of those companies have thousands of employees, which all pay taxes on their income and consumption. And generally, corporate taxes are just a pass through to consumers anyways.
You didn't respond to my points at all, but I'll respond to yours...
There are millions of small businesses who also have millions of employees in the US, and a lot of their costs are passed to their customers, and they all pay more in taxes too.
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It's all about closing the Buy, Borrow, Die loophole.
Indeed. But is there a better way to close the loophole?
In particular, is this proposal going to lead more companies to stay private and to undervalue themselves for tax purposes? Because that's bad for the people on this forum.
Perhaps closing the loophole at the "die" step could work better?
I think the problem with that is these fuckers will eventually learn how to live forever!
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It's all about closing the Buy, Borrow, Die loophole.
Indeed. But is there a better way to close the loophole?
In particular, is this proposal going to lead more companies to stay private and to undervalue themselves for tax purposes? Because that's bad for the people on this forum.
Perhaps closing the loophole at the "die" step could work better?
I think the problem with that is these fuckers will eventually learn how to live forever!
Indeed, but they haven't yet.
I'm a huge fan of reducing GINI, I'm just no sure what the best way to go about it is.
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In my mind, the "fairest" approach would be to have a big enough VAT or consumption tax on all goods and services that are consumed, in order to support the needed level of government spending. Meanwhile, eliminate all of the income tax code. In order to make it progressive, everyone would receive a monthly or annual transfer-payment of some multiple of the poverty rate, to make up for paying any of the consumption taxes on some base-line standard of living.
You've got two guys. A has 1,000$ to his name, and B is worth 1,000,000,000.
They both have to eat. So A buys a bag of rice and a bag of beans . . . and incredibly manages to get the total cost of his meals down to 1$ per day. B only eats sushi off naked women, so he's spending about 10,000$ a day on food.
They both have to live somewhere. So A has rented a cockroach infested place with five other guys and only has to pay 500$ a month. B has three mansions that he bought in the past that he jets to and from. He's paying 30,000$ each month in property taxes on the mansions.
They both need clothing. So A will occasionally buy used stuff from Goodwill. Let's say 5$ a month, because this shit is already pretty worn so it wears out. B likes to buy clothes that he'll never wear and then burn them for fun. So 15,000$ a month.
They both need to get around. A has a monthly bus pass for 120$. B likes to travel by helicopter . . . so let's say 50,000$ a month all in.
<snip>
Looks good so far right? The extravagant B is paying way more in taxes! Well . . . when you look at how much they're paying based upon net worth (ignoring all frivolous spending - just looking at the essentials necessary to survive here) . . . A is spending 39.3% of his net worth in taxes each year just to survive and B is spending 0.0588% of his while being a wasteful dick.
Consumption taxes tend to be rather regressive. They're great if you're rich enough that the cost of survival is so low you can choose to consume or not to. But most people dismiss them outright because of how unfairly they penalize the poorest folks in society.
Person A then gets a monthly payment of $32.70 so that they both spend about 0.0588% of their income on living expenses.
Yep. Wealth redistribution schemes are certainly a way around the problem. But then you've effectively re-built a graduated tax system . . .everyone pays the same price at the register, but people get monthly refunds based upon their income, wealth, spending, or some combination.
A graduated consumption tax like you're proposing sounds as fair as a graduated income tax . . . but it's going to carry with it all the complication that rantk81 seemed intent on avoiding.
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Concentration of capital is definitely a problem. But - I've heard that inter-generational wealth tends to disappear after 3 generations. So if my parents were wealthy, my kids or my grandkids would be likely to blow everything on naked person sushi and helicopter rides as GuitarStv suggested. Is this true? Or is it just apocryphal? 'cause it substantially reduces the problem of concentration of capital if it's true. Otherwise the system doesn't work at all - if capital can concentrate indefinitely across generations you'll see something a lot more extreme than what we have today.
Either way, capitalism seems to be the best system (so far) to produce aggregate societal wealth. The financial problem here is that people who aren't wealthy want to live beyond their means. In the case of poverty, they don't have too much choice in the matter. And making it worse, they're often trapped in poverty because they're so busy scrambling to earn a living they can't take time to improve their situation.
Living beyond your means can only be done with borrowed money for so long - eventually you have to pay the piper. When it's the government doing the borrowing, it's going to come down to taxes, interest rates or inflation. Take your pick.
So - do the US billionaires have enough concentrated wealth to make a difference in US government debt? If not, this is more of a feel good measure and society needs to focus on how to get everyone to a reasonable standard of living without borrowinging a ton of money.
As another topic - if you have to pay taxes on unrealized gains, does it follow that you get a deduction for unrealized losses? The plan seems to be assuming that capital always increases, and I know this is not the case.
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I agree that those societies are more equal with regards to wealth... but is that actually desirable?
Is it a coincidence that the most innovative and largest companies in the world come from the USA?
I agree we don't want people starving... but I think giving people "comfortable" lives from the government results in less innovation and therefore less improvement for the world as a whole.
Is it "desirable" for the downtrodden of society to come out with pitchforks and baseball bats? What's the point of having more innovative and larger companies if the average family doesn't get any benefit from it? In fact, the average family tends to subsidize companies like Amazon, Nike, Fedex, or Apple, who pay virtually ZERO federal taxes.
Speaking of the world as a whole -> the world may benefit, but it is US policy, stability, and infrastructure that allow these companies to thrive. Thus, they should pay adequate tax to support that structure.
We here on the MMM forum may debate whether it's a benefit but I would guess the average family thinks their life is much improved by
- their smartphones
- quick, cheap and easy access to lots of quality TV shows (and some trash)
- being able to shop at any time and have things delivered to home
So I wouldn't call that subsidizing those companies. I would call that being a consumer and buying what you are interested in.
And yes, those companies produce a lot of taxes,
direct taxes to SS/Medicare
income tax paid by their employees from the wages the companies pay
sales tax paid by the consumers on the products the companies sell
property tax on the building they own/use (either direct or via their rent)
etc., etc., etc.
Taxes produced by a company are not as simple as the bottom line of their income tax returns.
Just like non-profit doesn't mean not obscene pay. Have you looked at the compensation of some non-profit executives? Crazy.
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Either way, capitalism seems to be the best system (so far) to produce aggregate societal wealth. The financial problem here is that people who aren't wealthy want to live beyond their means. In the case of poverty, they don't have too much choice in the matter. And making it worse, they're often trapped in poverty because they're so busy scrambling to earn a living they can't take time to improve their situation.
Yup, capitalism is the best bad system, for sure. My favorite example is Pfizer. Pfizer was founder in 1849 by two German immigrants. 171 years later the corporation that they founded would release the first EUAed mRNA SARS-CoV-2 vaccine. One year later it would get full FDA approval.
But none of that means that Charles Pfizer and Charles F. Erhart should have got to live as robber barons during their lifetimes.
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I agree that those societies are more equal with regards to wealth... but is that actually desirable?
Is it a coincidence that the most innovative and largest companies in the world come from the USA?
I agree we don't want people starving... but I think giving people "comfortable" lives from the government results in less innovation and therefore less improvement for the world as a whole.
Is it "desirable" for the downtrodden of society to come out with pitchforks and baseball bats? What's the point of having more innovative and larger companies if the average family doesn't get any benefit from it? In fact, the average family tends to subsidize companies like Amazon, Nike, Fedex, or Apple, who pay virtually ZERO federal taxes.
Speaking of the world as a whole -> the world may benefit, but it is US policy, stability, and infrastructure that allow these companies to thrive. Thus, they should pay adequate tax to support that structure.
We here on the MMM forum may debate whether it's a benefit but I would guess the average family thinks their life is much improved by
- their smartphones
- quick, cheap and easy access to lots of quality TV shows (and some trash)
- being able to shop at any time and have things delivered to home
So I wouldn't call that subsidizing those companies. I would call that being a consumer and buying what you are interested in.
And yes, those companies produce a lot of taxes,
direct taxes to SS/Medicare
income tax paid by their employees from the wages the companies pay
sales tax paid by the consumers on the products the companies sell
property tax on the building they own/use (either direct or via their rent)
etc., etc., etc.
Taxes produced by a company are not as simple as the bottom line of their income tax returns.
Just like non-profit doesn't mean not obscene pay. Have you looked at the compensation of some non-profit executives? Crazy.
^This is an issue that could be addressed by higher income taxes on the top brackets. If past a certain point, half the money is going to the government anyway, then it wouldn't make sense for non-profits (or for-profit companies) to pay their executives such exorbitant sums. Since executive pay is determined by the board, and the board is usually made of people who are (or might someday be) executives of other institutions, they're personally incentivized to set the precedent for extremely high executive pay. You don't see these exorbitant wages as much in other countries that have higher rates on top income brackets, and surprise surprise, they still have companies and non-profits that are competently run.
Also, for all the societal benefits that come from innovative companies that make their founders and executives rich, it's important to also consider the costs. When these companies (and their shareholders) become too rich, they have the capacity and the incentives to stomp out or acquire competitors before they gain too much traction, and then the entire market becomes less efficient due to lack of competition.
I totally understand the perspective that these companies provide enormous value to society. Where I take issue is that I don't see a reality where higher taxes on extremely profitable companies and their extremely highly-compensated executives would reduce that value by an amount greater than the benefit to society caused by those taxes. The benefits would be a more competitive market, lower federal deficits, and less power accumulated in the hands of a billionaire oligarch class.
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So - do the US billionaires have enough concentrated wealth to make a difference in US government debt?
I just pulled up the Forbes billionaires list (https://www.forbes.com/real-time-billionaires/#3afdfc143d78), filtered by US billionaires, and they list 711 people. Their wealth sums to a bit under $5 trillion. You could impose a 100% wealth tax on all net worth exceeding $1 billion and pay off about 15% of the debt in the first year, but then we'd be out of billionaires and would bring in much less in future years.
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The great thing about the US system, is that anyone can try to start a company and become a billionaire. If they manage to succeed through a combination of luck, hard work and competence, then good for them. I don't really get the hate for billionaires, especially self made ones.
Poorly behaved billionaires is another story. If they're behaving badly, attack the behaviour. For example, if we don't like the business model where big companies buy out their potential competitors, then there should be a more effective way to address this than taxing the company's owners.
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It is amazing how the Republicans and the Democrats don’t give a damn about appealing to each other’s voters. It’s all about stirring the nuts in their own base.
The GOP talks stop the steal, life, guns, and tax reduction.
The Dems talk impeachments, socialism, and class warfare.
The parties are a disgrace. America is better than these morons and should rebel against them both.
Tax more INCOME, if you need to, not growth in net worth, but please don’t bullshit us that it’s going to accomplish anything.
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It is amazing how the Republicans and the Democrats don’t give a damn about appealing to each other’s voters. It’s all about stirring the nuts in their own base.
The GOP talks stop the steal, life, guns, and tax reduction.
The Dems talk impeachments, socialism, and class warfare.
The parties are a disgrace. America is better than these morons and should rebel against them both.
Tax more INCOME, if you need to, not growth in net worth, but please don’t bullshit us that it’s going to accomplish anything.
I think Ron summarizes things well. The problem with getting more taxes out of our billionaires (or corporate America) is the fact that our elected leaders will piss it away through corruption and waste.
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The great thing about the US system, is that anyone can try to start a company and become a billionaire. If they manage to succeed through a combination of luck, hard work and competence, then good for them.
Please show me how this is not possible in other countries? In what way is this unique to the US?
First; it's not really true. Economic mobility is LOWER in the US then many other OECD counties. How many have the freedom to "start a business"? Healthcare and retirement tied to employment? Majority having no opportunity to save up capital?
Second; starting a business isn't particularly easier in the US. In the Economist "ease of doing business" index it usually rates average. Especially all the red tape and inefficiecies. Precisely because of low taxes and hence low investment in general infrastructure (physical and digital), and effective government, the US is more like a developing country. Not to mention the lax anti-trust regulation that allows existing firms to crush competitors.
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It is amazing how the Republicans and the Democrats don’t give a damn about appealing to each other’s voters. It’s all about stirring the nuts in their own base.
The GOP talks stop the steal, life, guns, and tax reduction.
The Dems talk impeachments, socialism, and class warfare.
The parties are a disgrace. America is better than these morons and should rebel against them both.
Tax more INCOME, if you need to, not growth in net worth, but please don’t bullshit us that it’s going to accomplish anything.
I think Ron summarizes things well. The problem with getting more taxes out of our billionaires (or corporate America) is the fact that our elected leaders will piss it away through corruption and waste.
I think this line of thinking is kind of missing the point. Our federal government has run deficits nearly every year of the 21st century, and cut taxes while doing so. Taxes and spending are no longer tied together. Increasing taxes might have a side benefit of reducing our deficits or even allowing us to return to running a surplus year here and there, which would be nice.
But that bigger point is that people having this much money at all is a net negative for society. When money is speech, the ultra-rich have concerning capacity to influence the government, spread disinformation, and create so much random distraction that it's harder for ordinary citizens to sort through all the noise to make informed decisions. That's in addition to the fact that they can use this money to manipulate markets, destroy the competition, and expand the power of their functional monopolies. Markets and democracy are the two best forms of collective decision making we have - extreme wealth accumulation gives a tiny sector of unaccountable, un-elected people way too much power over both of them.
Bezos owns the Washington Post. A stray tweet from Musk can send a stock or a Cryptocurrency tumbling or shoot it to the moon. Since social media's taken a big PR hit and Facebook is a raging dumpster fire with no future, Zuck is turning around and using his pile of cash to make sure he gets to be king of the VR/AR industry. Even the biggest capitalism fan-boys should admit these aren't healthy, competitive markets.
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So - do the US billionaires have enough concentrated wealth to make a difference in US government debt?
I just pulled up the Forbes billionaires list (https://www.forbes.com/real-time-billionaires/#3afdfc143d78), filtered by US billionaires, and they list 711 people. Their wealth sums to a bit under $5 trillion. You could impose a 100% wealth tax on all net worth exceeding $1 billion and pay off about 15% of the debt in the first year, but then we'd be out of billionaires and would bring in much less in future years.
Seattlecyclone, could you do the math with anyone in the us with more than $100,000,000? I mean, if you can't live on that... /s
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In this board, I would hope people understand what a horrible precedent it would set to tax unrealized wealth.
You would hope. And quite often you would be disappointed. It comes with the territory.
I can think of so many things in my tax lifetime that started out only affecting the "rich" (not necessarily super rich) but now apply to many more of us: Alternative Minimum Tax (ATM); taxing social security if taxable income is over 25K; phasing out ability to write-off real estate losses if income is over 100K; Medicare surcharge if MAGI is over 250K. And those are the only ones that eventually affected my taxes after initially looking like they would only affect "the other guy".
Once they work out the bugs in figuring out net worth for the super rich, it'll be easier to inch down the cut-off for the rest of us.
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Once they we work out the bugs in figuring out net worth for the super rich, it'll be easier to inch down the cut-off for the rest of us.
In a democracy where the government is chosen from the people, by the people . . . there isn't a 'they'. No need to fear 'them' when 'they' are actually 'you'.
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"What happens if they start taxing MY capital gains?!" Uhhh ok. When there's something that isn't taxed, we call it a loophole. Taxing unrealized CG especially against the stock market makes sense to me. I'll likely be realizing most of my gains before I die anyways (along with like 98% of the posters on this site) so it's not a big deal. The problem is the .00001% of people in the country who carry 80% of the wealth who use CG's as simply a way of avoiding taxes. If this becomes a thing, you'll magically start seeing the Billionaires realize more of their gains instead of simply waiting for them to rollover on their death.
Being forced to realize a couple thousand dollars of my gains is hardly the end of the world and has virtually no effect on my goals of FIRE or wealth accumulation.
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"What happens if they start taxing MY capital gains?!" Uhhh ok. When there's something that isn't taxed, we call it a loophole. Taxing unrealized CG especially against the stock market makes sense to me. I'll likely be realizing most of my gains before I die anyways (along with like 98% of the posters on this site) so it's not a big deal. The problem is the .00001% of people in the country who carry 80% of the wealth who use CG's as simply a way of avoiding taxes. If this becomes a thing, you'll magically start seeing the Billionaires realize more of their gains instead of simply waiting for them to rollover on their death.
Being forced to realize a couple thousand dollars of my gains is hardly the end of the world and has virtually no effect on my goals of FIRE or wealth accumulation.
There is a reason they are called unrealized. You don't actually have the money, who cares if other people are selling investments that you own and aren't selling for higher than what you paid for them. If you own a $10k piece of art and then it sells for a $1 million, would you pay $200k in capital gains tax? Where would you get the money from? Tax either income or consumption and close all loopholes. Taxing paper increases in networth is impractical and unfair.
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This is different than capitalism. Capitalism is the cause of wealth disparity by design. The person who wins more gets more capital. This capital can be used to increase existing capital. It's a positive feedback loop. Socialism was originally devised as a counter to the wealth concentration that is fundamentally built into capitalist systems. So in capitalist/socialist hybrids, when wealth concentration becomes too great the only solution that can work to fix the problem is to shift balance towards more socialist policy. Whether that's through increased taxation/wealth distribution, more government programs, nationalization/abolition of private property, greater regulation . . . there is no way around it.
I don't think capitalism is the cause of wealth disparity. If you're trying to frame economics within the context of the board game Monopoly, I guess that's the way to look at it, but it's not the driver of capitalism. The driver of capitalism is the ability for individuals to exchange value for capital. People who have a lot of capital exchanged a whole lot of value to accumulate it. With stock ownership, the market has priced those shares and the owners of the business either provided products or services that people really, really wanted. My business works because I provide a service that many people don't want to do themselves (tax, accounting, and consulting). I don't need to work anymore. I just like doing it. I completely disagree that capitalism is only about capital acquisition; it's a small part of it. Most capital exists in the economy exchanging hands.
I'm ok with taxing realized gains of the wealthy more, but taxing unrealized gains is just a bad idea. It changes the game for allocating new funds to start ups and will lower job creation while not helping with wealth redistribution at all because the deficit is so bad already. IMO, the government should be focusing its resources on downstream benefits for the population that capitalism doesn't address like health because medical issues are inelastic in demand. $3 trillion annually going to health cost outside of CMS is insane. Surely we can deal with that "market" better with single payer. That's off topic. I just mean this new tax is a bad idea and isn't about the living standard of the wealthy or what they can "afford". It's moral grandstanding to change capital allocation from people who are good at it to the government who is bad at it.
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There is a reason they are called unrealized. You don't actually have the money, who cares if other people are selling investments that you own and aren't selling for higher than what you paid for them. If you own a $10k piece of art and then it sells for a $1 million, would you pay $200k in capital gains tax? Where would you get the money from? Tax either income or consumption and close all loopholes. Taxing paper increases in networth is impractical and unfair.
100% agree. and I tend to lean toward taxing consumption instead of production, as being a better thing on the whole (Even though it might not be better for me personally, as I've already pretty much reached FI with the headwinds of paying hefty income taxes my whole life, and don't relish the possibility of now paying high consumption taxes on any of my future spending.)
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This is different than capitalism. Capitalism is the cause of wealth disparity by design. The person who wins more gets more capital. This capital can be used to increase existing capital. It's a positive feedback loop. Socialism was originally devised as a counter to the wealth concentration that is fundamentally built into capitalist systems. So in capitalist/socialist hybrids, when wealth concentration becomes too great the only solution that can work to fix the problem is to shift balance towards more socialist policy. Whether that's through increased taxation/wealth distribution, more government programs, nationalization/abolition of private property, greater regulation . . . there is no way around it.
I don't think capitalism is the cause of wealth disparity. If you're trying to frame economics within the context of the board game Monopoly, I guess that's the way to look at it, but it's not the driver of capitalism. The driver of capitalism is the ability for individuals to exchange value for capital. People who have a lot of capital exchanged a whole lot of value to accumulate it. With stock ownership, the market has priced those shares and the owners of the business either provided products or services that people really, really wanted. My business works because I provide a service that many people don't want to do themselves (tax, accounting, and consulting). I don't need to work anymore. I just like doing it. I completely disagree that capitalism is only about capital acquisition; it's a small part of it. Most capital exists in the economy exchanging hands.
I'm ok with taxing realized gains of the wealthy more, but taxing unrealized gains is just a bad idea. It changes the game for allocating new funds to start ups and will lower job creation while not helping with wealth redistribution at all because the deficit is so bad already. IMO, the government should be focusing its resources on downstream benefits for the population that capitalism doesn't address like health because medical issues are inelastic in demand. $3 trillion annually going to health cost outside of CMS is insane. Surely we can deal with that "market" better with single payer. That's off topic. I just mean this new tax is a bad idea and isn't about the living standard of the wealthy or what they can "afford". It's moral grandstanding to change capital allocation from people who are good at it to the government who is bad at it.
I'm also a tax cpa. Ask any tax professional and they will tell you the same thing. It just won't work. Especially start ups. They can be cash strapped but have insane valuations, so the founder has to sell his share of the company to pay taxes on a valuation that isn't realistic. Also causing the valuation to plummet. They need to have tax professionals and people with real world business experience creating tax laws because a politician isn't going to have a clue and neither will popular opinion. I'd be all for taxing estates above $5 million at 90%. Or taxing consumption.
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This may been addressed already, but won't taxing consumption lead to less consumption?
And isn't 70% of the US economy based on consumption/consumer spending?
So what will happen to the US economy if you institute a 30% VAT? Even with tax credits after the fact, won't this discourage spending?
JGS
*from an environmental perspective, this may be great! from an economic perspective, this may be a disaster!
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This may been addressed already, but won't taxing consumption lead to less consumption?
And isn't 70% of the US economy based on consumption/consumer spending?
So what will happen to the US economy if you institute a 30% VAT? Even with tax credits after the fact, won't this discourage spending?
JGS
*from an environmental perspective, this may be great! from an economic perspective, this may be a disaster!
As long as all consumption was taxed evenly, it shouldn't have an effect. Money is no good unless you spend it, there would be no point in hoarding it and not spending it just to avoid taxes.
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This may been addressed already, but won't taxing consumption lead to less consumption?
And isn't 70% of the US economy based on consumption/consumer spending?
So what will happen to the US economy if you institute a 30% VAT? Even with tax credits after the fact, won't this discourage spending?
JGS
*from an environmental perspective, this may be great! from an economic perspective, this may be a disaster!
As long as all consumption was taxed evenly, it shouldn't have an effect. Money is no good unless you spend it, there would be no point in hoarding it and not spending it just to avoid taxes.
Well, the super wealthy could probably find a way to spend all of their money overseas to avoid spending it here. It'd be about like the Washington residents slipping over the border to buy stuff in Oregon.
I still think a consumption tax is a good strategy, but it would require doing something to keep billionaires from taking their money overseas to spend.
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"What happens if they start taxing MY capital gains?!" Uhhh ok. When there's something that isn't taxed, we call it a loophole. Taxing unrealized CG especially against the stock market makes sense to me. I'll likely be realizing most of my gains before I die anyways (along with like 98% of the posters on this site) so it's not a big deal. The problem is the .00001% of people in the country who carry 80% of the wealth who use CG's as simply a way of avoiding taxes. If this becomes a thing, you'll magically start seeing the Billionaires realize more of their gains instead of simply waiting for them to rollover on their death.
Being forced to realize a couple thousand dollars of my gains is hardly the end of the world and has virtually no effect on my goals of FIRE or wealth accumulation.
There is a reason they are called unrealized. You don't actually have the money, who cares if other people are selling investments that you own and aren't selling for higher than what you paid for them. If you own a $10k piece of art and then it sells for a $1 million, would you pay $200k in capital gains tax? Where would you get the money from? Tax either income or consumption and close all loopholes. Taxing paper increases in networth is impractical and unfair.
1. Art investments are stupid and overinflated, so if forcing people to sell them off busts that bubble (and is basically just a way for wealthy people to hide their money)... ok.
2. There's a very easy way for taxing illiquid investments without having to sell off small pieces of it. So it's a moot point anyways. (By basically back dating valuations of when you bought it so that illiquid and liquid investments are treated the same)
Your example of selling art is an example of realization. So I'm not sure what you're getting at.
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So - do the US billionaires have enough concentrated wealth to make a difference in US government debt?
I just pulled up the Forbes billionaires list (https://www.forbes.com/real-time-billionaires/#3afdfc143d78), filtered by US billionaires, and they list 711 people. Their wealth sums to a bit under $5 trillion. You could impose a 100% wealth tax on all net worth exceeding $1 billion and pay off about 15% of the debt in the first year, but then we'd be out of billionaires and would bring in much less in future years.
Seattlecyclone, could you do the math with anyone in the us with more than $100,000,000? I mean, if you can't live on that... /s
Good question. For that we're going to need to look at a different data source. I found a company called Wealth-X that tries to collect such data. They have a report (https://go.wealthx.com/world-ultra-wealth-report-2021) available with some summary data. They think there were 2,792 global billionaires in 2020, a couple hundred more than Forbes is saying there are now but the number is in the same ballpark.
They estimate a further 60,000 people with net worth between $100-999 million. Those are worldwide numbers. Most of the report is about the "ultra high net worth" cohort (defined as over $30 million), of which about a third are in the US. That ratio holds pretty true on the Forbes billionaire list, so let's assume it also holds true in the $100-999 million cohort. We can then estimate about 20,000 Americans between $100-999 million, with a combined wealth of roughly $5 trillion (again, dividing the global numbers in the report by three). Let each of these folks, plus the billionaires, keep $100 million after tax, and you'd stand to raise about $7-8 trillion the first year, much less after that.
Of course nobody is seriously proposing a 100% wealth tax above any given threshold. The Biden budget is for a 20% tax on unrealized capital gains over the past year for people over $100 million. This isn't a tax on the whole principal, but just the gains over the past year. It's also billed as a "minimum tax," so if the person is paying more than 20% of their unrealized gains anyway in other income taxes, this tax might not affect them. A Bloomberg article (https://www.bloomberg.com/news/articles/2022-03-28/manchin-pans-biden-s-proposed-tax-on-unrealized-gains-of-wealthy) about this proposal cites a prediction that the tax would raise about $0.036 trillion per year in the first decade. It also estimates 20,000 people who would be subject to the tax, agreeing with the Wealth-X numbers.
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There's a very easy way for taxing illiquid investments without having to sell off small pieces of it. So it's a moot point anyways. (By basically back dating valuations of when you bought it so that illiquid and liquid investments are treated the same)
But how do I know the fair market value of an illiquid investment? I've seen private tech startups either intentionally overvalue or undervalue their company to suit their needs at the time.
The same thing happens in divorce all the time. If one party is going to buy out the home equity of the other party you can spend a lot of time and money arguing about how much an illiquid investment is worth when the only way you will really know is to sell it.
The lack of known value is the biggest problem I see with this proposal, as I noted earlier.
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So if the "unrealized gains" go down, would the government issue a refund? I'm guessing news articles about the government writing Zuckerberg a six billion dollar check would not go over too well.
https://www.ndtv.com/world-news/mark-zuckerberg-lost-29-billion-in-just-one-day-2748554 (https://www.ndtv.com/world-news/mark-zuckerberg-lost-29-billion-in-just-one-day-2748554)
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So if the "unrealized gains" go down, would the government issue a refund? I'm guessing news articles about the government writing Zuckerberg a six billion dollar check would not go over too well.
https://www.ndtv.com/world-news/mark-zuckerberg-lost-29-billion-in-just-one-day-2748554 (https://www.ndtv.com/world-news/mark-zuckerberg-lost-29-billion-in-just-one-day-2748554)
I mean you could read the article? But I guess asking stupid, irrelevant questions here is also an option
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"What happens if they start taxing MY capital gains?!" Uhhh ok. When there's something that isn't taxed, we call it a loophole. Taxing unrealized CG especially against the stock market makes sense to me. I'll likely be realizing most of my gains before I die anyways (along with like 98% of the posters on this site) so it's not a big deal. The problem is the .00001% of people in the country who carry 80% of the wealth who use CG's as simply a way of avoiding taxes. If this becomes a thing, you'll magically start seeing the Billionaires realize more of their gains instead of simply waiting for them to rollover on their death.
Being forced to realize a couple thousand dollars of my gains is hardly the end of the world and has virtually no effect on my goals of FIRE or wealth accumulation.
There is a reason they are called unrealized. You don't actually have the money, who cares if other people are selling investments that you own and aren't selling for higher than what you paid for them. If you own a $10k piece of art and then it sells for a $1 million, would you pay $200k in capital gains tax? Where would you get the money from? Tax either income or consumption and close all loopholes. Taxing paper increases in networth is impractical and unfair.
1. Art investments are stupid and overinflated, so if forcing people to sell them off busts that bubble (and is basically just a way for wealthy people to hide their money)... ok.
2. There's a very easy way for taxing illiquid investments without having to sell off small pieces of it. So it's a moot point anyways. (By basically back dating valuations of when you bought it so that illiquid and liquid investments are treated the same)
Your example of selling art is an example of realization. So I'm not sure what you're getting at.
Please explain the solution to taxing illiquid assets because I don't follow. My art example is you have a piece of art, someone else sells a similar piece of art for $1 million, now your piece is worth about a million. Sorry can't keep the art because I can't afford to pay taxes on money I don't have. Same thing with I start a company and it's now worth $1 million dollars, how do I come up with the $200,000 taxes with money I don't have? Or I have a rental house that suddenly increases in value by $200k, where do I come up with the $40k in taxes? Or farmland increases in value to $10 million, but the farm is barely breaking even. I can think of dozens of examples where this doesn't work.
The easiest solution is wait until I sell the appreciated asset and the tax the proceeds that I receive. Seems pretty intuitive. Just get rid of the step up in basis at death and tax appreciated assets when they sell.
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So if the "unrealized gains" go down, would the government issue a refund? I'm guessing news articles about the government writing Zuckerberg a six billion dollar check would not go over too well.
https://www.ndtv.com/world-news/mark-zuckerberg-lost-29-billion-in-just-one-day-2748554 (https://www.ndtv.com/world-news/mark-zuckerberg-lost-29-billion-in-just-one-day-2748554)
I mean you could read the article? But I guess asking stupid, irrelevant questions here is also an option
I don't see anything in the original article that addresses this question.
My investment goes up for 5 years. Then it stumbles badly and drops in value to below its cost base.
Does the government now issue a refund for all the taxes I paid for the first 5 years? How about the apparent loss in capital that I have now incurred?
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I don't see anything in the original article that addresses this question.
That's because there isn't anything in the article discussing the question.
And yes, I have the same question. I guess they could say you don't get a refund of prior year Real Estate taxes if the value goes down either. But you need a place to live and R.E. is extremely difficult to pick up and move, which is why its taxed. You don't need to invest and improve your life in other ways however and this wealth tax will incentivize people to destroy wealth, not create it. Can't say I see how that will turn out well, as much as some here like to say it will.
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"What happens if they start taxing MY capital gains?!" Uhhh ok. When there's something that isn't taxed, we call it a loophole. Taxing unrealized CG especially against the stock market makes sense to me. I'll likely be realizing most of my gains before I die anyways (along with like 98% of the posters on this site) so it's not a big deal. The problem is the .00001% of people in the country who carry 80% of the wealth who use CG's as simply a way of avoiding taxes. If this becomes a thing, you'll magically start seeing the Billionaires realize more of their gains instead of simply waiting for them to rollover on their death.
Being forced to realize a couple thousand dollars of my gains is hardly the end of the world and has virtually no effect on my goals of FIRE or wealth accumulation.
There is a reason they are called unrealized. You don't actually have the money, who cares if other people are selling investments that you own and aren't selling for higher than what you paid for them. If you own a $10k piece of art and then it sells for a $1 million, would you pay $200k in capital gains tax? Where would you get the money from? Tax either income or consumption and close all loopholes. Taxing paper increases in networth is impractical and unfair.
1. Art investments are stupid and overinflated, so if forcing people to sell them off busts that bubble (and is basically just a way for wealthy people to hide their money)... ok.
2. There's a very easy way for taxing illiquid investments without having to sell off small pieces of it. So it's a moot point anyways. (By basically back dating valuations of when you bought it so that illiquid and liquid investments are treated the same)
Your example of selling art is an example of realization. So I'm not sure what you're getting at.
Please explain the solution to taxing illiquid assets because I don't follow. My art example is you have a piece of art, someone else sells a similar piece of art for $1 million, now your piece is worth about a million. Sorry can't keep the art because I can't afford to pay taxes on money I don't have. Same thing with I start a company and it's now worth $1 million dollars, how do I come up with the $200,000 taxes with money I don't have? Or I have a rental house that suddenly increases in value by $200k, where do I come up with the $40k in taxes? Or farmland increases in value to $10 million, but the farm is barely breaking even. I can think of dozens of examples where this doesn't work.
The easiest solution is wait until I sell the appreciated asset and the tax the proceeds that I receive. Seems pretty intuitive. Just get rid of the step up in basis at death and tax appreciated assets when they sell.
Illiquid assets wouldn't be taxed until they're sold, but instead there would be a retrospective tax applied to it so that they would be taxed the same as liquid investments under this model: https://www.jstor.org/stable/2006793
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The one area where people are already paying taxes on unrealized gains is real estate.
There's (at least) one more: the exercise of Incentive Stock Options.
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Imagine having to pay taxes on unrealized gains in stock market. And you do this for years. And then for some reason stock market tanks 80% and you have to sell for some reason. You've unfairly paid taxes on gains that didn't happen.. so unfair.
What would the tax rate be on the unrealized gains in stock market? like 1% similar to property taxes? Don't they realize this would help tank the stock market and make people not want to invest?
Also Biden has mentioned that long term capital gains should vanish and that all capital gains should just be taxed same as interest / short term gains. Another thing which would devastate the stock market.
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"What happens if they start taxing MY capital gains?!" Uhhh ok. When there's something that isn't taxed, we call it a loophole. Taxing unrealized CG especially against the stock market makes sense to me. I'll likely be realizing most of my gains before I die anyways (along with like 98% of the posters on this site) so it's not a big deal. The problem is the .00001% of people in the country who carry 80% of the wealth who use CG's as simply a way of avoiding taxes. If this becomes a thing, you'll magically start seeing the Billionaires realize more of their gains instead of simply waiting for them to rollover on their death.
Being forced to realize a couple thousand dollars of my gains is hardly the end of the world and has virtually no effect on my goals of FIRE or wealth accumulation.
There is a reason they are called unrealized. You don't actually have the money, who cares if other people are selling investments that you own and aren't selling for higher than what you paid for them. If you own a $10k piece of art and then it sells for a $1 million, would you pay $200k in capital gains tax? Where would you get the money from? Tax either income or consumption and close all loopholes. Taxing paper increases in networth is impractical and unfair.
1. Art investments are stupid and overinflated, so if forcing people to sell them off busts that bubble (and is basically just a way for wealthy people to hide their money)... ok.
2. There's a very easy way for taxing illiquid investments without having to sell off small pieces of it. So it's a moot point anyways. (By basically back dating valuations of when you bought it so that illiquid and liquid investments are treated the same)
Your example of selling art is an example of realization. So I'm not sure what you're getting at.
Please explain the solution to taxing illiquid assets because I don't follow. My art example is you have a piece of art, someone else sells a similar piece of art for $1 million, now your piece is worth about a million. Sorry can't keep the art because I can't afford to pay taxes on money I don't have. Same thing with I start a company and it's now worth $1 million dollars, how do I come up with the $200,000 taxes with money I don't have? Or I have a rental house that suddenly increases in value by $200k, where do I come up with the $40k in taxes? Or farmland increases in value to $10 million, but the farm is barely breaking even. I can think of dozens of examples where this doesn't work.
The easiest solution is wait until I sell the appreciated asset and the tax the proceeds that I receive. Seems pretty intuitive. Just get rid of the step up in basis at death and tax appreciated assets when they sell.
Illiquid assets wouldn't be taxed until they're sold, but instead there would be a retrospective tax applied to it so that they would be taxed the same as liquid investments under this model: https://www.jstor.org/stable/2006793
Oh lord that's dumb. So you're illiquid property increases in value $100k. You owe $20k in taxes but just get charged interest on it until you eventually sell in 40 yrs. Now including interest you owe 80k on $100k price appreciation. And really with inflation on the original purchase price of the property, the 100k gain represents a real loss. So you have a real loss after inflation and you are almost doubling the loss by taxing it.
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"What happens if they start taxing MY capital gains?!" Uhhh ok. When there's something that isn't taxed, we call it a loophole. Taxing unrealized CG especially against the stock market makes sense to me. I'll likely be realizing most of my gains before I die anyways (along with like 98% of the posters on this site) so it's not a big deal. The problem is the .00001% of people in the country who carry 80% of the wealth who use CG's as simply a way of avoiding taxes. If this becomes a thing, you'll magically start seeing the Billionaires realize more of their gains instead of simply waiting for them to rollover on their death.
Being forced to realize a couple thousand dollars of my gains is hardly the end of the world and has virtually no effect on my goals of FIRE or wealth accumulation.
There is a reason they are called unrealized. You don't actually have the money, who cares if other people are selling investments that you own and aren't selling for higher than what you paid for them. If you own a $10k piece of art and then it sells for a $1 million, would you pay $200k in capital gains tax? Where would you get the money from? Tax either income or consumption and close all loopholes. Taxing paper increases in networth is impractical and unfair.
1. Art investments are stupid and overinflated, so if forcing people to sell them off busts that bubble (and is basically just a way for wealthy people to hide their money)... ok.
2. There's a very easy way for taxing illiquid investments without having to sell off small pieces of it. So it's a moot point anyways. (By basically back dating valuations of when you bought it so that illiquid and liquid investments are treated the same)
Your example of selling art is an example of realization. So I'm not sure what you're getting at.
Please explain the solution to taxing illiquid assets because I don't follow. My art example is you have a piece of art, someone else sells a similar piece of art for $1 million, now your piece is worth about a million. Sorry can't keep the art because I can't afford to pay taxes on money I don't have. Same thing with I start a company and it's now worth $1 million dollars, how do I come up with the $200,000 taxes with money I don't have? Or I have a rental house that suddenly increases in value by $200k, where do I come up with the $40k in taxes? Or farmland increases in value to $10 million, but the farm is barely breaking even. I can think of dozens of examples where this doesn't work.
The easiest solution is wait until I sell the appreciated asset and the tax the proceeds that I receive. Seems pretty intuitive. Just get rid of the step up in basis at death and tax appreciated assets when they sell.
Illiquid assets wouldn't be taxed until they're sold, but instead there would be a retrospective tax applied to it so that they would be taxed the same as liquid investments under this model: https://www.jstor.org/stable/2006793
Oh lord that's dumb. So you're illiquid property increases in value $100k. You owe $20k in taxes but just get charged interest on it until you eventually sell in 40 yrs. Now including interest you owe 80k on $100k price appreciation. And really with inflation on the original purchase price of the property, the 100k gain represents a real loss. So you have a real loss after inflation and you are almost doubling the loss by taxing it.
If you add in inflation then this literally already happens with all investments already. You're taxed by the increase, not some inflation-adjusted price.
Not sure that you're numbers are quite correct though. I imagine that their would more likely be sliding scale tables that would instead smooth that curve overtime. My guess in the way that would shake out is by having that 80k be part of an exponential growth curve, so that way, most of the increase is on the latter end rather than the beginning. Not perfect, but much fairer than it is today.
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Just because it's HARD TO DO does not mean it's not worth doing.
Details will be figured out by some tax geniuses eventually, and I'm all for it.
Meanwhile, the rich will use their massive publicity machine to put fear in our hearts that "the taxman is coming for YOU next!". Yup, great reason not to try to tax them at all.
Nothing to see here, folks. Move on to the next distraction.
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Just because it's HARD TO DO does not mean it's not worth doing.
Details will be figured out by some tax geniuses eventually, and I'm all for it.
Meanwhile, the rich will use their massive publicity machine to put fear in our hearts that "the taxman is coming for YOU next!". Yup, great reason not to try to tax them at all.
Nothing to see here, folks. Move on to the next distraction.
And yet the CPAs in this thread* have pointed out how unfeasible taxing unrealized gains is. There are better ways to "tax the evil rich" than this proposition. Just as we'd caution people against taking pandemic advice from non-epidemiologists on the internet, I'd caution against disregarding the suggestions from tax code experts.
*There have only been three CPAs in this thread as far as I can tell, so maybe there are other tax experts here who are in support and not using their credentials as justification for their argument.
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Yeah while I’ve been a proponent in this thread for higher taxes on the rich, I’m not really sold that this is the way to do it. For now we should increase the top marginal income tax rates by quite a lot, and implement a modest wealth tax and on the largest fortunes to start working out the kinks in measuring and taxing overall wealth. It may “not work” when the ultra-wealthy can just shelter their assets in another country, but having the infrastructure in place sets the precedent for a future where major countries can band together to make the wealth tax harder and harder to dodge. Even taxing 2% of 25% of a hundred-billionaire’s fortune after they’ve sent the other 75% overseas is still something.
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Well, first of all, everyone who owns a home or rents a home is paying property taxes on the unsold value of the property. So the statement that it can't be done is ludicrous since it's done on almost all privately owned property in the country, each and every year.
But to make it simple, don't tax the value of the shares, tax the shares. Let the government sell the shares to raise the cash. Sometimes the government will make extra, other times it will make less, but it will always collect in taxes the correct percentage of the shares.
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Well, first of all, everyone who owns a home or rents a home is paying property taxes on the unsold value of the property. So the statement that it can't be done is ludicrous since it's done on almost all privately owned property in the country, each and every year.
But to make it simple, don't tax the value of the shares, tax the shares. Let the government sell the shares to raise the cash. Sometimes the government will make extra, other times it will make less, but it will always collect in taxes the correct percentage of the shares.
As we all know, about 2 out of 3 times you'll gain value on the delay between the time the shares are taxed and they are sold.
I bet if **THIS** was the taxing proposal and it was likely to get passed, we would find the tune changing to "Oh, sure, go ahead and tax us on the unrealized gains."
My proposal also has the advantage of avoiding refunding unrealized losses that were paid as taxes in prior years.
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Well, first of all, everyone who owns a home or rents a home is paying property taxes on the unsold value of the property. So the statement that it can't be done is ludicrous since it's done on almost all privately owned property in the country, each and every year.
But to make it simple, don't tax the value of the shares, tax the shares. Let the government sell the shares to raise the cash. Sometimes the government will make extra, other times it will make less, but it will always collect in taxes the correct percentage of the shares.
As we all know, about 2 out of 3 times you'll gain value on the delay between the time the shares are taxed and they are sold.
I bet if **THIS** was the taxing proposal and it was likely to get passed, we would find the tune changing to "Oh, sure, go ahead and tax us on the unrealized gains."
My proposal also has the advantage of avoiding refunding unrealized losses that were paid as taxes in prior years.
I think you'd lose that bet. Perhaps you can elaborate on your proposal. The government seizes and sells the shares? You say your proposal is simple, but I don't understand it. Maybe that's just me.
BTW, Property tax on homes is not the same thing as taxing unrealized gains. As you also know, when you sell a home, you pay tax on the gain above the exclusion. You don't pay that gain BEFORE you sell it.
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Well, first of all, everyone who owns a home or rents a home is paying property taxes on the unsold value of the property. So the statement that it can't be done is ludicrous since it's done on almost all privately owned property in the country, each and every year.
But to make it simple, don't tax the value of the shares, tax the shares. Let the government sell the shares to raise the cash. Sometimes the government will make extra, other times it will make less, but it will always collect in taxes the correct percentage of the shares.
As we all know, about 2 out of 3 times you'll gain value on the delay between the time the shares are taxed and they are sold.
I bet if **THIS** was the taxing proposal and it was likely to get passed, we would find the tune changing to "Oh, sure, go ahead and tax us on the unrealized gains."
My proposal also has the advantage of avoiding refunding unrealized losses that were paid as taxes in prior years.
I think you'd lose that bet. Perhaps you can elaborate on your proposal. The government seizes and sells the shares? You say your proposal is simple, but I don't understand it. Maybe that's just me.
BTW, Property tax on homes is not the same thing as taxing unrealized gains. As you also know, when you sell a home, you pay tax on the gain above the exclusion. You don't pay that gain BEFORE you sell it.
Wait, so lets say you pay 10K in taxes on your home as it is worth 500K, and you do this yearly for 10 years.
Then there is a depression, and the value of your home drops to 250K. Do you get all your money back from State/Local from those previous years just because the value dropped?
BTW, this happened in Florida (and lots of other places) during the real estate crisis in the mid aughts.
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Property taxes work as a quazii "wealth tax" because:
- The government has the role of keeping track of who owns it, who transfer ownership, and enforcing ownership rights
- The assets cannot be "hidden" since they are real and exist in plain sight (e.g. they are "real" as in real estate, have an address associated with them, etc.)
The combination of those two unique factors makes it easy for taxes to be imposed on it. However, it doesn't seem like it would scale well to overall net worth/wealth in general, since that can take many different forms, and the government isn't involved in all transactions.
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Having individuals who are richer than governments leads to dictatorship. Either tax the billionaires now or become their slaves later.
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Wait, so lets say you pay 10K in taxes on your home as it is worth 500K, and you do this yearly for 10 years.
Then there is a depression, and the value of your home drops to 250K. Do you get all your money back from State/Local from those previous years just because the value dropped?BTW, this happened in Florida (and lots of other places) during the real estate crisis in the mid aughts.
One big difference is that property taxes on real estate are not trying to pretend to be income taxes. They are a wealth tax.
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"What happens if they start taxing MY capital gains?!" Uhhh ok. When there's something that isn't taxed, we call it a loophole. Taxing unrealized CG especially against the stock market makes sense to me. I'll likely be realizing most of my gains before I die anyways (along with like 98% of the posters on this site) so it's not a big deal. The problem is the .00001% of people in the country who carry 80% of the wealth who use CG's as simply a way of avoiding taxes. If this becomes a thing, you'll magically start seeing the Billionaires realize more of their gains instead of simply waiting for them to rollover on their death.
Being forced to realize a couple thousand dollars of my gains is hardly the end of the world and has virtually no effect on my goals of FIRE or wealth accumulation.
There is a reason they are called unrealized. You don't actually have the money, who cares if other people are selling investments that you own and aren't selling for higher than what you paid for them. If you own a $10k piece of art and then it sells for a $1 million, would you pay $200k in capital gains tax? Where would you get the money from? Tax either income or consumption and close all loopholes. Taxing paper increases in networth is impractical and unfair.
1. Art investments are stupid and overinflated, so if forcing people to sell them off busts that bubble (and is basically just a way for wealthy people to hide their money)... ok.
2. There's a very easy way for taxing illiquid investments without having to sell off small pieces of it. So it's a moot point anyways. (By basically back dating valuations of when you bought it so that illiquid and liquid investments are treated the same)
Your example of selling art is an example of realization. So I'm not sure what you're getting at.
Please explain the solution to taxing illiquid assets because I don't follow. My art example is you have a piece of art, someone else sells a similar piece of art for $1 million, now your piece is worth about a million. Sorry can't keep the art because I can't afford to pay taxes on money I don't have. Same thing with I start a company and it's now worth $1 million dollars, how do I come up with the $200,000 taxes with money I don't have? Or I have a rental house that suddenly increases in value by $200k, where do I come up with the $40k in taxes? Or farmland increases in value to $10 million, but the farm is barely breaking even. I can think of dozens of examples where this doesn't work.
The easiest solution is wait until I sell the appreciated asset and the tax the proceeds that I receive. Seems pretty intuitive. Just get rid of the step up in basis at death and tax appreciated assets when they sell.
Illiquid assets wouldn't be taxed until they're sold, but instead there would be a retrospective tax applied to it so that they would be taxed the same as liquid investments under this model: https://www.jstor.org/stable/2006793
Oh lord that's dumb. So you're illiquid property increases in value $100k. You owe $20k in taxes but just get charged interest on it until you eventually sell in 40 yrs. Now including interest you owe 80k on $100k price appreciation. And really with inflation on the original purchase price of the property, the 100k gain represents a real loss. So you have a real loss after inflation and you are almost doubling the loss by taxing it.
If you add in inflation then this literally already happens with all investments already. You're taxed by the increase, not some inflation-adjusted price.
Not sure that you're numbers are quite correct though. I imagine that their would more likely be sliding scale tables that would instead smooth that curve overtime. My guess in the way that would shake out is by having that 80k be part of an exponential growth curve, so that way, most of the increase is on the latter end rather than the beginning. Not perfect, but much fairer than it is today.
You are right, in that we already tax inflation gains. My point is that this would add insult to injury. They should be going in the opposite direction and adjusting basis for inflation and then taxing any gains.
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Wait, so lets say you pay 10K in taxes on your home as it is worth 500K, and you do this yearly for 10 years.
Then there is a depression, and the value of your home drops to 250K. Do you get all your money back from State/Local from those previous years just because the value dropped?BTW, this happened in Florida (and lots of other places) during the real estate crisis in the mid aughts.
One big difference is that property taxes on real estate are not trying to pretend to be income taxes. They are a wealth tax.
And, most people have a general idea of what their property taxes are going to be year over year so it can be planned for in a budget.
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Wait, so lets say you pay 10K in taxes on your home as it is worth 500K, and you do this yearly for 10 years.
Then there is a depression, and the value of your home drops to 250K. Do you get all your money back from State/Local from those previous years just because the value dropped?BTW, this happened in Florida (and lots of other places) during the real estate crisis in the mid aughts.
One big difference is that property taxes on real estate are not trying to pretend to be income taxes. They are a wealth tax.
And, most people have a general idea of what their property taxes are going to be year over year so it can be planned for in a budget.
That, and the county assessor does the work of appraising your property for you and just sends you a bill. Put the onus on the individual to seek out an annual independent appraisal of every asset of significant value so that they can calculate how much unrealized appreciation they had in the past year, and you're creating a pretty huge administrative burden compared to the amount of money being raised.
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Wait, so lets say you pay 10K in taxes on your home as it is worth 500K, and you do this yearly for 10 years.
Then there is a depression, and the value of your home drops to 250K. Do you get all your money back from State/Local from those previous years just because the value dropped?BTW, this happened in Florida (and lots of other places) during the real estate crisis in the mid aughts.
One big difference is that property taxes on real estate are not trying to pretend to be income taxes. They are a wealth tax.
And, most people have a general idea of what their property taxes are going to be year over year so it can be planned for in a budget.
That, and the county assessor does the work of appraising your property for you and just sends you a bill. Put the onus on the individual to seek out an annual independent appraisal of every asset of significant value so that they can calculate how much unrealized appreciation they had in the past year, and you're creating a pretty huge administrative burden compared to the amount of money being raised.
But it's okay, because we're only worried about the super wealthy. They can afford it.
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Maybe a wealth tax could work if you require people to declare assets and value them every year. The carrot would be that declared assets would get some benefit, maybe only partial estate tax. The stick would be that undeclared assets get 100% estate tax. And you could encourage realistic valuation by requiring the owner to sell up to half if someone was willing to pay some amount based off your value, like maybe 200%. If you undervalue something, you risk having to sell (or perhaps you just got lucky and found that rare buyer who values it way beyond what you or just about anyone else does). If something is of great value to you, you declare it accordingly pay tax accordingly. No surprises on your end for what you'll be taxed.
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A wealth tax already exists by the way - property tax.
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A wealth tax already exists by the way - property tax.
Property tax is more of a consumption tax. You don’t have to buy expensive property. You can pull a Buffet and live in a fairly modest home and keep your money invested.
This is a pure “we think you have too much money and we’re going to steal it for ourselves and piss it away on entitlements for the purpose of buying votes” tax.
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A wealth tax already exists by the way - property tax.
Property tax is more of a consumption tax. You don’t have to buy expensive property. You can pull a Buffet and live in a fairly modest home and keep your money invested.
This is a pure “we think you have too much money and we’re going to steal it for ourselves and piss it away on entitlements for the purpose of buying votes” tax.
Lol no. You are not consuming your property. There are things such as investment properties where you'll still pay taxes on it. Or even if you leave your property completely empty, you'll still pay taxes.
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A wealth tax already exists by the way - property tax.
Property tax is more of a consumption tax. You don’t have to buy expensive property. You can pull a Buffet and live in a fairly modest home and keep your money invested.
This is a pure “we think you have too much money and we’re going to steal it for ourselves and piss it away on entitlements for the purpose of buying votes” tax.
Lol no. You are not consuming your property. There are things such as investment properties where you'll still pay taxes on it. Or even if you leave your property completely empty, you'll still pay taxes.
It’s a consumption tax in the sense that the more money you spend on property (generally in a given area) the higher your tax will be. If you want to avoid paying higher property taxes, you either buy a less expensive property, or buy in a lower cost area. Just like if you want to pay less sales tax, you buy less stuff. A wealth tax has no bearing on how much you consume.
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It's all right, I'm sure adding a little complexity to the US tax code won't be a problem.
Up here, the politicians are going a little bit whacky on real estate taxes. It's a bad time to be a non-resident owner in Canada, lemme tell you. Apparently we're convinced that foreign buyers are responsible for real estate price inflation so federal and provincial governments are getting ready to tax the snot out of any non-resident owner. For example, Ontario is introducing a 20% tax on non-resident purchases of real estate.
Many cities now have "empty house" taxes. That's right, if you own a house or a condo in Vancouver and you don't live it in enough, you get to pay more - quite a bit more - for the privilege of not using city infrastructure.
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A wealth tax already exists by the way - property tax.
Property tax is more of a consumption tax. You don’t have to buy expensive property. You can pull a Buffet and live in a fairly modest home and keep your money invested.
This is a pure “we think you have too much money and we’re going to steal it for ourselves and piss it away on entitlements for the purpose of buying votes” tax.
Lol no. You are not consuming your property. There are things such as investment properties where you'll still pay taxes on it. Or even if you leave your property completely empty, you'll still pay taxes.
It’s a consumption tax in the sense that the more money you spend on property (generally in a given area) the higher your tax will be. If you want to avoid paying higher property taxes, you either buy a less expensive property, or buy in a lower cost area. Just like if you want to pay less sales tax, you buy less stuff. A wealth tax has no bearing on how much you consume.
I live in Toronto, Ontario. My mom lives in Barrie, Ontario. Her place is worth 2/3rd what ours is and is 1000 sqft smaller. She pays more in property tax than I do (Toronto's rate in 2021 was 0.61% and Barrie's was 1.21%).
My larger property in a higher cost area means I pay less in property tax. So . . . I'm not seeing what you're saying at all.
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Pretty sure most public security ownership is already registered. Am I wrong on that?
The IRS, having determined that someone's wealth is over the taxable limit, could just require each registration entity to transfer ownership of a set percentage of those securities. Simple. Easy. Minimum fuss and bother after the first time the registration entities set up their systems to handle it.
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The one area where people are already paying taxes on unrealized gains is real estate.
There's (at least) one more: the exercise of Incentive Stock Options.
And with ISOs, employees are already forced to pay AMT when (early) exercising. Next year I will owe a boat load of AMT, on ISOs that still to this day have no real (liquid) value. It has hypothetical value, but is 100% illiquid. Yet I will be forced to write a check, paid for with cash, to clear this 'gain' that the government claims exists and that I have benefited from.
Adding a new tax on even UN-EXERCISED ISOs with unrealized gains would be beyond insane. When would you pay this? At the time of grant? Every year? Every month? What happens as the price fluctuates up and down? Who comes up with the value of the company / shares?
Take a look at any recent tech IPO. Each one has IPO'd and then progressively lost >80% of its original value. Employees would be paying millions in taxes on something that is not only completely illiquid, but can still lose all value. Now what? Tax credits for life? Can you pass existing credits down through multiple generations? Stupid.
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Pretty sure most public security ownership is already registered. Am I wrong on that?
No, but publicly-traded securities are also the very easiest thing to value and pay taxes on any change in value. It's all the other stuff (privately-held businesses, collectibles, real estate, vehicles) that make a wealth tax a complex beast.
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A wealth tax already exists by the way - property tax.
Property tax is more of a consumption tax. You don’t have to buy expensive property. You can pull a Buffet and live in a fairly modest home and keep your money invested.
This is a pure “we think you have too much money and we’re going to steal it for ourselves and piss it away on entitlements for the purpose of buying votes” tax.
Lol no. You are not consuming your property. There are things such as investment properties where you'll still pay taxes on it. Or even if you leave your property completely empty, you'll still pay taxes.
It’s a consumption tax in the sense that the more money you spend on property (generally in a given area) the higher your tax will be. If you want to avoid paying higher property taxes, you either buy a less expensive property, or buy in a lower cost area. Just like if you want to pay less sales tax, you buy less stuff. A wealth tax has no bearing on how much you consume.
I live in Toronto, Ontario. My mom lives in Barrie, Ontario. Her place is worth 2/3rd what ours is and is 1000 sqft smaller. She pays more in property tax than I do (Toronto's rate in 2021 was 0.61% and Barrie's was 1.21%).
My larger property in a higher cost area means I pay less in property tax. So . . . I'm not seeing what you're saying at all.
Highlighted what you missed. In a given area, generally if you buy a more expensive place, you spend more in taxes. So if you buy a $1M house, taxes are higher, if you buy the cheaper place down the street, taxes are lower. Yes, regionally this can be different, property taxes are not comparable across states, but in a given area the higher the house price the higher the taxes.
So if Warren Buffet decided to sell his $500k ranch with presumably reasonable property tax bill, and build a $20M 30k sq Ft house down the street, he’d pay a lot more property taxes on the $$$ house. His wealth has nothing to do with the property tax bill, the value of the property he bought does, hence it’s more of a consumption tax (related to how much he’s spending) than a wealth tax (related to how much he’s worth).
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Pretty sure most public security ownership is already registered. Am I wrong on that?
No, but publicly-traded securities are also the very easiest thing to value and pay taxes on any change in value. It's all the other stuff (privately-held businesses, collectibles, real estate, vehicles) that make a wealth tax a complex beast.
Even publicly traded securities aren’t as cut and dried. Let’s say you hit Musk or Bezos or whomever with a 9-figure tax bill. How are they going to pay that? Sell stock. If they sell that much stock, what effect is it going to have on the market? Is it going to depress it? So Elon or Bezos gets a 9-figure tax bill AND takes a 5% net worth haircut because they flooded the market with stock and dropped the price? Awesome.
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Pretty sure most public security ownership is already registered. Am I wrong on that?
No, but publicly-traded securities are also the very easiest thing to value and pay taxes on any change in value. It's all the other stuff (privately-held businesses, collectibles, real estate, vehicles) that make a wealth tax a complex beast.
Even publicly traded securities aren’t as cut and dried. Let’s say you hit Musk or Bezos or whomever with a 9-figure tax bill. How are they going to pay that? Sell stock. If they sell that much stock, what effect is it going to have on the market? Is it going to depress it? So Elon or Bezos gets a 9-figure tax bill AND takes a 5% net worth haircut because they flooded the market with stock and dropped the price? Awesome.
You missed the part where I said their tax would be taxed and paid IN SHARES, not dollars. All that complexity you must mentioned on valuation goes away.
The government can then start selling the stock at its convenience a bit at a time. If the tax was 1%, a fee that active management companies might charge, then we're talking about 1/12th of a percent of stock a month being sold by the government. No big deal.
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Pretty sure most public security ownership is already registered. Am I wrong on that?
No, but publicly-traded securities are also the very easiest thing to value and pay taxes on any change in value. It's all the other stuff (privately-held businesses, collectibles, real estate, vehicles) that make a wealth tax a complex beast.
Even publicly traded securities aren’t as cut and dried. Let’s say you hit Musk or Bezos or whomever with a 9-figure tax bill. How are they going to pay that? Sell stock. If they sell that much stock, what effect is it going to have on the market? Is it going to depress it? So Elon or Bezos gets a 9-figure tax bill AND takes a 5% net worth haircut because they flooded the market with stock and dropped the price? Awesome.
You missed the part where I said their tax would be taxed and paid IN SHARES, not dollars. All that complexity you must mentioned on valuation goes away.
The government can then start selling the stock at its convenience a bit at a time. If the tax was 1%, a fee that active management companies might charge, then we're talking about 1/12th of a percent of stock a month being sold by the government. No big deal.
So effectively your thought is that when someone grows too successful (owns too much of a company) your solution is that the government gets to take shares in that corporation away from them?
(https://y.yarn.co/bafb2c18-ec9b-46f5-b8c6-e53aa3515ff9_text.gif)
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Pretty sure most public security ownership is already registered. Am I wrong on that?
No, but publicly-traded securities are also the very easiest thing to value and pay taxes on any change in value. It's all the other stuff (privately-held businesses, collectibles, real estate, vehicles) that make a wealth tax a complex beast.
Even publicly traded securities aren’t as cut and dried. Let’s say you hit Musk or Bezos or whomever with a 9-figure tax bill. How are they going to pay that? Sell stock. If they sell that much stock, what effect is it going to have on the market? Is it going to depress it? So Elon or Bezos gets a 9-figure tax bill AND takes a 5% net worth haircut because they flooded the market with stock and dropped the price? Awesome.
You missed the part where I said their tax would be taxed and paid IN SHARES, not dollars. All that complexity you must mentioned on valuation goes away.
The government can then start selling the stock at its convenience a bit at a time. If the tax was 1%, a fee that active management companies might charge, then we're talking about 1/12th of a percent of stock a month being sold by the government. No big deal.
This exact issue is mentioned in basically every academic paper on the subject. The short of it is that even if the richest people were forced to sell stocks every year, it would be a negligible. These threads are always rehashing the same 5-6 points that have all been thoroughly explained in papers that people don't want to read.
Amazon trades ~3.5MM stocks each day.
If Bezos needed to raise 5B in cash to pay this tax, he would need to sell ~1.5MM shares. Over ~900 trading days, bezos would need to sell ~1600 shares each day. Or a change of .04% to the daily volume.
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Pretty sure most public security ownership is already registered. Am I wrong on that?
No, but publicly-traded securities are also the very easiest thing to value and pay taxes on any change in value. It's all the other stuff (privately-held businesses, collectibles, real estate, vehicles) that make a wealth tax a complex beast.
Even publicly traded securities aren’t as cut and dried. Let’s say you hit Musk or Bezos or whomever with a 9-figure tax bill. How are they going to pay that? Sell stock. If they sell that much stock, what effect is it going to have on the market? Is it going to depress it? So Elon or Bezos gets a 9-figure tax bill AND takes a 5% net worth haircut because they flooded the market with stock and dropped the price? Awesome.
You missed the part where I said their tax would be taxed and paid IN SHARES, not dollars. All that complexity you must mentioned on valuation goes away.
The government can then start selling the stock at its convenience a bit at a time. If the tax was 1%, a fee that active management companies might charge, then we're talking about 1/12th of a percent of stock a month being sold by the government. No big deal.
So effectively your thought is that when someone grows too successful (owns too much of a company) your solution is that the government gets to take shares in that corporation away from them?
(https://y.yarn.co/bafb2c18-ec9b-46f5-b8c6-e53aa3515ff9_text.gif)
Those are called taxes. Are taxes Russia now? Stop trolling.
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Pretty sure most public security ownership is already registered. Am I wrong on that?
No, but publicly-traded securities are also the very easiest thing to value and pay taxes on any change in value. It's all the other stuff (privately-held businesses, collectibles, real estate, vehicles) that make a wealth tax a complex beast.
Even publicly traded securities aren’t as cut and dried. Let’s say you hit Musk or Bezos or whomever with a 9-figure tax bill. How are they going to pay that? Sell stock. If they sell that much stock, what effect is it going to have on the market? Is it going to depress it? So Elon or Bezos gets a 9-figure tax bill AND takes a 5% net worth haircut because they flooded the market with stock and dropped the price? Awesome.
You missed the part where I said their tax would be taxed and paid IN SHARES, not dollars. All that complexity you must mentioned on valuation goes away.
The government can then start selling the stock at its convenience a bit at a time. If the tax was 1%, a fee that active management companies might charge, then we're talking about 1/12th of a percent of stock a month being sold by the government. No big deal.
So effectively your thought is that when someone grows too successful (owns too much of a company) your solution is that the government gets to take shares in that corporation away from them?
(https://y.yarn.co/bafb2c18-ec9b-46f5-b8c6-e53aa3515ff9_text.gif)
Those are called taxes. Are taxes Russia now? Stop trolling.
Taking shares in a publicly held company away from an owner because the government arbitrarily decided someone has too much wealth isn’t any tax I’ve ever heard of.
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Government has a spending problem, not a taxing problem.
If you think any solution about government has to do with raising money, you don't understand government. Sorry.
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Taxation according to law by a democratically elected government is not theft. Try living in an area with a protection racket going if you want to know what a theft tax is.
Successful companies exist under successful governments. Successful governments need taxes.
It's not complicated, folks.
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Taxation according to law by a democratically elected government is not theft. Try living in an area with a protection racket going if you want to know what a theft tax is.
Successful companies exist under successful governments. Successful governments need taxes.
It's not complicated, folks.
Except when the more than half of Americans who pay no Federal income taxes start to vote to increase taxes on the less than half that do it’s starting to resemble theft.
https://www.cnbc.com/amp/2022/03/25/57percent-of-us-households-paid-no-federal-income-tax-in-2021-study.html
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Taxation according to law by a democratically elected government is not theft. Try living in an area with a protection racket going if you want to know what a theft tax is.
Successful companies exist under successful governments. Successful governments need taxes.
It's not complicated, folks.
Except when the more than half of Americans who pay no Federal income taxes start to vote to increase taxes on the less than half that do it’s starting to resemble theft.
https://www.cnbc.com/amp/2022/03/25/57percent-of-us-households-paid-no-federal-income-tax-in-2021-study.html
It resembles democracy.
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Taxation according to law by a democratically elected government is not theft. Try living in an area with a protection racket going if you want to know what a theft tax is.
Successful companies exist under successful governments. Successful governments need taxes.
It's not complicated, folks.
Except when the more than half of Americans who pay no Federal income taxes start to vote to increase taxes on the less than half that do it’s starting to resemble theft.
https://www.cnbc.com/amp/2022/03/25/57percent-of-us-households-paid-no-federal-income-tax-in-2021-study.html
And now we are back to income inequality.
We have a negative tax liability, we get refundable credits - because our AGI is low. If we earned more income, we'd owe taxes and be ineligible for refundable and nonrefundable credits, so we'd become tax payers.
From the article: "If you have people paying no tax and you want them to pay more taxes than they're paying now, I don't understand what Scott is saying. The reason people don't pay federal income tax is that they don't make enough money," he said.
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Taxation according to law by a democratically elected government is not theft. Try living in an area with a protection racket going if you want to know what a theft tax is.
Successful companies exist under successful governments. Successful governments need taxes.
It's not complicated, folks.
Except when the more than half of Americans who pay no Federal income taxes start to vote to increase taxes on the less than half that do it’s starting to resemble theft.
https://www.cnbc.com/amp/2022/03/25/57percent-of-us-households-paid-no-federal-income-tax-in-2021-study.html
It resembles democracy.
All Americans pay taxes. All of them. Every single one of them.
Some Americans don't pay income tax because
(a) they don't have enough income to tax or
(b) because they have a shit-ton of wealth that's bought laws that protect them from being properly taxed.
The wealth taxes under discussion are an attempt to solve (b), "the ultra-rich bastards don't pay their fair share of taxes". Some approaches are better than others, but it's a problem that desperately needs to be solved. My proposal that we collect taxes as a percentage of shares owned has the benefit of simplicity and predictability. It's also kinder than the guillotine for the rich, which is where our society will end up if (a) and (b) aren't solved.
The movement to require all employers to pay a living wage instead of a poverty wage is an attempt to address (a), "we have a term for people who work and still live in poverty - 'the working poor'". If everyone who had a job was paid a decent living, then darn near all Americans would be paying income tax.
This is not hard to understand.
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Yeah while I’ve been a proponent in this thread for higher taxes on the rich, I’m not really sold that this is the way to do it. For now we should increase the top marginal income tax rates by quite a lot, and implement a modest wealth tax and on the largest fortunes to start working out the kinks in measuring and taxing overall wealth. It may “not work” when the ultra-wealthy can just shelter their assets in another country, but having the infrastructure in place sets the precedent for a future where major countries can band together to make the wealth tax harder and harder to dodge. Even taxing 2% of 25% of a hundred-billionaire’s fortune after they’ve sent the other 75% overseas is still something.
I am glad that there is robust ongoing discussion about doing something, even if it does not lead to a simple, near term solution. Incremental change that staves off collapse is better than doing nothing while knowing the problem of wealth inequality and the super wealthy paying little to no tax gets worse. America has a national debt that is out of control, deficits with no end in sight, a Fed that has to print money to make up this annual funding shortfall since too few foreign countries wants to buy our low yield Treasuries anymore, and inflation running hot with little appetite to fight it. Inflation and dollar devaluation is a tax also, it's unavoidable that we will all be paying at some point, but of course, the small group of super wealthy are again best situated to shift the costs to everyone else.
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That this would be a huge administrative burden and or a major shift for the first year is not a strong enough argument to not do anything. After having lived and paid taxes in both Norway and France, once you get over the initial shift and start to make a change, alternate systems of taxation do exist and can be implemented. I bring up Norway and France because the government sends you a pre-filled tax form. They have your income and, in the case of Norway, an estimate of your taxable wealth. Very similar to a property assessor, you can either accept the numbers as estimated and available from public records, or you can fight and maybe get a little relief, but it would be impossible for Bezos, Musk, etc. to pay zero tax in Norway...
There are different ways to solve this problem, but there are also examples and frameworks out there to start from. Otherwise I do believe the direction America is headed is unsustainable even for another decade. We will start to run up against having to make painful cuts to government spending and lowering the quality of life for 99% of the population, including all of the service industry - that just isn't going to go over well for long... If it doesn't result in instability, then, at best, we will have a country that looks more like the Philippines or the Middle East - people looking abroad for work that actually pays a living wage and or subjugated domestic workers, and the wealthy handful that can afford to live in compounds and travel abroad, all while protecting their wealth and status against the powerless majority...
I know both of these outcomes (pre-filled tax forms and subjugation of service workers) sound alien and unacceptable to most Americans, but if we cannot find ways to address our problems democratically and make our lifestyle sustainable, then we are going to have to accept changes forced upon us. And as it currently stands, the wealthy will get to decide what those changes look like.
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This is not hard to understand.
It's VERY hard to understand if all you got is Chamber of Commerce talking points for your rebuttal.
I have to agree with Former Player and SwordGuy, I think it's a bit idiotic that I make six figures and pay 14% effective federal income tax. Meanwhile there are individuals with who make a lot less than me and pay 25%. On the other end are the Billionaires who pay essentially ZERO.
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That this would be a huge administrative burden and or a major shift for the first year is not a strong enough argument to not do anything. After having lived and paid taxes in both Norway and France, once you get over the initial shift and start to make a change, alternate systems of taxation do exist and can be implemented. I bring up Norway and France because the government sends you a pre-filled tax form. They have your income and, in the case of Norway, an estimate of your taxable wealth. Very similar to a property assessor, you can either accept the numbers as estimated and available from public records, or you can fight and maybe get a little relief, but it would be impossible for Bezos, Musk, etc. to pay zero tax in Norway...
There are different ways to solve this problem, but there are also examples and frameworks out there to start from. Otherwise I do believe the direction America is headed is unsustainable even for another decade. We will start to run up against having to make painful cuts to government spending and lowering the quality of life for 99% of the population, including all of the service industry - that just isn't going to go over well for long... If it doesn't result in instability, then, at best, we will have a country that looks more like the Philippines or the Middle East - people looking abroad for work that actually pays a living wage and or subjugated domestic workers, and the wealthy handful that can afford to live in compounds and travel abroad, all while protecting their wealth and status against the powerless majority...
I know both of these outcomes (pre-filled tax forms and subjugation of service workers) sound alien and unacceptable to most Americans, but if we cannot find ways to address our problems democratically and make our lifestyle sustainable, then we are going to have to accept changes forced upon us. And as it currently stands, the wealthy will get to decide what those changes look like.
As it is tax season, oh how I would love to get a postcard in the mail telling me what I owe in taxes for the year! Think about the TIME everyone would save if this were our system.
BUT, I'm pretty sure H&R Block, Intuit (who owns Turbotax) have a pretty strong lobbying campaign against tax simplification, all the while systematically encouraging the gutting of the IRS.
https://www.foxbusiness.com/markets/shame-on-these-companies-for-fighting-to-make-tax-preparing-harder
https://www.propublica.org/article/filing-taxes-could-be-free-simple-hr-block-intuit-lobbying-against-it
https://www.nbcnews.com/business/taxes/turbotax-h-r-block-spend-millions-lobbying-us-keep-doing-n736386
https://www.propublica.org/article/inside-turbotax-20-year-fight-to-stop-americans-from-filing-their-taxes-for-free
AND on IRS funding and workforce:
https://www.irs.gov/statistics/irs-budget-and-workforce
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Government has a spending problem, not a taxing problem.
If you think any solution about government has to do with raising money, you don't understand government. Sorry.
Hard not to agree with this.
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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.
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Government has a spending problem, not a taxing problem.
If you think any solution about government has to do with raising money, you don't understand government. Sorry.
The real benefit of taxing is to reduce the supply of money, which keeps inflation in check. The government does keep track of deficits and surpluses but it simply creates the money it wants to spend. If they wanted to use taxes to reduce inflation they have to tax the middle class, which Biden will not do.
I understand almost nothing about the GOP these days. I don’t understand the Dems on taxes—except to criticize the dopey progressives who like to stir class warfare for political gain. 2-party system is a disaster.
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Government has a spending problem, not a taxing problem.
If you think any solution about government has to do with raising money, you don't understand government. Sorry.
The real benefit of taxing is to reduce the supply of money, which keeps inflation in check. The government does keep track of deficits and surpluses but it simply creates the money it wants to spend. If they wanted to use taxes to reduce inflation they have to tax the middle class, which Biden will not do.
I understand almost nothing about the GOP these days. I don’t understand the Dems on taxes—except to criticize the dopey progressives who like to stir class warfare for political gain. 2-party system is a disaster.
It's better than the 1 party system.
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Government has a spending problem, not a taxing problem.
If you think any solution about government has to do with raising money, you don't understand government. Sorry.
The real benefit of taxing is to reduce the supply of money, which keeps inflation in check. The government does keep track of deficits and surpluses but it simply creates the money it wants to spend. If they wanted to use taxes to reduce inflation they have to tax the middle class, which Biden will not do.
I understand almost nothing about the GOP these days. I don’t understand the Dems on taxes—except to criticize the dopey progressives who like to stir class warfare for political gain. 2-party system is a disaster.
Dems would be reluctant to fix the 2-party system, the GOP are against absolutely anything that resembles more parties. They have been the minority for basically 30 years but can attain power almost 50% of the time. More parties would ruin them.
I imagine if we had a parliament system we'd end up with a government somewhat similar to Canada's. (ie basically neo-lib dems would still run everything)
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Government has a spending problem, not a taxing problem.
If you think any solution about government has to do with raising money, you don't understand government. Sorry.
The real benefit of taxing is to reduce the supply of money
Taxes are used ( in theory ) to fund the government, not to manage the money supply.
They don't delete tax revenues and if they do, they are massive time-wasting morons for processing so much paperwork for the sole purpose of undoing their own over-printing of money.
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Government has a spending problem, not a taxing problem.
If you think any solution about government has to do with raising money, you don't understand government. Sorry.
The real benefit of taxing is to reduce the supply of money, which keeps inflation in check. The government does keep track of deficits and surpluses but it simply creates the money it wants to spend. If they wanted to use taxes to reduce inflation they have to tax the middle class, which Biden will not do.
I understand almost nothing about the GOP these days. I don’t understand the Dems on taxes—except to criticize the dopey progressives who like to stir class warfare for political gain. 2-party system is a disaster.
It's better than the 1 party system.
To be fair, this largely depends on your role in the 1 party.
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Government has a spending problem, not a taxing problem.
If you think any solution about government has to do with raising money, you don't understand government. Sorry.
The real benefit of taxing is to reduce the supply of money
Taxes are used ( in theory ) to fund the government, not to manage the money supply.
Don’t believe what politicians say, watch what the government actually does.
When the federal government receives taxes from us the money is set as a credit in their account at the treasury. This money is effectively taken out of circulation.
When the federal government spends money it debits their account at the treasury and credits an account in a commercial bank. The act of crediting the commercial bank account creates money.
The federal government creates/spends money without regard to the amount of taxes paid. About 80% of the time during the past 100 years or so the federal government has a deficit in its treasury account.
Neither political party cares about the federal deficit. Democrats tax and spend. Republicans cut taxes and spend. They both spend without regard to the amount of taxes collected.
The primary downside to deficits comes from too much money in the system, which encourages inflation. When buyers outnumber sellers prices go up. Taxation is essentially a tool to control inflation.
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Government has a spending problem, not a taxing problem.
If you think any solution about government has to do with raising money, you don't understand government. Sorry.
The real benefit of taxing is to reduce the supply of money
Taxes are used ( in theory ) to fund the government, not to manage the money supply.
Don’t believe what politicians say, watch what the government actually does.
When the federal government receives taxes from us the money is set as a credit in their account at the treasury.
When the federal government spends money it debits their account at the treasury and credits an account in a commercial bank. The act of crediting the commercial bank account creates money.
The federal government creates/spends money without regard to the amount of taxes paid. About 80% of the time during the past 100 years or so the federal government has a deficit in its treasury account.
Neither political party cares about the federal deficit. Democrats tax and spend. Republicans cut taxes and spend. They both spend without regard to the amount of taxes collected.
The primary downside to deficits comes from too much money in the system, which encourages inflation. When buyers outnumber sellers prices go up. Taxation is essentially a tool to control inflation.
If we only spent what came in in taxes, then our economy would crash. Inflation is a way of understanding the velocity of our money, and when we are going to fast, we increase taxes to slow that velocity down. If we do as the Heritage Foundation suggests and limit spending to what we bring in in taxes, the velocity would slow down so much, we'd likely end up in a recession.
Taxation is probably the most important aspect when trying to understand the value of the dollar. And wealthy people hoarding those dollars do in fact, take away from the value of the dollar at large by taking away that velocity. Taxation forces wealthy people to stay alert and more active with their finances and invest more in their businesses. Whereas low taxation tends to make them lazy and simply defend their stash wasting money on the lobbying process.
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Taxation is probably the most important aspect when trying to understand the value of the dollar. And wealthy people hoarding those dollars do in fact, take away from the value of the dollar at large by taking away that velocity.
Wealthy people horde dollars? Do any of the richest 1000 or so people actually hold a significant portion of their wealth in dollars as opposed to some other form such as equity in a company?
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Taxation is probably the most important aspect when trying to understand the value of the dollar. And wealthy people hoarding those dollars do in fact, take away from the value of the dollar at large by taking away that velocity.
Wealthy people horde dollars? Do any of the richest 1000 or so people actually hold a significant portion of their wealth in dollars as opposed to some other form such as equity in a company?
Yeah, not following…
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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.
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Taxation is probably the most important aspect when trying to understand the value of the dollar. And wealthy people hoarding those dollars do in fact, take away from the value of the dollar at large by taking away that velocity.
Wealthy people horde dollars? Do any of the richest 1000 or so people actually hold a significant portion of their wealth in dollars as opposed to some other form such as equity in a company?
Yeah, not following…
This is just a talking people people repeat when they don't understand wealth creation.
The logic they use is that the economy ( and therefore wealth ) grows through spending velocity.
So if I give you 5$ and you make me a sandwich, that's one sandwich in the economy. Now if we exchange the 5$ again and I make you a sandwich, that's TWO sandwiches! Imagine if we did that 500 times how many sandwiches there would be vs me just eating the first sandwich and "hoarding" the 5$.
So in comes taxation.
The idea now is that after the first exchange, you take my 5$ back and you get me to make you another sandwich. Now the economy has two sandwiches instead of just one! Thanks to my taxation program! I boosted the economy! Yay!
Of course in reality all that happened is instead of making myself a sandwich, I also had to make you one. This is not an economic miracle.
So yeah that's the logic of "tax the wealthy" people. Instead of them making themselves a sandwich and "hoarding" their free time, you're forcing them to make you a sandwich as well and then pretending like you're doing them a favor because the economy which they are a part of now has ONE MORE SANDWICH! Isn't that amazing? Don't you want a larger economy?
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Taxation is probably the most important aspect when trying to understand the value of the dollar. And wealthy people hoarding those dollars do in fact, take away from the value of the dollar at large by taking away that velocity.
Wealthy people horde dollars? Do any of the richest 1000 or so people actually hold a significant portion of their wealth in dollars as opposed to some other form such as equity in a company?
Yeah, not following…
This is just a talking people people repeat when they don't understand wealth creation.
The logic they use is that the economy ( and therefore wealth ) grows through spending velocity.
So if I give you 5$ and you make me a sandwich, that's one sandwich in the economy. Now if we exchange the 5$ again and I make you a sandwich, that's TWO sandwiches! Imagine if we did that 500 times how many sandwiches there would be vs me just eating the first sandwich and "hoarding" the 5$.
So in comes taxation.
The idea now is that after the first exchange, you take my 5$ back and you get me to make you another sandwich. Now the economy has two sandwiches instead of just one! Thanks to my taxation program! I boosted the economy! Yay!
Of course in reality all that happened is instead of making myself a sandwich, I also had to make you one. This is not an economic miracle.
So yeah that's the logic of "tax the wealthy" people. Instead of them making themselves a sandwich and "hoarding" their free time, you're forcing them to make you a sandwich as well and then pretending like you're doing them a favor because the economy which they are a part of now has ONE MORE SANDWICH! Isn't that amazing? Don't you want a larger economy?
Isn't this effectively an argument for trickle down economics?
You're basically saying that rich people create wealth, and taxation of them will damage this wealth creation. (No more sandwiches.)
But in practice trickle down economics is a total failure. Time and again it has been shown that, tax cuts to the rich have not resulted in more employment or consumer spending. Tax cuts to the rich do not result in better living conditions for anyone but the rich . . . and it accelerates the disparity between the rich and poor.
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You're basically saying that rich people create wealth, and taxation of them will damage this wealth creation. (No more sandwiches.)
People create wealth.
Taxation damages all wealth creation. At its root all taxation does is divert wealth away from those who earned it/made it and onto those who didn't.
Then it puts that wealth management in the hands of people who suffer little to no consequences for losing it/mismanaging it.
This is a horrible way to generate wealth.
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Taxation is probably the most important aspect when trying to understand the value of the dollar. And wealthy people hoarding those dollars do in fact, take away from the value of the dollar at large by taking away that velocity.
Wealthy people horde dollars? Do any of the richest 1000 or so people actually hold a significant portion of their wealth in dollars as opposed to some other form such as equity in a company?
Company equity doesn't do anything. People do things. Companies can do more with a higher stock value, but it's not linear. At some point, higher stock prices don't mean anything except just being inflated assets.
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Taxation is probably the most important aspect when trying to understand the value of the dollar. And wealthy people hoarding those dollars do in fact, take away from the value of the dollar at large by taking away that velocity.
Wealthy people horde dollars? Do any of the richest 1000 or so people actually hold a significant portion of their wealth in dollars as opposed to some other form such as equity in a company?
Yeah, not following…
This is just a talking people people repeat when they don't understand wealth creation.
The logic they use is that the economy ( and therefore wealth ) grows through spending velocity.
So if I give you 5$ and you make me a sandwich, that's one sandwich in the economy. Now if we exchange the 5$ again and I make you a sandwich, that's TWO sandwiches! Imagine if we did that 500 times how many sandwiches there would be vs me just eating the first sandwich and "hoarding" the 5$.
So in comes taxation.
The idea now is that after the first exchange, you take my 5$ back and you get me to make you another sandwich. Now the economy has two sandwiches instead of just one! Thanks to my taxation program! I boosted the economy! Yay!
Of course in reality all that happened is instead of making myself a sandwich, I also had to make you one. This is not an economic miracle.
So yeah that's the logic of "tax the wealthy" people. Instead of them making themselves a sandwich and "hoarding" their free time, you're forcing them to make you a sandwich as well and then pretending like you're doing them a favor because the economy which they are a part of now has ONE MORE SANDWICH! Isn't that amazing? Don't you want a larger economy?
So you think taxation causes a larger economy, but that's a bad thing because larger economies are really just a numbers game that economists play?
Yeah, not a convincing metaphor.
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You're basically saying that rich people create wealth, and taxation of them will damage this wealth creation. (No more sandwiches.)
People create wealth.
Taxation damages all wealth creation. At its root all taxation does is divert wealth away from those who earned it/made it and onto those who didn't.
Then it puts that wealth management in the hands of people who suffer little to no consequences for losing it/mismanaging it.
This is a horrible way to generate wealth.
There is a whole lot more to taxation than it simply being a burden on wealth creation. If done well, taxation provides for the needs of the population (providing federal natural parks, roads, infrastructure, education, health, and old age social security) and ultimately underpins wealth creation. It's really hard for a country, state, or municipality to have 'wealth' if there are no educated workers, the old and infirm are dying of preventable illnesses, and you can only sell your goods in an area that you can get to without roads. This is also oversimplified, but hopefully proves the counterpoint.
The other bit, taxation and government spending as fiscal policy (as opposed to Federal Reserve's monetary policy) is worth noting. Raising taxes (and/or cutting spending) would be a tool to tamp down inflation. Unfortunately fiscal policy has also been wildly inflationary (starting with the TCJA of 2017/18).
We can argue all we want that government should cut spending, but neither party seems politically able to do so. So I'd argue raising taxes on people who can most afford inflation is another good argument to raise taxes on super wealthy.
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So you think taxation causes a larger economy
No. I'm making fun of people who think this.
In my example it's a net detriment as instead of two people exchanging a sandwich they both made, you have one person being forced ( by a 3rd party ) into making two sandwiches.
So you get the same amount of sandwiches (2) but you also have wasted a 3rd person's time / effort to make it happen.
In the real world that 3rd person is government. They make nothing, they just transfer stuff in a semi-arbitrary fashion, creating waste at every step.
They love the idea that wealth creation comes from "velocity of money" because they tax transactions. They get their revenues from money changing hands. That doesn't create anything other than tax revenues, which is just political capital for politicians to spend.
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So you think taxation causes a larger economy
No. I'm making fun of people who think this.
In my example it's a net detriment as instead of two people exchanging a sandwich they both made, you have one person being forced ( by a 3rd party ) into making two sandwiches.
So you get the same amount of sandwiches (2) but you also have wasted a 3rd person's time / effort to make it happen.
In the real world that 3rd person is government. They make nothing, they just transfer stuff in a semi-arbitrary fashion, creating waste at every step.
They love the idea that wealth creation comes from "velocity of money" because they tax transactions. They get their revenues from money changing hands. That doesn't create anything other than tax revenues, which is just political capital for politicians to spend.
You could always conduct an experiment on no taxes and go live in one of the places that is so disfunctional what government there is doesn't have the ability to collect taxes. I don't think you would find that it to be a great centre of wealth creation.
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You could always conduct an experiment on no taxes and go live in one of the places that is so disfunctional what government there is doesn't have the ability to collect taxes. I don't think you would find that it to be a great centre of wealth creation.
No one said "absence of taxation" is the one and only variable to generating wealth.
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Government has a spending problem, not a taxing problem.
If you think any solution about government has to do with raising money, you don't understand government. Sorry.
The real benefit of taxing is to reduce the supply of money
Taxes are used ( in theory ) to fund the government, not to manage the money supply.
Don’t believe what politicians say, watch what the government actually does.
When the federal government receives taxes from us the money is set as a credit in their account at the treasury. This money is effectively taken out of circulation.
When the federal government spends money it debits their account at the treasury and credits an account in a commercial bank. The act of crediting the commercial bank account creates money.
The federal government creates/spends money without regard to the amount of taxes paid. About 80% of the time during the past 100 years or so the federal government has a deficit in its treasury account.
Neither political party cares about the federal deficit. Democrats tax and spend. Republicans cut taxes and spend. They both spend without regard to the amount of taxes collected.
The primary downside to deficits comes from too much money in the system, which encourages inflation. When buyers outnumber sellers prices go up. Taxation is essentially a tool to control inflation.
That's not true. The Treasury spends money and has its own funds in an account at the Federal Reserve. Commercial banks also have accounts with the federal reserve and when the treasury needs to spend more than it has, it has to issue bonds. Different organizations, governments, and people have to buy those bonds. During Covid, the federal reserve was buying most of the bonds and their balance sheet grew to $6 trillion which created new money, but the money exists in balance sheets all around the world and is a debt to be repaid by the Treasury. Taxation being a tool to control inflation is MMT nonsense and has no influence whatsoever on tax policy.
Now the parties not caring about the deficit, that's certainly true.
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I didn't see the answer in a Google search: How many DOLLARS did some of these folks pay the gvmt over the last decade?
I seem to always be in the vast minority on political issues, so I'm sure I'm wrong here (and very smart people have given this more thought than me). My definition of "fair" must be way out of whack with the avg person. Why do we care so much about rates? Would progressives' idea of an ideal society be to set prices on every item in a store based on a percentage of the customer's net worth? Should real estate prices be set that way too? Are the top 1% getting more for the 10x dollars they put toward the military than I am?
I guess I'm just not that bothered by someone's salary / net worth being tremendously higher than mine; I don't think that prevents me from having good opportunities. And I'm leery that more government oversight would fix more problems than it would cause.
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That this would be a huge administrative burden and or a major shift for the first year is not a strong enough argument to not do anything. After having lived and paid taxes in both Norway and France, once you get over the initial shift and start to make a change, alternate systems of taxation do exist and can be implemented. I bring up Norway and France because the government sends you a pre-filled tax form. They have your income and, in the case of Norway, an estimate of your taxable wealth. Very similar to a property assessor, you can either accept the numbers as estimated and available from public records, or you can fight and maybe get a little relief, but it would be impossible for Bezos, Musk, etc. to pay zero tax in Norway...
There are different ways to solve this problem, but there are also examples and frameworks out there to start from. Otherwise I do believe the direction America is headed is unsustainable even for another decade. We will start to run up against having to make painful cuts to government spending and lowering the quality of life for 99% of the population, including all of the service industry - that just isn't going to go over well for long... If it doesn't result in instability, then, at best, we will have a country that looks more like the Philippines or the Middle East - people looking abroad for work that actually pays a living wage and or subjugated domestic workers, and the wealthy handful that can afford to live in compounds and travel abroad, all while protecting their wealth and status against the powerless majority...
I know both of these outcomes (pre-filled tax forms and subjugation of service workers) sound alien and unacceptable to most Americans, but if we cannot find ways to address our problems democratically and make our lifestyle sustainable, then we are going to have to accept changes forced upon us. And as it currently stands, the wealthy will get to decide what those changes look like.
This reminds me of the Michael Moore doc I just watched on Amazon Prime, Where to Invade Next.
(Moore 'invades' various countries to claim their ideas that work for govt policy)
One of the things I learned was that the US spends 60% of its taxes on defense. Having also just recently watched some other docs that referenced 'black' military spending that isn't accountable to congress, I shouldn't have been quite as shocked as I was. But it does explain why a country that does have substantial taxes offers so little to its population for the money they take.
I think, (and I haven't dug into this, but what a great project it would be) it would be really useful to have a really complete and accurate global tax calculator that you could put your before tax income into and learn, here's what I would be taxed in France, Sweden, Canada, Hong Kong. And here's what I get for those taxes.
I think the United States is overdue for a revolution. Not the bloody kind, but a revolution in awareness.
I wonder what the citizens of the United States would do if they actually knew what their taxes were relative to other low and middle class earners in other countries, and what they could be getting in infrastructure, health care and education if their taxes weren't going to line the pockets of the military-industrial complex.
And this isn't an argument against the military or the need for a strong one. It's about efficient spending, appropriate spending, and engaging for the right reasons.
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Don’t agree with this concept whatsoever. The politicians start at the top and work their way down…pretty soon they’re coming for “you”, that worked, saved and invested wisely.
Why? Because you have “too” much.
I’m much more in favor of a flat tax…everyone should have some skin in the game.
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That this would be a huge administrative burden and or a major shift for the first year is not a strong enough argument to not do anything. After having lived and paid taxes in both Norway and France, once you get over the initial shift and start to make a change, alternate systems of taxation do exist and can be implemented. I bring up Norway and France because the government sends you a pre-filled tax form. They have your income and, in the case of Norway, an estimate of your taxable wealth. Very similar to a property assessor, you can either accept the numbers as estimated and available from public records, or you can fight and maybe get a little relief, but it would be impossible for Bezos, Musk, etc. to pay zero tax in Norway...
There are different ways to solve this problem, but there are also examples and frameworks out there to start from. Otherwise I do believe the direction America is headed is unsustainable even for another decade. We will start to run up against having to make painful cuts to government spending and lowering the quality of life for 99% of the population, including all of the service industry - that just isn't going to go over well for long... If it doesn't result in instability, then, at best, we will have a country that looks more like the Philippines or the Middle East - people looking abroad for work that actually pays a living wage and or subjugated domestic workers, and the wealthy handful that can afford to live in compounds and travel abroad, all while protecting their wealth and status against the powerless majority...
I know both of these outcomes (pre-filled tax forms and subjugation of service workers) sound alien and unacceptable to most Americans, but if we cannot find ways to address our problems democratically and make our lifestyle sustainable, then we are going to have to accept changes forced upon us. And as it currently stands, the wealthy will get to decide what those changes look like.
This reminds me of the Michael Moore doc I just watched on Amazon Prime, Where to Invade Next.
(Moore 'invades' various countries to claim their ideas that work for govt policy)
One of the things I learned was that the US spends 60% of its taxes on defense. Having also just recently watched some other docs that referenced 'black' military spending that isn't accountable to congress, I shouldn't have been quite as shocked as I was. But it does explain why a country that does have substantial taxes offers so little to its population for the money they take.
I think, (and I haven't dug into this, but what a great project it would be) it would be really useful to have a really complete and accurate global tax calculator that you could put your before tax income into and learn, here's what I would be taxed in France, Sweden, Canada, Hong Kong. And here's what I get for those taxes.
I think the United States is overdue for a revolution. Not the bloody kind, but a revolution in awareness.
I wonder what the citizens of the United States would do if they actually knew what their taxes were relative to other low and middle class earners in other countries, and what they could be getting in infrastructure, health care and education if their taxes weren't going to line the pockets of the military-industrial complex.
And this isn't an argument against the military or the need for a strong one. It's about efficient spending, appropriate spending, and engaging for the right reasons.
Missy, I'm not a particularly militant individual....... but..... imagine what the military budget of Norway, Finland, Sweden, Denmark, Poland, Germany, France (etc...) would be if they didn't know that the USA continue to spend their money to support a huge military in their region? There's been a bit of wake up call in that regard over the last 40 days.
Those countries give up POWER, and they get more social services. That's the trade-off.
As for awareness, I think there are plenty of Americans who are more than willing to give up social services for the secondary benefit of knowing that they are citizens of the most powerful country in the world, even if they live at a lower socioeconomic status than some of the countries that they protect. Go figure.
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That this would be a huge administrative burden and or a major shift for the first year is not a strong enough argument to not do anything. After having lived and paid taxes in both Norway and France, once you get over the initial shift and start to make a change, alternate systems of taxation do exist and can be implemented. I bring up Norway and France because the government sends you a pre-filled tax form. They have your income and, in the case of Norway, an estimate of your taxable wealth. Very similar to a property assessor, you can either accept the numbers as estimated and available from public records, or you can fight and maybe get a little relief, but it would be impossible for Bezos, Musk, etc. to pay zero tax in Norway...
There are different ways to solve this problem, but there are also examples and frameworks out there to start from. Otherwise I do believe the direction America is headed is unsustainable even for another decade. We will start to run up against having to make painful cuts to government spending and lowering the quality of life for 99% of the population, including all of the service industry - that just isn't going to go over well for long... If it doesn't result in instability, then, at best, we will have a country that looks more like the Philippines or the Middle East - people looking abroad for work that actually pays a living wage and or subjugated domestic workers, and the wealthy handful that can afford to live in compounds and travel abroad, all while protecting their wealth and status against the powerless majority...
I know both of these outcomes (pre-filled tax forms and subjugation of service workers) sound alien and unacceptable to most Americans, but if we cannot find ways to address our problems democratically and make our lifestyle sustainable, then we are going to have to accept changes forced upon us. And as it currently stands, the wealthy will get to decide what those changes look like.
This reminds me of the Michael Moore doc I just watched on Amazon Prime, Where to Invade Next.
(Moore 'invades' various countries to claim their ideas that work for govt policy)
One of the things I learned was that the US spends 60% of its taxes on defense. Having also just recently watched some other docs that referenced 'black' military spending that isn't accountable to congress, I shouldn't have been quite as shocked as I was. But it does explain why a country that does have substantial taxes offers so little to its population for the money they take.
I think, (and I haven't dug into this, but what a great project it would be) it would be really useful to have a really complete and accurate global tax calculator that you could put your before tax income into and learn, here's what I would be taxed in France, Sweden, Canada, Hong Kong. And here's what I get for those taxes.
I think the United States is overdue for a revolution. Not the bloody kind, but a revolution in awareness.
I wonder what the citizens of the United States would do if they actually knew what their taxes were relative to other low and middle class earners in other countries, and what they could be getting in infrastructure, health care and education if their taxes weren't going to line the pockets of the military-industrial complex.
And this isn't an argument against the military or the need for a strong one. It's about efficient spending, appropriate spending, and engaging for the right reasons.
Missy, I'm not a particularly militant individual....... but..... imagine what the military budget of Norway, Finland, Sweden, Denmark, Poland, Germany, France (etc...) would be if they didn't know that the USA continue to spend their money to support a huge military in their region? There's been a bit of wake up call in that regard over the last 40 days.
Those countries give up POWER, and they get more social services. That's the trade-off.
As for awareness, I think there are plenty of Americans who are more than willing to give up social services for the secondary benefit of knowing that they are citizens of the most powerful country in the world, even if they live at a lower socioeconomic status than some of the countries that they protect. Go figure.
I think what I've bolded there is a false duality. The whole question of militarization and how much is enough is a complex one, and I don't have the knowledge or numbers to say how much of American foreign military action has caused more militarization of 'opposite' countries and generated more problems that wouldn't have otherwise existed, and how much of that has provided a power balance, that for instance discourages certain dictators to roll unimpeded across Europe.
And having said that, the US military is justifiably famous for its profligate waste and profiteering, and the enrichment of third-party providers, and the lack of spend transparency on many of their programs. I think if Americans were paying fairly for what they're buying in military product, and actually buying what they needed to use, the American govt could afford to dramatically improve educational opportunities and other things that actually serve Americans and their quality of life.
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One of the things I learned was that the US spends 60% of its taxes on defense. Having also just recently watched some other docs that referenced 'black' military spending that isn't accountable to congress, I shouldn't have been quite as shocked as I was. But it does explain why a country that does have substantial taxes offers so little to its population for the money they take.
Going back to the last pre-Covid year, total federal expenditures in 2019 were $4.4 trillion and the department of defense budget was $693 billion. That's roughly 15%. The difference between 15% and Moore's number is whether or not you think Social Security/Medicare (and their funding sources) are expenditures (or taxes).
Now, if you believe that military budget really is 60% of federal spending, you must also believe that 50%+ of people aren't paying federal taxes. If you believe military spending is only 15% of federal spending, you must also believe that the vast majority of people are paying federal taxes.
https://en.wikipedia.org/wiki/2019_United_States_federal_budget
https://en.wikipedia.org/wiki/Military_budget_of_the_United_States
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One of the things I learned was that the US spends 60% of its taxes on defense. Having also just recently watched some other docs that referenced 'black' military spending that isn't accountable to congress, I shouldn't have been quite as shocked as I was. But it does explain why a country that does have substantial taxes offers so little to its population for the money they take.
Going back to the last pre-Covid year, total federal expenditures in 2019 were $4.4 trillion and the department of defense budget was $693 billion. That's roughly 15%. The difference between 15% and Moore's number is whether or not you think Social Security/Medicare (and their funding sources) are expenditures (or taxes).
Now, if you believe that military budget really is 60% of federal spending, you must also believe that 50%+ of people aren't paying federal taxes. If you believe military spending is only 15% of federal spending, you must also believe that the vast majority of people are paying federal taxes.
https://en.wikipedia.org/wiki/2019_United_States_federal_budget
https://en.wikipedia.org/wiki/Military_budget_of_the_United_States
Thanks for positing that, yes defense spending is nowhere near 60%. CBO says 676B/4.4T = 15% https://www.cbo.gov/publication/56324
Now yes lets absolutely talk about the spending we do on defense, but lets absolutely not take Michael Moore/Tucker Carlson's word for it eh?
I would also like to point out that only 6.6% of federal income comes from taxing corporations. On some level I feel that is criminally low, but I am not sure what we can really do about it. I don't trust politicians to not put 10 million loopholes into the law, and I don't blame corporations for having smart lawyers who take advantage of those loopholes.
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I’m much more in favor of a flat tax…everyone should have some skin in the game.
A big problem that was discussed a couple pages ago is “flat tax x% of _____”. What goes in the blank? (Hint: don’t say income…)
I am a big fan of that type of concept, but as others have argued quite a bit, it’s not so simple.
I am not a fan of punishing folks at the top, and I am not a fan of handouts to those at bottom (within reason, which is yet another very difficult and complex thing).
I have read through the whole thread and it does seem that most posters are in favor of something, but I haven’t noticed many common points. That shows just how crazy complex the problem is.
I’d like to see some simplification of the tax code to shore up some of loopholes. Like the idea of some higher VAT style tax, and eliminating the step up basis.
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One of the things I learned was that the US spends 60% of its taxes on defense. Having also just recently watched some other docs that referenced 'black' military spending that isn't accountable to congress, I shouldn't have been quite as shocked as I was. But it does explain why a country that does have substantial taxes offers so little to its population for the money they take.
Going back to the last pre-Covid year, total federal expenditures in 2019 were $4.4 trillion and the department of defense budget was $693 billion. That's roughly 15%. The difference between 15% and Moore's number is whether or not you think Social Security/Medicare (and their funding sources) are expenditures (or taxes).
Now, if you believe that military budget really is 60% of federal spending, you must also believe that 50%+ of people aren't paying federal taxes. If you believe military spending is only 15% of federal spending, you must also believe that the vast majority of people are paying federal taxes.
https://en.wikipedia.org/wiki/2019_United_States_federal_budget
https://en.wikipedia.org/wiki/Military_budget_of_the_United_States
Thanks for positing that, yes defense spending is nowhere near 60%. CBO says 676B/4.4T = 15% https://www.cbo.gov/publication/56324
Now yes lets absolutely talk about the spending we do on defense, but lets absolutely not take Michael Moore/Tucker Carlson's word for it eh?
I would also like to point out that only 6.6% of federal income comes from taxing corporations. On some level I feel that is criminally low, but I am not sure what we can really do about it. I don't trust politicians to not put 10 million loopholes into the law, and I don't blame corporations for having smart lawyers who take advantage of those loopholes.
I took the person saying 60% of taxes to mean out of total tax revenue not total spending.
FY 2019 tax revenue was 3.46T so then 676/3460 = ~20%
But just the DoD spending doesn't include everything does it? I mean, 60% seems like a silly number.
You also need to include the ~200B spent on spent Vets in the VA
and another ~50B for the DoD and VA's share of the interest on the national debt.
That gets you to ~27% of tax revenue. Yeah, not sure where you're going to magically find a missing trillion annually to get to 60%.
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You also need to include the ~200B spent on spent Vets in the VA and another ~50B for the DoD and VA's share of the interest on the national debt. That gets you to ~27% of tax revenue. Yeah, not sure where you're going to magically find a missing trillion annually to get to 60%.
Perhaps if you took the numbers from the CBO report Jon Bon posted, you could correctly claim that "Non-defense spending only accounts for 40% of discretionary spending" which would be in line with the numbers Moore uses. Add a healthy dose of spin/slant and you could get that to the US spending 60% of its taxes on defense.
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You also need to include the ~200B spent on spent Vets in the VA and another ~50B for the DoD and VA's share of the interest on the national debt. That gets you to ~27% of tax revenue. Yeah, not sure where you're going to magically find a missing trillion annually to get to 60%.
Perhaps if you took the numbers from the CBO report Jon Bon posted, you could correctly claim that "Non-defense spending only accounts for 40% of discretionary spending" which would be in line with the numbers Moore uses. Add a healthy dose of spin/slant and you could get that to the US spending 60% of its taxes on defense.
The only way to have a plausible claim that the US spends 60% or more on defense is to ignore half of what the US spends. The most common way this is done is to divide spending into "Discretionary" and "Non-Discretionary" spending, then ignore the non-discretionary spending. Watch for that terminology on the many misleading "Discretionary" pie charts floating about.
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You also need to include the ~200B spent on spent Vets in the VA and another ~50B for the DoD and VA's share of the interest on the national debt. That gets you to ~27% of tax revenue. Yeah, not sure where you're going to magically find a missing trillion annually to get to 60%.
Perhaps if you took the numbers from the CBO report Jon Bon posted, you could correctly claim that "Non-defense spending only accounts for 40% of discretionary spending" which would be in line with the numbers Moore uses. Add a healthy dose of spin/slant and you could get that to the US spending 60% of its taxes on defense.
The only way to have a plausible claim that the US spends 60% or more on defense is to ignore half of what the US spends. The most common way this is done is to divide spending into "Discretionary" and "Non-Discretionary" spending, then ignore the non-discretionary spending. Watch for that terminology on the many misleading "Discretionary" pie charts floating about.
For some reason that one really bothers me, just feels like a dirty trick and is also so easily verifiable! Spending is spending, you can call it mandatory, discretionary, or unicorn transactions, it is all spending.
To really complicate matters I could take it the other way and throw in the states taxes and spending. Sure they have the national guard and all of that but I would assume states spend way less on "defense" then the federal government does. So total spending on defense would probably be less than 10% (this is a totally made up number and I have zero desire to actually do the math)
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You also need to include the ~200B spent on spent Vets in the VA and another ~50B for the DoD and VA's share of the interest on the national debt. That gets you to ~27% of tax revenue. Yeah, not sure where you're going to magically find a missing trillion annually to get to 60%.
Perhaps if you took the numbers from the CBO report Jon Bon posted, you could correctly claim that "Non-defense spending only accounts for 40% of discretionary spending" which would be in line with the numbers Moore uses. Add a healthy dose of spin/slant and you could get that to the US spending 60% of its taxes on defense.
The only way to have a plausible claim that the US spends 60% or more on defense is to ignore half of what the US spends. The most common way this is done is to divide spending into "Discretionary" and "Non-Discretionary" spending, then ignore the non-discretionary spending. Watch for that terminology on the many misleading "Discretionary" pie charts floating about.
For some reason that one really bothers me, just feels like a dirty trick and is also so easily verifiable! Spending is spending, you can call it mandatory, discretionary, or unicorn transactions, it is all spending.
To really complicate matters I could take it the other way and throw in the states taxes and spending. Sure they have the national guard and all of that but I would assume states spend way less on "defense" then the federal government does. So total spending on defense would probably be less than 10% (this is a totally made up number and I have zero desire to actually do the math)
Not to mention one of the main purposes, if not THE main purpose of federal government is protection and then second interstate affairs. So defense spending should be the biggest part of the budget. And as others said, we subsidize half the other countries in the world by providing them protection which allows them to woefully underspend compared to what they would need to spend if we didn't offer them protection. See Trumps threat to leave NATO if the other countries didn't start to pull their own weight. See also all NATO countries turning to US to address the Russia crisis. Plus our taxes are much lower than many other comparable European countries.
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You also need to include the ~200B spent on spent Vets in the VA and another ~50B for the DoD and VA's share of the interest on the national debt. That gets you to ~27% of tax revenue. Yeah, not sure where you're going to magically find a missing trillion annually to get to 60%.
Perhaps if you took the numbers from the CBO report Jon Bon posted, you could correctly claim that "Non-defense spending only accounts for 40% of discretionary spending" which would be in line with the numbers Moore uses. Add a healthy dose of spin/slant and you could get that to the US spending 60% of its taxes on defense.
The only way to have a plausible claim that the US spends 60% or more on defense is to ignore half of what the US spends. The most common way this is done is to divide spending into "Discretionary" and "Non-Discretionary" spending, then ignore the non-discretionary spending. Watch for that terminology on the many misleading "Discretionary" pie charts floating about.
For some reason that one really bothers me, just feels like a dirty trick and is also so easily verifiable! Spending is spending, you can call it mandatory, discretionary, or unicorn transactions, it is all spending.
To really complicate matters I could take it the other way and throw in the states taxes and spending. Sure they have the national guard and all of that but I would assume states spend way less on "defense" then the federal government does. So total spending on defense would probably be less than 10% (this is a totally made up number and I have zero desire to actually do the math)
Not to mention one of the main purposes, if not THE main purpose of federal government is protection and then second interstate affairs. So defense spending should be the biggest part of the budget. And as others said, we subsidize half the other countries in the world by providing them protection which allows them to woefully underspend compared to what they would need to spend if we didn't offer them protection. See Trumps threat to leave NATO if the other countries didn't start to pull their own weight. See also all NATO countries turning to US to address the Russia crisis. Plus our taxes are much lower than many other comparable European countries.
Yeah I was not really advocating either way, just annoyed when people take the position that we spend more on the military then we do on social programs.
Should it be more or less? Sure? Make your case, convince me, but its not like we have to wait in line for bread because we spent all our money on the new T-72 and nothing on the people either....
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You also need to include the ~200B spent on spent Vets in the VA and another ~50B for the DoD and VA's share of the interest on the national debt. That gets you to ~27% of tax revenue. Yeah, not sure where you're going to magically find a missing trillion annually to get to 60%.
Perhaps if you took the numbers from the CBO report Jon Bon posted, you could correctly claim that "Non-defense spending only accounts for 40% of discretionary spending" which would be in line with the numbers Moore uses. Add a healthy dose of spin/slant and you could get that to the US spending 60% of its taxes on defense.
The only way to have a plausible claim that the US spends 60% or more on defense is to ignore half of what the US spends. The most common way this is done is to divide spending into "Discretionary" and "Non-Discretionary" spending, then ignore the non-discretionary spending. Watch for that terminology on the many misleading "Discretionary" pie charts floating about.
For some reason that one really bothers me, just feels like a dirty trick and is also so easily verifiable! Spending is spending, you can call it mandatory, discretionary, or unicorn transactions, it is all spending.
To really complicate matters I could take it the other way and throw in the states taxes and spending. Sure they have the national guard and all of that but I would assume states spend way less on "defense" then the federal government does. So total spending on defense would probably be less than 10% (this is a totally made up number and I have zero desire to actually do the math)
Not to mention one of the main purposes, if not THE main purpose of federal government is protection and then second interstate affairs. So defense spending should be the biggest part of the budget. And as others said, we subsidize half the other countries in the world by providing them protection which allows them to woefully underspend compared to what they would need to spend if we didn't offer them protection. See Trumps threat to leave NATO if the other countries didn't start to pull their own weight. See also all NATO countries turning to US to address the Russia crisis. Plus our taxes are much lower than many other comparable European countries.
Yeah I was not really advocating either way, just annoyed when people take the position that we spend more on the military then we do on social programs.
Should it be more or less? Sure? Make your case, convince me, but its not like we have to wait in line for bread because we spent all our money on the new T-72 and nothing on the people either....
I'm also not arguing one way or the other here, but around 10% of US households were uncertain of having, or unable to acquire, enough food to meet the needs of all their members because they had insufficient money or other resources for food during the year.
Better than some countries, but still not great.
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You also need to include the ~200B spent on spent Vets in the VA and another ~50B for the DoD and VA's share of the interest on the national debt. That gets you to ~27% of tax revenue. Yeah, not sure where you're going to magically find a missing trillion annually to get to 60%.
Perhaps if you took the numbers from the CBO report Jon Bon posted, you could correctly claim that "Non-defense spending only accounts for 40% of discretionary spending" which would be in line with the numbers Moore uses. Add a healthy dose of spin/slant and you could get that to the US spending 60% of its taxes on defense.
The only way to have a plausible claim that the US spends 60% or more on defense is to ignore half of what the US spends. The most common way this is done is to divide spending into "Discretionary" and "Non-Discretionary" spending, then ignore the non-discretionary spending. Watch for that terminology on the many misleading "Discretionary" pie charts floating about.
For some reason that one really bothers me, just feels like a dirty trick and is also so easily verifiable! Spending is spending, you can call it mandatory, discretionary, or unicorn transactions, it is all spending.
To really complicate matters I could take it the other way and throw in the states taxes and spending. Sure they have the national guard and all of that but I would assume states spend way less on "defense" then the federal government does. So total spending on defense would probably be less than 10% (this is a totally made up number and I have zero desire to actually do the math)
Not to mention one of the main purposes, if not THE main purpose of federal government is protection and then second interstate affairs. So defense spending should be the biggest part of the budget. And as others said, we subsidize half the other countries in the world by providing them protection which allows them to woefully underspend compared to what they would need to spend if we didn't offer them protection. See Trumps threat to leave NATO if the other countries didn't start to pull their own weight. See also all NATO countries turning to US to address the Russia crisis. Plus our taxes are much lower than many other comparable European countries.
Yeah I was not really advocating either way, just annoyed when people take the position that we spend more on the military then we do on social programs.
Should it be more or less? Sure? Make your case, convince me, but its not like we have to wait in line for bread because we spent all our money on the new T-72 and nothing on the people either....
I'm also not arguing one way or the other here, but around 10% of US households were uncertain of having, or unable to acquire, enough food to meet the needs of all their members because they had insufficient money or other resources for food during the year.
Better than some countries, but still not great.
Yeah sorry not a great metaphor, I was saying that yeah we have SNAP, SSI, Welfare etc etc. All the government money is not going to building tanks.
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One of the things I learned was that the US spends 60% of its taxes on defense. Having also just recently watched some other docs that referenced 'black' military spending that isn't accountable to congress, I shouldn't have been quite as shocked as I was. But it does explain why a country that does have substantial taxes offers so little to its population for the money they take.
Going back to the last pre-Covid year, total federal expenditures in 2019 were $4.4 trillion and the department of defense budget was $693 billion. That's roughly 15%. The difference between 15% and Moore's number is whether or not you think Social Security/Medicare (and their funding sources) are expenditures (or taxes).
Now, if you believe that military budget really is 60% of federal spending, you must also believe that 50%+ of people aren't paying federal taxes. If you believe military spending is only 15% of federal spending, you must also believe that the vast majority of people are paying federal taxes.
https://en.wikipedia.org/wiki/2019_United_States_federal_budget
https://en.wikipedia.org/wiki/Military_budget_of_the_United_States
I'm the first to admit that I'm no expert on US budget and taxes. So color me confused.
https://www.cnbc.com/2021/08/18/61percent-of-americans-paid-no-federal-income-taxes-in-2020-tax-policy-center-says.html
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One of the things I learned was that the US spends 60% of its taxes on defense. Having also just recently watched some other docs that referenced 'black' military spending that isn't accountable to congress, I shouldn't have been quite as shocked as I was. But it does explain why a country that does have substantial taxes offers so little to its population for the money they take.
Going back to the last pre-Covid year, total federal expenditures in 2019 were $4.4 trillion and the department of defense budget was $693 billion. That's roughly 15%. The difference between 15% and Moore's number is whether or not you think Social Security/Medicare (and their funding sources) are expenditures (or taxes).
Now, if you believe that military budget really is 60% of federal spending, you must also believe that 50%+ of people aren't paying federal taxes. If you believe military spending is only 15% of federal spending, you must also believe that the vast majority of people are paying federal taxes.
https://en.wikipedia.org/wiki/2019_United_States_federal_budget
https://en.wikipedia.org/wiki/Military_budget_of_the_United_States
I'm the first to admit that I'm no expert on US budget and taxes. So color me confused.
https://www.cnbc.com/2021/08/18/61percent-of-americans-paid-no-federal-income-taxes-in-2020-tax-policy-center-says.html
I believe the point was that federal income taxes are not the same as federal taxes. Social security and medicare are payroll taxes, not income taxes. So if one is going to include social security and medicare as part of the budget and expenditures, then you should also include payroll taxes as part of "federal taxes."
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One of the things I learned was that the US spends 60% of its taxes on defense. Having also just recently watched some other docs that referenced 'black' military spending that isn't accountable to congress, I shouldn't have been quite as shocked as I was. But it does explain why a country that does have substantial taxes offers so little to its population for the money they take.
Going back to the last pre-Covid year, total federal expenditures in 2019 were $4.4 trillion and the department of defense budget was $693 billion. That's roughly 15%. The difference between 15% and Moore's number is whether or not you think Social Security/Medicare (and their funding sources) are expenditures (or taxes).
Now, if you believe that military budget really is 60% of federal spending, you must also believe that 50%+ of people aren't paying federal taxes. If you believe military spending is only 15% of federal spending, you must also believe that the vast majority of people are paying federal taxes.
https://en.wikipedia.org/wiki/2019_United_States_federal_budget
https://en.wikipedia.org/wiki/Military_budget_of_the_United_States
I'm the first to admit that I'm no expert on US budget and taxes. So color me confused.
https://www.cnbc.com/2021/08/18/61percent-of-americans-paid-no-federal-income-taxes-in-2020-tax-policy-center-says.html
I believe the point was that federal income taxes are not the same as federal taxes. Social security and medicare are payroll taxes, not income taxes. So if one is going to include social security and medicare as part of the budget and expenditures, then you should also include payroll taxes as part of "federal taxes."
Payroll taxes are supposed to be a specific payment into a specific program that you will benefit from later on in life, assuming you don’t die and it doesn’t go insolvent. Payroll taxes are not supposed to be used for the actually running of the government.
In my opinion, it is a very important point that some ~50-60% of Americans don’t pay income tax (I.e. contribute to keeping the government running); that they pay payroll taxes which are intended to benefit them specifically (in the form of SS and access to Medicare) in the future is besides the point.
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One of the things I learned was that the US spends 60% of its taxes on defense. Having also just recently watched some other docs that referenced 'black' military spending that isn't accountable to congress, I shouldn't have been quite as shocked as I was. But it does explain why a country that does have substantial taxes offers so little to its population for the money they take.
Going back to the last pre-Covid year, total federal expenditures in 2019 were $4.4 trillion and the department of defense budget was $693 billion. That's roughly 15%. The difference between 15% and Moore's number is whether or not you think Social Security/Medicare (and their funding sources) are expenditures (or taxes).
Now, if you believe that military budget really is 60% of federal spending, you must also believe that 50%+ of people aren't paying federal taxes. If you believe military spending is only 15% of federal spending, you must also believe that the vast majority of people are paying federal taxes.
https://en.wikipedia.org/wiki/2019_United_States_federal_budget
https://en.wikipedia.org/wiki/Military_budget_of_the_United_States
I'm the first to admit that I'm no expert on US budget and taxes. So color me confused.
https://www.cnbc.com/2021/08/18/61percent-of-americans-paid-no-federal-income-taxes-in-2020-tax-policy-center-says.html
I believe the point was that federal income taxes are not the same as federal taxes. Social security and medicare are payroll taxes, not income taxes. So if one is going to include social security and medicare as part of the budget and expenditures, then you should also include payroll taxes as part of "federal taxes."
Payroll taxes are supposed to be a specific payment into a specific program that you will benefit from later on in life, assuming you don’t die and it doesn’t go insolvent. Payroll taxes are not supposed to be used for the actually running of the government.
In my opinion, it is a very important point that some ~50-60% of Americans don’t pay income tax (I.e. contribute to keeping the government running); that they pay payroll taxes which are intended to benefit them specifically (in the form of SS and access to Medicare) in the future is besides the point.
woosh
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One of the things I learned was that the US spends 60% of its taxes on defense. Having also just recently watched some other docs that referenced 'black' military spending that isn't accountable to congress, I shouldn't have been quite as shocked as I was. But it does explain why a country that does have substantial taxes offers so little to its population for the money they take.
Going back to the last pre-Covid year, total federal expenditures in 2019 were $4.4 trillion and the department of defense budget was $693 billion. That's roughly 15%. The difference between 15% and Moore's number is whether or not you think Social Security/Medicare (and their funding sources) are expenditures (or taxes).
Now, if you believe that military budget really is 60% of federal spending, you must also believe that 50%+ of people aren't paying federal taxes. If you believe military spending is only 15% of federal spending, you must also believe that the vast majority of people are paying federal taxes.
https://en.wikipedia.org/wiki/2019_United_States_federal_budget
https://en.wikipedia.org/wiki/Military_budget_of_the_United_States
I'm the first to admit that I'm no expert on US budget and taxes. So color me confused.
https://www.cnbc.com/2021/08/18/61percent-of-americans-paid-no-federal-income-taxes-in-2020-tax-policy-center-says.html
I believe the point was that federal income taxes are not the same as federal taxes. Social security and medicare are payroll taxes, not income taxes. So if one is going to include social security and medicare as part of the budget and expenditures, then you should also include payroll taxes as part of "federal taxes."
Payroll taxes are supposed to be a specific payment into a specific program that you will benefit from later on in life, assuming you don’t die and it doesn’t go insolvent. Payroll taxes are not supposed to be used for the actually running of the government.
In my opinion, it is a very important point that some ~50-60% of Americans don’t pay income tax (I.e. contribute to keeping the government running); that they pay payroll taxes which are intended to benefit them specifically (in the form of SS and access to Medicare) in the future is besides the point.
Which is fine. If you don't want to include SS and medicare taxes, then don't include social security and medicare as expenditures in the budget. The point by @YttriumNitrate , as far as I understood it, was to be consistent with the income from taxes and the spending.
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Speaking as a wealthy person, I'm all in favor of this. Inequality in the U.S. is out of control. If everyone had a place to live, sufficient food, access to affordable medical care and other basic survival needs, I wouldn't mind as much that there were some very rich individuals. As it is, it's egregious that a tiny number of people can hoard billions of dollars while kids go hungry and people with diabetes have to ration insulin.
The most useful thing about a wealth tax is that it would cut down on generational inequality. If capitalism is about merit, about using your skills and innovating to create value, why is there inheritance? Shouldn't everyone get the same fair shake when they start out, rather than some people getting to coast because their parents were rich?
I live in a country with a wealth tax; I pay it, as virtually all of us do in at least some small part. We also have a much lower estate tax rate than the US does, though (although it's difficult to compare the exclusions---in the US, it's based on the size of the estate, whereas here it's based on the amount that a particular heir receives, so there's some incentive to spread the wealth). Even though we're big on the socialized education and healthcare, we're not so opposed to the accumulation and perpetuation of wealth. I think that it's seen as a very significant factor in encouraging the financial productivity that is generally regarded as the benefit of capitalism; really taking away generational benefit from that would massively change how people choose to earn/save/invest in ways that aren't obviously beneficial.
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Two different issues. One can be against money and influence in politics while also not being against confiscatory taxes. Consider: if the government had fewer touch points on our daily lives, the ability of billionaires to influence government would be greatly reduced. A flat tax would be a great example of this.
So, according to you, massive inequality in our current system would be corrected if government, instead of regulating it away, chooses to take the guardrails off entirely???
I think the healthcare point above is a great example of what can happen when the government "keeps its hands off" our daily lives.
1. I think the massive inequality in our system is looked at incorrectly. I don’t care how far ahead of me Bezos, etc are. We’re better served looking at how far behind others are and trying to fix that. And just taking it from Bezos etc and giving it to others isn’t going to fix that.
2. Yes, government tries to do too much at once and it distorts things. Look at our Byzantine tax code, where wealthy people can use a zillion tax avoidance schemes to lower their burden, schemes that are often not available to the common person. Throw a flat tax out there and top trying to use the tax code to force a zillion other behaviors and there are much less opportunities for fuckery.
1. Agree to disagree
2. I'd agree to a flat tax if you place it at 25% and only start it AFTER 300K in income. Deal? Also, bring back inheritance tax of 25% of anything over 2.5 million per individual.
[anyone want to do the math on that one?]
How about everyone pays 10k a year for the right to live in the US regardless of income. If you wat to talk about fairness, that's the most fair. If you go to Disneyland everyone pays the same amount to get in regardless of how much money they make or how many rides they go on. Start with "fair" and then add some generosity.
As someone who pays a lot more than that to the US and doesn't even live there, I like it.
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A "Wealth Tax" of sorts can already be considered to exist on anything that is considered for taxes as capital gains -- when you consider inflation.
Now we have an inflation rate that is approaching 10% YoY. Say for example you held an asset for a year, that appreciated at exactly the same rate as inflation: 10% in one year -- and then sold that asset. In "real" dollars, you sold the asset for the same price you bought it for. But since there was 10% inflation, and the asset increased in price by 10% in nominal dollars, you pay capital gains taxes on that fake "gain". This taxable "fake gain" can be pretty massive, if you have several years of large inflation in a row (which looks likely.)
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A "Wealth Tax" of sorts can already be considered to exist on anything that is considered for taxes as capital gains -- when you consider inflation.
Now we have an inflation rate that is approaching 10% YoY. Say for example you held an asset for a year, that appreciated at exactly the same rate as inflation: 10% in one year -- and then sold that asset. In "real" dollars, you sold the asset for the same price you bought it for. But since there was 10% inflation, and the asset increased in price by 10% in nominal dollars, you pay capital gains taxes on that fake "gain". This taxable "fake gain" can be pretty massive, if you have several years of large inflation in a row (which looks likely.)
That's actually a good example of how the merely wealthy shoulder tax burdens that the super wealthy can easily skirt. When you have enough millions in equities, banks are more than happy to accept this as collateral to secure a low rate loan. So the bank gets a guaranteed return and the super wealthy don't have to pay tax to make their assets liquid.
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I would be ok with not taxing the super wealthy while they are alive, but then taxing inheritances over $10 million by about 90-95%. Hell, make it $50 million.
Their kids get all the benefit of growing up wealthy, which is huge. The people who got rich get to enjoy their wealth. We don't end up with a large caste of Walton/Koch types who did nothing but be born into a particular family but go around dictating their privilege on the rest of us. They already have the benefit of the best education and opportunities, and $50 million dollars. If that isn't enough they can go somewhere else.
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I would be ok with not taxing the super wealthy while they are alive, but then taxing inheritances over $10 million by about 90-95%. Hell, make it $50 million.
Their kids get all the benefit of growing up wealthy, which is huge. The people who got rich get to enjoy their wealth. We don't end up with a large caste of Walton/Koch types who did nothing but be born into a particular family but go around dictating their privilege on the rest of us. They already have the benefit of the best education and opportunities, and $50 million dollars. If that isn't enough they can go somewhere else.
Agreed. Unearned wealth transfers from parent to child are a net negative for society (they defeat the any meritocratic practices in place).
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Interesting piece from Pro-Publica just came out today:
https://projects.propublica.org/americas-highest-incomes-and-taxes-revealed/
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Interesting piece from Pro-Publica just came out today:
https://projects.propublica.org/americas-highest-incomes-and-taxes-revealed/
Great piece that really lays out why the wealthiest must have a special tax that hits their assets. They currently pay less than the rest of the top 1%. You have to create special rules that taxes them fairly on the progressive scale that we use.
People that use scare mongering about taxes making it to non-billionaires are actively protecting billionaires' preferred tax status.
I don't think taxing their wealth at death is enough, because people like Gates will hide it behind a charity org that can then be passed on to whoever he wants. The power remains and he avoids taxes on the majority of his wealth. Tax incentives on charity donations also have to be limited. The ultra wealthy also use 501-c3's differently than the rest of us.
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Interesting piece from Pro-Publica just came out today:
https://projects.propublica.org/americas-highest-incomes-and-taxes-revealed/
Great piece that really lays out why the wealthiest must have a special tax that hits their assets. They currently pay less than the rest of the top 1%. You have to create special rules that taxes them fairly on the progressive scale that we use.
People that use scare mongering about taxes making it to non-billionaires are actively protecting billionaires' preferred tax status.
I don't think taxing their wealth at death is enough, because people like Gates will hide it behind a charity org that can then be passed on to whoever he wants. The power remains and he avoids taxes on the majority of his wealth. Tax incentives on charity donations also have to be limited. The ultra wealthy also use 501-c3's differently than the rest of us.
+1
That's a great article that lays everything out very clearly.
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I would be ok with not taxing the super wealthy while they are alive, but then taxing inheritances over $10 million by about 90-95%. Hell, make it $50 million.
Their kids get all the benefit of growing up wealthy, which is huge. The people who got rich get to enjoy their wealth. We don't end up with a large caste of Walton/Koch types who did nothing but be born into a particular family but go around dictating their privilege on the rest of us. They already have the benefit of the best education and opportunities, and $50 million dollars. If that isn't enough they can go somewhere else.
Agreed. Unearned wealth transfers from parent to child are a net negative for society (they defeat the any meritocratic practices in place).
I think the current 40% tax (successfully applied) strikes a reasonable balance between revenue collection and maintaining an important part of the incentive to establish vast fortunes (if you reject the premise that society benefits at all from people having an incentive to establish a vast fortunes, ok, but then why wait until death to impose the taxes?).
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Interesting piece from Pro-Publica just came out today:
https://projects.propublica.org/americas-highest-incomes-and-taxes-revealed/
Great piece that really lays out why the wealthiest must have a special tax that hits their assets. They currently pay less than the rest of the top 1%. You have to create special rules that taxes them fairly on the progressive scale that we use.
People that use scare mongering about taxes making it to non-billionaires are actively protecting billionaires' preferred tax status.
I don't think taxing their wealth at death is enough, because people like Gates will hide it behind a charity org that can then be passed on to whoever he wants. The power remains and he avoids taxes on the majority of his wealth. Tax incentives on charity donations also have to be limited. The ultra wealthy also use 501-c3's differently than the rest of us.
Great, but I still paid AMT on my wage income for many years as a consequence of my state tax deduction (not what Congress intended) and paid capital gains taxes on the sale of my pleasant-but-middle-class home because the gain exceeded the one-enormous-seeming exemption (why the US wants to use tax policy to decrease mobility is beyond me), so I understand the fear that the only real trickle-down in the US is from taxes aimed at “the rich” that find their way to others.
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I would be ok with not taxing the super wealthy while they are alive, but then taxing inheritances over $10 million by about 90-95%. Hell, make it $50 million.
Their kids get all the benefit of growing up wealthy, which is huge. The people who got rich get to enjoy their wealth. We don't end up with a large caste of Walton/Koch types who did nothing but be born into a particular family but go around dictating their privilege on the rest of us. They already have the benefit of the best education and opportunities, and $50 million dollars. If that isn't enough they can go somewhere else.
Agreed. Unearned wealth transfers from parent to child are a net negative for society (they defeat the any meritocratic practices in place).
I think the current 40% tax (successfully applied) strikes a reasonable balance between revenue collection and maintaining an important part of the incentive to establish vast fortunes (if you reject the premise that society benefits at all from people having an incentive to establish a vast fortunes, ok, but then why wait until death to impose the taxes?).
I don't believe that society benefits at all from establishment of vast generational fortunes.
Waiting until death to impose taxes seems good because it keeps the primary meritocratic incentive of wealth generation (wealth and the power that it confers) that capitalism depends on in place better than early taxation would, while also sidestepping the establishment of a rich ruling class - who rule by accident of birth rather than personal merit.
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Interesting piece from Pro-Publica just came out today:
https://projects.propublica.org/americas-highest-incomes-and-taxes-revealed/
Great piece that really lays out why the wealthiest must have a special tax that hits their assets. They currently pay less than the rest of the top 1%. You have to create special rules that taxes them fairly on the progressive scale that we use.
People that use scare mongering about taxes making it to non-billionaires are actively protecting billionaires' preferred tax status.
I don't think taxing their wealth at death is enough, because people like Gates will hide it behind a charity org that can then be passed on to whoever he wants. The power remains and he avoids taxes on the majority of his wealth. Tax incentives on charity donations also have to be limited. The ultra wealthy also use 501-c3's differently than the rest of us.
Great, but I still paid AMT on my wage income for many years as a consequence of my state tax deduction (not what Congress intended) and paid capital gains taxes on the sale of my pleasant-but-middle-class home because the gain exceeded the one-enormous-seeming exemption (why the US wants to use tax policy to decrease mobility is beyond me), so I understand the fear that the only real trickle-down in the US is from taxes aimed at “the rich” that find their way to others.
The "Super Wealthy" don't pay AMT. We're not talking about the top 5%; we're talking about the top .001%. This is why you have to have a tax that hits their capital gains somehow, otherwise you're saying that their allowed to be taxed at much smaller rates than you. This is about fixing the regressive nature of the top end of the tax bracket. Not finding more revenue.
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Interesting piece from Pro-Publica just came out today:
https://projects.propublica.org/americas-highest-incomes-and-taxes-revealed/
Great piece that really lays out why the wealthiest must have a special tax that hits their assets. They currently pay less than the rest of the top 1%. You have to create special rules that taxes them fairly on the progressive scale that we use.
People that use scare mongering about taxes making it to non-billionaires are actively protecting billionaires' preferred tax status.
I don't think taxing their wealth at death is enough, because people like Gates will hide it behind a charity org that can then be passed on to whoever he wants. The power remains and he avoids taxes on the majority of his wealth. Tax incentives on charity donations also have to be limited. The ultra wealthy also use 501-c3's differently than the rest of us.
Great, but I still paid AMT on my wage income for many years as a consequence of my state tax deduction (not what Congress intended) and paid capital gains taxes on the sale of my pleasant-but-middle-class home because the gain exceeded the one-enormous-seeming exemption (why the US wants to use tax policy to decrease mobility is beyond me), so I understand the fear that the only real trickle-down in the US is from taxes aimed at “the rich” that find their way to others.
The "Super Wealthy" don't pay AMT. We're not talking about the top 5%; we're talking about the top .001%. This is why you have to have a tax that hits their capital gains somehow, otherwise you're saying that their allowed to be taxed at much smaller rates than you. This is about fixing the regressive nature of the top end of the tax bracket. Not finding more revenue.
Sorry for not being more direct. The AMT was originally meant to tax the super rich, but drifted to hit the middle class. The capital gains exclusion for homes was meant to shield all but the rich, but was allowed to be eroded by inflation. They are two very real examples of why people who are just comfortable (or maybe even a little rich) will be suspect of promises that “tax the super rich” policies won’t come to them.
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Interesting piece from Pro-Publica just came out today:
https://projects.propublica.org/americas-highest-incomes-and-taxes-revealed/
Great piece that really lays out why the wealthiest must have a special tax that hits their assets. They currently pay less than the rest of the top 1%. You have to create special rules that taxes them fairly on the progressive scale that we use.
People that use scare mongering about taxes making it to non-billionaires are actively protecting billionaires' preferred tax status.
I don't think taxing their wealth at death is enough, because people like Gates will hide it behind a charity org that can then be passed on to whoever he wants. The power remains and he avoids taxes on the majority of his wealth. Tax incentives on charity donations also have to be limited. The ultra wealthy also use 501-c3's differently than the rest of us.
Great, but I still paid AMT on my wage income for many years as a consequence of my state tax deduction (not what Congress intended) and paid capital gains taxes on the sale of my pleasant-but-middle-class home because the gain exceeded the one-enormous-seeming exemption (why the US wants to use tax policy to decrease mobility is beyond me), so I understand the fear that the only real trickle-down in the US is from taxes aimed at “the rich” that find their way to others.
The "Super Wealthy" don't pay AMT. We're not talking about the top 5%; we're talking about the top .001%. This is why you have to have a tax that hits their capital gains somehow, otherwise you're saying that their allowed to be taxed at much smaller rates than you. This is about fixing the regressive nature of the top end of the tax bracket. Not finding more revenue.
Sorry for not being more direct. The AMT was originally meant to tax the super rich, but drifted to hit the middle class. The capital gains exclusion for homes was meant to shield all but the rich, but was allowed to be eroded by inflation. They are two very real examples of why people who are just comfortable (or maybe even a little rich) will be suspect of promises that “tax the super rich” policies won’t come to them.
Wikipedia says that only ~200k were hit with AMT in 2018 from the Trump tax cuts (though they put an expiration on it for 2025). That proves that congress is more than able to reduce taxes on the middle class. So this one way street of taxes always hitting the middle class is kind of lackluster.
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Interesting piece from Pro-Publica just came out today:
https://projects.propublica.org/americas-highest-incomes-and-taxes-revealed/
Great piece that really lays out why the wealthiest must have a special tax that hits their assets. They currently pay less than the rest of the top 1%. You have to create special rules that taxes them fairly on the progressive scale that we use.
People that use scare mongering about taxes making it to non-billionaires are actively protecting billionaires' preferred tax status.
I don't think taxing their wealth at death is enough, because people like Gates will hide it behind a charity org that can then be passed on to whoever he wants. The power remains and he avoids taxes on the majority of his wealth. Tax incentives on charity donations also have to be limited. The ultra wealthy also use 501-c3's differently than the rest of us.
Great, but I still paid AMT on my wage income for many years as a consequence of my state tax deduction (not what Congress intended) and paid capital gains taxes on the sale of my pleasant-but-middle-class home because the gain exceeded the one-enormous-seeming exemption (why the US wants to use tax policy to decrease mobility is beyond me), so I understand the fear that the only real trickle-down in the US is from taxes aimed at “the rich” that find their way to others.
The "Super Wealthy" don't pay AMT. We're not talking about the top 5%; we're talking about the top .001%. This is why you have to have a tax that hits their capital gains somehow, otherwise you're saying that their allowed to be taxed at much smaller rates than you. This is about fixing the regressive nature of the top end of the tax bracket. Not finding more revenue.
Sorry for not being more direct. The AMT was originally meant to tax the super rich, but drifted to hit the middle class. The capital gains exclusion for homes was meant to shield all but the rich, but was allowed to be eroded by inflation. They are two very real examples of why people who are just comfortable (or maybe even a little rich) will be suspect of promises that “tax the super rich” policies won’t come to them.
This is tangential to the topic, but the effects of the AMT have always been a little unclear to me. What are the situations where middle class Joe's are being hit with the AMT?
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I believe AMT is less of a factor since Trump capped the SALT tax exemption at $10k. Prior to that, it was not unusual if you lived in a high tax state to have a lot of deductions (mortgage interest + property taxes + state income tax) that reduced your tax liability low enough that AMT kicked in. I remember my dad always bitching he was getting hit with it years ago, and his income wasn’t anything too crazy (<$200k in CT in probably late 1990s/into the 2000s) but I don’t remember exactly when he was being affected.
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I believe AMT is less of a factor since Trump capped the SALT tax exemption at $10k. Prior to that, it was not unusual if you lived in a high tax state to have a lot of deductions (mortgage interest + property taxes + state income tax) that reduced your tax liability low enough that AMT kicked in. I remember my dad always bitching he was getting hit with it years ago, and his income wasn’t anything too crazy (<$200k in CT in probably late 1990s/into the 2000s) but I don’t remember exactly when he was being affected.
That makes some sense, I also hear about stock options as compensation being involved in being taxed at AMT levels. I think part of it is the wide range of incomes that people consider "middle class." I usually default to thinking of a middle class income as the middle three fifths of the income distribution. 200k in 2000 is around 330K today, which is in about the 98th percentile, so I call that an upper class income, but people's definition of middle class vary widely.
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I believe AMT is less of a factor since Trump capped the SALT tax exemption at $10k. Prior to that, it was not unusual if you lived in a high tax state to have a lot of deductions (mortgage interest + property taxes + state income tax) that reduced your tax liability low enough that AMT kicked in. I remember my dad always bitching he was getting hit with it years ago, and his income wasn’t anything too crazy (<$200k in CT in probably late 1990s/into the 2000s) but I don’t remember exactly when he was being affected.
That makes some sense, I also hear about stock options as compensation being involved in being taxed at AMT levels. I think part of it is the wide range of incomes that people consider "middle class." I usually default to thinking of a middle class income as the middle three fifths of the income distribution. 200k in 2000 is around 330K today, which is in about the 98th percentile, so I call that an upper class income, but people's definition of middle class vary widely.
Less than $200k. I’m guessing because I don’t know when it was, nor the exact incomes in question. He was an engineer and I don’t think ever made more than $125k or so, and retired a few years ago so I’m guessing he was around $100k back then. Mom was a social worker making maybe $50k, and then got an office job and maybe was $75k. Maybe it was less around 2000 and that was more like 2010, I dunno. Anyways in HCOL CT it was comfortable but certainly not extravagant to the point he needed special taxes pointed at him.
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I would be ok with not taxing the super wealthy while they are alive, but then taxing inheritances over $10 million by about 90-95%. Hell, make it $50 million.
Their kids get all the benefit of growing up wealthy, which is huge. The people who got rich get to enjoy their wealth. We don't end up with a large caste of Walton/Koch types who did nothing but be born into a particular family but go around dictating their privilege on the rest of us. They already have the benefit of the best education and opportunities, and $50 million dollars. If that isn't enough they can go somewhere else.
This idea would crush family farms which we all depend on to eat. Many large farmers are "land wealthy" but don't necessarily make huge incomes. The kids aren't necessarily growing up wealthy either.
These type of things are a slippery slope. Where do you draw the line on what is considered super wealthy?
How about anyone that has more than me?
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I would be ok with not taxing the super wealthy while they are alive, but then taxing inheritances over $10 million by about 90-95%. Hell, make it $50 million.
Their kids get all the benefit of growing up wealthy, which is huge. The people who got rich get to enjoy their wealth. We don't end up with a large caste of Walton/Koch types who did nothing but be born into a particular family but go around dictating their privilege on the rest of us. They already have the benefit of the best education and opportunities, and $50 million dollars. If that isn't enough they can go somewhere else.
This idea would crush family farms which we all depend on to eat. Many large farmers are "land wealthy" but don't necessarily make huge incomes. The kids aren't necessarily growing up wealthy either.
These type of things are a slippery slope. Where do you draw the line on what is considered super wealthy?
How about anyone that has more than me?
1. Every time these bills come up there is a gigantic exception clause given to family farms.
2. Every time they do a study on how many family farms would be hit by this. Answer: almost none of them. There are no poor, 10 million net-worth farmers. This is a complete myth that's held on since the 80's.
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I believe AMT is less of a factor since Trump capped the SALT tax exemption at $10k. Prior to that, it was not unusual if you lived in a high tax state to have a lot of deductions (mortgage interest + property taxes + state income tax) that reduced your tax liability low enough that AMT kicked in. I remember my dad always bitching he was getting hit with it years ago, and his income wasn’t anything too crazy (<$200k in CT in probably late 1990s/into the 2000s) but I don’t remember exactly when he was being affected.
That makes some sense, I also hear about stock options as compensation being involved in being taxed at AMT levels. I think part of it is the wide range of incomes that people consider "middle class." I usually default to thinking of a middle class income as the middle three fifths of the income distribution. 200k in 2000 is around 330K today, which is in about the 98th percentile, so I call that an upper class income, but people's definition of middle class vary widely.
Less than $200k. I’m guessing because I don’t know when it was, nor the exact incomes in question. He was an engineer and I don’t think ever made more than $125k or so, and retired a few years ago so I’m guessing he was around $100k back then. Mom was a social worker making maybe $50k, and then got an office job and maybe was $75k. Maybe it was less around 2000 and that was more like 2010, I dunno. Anyways in HCOL CT it was comfortable but certainly not extravagant to the point he needed special taxes pointed at him.
Right on. In 2000, a household would leave the middle class and move into the upper class of income around $87,000, using my middle 3/5ths definition.
The way Undecided's comment came across to me was that we shouldn't tax the top 0.001% higher than 27% of their income, because there is the possibility that the merely rich might also have their taxes increased. (Note that this is likely not what they meant, just the way their comment came across to me when first reading it.)
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I believe AMT is less of a factor since Trump capped the SALT tax exemption at $10k. Prior to that, it was not unusual if you lived in a high tax state to have a lot of deductions (mortgage interest + property taxes + state income tax) that reduced your tax liability low enough that AMT kicked in. I remember my dad always bitching he was getting hit with it years ago, and his income wasn’t anything too crazy (<$200k in CT in probably late 1990s/into the 2000s) but I don’t remember exactly when he was being affected.
That makes some sense, I also hear about stock options as compensation being involved in being taxed at AMT levels. I think part of it is the wide range of incomes that people consider "middle class." I usually default to thinking of a middle class income as the middle three fifths of the income distribution. 200k in 2000 is around 330K today, which is in about the 98th percentile, so I call that an upper class income, but people's definition of middle class vary widely.
Less than $200k. I’m guessing because I don’t know when it was, nor the exact incomes in question. He was an engineer and I don’t think ever made more than $125k or so, and retired a few years ago so I’m guessing he was around $100k back then. Mom was a social worker making maybe $50k, and then got an office job and maybe was $75k. Maybe it was less around 2000 and that was more like 2010, I dunno. Anyways in HCOL CT it was comfortable but certainly not extravagant to the point he needed special taxes pointed at him.
Right on. In 2000, a household would leave the middle class and move into the upper class of income around $87,000, using my middle 3/5ths definition.
I think if you did that by state you’d get a pretty different answer for Connecticut versus looking at the US as a whole.
Also in the 2000s, my parents had kids in college they were partially paying for (offset by scholarships) for most of the decade (00-06) so I’m sure they didn’t feel like Rockefellers ;)
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I would be ok with not taxing the super wealthy while they are alive, but then taxing inheritances over $10 million by about 90-95%. Hell, make it $50 million.
Their kids get all the benefit of growing up wealthy, which is huge. The people who got rich get to enjoy their wealth. We don't end up with a large caste of Walton/Koch types who did nothing but be born into a particular family but go around dictating their privilege on the rest of us. They already have the benefit of the best education and opportunities, and $50 million dollars. If that isn't enough they can go somewhere else.
This idea would crush family farms which we all depend on to eat. Many large farmers are "land wealthy" but don't necessarily make huge incomes. The kids aren't necessarily growing up wealthy either.
These type of things are a slippery slope. Where do you draw the line on what is considered super wealthy?
How about anyone that has more than me?
1. Every time these bills come up there is a gigantic exception clause given to family farms.
2. Every time they do a study on how many family farms would be hit by this. Answer: almost none of them. There are no poor, 10 million net-worth farmers. This is a complete myth that's held on since the 80's.
My dad's a farmer . . . he lives in an area where there's a lot of family farming. There's nobody anywhere near him who has a farm worth anywhere near 50 million dollars. The average farm price in Canada is 2.6 million dollars according to stats-can (https://www.ctvnews.ca/canada/fields-of-dollars-soaring-farmland-prices-threaten-future-of-farming-in-canada-1.3932331 (https://www.ctvnews.ca/canada/fields-of-dollars-soaring-farmland-prices-threaten-future-of-farming-in-canada-1.3932331)). In the US 89% of farms have a gross yearly income below 350,000 (https://www.ers.usda.gov/data-products/ag-and-food-statistics-charting-the-essentials/farming-and-farm-income/ (https://www.ers.usda.gov/data-products/ag-and-food-statistics-charting-the-essentials/farming-and-farm-income/)) . . . it doesn't sound like they would be sitting on 50 million dollars of assets either.
I really don't think 50 million dollars inheritance would have any real impact on family farms.
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I would be ok with not taxing the super wealthy while they are alive, but then taxing inheritances over $10 million by about 90-95%. Hell, make it $50 million.
Their kids get all the benefit of growing up wealthy, which is huge. The people who got rich get to enjoy their wealth. We don't end up with a large caste of Walton/Koch types who did nothing but be born into a particular family but go around dictating their privilege on the rest of us. They already have the benefit of the best education and opportunities, and $50 million dollars. If that isn't enough they can go somewhere else.
This idea would crush family farms which we all depend on to eat. Many large farmers are "land wealthy" but don't necessarily make huge incomes. The kids aren't necessarily growing up wealthy either.
These type of things are a slippery slope. Where do you draw the line on what is considered super wealthy?
How about anyone that has more than me?
1. Every time these bills come up there is a gigantic exception clause given to family farms.
2. Every time they do a study on how many family farms would be hit by this. Answer: almost none of them. There are no poor, 10 million net-worth farmers. This is a complete myth that's held on since the 80's.
My dad's a farmer . . . he lives in an area where there's a lot of family farming. There's nobody anywhere near him who has a farm worth anywhere near 50 million dollars. The average farm price in Canada is 2.6 million dollars according to stats-can (https://www.ctvnews.ca/canada/fields-of-dollars-soaring-farmland-prices-threaten-future-of-farming-in-canada-1.3932331 (https://www.ctvnews.ca/canada/fields-of-dollars-soaring-farmland-prices-threaten-future-of-farming-in-canada-1.3932331)). In the US 89% of farms have a gross yearly income below 350,000 (https://www.ers.usda.gov/data-products/ag-and-food-statistics-charting-the-essentials/farming-and-farm-income/ (https://www.ers.usda.gov/data-products/ag-and-food-statistics-charting-the-essentials/farming-and-farm-income/)) . . . it doesn't sound like they would be sitting on 50 million dollars of assets either.
I really don't think 50 million dollars inheritance would have any real impact on family farms.
And considering that most farms of that size are only growing corn or canola, and these crops are regularly overgrown anyways, losing a few would not hurt the food supply whatsoever. We could feed the entire US on probably half the farmland if we started using better farming practices.
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Interesting piece from Pro-Publica just came out today:
https://projects.propublica.org/americas-highest-incomes-and-taxes-revealed/
Great piece that really lays out why the wealthiest must have a special tax that hits their assets. They currently pay less than the rest of the top 1%. You have to create special rules that taxes them fairly on the progressive scale that we use.
People that use scare mongering about taxes making it to non-billionaires are actively protecting billionaires' preferred tax status.
I don't think taxing their wealth at death is enough, because people like Gates will hide it behind a charity org that can then be passed on to whoever he wants. The power remains and he avoids taxes on the majority of his wealth. Tax incentives on charity donations also have to be limited. The ultra wealthy also use 501-c3's differently than the rest of us.
Great, but I still paid AMT on my wage income for many years as a consequence of my state tax deduction (not what Congress intended) and paid capital gains taxes on the sale of my pleasant-but-middle-class home because the gain exceeded the one-enormous-seeming exemption (why the US wants to use tax policy to decrease mobility is beyond me), so I understand the fear that the only real trickle-down in the US is from taxes aimed at “the rich” that find their way to others.
The "Super Wealthy" don't pay AMT. We're not talking about the top 5%; we're talking about the top .001%. This is why you have to have a tax that hits their capital gains somehow, otherwise you're saying that their allowed to be taxed at much smaller rates than you. This is about fixing the regressive nature of the top end of the tax bracket. Not finding more revenue.
Sorry for not being more direct. The AMT was originally meant to tax the super rich, but drifted to hit the middle class. The capital gains exclusion for homes was meant to shield all but the rich, but was allowed to be eroded by inflation. They are two very real examples of why people who are just comfortable (or maybe even a little rich) will be suspect of promises that “tax the super rich” policies won’t come to them.
Wikipedia says that only ~200k were hit with AMT in 2018 from the Trump tax cuts (though they put an expiration on it for 2025). That proves that congress is more than able to reduce taxes on the middle class. So this one way street of taxes always hitting the middle class is kind of lackluster.
You seem to have a backwards understanding here—the AMT existed for decades and slowly crept into the middle class in high-tax states, after having been created to tax the ultra wealthy who were paying (legally) low taxes in the basis of accounting deductions (as opposed to deductions for actual cash expenses). After many years of that unintended outcome, yes, it was “fixed” in 2018 (by making state tax bills non-deductible, not by raising the income levels or otherwise making a real fix). (As someone who saw my total state and federal taxes increase approximately 2% under the “cuts” of 2018, it didn’t seem much of a fix.) Regardless, it was a real problem for years. If you want to ignore fact because it interferes with your claim that these tax measures could never spread, you’ll excuse those of us who have gone through it if we’re not entirely convinced. That doesn’t mean I don’t think it’s a plausible idea, by the way, just that it’s naive to pretend there’s no meaningful chance of it spreading beyond the current intended audience (and so I think that should be a factor in how any such law is drafted).
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Interesting piece from Pro-Publica just came out today:
https://projects.propublica.org/americas-highest-incomes-and-taxes-revealed/
Great piece that really lays out why the wealthiest must have a special tax that hits their assets. They currently pay less than the rest of the top 1%. You have to create special rules that taxes them fairly on the progressive scale that we use.
People that use scare mongering about taxes making it to non-billionaires are actively protecting billionaires' preferred tax status.
I don't think taxing their wealth at death is enough, because people like Gates will hide it behind a charity org that can then be passed on to whoever he wants. The power remains and he avoids taxes on the majority of his wealth. Tax incentives on charity donations also have to be limited. The ultra wealthy also use 501-c3's differently than the rest of us.
Great, but I still paid AMT on my wage income for many years as a consequence of my state tax deduction (not what Congress intended) and paid capital gains taxes on the sale of my pleasant-but-middle-class home because the gain exceeded the one-enormous-seeming exemption (why the US wants to use tax policy to decrease mobility is beyond me), so I understand the fear that the only real trickle-down in the US is from taxes aimed at “the rich” that find their way to others.
The "Super Wealthy" don't pay AMT. We're not talking about the top 5%; we're talking about the top .001%. This is why you have to have a tax that hits their capital gains somehow, otherwise you're saying that their allowed to be taxed at much smaller rates than you. This is about fixing the regressive nature of the top end of the tax bracket. Not finding more revenue.
Sorry for not being more direct. The AMT was originally meant to tax the super rich, but drifted to hit the middle class. The capital gains exclusion for homes was meant to shield all but the rich, but was allowed to be eroded by inflation. They are two very real examples of why people who are just comfortable (or maybe even a little rich) will be suspect of promises that “tax the super rich” policies won’t come to them.
Wikipedia says that only ~200k were hit with AMT in 2018 from the Trump tax cuts (though they put an expiration on it for 2025). That proves that congress is more than able to reduce taxes on the middle class. So this one way street of taxes always hitting the middle class is kind of lackluster.
You seem to have a backwards understanding here—the AMT existed for decades and slowly crept into the middle class in high-tax states, after having been created to tax the ultra wealthy who were paying (legally) low taxes in the basis of accounting deductions (as opposed to deductions for actual cash expenses). After many years of that unintended outcome, yes, it was “fixed” in 2018 (by making state tax bills non-deductible, not by raising the income levels or otherwise making a real fix). (As someone who saw my total state and federal taxes increase approximately 2% under the “cuts” of 2018, it didn’t seem much of a fix.) Regardless, it was a real problem for years. If you want to ignore fact because it interferes with your claim that these tax measures could never spread, you’ll excuse those of us who have gone through it if we’re not entirely convinced. That doesn’t mean I don’t think it’s a plausible idea, by the way, just that it’s naive to pretend there’s no meaningful chance of it spreading beyond the current intended audience (and so I think that should be a factor in how any such law is drafted).
This only works if you are looking at individual tax ideas. You just pointed out that despite no longer paying AMT, your taxes still went up. So simply pointing to AMT as the spreading of extra taxes from the rich to the middle class is still suspect. I can agree that there is an issue with AMT and high tax states, ( but also it's a little ridiculous when someone making $200k+ in the 90's is claiming "middle class" status) The AMT is also only marginally larger than regular taxes. An extra 2% is hardly comparable to what we've been talking about (raising billionaires' taxes by about 20%+). It still reads as a nothing burger to me.
Heck look at the estate tax. The exemption in the past 30 years has jumped up ~12MM dollars and the rate has dropped 15%.
A person complaining about the size of the AMT is also the exact same person whose estate taxes have plummeted in the same time period. I can understand preferring estate taxes to AMT, but the end state is still that taxes are regressive for the extremely wealthy.
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Interesting piece from Pro-Publica just came out today:
https://projects.propublica.org/americas-highest-incomes-and-taxes-revealed/
Great piece that really lays out why the wealthiest must have a special tax that hits their assets. They currently pay less than the rest of the top 1%. You have to create special rules that taxes them fairly on the progressive scale that we use.
People that use scare mongering about taxes making it to non-billionaires are actively protecting billionaires' preferred tax status.
I don't think taxing their wealth at death is enough, because people like Gates will hide it behind a charity org that can then be passed on to whoever he wants. The power remains and he avoids taxes on the majority of his wealth. Tax incentives on charity donations also have to be limited. The ultra wealthy also use 501-c3's differently than the rest of us.
Great, but I still paid AMT on my wage income for many years as a consequence of my state tax deduction (not what Congress intended) and paid capital gains taxes on the sale of my pleasant-but-middle-class home because the gain exceeded the one-enormous-seeming exemption (why the US wants to use tax policy to decrease mobility is beyond me), so I understand the fear that the only real trickle-down in the US is from taxes aimed at “the rich” that find their way to others.
The "Super Wealthy" don't pay AMT. We're not talking about the top 5%; we're talking about the top .001%. This is why you have to have a tax that hits their capital gains somehow, otherwise you're saying that their allowed to be taxed at much smaller rates than you. This is about fixing the regressive nature of the top end of the tax bracket. Not finding more revenue.
Sorry for not being more direct. The AMT was originally meant to tax the super rich, but drifted to hit the middle class. The capital gains exclusion for homes was meant to shield all but the rich, but was allowed to be eroded by inflation. They are two very real examples of why people who are just comfortable (or maybe even a little rich) will be suspect of promises that “tax the super rich” policies won’t come to them.
Wikipedia says that only ~200k were hit with AMT in 2018 from the Trump tax cuts (though they put an expiration on it for 2025). That proves that congress is more than able to reduce taxes on the middle class. So this one way street of taxes always hitting the middle class is kind of lackluster.
You seem to have a backwards understanding here—the AMT existed for decades and slowly crept into the middle class in high-tax states, after having been created to tax the ultra wealthy who were paying (legally) low taxes in the basis of accounting deductions (as opposed to deductions for actual cash expenses). After many years of that unintended outcome, yes, it was “fixed” in 2018 (by making state tax bills non-deductible, not by raising the income levels or otherwise making a real fix). (As someone who saw my total state and federal taxes increase approximately 2% under the “cuts” of 2018, it didn’t seem much of a fix.) Regardless, it was a real problem for years. If you want to ignore fact because it interferes with your claim that these tax measures could never spread, you’ll excuse those of us who have gone through it if we’re not entirely convinced. That doesn’t mean I don’t think it’s a plausible idea, by the way, just that it’s naive to pretend there’s no meaningful chance of it spreading beyond the current intended audience (and so I think that should be a factor in how any such law is drafted).
This only works if you are looking at individual tax ideas. You just pointed out that despite no longer paying AMT, your taxes still went up. So simply pointing to AMT as the spreading of extra taxes from the rich to the middle class is still suspect. I can agree that there is an issue with AMT and high tax states, ( but also it's a little ridiculous when someone making $200k+ in the 90's is claiming "middle class" status) The AMT is also only marginally larger than regular taxes. An extra 2% is hardly comparable to what we've been talking about (raising billionaires' taxes by about 20%+). It still reads as a nothing burger to me.
Heck look at the estate tax. The exemption in the past 30 years has jumped up ~12MM dollars and the rate has dropped 15%.
A person complaining about the size of the AMT is also the exact same person whose estate taxes have plummeted in the same time period. I can understand preferring estate taxes to AMT, but the end state is still that taxes are regressive for the extremely wealthy.
So you’re saying it’s ok with you if a tax on the super wealthy (as the AMT was originally intended) does spread to the merely affluent; yeah, that’s exactly why some of those people oppose special new taxes on the “super rich.”
Also, you’ve doubled the amount of the estate tax exemption and ignored that the increase is a much more recent phenomenon.
I’ve simply pointed out that there are examples of mission drift in taxes on the “super wealthy” over the years. You said “non-billionaires,” but then you’re not worried about Chris22’s example of someone making a couple hundred thousand dollars being picked up, because that’s not “middle class.” There are people between middle class and billionaire status, and I don’t think those people are crazy to be nervous (for their own reasons) about special taxes initially aimed at billionaires.
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I got him by the AMT this year. I'm no fancy-pants million dollar income ultra wealthy person, but I also don't see the AMT as an example of how taxes intending to hit the rich are now ruining the lives of the merely wealthy. Overall, my tax rate (Federal income tax paid / total income) was still below 20%.
More frustrating to me is that Warren Buffet, Elon Musk, and Jeff Bezos all pay a lower income tax rate than I do. They certainly 'have enough' to live the rest of their lives in comfort, so why do people defend their right to use tax loopholes and complain when the government tries to fix them? They really are getting their money's worth when it comes to PR and influencing Congress.
If Biden's tax proposal were to go through and my net worth exceeds $100M someday, I'll also gladly pay an additional wealth tax. If I make less income, I don't pay the AMT, and if my net worth were to drop below $100M, I wouldn't pay a wealth tax - oh the horror!
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So you’re saying it’s ok with you if a tax on the super wealthy (as the AMT was originally intended) does spread to the merely affluent; yeah, that’s exactly why some of those people oppose special new taxes on the “super rich.”
Also, you’ve doubled the amount of the estate tax exemption and ignored that the increase is a much more recent phenomenon.
I’ve simply pointed out that there are examples of mission drift in taxes on the “super wealthy” over the years. You said “non-billionaires,” but then you’re not worried about Chris22’s example of someone making a couple hundred thousand dollars being picked up, because that’s not “middle class.” There are people between middle class and billionaire status, and I don’t think those people are crazy to be nervous (for their own reasons) about special taxes initially aimed at billionaires.
I'm saying that if the tax code changes and at the end you basically pay the same but now it's being structured under AMT instead of the regular tax bracket does it really matter? The problem with Chris22's example is that it is only looking at a single point of data in a very complicated system. It'd be like complaining about the price of milk going up but their total grocery bill staying the same. So what? I get that AMT is treated like a scary word, but unless there's some data showing that the AMT is causing a inverted tax structure then it doesn't mean anything. And that doesn't necessarily man that the answer is by changing the AMT portion either.
If at some point in the future a large number of people in the 120-200k income range are all using a CG-debt-death strategy that the super wealthy are using now, then including it further down may make sense. But that's not what people in the 1-2MM range do, so discussing this as even a likelihood doesn't make sense. I see this tax proposal being more akin to the estate tax than the AMT so if anything, I see the cap being raised quite consistently to stay far away from the majority of people.
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Every time they do a study on how many family farms would be hit by this. Answer: almost none of them. There are no poor, 10 million net-worth farmers. This is a complete myth that's held on since the 80's.
The average decent, well run family farm around here is 1500 acres that could easily be worth $12 mil for the land alone, plus another couple mil in equipment & buildings, and possibly some livestock.
These folks aren't poor, but they certainly aren't baling money either. $200k Annual income would be pretty normal for folks in this class. It's a very capitol intense, risky, low margin business. Be thankful you've got some folks that have chosen this career path. We need them.
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Every time they do a study on how many family farms would be hit by this. Answer: almost none of them. There are no poor, 10 million net-worth farmers. This is a complete myth that's held on since the 80's.
The average decent, well run family farm around here is 1500 acres that could easily be worth $12 mil for the land alone, plus another couple mil in equipment & buildings, and possibly some livestock.
These folks aren't poor, but they certainly aren't baling money either. $200k Annual income would be pretty normal for folks in this class. It's a very capitol intense, risky, low margin business. Be thankful you've got some folks that have chosen this career path. We need them.
What's the average leverage on the land? Even if thy had to cover $2MM in CG one time in their life. That's a one-time 200k loan to take out on the land which could very easily be covered in a 5-7 year time frame. Absolutely not something that would take down a family farm.
Even then, the exemption people are talking about is closer to 50MM not 10MM.
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So you’re saying it’s ok with you if a tax on the super wealthy (as the AMT was originally intended) does spread to the merely affluent; yeah, that’s exactly why some of those people oppose special new taxes on the “super rich.”
Also, you’ve doubled the amount of the estate tax exemption and ignored that the increase is a much more recent phenomenon.
I’ve simply pointed out that there are examples of mission drift in taxes on the “super wealthy” over the years. You said “non-billionaires,” but then you’re not worried about Chris22’s example of someone making a couple hundred thousand dollars being picked up, because that’s not “middle class.” There are people between middle class and billionaire status, and I don’t think those people are crazy to be nervous (for their own reasons) about special taxes initially aimed at billionaires.
I'm saying that if the tax code changes and at the end you basically pay the same but now it's being structured under AMT instead of the regular tax bracket does it really matter? The problem with Chris22's example is that it is only looking at a single point of data in a very complicated system. It'd be like complaining about the price of milk going up but their total grocery bill staying the same. So what? I get that AMT is treated like a scary word, but unless there's some data showing that the AMT is causing a inverted tax structure then it doesn't mean anything. And that doesn't necessarily man that the answer is by changing the AMT portion either.
If at some point in the future a large number of people in the 120-200k income range are all using a CG-debt-death strategy that the super wealthy are using now, then including it further down may make sense. But that's not what people in the 1-2MM range do, so discussing this as even a likelihood doesn't make sense. I see this tax proposal being more akin to the estate tax than the AMT so if anything, I see the cap being raised quite consistently to stay far away from the majority of people.
I wonder what it is exactly about the variations on this proposal that doomed it to failure. Maybe it should try addressing inequality by offering up some education and healthcare, and see if that makes the revenue need seem more compelling. I pay a wealth tax in my country of residence (as does nearly everyone), but the rate is more modest (generally 0.2%, a flat rate), so I found the 2% or more talk (on wealth) to be shockingly high. (Really I just want the US to do away with citizenship-based taxation (at least for those of us living in another country where we are also citizens), and then make whatever statement-driven tax changes it wants.)
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2% is shockingly high. That's just as expensive as buying old style mutual funds with their inflated MERs!
Many people recall that taxes were originally introduced so the government could fund things that wouldn't be done otherwise. Like the police, the military and roadways.
The notion that taxes should also be used as a policy instrument for social engineering takes a bit of adjustment.
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2% is shockingly high. That's just as expensive as buying old style mutual funds with their inflated MERs!
Many people recall that taxes were originally introduced so the government could fund things that wouldn't be done otherwise. Like the police, the military and roadways.
The notion that taxes should also be used as a policy instrument for social engineering takes a bit of adjustment.
What? That's literally what taxes have always been.
What were tariffs at the beginning of our nation but the attempt at protecting certain US industries and workers? All taxes in the history of taxes have always been a political decision on who should pay and should benefit. No adjustment needed.
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The notion that taxes should also be used as a policy instrument for social engineering takes a bit of adjustment.
Agreed with @FIPurpose. Taxes shape incentives. People respond to incentives. Every tax has always resulted in behavior changes around the thing being taxed. While the primary purpose of taxation may be to raise revenue, the choice of taxing X vs. taxing Y in order to raise that revenue is an explicit political decision about which behaviors are to be encouraged or discouraged. Better IMO to recognize that fact head-on than pretend this "social engineering" aspect of taxation is somehow a new thing.
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2% is shockingly high. That's just as expensive as buying old style mutual funds with their inflated MERs!
Many people recall that taxes were originally introduced so the government could fund things that wouldn't be done otherwise. Like the police, the military and roadways.
The notion that taxes should also be used as a policy instrument for social engineering takes a bit of adjustment.
What? That's literally what taxes have always been.
What were tariffs at the beginning of our nation but the attempt at protecting certain US industries and workers? All taxes in the history of taxes have always been a political decision on who should pay and should benefit. No adjustment needed.
The notion that taxes should also be used as a policy instrument for social engineering takes a bit of adjustment.
Agreed with @FIPurpose. Taxes shape incentives. People respond to incentives. Every tax has always resulted in behavior changes around the thing being taxed. While the primary purpose of taxation may be to raise revenue, the choice of taxing X vs. taxing Y in order to raise that revenue is an explicit political decision about which behaviors are to be encouraged or discouraged. Better IMO to recognize that fact head-on than pretend this "social engineering" aspect of taxation is somehow a new thing.
Heh, I didn't mean to say that taxes weren't being used as a policy instrument. I said the idea that they should be used as a policy instrument takes some adjustment.
Government policies have unintended consequences as well as intended consequences. For example, the Ontario government promoted the use of compact fluorescent light bulbs before LED light bulbs were readily available. This lead to the unintended consequence of having to dispose of light bulbs as hazardous waste.
We did the same thing with green electricity. There are lots of big wind turbines now, but the green energy policy led to overly high electricity rates in the province that are still with us today.
I don't believe that government knows all the answers. When we have a problem, we shouldn't necessarily look to government to solve it. Look at housing prices in Canada right now. Every level of government is imposing taxes and rules and regulations to try and lower housing prices. Umm, since when does taxing something ever lower it's price?
On the other hand, there are many examples where government intervention has been very beneficial. Environmental regulations for example.
I experience a bit of cognitive dissonance whenever I see arguments for government intervention. Wealth taxes are a good example, since prior attempts to do this (in Europe) have been cancelled.
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Heh, I didn't mean to say that taxes weren't being used as a policy instrument. I said the idea that they should be used as a policy instrument takes some adjustment.
I don't think "should" factors into it at all. Taxes are a method of nudging behavior whether you mean to or not. Unintended consequences of a tax are a direct result of policymakers failing to consider how people would change their behavior in response to the tax. This seems more likely to happen when the legislators pretend taxes aren't a tool for "social engineering" than when they face that fact with their eyes open.
I don't believe that government knows all the answers. When we have a problem, we shouldn't necessarily look to government to solve it. Look at housing prices in Canada right now. Every level of government is imposing taxes and rules and regulations to try and lower housing prices. Umm, since when does taxing something ever lower it's price?
I'm with you there. Plenty of government regulations (such as zoning that requires $X worth of land per home, and requiring each home to come with Y parking spots attached whether the resident needs them or not) add to the cost of housing. The two main levers government has to lower the price of housing are to 1) reduce/remove these regulations, and 2) directly subsidize housing. Taxing something doesn't make it cheaper.
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No budget arguments are occurring here. The amount of revenue this tax would raise is like Uncle Sam walking into the kitchen and grabbing the loose change bucket off the counter to take to a coinstar. We're so focused on some false morality regarding billionaires and little on the trillions of dollars the government is already spending, committed to and proposing. The tax code is supposed to fund government programs not to shackle ankle weights on people. Billionaires haven't taken our agency. They don't control our lives. They pay a less marginal rate because capital gains rates and donations (duh) but still pay more nominally than any of us are likely to make in a lifetime. How terrible.
To be clear, I'm for a more progressive capital gains tax, but to help pay government accumulated debt not to placate conspiracies about rich people. The reality is a wealth tax (including unrealized gains) would require a constitutional amendment or a very loose interpretation of income by the supreme court (extremely unlikely with current justices). This is DOA; a bone thrown out by Democrats to satisfy the mob.
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No budget arguments are occurring here. The amount of revenue this tax would raise is like Uncle Sam walking into the kitchen and grabbing the loose change bucket off the counter to take to a coinstar. We're so focused on some false morality regarding billionaires and little on the trillions of dollars the government is already spending, committed to and proposing. The tax code is supposed to fund government programs not to shackle ankle weights on people. Billionaires haven't taken our agency. They don't control our lives. They pay a less marginal rate because capital gains rates and donations (duh) but still pay more nominally than any of us are likely to make in a lifetime. How terrible.
To be clear, I'm for a more progressive capital gains tax, but to help pay government accumulated debt not to placate conspiracies about rich people. The reality is a wealth tax (including unrealized gains) would require a constitutional amendment or a very loose interpretation of income by the supreme court (extremely unlikely with current justices). This is DOA; a bone thrown out by Democrats to satisfy the mob.
Billionaires buy politicians so they control our lives, they just do it in ways that you don't have to see if you don't want to. Tech billionaires have more personal information on any of us than can be guessed at by anyone outside the data industry and use it to control/influence what we see on line.
The fact that something probably won't happen doesn't mean that it is right that it doesn't.
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No budget arguments are occurring here. The amount of revenue this tax would raise is like Uncle Sam walking into the kitchen and grabbing the loose change bucket off the counter to take to a coinstar. We're so focused on some false morality regarding billionaires and little on the trillions of dollars the government is already spending, committed to and proposing. The tax code is supposed to fund government programs not to shackle ankle weights on people. Billionaires haven't taken our agency. They don't control our lives. They pay a less marginal rate because capital gains rates and donations (duh) but still pay more nominally than any of us are likely to make in a lifetime. How terrible.
To be clear, I'm for a more progressive capital gains tax, but to help pay government accumulated debt not to placate conspiracies about rich people. The reality is a wealth tax (including unrealized gains) would require a constitutional amendment or a very loose interpretation of income by the supreme court (extremely unlikely with current justices). This is DOA; a bone thrown out by Democrats to satisfy the mob.
Billionaires buy politicians so they control our lives, they just do it in ways that you don't have to see if you don't want to. Tech billionaires have more personal information on any of us than can be guessed at by anyone outside the data industry and use it to control/influence what we see on line.
The fact that something probably won't happen doesn't mean that it is right that it doesn't.
A bit of hyperbole, don’t you think? When is the last time a tech billionaire forced you to do something you didn’t want to do? Seeing some ads or an algorithm trying to get you to click on content in free services is way overrated form of control. And to what end? Do all billionaires see the world in the same way? Which are good and which are bad? If they’re all bad and shouldn’t exist, who decides how to allocate the capital and what are their qualifications?
And ending billionaires is a different issue than taxation. Does taxing unrealized gains change that ability to buy politicians? No. The tax is supposed to pay for something for Americans. It’s clear it’s not about that at all since it’s so poorly thought out as to have virtually no chance of being enacted.
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What we don't see and can't know is what the alternative would look like if the US were more egalitarian. Maybe there would be less McMansions, less frothing at the mouth about guns, less Fox News, maybe the Fed wouldn't have a 9T balance sheet from bailing out Wall Street and placating politicians... who knows? I do know that everyday life felt more free and stable in Norway and people generally worked at jobs they enjoyed, since most jobs paid the same. The CEO was a 'normal person' that I saw speak several times in person. My 'boss' genuinely cared if I was happy at work. When I was there, I could look up anyone's income and net worth (at least tax-wise) and they could look up mine.
It's such an inconceivable way to live for most Americans that they just shrug when these 'billionaire tax' ideas cross their mind, because they can't conceive of the US being anything but economically disparate. However, now that the problem has grown exponentially, we don't have the economic and social mobility that previous generations enjoyed.
Like I've said before, this situation is unsustainable. It either needs to start heading in the right direction by choice and deliberate action, or else it will hit a boiling point. Populism and Trump are an example of where this has started going...
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No budget arguments are occurring here. The amount of revenue this tax would raise is like Uncle Sam walking into the kitchen and grabbing the loose change bucket off the counter to take to a coinstar. We're so focused on some false morality regarding billionaires and little on the trillions of dollars the government is already spending, committed to and proposing. The tax code is supposed to fund government programs not to shackle ankle weights on people. Billionaires haven't taken our agency. They don't control our lives. They pay a less marginal rate because capital gains rates and donations (duh) but still pay more nominally than any of us are likely to make in a lifetime. How terrible.
To be clear, I'm for a more progressive capital gains tax, but to help pay government accumulated debt not to placate conspiracies about rich people. The reality is a wealth tax (including unrealized gains) would require a constitutional amendment or a very loose interpretation of income by the supreme court (extremely unlikely with current justices). This is DOA; a bone thrown out by Democrats to satisfy the mob.
Billionaires buy politicians so they control our lives, they just do it in ways that you don't have to see if you don't want to. Tech billionaires have more personal information on any of us than can be guessed at by anyone outside the data industry and use it to control/influence what we see on line.
The fact that something probably won't happen doesn't mean that it is right that it doesn't.
A bit of hyperbole, don’t you think? When is the last time a tech billionaire forced you to do something you didn’t want to do?
Billionaires, and even just millionaires, force things or (perhaps as important) block changes all of the time. To me that is what Super PACs are all about.
Edit to add: one specific thing billionaire money has forced where I live is that public schools are required to provide transportation for private, religious and charter schools. With more religious and charter schools opening (and sponsored by Pro-Charter and school choice folks) our school taxes are going up year on year, and our transportation resources are spread so thin that the "no service" area for our public schools has gotten larger in the last couple of years.
And there is a whole slew of consequences that flow from that, including traffic problems, car accidents, infrastructure that can't handle the increased traffic from parents now needing to drop their kids off, the need to hire people to handle the drop off traffic, the larger need for pre and afterschool programs to handle drop off and pick up, etc.
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No budget arguments are occurring here. The amount of revenue this tax would raise is like Uncle Sam walking into the kitchen and grabbing the loose change bucket off the counter to take to a coinstar. We're so focused on some false morality regarding billionaires and little on the trillions of dollars the government is already spending, committed to and proposing. The tax code is supposed to fund government programs not to shackle ankle weights on people. Billionaires haven't taken our agency. They don't control our lives. They pay a less marginal rate because capital gains rates and donations (duh) but still pay more nominally than any of us are likely to make in a lifetime. How terrible.
To be clear, I'm for a more progressive capital gains tax, but to help pay government accumulated debt not to placate conspiracies about rich people. The reality is a wealth tax (including unrealized gains) would require a constitutional amendment or a very loose interpretation of income by the supreme court (extremely unlikely with current justices). This is DOA; a bone thrown out by Democrats to satisfy the mob.
Billionaires buy politicians so they control our lives, they just do it in ways that you don't have to see if you don't want to. Tech billionaires have more personal information on any of us than can be guessed at by anyone outside the data industry and use it to control/influence what we see on line.
The fact that something probably won't happen doesn't mean that it is right that it doesn't.
Do you really feel that billionaires and the government control your life?
That's a bit dramatic.
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The fact is the billionaires don’t need to control our lives, or even control the government. They just need to throw enough of a wrench in the legislature to stop anything from ever happening, because the status quo is just fine for them. If they prop up the corpse of the obstructionist party for long enough, they can keep raking in enough cash to be able to do whatever they want without oversight or regulation. If it’s illegal here, they have so much money they can just go do it somewhere else. But they need America to continue to be the land of extreme inequality because here’s where they “earn” it all.
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I used to be far more libertarian when it came to this issue. Now that I'm grown, and have experienced my career, befriended some relatively wealthy people (nowhere near billionaires, but low 7-figure incomes) and seen their lives...I have very little problem with taxing rich people. They really will be just fine. The ones I've met didn't really work any harder than my other friends, but had a combination of smarts/skill/luck/advantages that coalesced. Now the wealthy ones are happily living it up, killing the world faster than the rest of us without a batted eyelash.
I can't even conceive of the billionaires. Tax away (assuming we direct the taxes toward something useful, like climate change sustainability or health care, or even lowering other people's taxes).
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It sounds like the thread is concerned more about the influence the super wealthy have on society than the fact that they're super wealthy.
There's not much point in taxing them to fix this unless the taxation is at such a level that it strips them of all their influence (and all their wealth?)
Are there no ways to get back to 1 person 1 vote levels of influence?
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It sounds like the thread is concerned more about the influence the super wealthy have on society than the fact that they're super wealthy.
There's not much point in taxing them to fix this unless the taxation is at such a level that it strips them of all their influence (and all their wealth?)
Are there no ways to get back to 1 person 1 vote levels of influence?
Wealth disparity is the cause of the outsized influence that the extremely wealthy have. Taxation to reduce this wealth gap seems like the most straightforward way to address the issue. How else would you go about doing it?
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Are there no ways to get back to 1 person 1 vote levels of influence?
Would have to outlaw campaign donations, lobbying...probably would have to get rid of campaigning altogether. Not necessarily saying that would be bad.
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Are there no ways to get back to 1 person 1 vote levels of influence?
Would have to outlaw campaign donations, lobbying...probably would have to get rid of campaigning altogether. Not necessarily saying that would be bad.
Can't do that. Money is speech, remember?
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Are there no ways to get back to 1 person 1 vote levels of influence?
Not with this Supreme Court.
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Are there no ways to get back to 1 person 1 vote levels of influence?
Get back to 1 person 1 vote levels of influence? I think your question is flawed in that it presumes that at some point there was 1 person 1 vote levels of influence. Such a thing has never existed.
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It sounds like the thread is concerned more about the influence the super wealthy have on society than the fact that they're super wealthy.
There's not much point in taxing them to fix this unless the taxation is at such a level that it strips them of all their influence (and all their wealth?)
Are there no ways to get back to 1 person 1 vote levels of influence?
Wealth disparity is the cause of the outsized influence that the extremely wealthy have. Taxation to reduce this wealth gap seems like the most straightforward way to address the issue. How else would you go about doing it?
I guess one way would be to could change the constitution so that people who make/have over $X can't vote.
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Are there no ways to get back to 1 person 1 vote levels of influence?
Would have to outlaw campaign donations, lobbying...probably would have to get rid of campaigning altogether. Not necessarily saying that would be bad.
Can't do that. Money is speech, remember?
Pretty much every method of disseminating an idea requires spending money. The First Amendment would be rendered basically moot if it were interpreted to mean that the government can step in and make restrictions on speech the second someone spends a dollar to boost their message. The right to stand on a street corner and talk to people would be protected. That's about it. Signs and megaphones are right out, and don't even think about starting a blog or a podcast or making a documentary film without the government's say-so.
I fully recognize that the ability to purchase the attention of a large number of people through media is a very powerful thing. I'm all in favor of trying to find targeted ways to reform that power for the greater good, but completely throwing out the legal protections currently afforded to the expression of political thought is not the way IMO.
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It sounds like the thread is concerned more about the influence the super wealthy have on society than the fact that they're super wealthy.
There's not much point in taxing them to fix this unless the taxation is at such a level that it strips them of all their influence (and all their wealth?)
Are there no ways to get back to 1 person 1 vote levels of influence?
Wealth disparity is the cause of the outsized influence that the extremely wealthy have. Taxation to reduce this wealth gap seems like the most straightforward way to address the issue. How else would you go about doing it?
There's no way taxation will ever reach levels sufficient to reduce the wealth gap to address this issue. The closest we're likely to get is to clamp down on intergenerational wealth transfer, and the wealthy will find loopholes in that too.
What's really needed is societal change, so that everyone in the US thinks more like everyone in Norway. (Ok, that's a bit tongue in cheek.) People need education, ethics, and principles. Big swaths of the US are going in the opposite direction though.
A good first step in this direction would be to figure out how to control the mis-information on social media. There are all these big brained people in Google/Alphabet and Facebook/Meta, maybe they could do something more worthwhile than ad slinging. Remember "don't be evil"?
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It sounds like the thread is concerned more about the influence the super wealthy have on society than the fact that they're super wealthy.
There's not much point in taxing them to fix this unless the taxation is at such a level that it strips them of all their influence (and all their wealth?)
Are there no ways to get back to 1 person 1 vote levels of influence?
Wealth disparity is the cause of the outsized influence that the extremely wealthy have. Taxation to reduce this wealth gap seems like the most straightforward way to address the issue. How else would you go about doing it?
There's no way taxation will ever reach levels sufficient to reduce the wealth gap to address this issue. The closest we're likely to get is to clamp down on intergenerational wealth transfer, and the wealthy will find loopholes in that too.
What's really needed is societal change, so that everyone in the US thinks more like everyone in Norway. (Ok, that's a bit tongue in cheek.) People need education, ethics, and principles. Big swaths of the US are going in the opposite direction though.
A good first step in this direction would be to figure out how to control the mis-information on social media. There are all these big brained people in Google/Alphabet and Facebook/Meta, maybe they could do something more worthwhile than ad slinging. Remember "don't be evil"?
Norway literally has a wealth tax. And a tax rate of around 50% for all income and capital gains.
Sounds like the way to think like Norway is to start taxing the wealthy.
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Are there no ways to get back to 1 person 1 vote levels of influence?
Would have to outlaw campaign donations, lobbying...probably would have to get rid of campaigning altogether. Not necessarily saying that would be bad.
Can't do that. Money is speech, remember?
Pretty much every method of disseminating an idea requires spending money. The First Amendment would be rendered basically moot if it were interpreted to mean that the government can step in and make restrictions on speech the second someone spends a dollar to boost their message. The right to stand on a street corner and talk to people would be protected. That's about it. Signs and megaphones are right out, and don't even think about starting a blog or a podcast or making a documentary film without the government's say-so.
I fully recognize that the ability to purchase the attention of a large number of people through media is a very powerful thing. I'm all in favor of trying to find targeted ways to reform that power for the greater good, but completely throwing out the legal protections currently afforded to the expression of political thought is not the way IMO.
The thing is, other democracies manage to regulate political spending without any noticeable detriment to either free speech or political discourse. The USA could have, and did in the past, but the people with money who want to influence politics have probably grown too powerful to let it happen again.
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It sounds like the thread is concerned more about the influence the super wealthy have on society than the fact that they're super wealthy.
There's not much point in taxing them to fix this unless the taxation is at such a level that it strips them of all their influence (and all their wealth?)
Are there no ways to get back to 1 person 1 vote levels of influence?
Wealth disparity is the cause of the outsized influence that the extremely wealthy have. Taxation to reduce this wealth gap seems like the most straightforward way to address the issue. How else would you go about doing it?
There's no way taxation will ever reach levels sufficient to reduce the wealth gap to address this issue. The closest we're likely to get is to clamp down on intergenerational wealth transfer, and the wealthy will find loopholes in that too.
What's really needed is societal change, so that everyone in the US thinks more like everyone in Norway. (Ok, that's a bit tongue in cheek.) People need education, ethics, and principles. Big swaths of the US are going in the opposite direction though.
A good first step in this direction would be to figure out how to control the mis-information on social media. There are all these big brained people in Google/Alphabet and Facebook/Meta, maybe they could do something more worthwhile than ad slinging. Remember "don't be evil"?
Norway literally has a wealth tax. And a tax rate of around 50% for all income and capital gains.
Sounds like the way to think like Norway is to start taxing the wealthy.
You have it backwards. If you think like Norway you may start taxing the wealthy. :-)
Norway's tax rate is progressive. The top marginal tax rate is about 54% (just like where I live!), but if you make less income, you pay tax at a lower rate. Here are the tax brackets for the Norwegian surtax. If I understand their system correctly, you pay a flat tax of 22% or so, and then a surtax based on your income. Then they account for public insurance payments separately to get up to the 54%. I may have the details wrong, but I think the basic description is about right.
Bracket tax consists of four steps. You will not pay any bracket tax on the first NOK 184,800 of your personal income. 1 Norwegian krone is worth about 0.11 USD right now.
Income between NOK 0 – 190,349 No bracket tax
Step 1 Income between NOK 190,350 – 267,899 1.7% bracket tax
Step 2 Income between NOK 267,900 – 643,799 4.0% bracket tax
Step 3 Income between NOK 643,800 – 969,199 13.4% bracket tax*
Step 4 Income between NOK 969 200 – 1 999 999 16.4% bracket tax
Step 5 Income over NOK 2,000,000 17.4% bracket tax
Anyway, back to my point. If you taxed American billionaires at 54% of all their income (including capital gains and dividends and everything), and 2% of their wealth, do you really think that would be enough to curtail their influence?
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Norway literally has a wealth tax. And a tax rate of around 50% for all income and capital gains.
Sounds like the way to think like Norway is to start taxing the wealthy.
I would love to start thinking like Norway. I would point out that both Switzerland and Norway have progressive wealth taxes with top marginal rates of 0.3% and 1.1% respectively AFAIK.
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It sounds like the thread is concerned more about the influence the super wealthy have on society than the fact that they're super wealthy.
There's not much point in taxing them to fix this unless the taxation is at such a level that it strips them of all their influence (and all their wealth?)
Are there no ways to get back to 1 person 1 vote levels of influence?
Wealth disparity is the cause of the outsized influence that the extremely wealthy have. Taxation to reduce this wealth gap seems like the most straightforward way to address the issue. How else would you go about doing it?
There's no way taxation will ever reach levels sufficient to reduce the wealth gap to address this issue. The closest we're likely to get is to clamp down on intergenerational wealth transfer, and the wealthy will find loopholes in that too.
What's really needed is societal change, so that everyone in the US thinks more like everyone in Norway. (Ok, that's a bit tongue in cheek.) People need education, ethics, and principles. Big swaths of the US are going in the opposite direction though.
A good first step in this direction would be to figure out how to control the mis-information on social media. There are all these big brained people in Google/Alphabet and Facebook/Meta, maybe they could do something more worthwhile than ad slinging. Remember "don't be evil"?
Norway literally has a wealth tax. And a tax rate of around 50% for all income and capital gains.
Sounds like the way to think like Norway is to start taxing the wealthy.
You have it backwards. If you think like Norway you may start taxing the wealthy. :-)
Norway's tax rate is progressive. The top marginal tax rate is about 54% (just like where I live!), but if you make less income, you pay tax at a lower rate. Here are the tax brackets for the Norwegian surtax. If I understand their system correctly, you pay a flat tax of 22% or so, and then a surtax based on your income. Then they account for public insurance payments separately to get up to the 54%. I may have the details wrong, but I think the basic description is about right.
Bracket tax consists of four steps. You will not pay any bracket tax on the first NOK 184,800 of your personal income. 1 Norwegian krone is worth about 0.11 USD right now.
Income between NOK 0 – 190,349 No bracket tax
Step 1 Income between NOK 190,350 – 267,899 1.7% bracket tax
Step 2 Income between NOK 267,900 – 643,799 4.0% bracket tax
Step 3 Income between NOK 643,800 – 969,199 13.4% bracket tax*
Step 4 Income between NOK 969 200 – 1 999 999 16.4% bracket tax
Step 5 Income over NOK 2,000,000 17.4% bracket tax
Anyway, back to my point. If you taxed American billionaires at 54% of all their income (including capital gains and dividends and everything), and 2% of their wealth, do you really think that would be enough to curtail their influence?
Yes, they'd literally have less money by which to buy their influence. In fact, I'd say that they'd be able to buy around 50% fewer politicians than they do today.
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Are there no ways to get back to 1 person 1 vote levels of influence?
Would have to outlaw campaign donations, lobbying...probably would have to get rid of campaigning altogether. Not necessarily saying that would be bad.
Can't do that. Money is speech, remember?
Pretty much every method of disseminating an idea requires spending money. The First Amendment would be rendered basically moot if it were interpreted to mean that the government can step in and make restrictions on speech the second someone spends a dollar to boost their message. The right to stand on a street corner and talk to people would be protected. That's about it. Signs and megaphones are right out, and don't even think about starting a blog or a podcast or making a documentary film without the government's say-so.
I fully recognize that the ability to purchase the attention of a large number of people through media is a very powerful thing. I'm all in favor of trying to find targeted ways to reform that power for the greater good, but completely throwing out the legal protections currently afforded to the expression of political thought is not the way IMO.
Was the US known for oppression of ideas prior to Citizens United? I'd actually argue that the ruling has made speech less free in the US because now the rich are better able to outshout those with less money, while simultaneously increasing corruption in the political system.
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Was the US known for oppression of ideas prior to Citizens United? I'd actually argue that the ruling has made speech less free in the US because now the rich are better able to outshout those with less money, while simultaneously increasing corruption in the political system.
Citizens United is unfortunate, but I personally worry more about paid lobbyists.
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Was the US known for oppression of ideas prior to Citizens United? I'd actually argue that the ruling has made speech less free in the US because now the rich are better able to outshout those with less money, while simultaneously increasing corruption in the political system.
Citizens United is unfortunate, but I personally worry more about paid lobbyists.
Ways to deal with paid lobbyists are:
1) You require all gifts/money/hospitality/travel to elected officials to be registered, and put a monetary limit on what can be accepted.
2) You outlaw insider trading by elected officials and require cabinet members to either sell individual share holdings or put them into a blind trust run by impartial trustees.
3) You drastically reduce the numbers of party political appointments to the administration (ie stop the "revolving door" of officials/lobbyists).
4) You establish a sufficiently large, professional, non-party affiliated/appointed class of civil servants that can develop policy and legislation to the orders of the administration, so that the administration and lawmakers do not have to rely on lobbyists for ideas and the means to implement them.
Basically, what most European democracies do.
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Was the US known for oppression of ideas prior to Citizens United? I'd actually argue that the ruling has made speech less free in the US because now the rich are better able to outshout those with less money, while simultaneously increasing corruption in the political system.
Citizens United is unfortunate, but I personally worry more about paid lobbyists.
FWIW - I used to worry more about paid lobbyists too. But superpacs have (smartly) increased the scope of the strategy all the way down to tiny local races and it is WILD to see in person.
Here is my anecdote: During our last election cycle Freedom Works held events in my town that were co-located with v. conservative candidates running for school board.
At first, a lot of us wrote the v. conservative candidates off. They had just moved to town within the year, no one knew who they were, neither of them had children who attended our schools. They were running against a local mother who was a former teacher, current high school band volunteer, active member of the community and had a PhD focusing on special ed. She was a shoe-in, until she wasn't.
The Freedom Works related folks held workshops on how to protest CRT and mask requirements, and a few days later our school board meetings were shut down with protestors. Some of us started to notice the flood of political supporters for the candidates in our town facebook group. The conservative candidates ran targeted facebook ads and robocalls and filled our mail boxes and front doors knobs with materials. They were everywhere.
FWIW - I have never in my time in this town received materials for someone running for the board - I went to the debate and met them when they walked around my neighborhood. So this was new and different.
It took an exhaustive, labor intensive social campaign in the last three weeks of the election for the local candidate to eek out a win by a few points. And it was basically local, working parents (mothers) on zoom at 11pm frantically coming up with with free and "easy" ways to point out how bad the two newcomers were. But I guarantee we wouldn't have the time or energy (and already didn't have tens of extra thousands of dollars to spend) to keep this going long term.
Parents with work and kids have a hard time competing with funded candidates. As a person who cares deeply about politics, it has been one of the hardest things for me to accept - that there is so little I can do.
(FWIW I also think the "working a w2 job w/kids" thing and general demographics contribute to the candidate gap we see in down ballot races when looking at Rs vs Ds.)
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It sounds like the thread is concerned more about the influence the super wealthy have on society than the fact that they're super wealthy.
There's not much point in taxing them to fix this unless the taxation is at such a level that it strips them of all their influence (and all their wealth?)
Are there no ways to get back to 1 person 1 vote levels of influence?
Wealth disparity is the cause of the outsized influence that the extremely wealthy have. Taxation to reduce this wealth gap seems like the most straightforward way to address the issue. How else would you go about doing it?
There's no way taxation will ever reach levels sufficient to reduce the wealth gap to address this issue. The closest we're likely to get is to clamp down on intergenerational wealth transfer, and the wealthy will find loopholes in that too.
What's really needed is societal change, so that everyone in the US thinks more like everyone in Norway. (Ok, that's a bit tongue in cheek.) People need education, ethics, and principles. Big swaths of the US are going in the opposite direction though.
A good first step in this direction would be to figure out how to control the mis-information on social media. There are all these big brained people in Google/Alphabet and Facebook/Meta, maybe they could do something more worthwhile than ad slinging. Remember "don't be evil"?
Norway literally has a wealth tax. And a tax rate of around 50% for all income and capital gains.
Sounds like the way to think like Norway is to start taxing the wealthy.
My country also has a wealth tax, but there's no threshold below which it doesn't apply.
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Are there no ways to get back to 1 person 1 vote levels of influence?
Would have to outlaw campaign donations, lobbying...probably would have to get rid of campaigning altogether. Not necessarily saying that would be bad.
Can't do that. Money is speech, remember?
Pretty much every method of disseminating an idea requires spending money. The First Amendment would be rendered basically moot if it were interpreted to mean that the government can step in and make restrictions on speech the second someone spends a dollar to boost their message. The right to stand on a street corner and talk to people would be protected. That's about it. Signs and megaphones are right out, and don't even think about starting a blog or a podcast or making a documentary film without the government's say-so.
I fully recognize that the ability to purchase the attention of a large number of people through media is a very powerful thing. I'm all in favor of trying to find targeted ways to reform that power for the greater good, but completely throwing out the legal protections currently afforded to the expression of political thought is not the way IMO.
Was the US known for oppression of ideas prior to Citizens United? I'd actually argue that the ruling has made speech less free in the US because now the rich are better able to outshout those with less money, while simultaneously increasing corruption in the political system.
Honestly I don't mind the Citizens United decision at all.
For reference, the actual case at issue was that a non-profit organization put together a documentary film critical of Hillary Clinton, and they wanted to play it prior to the 2008 presidential primary. The law at the time said that corporations (including non-profits), as well as labor unions, weren't allowed to advocate for or against candidates within a certain time period of an election.
If some billionaire wanted to pay for the same film out of his own pocket that would have been totally legal. If some filmmaker had put together a GoFundMe to raise money to his own bank account to pay for the film, that also would have been legal.
One potential pitfall with the GoFundMe model is that there's little accountability—the filmmaker gets the money with few strings attached. Historically when groups of people sharing a common interest start to grow past a certain size and amount of money, they find it worthwhile to start a formal organization such as a non-profit corporation to manage the organization's affairs separate from the members' personal bank accounts. This enables a formal governance structure to ensure accountability and continued progress toward the group's stated mission. This exact structure is what allows multiple smaller donations to combine and compete with the voices of wealthier individuals, and we're supposed to think that's a bad thing?
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Are there no ways to get back to 1 person 1 vote levels of influence?
Would have to outlaw campaign donations, lobbying...probably would have to get rid of campaigning altogether. Not necessarily saying that would be bad.
Can't do that. Money is speech, remember?
Pretty much every method of disseminating an idea requires spending money. The First Amendment would be rendered basically moot if it were interpreted to mean that the government can step in and make restrictions on speech the second someone spends a dollar to boost their message. The right to stand on a street corner and talk to people would be protected. That's about it. Signs and megaphones are right out, and don't even think about starting a blog or a podcast or making a documentary film without the government's say-so.
I fully recognize that the ability to purchase the attention of a large number of people through media is a very powerful thing. I'm all in favor of trying to find targeted ways to reform that power for the greater good, but completely throwing out the legal protections currently afforded to the expression of political thought is not the way IMO.
Was the US known for oppression of ideas prior to Citizens United? I'd actually argue that the ruling has made speech less free in the US because now the rich are better able to outshout those with less money, while simultaneously increasing corruption in the political system.
Honestly I don't mind the Citizens United decision at all.
For reference, the actual case at issue was that a non-profit organization put together a documentary film critical of Hillary Clinton, and they wanted to play it prior to the 2008 presidential primary. The law at the time said that corporations (including non-profits), as well as labor unions, weren't allowed to advocate for or against candidates within a certain time period of an election.
If some billionaire wanted to pay for the same film out of his own pocket that would have been totally legal. If some filmmaker had put together a GoFundMe to raise money to his own bank account to pay for the film, that also would have been legal.
One potential pitfall with the GoFundMe model is that there's little accountability—the filmmaker gets the money with few strings attached. Historically when groups of people sharing a common interest start to grow past a certain size and amount of money, they find it worthwhile to start a formal organization such as a non-profit corporation to manage the organization's affairs separate from the members' personal bank accounts. This enables a formal governance structure to ensure accountability and continued progress toward the group's stated mission. This exact structure is what allows multiple smaller donations to combine and compete with the voices of wealthier individuals, and we're supposed to think that's a bad thing?
7.5% of total political donations in the past decade were contributions by just 12 individuals. SeattleCyclone, do you think this gave those individuals a greater than proportional power over us little folks?
https://abcnews.go.com/Politics/12-megadonors-accounted-75-political-giving-past-decade/story?id=77189636
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Was the US known for oppression of ideas prior to Citizens United? I'd actually argue that the ruling has made speech less free in the US because now the rich are better able to outshout those with less money, while simultaneously increasing corruption in the political system.
Citizens United is unfortunate, but I personally worry more about paid lobbyists.
FWIW - I used to worry more about paid lobbyists too. But superpacs have (smartly) increased the scope of the strategy all the way down to tiny local races and it is WILD to see in person.
Here is my anecdote: During our last election cycle Freedom Works held events in my town that were co-located with v. conservative candidates running for school board.
At first, a lot of us wrote the v. conservative candidates off. They had just moved to town within the year, no one knew who they were, neither of them had children who attended our schools. They were running against a local mother who was a former teacher, current high school band volunteer, active member of the community and had a PhD focusing on special ed. She was a shoe-in, until she wasn't.
The Freedom Works related folks held workshops on how to protest CRT and mask requirements, and a few days later our school board meetings were shut down with protestors. Some of us started to notice the flood of political supporters for the candidates in our town facebook group. The conservative candidates ran targeted facebook ads and robocalls and filled our mail boxes and front doors knobs with materials. They were everywhere.
Again, I don't like Citizens United, but wouldn't half of that stuff be allowed even under Citizens United? Does Citizens United even cover Facebook ads? I genuinely curious.
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Was the US known for oppression of ideas prior to Citizens United? I'd actually argue that the ruling has made speech less free in the US because now the rich are better able to outshout those with less money, while simultaneously increasing corruption in the political system.
Citizens United is unfortunate, but I personally worry more about paid lobbyists.
FWIW - I used to worry more about paid lobbyists too. But superpacs have (smartly) increased the scope of the strategy all the way down to tiny local races and it is WILD to see in person.
Here is my anecdote: During our last election cycle Freedom Works held events in my town that were co-located with v. conservative candidates running for school board.
At first, a lot of us wrote the v. conservative candidates off. They had just moved to town within the year, no one knew who they were, neither of them had children who attended our schools. They were running against a local mother who was a former teacher, current high school band volunteer, active member of the community and had a PhD focusing on special ed. She was a shoe-in, until she wasn't.
The Freedom Works related folks held workshops on how to protest CRT and mask requirements, and a few days later our school board meetings were shut down with protestors. Some of us started to notice the flood of political supporters for the candidates in our town facebook group. The conservative candidates ran targeted facebook ads and robocalls and filled our mail boxes and front doors knobs with materials. They were everywhere.
Again, I don't like Citizens United, but wouldn't half of that stuff be allowed even under Citizens United? Does Citizens United even cover Facebook ads? I genuinely curious.
The politicking itself is 100% allowed and Citizens doesn't change that. I was highlighting it as an example of what outsized money can do to disrupt a small local election.
My concern comes from millionaires in other states trying to influence my kids' school. I know donors are anonymous, but more than half of the operating revenue of the org that got involved (so millions) came from only 4 people.
Maybe they aren't out of state? But even if they are in state, I want to know who they are and why they care so much about my school district, you know?
And I know it sounds nuts, but also, it IS nuts. We had two people move into our school district weeks before the filing deadline, have no children in our schools, and then run well funded and targeted campaigns, coordinated with a national organization fueled by anonymous donors and then they came way closer to winning than anyone thought possible.
Tax the people funding these shenanigans so they'll stop messing with our schools please! :)
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Taxing the rich is like treating an illness instead of preventing an illness. If workers who generated the wealth were fairly compensated at every point in the production, transportation and sales cycle, there would be less wealth for individuals at the top to hoard and no need to redistribute that wealth via taxes. The gap between the average worker's pay and the top executive's pay is much greater than it was 40 years ago. Shrinking that gap is what we should be focused on.
I agree to an extent, but you almost have to do it to have any prayer of fixing the problem. You have to break the gross power imbalance somehow.
What a lot of lower-income people who oppose taxing high incomes/net worths more aggressively miss, is all the *secondary* consequences of income/wealth inequality:
-A ton more resources(both labor and capital) end up going to serve the minor whims of the very rich, instead of the needs of middle/lower income individuals. Billionaires have no trouble commissioning superyachts, but getting developers to build starter homes is like pulling teeth.
-Too much concentration of power is always dangerous. If you think government overreach is bad, you should also be massively concerned about the powers that near-monopolies (or individuals with >$100 Billion in net worth) are capable of wielding over our daily lives. Regardless of whether you agree or disagree with Elon Musk's politics, the fact that one person could hypothetically buy a large media company and completely change its policies on what information it allows/doesn't allow on a whim is tremendously problematic in and of itself.
-As an extension of the above, gross discrepancies in wealth lead directly to gross discrepancies in political/institutional influence. For example - while I'm relatively well off, my university's richest alum has enough money that it would take a full decade of classes of students with my net worth, to match his degree of potential donations. When 1 uber-rich dude has over 10,000 times the financial impact of a fairly typical upper-middle-class individual it leads to all kinds of warped incentives for institutions to do things that aren't in the interest in the majority of their members.
I could go on, but I won't. Wealth inequality on the extreme high end needs to be drastically reduced by one means or another. Its societal harm is greater than most recognize.
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Taxing the rich is like treating an illness instead of preventing an illness. If workers who generated the wealth were fairly compensated at every point in the production, transportation and sales cycle, there would be less wealth for individuals at the top to hoard and no need to redistribute that wealth via taxes. The gap between the average worker's pay and the top executive's pay is much greater than it was 40 years ago. Shrinking that gap is what we should be focused on.
I agree to an extent, but you almost have to do it to have any prayer of fixing the problem. You have to break the gross power imbalance somehow.
What a lot of lower-income people who oppose taxing high incomes/net worths more aggressively miss, is all the *secondary* consequences of income/wealth inequality:
-A ton more resources(both labor and capital) end up going to serve the minor whims of the very rich, instead of the needs of middle/lower income individuals. Billionaires have no trouble commissioning superyachts, but getting developers to build starter homes is like pulling teeth.
-Too much concentration of power is always dangerous. If you think government overreach is bad, you should also be massively concerned about the powers that near-monopolies (or individuals with >$100 Billion in net worth) are capable of wielding over our daily lives. Regardless of whether you agree or disagree with Elon Musk's politics, the fact that one person could hypothetically buy a large media company and completely change its policies on what information it allows/doesn't allow on a whim is tremendously problematic in and of itself.
-As an extension of the above, gross discrepancies in wealth lead directly to gross discrepancies in political/institutional influence. For example - while I'm relatively well off, my university's richest alum has enough money that it would take a full decade of classes of students with my net worth, to match his degree of potential donations. When 1 uber-rich dude has over 10,000 times the financial impact of a fairly typical upper-middle-class individual it leads to all kinds of warped incentives for institutions to do things that aren't in the interest in the majority of their members.
I could go on, but I won't. Wealth inequality on the extreme high end needs to be drastically reduced by one means or another. Its societal harm is greater than most recognize.
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?
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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?
Would those consumers be as inclined, in such numbers, to make it more profitable work if there were a wealth tax of 90% over, say, $100mm?
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I used to be far more libertarian when it came to this issue. Now that I'm grown, and have experienced my career, befriended some relatively wealthy people (nowhere near billionaires, but low 7-figure incomes) and seen their lives...I have very little problem with taxing rich people. They really will be just fine. The ones I've met didn't really work any harder than my other friends, but had a combination of smarts/skill/luck/advantages that coalesced. Now the wealthy ones are happily living it up, killing the world faster than the rest of us without a batted eyelash.
I can't even conceive of the billionaires. Tax away (assuming we direct the taxes toward something useful, like climate change sustainability or health care, or even lowering other people's taxes).
This sums me up too. There's a limit to how much money can significantly improve a person's life, & there's certainly a limit to how much consumption can improve a person's life. Which I'd hope that we in the FIRE community, especially, would know: we're statistically likely to be or arrive in the top five or ten percent in the country, have experience with affluence, & be aware that there comes a point at which pursuit of a "higher score" is flatly pathological.
Beyond a point (& I'd say the proposals for steep wealth taxes on centa-millionaires & up, or income taxes on five million & up, or estate taxes on fifty million & up, or even some combination, all allow FAR beyond that point) we accomplish nothing more than letting individuals concentrate & hoard resources, real property & power, to the tune of crushing their fellow man & our one finite planet, the only benefit of which being that they can play at being gods - which, since this is a discussion of the US, also feels foundationally misaligned with the American experiment as a whole under which we are notionally created equal.
It took knowing enough very affluent people - many of whom I certainly quite like, admire, & relate to - & understanding what money could buy to really see that there's just no wholesome rationale for concentrating resources to that extent. None. It's not that the harms "outweigh" the benefits, there are no benefits; whereas there are enormous, measurable harms.
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I used to be far more libertarian when it came to this issue. Now that I'm grown, and have experienced my career, befriended some relatively wealthy people (nowhere near billionaires, but low 7-figure incomes) and seen their lives...I have very little problem with taxing rich people. They really will be just fine. The ones I've met didn't really work any harder than my other friends, but had a combination of smarts/skill/luck/advantages that coalesced. Now the wealthy ones are happily living it up, killing the world faster than the rest of us without a batted eyelash.
I can't even conceive of the billionaires. Tax away (assuming we direct the taxes toward something useful, like climate change sustainability or health care, or even lowering other people's taxes).
Beyond a point (& I'd say the proposals for steep wealth taxes on centa-millionaires & up, or income taxes on five million & up, or estate taxes on fifty million & up, or even some combination, all allow FAR beyond that point) we accomplish nothing more than letting individuals concentrate & hoard resources, real property & power, to the tune of crushing their fellow man & our one finite planet, the only benefit of which being that they can play at being gods - which, since this is a discussion of the US, also feels foundationally misaligned with the American experiment as a whole under which we are notionally created equal.
In the US, we used to have similar thoughts in regards to the size and economic/political power of corporations. This led to the breakup of giants like AT&T and Standard Oil back in the day. Have we collectively decided that it really is okay for companies to grow without restrictions?
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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?
Would those consumers be as inclined, in such numbers, to make it more profitable work if there were a wealth tax of 90% over, say, $100mm?
Probably. So your goal is to eliminate more profitable work?
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I used to be far more libertarian when it came to this issue. Now that I'm grown, and have experienced my career, befriended some relatively wealthy people (nowhere near billionaires, but low 7-figure incomes) and seen their lives...I have very little problem with taxing rich people. They really will be just fine. The ones I've met didn't really work any harder than my other friends, but had a combination of smarts/skill/luck/advantages that coalesced. Now the wealthy ones are happily living it up, killing the world faster than the rest of us without a batted eyelash.
I can't even conceive of the billionaires. Tax away (assuming we direct the taxes toward something useful, like climate change sustainability or health care, or even lowering other people's taxes).
Beyond a point (& I'd say the proposals for steep wealth taxes on centa-millionaires & up, or income taxes on five million & up, or estate taxes on fifty million & up, or even some combination, all allow FAR beyond that point) we accomplish nothing more than letting individuals concentrate & hoard resources, real property & power, to the tune of crushing their fellow man & our one finite planet, the only benefit of which being that they can play at being gods - which, since this is a discussion of the US, also feels foundationally misaligned with the American experiment as a whole under which we are notionally created equal.
In the US, we used to have similar thoughts in regards to the size and economic/political power of corporations. This led to the breakup of giants like AT&T and Standard Oil back in the day. Have we collectively decided that it really is okay for companies to grow without restrictions?
Basically yes, Reagan adopted Bork's stance on antitrust which came down to arguing that economic efficiency should be considered equally with protection of competition.
The Supreme Court has cited Bork's book in probably a half dozen antitrust rulings undoing most of the protections that anti-trust legislation afforded. So now the rule that the federal government follows is more or less "Can a merger promise lower prices to consumers?" And if the company can prove that their merger will result in a positive outcome for consumers, then the merger can go forward.
This has led to the giant monopolies we have today.
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I used to be far more libertarian when it came to this issue. Now that I'm grown, and have experienced my career, befriended some relatively wealthy people (nowhere near billionaires, but low 7-figure incomes) and seen their lives...I have very little problem with taxing rich people. They really will be just fine. The ones I've met didn't really work any harder than my other friends, but had a combination of smarts/skill/luck/advantages that coalesced. Now the wealthy ones are happily living it up, killing the world faster than the rest of us without a batted eyelash.
I can't even conceive of the billionaires. Tax away (assuming we direct the taxes toward something useful, like climate change sustainability or health care, or even lowering other people's taxes).
This sums me up too. There's a limit to how much money can significantly improve a person's life, & there's certainly a limit to how much consumption can improve a person's life. Which I'd hope that we in the FIRE community, especially, would know: we're statistically likely to be or arrive in the top five or ten percent in the country, have experience with affluence, & be aware that there comes a point at which pursuit of a "higher score" is flatly pathological.
Beyond a point (& I'd say the proposals for steep wealth taxes on centa-millionaires & up, or income taxes on five million & up, or estate taxes on fifty million & up, or even some combination, all allow FAR beyond that point) we accomplish nothing more than letting individuals concentrate & hoard resources, real property & power, to the tune of crushing their fellow man & our one finite planet, the only benefit of which being that they can play at being gods - which, since this is a discussion of the US, also feels foundationally misaligned with the American experiment as a whole under which we are notionally created equal.
It took knowing enough very affluent people - many of whom I certainly quite like, admire, & relate to - & understanding what money could buy to really see that there's just no wholesome rationale for concentrating resources to that extent. None. It's not that the harms "outweigh" the benefits, there are no benefits; whereas there are enormous, measurable harms.
Except for a majority of the billionaires people rail against (Musk/Bezos/Zuck/Gates/etc) that wealth is tied to control of the companies they founded/run. I don’t think Bezos or Musk or whomever cares if they have $20B or $200B, but they do care about maintaining control of their companies. If you remove their wealth (force them to sell stock) you effectively remove their control. That’s not insignificant.
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I used to be far more libertarian when it came to this issue. Now that I'm grown, and have experienced my career, befriended some relatively wealthy people (nowhere near billionaires, but low 7-figure incomes) and seen their lives...I have very little problem with taxing rich people. They really will be just fine. The ones I've met didn't really work any harder than my other friends, but had a combination of smarts/skill/luck/advantages that coalesced. Now the wealthy ones are happily living it up, killing the world faster than the rest of us without a batted eyelash.
I can't even conceive of the billionaires. Tax away (assuming we direct the taxes toward something useful, like climate change sustainability or health care, or even lowering other people's taxes).
This sums me up too. There's a limit to how much money can significantly improve a person's life, & there's certainly a limit to how much consumption can improve a person's life. Which I'd hope that we in the FIRE community, especially, would know: we're statistically likely to be or arrive in the top five or ten percent in the country, have experience with affluence, & be aware that there comes a point at which pursuit of a "higher score" is flatly pathological.
Beyond a point (& I'd say the proposals for steep wealth taxes on centa-millionaires & up, or income taxes on five million & up, or estate taxes on fifty million & up, or even some combination, all allow FAR beyond that point) we accomplish nothing more than letting individuals concentrate & hoard resources, real property & power, to the tune of crushing their fellow man & our one finite planet, the only benefit of which being that they can play at being gods - which, since this is a discussion of the US, also feels foundationally misaligned with the American experiment as a whole under which we are notionally created equal.
It took knowing enough very affluent people - many of whom I certainly quite like, admire, & relate to - & understanding what money could buy to really see that there's just no wholesome rationale for concentrating resources to that extent. None. It's not that the harms "outweigh" the benefits, there are no benefits; whereas there are enormous, measurable harms.
Except for a majority of the billionaires people rail against (Musk/Bezos/Zuck/Gates/etc) that wealth is tied to control of the companies they founded/run. I don’t think Bezos or Musk or whomever cares if they have $20B or $200B, but they do care about maintaining control of their companies. If you remove their wealth (force them to sell stock) you effectively remove their control. That’s not insignificant.
Are you just making things up?
Gates owns almost no Microsoft stock at this point (< 1% ownership)
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.
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Except for a majority of the billionaires people rail against (Musk/Bezos/Zuck/Gates/etc) that wealth is tied to control of the companies they founded/run. I don’t think Bezos or Musk or whomever cares if they have $20B or $200B, but they do care about maintaining control of their companies. If you remove their wealth (force them to sell stock) you effectively remove their control. That’s not insignificant.
Musk would be pretty bummed if his wealth were only $20B or tied up in TSLA stock, he wouldn't be able to finance his purchase of TWTR! Bezos might also struggle to finance his $500M Superyacht (https://nypost.com/2022/02/18/how-bezos-super-yacht-sizes-up-against-ellisons-and-brins/)...
Not sure where you're coming up with this theory that wealth taxation will cause CEO's to lose control of their companies. Perhaps you've never heard of super-voting shares?
Different share classes also have different voting rights. For instance, a company's founders, executives, or other large stakeholders may be assigned a class of common stock that has multiple votes for every single share of stock. This super-voting multiple is about 10 votes per higher class share, although some companies may choose to make them much higher.
Super-voting shares give key company insiders greater control over the company's voting rights, its board, and corporate actions. The existence of super-voting shares can also be an effective defense against hostile takeovers since key insiders can maintain majority voting control of their company without actually owning more than half of the outstanding shares.
Voting issues aside, different share classes typically have the same rights to profits and company ownership. Even though retail investors may be limited to purchasing only inferior classes of common stock for a given company, they still enjoy a proportionally equal claim to the company's profits. In these cases, investors see their fair share of a company's returns on equity (ROE), although they do not enjoy the voting power their shares would normally provide in the absence of dual classes.
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In the US, we used to have similar thoughts in regards to the size and economic/political power of corporations. This led to the breakup of giants like AT&T and Standard Oil back in the day. Have we collectively decided that it really is okay for companies to grow without restrictions?
Basically yes, Reagan adopted Bork's stance on antitrust which came down to arguing that economic efficiency should be considered equally with protection of competition.
The Supreme Court has cited Bork's book in probably a half dozen antitrust rulings undoing most of the protections that anti-trust legislation afforded. So now the rule that the federal government follows is more or less "Can a merger promise lower prices to consumers?" And if the company can prove that their merger will result in a positive outcome for consumers, then the merger can go forward.
This has led to the giant monopolies we have today.
Thanks for summing that up better than I could. We've lost the political will to regulate & now, in the absence of independent players, almost everything you buy or use comes back to the same corporate behemoths who leverage size to keep the field barren of any viable competition via scooping & lobbying. Innovation suffocates, except at the high end for what are typically waves of useless luxuries; the masses receive minimum-viable upgrades to incentivize further cycling through consumer goods, which is depleting tangible resources for nearly no human benefit. Meanwhile the whole country falls behind, going abroad feels like time travel.
Profit as a sole, superceding motive rapidly becomes a paperclip maximizer problem.
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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.
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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.
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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.
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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.
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Are you just making things up?
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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.
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Are you just making things up?
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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.
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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....
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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.
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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.
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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 (https://youtu.be/YRvf00NooN8?t=3637) 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.
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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.
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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.
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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?
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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.
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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.
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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.
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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.
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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".
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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?
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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.
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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.
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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).
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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?
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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.
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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.
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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?
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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.
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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.
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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.
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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.
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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?
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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.
-
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).
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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.
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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.
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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."
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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.
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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.
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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.
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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.
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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.
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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?
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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.
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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.
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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.
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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".
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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).
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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 (https://fortune.com/2022/05/17/intel-shareholders-reject-executive-pay-program-ceo-180-million-pay-package/)
JPMorgan shareholders vote down pay bump for CEO Jamie Dimon (https://www.cnn.com/2022/05/18/investing/jpmorgan-ceo-pay-shareholders/index.html)
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.
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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 (https://fortune.com/2022/05/17/intel-shareholders-reject-executive-pay-program-ceo-180-million-pay-package/)
JPMorgan shareholders vote down pay bump for CEO Jamie Dimon (https://www.cnn.com/2022/05/18/investing/jpmorgan-ceo-pay-shareholders/index.html)
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