Tax the Super Wealthy

[dividendman]

A wealth tax already exists by the way - property tax.

[Chris22]

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.

[FIPurpose]

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.

[Chris22]

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.

[scottish]

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.

[GuitarStv]

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.

[SwordGuy]

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.

[bryan995]

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.

[seattlecyclone]

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.

[Chris22]

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). 

[Chris22]

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.

[SwordGuy]

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.

[Chris22]

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?

[FIPurpose]

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.

[FIPurpose]

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?

Those are called taxes. Are taxes Russia now? Stop trolling.

[Chris22]

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?

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.

[poxpower]

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.

[former player]

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.

[Chris22]

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

[former player]

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.

[teen persuasion]

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.

[SwordGuy]

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.

[EscapeVelocity2020]

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. 

[EscapeVelocity2020]

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.

[JGS1980]

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.

[JGS1980]

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

[Fishindude]

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.

[Sibley]

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

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

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

Step 4: Capital gains are taxed as ordinary income.

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

[Ron Scott]

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.

[scottish]

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.

[FIPurpose]

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)

[poxpower]

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.

[GuitarStv]

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.

[Ron Scott]

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.

[FIPurpose]

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.

[YttriumNitrate]

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?

[Ron Scott]

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…

[wageslave23]

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.

[poxpower]

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?

[GuitarStv]

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.

[poxpower]

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.

[FIPurpose]

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.

[FIPurpose]

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.

[EscapeVelocity2020]

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.

[poxpower]

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.

[former player]

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.

[poxpower]

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.

[lemonlyman]

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.

[johndoe]

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.

[Missy B]

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.