It seems kind of like clickbait, and to the extent that you should care about the Newsweek "fairness meter" at the bottom of their own articles, this one is labeled as "unfair". It seems that the times article it references is conflating unrealized stock gains and income.
> In 2011, a year in which his wealth held roughly steady at $18 billion, Bezos filed a tax return reporting he lost money — his income that year was more than offset by investment losses. What’s more, because, according to the tax law, he made so little, he even claimed and received a $4,000 tax credit for his children.
Almost all tax loopholes people talk about are intentional policies with intentional results. The thing you're quoting is very much an example - it's very much by design that capital gains are offset by capital losses and you're taxed only on the net. (I should note that the article is being imprecise, and ordinary income is much harder to offset this way.)
The people who wrote in the $200/400k income limits almost certainly did not plan for that to be used by Jeff Bezos.
You might argue that they considered the possibility and decided closing the loophole would do more harm than good (means testing frequently does this), but it certainly wasn't the intention of the credit to give $4k to the world's second wealthiest person.
I think we can all agree legislators need to better "red team" their laws, and try to predict how people will get around the spirit of the law by using technicalities in the wording of the law, so that better words can be enacted.
If they did not intend for Bezos to take advantage of income limits, they should have written the law better so that he couldn't.
Again agreeing or disagreeing with policy doesn’t change if something is a loophole or not. Handouts because someone is installing rooftop solar are still handouts even if they get baked into tax policy.
In other situations taxes apply to money you haven’t received.
Exercise an options contract and you’re taxed before you sell the shares. At that point you could still ultimately lose money just as with capital gains.
RSU grants are taxed even if you haven't sold the stock you are granted. But they commonly deal with this by selling some stock right away to cover tax liabilities.
The problem with exercising an option is that the stock might not be traded or can't be sold, then you have to pay the tax out of pocket, since Uncle Sam doesn't want some private non-traded stock.
Sure, but in comparison the unrealized capital gains loophole just becomes more clear. Property taxes based on assessed value are common for other asset classes like cars and land.
> So how do megabillionaires pay their megabills while opting for $1 salaries and hanging onto their stock? According to public documents and experts, the answer for some is borrowing money — lots of it.
After decades of avoiding taxes on it, there's a final loophole!
> The notion of dying as a tax benefit seems paradoxical. Normally when someone sells an asset, even a minute before they die, they owe 20% capital gains tax. But at death, that changes. Any capital gains till that moment are not taxed. This allows the ultrarich and their heirs to avoid paying billions in taxes. The “step-up in basis” is widely recognized by experts across the political spectrum as a flaw in the code.
Do you have a a cite for this? Googling "step-up in basis cap" finds very little supporting the assertion, at first glance, and https://en.wikipedia.org/wiki/Stepped-up_basis doesn't mention such a thing.
I think you're may be confusing it with estate taxes. (Which the ProPublica article addresses in the subsequent few paragraphs.)
The step-up itself is not capped but the tax savings are capped by the estate tax limits. If your estate is less than $12M you pay no estate tax and your heirs pay no capital gains tax either; that's the loophole. But if your estate is much larger than $12M it has to pay back your loans, then pay estate tax, then the basis gets stepped up for whatever's left. There's little or no savings. AFAIK.
> And after death, the common understanding goes, there’s a final no-escape clause: the estate tax, which imposes a steep tax rate on sums over $11.7 million. ProPublica found that none of these factors alter the fundamental picture.
> It’s clear, though, from aggregate IRS data, tax research and what little trickles into the public arena about estate planning of the wealthy that they can readily escape turning over almost half of the value of their estates. Many of the richest create foundations for philanthropic giving, which provide large charitable tax deductions during their lifetimes and bypass the estate tax when they die.
> Wealth managers offer clients a range of opaque and complicated trusts that allow the wealthiest Americans to give large sums to their heirs without paying estate taxes. The IRS data obtained by ProPublica gives some insight into the ultrawealthy’s estate planning, showing hundreds of these trusts.
The rich put all their assets over the estate tax limit in a trust/philanthropic giving org that their heirs control. Now the heirs get their 26 million plus control of a billion dollar organization with no taxes.
I was surprised to see that arrow 100% of the way to the left — but then after I voted, it changed to say "Most Readers Rated This Article CENTER / FAIR". So I'm not sure why it defaults to left, but I don't think that represents the actual rating.
My house has an 'unrealized' value yet I have to pay taxes on it based on that unrealized value, which is also a value I can't unlock unless I become homeless (a much more difficult situation to be in than being 'stockless'). I can also lose that asset (which is my shelter) if I don't pay that tax on it's 'unrealized' value.
Nothing stops someone from selling a 3 million dollar Cupertino home and buying a $300,000 home someplace else. So it’s a bit disingenuous to say that person is “homeless”. They’d have a different home and a pile of cash.
I for one would love to know why people are downvoting you as I think you’ve made a good argument. I’d love someone to pipe up with the counter argument.
He did not make a good argument. Property taxes are the cost of the city's government; they include city infrastructure, police, and fire coverage. A poster below answered this.
To be clear, you're being taxed on the asset's value, not on the unrealized gain. This conversation seems more like:
- you make $100k a year
- you pay $20k in taxes
- one year, you buy a house for $400k
- in the next year, its value doubles to $800k
- I say "your income (including unrealized gains) last year was $500k. You only paid $20k in taxes. That's only a 4% rate! How unfair!"
Among other things, I find the whole thing silly because of course it'll only be used to criticize the low tax rates of people who have unrealized gains. If Amazon crashes and Jeff Bezos's net worth goes down by $20B and he pays $100M in taxes, no one will write an article about how unfair it is to tax the poor guy $100M on his incredibly low income of negative $20B. Poor guy, he'd probably be the lowest-income person in the whole country!
The analogous situation is that the business that you own, which is what the stock represents, also pays property tax. When you sell the house that you lived in, you can get a section 121 exclusion, allowing you to keep the profit tax free.
I have bought, lived in, and sold several houses over my adult life. Never in those transactions was I “homeless” in the colloquial sense. Here is the trick in case you are interested and unsure how to do it—after your closing date is set…you go find another place to rent, you move all the stuff in the home that you are selling to the place you are renting. Then you perform the transaction to sell your home. Go home to your rental place, pour all the cash on your bed you earned from the sale of your home, and roll around in it.
A critique of property tax structures as they exist is not an argument for considering unrealized gains as income. One does not logically follow from the other.
To steel man property taxes, land is immobile and requires certain government services even when it is unused (perhaps even more-so). Taxing that property is a direct an efficient(from a taxation perspective) way to fund the government services associated with that property.
Pretty depressing, also on you always get people crawling out of the woodwork playing devils advocate, saying people should try harder to not be poor, attacking the stats with minor flaws, or that "this is fine actually"
I'm trying to be more involved in my local community, but we need some change on the national level, and I'm concerned things wont get better until they gets worse first.
Its because it's false and misleading. What is "more", the wealthy are paying more in terms of dollar amounts. We have very high marginal tax rates in America, and we have very rich people paying a lot of taxes.
In percentage terms the middle class is overtaxed the most of course. But percentage terms are an extremely misleading way to look at this.
Being middle class I'm more angry that the bottom 50% on net pay no income taxes and I'm a net payer into their lifestyle.
It's not. Relatively speaking, the rich do pay less % of their share of income in taxes, despite them obviously being way more able to pay taxes than the lower castes.
Warren Buffett infamously paid (and likely still pays) less of his income than his own secretary. This is beyond ridiculous.
And that doesn't even take into account the obscene gains in wealth that aren't taxed at all (partially, because taxing unrealized gains is hard). The rich just evade that tax (or practically, they shift the payment date towards infinity) by taking ultra low-interest loans on their stock and pay the interest from dividends.
>Relatively speaking, the rich do pay less % of their share of income in taxes, despite them obviously being way more able to pay taxes than the lower castes.
It's not entirely clear what you are trying to say, but as a share of income earned, the rich earn 20% of the income, they pay 40% of the income taxes collected by the government. They objectively pay more than a fair share.
> It's not entirely clear what you are trying to say, but as a share of income earned, the rich earn 20% of the income, they pay 40% of the income taxes collected by the government. They objectively pay more than a fair share.
The question is what one defines as fair. For me, fairness is defined as "how much can one pay in relation to his income"... and then it's simple: when the secretary earning 48k a year has to pay 5% more in taxes, that's 2.4k less for her - and she'll feel that very immediately. Meanwhile, assuming Buffett has a yearly income of 480 million dollars (officially, he has a 100k/y salary, but there's no way his real income is that low given his net worth of ~130 billion dollars, so I just plugged in some number that is likely still way too low), if he has to pay 5% more taxes that's 24 million dollars - a sum that won't even register on any of his decisions.
Once you pass a certain amount of wealth and/or income, you just have/earn so much that any kind of tax increase or decrease will not make any material difference in your lifestyle.
Therefore, "fairness" for me would be defined as "all members of the economy, both the poor and the rich, contribute to society in a way so that both can live a reasonable life after taxes".
Well, yeah, that makes sense. The top 1% (3.3m people) hold over 30% of all wealth in America. The bottom 50% (over 150m people) only hold 2.5% of the wealth in America.
Also, how does the top 10% pay 80% of taxes but the top 1% pay 50%? I highly doubt they're paying 130% in taxes collectively...
We are taking about income tax and not wealth tax. Like this terrible article, you use them interchangeably. The authors are trying to be deceptive to push their preferred policy position.
I have to pay taxes on my house based on unrealized gains, and to unlock those gains I would have to become homeless (which sucks worse than becoming stockless). If I don't pay the tax on that 'unrealized value' I lose the actual asset. But please tell me how unreasonable taxing unrealized stock gains would be, and how doing taxing unrealized gains is unheard of, irrational, and would destroy the market that created those gains (I guess like how property taxes have decimated housing prices?).
Where's the data to back up your assertion about the rich "sit on most of their money"?
I think many of the top tech billionaires have their wealth in company stock (in the case of Jeff Bezos and Steve Ballmer, Bill Gates has diversified away from just MSFT stock, Elon Musk is mostly TSLA and SpaceX)
If the rich actually sit on most of their wealth (all cash - 0% interest, no income, no interest-bearing instruments/bonds, no selling stocks) then they'd pay no taxes on their wealth in the USA. But inflation would hit them hard, especially in the past couple of years.
The rich aren't Scrooge McDuck or Smaug. They didn't have swimming pools full of cash and gold. They are wealthy because the vast majority of their wealth are investments. They own large portions of companies. Sure they may have an expensive estate or three and a yacht and private jet, but that is s small portion of their wealth. This is actually one of the reasons I dislike a wealth tax.
The annoying thing about these articles is it feels like someone is trying to shape my political opinions, but I'm not sure to what end. How am I supposed to finish the sentence, "I'm mad as heck at the b-b-b-billionaires, and therefore I'm going to..." Or is it just that they get a penny for my click?
Everyone you can who may move the needle in the right direction. There are no guarantees that it will help, but doing nothing is even less likely to improve things.
They want you to start supporting redistributionist policies by making you feel it's unfair that someone who is a lot older than you and has worked many more years than you and pays a greater share of the tax burden than their share of the income has more money than you.
... support policies that punish and ultimately eliminate rich people.
Privately rich people have the power to change the world, sometimes for good and sometimes for evil. The dream is to eliminate the Bill Gateses, Elon Musks, Donald Trumps, and George Soroses of the world, so that only those connected to government and The Party have real financial power.
Draw the line low enough, and it might eliminate the Paul Grahams of the world. Or even, as in Russia, small time independent farmers (https://www.britannica.com/topic/kulak ).
I obviously think this is a terrible idea. Destroying the wealthy out of jealousy is a bloody impulse without a bottom that leaves everyone powerless. But it does greatly empower those who can make themselves exceptions to the rule, which is the actual point.
> JP Doherty did not want to sign the email. But he knew he didn’t have a choice. His son, Rhys, was scheduled to have strabismus surgery in January, correcting an eye issue that made it difficult for him to walk on his own. The procedure cost $10,000 out of pocket. Doherty discussed the decision with his wife, and while she wanted him to be able to quit, they both knew the kids needed his health insurance.[0]
How about destroying the wealthy because they ultimately decide if your child will get medical treatment?
That's not a serious question. It's a sloppy and unfair assertion that is something you would only say if you'd already made up your mind. The wealthy are not a monolith - they are people. Judging one for the actions of another is fundamentally unjust. And equating layoffs to denial of medical care is a pretty big reach - there are a lot of mechanisms disconnecting the two. And even ignoring all of that, none of that adds up to a situation in which destroying people is either just or going to make things better.
Rage without justice or reason is a solid indication you're being exploited. Not generally for your benefit, either. The people who want you to help them destroy the wealthy don't intend to make you president when they're done.
I’ve had my own heath insurance revoked in a layoff, and I need it in order to keep walking. I don’t have much and if I lost that I don’t know what I’d do. You may think that the country can survive through unlimited inequality, but I suspect there is a limit.
I'm sorry for your troubles. I too have a lot of experience with the danger of being swallowed up by medical demons. CORBA isn't really a solution, and I don't really think Medicare[1] is either writ large (though it certainly can be writ small), but health cost sharing organizations might be worth a look. Treatment alternatives are always worth a look.
For what it's worth, I'm of the opinion that the combination of very expensive health care and the fact that health insurance is tied to employment effectively add up to a form of slavery. That's a great evil. I'm sorry it so directly affects you personally. It's easy to point to the employers who apparently benefit from the situation, but they didn't ask for things to be this way and are also struggling with how expensive your insurance is. If you lose health insurance in a layoff, that's an indication that the problem is bigger than your employer can handle on your behalf. You don't make enough money to cover your expenses - a harsh situation, but fundamentally a problem for charity, not for business.
I think when we suffer, or are afraid we will suffer, it is easy to get angry at the wrong people. I would suggest that the billionaire next door has nothing to do with your medical stress (and for all you know, may be running a foundation to cure your disease), and that your beef ought to be with a medical industry that makes critical treatment so expensive and leaves you with so few alternatives. That is the kidnapper in this scenario, and everything else is arguing over who should pay the ransom. I could point to a dozen cursed mechanisms that make things that way. With pharmaceuticals alone, there seem to be a hundred different flavors of people held hostage by extremely and unnecessarily expensive treatments - a famous one being diabetics needing hundreds of dollars to pay for a medicine that the veterinary world manages to produce for horses for mere cents.
The cost of medicine is making us poor, and somewhat enslaved to boot. This is not a problem of inequality. Medicare is an attempt to provide a financially equitable solution, and is struggling on both ends: doctors refusing to take it because it doesn't pay enough to cover their expenses, and the government concerned that the program is so expensive, it couldn't be paid for no matter how much you took from all the rich people. The problem is not the distribution of money, but the cost of the service itself.
The industry is in crisis on many levels, and due for a total reboot. And there are lots of (sometimes rich!) people attempting just that. I can point to the direct primary care phenomenon and the recent revolution in type 2 diabetes care as two obvious and recent ones. But there are zillions - I even see YC companies in the health space pretty frequently.
Broadly speaking, I would say that we as a population are becoming sicker and are leaning on a medical industry that can't own up to its own inability to make us well - but is willing to very expensively fail at the job. (And I don't just mean obesity and heart disease, though those are obvious examples - it seems to me that many health problems follow this pattern.) That opinion puts me pretty far outside the mainstream, but then again I think it is becoming increasingly obvious that the mainstream is in crisis.
There are specific paths out of the disaster, for specific people and specific problems. Look for them, and keep looking, and help others. In the mean time, be careful with frustration and rage. Plenty of forces want to exploit your anger for their ends - don't get played. Be clear on what the problem actually is and stay focused on that.
[1] I am using "Medicare" as a metonymy for Medicare, Medicaid, and similar plans both real and proposed, to pay for medical care via taxes.
They are trying to trick you into thinking more taxes (and therefore more government) is a good idea, when the better idea is just enforcing antitrust law again because the problem isnt rich people, its the market power their corporations can exert. Amazon isn't the problem. Amazon being able to exert marketpower to abuse their customers and suppliers is. The solution is outlawing bad practices up to breaking up the market power abusing company if mitigation doesnt seem possible.
also, it is extremely annoying when people mislead by looking at personal income tax without adjuating the effective tax rate up by what has already been paid by the corporation. Dividend and cap gains taxes should be lower because the corp pays tax and how a dollar is earned shouldnt affect the tax paid on it. The goal is for the corp tax plus the dividend/cap gains tax to roughly equal what the tax would be if the person just earned the dollar personally and it largely does that at these rates.
More taxes or better tax enforcement doesn’t necessarily mean more government. Those revenues can be applied to closing the budget deficit and even paying down national debt, as the Clinton administration was able to do in the 90s.
Lets ignore that it's not really clear that Clinton raised taxes (he increased the income tax rate but dropped the capital gains tax rate, which is pretty unclear as to effect because it took a while for people to adjust their tax strategy to move as much as possible to capital gains). What happened under Clinton was primarily the same thing that happened up here in Canada, the dotcom caused a massive inflation in income as the stock bubble grew and was crystalized. It primarily wasn't more taxes, it was the taxes we primarily already had taking a share of a bigger pie. Overwhelmingly this isn't what happens though. Overwhelmingly more taxes mean more government in a historical context.
I pay taxes on the 'unrealized gains' relating to the value of my home. If I don't pay that tax, every year, I lose the asset. But please tell me again how taxing 'unrealized gains' is nonsense and has no precedent in the American tax system.
> The proposal to tax unrealized capital gains would not tax them as ordinary income.
The proposal we are discussing does align capital gains on ordinary income:
“Long-term capital gains and qualified dividends of taxpayers with taxable income of more than $1 million would be taxed at ordinary rates, with 37 percent generally being the highest rate.”
Another proposal is to even bring rates higher than now:
“A separate proposal would first raise the top ordinary rate to 39.6 percent … An additional proposal would increase the net investment income tax rate by 1.2 percentage points above $400,000 … Together, the proposals would increase the top marginal rate on long-term capital gains and qualified dividends to 44.6 percent,”
Those proposals were not for unrealized capital gains.
"The proposal would impose a minimum tax of 25 percent on total income, generally inclusive of unrealized capital gains, for all taxpayers with wealth (that is, the difference obtained by subtracting liabilities from assets) greater than $100 million."
You really don’t. Even setting aside income tax vs property tax, people misunderstand property taxes in the US considerably.
A budget is normally set and it is funded by property taxes as a ratio of the asset value compared to all other asset values in the county. If your home didn’t increase in value nor did anyone else’s you’d pay the same amount because that budget has to be realized one way or the other.
Some jurisdictions make this less transparent by taxing at a flat rate (x% of assessed home value) but that’s misleading because they determined that rate to set their budget to begin with. If there were a downturn in property values across the board that didn’t happen at the same time as a recession somehow such that the monetary outflow remained high (high employment for the local government, high costs, no deflation, etc) then there would be a budget crisis and they’d revisit that percentage.
Could the same work for financial assets, in principle? Ignoring second order effects on the economy.
The federal government sets a budget. Then taxes everyone's financial holdings in the same way as you describe (in the second paragraph) to meet that budget?
If I understand you correctly, the way it would work is that federal government sets a budget of $100. Alice has $1000 of stocks and Bob has $500 dollars of bonds. So Alice pays $66 of taxes and Bob $33. If next year Alice has $2000 dollars of stocks and Bob has $500 dollars of bonds. Then Alice pays $80 and Bob $20.
Theoretically? Sure. In practice? You really have to bear in mind second order ramifications. People will be disincentivized from holding a stock, especially one that has unrealized loss (theyll lose money AND pay for the privilege of doing so!). You’ll hurt long term stock holders but not tax day traders and wall street bros dealing in options. You’ll tax retirement portfolios more than the normal wealthy. If stocks take a haircut every year, holding onto cash and eating the inflation might become more attractive. P/Es will come crashing down, tanking the GDP as they go.
These are two different types of taxes. Your home, and any increase in value, is not taxed as income like what is trying to be done to unrealized gains. Your residence is actually a loss asset given the upkeep costs and property taxes that you pay without earning income on it. Property taxes only similarity with income taxes is that money is being collected by the state.
Government systems captured by the wealthy, tuned to serve the wealthy while we bicker over social issues (which are important) but also serve to distract from the people at the top screwing us all over so they can buy a Nth mega-yacht or vacation property.
98 comments
[ 4.5 ms ] story [ 195 ms ] threadThe fact that Jeff Bezos can manage to quality for a child tax credit is a bit of a loophole, though.
https://www.propublica.org/article/the-secret-irs-files-trov...
> In 2011, a year in which his wealth held roughly steady at $18 billion, Bezos filed a tax return reporting he lost money — his income that year was more than offset by investment losses. What’s more, because, according to the tax law, he made so little, he even claimed and received a $4,000 tax credit for his children.
You might argue that they considered the possibility and decided closing the loophole would do more harm than good (means testing frequently does this), but it certainly wasn't the intention of the credit to give $4k to the world's second wealthiest person.
If they did not intend for Bezos to take advantage of income limits, they should have written the law better so that he couldn't.
Again agreeing or disagreeing with policy doesn’t change if something is a loophole or not. Handouts because someone is installing rooftop solar are still handouts even if they get baked into tax policy.
Exercise an options contract and you’re taxed before you sell the shares. At that point you could still ultimately lose money just as with capital gains.
The problem with exercising an option is that the stock might not be traded or can't be sold, then you have to pay the tax out of pocket, since Uncle Sam doesn't want some private non-traded stock.
https://www.propublica.org/article/the-secret-irs-files-trov...
> So how do megabillionaires pay their megabills while opting for $1 salaries and hanging onto their stock? According to public documents and experts, the answer for some is borrowing money — lots of it.
After decades of avoiding taxes on it, there's a final loophole!
> The notion of dying as a tax benefit seems paradoxical. Normally when someone sells an asset, even a minute before they die, they owe 20% capital gains tax. But at death, that changes. Any capital gains till that moment are not taxed. This allows the ultrarich and their heirs to avoid paying billions in taxes. The “step-up in basis” is widely recognized by experts across the political spectrum as a flaw in the code.
I think you're may be confusing it with estate taxes. (Which the ProPublica article addresses in the subsequent few paragraphs.)
> And after death, the common understanding goes, there’s a final no-escape clause: the estate tax, which imposes a steep tax rate on sums over $11.7 million. ProPublica found that none of these factors alter the fundamental picture.
> It’s clear, though, from aggregate IRS data, tax research and what little trickles into the public arena about estate planning of the wealthy that they can readily escape turning over almost half of the value of their estates. Many of the richest create foundations for philanthropic giving, which provide large charitable tax deductions during their lifetimes and bypass the estate tax when they die.
> Wealth managers offer clients a range of opaque and complicated trusts that allow the wealthiest Americans to give large sums to their heirs without paying estate taxes. The IRS data obtained by ProPublica gives some insight into the ultrawealthy’s estate planning, showing hundreds of these trusts.
I was surprised to see that arrow 100% of the way to the left — but then after I voted, it changed to say "Most Readers Rated This Article CENTER / FAIR". So I'm not sure why it defaults to left, but I don't think that represents the actual rating.
See https://news.ycombinator.com/item?id=40321399#40322190
- you make $100k a year
- you pay $20k in taxes
- one year, you buy a house for $400k
- in the next year, its value doubles to $800k
- I say "your income (including unrealized gains) last year was $500k. You only paid $20k in taxes. That's only a 4% rate! How unfair!"
Among other things, I find the whole thing silly because of course it'll only be used to criticize the low tax rates of people who have unrealized gains. If Amazon crashes and Jeff Bezos's net worth goes down by $20B and he pays $100M in taxes, no one will write an article about how unfair it is to tax the poor guy $100M on his incredibly low income of negative $20B. Poor guy, he'd probably be the lowest-income person in the whole country!
I have bought, lived in, and sold several houses over my adult life. Never in those transactions was I “homeless” in the colloquial sense. Here is the trick in case you are interested and unsure how to do it—after your closing date is set…you go find another place to rent, you move all the stuff in the home that you are selling to the place you are renting. Then you perform the transaction to sell your home. Go home to your rental place, pour all the cash on your bed you earned from the sale of your home, and roll around in it.
To steel man property taxes, land is immobile and requires certain government services even when it is unused (perhaps even more-so). Taxing that property is a direct an efficient(from a taxation perspective) way to fund the government services associated with that property.
I'm trying to be more involved in my local community, but we need some change on the national level, and I'm concerned things wont get better until they gets worse first.
In percentage terms the middle class is overtaxed the most of course. But percentage terms are an extremely misleading way to look at this.
Being middle class I'm more angry that the bottom 50% on net pay no income taxes and I'm a net payer into their lifestyle.
Ah yes, that wonderful lifestyle of being poor. How dare they not pay for that privilege.
Top 1% of earners pay like 50% of all taxes
Top 10% pay 80% of all taxes
Bottom 50% pay 0% or negative amount of taxes after benefit transfers.
It's not. Relatively speaking, the rich do pay less % of their share of income in taxes, despite them obviously being way more able to pay taxes than the lower castes.
Warren Buffett infamously paid (and likely still pays) less of his income than his own secretary. This is beyond ridiculous.
And that doesn't even take into account the obscene gains in wealth that aren't taxed at all (partially, because taxing unrealized gains is hard). The rich just evade that tax (or practically, they shift the payment date towards infinity) by taking ultra low-interest loans on their stock and pay the interest from dividends.
[1] https://money.cnn.com/2013/03/04/news/economy/buffett-secret...
It's not entirely clear what you are trying to say, but as a share of income earned, the rich earn 20% of the income, they pay 40% of the income taxes collected by the government. They objectively pay more than a fair share.
The question is what one defines as fair. For me, fairness is defined as "how much can one pay in relation to his income"... and then it's simple: when the secretary earning 48k a year has to pay 5% more in taxes, that's 2.4k less for her - and she'll feel that very immediately. Meanwhile, assuming Buffett has a yearly income of 480 million dollars (officially, he has a 100k/y salary, but there's no way his real income is that low given his net worth of ~130 billion dollars, so I just plugged in some number that is likely still way too low), if he has to pay 5% more taxes that's 24 million dollars - a sum that won't even register on any of his decisions.
Once you pass a certain amount of wealth and/or income, you just have/earn so much that any kind of tax increase or decrease will not make any material difference in your lifestyle.
Therefore, "fairness" for me would be defined as "all members of the economy, both the poor and the rich, contribute to society in a way so that both can live a reasonable life after taxes".
Also mentioned in the article:
> Another factor is that many modern billionaires live off their wealth rather than their incomes, unlike most ordinary Americans.
Lucky duckies! https://gocomics.typepad.com/tomthedancingbugblog/2010/07/lu...
Also, how does the top 10% pay 80% of taxes but the top 1% pay 50%? I highly doubt they're paying 130% in taxes collectively...
The top 2-10% presumably pay about 30%.
I guess taxes are supposed to deal with this
I think many of the top tech billionaires have their wealth in company stock (in the case of Jeff Bezos and Steve Ballmer, Bill Gates has diversified away from just MSFT stock, Elon Musk is mostly TSLA and SpaceX)
If the rich actually sit on most of their wealth (all cash - 0% interest, no income, no interest-bearing instruments/bonds, no selling stocks) then they'd pay no taxes on their wealth in the USA. But inflation would hit them hard, especially in the past couple of years.
That would be sitting on it, yes.
Amazon gets money when they sell new shares in a public offering. Subsequent exchanges don’t affect their cash on hand.
Privately rich people have the power to change the world, sometimes for good and sometimes for evil. The dream is to eliminate the Bill Gateses, Elon Musks, Donald Trumps, and George Soroses of the world, so that only those connected to government and The Party have real financial power.
Draw the line low enough, and it might eliminate the Paul Grahams of the world. Or even, as in Russia, small time independent farmers (https://www.britannica.com/topic/kulak ).
I obviously think this is a terrible idea. Destroying the wealthy out of jealousy is a bloody impulse without a bottom that leaves everyone powerless. But it does greatly empower those who can make themselves exceptions to the rule, which is the actual point.
How about destroying the wealthy because they ultimately decide if your child will get medical treatment?
[0]https://www.vanityfair.com/news/elon-musk-twitter-ultimatum
Rage without justice or reason is a solid indication you're being exploited. Not generally for your benefit, either. The people who want you to help them destroy the wealthy don't intend to make you president when they're done.
For what it's worth, I'm of the opinion that the combination of very expensive health care and the fact that health insurance is tied to employment effectively add up to a form of slavery. That's a great evil. I'm sorry it so directly affects you personally. It's easy to point to the employers who apparently benefit from the situation, but they didn't ask for things to be this way and are also struggling with how expensive your insurance is. If you lose health insurance in a layoff, that's an indication that the problem is bigger than your employer can handle on your behalf. You don't make enough money to cover your expenses - a harsh situation, but fundamentally a problem for charity, not for business.
I think when we suffer, or are afraid we will suffer, it is easy to get angry at the wrong people. I would suggest that the billionaire next door has nothing to do with your medical stress (and for all you know, may be running a foundation to cure your disease), and that your beef ought to be with a medical industry that makes critical treatment so expensive and leaves you with so few alternatives. That is the kidnapper in this scenario, and everything else is arguing over who should pay the ransom. I could point to a dozen cursed mechanisms that make things that way. With pharmaceuticals alone, there seem to be a hundred different flavors of people held hostage by extremely and unnecessarily expensive treatments - a famous one being diabetics needing hundreds of dollars to pay for a medicine that the veterinary world manages to produce for horses for mere cents.
The cost of medicine is making us poor, and somewhat enslaved to boot. This is not a problem of inequality. Medicare is an attempt to provide a financially equitable solution, and is struggling on both ends: doctors refusing to take it because it doesn't pay enough to cover their expenses, and the government concerned that the program is so expensive, it couldn't be paid for no matter how much you took from all the rich people. The problem is not the distribution of money, but the cost of the service itself.
The industry is in crisis on many levels, and due for a total reboot. And there are lots of (sometimes rich!) people attempting just that. I can point to the direct primary care phenomenon and the recent revolution in type 2 diabetes care as two obvious and recent ones. But there are zillions - I even see YC companies in the health space pretty frequently.
Broadly speaking, I would say that we as a population are becoming sicker and are leaning on a medical industry that can't own up to its own inability to make us well - but is willing to very expensively fail at the job. (And I don't just mean obesity and heart disease, though those are obvious examples - it seems to me that many health problems follow this pattern.) That opinion puts me pretty far outside the mainstream, but then again I think it is becoming increasingly obvious that the mainstream is in crisis.
There are specific paths out of the disaster, for specific people and specific problems. Look for them, and keep looking, and help others. In the mean time, be careful with frustration and rage. Plenty of forces want to exploit your anger for their ends - don't get played. Be clear on what the problem actually is and stay focused on that.
[1] I am using "Medicare" as a metonymy for Medicare, Medicaid, and similar plans both real and proposed, to pay for medical care via taxes.
also, it is extremely annoying when people mislead by looking at personal income tax without adjuating the effective tax rate up by what has already been paid by the corporation. Dividend and cap gains taxes should be lower because the corp pays tax and how a dollar is earned shouldnt affect the tax paid on it. The goal is for the corp tax plus the dividend/cap gains tax to roughly equal what the tax would be if the person just earned the dollar personally and it largely does that at these rates.
The proposal to tax unrealized capital gains would not tax them as ordinary income.
The proposal we are discussing does align capital gains on ordinary income:
“Long-term capital gains and qualified dividends of taxpayers with taxable income of more than $1 million would be taxed at ordinary rates, with 37 percent generally being the highest rate.”
Another proposal is to even bring rates higher than now:
“A separate proposal would first raise the top ordinary rate to 39.6 percent … An additional proposal would increase the net investment income tax rate by 1.2 percentage points above $400,000 … Together, the proposals would increase the top marginal rate on long-term capital gains and qualified dividends to 44.6 percent,”
"The proposal would impose a minimum tax of 25 percent on total income, generally inclusive of unrealized capital gains, for all taxpayers with wealth (that is, the difference obtained by subtracting liabilities from assets) greater than $100 million."
A budget is normally set and it is funded by property taxes as a ratio of the asset value compared to all other asset values in the county. If your home didn’t increase in value nor did anyone else’s you’d pay the same amount because that budget has to be realized one way or the other.
Some jurisdictions make this less transparent by taxing at a flat rate (x% of assessed home value) but that’s misleading because they determined that rate to set their budget to begin with. If there were a downturn in property values across the board that didn’t happen at the same time as a recession somehow such that the monetary outflow remained high (high employment for the local government, high costs, no deflation, etc) then there would be a budget crisis and they’d revisit that percentage.
The federal government sets a budget. Then taxes everyone's financial holdings in the same way as you describe (in the second paragraph) to meet that budget?
If I understand you correctly, the way it would work is that federal government sets a budget of $100. Alice has $1000 of stocks and Bob has $500 dollars of bonds. So Alice pays $66 of taxes and Bob $33. If next year Alice has $2000 dollars of stocks and Bob has $500 dollars of bonds. Then Alice pays $80 and Bob $20.
1) The rich have never paid less
2) The bottom half of earners have never paid more
3) The Carnegies and Rockefellers existed despite the oppressive tax rate of the past
So what gives?