Interesting - So, basically, you are questioning the philosophical basis of ‘income based’ governmental revenue?
Your posited situation is that you have lots of money, but no ‘income’, and that therefore, you wouldn’t pay any income tax. (am I correct?)
I think I’m okay with that - the alternative (tax on value?) seems less workable.
On the other hand, maybe a sales tax based system would be more fair in the situation you describe. On the other other hand, you’ve already been taxed on the money in your closet once. You shouldn’t have to pay a second time. <shrug>
Yeah, as long as you aren’t trying to claim food stamps I don’t see why the authorities should be concerned with you having a large pile of legally-earned cash at home.
You’ll pay your taxes on that income this year. It’ll be enough to cover your fair share of the overhead for many years to come. Future tax (assuming you truly don’t invest) will be in the form of property and sales tax. It all ought to come out just fine.
No income, so no income taxes. What you have are now assets, not income. Whatever taxes the govt. would get would come from sales tax, property tax and the like. So zero, zero, and zero.
Do you mean next year when you file your taxes for this year?
Your INCOME tax rate should and will be zero once you’ve paid taxes on your huge income.
The Nancy Reagan Home for the Humor Impaired will be back wanting another donation though and now you are going to be on the mailing list for the Dick Cheney Home for Gunshot Victims.
Since this is GD, does anybody actually want to take the Devil’s Advocate position that some kind of “wealth” tax needs to be imposed? Or that there is a moral imperative that such assets be taxed?
The taxes on his $2M would have reduced it to about $1,200,000. Assuming he makes 2.5% on that (it notes he put it in the bank) his income should be about $30k; which will be taxed - leaving him about $19k to live on. If that qualifies him for food stamps, I say, so be it. He has certainly paid his share of taxes, and deserves to benefit from any governemnt program he’s paid into.
Morals have nothing to do with your tax rate, but I expect you know that.
My preference would be that you do not pay any tax on the winnings in the first place. This is how it is in Canada, and it seems to work just fine.
Then, if you seriously just stack the money in your closet, I would say you should pay $0 in tax, since you have no income.
If you invest the money, I think that you should pay the same amount of tax based on the amount of money you make in the year. In other words, the same rate as anyone else who is bringing in the same amount of money,no matter how; salary, interest on bonds, capital gains from stocks, whatever. No preferential treatment for how you get your income; all income is taxed at the same rate.
I don’t think that because you are taxed at the same rate, that you will not chase after the best returns.
As to what rate? Well, if you invest 80 million at 0.01%, and get $80,000/year income, I would expect you to pay a rate of 25% on that income between $35,351 – $85,650.
If you invested more wisely, and got a better rate of return, I would expect you to pay a rate of 35% on that income above $388,351
The OP posits keeping the cash stacked in a closet. So, no return on investment and no taxable interest or dividend income.
I imagine most people can live out the rest of their lives quite comfortably on $80M without investing it and still leave a fair amount for the kids (of course THAT money would be taxed after Bricker kicked the bucket).
Or until word gets around that he has eighty million dollars in cash sitting around in his closet and someone shows up to bop him on the head and walk off with it.
I see a lot of “no revenue-no tax” answers here. Can someone come up with a link where that result actually happened in regards to a government run lottery?
Well, I’m not sure. I’ve read a bunch of commentary over the years that tied taxation and tax rates and tax policy to a moral grounding of some kind. At the heart of it, in fact, I’d at least offer the proposition that ANY tax policy, whether based on income or wealth, should have some basis in the moral understanding that an individual may be separated from property that he owns for reasons he may not personally agree with but serve the social contract.
One reason I wrote this OP was to explore that proposition’s boundaries. The other was to probe the response to an idea of wealth-based taxation as opposed to, or in addition to, income-based taxation.
Not saying you’re suggesting otherwise, but I think that welfare requires disclosure of assets. In real life, you’d better sell your boat and three caddies before you start begging for WIC. (I don’t know this for sure, though.)