Somehow I missed that post…sorry.
It looks like this plan is not in the 1.7T framework laid out today.
Instead the revenue generators are:
- A 15 percent minimum tax on the reported profits of large corporations.
- Efforts to reduce profit-shifting by multinational companies , including a separate 15 percent minimum tax on profits earned by U.S. companies abroad — and tax penalties for companies that have their headquarters in global tax havens.
- A 1 percent tax on corporate stock buybacks .
- Increased enforcement for large corporations and the wealthy at the Internal Revenue Service.
- An additional 5 percent tax on incomes exceeding $10 million a year and another 3 percent tax on incomes above $25 million.
- Efforts to limit business losses for the very wealthy and to impose a 3.8 percent Medicare tax on certain people earning more than $400,000 a year who did not previously pay that tax.
Cite: NY Times live updates.
And I wish someone would give me a billion dollars. But neither is gonna happen. Apparently, the plan is to tax unrealized gains only on things like stocks and bonds. So your Mickey Mantle rookie card will be taxed only when you sell it. Anyway the partisan courts will throw it out.
Where did you see this? The latest I saw didn’t include the UCG tax at all.
Thanks for summarizing. On my to-do list is to dig into the above bullet. GAAP and IRS don’t always count things the same way, which leads to some (not all) of the outraged headlines.
I’m assuming the post in question was not made with your latest update in mind.
That’s my point. The card is bringing him net worth only on paper. He has no additional funds in the bank to pay any hypothetical increase in value of the card. So likely he would have to sell the card to pay the taxes and realize his gain (minus the taxes) immediately. And the statement that this would only apply to billionaires is answered by, 1) as said before, for right now, and 2) so what because billionaires have to do the same thing only on a larger scale. As noted, billionaires have very little (comparatively) cash on hand and have to liquidate assets to pay this new tax, so it is effectively like my dad’s baseball card.
It then introduces an unknown externality in the system. My dad and everyone like him are flooding the market with collectibles, antiques, stocks. land, etc. and nobody is wanting to buy for the very same reason. Prices crater causing not only individuals but the government to lose money. This just seems to be very poorly thought out and it comes from the same flawed idea that is behind all of these proposals, namely, that the rich just have this untapped pool of money that we need to get at and that we can do so without causing major problems.
This could be greatly reduced by just using an average calculated over some period, and anyone potentially subject to the tax can sell some options to hedge against extreme moves.
If you are wealthy enough for your net worth to go up or down $10 billion on a day’s trading, you already have an army of finance people figuring out how to limit your risk. This is one more factor for them to put into their financial models and add some automatic trades to sell off a bit when the price spikes so you can pay your expected tax bill.
I’m not convinced this is really much of a downside. The Federal Budget doesn’t seem to be particularly influenced by tax revenues in a given year. This means that deficits will be larger some years and smaller some other ones. The US bond market has been remarkably stable over a variety of deficit levels for a long time, so as long as this increases taxes on net over a period of several years, this should be fine.
This kind of argument makes sense when considering State taxes like this, but not really Federal taxes.
I agree that we can’t just fund everything by soaking the rich, but I think it’s pretty problematic to have wealth inequality keep increasing year over year. There are possible policies and rates that would in fact be ruinous, but there are also some that would not be.
This argument is weird. I don’t know about you, but I already pay an annual tax based on the value of my house. Most homeowners do. And for most people in the lower 99.9%, the value of their house is a pretty good proxy for their net worth. So everyone but the top 0.1% already pays a wealth tax. Places I’ve lived, the property tax is about 1% of assessed value per year. So, in your example, if I owned that house, I’d owe $20k a year for the last 40 years. Except I have to actually pay it every year (I can’t defer until a sale) and total tax is unbounded (not capped at 49%). Sounds like the billionaires are still getting a better deal than I get.
I find the “billionaires would have to sell stock to pay this tax” argument fairly unconvincing. If my employer paid me in stock, then I’d have to sell stock to pay my taxes. If I didn’t have some other income stream to pay my property taxes, I’d have to rent my house out or take a loan against it or sell it off piecemeal (harder for a house). These arguments seem to amount to “rich people should get to pay lower tax rates because making them pay higher ones would mean they’d lose some of their wealth!”
While I do not know what the answer might be, certainly something needs to be done. The current trends in wealth inequality are not sustainable. Not only is wealth inequality trending in a bad direction, but the sentiment against such inequality is growing. That creates social instability (hmmm have we seen any of that recently?). The ultrarich have benefited from a legal and economic framework that has allowed them to become richer at the expense of everybody else (including the rich). There’s nothing wrong with saying that some type of redistribution needs to take place to level the playing field. We certainly shouldn’t be relying on the kind-heartedness and some sense of personal responsibility of the ultra-rich, and we certainly cannot rely on the laughable trickle-down effect. Again, how things should be levelled, I don’t know. Certainly, this is one way to do it that should work until they figure out a new way to squirm out of it (i.e., get Republicans in power again). The alternative is over the long term increased political and social instability.
My rule of thumb is if Elon Musk thinks it is a bad idea, then it must be good for the country. And vice versa.
But seriously, is there a good reason why the richest person in the world pays no income tax? Especially since his fortune was paid for on the back of government money.
I mean, the simple answer is that he didn’t make any income in that year. There have been a few years since 2018, so I doubt that it’s true in general that he pays no income tax and that year is cherry-picked.
I think he should probably pay more in taxes, but picking a single year and a single type of tax is not a reasoned argument.
I googled around a bit. According to Forbes, Elon’s net worth actually went down in 2018. And he was “only” worth $20B back then. It’s only in the last couple years that he’s gotten into Bezos territory.
Even if we implemented a billionaire wealth tax, there’d be some year when Tesla stock dropped by 3% or something and he got a refund for previous taxes paid we’d have to read a bunch of stupid articles with headlines like “Elon Musk is worth $376 billion, yet the IRS gave him $160 million last year!!!1!”
Get your pitchforks.
I’m assuming a carry-forward would be more likely than past-year refunds. Not that this would eliminate outrage wharrgarbl of the same flavor.
It must be legal as futures are already taxed on a mark-to-market basis. That is, unrealized gains and losses are taxed.