I can’t disagree that people are misled, but given all the facts not many will point to the Effective Tax Rate as being the big problem. People may not know the details but they know the rich have ways to make money and avoid paying taxes on it that everybody else does not.
I guess I’m suggesting that we’d have to start with explaining to people what it is that I’m pointing out.
Is there outrage at the revelations from DJT’s taxes ?
If so, what if he really isn’t an outlier but much closer to being representative of the true taxation of the wealthiest X (pick your number) percent of Americans.
I checked. It looks like 30% of US taxpayers itemize.
And raising the standard deduction (2018) shrinks that number.
And only some % of those people would ever stop to consider the point I’m making.
Which leaves everybody else … content that Gates and Buffett pay federal income taxes at a higher rate than I do.
Which … to my original point … is almost surely just bullshit.
Decisions like these (deciding on a metric, how and when to use it) are made at the top. People at the top aren’t generally stupid, but some of them are evil.
I’d put this charade squarely in the ‘evil’ category 
the top 1% who get their income as income do. they may pay a 40% total tax rate. a doctor making 500k in income may pay 200k on taxes.
The top 0.1% who get their income as investments? no they don’t pay enough. they pay much lower rates.
We also need a wealth tax that kicks in on wealth higher than 50 million or so.
How would a “wealth tax” work?
If the stock market goes up one day and pushes your new worth over some threshold, does the IRS seize some of your assets?
Is that how things work today, if your income one year is unexpectedly high? Does the IRS seize some of your assets? Or do you file your tax return as always and perhaps pay more than the previous year?
It doesn’t work that way AT ALL.
You are not taxed on assets - only income. So, your stock market holdings aren’t taxed until you sell them (or get dividends in cash). So, I repeat - how would a “wealth tax” work?
A person would be required to report the value of their assets at year end, and would be given a tax bill based on the value. How they go about paying the bill is their own concern.
The fact that stock market holdings aren’t taxed is a function of tax law, not an immutable function of reality. It is the very thing that would be changed under a wealth tax.
How about a wealth tax based on a person’s annual increase in wealth?
Is that how property taxes work?
If your property value increases, do the relevant authorities come and seize some of your property?
And, personally, I do think that that is the best way of doing a wealth tax, through a federal property tax.
You get say a million or so tax free(I am flexible on the deduction), and then you start paying on the remainder. Based on total holdings, not per property.
That’s always going to happen though, unless the government starts confiscating wealth instead of taxing income. If I make $1,000,000/year and am taxed at 40%, while you make $2,000,000/year and are taxed at 50%, your wealth is going to increase more than mine, even though you’re paying a far higher amount of taxes. Also, keep in mind that wealth is retained earnings. If we have equivalent lifestyles, then your wealth increase compared to mine will be even greater.
That’s not the reality. You may be getting taxed at 40% on your million dollars while I am being taxed at 20% on my two million dollars. How do you justify a system where I made more money and paid a lower tax rate?
You already have that. It’s called an income tax. Where do you think the increase in wealth is coming from?
The question from the OP is whether large amounts of income that ostensibly should be taxed is being avoided from taxation by so-called loopholes. That’s apparently how Trump keeps his tax bill low. A bigger question relating to Warren’s wealth tax is whether it’s desirable to tax unrealised gains in asset values. That idea sounds attractive to some people who are thinking about Jeff Bezos’s stock market gains in 2020. It sounds pretty horrible if you start applying it to Jeff Bezos’s wealth in 1996.
If you hit the lottery for half a billion dollars you can pay taxes on the lump sum one time, tuck the rest in a non-interest bearing account, live off the residual and never pay income taxes again. I’m ok with that. You “earned” it, you paid your fair share; it just happened to all happen in one year.
A wealth tax would be enormously complicated to administer. A fair tax code with high progressivity (and a fully funded IRS to oversee it) would be much healthier for the country. Current rates are ridiculously low and the current code is far more complex than it needs to be.
(erroneously posted first in another thread)
No, this is not true. Have you been reading the posts?
Income taxes only tax income. There are lots of ways for your wealth to increase that aren’t considered to be income.
No, that is a tax on income.
Capital gains are not taxed as income.
No, wealth can increase without any income at all.
A 2% wealth tax on your winnings would cost you about 5 million a year, (Assuming that you end up with half of that half billion.)
You’d still never run out of money, even if you just keep the money in a non-interest bearing account.
However, if you invest it even slightly, then you would be getting much better than a 2% return. Which means that, even paying the wealth tax, you are still coming out well ahead.
I don’t justify it, especially if we’re talking about straight income, i.e. salary and bonuses. The income tax system is meant to be progressive, and should not contain loopholes allowing non-investment income to avoid tax. Lower capital gains tax rates are a bit trickier since they’re meant to encourage investment and ultimately increase the amount of tax by having a larger pool of income to tax from. That seems to have worked for when the long-term capital gains rate was set at 20%, but not from when it was changed to 15%. Law of diminishing returns, I expect.
How so? Reporting requirements would be similar to that for reporting income; we have something similar on a local basis for property taxes.
Actually, that’s an argument for not investing in real estate - no tax on the holdings.