# Make the rich pay their fair share! **URL:** \ **Category:** Miscellaneous and Personal Stuff I Must Share\ **Created:** [December 1, 2024, 3:38pm UTC](https://boards.straightdope.com/t/make-the-rich-pay-their-fair-share/1011019 "2024-12-01T15:38:45Z")\ **Posts on this page:** 20\ **Page:** 13
**Author:** ![Measure\_for\_Measure](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/measure_for_measure/32/557_2.png) [@Measure\_for\_Measure](https://boards.straightdope.com/u/Measure_for_Measure)\ **Post date:** [December 8, 2024, 9:25pm UTC](https://boards.straightdope.com/t/make-the-rich-pay-their-fair-share/1011019/241 "2024-12-08T21:25:24Z")
> [@Chronos](#): > > That does bring up another loophole, though, that the charities created by the ultra-rich often aren’t regulated enough, so you can end up with things like the untaxed charity buying a private jet for the use of the director of the charity (who, surprise surprise, is the ultra-rich person who created the charity). This may or may not be legal, but it’s often not enforced. Also, charitable donations can be given to the Cato Foundation or the Heritage Foundation and receive a tax deduction. I took 2 extreme cases: I daresay most gazillionaires don’t direct their charitable funds in especially productive ways. But it’s their money! Well sort of. > [@OldOlds](#): > > This is one of my pet peeves. This argument that when certain entities (wealthy, corporations) have more money they invest it in job-creation is annoying. They MAY do so, but very, very often they just sit on it. If I plow a billion dollars into the stock of a billion dollar company, I can push the value of that company up, but they don’t necessarily spend more money. A bunch of investors just have (now) a big unrealized gain. There’s a lot of foggy thinking on this subject in the press and even in this thread. Drive the price of the stock up and you reduce the cost of capital of that stock and stimulate capital spending. So that’s an offset. How large is that offset? That’s an _empirical_ question, not settled in an armchair. What drives a firm’s decision to buy new machines, land, or invest in research? Lots of things. Does the stock price play a role? Yes. Is it large? No, it’s small, almost a side show. (An exception is for IPOs, when new stock is issued: in those cases investor sentiment matters.) [Cite](https://scholar.harvard.edu/files/shleifer/files/stock_market_and_investment.pdf) So sure, increase estate taxes and you might affect stock market prices, something you really shouldn’t care about if you are concerned with long run growth. > [@bump](#): > > That other $20k are unrealized gains. _ **They’re not actual money.** _ They’re more like an estimate of what you could get if you sold at any particular moment. But it’s not actually anything other than a bogus number until the moment that a particular share is sold and that value is realized. That’s the problem with taxing it; you’re taxing someone on something that doesn’t really exist, and in many cases is based on complete nonsense. So stock market prices can be complete nonsense. Sure, I’ll agree. ISTM though that taxing them should be manageable, _provided there’s a liquid market in the assets_. If there isn’t -as in the case of private equity - then things get complicated. Tax unrealized capital gains in a liquid stock and the shareholder can either sell the stock to raise funds to pay for taxes, or put them in escrow and borrow funds to pay those taxes. If the stock price declines, no worries the investor can pay off the loan with the tax refund. Provided the law is well crafted. Yeah, there are details to consider. > [@Exapno\_Mapcase](#): > > The proper analogy is potential energy. It has notional value but is in fact worthless until tapped and converted into kinetic energy. This is an interesting analogy that deserves exploration. ---
**Author:** ![OldOlds](https://avatars.discourse-cdn.com/v4/letter/o/a3d4f5/32.png) [@OldOlds](https://boards.straightdope.com/u/OldOlds)\ **Post date:** [December 8, 2024, 9:34pm UTC](https://boards.straightdope.com/t/make-the-rich-pay-their-fair-share/1011019/242 "2024-12-08T21:34:26Z")
I don’t understand why we’re debating the “reality” of unrealized gains. I think everyone here understands that unrealized gains are potential. I don’t see anyone here advocating for taxing those, though I am aware that it is a position held by some. Count me among those who think it’s challenging and stupid, for many of the reasons given here. Not least of which is in fact the possibility they could recede in value. But, as also pointed out, many of those gains are tied to things of real and measurable value. Ownership in the US stock market IS such a thing. And the fact that lenders are willing to take that as collateral is proof. They’ll add a certain % of a hedge- perhaps only loaning to 10% of holdings. But if I have $50 billion in holdings, 10% is plenty. And if we’re talking broad, total market holdings, 10% would be extremely conservative. Now add in real estate, gold, yachts, a few Rembrandts? I’m sure we can get a much higher LTV. So it IS real wealth. And since, historically, we can rely on such a portfolio to rise over time, we can expect that unless we have a serious spending problem, our $50 billion can continuously fund loans _at an ever shrinking share of our wealth._ I see lots of explaining of how things work, which frankly I think I understand pretty well. I don’t see a lot of positions on if, how, and whether we should be taxing people whose wealth is nearly all CG. ---
**Author:** ![steronz](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/steronz/32/11765_2.png) [@steronz](https://boards.straightdope.com/u/steronz)\ **Post date:** [December 8, 2024, 9:43pm UTC](https://boards.straightdope.com/t/make-the-rich-pay-their-fair-share/1011019/243 "2024-12-08T21:43:23Z")
Are you talking about how the mechanics would work? Or the legality? Or the politics? ---
**Author:** ![OldOlds](https://avatars.discourse-cdn.com/v4/letter/o/a3d4f5/32.png) [@OldOlds](https://boards.straightdope.com/u/OldOlds)\ **Post date:** [December 8, 2024, 9:51pm UTC](https://boards.straightdope.com/t/make-the-rich-pay-their-fair-share/1011019/244 "2024-12-08T21:51:20Z")
I’m pro-tangent. Knock yourself out (though, it’s not my thread). My position is that it’s difficult to tax unrealized gains, and would hurt a lot of people who aren’t actually rich. However, we could change the laws so that (say) the first ten million gets the step-up upon death, and disallow things like trusts to shield the money. That is, live it up, because when you die, that $100 billion is gettin’ taxed. ---
**Author:** ![Exapno\_Mapcase](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/exapno_mapcase/32/1051_2.png) [@Exapno\_Mapcase](https://boards.straightdope.com/u/Exapno_Mapcase)\ **Post date:** [December 8, 2024, 10:01pm UTC](https://boards.straightdope.com/t/make-the-rich-pay-their-fair-share/1011019/245 "2024-12-08T22:01:27Z")
> [@OldOlds](#): > > I see lots of explaining of how things work, which frankly I think I understand pretty well. I don’t see a lot of positions on if, how, and whether we should be taxing people whose wealth is nearly all CG. As I mentioned above, Piketty has a chapter on a global wealth tax. Not only does he admit that the possibility is purely utopian, he goes on at length to show how difficult implementation would be without a list of seemingly impossible simultaneous changes to the world economic system. I wouldn’t be interested in slogging through the thoughts on a wealth tax from a bunch of people who frankly are unsure of the basic concepts of wealth, income, money, and value. We have had multiple mentions of ways the system could be tweaked to have the rich pay a fairer share to the government, though, if the political will were there. It’s not like the subject hasn’t come up a million times in a million places. Ideas abound. How to achieve the political will is still unknown. Worst case, the system may require another Depression-like collapse. Unfortunately, that may also be the best case. ---
**Author:** ![Kron](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/kron/32/12444_2.png) [@Kron](https://boards.straightdope.com/u/Kron)\ **Post date:** [December 8, 2024, 11:56pm UTC](https://boards.straightdope.com/t/make-the-rich-pay-their-fair-share/1011019/246 "2024-12-08T23:56:41Z")
> [@OldOlds](#): > > difficult to tax unrealized gains In the “easy and wrong” category, wouldn’t it be easiest to tax loans as income, with some carveouts to protect the non-wealthy (no tax on loans for a primary residence, no tax for loans on a first vehicle, others as needed…) Basically, if Scrooge McDuck is living the high life by using “unrealized gains” as collateral for everyday walkin’ around money, then the amount of money he had available for spending on hookers and blow has gone up… in other words, he had some income that he gets to use as he wishes. He still has a leg up on the plebs like me, who doesn’t get to STILL earn money using that collateral, but at least he’s not getting to live for free via tax loopholes. ---
**Author:** ![Robot\_Arm](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/robot_arm/32/18280_2.png) [@Robot\_Arm](https://boards.straightdope.com/u/Robot_Arm)\ **Post date:** [December 9, 2024, 12:21am UTC](https://boards.straightdope.com/t/make-the-rich-pay-their-fair-share/1011019/247 "2024-12-09T00:21:00Z")
> [@Kron](#): > > In the “easy and wrong” category, wouldn’t it be easiest to tax loans as income, with some carveouts to protect the non-wealthy (no tax on loans for a primary residence, no tax for loans on a first vehicle, others as needed…) I was thinking the other way around. Don’t tax the loan, tax the gain on the asset used to secure the loan. Using an unrealized capital gain as security for a loan should count as a form of realizing the gain. Between you and the bank, you are establishing a value for that asset, and gaining a benefit based on that valuation. It’s not an imaginary gain anymore. That’s very similar to what happens when you sell a stock. If the value you agree on with the bank is more than what you paid for the asset, that should be a taxable gain. ---
**Author:** ![Kron](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/kron/32/12444_2.png) [@Kron](https://boards.straightdope.com/u/Kron)\ **Post date:** [December 9, 2024, 12:51am UTC](https://boards.straightdope.com/t/make-the-rich-pay-their-fair-share/1011019/248 "2024-12-09T00:51:31Z")
Hell, that’s easier than my idea, and doesn’t require complicated carveouts, and applies equally to all. ---
**Author:** ![epbrown](https://avatars.discourse-cdn.com/v4/letter/e/e47774/32.png) [@epbrown](https://boards.straightdope.com/u/epbrown)\ **Post date:** [December 9, 2024, 3:22am UTC](https://boards.straightdope.com/t/make-the-rich-pay-their-fair-share/1011019/249 "2024-12-09T03:22:37Z")
> [@crowmanyclouds](#): > > Yeah, but can you point to that as meaning that a million isn’t rich when at the same time so many are complaining that the cost of houses means they don’t see themselves ever owning a house? Those people are either speaking from a place of privilege or suffering from a misconception. Owning a house was the American **Dream** not the American Typical Lifestyle - my grandparents had 10 kids, and they didn’t buy a house until they were nearly 60, and they could afford it because they got an insurance payout when I lost both parents. Of their 10 working-class kids, only one of them owns a house. Of the fifty-something grandkids, less than 10 own their own homes. The spike in home ownership after WW2 is the anomaly, not the norm. It’s not some huge injustice that later generations can’t afford homes. ---
**Author:** ![crowmanyclouds](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/crowmanyclouds/32/19884_2.png) [@crowmanyclouds](https://boards.straightdope.com/u/crowmanyclouds)\ **Post date:** [December 9, 2024, 3:27am UTC](https://boards.straightdope.com/t/make-the-rich-pay-their-fair-share/1011019/250 "2024-12-09T03:27:32Z")
Yeah, somehow we get ‘owns a house’ from ‘rents a house from a mortgage company’. ---
**Author:** ![epbrown](https://avatars.discourse-cdn.com/v4/letter/e/e47774/32.png) [@epbrown](https://boards.straightdope.com/u/epbrown)\ **Post date:** [December 9, 2024, 3:30am UTC](https://boards.straightdope.com/t/make-the-rich-pay-their-fair-share/1011019/251 "2024-12-09T03:30:13Z")
Exactly. The chief complaint about gentrification displacing long-time residents is that property values increase and the residents can’t afford to pay the tax on the unrealized gains their homes have made. When it happens to wealthy people, though, what an outrage! ---
**Author:** ![Cheesesteak](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/cheesesteak/32/3694_2.png) [@Cheesesteak](https://boards.straightdope.com/u/Cheesesteak)\ **Post date:** [December 9, 2024, 1:51pm UTC](https://boards.straightdope.com/t/make-the-rich-pay-their-fair-share/1011019/252 "2024-12-09T13:51:03Z")
> [@OldOlds](#): > > My position is that it’s difficult to tax unrealized gains As noted already, thousands of podunk towns in this country tax unrealized gains on real estate, and every single one of them has to run around every few years, at their own expense, to estimate the values they’re going to tax you on. The stock market has a listed market price recorded every couple of minutes (or seconds) every day for every asset people own. Things not in the stock market (like jewelry or art) are either of insignificant enough value to not be estimated anywhere or they are covered by an insurance policy where the client signs a document stating the value of the items. ---
**Author:** ![Northern\_Piper](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/northern_piper/32/5304_2.png) [@Northern\_Piper](https://boards.straightdope.com/u/Northern_Piper)\ **Post date:** [December 9, 2024, 4:13pm UTC](https://boards.straightdope.com/t/make-the-rich-pay-their-fair-share/1011019/253 "2024-12-09T16:13:33Z")
I’m increasingly baffled by this argument that unrealized gains and increases in value are just imaginary and can’t possibly be used as the basis for taxes. Estimated values is the foundation of modern accounting and the balance sheet: Assets must equal liabilities and equity. And the value of the assets, liabilities and equity is based on current estimated values, not the values when the assets were acquired 20 years ago when the company bought a building, or the estimate of a liability of a loan when it was first acquired, before there were any payments and based on the interest rates five years ago. Contingent liabilities, like law suits, can be a major part of the liability side. The value of the owner’s own shares in the company have to be estimated. And accountants are very cautious to ensure that the estimated values meet generally accepted accounting practices, because their professional qualification depends on it. But when it’s a question of taxes, suddenly all that long-established accounting practice goes out the window and it’s just not possible to have an accurate estimate of value? That argument just doesn’t make sense to me. ---
**Author:** ![OldOlds](https://avatars.discourse-cdn.com/v4/letter/o/a3d4f5/32.png) [@OldOlds](https://boards.straightdope.com/u/OldOlds)\ **Post date:** [December 9, 2024, 4:26pm UTC](https://boards.straightdope.com/t/make-the-rich-pay-their-fair-share/1011019/254 "2024-12-09T16:26:56Z")
I don’t think I’ve seen an adequate explanation for how to handle capital losses. Which can be transitory or permanent. And I don’t think the housing example applies. I also worry it will end up hurting regular folks. Lots of people are saving for retirement, and as noted, saving a million dollars over a career, that one is going to live on in retirement, isn’t rich. But now you’re taxing people on that, which likely means forcing them to give up some of the growth of their retirement funds. I, for instance, have no access to a retirement plan at work. So I’m saving all my retirement money in a regular brokerage account. It would be a serious hit to me if, on top of the income taxes I’m paying, I had to pay some wealth tax. ---
**Author:** ![Northern\_Piper](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/northern_piper/32/5304_2.png) [@Northern\_Piper](https://boards.straightdope.com/u/Northern_Piper)\ **Post date:** [December 9, 2024, 4:28pm UTC](https://boards.straightdope.com/t/make-the-rich-pay-their-fair-share/1011019/255 "2024-12-09T16:28:43Z")
But that then gets into the details of the tax, setting the base amount that triggers the tax at an appropriate level, providing appropriate deductions. That’s not an argument for saying not to consider this type of tax at all, on the basis of the impossibility of valuing it. And the possibility of a loss is one of those contingencies that can be dealt with in that way. But again, the housing issue is a counter-example. If housing prices drop suddenly in my neighbourhood due to circumstances beyond my control, and I sell my house well under its assessed value over the past ten years, I don’t get to reclaim past taxes. But that doesn’t suddenly mean that municipal taxes on real estate are unfair and should no longer be used. ---
**Author:** ![Cheesesteak](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/cheesesteak/32/3694_2.png) [@Cheesesteak](https://boards.straightdope.com/u/Cheesesteak)\ **Post date:** [December 9, 2024, 4:42pm UTC](https://boards.straightdope.com/t/make-the-rich-pay-their-fair-share/1011019/256 "2024-12-09T16:42:41Z")
> [@OldOlds](#): > > I don’t think I’ve seen an adequate explanation for how to handle capital losses. If your valuable assets decrease in value, next year you get taxed on the reduced value. Hope that helps. ---
**Author:** ![Northern\_Piper](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/northern_piper/32/5304_2.png) [@Northern\_Piper](https://boards.straightdope.com/u/Northern_Piper)\ **Post date:** [December 9, 2024, 5:00pm UTC](https://boards.straightdope.com/t/make-the-rich-pay-their-fair-share/1011019/257 "2024-12-09T17:00:23Z")
> [@bump](#): > > but the pertinent legislation often catches the merely wealthy- a doctor who’s saved his money, or a junior partner in a law firm, or someone whose family sold the family farm and is now sitting on money in the low seven figures. Or a successful small businessman- say a restauranteur with three locations. > > I don’t think those sorts of wealthy people are who society necessarily wants to penalize; those _are_ the sorts of wealth that people can aspire to. I agree that’s a fair consideration, but there’s a question right there in your opening: why does the pertinant legislation catch those types of people, but not the mega=rich? Hmmmm. 🧐 > [@](#): > > I’m not convinced any of them need to have their family’s wealth taken by the government just because other people weren’t as successful as they were. That seems unfair to me- it’s not the government’s money, and it’s definitely not the less successful people’s money or business. You’re jumping there from the issue you raise to the statement that the government takes their wealth. But that’s not how other taxes work. We have income taxes; that doesn’t mean that all income is taken by the government. We have property taxes; that doesn’t mean that people lose their houses. What people are arguing here is that other types of property, not just real estate, could be the basis for a tax. I keep coming back to that: why is it appropriate to impose a tax based one the major property owned by middle class people, their house, and to impose a tax on the income of the middle class, but not appropriate to impose a tax on other types of property that tend to be owned by the upper class, and which they can use to avoid paying income taxes? Why is that class warfare? Why is that unfair? The concerns that you are raising, including the jump to “the government wants to take away wealth”, can be met by a carefully designed tax, just like the income tax is carefully designed, so as not to tax poor people and to recognise the value of economic activity, through business expense deductions. Yes, we want to reward people who contribute to society, but we also think that those people, who have benefited from society more than the lower classes, should be asked to contribute more than the lower classes. ---
**Author:** ![OldOlds](https://avatars.discourse-cdn.com/v4/letter/o/a3d4f5/32.png) [@OldOlds](https://boards.straightdope.com/u/OldOlds)\ **Post date:** [December 9, 2024, 5:23pm UTC](https://boards.straightdope.com/t/make-the-rich-pay-their-fair-share/1011019/258 "2024-12-09T17:23:04Z")
> [@Cheesesteak](#): > > If your valuable assets decrease in value, next year you get taxed on the reduced value. > > Hope that helps. Very cute, but in many cases the basis will already have been taxed. If I pay 25% income tax on the $10,000 that I invest, it then rises to $12,000 and I’m taxed at 15% on the $2,000 what happens when it falls to $8,000 in value? I’ve now paid $3,333 in income taxes and $300 in CG, and I only have $8000. Which means I’ve paid more taxes on a loss than if I had just stuffed it in a mattress. ETA: Fixed a typo in my math. ---
**Author:** ![Cheesesteak](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/cheesesteak/32/3694_2.png) [@Cheesesteak](https://boards.straightdope.com/u/Cheesesteak)\ **Post date:** [December 9, 2024, 5:25pm UTC](https://boards.straightdope.com/t/make-the-rich-pay-their-fair-share/1011019/259 "2024-12-09T17:25:42Z")
> [@OldOlds](#): > > what happens when it falls to $8,000 in value? You record a $4,000 reduction in income for that year. ---
**Author:** ![LSLGuy](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/lslguy/32/5813_2.png) [@LSLGuy](https://boards.straightdope.com/u/LSLGuy)\ **Post date:** [December 9, 2024, 6:53pm UTC](https://boards.straightdope.com/t/make-the-rich-pay-their-fair-share/1011019/260 "2024-12-09T18:53:57Z")
'Zactly. If the paper gains on unsold capital assets that increased in book value over a year are to be taxed as income then the corresponding paper losses on unsold capital assets that decreased in book value over a year should be fully deductible in the year incurred. Net, as @Northern_Piper said, of whatever thresholds and special tax rates are used on this category of paper income. [Previous page](https://boards.straightdope.com/t/make-the-rich-pay-their-fair-share/1011019.md?page=12) [Next page](https://boards.straightdope.com/t/make-the-rich-pay-their-fair-share/1011019.md?page=14)