Remember, we are talking Estate taxes- so they havent earned any of that. And there are other generous exclusions.
Yep- mostly anway.
Nope, that is what Gift Tax is for, but sure you can give each one of them $13K a year, year after year (IIRC it is 13K, it likely is more now).
And it is excluded on Estate taxes. I agree- to a point. Once you get 10X the average home price, it is a wealth indicator. In CA a million dollar house isnt wealthy, but a $10M house certainly is.
I mean they are literally a tiny percentage of the population. Not enough to buy half the houses in California. Pretty much by definition, the middle half - 25th to 75th percentiles - of the houses in California are bought by the middle class.
As I thought I’ve made clear in this thread I’m against modern wealth inequality. I do not inherently hate billionaires and I do find lamebrain schemes to somehow peel wealth away from them without altering the conditions by which the wealth came into existence exasperating. Changes could realistically be made - albeit with difficulty - if the lower classes could concentrate their anger on the right targets. Or even if they understood the difference between wealth and income. Capitalism does not have to look the way it is; it changed during my adult lifetime and it can change back.
I do like what someone* said, though. If you eat just one billionaire, the rest will take notice.
* The line exists in a number of forms and has been around for a few years. The earliest I can trace it is to Sami Shah in 2021: “Just one. I’m telling you. We eat just one billionaire and the rest will fall into line.” But it could be older.
What happened to the plan of raising taxes on people making over $400,000? There should be enough voters making less than 400k to agree it is fair to raise taxes on those making more.
Another consideration is inflation. Wages tend to increase with inflation, while especially eroding the buying power of those who have money but no longer work.
Voters? The only voters that count are the ones in the House of Representatives. And altho the GOP has a razor thin margin, likely too thin to do anything too controversial , they certainly wont vote in higher taxes for the rich.
Exponentially, no. But otherwise it’s generally a good thing. That’s how families go from poverty/working class to middle class, and beyond. They inherit their parents’ houses and stuff, and it’s a big boon to them. There are probably a lot of people who otherwise couldn’t afford houses except for inheriting them. And it would be pretty awful to yank that out from under someone who’s house-poor just because of the value of the home.
I think the question is what the amount of tax the super-rich should pay, and nobody disputes that the government should absolutely pay their fair share.
What gets me is this idea that somehow people with a few million bucks in net worth are somehow ‘rich’. That is most emphatically NOT the case. A few million is just the result of persistent investment in one’s 401k and buying a house that appreciates over time. What we’re supposed to do, after all. A few million net worth is able to pay their own way and leave something to their kids, hopefully.
100 million is a different story.
I think all the neo-socialist nonsense on places like Reddit don’t help, where those idiots say things like “if you’re not poor, you’re rich.” Which is emphatically untrue. There’s a long way between working class/poor and “living off the proceeds of your wealth type rich”, and most people fall into that middle class (funny how that works out).
I wouldn’t have a problem going after the super-rich- but the thing is, the real problem is that the bottom 50% are busted as fuck, not that the rest are particularly well off. The question is why. Is it because they’re doing jobs that literally anyone can do, and therefore there’s no upward wage pressure because people who can do those simple jobs are not in short supply? I suspect so, but how do we get out of that situation? Short of raising minimum wages, I don’t know.
Tax accountants call a change of wealth unrealized capital gains. It is not taxed while the taxpayer lives, provided the asset is not sold. Biden proposed to tax it, to the fury of certain Silicon Valley investors some of whom have lost their marbles.
After the taxpayer dies, the value of the assets are, “Stepped up”. So if you buy Google at $10, die when it reaches $100, and your heirs later sell it at $110, the heirs will pay a tax on the $10 of capital gains, but not the $90 that occurred during the original investor’s lifetime. That part is tax free. To be sure, there is a tax on the estate, provided it is above something like $14 million dollars (the amount increases with inflation). Most developed countries have a much lower threshold.
Then there’s the carried interest loophole, which essentially permits certain Wall Street types to treat their yearly income as a capital gain, thus facing a lower tax rate.
So we have 3 loopholes. Unrealized capital gains, stepped up basis, and the carried interest loophole. All could be closed without a wealth tax. Just saying. I don’t know about the constitutional issues, but I do know that Philadelphia had a wealth tax some years back, which was later repealed.
I would restate @Exapno_Mapcase’s point. What people take from society is represented by what they consume. If a capitalist buys a textile factory, manages it well, uses it to buy other companies, but for example lives in the same house he did when he was young and doesn’t pay himself a large salary, then his business empire is an engine for the country’s prosperity and not something that should be taxed. That’s essentially the story of Warren Buffett, a billionaire who lives an upper middle class lifestyle. I don’t buy this argument (nor does Buffett himself) but I think there is a legitimate point floating around here. Somewhere.
Put it another way, Bill Gates used some of his wealth to build a giganormous mansion. And some of it to endow a charity. He certainly should pay a tax in one way or another on the former, but the latter isn’t entirely clear. But that’s just saying there should be some sort of charitable deduction, which there is in the US.
Bill Gates and Warren Buffett are edge cases. Most billionaires lack their character.
I didn’t mean to imply that. But someone with a net worth of a few million doesn’t need to worry about the estate tax, especially since a big chunk of that is probably in their house, and they can give away maybe a half-million tax free before their death, and even if they do nudge up over the threshold where the estate tax kicks in, their heirs still get most of the part over that threshold.
For someone for whom the estate tax is significant, they have taken most of that wealth out of the economy, and so “keep it in the economy” means taxing it. “The economy” isn’t just money; it’s the flow of money, and money that’s just accumulating like a high-score counter isn’t flowing.
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.
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.
Likewise, Apple is currently producing all the gadgets they can sell. If they have another $trillion they’re probably just returning it to the shareholders, not building a new factory just because they can; they will do so only if they need to.
I think we should be circumspect about the argument that “money being sat on” isn’t in the economy.
Money in the mattress, or in Mason jars in the yard – that money isn’t in the economy.
But savings and lending institutions and investment firms and brokerage houses both lend and invest their assets (within certain prescribed ratios).
Meaning: I think it would be fair to say that some degree of the wealthiest Americans’ assets are fueling some sector of the economy or other.
Assets for which they paid cash? Far less so, but – like the rest of us – those assets often require ongoing maintenance. I remember hearing – when the yachts of oligarchs were being seized – that it costs roughly 10% of the value of the yacht in annual maintenance.
“Trickle down” is an outright scam, but it’s not an outright scam that’s devoid of any theoretical truth whatsoever 
It’s also worth considering what % of the wealthiest’s assets are invested overseas. While some of that money yields economic growth in the US, certainly it isn’t all.
You say that like it’s not the entire point of their being in business in the first place.
I know that, but what I’m saying is that if someone spends say… $10k on stock, and it appreciates to $30k, the owner didn’t take any money out of circulation, except maybe the initial $10k. And even then, he actually paid someone else $10k, and got shares in return.
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.
By that token, people ought to get tax rebates on stock price drops- they’re as illusory as gains, until they’re realized.
No, you should read what I wrote. I was criticizing the idea that putting more money in corporate coffers equates more investment and job creation. Which is one of the reasons given for continually lowering the corporate tax rate. Which is bullshit. Money will have more velocity if its in the hands of average consumers.
But again, and this isn’t the first time this has been pointed out, the rich have found ways to never realize the gain. I’m not rich, but when I retire I will have to realize my gains because I can’t employ the aforementioned “Buy Borrow Die”
Which is (effectively) how property taxes work in my area.
ETA: also, as I mentioned upthread, if wealthy people can pledge, encumber, or hypothecate their assets, then somebody has figured out a reasonable method of assessing the value of those assets at a given point in time, no?
I’d much rather have the money in corporate coffers than in hedge funds or the other make money off of pricing shenanigans schemes that are modern finance. Corporations at least provide some value. Junk bonds do not.
Money can be created out of nowhere. The government prints bonds, but those must be sold to someone with the temptation of getting more money back in the future. When a stock goes from $10 to $20 that increased potential value is magic money. Far, far more magic money has been created than any government ever managed.
As @bump said, appreciated value is not actual money. It’s potential money. Take the $45,000 house of @OldOlds’ father now worth a million. What happens if the house catches fire? If a plane aborts its takeoff and crashes into it? If trees topple in an ice storm or tornado or hurricane and crush it to bit? What if he doesn’t have a million dollar insurance policy on it? Worse, what if he took out a second mortgage with the intention of paying it back when he sold the house and now owes hundreds of thousands?
Potential money is a notion. Like all money the notional value is an object that can be used before it exists. A $100 bill is worth more than a $1 bill because of its higher notional value. An unsold house or unsold stock or unsold art has notional value. Yet that value isn’t fixed. $100 won’t buy you what it did 25 or 50 or 100 years ago, and it will vary even moment to moment if you try to transfer it to a different currency.
The proper analogy is potential energy. It has notional value but is in fact worthless until tapped and converted into kinetic energy. Often not even then. The World Trade Centers had billionaire values of potential energy as long as they kept standing. When they were converted into energy, huge amounts of negative value was created.
Billionaires have large amounts of notional value, of potential money. The catch lies in the proper way to tap it.
What happens if he has ten thousand Benjamins stashed under his mattress, and the house catches fire? Does that mean that those Benjamins aren’t “actual money”?
Not any more they ain’t.
They lost all their notional value.
Exactly!
I like the potential energy analogy. That’s a great way to describe it.
There are dozens of examples of investment bubbles that point out just how illusory this sort of wealth is- tulips, Beanie Babies, and many others. Cryptocurrency may be the purest sort of example, in that those bitcoins or whatever have zero value and don’t even exist in any sense outside of what someone’s willing to pay for them.
So your home value goes down and the taxing authority pays you? Where’s this at?
My property tax assessment can float up and down with market-driven changes in the value of my property.
How is that possible? Appreciated value is not actual money. It’s potential money. You’re being forced to pay taxes on value that hasn’t been realized!
Rebates? Probably not. But deductions that can be applies to offset taxes owed on future gains? Sure, happens all the time when it comes to realized losses/gains:
And yet he was still taxed on them when he got them. The fact that wealth can be destroyed doesn’t mean that it’s not “real” wealth.