See the quotation from Warren Buffett in post 75.
Yes, but if a bank recognizes that those shares have a real, calculable value, enough so that they accept it as collateral on a loan, then the tax code could, too.
However it would put more money into the nation in general which would help the economy and general wealth. And of course the tax base, it just wouldn’t be coming from them.
What I’m saying is that on the whole, it’s the wealthy who have the capital to invest and start/expand new businesses. That’s how employment gets created. My point is that the wealthy do play a vital role in today’s economy.
What’s really at issue here is “fair share”. So far, all I hear out of most people is that they want some sort of punitive tax on the wealthy because they’re irritated that someone else has a lot more than they do. Sort of a “Jeff Bezos needs to be punished for being a billionaire” sort of attitude, rather than “Jeff Bezos can be taxed a lot higher, because 3% of a billion dollars is still a staggering amount of money for him to personally retain.”
But is that fair? Everything here seems to center around the idea that he struck it rich, while other people are poor, and that he needs to be taken down a peg. Personally, I’m not sure the two things are necessarily related- it’s not a zero sum game. Just because Bezos is rich, doesn’t make it automatically and necessarily true that he did that by reducing the quality of life/income for others.
I think that’s both a dangerous way of thinking and a slippery slope; where do you draw the line at “rich” and who needs punishment for being that way? How much punishment? And what did anyone else do to deserve their money and assets?
Many people like Bezos were not wealthy when they first started their businesses. And some of the capital came from the poors via things like pension funds.
Man, this thread moved fast, and there’s no way I can catch up with it all. So at the risk of repeating, here’s what I’d say:
I know it’s been pointed out that income, wealth, and taxing of each are radically different things, and it’s been pointed out that most of the really, really rich have negligible income compared to their worth. That needs to be fixed.
Second, has anyone brought up “Buy, Borrow, Die” yet? It’s appallingly easy for people with vast wealth to avoid taxes. Basically, take loans against your assets, and loans aren’t income, therefore no taxes. And when you have a billion dollars, you aren’t paying 7% for that secured loan.
Third, carried interest is 100% wrong. It’s another way rich fund managers get to take their salaries as something else (cap gains) and enjoy a nice low rate.
Finally, I’ll share an anecdote from my wife and I. We aren’t rich, but we have saved quite a bit. As long as we keep our income from 401ks in retirement below about $98,000 we can take unlimited money from our brokerage account and it never rises above 15%; indeed the first $25k CG is at 0%. Out intent is to live well, and it looks like until the RMDs really hit, we won’t exceed a 15% overall tax rate. To put that in perspective, someone living off of straight income and making what we plan to live off of, would be at the 24% marginal rate.
The tax code is extremely easy on people with real money, and extremely hard on upper middle to lower upper income earners.
Sure, but the government doesn’t need to create incentives for people to invest in good ideas and growing businesses. There’s already an incentive to get rich, it’s called “being rich”.
I think Broomstick addressed this well.
Personally, I don’t want to punish rich people, but I do dislike sloppy arguments defending them. The OP looks only at federal income tax, which falls most heavily on high-earners, and ignores all the other taxes that don’t. That’s a sloppy argument.
I don’t think Bezos needs to be taken down a peg, but I don’t think he’s some specially imbued individual who needs to be coddled and catered to. He made his fortune in a country that has good infrastructure, transportation, education, research, and a social safety net in case his risks hadn’t paid off. If he finds the tax burden to pay for those things to be too onerous, that’s a shame; let him try to start his next company in a country without them.
I would disagree. There is a basic ideological issue at play: do you want to live in a democracy, or a plutocracy?
Extreme imbalances in wealth are dangerous for a society, and long-term, can lead to exactly the sort of civil unrest that is detrimental to the wealthy. I joked about “À la lanterne” upthread, but the reality there was that extreme imbalances in wealth and taxation burdens were strong contributing factors for the French Revolution, stringing up the aristos, and confiscating their wealth. See also the Russian Revolution.
I have been present in conversations with really wealthy people (by my standards at least), and when they were alone with their kind, they seriously discussed how wealthy people should have greater control in society, maybe by literally having more votes than poor people, so that they could protect their role and property.
That’s why I wasn’t surprised by Romney’s 47% speech, delivered in private to his fellow rich people, where he said that he wasn’t interested in winning votes from the people who don’t pay federal taxes.
As Buffett said, yes, there is class warfare going on, and the rich are winning it.
Which, as I understand it, is true if you include children, housewives the disabled, etc. True, but bullshit nonetheless.
That stat was right, but he essentially took from it that they would never vote for him, so why should he worry about what they thought, because they didn’t really contribute to society:
My job is not to worry about those people. I’ll never convince them they should take personal responsibility and care for their lives.
Right, but if you’re including 12 year olds and housewives, it’s pretty disingenuous to argue that they aren’t taking responsibility or that they’re freeloaders. Unless you’re saying 47% of labor participants pay no taxes because, while working, they don’t make enough. Those are really different things.
As I mentioned in post #6, I don’t think the rich pay anywhere near the effective tax rate that we’re told they pay.
I don’t.
And if that’s true, then couldn’t the pervasive sense that the majority of Americans have – that the rich actually don’t pay their fair share – be based on something other than hatred, envy, and class warfare?
Couldn’t Americans view the 7,000 page Tax Code and the Treasury Department’s own 70,000 page users manual as prima facie evidence that the Tax Code wasn’t written for them, wasn’t written by them, and wasn’t structured to advantage them?
Couldn’t the POV of most Americans, then – instead of being based on the right-wing caricature of that perspective – actually be based on reality?
Put another way…
You know those things that Trump supporters think Make America Great?
They’re not all just empty bumper-sticker slogans.
Most of them cost money. We generate that money through taxation. Somebody who puts a profound amount of effort into NOT paying their fair share is a freeloader … a leach … a drain on society. The more they do that, the more the rest of us have to foot the bill.
Is that REALLY the way to “Make America Great Again?”
For a lot of us we’re irritated that the rich are getting richer while our own wages are stagnating and if we ask for a raise we’re told “the money’s not there” even as our employer is announcing record profits.
Somebody is benefiting from the productivity of American workers… but it’s not the American workers.
^ This.
Several times, and there is one teeny tiny problem- that last word.
And who cares?
I mean we can all do it- Get a mortgage, live in the house then die before it’s paid off.
The die part refers to the basis of one’s assets resetting before being handed to the next generation, so they avoid any taxes, including CG on those assets. It’s not a punishment, it’s part of the plan.
And anyone can’t do it. You will not get the loan terms on a mortgage that they will. And if you’re anything like normal, there is no way the underlying asset (your home) will grow fast enough that you can borrow against it, year on year, to fund your lifestyle.
I’m not anti-rich. I’m a greedy SOB. But I’d like to hear the argument that the US tax code isn’t vastly favorable to the wealthy.
This all started because the OP pointed out that high income earners pay a large share of the income tax. But there’s a related argument, being made by many here, that this is only half the story.
Incorrect. The really, really rich have really, really high income, too. The tax code has just been twisted to call their particular kind of income non-taxable income.
Huh? I do not think so.
The tax code was twisted to reduce the marginal tax rate, certainly, and then make the middle class pay more. But I am pretty good at the history of the tax code, and nope, I cant think of any significant source of income for the very rich that was changed from taxable to non-taxable.
For Bezos it would be the people who do the actual labor that makes Amazon what it is. For Musk the people who work at Tesla, Space X, and X. For Bill Gates the workers at Microsoft. And so on.
For those with both interest and a bit of patience … one specific post from the thread I started four years ago (and linked to upthread):
Take a minute and look at the charts, and then my armchair analysis beneath.
I don’t think that what’s actually going on matches up to what most of us think is going on wrt wealth, income, and taxes paid.
The tax code is definitely friendlier towards the rich than it would be if we simply used tax brackets without all of the loopholes. The top 10% average income puts one in the 35% tax bracket, but as I noted above, they only pay around 21.11%. If we simply taxed them at 35% with no deductions, we’d had have over a trillion dollars in additional revenue in the year 2022. That’s more than 2/3rds of our deficit right there.