So, as the rich have paid less over time, the total amount the government has gotten has stayed about constant. The implication is clear: The burden has been shifted more onto the non-rich.
I will try to find a cite, but I am certain that I recently heard on NPR (All Things Considered?) that since 2000 the US government has seen a reduction in about 3% GDP in tax revenues. That is, we used to collect about 20% GDP as taxes, and we’re now at about 17%.
Recall that in 2000 we were worried about not having enough government debt to satisfy bond market demand, and then [shit happened; tax cuts] we went back to a deficit budget.
Here’s the thing though; a company can’t spend/pay out stock value increases. That’s largely where the disconnect here is. Most people’s wealth is in ownership shares, and the lion’s share of the wealth from those is in their value, not in the dividends they pay, if they pay dividends at all. Amazon famously doesn’t pay dividends, which means that the money the company earns stays within the company itself. It’s not paid back to the owners (i.e. shareholders), which would be a dividend.
So in that case, the company’s retaining the earnings, and Bezos nor anyone else is seeing that directly. That tends to make the stock price go up, but it’s not a direct relationship.
Apple on the other hand, pays monthly dividends that have ranged from a low of about 47 cents a share all the way up to 82 cents a share over the last decade. Meanwhile the stock price has gone up nearly tenfold, despite a number of splits during that time. So yeah, you get a good chunk of change from dividends if you hold a lot of shares, but that’s massively dwarfed by the increase in value per share over the same period.
Getting angry and assuming that value increases of the wealthy = retaining profits someone else worked for is not accurate in most cases.
If you taxed ME without any deductions, I would be bankrupt. And I aint rich. Hell, if you taxed your average lower middle class family that way, they couldn’t afford it. It isnt the deductions.
Like I said, bring back the pre Reagan tax brackets- that would be a top of 70%.
Well, yes, it started with Reagan cutting the marginal tax rates. Then to make up for it, making social security taxable. And Unemployment. trump made it worse.
I can sort of see the logic behind it - it can encourage heirs to diversify a highly skewed portfolio if they are not as active in the company as the former owner of the shares - but ultimately it amounts to huge amounts of wealth that never get taxed to support the common good.
Putting a high cap (10 million?) on the amount of money that can be stepped up at the death of the owner would help, or possibly make it a couple million bucks per heir of an estate. Chance of that happening in our political climate - somewhere between nil and zero.
I don’t have any issues with standard deductions, such as the 27K or so for married couples. The top 1% claimed an average of $634,624 in deductions. You don’t get there through standard deductions. Suddenly your houses/planes/cars/mistresses/cocaine/golfing/clothing becomes a “vital business expense”.
Maybe we should change that.
Because the end result is the rich get richer and the non-rich get squeezed tighter and tighter. We’ve had 40 years of favoring the rich and it has benefited only the rich. A rising tide has not risen all boats, only the luxury yachts. The not-rich are less secure than they were 40 years ago.
At some point the “peasants” are going to remember they vastly outnumber the rich.
And that kind of tax return ought to be thoroughly audited.
Curiously, the Republicans in Congress regularly try to cut the IRS budget to reduce its enforcement powers.
But even when they are properly audited, a lot of the deductions will hold up. The rich have a lot of influence over the tax code. And the rich have a lot of flexibility to make their financial situation complex, especially as we only tax “income” and not “wealth”.
That doesn’t even make sense though. This is exactly the kind of emotion driven absurd sour grapes class warfare I was talking about earlier.
Look at it this way; let’s say you buy a statue for $10. You polish it up, put it on a better base, etc… and one of your neighbors decides that it’s a mighty fine statue for $20.
Your wealth increased by $10 in this scenario, but you can’t actually spend it, because it’s all tied up in what your neighbor would be willing to pay for that statue, if you chose to sell it. But until you sell it, it’s just a piece of art in your living room, and your bank account hasn’t changed.
If we go further, and someone discovers that it’s a long-lost work by , your paper wealth increases by even more- let’s say it’s worth 3x your annual income. But you still can’t spend it until you sell it.
And in that situation, how would you feel about paying taxes on that increase in wealth as if it were income, even if you leave that statue sitting on its pedestal in your living room? Suddenly you’re on the hook for income taxes as if you made 3x what you actually did.
That’s the difference between wealth and income; your income didn’t change, but your wealth did. And most of the very wealthy are much the same- their wealth is in shares of stock that go up in value because someone else thinks they’re worth more, but the actual holder doesn’t see any actual cash until it’s sold.
It really isn’t. That’s just a facile and highly loaded characterization of a legitimate POV. The fact that you mentioned it earlier means only that you did it before and are now doing it again.
Noted.
If people of significant wealth can pledge, encumber, and hypothecate the assets that comprise that wealth in order to live, pay bills, or buy yachts, then what says they couldn’t do the same thing to increase the wages they pay to their workers?
Or until they go to the bank and get a loan for the amount, using the statue as collateral.
If people can use their wealth to obtain access to money without selling it, why can’t the tax authorities use that wealth as the basis for a tax?
Also, what you have described is essentially how property taxes work. I have no plans to sell my house, but I pay taxes on its assessed value every year. If the market conditions change and real estate prices in my area go up, the assessed value of my house will go up, and I will pay higher taxes (assuming the mill rate stays the same).
As others have commented, for the low and middle classes, their house is their major source of wealth, in the sense of property that they own and is likely to increase in value over time. They get taxed on that source of wealth, in pretty much any muncipality.
But if we start saying, “What about a tax on wealth owned by the really rich, like on artwork or super-yachts, or extensive stock holdings?” that’s class warfare?
There is also a lot of cheating going on. A tax attorney in-law of mine told me that one common and easy way of doing it- if one has the money- is to start a charitable foundation.* Then that entity can do things like buy a car for its use. Which just happens to be driving you to work. I don’t claim to know the details, but as I mentioned this was explained to me by someone who does this for a living.
*It may not have been a foundation; trust? You get the idea.
Yes, but that’s where things like Buy Borrow Die become a problem. The Die part is where the basis of that statue is reset to its current value before being passed on to the heirs. So it’s NEVER taxed. Because the borrow part is where @Broomstick takes a loan from the bank for $5 and spends it on hookers and blow. But loans aren’t income and so aren’t taxed.
I think the easier way to fix it is to have CG taxes apply at death, prior to transfer. So fine, you’ve avoided taxes all along by never “spending” that money and realizing the gains. But that million in the market that grew to 10 million? When you die, you pay the LTCG on the 9 million, and the rest gets handed to your heir and whatever that is becomes the basis for the heir.
Which is how it works in other countries, such as Canada.
I’m sure the aristos and prelates of the church in France dismissed the complaints of starving peasants as merely sour grapes.
Until they were being strung up on the lamp-post by the peasants, which probably concentrated their thoughts a bit.
Extreme tax and wealth imbalances are dangerous for the long-term stability of a country, including for the really wealthy,
I think it’s incorrect to call that a loophole, which suggests it was an oversight or an unforeseen implication.
It was a carefully planned provision to ensure wealthy people could take advantage of their wealth, and then pass that wealth on to their heirs, without paying capital gains tax.
It’s working as planned.
Most loopholes are intentionally planned to benefit someone.