That’s why I don’t like using it. Cui bono? is an important question of tax policy. Using language that suggests it was accidental masks that important question.
But I guess asking that question is part of the “class warfare” we keep hearing about.
You can explain this over and over like you’re explaining it to a child but it’s not a profound point – we understand that if you buy a statue for $10 and overnight it becomes worth $20 billion that you don’t actually have the cash to spend (or pay taxes with). It’s a very simple concept and we all get it.
The problem is that now that you possess a statue worth $20 billion, you can (as others have mentioned repeatedly) borrow an obscene amount of money, pretty much indefinitely, and live life like a billionaire despite never having earned $20 billion in income.
But worse, you can influence our society in absurd and obscene ways. You can buy politicians, you can create whole industries, you can start your own non-profit for whatever pet project you have regardless of whether or not it benefits the public and fund it indefinitely. You can influence regulations, legislation, you can make people in your community act in all kinds of useless and demeaning ways simply by dangling cash in front of them.
You can keep saying it’s emotional but it’s not. Logically speaking, nothing good has ever come from individuals (or corporations) having such obscene amounts of money. Nobody needs $20 billion, even if it’s in statue form. People with $20 billion statues don’t operate in society’s best interest. Therefore, it’s in society’s best interest to make sure people don’t amass that kind of wealth. That kind of wealth should be taken from people by force. This is a logical, not an emotional, decision.
Is it class warfare? Absolutely. Justifiable class warfare.
Fair enough. I guess where I get crossways with this is that a lot of the time, people talk about “the rich” and talk about the Bezoses and Ellisons of the world, 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.
Part of it is the experience of people I know who are in those situations- my uncle is a very successful small businessman; he owns a successful contracting company and restoration company, which he built from nothing; I believe his father was an engineer of some sort, so he didn’t come from money. Another friend’s parents have a small pile of money due to selling some land their family obtained over 100 years ago. And I’ve known several lawyers who are successful - six-figure salaries plus bonuses.
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.
Now if we’re talking about someone like Jeff Bezos, who could have 99% of their wealth and/or income taken and still have hundreds of millions of dollars, then that’s somewhat of a different story. But where is that line drawn? Unless we define that very clearly, we run the risk of penalizing those who are doing things right.
Sure. But to state the obvious, the reason those people are the ones bearing the lion’s share of the income tax burden is because people like Elon Musk and Jeff Bezos have influenced Congress to write the tax code that way. Saying that “we shouldn’t tax the wealthy” is also obviously not a remedy to this problem.
I am not anti-rich. I don’t know that I agree there should be a limit to allowed wealth. Maybe- I’m open to such a debate, but it does go against my grain.
My complaint is with the inequity of the system. My wife and I have very good jobs (both executives). It’s all income. Even her stock options are taxed as income when she exercises them. You simply would not believe our tax burden. And I don’t consider us rich. very comfortable, but not rich. On top of that, when we retire we will have to live off of our savings, currently invested mostly in the stock market. And we will have to pay CG on those, because I’m not going to get a Bezos loan on my holdings. We do have IRAs, which will be taxed as income too. And, by the way, I’m not allowed to take a deduction for contributing to an IRA.
Meanwhile, someone who inherits a billion dollars, employs buy borrow die and enjoys a private jet, then leaves his kids 10 billion dollars, could in theory pay less in taxes than I do. Now, of course there may be things like sales tax on the private jet, but only if they’re dumb enough to own it in NY.
That’s my problem. There are probably billionaires paying less in federal taxes every year than me, to say nothing of their tax rate.
Never you worry.
Cost Accountants, Humanitarians, and all-around Top Men, Elon Musk and Vivek Ramaswamy, are going to wring Every. Single. Penny. out of the Federal government – “scorched Earth,” let’s call it.
After which, Trump can pass more and deeper tax cuts for the uber-wealthy – made permanent – and nowhere near enough tax cuts for the rest of us – expiring in 2028, unless he’s elected to a third term – to offset his well-conceived tariff schema.
All will be well. Just you wait and see.
Buncha’ Debbie Downers, y’all are. Sheesh.
There’s also a middle ground. Doctors making 7 figures are easy enough to leave alone. Car dealership owners with $50 million net worths? I don’t see why that should be allowed.
I see the same struggle with celebrities. Taylor Swift was easy to root for when she was just a gal writing her own songs. She’s now part of the billionaire class, and people have a hard time coping with the fact that she now has more money than anyone should be allowed to have.
I’ve been following this thread and this is something that I don’t quite understand. If I discover a rare coin collection in my late father’s safe-deposit box worth, say, 10 million bucks, I can assumedly use that as a collateral for a ten-million dollar loan. But at some point the bank will demand interest and principal payments. Then at some later point, if I don’t earn any money elsewhere, I will have no money left due to loan payments, hookers, and blow. And I will undoubtedly have outstanding principal still to pay on the loan. But you’re saying that I can now get another 10 million dollar loan on the coin collection, use part of that to pay off the original loan, and continue my extravagant lifestyle? Am I understanding this correctly?
That’s why you have to be super rich.
Bezos goes to his private banker. He’s worth (say) $100 billion. He needs, maybe 200 million to get through the next year. The banker says “fine. Here’s 200 mill against your $80 billion in Meta shares. For you? 2%.”
When that money comes due (probably all in one lump sum; he doesn’t get a payment book like some chump) the private banker says “Ok. Here 's a new loan for $404 million, against your [checks, sees the value has gone up] $88 billion in Meta shares. See you in a year”
Of course, it isn’t all really in Meta shares, and some is in things like yachts, which is why they buy yachts they never use. They need a variety of assets. And if you have $80 billion in say the S&P 500, it will return an average of 10.5% per year. If you’re borrowing at less than 10.5% you can still grow your wealth, even as you run up these debts.
You can easily get a $5 million loan using the $10 million coins as collateral at a really low interest rate (because, hey, safe bet for the bank, right?) invest the $5 million in an S&P index fund earning (historically) 10%, use the proceeds to fund your lifestyle AND pay the interest on the loan. Meanwhile you’re only paying taxes on the investment gains rather than on the $10 million value of the coins.
Of course, realistically nobody’s using their loans to invest in the market, they’re using them to buy businesses and whatnot. And the numbers are much higher.
OK, thanks for the answers.
Both replies from @steronz and @OldOlds assume that I will be using the money to invest and make more money. Or that my original collateral will increase in value. So if I’m spending all the ten million on hookers and blow, that’s probably not a wise move. Dammit.
Surely you can get by on just $5 million in hookers and blow?
Did someone mention class warfare? Because today the CEO of UnitedHealthcare was shot dead. Now that’s class warfare.
Wow. Apparently a targeted attack on Brian Thompson.
Gunman at large after UnitedHealthcare CEO fatally shot in ‘brazen targeted attack,’ police say
FYI, there’s a Dope thread for that (but of course):
Incorrect. The tax code was twisted to encourage behaviors the Federal government want but is unable to legislate because it is limited by the enumerated powers. Child care, donating to charity, buying EV cars, carrying a mortgage, etc.
So you give them the coin and it satisfies the debt. You’ve spent $10M on hookers and blow (and interest), without paying a cent of income tax.
If you sold the coin for $10M, that’s income, sucker!
Do I have that right?
Capital gains, but nonetheless taxed.
(actually, someone in one of these threads said collectibles are NOT CG, but income?)
Simply, if you have something and it appreciates, like a stock, you pay CG on the change in value when you sell it. So a $10 share sells later for $22, you are taxed on the $12 gain.
My first thought was that either someone was denied medical care, or has been financially ruined by medical debt.
But yeah, it could be just because a CEO of that large a corporation is perceived to be rich.
That’s possible though based on years of watching Law & Order, it could be entirely personal.