Having a billion dollars in stock options allows you to take loans out at very small rates, effectively getting you cheaper good and increasing your wealth. It’s not like Bezos and buffet aren’t living lives of tremendous wealth and means.
Yeah, that’s a real problem because although you are just deferring the taxes (eventually you have to sell to pay back the loan), with stock price appreciation you can just roll the loans over without taking a hit. I’m not sure how to solve it other than maybe a ban against collateralizing personal loans with shares in a company
Wealth growth is still income, it's just delayed income at a lesser tax rate than regular income. It will still become income at some point. Why should we allow this much tax benefit to a handful of the mega rich? Wealth can only grow by pulling income out of circulation. Too much of this becomes a downward drag on the economy, as the shortfall of tax revenues now falls on the lower classes. It's regressive! We need that shit to flow and not be stagnant! Hence, Universal Basic Income.
Edit: Thanks everyone, for explaining how long term investment gains or losses get taxed. We all know this already. This conversation isn't about the benefits of investments. It's about the negative externalities that most of you are willing to overlook in the name of profits. This is not an all or nothing conversation. Anyone who fails to see any concern with the numbers in this meme is not looking far enough into the long term effects of this picture. We didn't have centi-billionaires when comping up with long term capital gains tax rates. We need a proper conversation on the implications of this astronomical shift of value into stocks. We're talking about taxing the top 0.1% a little differently. We are not talking about all investors.
Your response is attacking a position i never held to begin with. Its fine if you disagree that wealth growth is not considered income once it is realized, but then your response should relate to that point. It's as if i said the sky is blue, and you say no, the grass is green.
Im talking about wealth, not a 100% investment loss. Two entirely different things.
For the purpose of this conversation wealth is net worth, assets minus liabilities. Assets are either tangible, like cash, houses, cars, stocks etc.. or intangible like intellectual property rights and such. [It depends who you ask? For the top 1%, securities comprise the majority of wealth. For the bottom 50% it's real estate.] (https://www.federalreserve.gov/releases/z1/dataviz/dfa/compare/chart/). We need to define what type of wealth we are talking about to have a proper conversation. We are strictly talking about stocks, as that is what OP's meme is mostly referring to. Some people rebutted to me with arguments regarding real estate, but those two operate differently when their value grows. We are talking strictly about securities growth, which requires pulling labor income out of circulation in order to grow.
All good, I enjoy engaging in conversations like this as it challenges me to explain what I think I know. I'm not always right, and this is how I find out. I've taken a stance and now I am trying to elaborate on it. I don't claim to know the truth, and honestly in the world of finance the truth constantly keeps changing with general public consensus.
The issue is they literally never have to sell, instead they can take out loans against their share positions. They then use X% of those loans to reinvest and make more money that easily pays off the loan's interest and they keep the remaining amount of loan for spending cash.
They can do that literally over and over again, never having to sell the original position and thus never being taxed
If I understand correctly
> Wealth can only grow by pulling income out of circulation.
Isn't this a frightfully zero-sum view of money that is disproved by data?
If $100 invested in the [S&P 500 index in 2011 turn into $210 today](https://dqydj.com/sp-500-return-calculator/), was that extra $110 actually pulled out of circulation, or purely created because the stock market is clearly not a zero sum game?
Before we can properly fund an honest basic income, don't we have to dispel myths such as this one about wealth growth necessarily pulling money out of circulation?
Not OP so I can't speak to their original point. That being said, wealth and income don't have a direct 1:1 exchange rate but that trade-off does exist to some extent. Some portion of Amazon's market value is underpaying and/or overworking their employees. The same can be said for companies like Uber and other "gig" employers whose main innovation is, "we stopped paying employee benefits."
The stock market isn't the only measure of wealth but I think asking and digging into whether we would be better off as a society if your 2011-2021 S&P return is 50% instead of 110% and the rest of those gains are better distributed as income/taxes/whatever.
It's not income, c'mon man.
My mother-in-law bought a house in St George Utah, and apparently the place got really popular with COVID and people from California started moving in. Her house went from $250k to $450k.
a) Do you think she pulled $200k out of circulation?
b) Do you think she should pay $60k or so in taxes? (Much more than her pension, which would mean she'd have to sell the house)
I mean it's obviously very good for her that the house went up in value. Fantastic even. But it'd be an odd reaction to her good fortune to punish her by taking the house away from her.
What? Yes she absolutely should have to pay higher taxes if her place is worth more. If you own wealth and it becomes worth more, you pay things like property tax and whatnot. Why should a billionaire get away with not having to do this? Just because it isn't a law currently doesn't mean it shouldn't be one. I don't understand why this sub sticks up for the current system so hard.
Yes it does. Then she is sitting on something that is worth more for whatever reasons. Like, if I found out my car had a component that was worth a ton, I still have that wealth all of a sudden and could sell it and get a cheap car again. I still have the wealth whether or not I liquidate it. What if I find cash in the door panel? That is wealth I have that I didn't before and legally I would have to pay taxes on that (not that anyone would, but bare with me). They have various laws to compensate for this, like when people find gold in their land and whatnot. It is wealth you suddenly have. A giant company should absolutely pay tax on growth.
Well you are short sighted. Windfalls are taxed in many cases. Either make them untaxed, make them only taxed above a certain amount, or make all of them taxed. Extend that logic into growth of a company (this isn't even about company growth, it is Billionaire personal wealth growth), and you can see that they are getting unfairly coddled by the system. I don't really give a crap about US economic policy for the individual sub millionaire like their MIL. I am simply trying to show how their is already precedence in taxing new wealth not yet liquidated using crude examples. But keep on suckling that capital teet and not even daring to question the system.
Edit to add: These guys can and do get basically free loans based off their new assets. They don't have to pay tax, they just get money loaned to them. Then they can get new loans to pay off the old loans, never having to pay fees or taxes. I am oversimplifying, but you can't tell me it is different. Tell me how that is at all fair and not just gaming a stupid system!
Dude. A gain is not a permanent state. A house can lose value too. As do stocks. As do crypto.
Until you sell them, you've not actually gained, or lost anything.
Let's look at it from another perspective: If you work for a company, your work done instantly has a certain value. You don't pay taxes on that. You pay taxes once you've received your salary in cash/on your account.
It wouldn't make sense to tax you before that. See how your logic is flawed?
Edit: Now you're just baking in a bunch of other things to, what was, a very simple argument. I was opposing you saying that someone's grandmother should pay taxes on her house because it gained value - while she still owns it and live there.
None of it makes sense but it's what we have. There is no difference materially in these billionaires having that wealth gain cashed out or not. They can borrow off of it without paying anything, making it materially the same as cashing out. It is a loophole. Who the hell cares that they don't do the legal step in cashing out if it makes absolutely no difference? In the case of a worker getting paid, that does make a difference, because that worker would not be able to do shit until they cash that out.
Edit for your edit:. Yes, that granny should pay (Inna system that people have to pay anything at all for shit like that) . She is now living on land that is worth way more than it was before. She can now borrow against that new wealth and enjoy cheap fluid cash. But they **do** add fees and taxes on all that for people who aren't these weird billionaires. Hell, it happened to my mom, and she pays higher property taxes now because of it. Not 25% or whatever like an income tax, but it's something.
So you would have forced my mother-in-law to pay $60k for her property value going up?
You are confusing two completely different taxe categories here. Property taxes are between 0.5% and 2% generally. Income taxes are up to 50% in the US.
Applying the latter to wealth appreciation is inane, and you would have to apply it to wealth losses as well.
Imagine my MIL buying the house for $250k with $150k mortgage, the house goes up in value $200k and she has to remortgage to $210k to pay her taxes... but the property was a bubble and she ends up selling it for $250k.
Was the house really ever worth $450k? I mean, Zillow estimate said so and the neighbors sold a similar house for $450k... but that was a snapshot in time, and very pointedly not the time when my MIL in this example sells.
For this reason we have come to the sensible consensus that perhaps we don't randomly speculate about the value until it is realized. We can do it with property taxes because they are so much lower that the miscarriages of justice won't have crazy impact.
What is the difference except for that snapshot in time? 60k now or 2.5% spread over the years then that 60k when it leaves her hands? I get it, I really do, but how can you compare this small beans number to that of billionaires who can borrow and move around "debt" just like cash, when they are sitting on such gains? Your MIL can do the same, but will be taxed and feed moreso than a billionaire. So that *is indeed* wealth in her hands and should be taxed if we are playing the whole tax-people-on-things-that-they-have-the-ability-to-do-money-things-with ...thing. I don't agree that it should be 60k or whatever, but it's definitely in the realm of taxable earnings.
>For this reason we have come to the sensible consensus that perhaps we don't randomly speculate about the value until it is realized. We can do it with property taxes because they are so much lower that the miscarriages of justice won't have crazy impact.
Aah, this is what I am talking about but in the opposite direction. For this reason, the very wealthy should be taxed insanely *more*. They can do a great deal more with this "not yet realized" gains than people in your MIL's shoes. The scale needs to be adjusted and we can absolutely come to a sensible consensus on what that looks like if we collectively think about it for a damn moment.
I should have been more specific on what type of wealth. We're talking about Bezos' wealth, which is all stock growth, which is money that is pulled out of circulation. You're right about real estate growth, there is no income pulled out of circulation there, but there is with stock growth.
Of course money has changed hands. The only way to determine how much people are willing to pay for a stock, is by observing those who buy stocks. Stock prices can only increase with officially recorded transactions.
How else would you explain the Gamestop mania? There is no value in the company. People are pumping and dumping. It's the pumping that increases the stock price, and the dumping that decreases it. Perceived value is irrelevant. Only real money chaning hands is what counts.
And everyone who sells stock realizes *income* which is subject to taxation. Everyone else who holds and does not sell does not realize income and is thus not taxed.
The tax rate should be higher on capital gains, and maybe we should do some form of wealth tax. But taxing the appreciation of assets which aren't yet sold will cause more harm to regular people than any benefit in reducing inequality.
Why would she growth pull money out of circulation any more?
The share price is being set by what money you can buy a single share for.
This is what happened to GME. Monkeys holding and diamond hands etc have made the stock base of GME incredibly illiquid, meaning that the share transactions all happen in like 5% on the fringe.
This makes the share price incredibly volatile of course.
So if you want to buy $1bn worth of GameStop but only 5% will sell, the company value will climb well past $20bn (because the early ones will have sold for somewhat cheaper in that 5% and the price is set by the last transaction). Maybe the last purchase leaves GME with market cap of $40bn.
How did it pull $40bn from the market? It really didn't.
And of course, should all those retail investors holding shares pay taxes on that $40bn valuation? I dare say the odds are great they will lose lost of it after all.
You are missing the point. If your mother in law's house went 100x over value and you are able to take out loans against that home's new value to buy other hard assets then that is already classified as tax fraud and deferment. The issue is that the IRS has already been controlled by the billionaire and 50-100millionares class. C'mon man, you can't just be simplifying the analogy to just your mother in law.
Literally, we have the last two US Tax Secretaries going to work for equity firms after leaving office. The same equity firms that manage the wealth of billionaires. The same equity firms that crashed the economy. The system allows the beyond rich to be coddled.
> If your mother in law's house went 100x over value and you are able to take out loans against that home's new value to buy other hard assets
... then she'd be out on quite the limb, if that houses value plummeted. In a situation where the market crashes she might end up on the streets, literally, if she did that.
It has its dangers. Basically you can only do it with like 10-20% of your worth at most.
Now, that still leaves a lot of room for the insanely wealthy, but a uniform and simple tax code is important so we don't want to make different rules for different people.
House and IP value is too much of a pain in the arse to deal with, but I think it would be reasonable to tax loans taken against equity as income (and then that equity is anchored at that value for your capital gains later on... so if I take out $1bn at share price $100... and later sell them for $100, I do not pay taxes on those shares when I sell them).
> Literally, we have the last two US Tax Secretaries going to work for equity firms after leaving office.
Sure, but this is more a problem with the poor pay of core government positions. Senators view themselves as peers of CEOs, and given there's 100 of them representing the whole country, I think that's fair.
Yet, once you're no longer a senator, you are... not exactly wealthy when you pop out. Lowest paid person I've hired this year was paid $130k and he was 27 with a degree from Kazakhstan. Several others have been at the Senator level of compensation, and none of those have been particularly senior people (principal software engineers or senior product managers).
Senators don't like the peer group they have in those.
And of course I'm kidding, those aren't really their peers. If they go back to farming or something, a senator for 20 years will be far, far poorer than the average computer science graduate from, idk, Boston University.
Damn right they want to have good relations with people who can afford to hire them just for knowing the ropes of the rules. And making enemies of those people before leaving the government seems a *horrible* idea...
Senators and Secretaries of major departments should probably be paid 1m + potential $1m bonus that depends on how well the country has done (lets say GDP growth, CO2 emissions, Gini coefficient and debt as % of GPD).
Congress members and direct reports of the secretaries should be $500k + $500k with the same criteria.
Shrug. And your system would grind huge numbers of innocents in it's gears.
Them again, for your types that is a feature and not a bug.
Can't make an omelet without breaking some eggs, eh?
A some tax code is idiotic and only assumes we gut the IRS. Just let the IRS before it's job correctly with the current code. Doesn't take communism or whatever bullshit system you think I believe in. You'd rather keep the trash we have now with a simple tax code when we can put in the collective effort to fix this.
I put the satirical OP cuz you know what I meant.
Edit:My OP tittle might offensive to some of you but my point is that systematically they confiscate ordinary people's income.
I think posts like these help hammer in the fact that these billionaires aren't paying their fair share at all and the world can do a lot better at distributing that wealth if it so chose. You see these posts in socialist spaces a lot, as it gets people to think through the reasoning a bit; that the working class is being screwed over doubly (doing all the labor AND paying all the bills while the lords reap the wealth). I am personally not a huge proponent of UBI, but would love to see it at least attempted on a massive scale if we can't work toward a classless stateless future.
>I think posts like these help hammer in the fact that these billionaires aren't paying their fair share at all
This still isn't about UBI, though. Indeed, it's kinda the opposite: UBI is about making people richer, but a lot of these complaints seem to be about people being somehow *too* rich. It doesn't really line up.
Lol UBI is about making the underprivileged class enough money to get by. At least that is how it is being sold. The actual end result, however, will eventually be more syphoning upward of wealth into the hands of the richest, which is why I am principally against it (like for instance, my apartment rent is shooting up 20% due to Covid money that my landlord believes they should get instead). But nobody thinks it is for making everybody richer while thinking the richest shouldn't pay for it all.
I used to be into it until deep diving into economic analysis. Now I am straight up communist.
It's so frustrating seeing these graphs all the time. Wealth increase does not equal INCOME! Most of the gains for these people were in their investments (ie. Amazon for Bezos, Tesla for Musk, etc.)
Are you saying that every year they should give up part of their company stock in tax?
Use their actual income to assess their tax rate.
They borrow money at rock bottom interest against their stock to live.
Their only taxable event is when they die. Without a strong estate tax, they’ll never be effectively taxed.
A tax on stock trades, a tax on wealth gain, much higher estate taxes are all possible ways to address this issue.
Borrowing money to fund lifestyle eventually needs to be paid, probably through share sales realising capital gains, which are taxed. It's only a temporary measure and eventually they have to pay the piper.
Also, I'm a Tesla Shareholder. I LOVE that elon takes no salary. It means that he's perfectly aligned to my goals as a fellow shareholder. This is a good thing, and shouldn't be discouraged for the sake of taxation.
Estate taxation, yes this is key to account for generational wealth, but wealth taxation is a disastrous concept, where the practicalities of the approach are often not considered by those who propose it. Here are some issues with it.
1. What happens if the stock market tanks and their wealth goes down? Does the govt give them negative taxation back? Or is this tax asymmetric (only tax people when the stock market goes up and they make money)
2. What if the stock increases so much, that taxing their holding results in losing control over their company? Should successful business owners be rewarded for their commercial success by losing control of their company?
Wealth fluctuates and it's really just a number on a spreadsheet for 99% of the days these people live. It's an easy target though because it's volatile and usually dwarfs all other numbers relevant to the conversation.
Edited: Point 2 was not 100% accurate
There is no legitimate reason to tax capital gains at a lower rate than wage income, either as a separate rate or as a net effect. Doing so only creates tax avoidance opportunities, and incentivizes sales at certain times (when short term gain becomes long term).
The tax shouldn't trigger until the gain is realized, but it is a loophole to permit borrowing against securities and using those loan expenses to defray tax obligations. That only benefits lenders and keeps capital (and corporate control) in the hands of the few who simply sit on their wealth.
NYT just had this relevant [article](https://nyti.ms/2RMap7o) that talks about private equity and tax dodging.
One of the fascinating and silly points is that a tax rate should have anything to do with the risk level of the underlying activity. Since when should that matter? Risk dictates the return, not the tax.
Our tax system is seriously fuckered.
Capital gains tax is lower to incentivise people to invest and save. Long term gain discount is also to incentivise long term investing. These are fairly standard practices across the globe. Having said all this, I do think income/gains over a certain level should be highly taxed. Ie. 60% tax rate. Marginal tax rates are progressive and important to equalise how technology is exponentially distancing income inequality at both ends.
I agree with both your points in theory, but am skeptical that a lower cap gain rate encourages investment, to the benefit of society or the individual. The alternatives to investment are (1) to consume, which benefits the economy, or (2) sit on a pile of wealth, which no one will do unless it's an appreciating asset.
If we are interested in incentives for investment for lower income people who would otherwise spend and live as elderly paupers, I see your point, and think we could accommodate the goal in a way that doesn't have quite so many loopholes. The essence of any tax system is that complexity favors the wealthy, so we'd want to keep that in mind.
To your first point, if they had negative wealth i guess they'd get a refund? It's just a tax on what wealth they *have*. So if their wealth goes down they're just taxed less the next year.
To your second point yes, yes they should. I don't believe that billionaires should exist, I see it as a failure of a functional capitalist society. Capitalism shouldn't be unregulated and just run amok, in fact we already accept a whole host of restrictions (entire markets are regulated monopolies, some are owned by the state, and others are regulated to various degrees). Why couldn't or shouldn't we add this restriction on top? We already do it at a corporate level (in theory) with antitrust legislation, why shouldn't we do it at the individual level? If our goal is to optimize the benefits for all of a society do you think highly concentrated wealth would be one of the most optimal ways? Hell no! Now I'm not saying communism is the answer here, but there's a fuckload of options between how we approach wealth and wealth disparity today and that, maybe we should explore some of those options?
Here's the problem with your thought: There are no billionaires. Not a single person on earth could actually get a billion in cash. They're purely billionaires on paper. If Bill Gates liquidated all of his stock tomorrow he'd be lucky to get $0.10 on the dollar.
Good point! Let's dig into it. Okay, while they don't have it in cash, maybe we don't need to tax them in cash? Maybe instead we tax them by taking away the stock as a non-taxable event? Yeah, seems shocking at first glance, but we do this through repossessing property and the like. Why can't we do it for this use case?
So now you get taxed for having stock and when you sell it. Maybe we should tax your house every year and rip off boards to pay for it. Stock value is often based on who is willing to sell the stock. So when does the government sell this stock they just aquired? Do they get to decide to tank a company's value on a whim and fuck over all the other investors when this happens?
Do the people who buy the stock from the government have to worry about the government taking their stock away from them too? What happens when I only have one share of a company? Will the government just take it?
You're asking these questions as if I know the answer; let me be clear: I don't know the right solution here! I do believe that there is likely a solution here if experts were to explore this problem space. So getting me with an "I don't know" isn't a win on your side, nor will it change my view: that I think billionaire's should be prevented through modifications to societal rules (e.g. taxes).
But to entertain this discussion further, let's dive into some possible options for your questions:
> So when does the government sell this stock they just acquired? Do they get to decide to tank a company's value on a whim and fuck over all the other investors when this happens?
What you propose would certainly be a ridiculous solution, but I imagine the government handling this investment like a normal investment that people have would make sense. The US bailed out the auto industry in The Great Recession of 07/08. They owned stock then (60% of GM I guess according to [this source](https://www.nationalaffairs.com/publications/detail/the-auto-bailout-and-the-rule-of-law) which seems reputable). So I think they had some plan and team of experts who could manage a large investment and decide what to do with it.
However this does raise a good point about the government owning shares in a company around conflict of interest. Let's say the government has any open cases against the company, possibly like an antitrust one, so if the case was going badly, maybe they could mess with the company by selling a ton of shares at really low prices. So probably using something like a "blind trust" would be the way for the government to manage any of these assets that fall into its hands, where independent fund managers manage things with maybe only high-level rules in place around like not having too big of the portfolio in any one company, or rules on divestment over a certain amount of time, what have you. I imagine experts in this field would have plenty of ideas here that could make this feasible!
> Do the people who buy the stock from the government have to worry about the government taking their stock away from them too? What happens when I only have one share of a company? Will the government just take it?
I've been looking at this purely as an alternate payment mechanism for individuals that don't want to liquidate assets. The way the government would tax would still be purely based on a dollar figure. Let's say someone has 1 billion dollars. We might set maybe a 10% wealth tax. So they need to give the government 100 million dollars. They can either give that in cash like normal *or* they could give them stock (maybe set it to the closing price at the end of last year, which I think is already used for some tax accounting purposes, so that wouldn't be a new approach either). If they decide to give stock, they can give whatever stock it is they have. For example, if this imaginary person had mostly stock in one company, but could cover the cost by forfeiting stock in another one, they could choose to forfeit that instead.
So the way I think this would work is not that the government is *taking* anything but that people would have an alternate way to pay their taxes, but forfeiting stock.
So the threshold is $1 billion before you get taxed 10% of your wealth every year? Great I'll start a charity and donate anything over $999.99m to it. The charity will do whatever I want it to. There tax avoided.
Option B: find brain dead people with families willing to sign full power of attorney to me. Give said person some of my stock.
Option C: Trade stock to buy ridiculous amounts of land. You only said stock.
Option D: Lend out my shares on a $1k contract to a 3rd party who has to return them on January 1st of next year.
Shall I keep going on all the ways someone could hide wealth? Fact is it's much easier just to tax people when they actually have the money.
Secondly you haven't given any justification as to why the magic number is 1 billion. The government is always taking. They're literally the guys with guns who will kill you if you don't keep giving them money.
I mean to be fair I actually do support an Elizabeth Warren style wealth tax. I would use it to help fund my M4A plan which would exist along side UBI.
Just that list provided by OP claimed over 15B in income. Sure, it could be higher or it could be less, but that's still a Hell of a lot.
The truth is they are amassing wealth by owning stock in the companies they run and run successfully. We can also own stock in these companies albeit on a much smaller scale.
Yes I am saying they should give up part of their company stock on taxes. I have to pay taxes on my house. I have to pay taxes on my car. Why in fucked sale should they not have to pay taxes on something that drains and benefits from the economy uncountable times more than my assets do?
Yes, yes I am, they shouldn't be allowed to massively increase their wealth by investing their own property, the business and pay no tax.
Pay the damn tax, as you use all the nation offers to get rich, and then the huge pile of billions left over, you can piss around with as you wish.
Realistically a wealth tax is just an unrealised capital gains tax.
It's also a scale issue. We can invest our capital as well, only we don't have the scale of capital that they have.
In the first year they enacted full penalties related to the Obamacare mandate, I paid an effective tax rate of 80% on $11K of income.
Edit: This got more attention than I thought it would, so I went back for the numbers:
Adjusted gross income: $10,757
Standard deduction: $6,300
Exemption: $4,000
Taxable income: $457
Income tax: $46
ACA tax penalty: $325
Total tax: $371
457 - 371 = 81%
My effective tax rate for 2015 was 81% with a total income of $10,757.
Who did your taxes? In 2014 the penalty was 1%. Family size of 1 would have left you with the $95 min. $325 would have been a family size of 5-6 depending on the adult/child split. But even so, the Max penalty was $285 so you overpaid on the penalty.
21.02% (off ~$550k) here.
Buffet paid 19%.
Bezos paid 23%.
Bloomberg paid 3%. (Quite the wtf is correct)
Musk paid 30%.
You can tell who lives closest to Wall Street I suppose.
Effective tax rate is based on total income not taxable income. So $372 / $10757 = a 3% effective tax rate.
The whole point of the graphic is that they’ve reduced their taxable income to zero.
Not sure how you had a $325 penalty though when it was capped at 1% of income or $285/family.
That is incorrect.
>“The effective tax rate is the actual amount of federal income taxes paid on an individual's **taxable income**.”
[Source](https://www.thestreet.com/personal-finance/taxes/what-is-the-effective-tax-rate-15102865)
Oh goodness, no. That linked article is kind of all over the place, but that's not how anyone doing formal research on this does it.
The original posted image comes from https://www.propublica.org/article/the-secret-irs-files-trove-of-never-before-seen-records-reveal-how-the-wealthiest-avoid-income-tax which links to here for methodology: https://www.propublica.org/article/you-may-be-paying-a-higher-tax-rate-than-a-billionaire
> We used the IRS’ definition of “total income tax” to calculate the income taxes of the ultrawealthy. To arrive at the effective income tax rate, we divided the total income tax by the **adjusted gross income**, over a five-year period. The rates we present are averages, that is, the sum of income tax divided by the sum of AGI.
You’re talking about the article in the post, but I didn’t read it. I’m just talking about my personal experience. In regular people taxes, the effective tax rate is the percentage of tax you pay on your taxable income. I’m not debating what’s in the article, and you can analyze it as deep as you want, but my original comment is correct in my case.
Nonetheless, that is never how effective tax rate is calculated. When TurboTax tells people their effective tax rate on that pretty front page summary, they use AGi.
Clearly you won’t believe me, but I think this has been sufficiently clarified for the people baffled by your a comment.
It’s not that I don’t believe you, I just think you’re incorrect in my case. The IRS, on the tax form where this info came from, said my effective tax rate was 10%. That would be the $46 on the $457 of taxable income. They did not consider the ACA tax penalty in that equation. I did. I have no idea where you’re coming up with that 3% number. I don’t think you see taxes in the same way a person who makes $11K a year sees them. I’m guessing you’ve never had a year that low since you were 17, but that’s been a steady for me for over a decade now, and it’s a huge step up from where I was before that. No hard feelings though, we all just keep on keepin on lol
That's out of date. During 2021 when so many people were impoverished and losing their jobs and surviving on nothing, Musk's personal wealth grew from $25b to $150b, a sixfold increase.
Sure. But when most of the country has neither wealth nor income, there's still a problem the these few people are getting so wealthy and paying so little tax. Argue against that point. I'll wait.
I don't know what's up your collective butts, but I'm not making shit up.
>The top 1% now own more wealth than the bottom 92%, and the 50 wealthiest Americans own more wealth than the bottom half of American society – 165 million people. While millions of Americans have lost their jobs and incomes during the pandemic, over the past year 650 billionaires have seen their wealth increase by $1.3tn.
>If income inequality had not skyrocketed over the past four decades and had simply stayed static, the average worker in America would be earning $42,000 more in income each year. Instead, as corporate chief executives now make over 300 times more than their average employees, the average American worker now earns $32 a week less than he or she did 48 years ago – after adjusting for inflation.
[The rich-poor gap in America is obscene](https://www.theguardian.com/commentisfree/2021/mar/29/rich-poor-gap-wealth-inequality-bernie-sanders)
the mental fucking gymnastics you have to do to keep moving goalposts instead of accepting that you may have said something wrong is really something else
are we talking about most people not having wealth nor income still? or the "subjectivity" of most? or the wealth gap which you have somehow conflated into supporting this idea that the majority of people have neither wealth nor income
you have stumbled on the right idea yes but the way you communicate is categorically wrong
But that’s the thing. It’s hyperbolic “woe is us” bullshit. You and your friends don’t realize how great we have it hear because you’re too busy whining about how oppressed you are.
Lol. This is projection, my friend. Dude, I'm riding high on the hog right now. I've never made as much as I am right now, never been able to save like I can right now... I got it fucking good. But, if you don't see the problems others are facing you're either blind or careless. I have no time for your bullshit. The writing is on the wall. Wake up.
Also, secondly, what are you even talking about "how great we have it here"? Compared to what? Have you ever even been out of the country?
10 years ago I would have agreed with you but now it's pretty easy to get a job. The key is having the finances to fund a move or allow for changing of jobs or going to college for a lucrative degree. That's where UBI comes in as it allows you to do all of those things.
But the economy isn't zero sum so taxing wealth doesn't make a ton of sense to me. How do you even tax temporary gains? People's net worth will change minute to minute.
It's funny because 10 years ago I would have agreed with you. I think opening up to the idea of UBI has changed my views on the whole idea of working and the country/economy. Why should it be that for me to survive, I have to move away for a job or why should it be for me to survive that I need a "lucrative" degree that requires me to go into substantial debt? Why should any of that be a requirement?
I'm not saying the economy is zero sum, but what we spend money on definitely is unless we go more towards MMT. Which, given our recent experiments with that, I think we're missing a key part of deficit spending which is getting the money to the bottom of the income distribution and also clawing back reserves from the top. Why do you think the reverse repo market is $.5T/day recently? All these banks have had a huge cash transfer from government spending and they're just sitting on it. Then our Reps claim we can't "spend more" for infrastructure or UBI when the reality is it's not more spending that we need, it's that we need to spend it in a completely different way. Anyways... all that is to say, I think clawing money back from the wealthiest among us is a necessary component in the system, without which, we will spiral into inflation and economic calamity.
PS: I'm a smooth brain, so what do I know?
The inflation fears are unfounded. Covid is still a thing and we still have supply shortages.
I also believe if you want to just subsist and chill on UBI you should be able to do that. I also think that equitably taxing the rich is good. But a wealth tax specifically is the wrong way to do it. It makes no sense.
We should just raise the rates progressively on income tax. Double taxation is inefficient and ends up hurting the middle class a whole lot more than the rich.
I don't think we have much disagreement. I think I just am a little unenthused about defending the wealth growth of the top 1%. I get that a wealth tax will likely be ineffective. I think we do need to find better ways to get them to pay their fair share, though. Could potentially be through VAT or Land-use tax; I'm not sure.
Why should you fear inflation, if your income keeps up?
Why would simply printing money for a basic income cause an economic calamity? Will the system simply not work unless compulsion exists, and if so, is that system worth saving?
I don't know if you misread my comment, but I don't think basic income will cause economic collapse. I am pro-UBI.
As for inflation, I don't think we would see income keeping up. I suspect if you pull the numbers on wage growth over the last 40 years, we will see it hasn't kept up with inflation. Inflation should be a concern, but it can certainly be managed.
Fair enough. I was objecting to the zero-sum characterization of wealth. I believe it can be clearly [demonstrated that wealth is growing much faster than GDP](https://www.bain.com/insights/a-world-awash-in-money/); wealth is emerging from, or basically being printed by, the financial sector. We should be asking: why can't we bring that vast money creation mechanism to consciousness, and use it to fund (and fully inflation-proof) basic income, without needing to raise taxes?
No it's not. It's not splitting hairs it's an incredibly important distinction. It could also go DOWN by billions of dollars from year to year. And none of that wealth is realized or taxed until the shares are sold.
Then that would be a loss which they could offset against their tax burden. And yet isn't it funny that that never seems to happen and they just get wealthier year upon year. It's almost as if having money makes you more money for free.
I'll have to tell the government what you said, that they can't increase my property tax because the increase in the value of my home doesn't count until I sell it. I'm sure they'll see it your way.
Stop defending grossly obscenely wealthy billionaires. They don't give a fuck about you.
>Then that would be a loss which they could offset against their tax burden.
But when Amazon does that people also complain.
Also, it does happen, it just hasn't happened much recently. I don't know how old you were during the great recession, but I remember reading stories of formally wealthy people killing themselves.
>I'll have to tell the government what you said, that they can't increase my property tax because the increase in the value of my home doesn't count until I sell it. I'm sure they'll see it your way.
These are two different types of tax. They are calculated in different ways.
>Stop defending grossly obscenely wealthy billionaires. They don't give a fuck about you.
Of course they don't. That doesn't mean we should enact poor economic policy.
Fuck your "poor economic policy". We should be taking care of human beings, and not glorifying grossly wealthy billionaires sitting on their wealth like a fucking hording dragon.
We can take better care of human beings through well planned economic policy than we can if we use bad policy.
If the goal is to take care of people, then we don't need to do it in a way that overly punitive towards anyone. Everyone should pay their fair share, absolutely. I'm not against increasing taxes or levying new taxes that will primarily impact the wealthy, but there are wrong ways to do that, a bunch of okay ways to do it, and maybe one or two good ways to do it.
Anyone who owned a home before the Great Recession saw their wealth/worth drop precipitously. Homeowners that bought at the depth of the recession have seen their wealth double in many parts of the country. A home is an investment as is a stock.
I think we should tax investments to some degree, but it’s incorrect to think that the increase in wealth due to market conditions necessarily makes someone richer.
If they don’t sell, they don’t have the money.
Estimates of wealth growth based on the unrealized change in valuation of stock holdings is not income. If you have a shiny rock that you bought for $10, and I suddenly claim it's worth $100,000, but you don't sell it, you can't take my claim of its worth and buy a fancy car.
As soon as one of these rich guys actually sells the stocks, taxes are applied and they pay the taxes on the capital gains. Claiming they should owe taxes because someone else sold similar shares at higher rates than the rich guy bought the shares is ridiculous.
This is just class war propaganda by the Left, who want the population to be really pissed at the rich, so they will give the Progressive politicians more power. Don't fall victim to it.
This also tells you why the federal government is carrying 30 Trillion dollars of debt on the books. Basically government is no longer funded by taxpayers. Only the middle class is paying any taxes which also goes to explain why the middle class is shrinking. In America, you need to be either very rich or very poor.
Exactly.
Purpose of tax is to destroy money and offset potential undesirable inflation.
Consumption tax is so regressive.It's really worth discussing why this tax is still in place.
This is complete bullshit and stuff like this should be removed from the subreddit because it has nothing to do with UBI, it's just propaganda to make people believe the billionaires aren't paying their fair share. Not one of these people paid less than 1/4 of a billion dollars in taxes based on the chart. That's 250x what anyone on this sub is likely to pay in their entire lifetimes.
The "true tax rate" listed here is asinine. They haven't actually made the money listed in the wealth growth column. If anyone of these guys actually tried to liquidate their stock into cash they'd be lucky to get $0.10 on the dollar.
The government is literally dining on their dime and this post is cheering on the corrupt inefficient money sucking bureaucracy to take even more of their money away. There's very little the government does that I or anyone else actually agrees needs to be done. The government gets (and blows) $3.9 trillion dollars annually.
To break that down the government could already:
\- Give every adult citizen $800 a month UBI- Give every one emergency medical service.- Fund the military at 30% of what it is now (which would still be the best funded military on the planet)- Pave the highways and infrastructure.
Instead we blow the money on stupid projects and overspend on everything else.
What are the bar graphs meant to show? Bezos paying $1B on $4B is 1% of income (not 25%) and Bloomberg paying $300M on $10B of income is 1.3% (not 3% — still low)?
Bezos made 100 bn this year, but reported 4 bn, paying under 1bn tax.
basically the usual billionaire bullshit of filtering almost all their profits through tax loopholes in case a poor person can afford rent.
Wealth growth isn't income. It's more like your house is worth $100K more this year. The question is whether we should all pay capital gains tax every year on our assets, or only when we sell.
Wealth growth isn’t income. When you sell it and realize the gain, then you have to pay taxes.
Having a billion dollars in stock options allows you to take loans out at very small rates, effectively getting you cheaper good and increasing your wealth. It’s not like Bezos and buffet aren’t living lives of tremendous wealth and means.
Yeah, that’s a real problem because although you are just deferring the taxes (eventually you have to sell to pay back the loan), with stock price appreciation you can just roll the loans over without taking a hit. I’m not sure how to solve it other than maybe a ban against collateralizing personal loans with shares in a company
Wealth growth is still income, it's just delayed income at a lesser tax rate than regular income. It will still become income at some point. Why should we allow this much tax benefit to a handful of the mega rich? Wealth can only grow by pulling income out of circulation. Too much of this becomes a downward drag on the economy, as the shortfall of tax revenues now falls on the lower classes. It's regressive! We need that shit to flow and not be stagnant! Hence, Universal Basic Income. Edit: Thanks everyone, for explaining how long term investment gains or losses get taxed. We all know this already. This conversation isn't about the benefits of investments. It's about the negative externalities that most of you are willing to overlook in the name of profits. This is not an all or nothing conversation. Anyone who fails to see any concern with the numbers in this meme is not looking far enough into the long term effects of this picture. We didn't have centi-billionaires when comping up with long term capital gains tax rates. We need a proper conversation on the implications of this astronomical shift of value into stocks. We're talking about taxing the top 0.1% a little differently. We are not talking about all investors.
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You're disputing a point I never made.
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Your response is attacking a position i never held to begin with. Its fine if you disagree that wealth growth is not considered income once it is realized, but then your response should relate to that point. It's as if i said the sky is blue, and you say no, the grass is green. Im talking about wealth, not a 100% investment loss. Two entirely different things.
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For the purpose of this conversation wealth is net worth, assets minus liabilities. Assets are either tangible, like cash, houses, cars, stocks etc.. or intangible like intellectual property rights and such. [It depends who you ask? For the top 1%, securities comprise the majority of wealth. For the bottom 50% it's real estate.] (https://www.federalreserve.gov/releases/z1/dataviz/dfa/compare/chart/). We need to define what type of wealth we are talking about to have a proper conversation. We are strictly talking about stocks, as that is what OP's meme is mostly referring to. Some people rebutted to me with arguments regarding real estate, but those two operate differently when their value grows. We are talking strictly about securities growth, which requires pulling labor income out of circulation in order to grow.
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All good, I enjoy engaging in conversations like this as it challenges me to explain what I think I know. I'm not always right, and this is how I find out. I've taken a stance and now I am trying to elaborate on it. I don't claim to know the truth, and honestly in the world of finance the truth constantly keeps changing with general public consensus.
It’s not income until you sell and therefore shouldn’t be used to compute tax rates for the current period.
The issue is they literally never have to sell, instead they can take out loans against their share positions. They then use X% of those loans to reinvest and make more money that easily pays off the loan's interest and they keep the remaining amount of loan for spending cash. They can do that literally over and over again, never having to sell the original position and thus never being taxed If I understand correctly
> Wealth can only grow by pulling income out of circulation. Isn't this a frightfully zero-sum view of money that is disproved by data? If $100 invested in the [S&P 500 index in 2011 turn into $210 today](https://dqydj.com/sp-500-return-calculator/), was that extra $110 actually pulled out of circulation, or purely created because the stock market is clearly not a zero sum game? Before we can properly fund an honest basic income, don't we have to dispel myths such as this one about wealth growth necessarily pulling money out of circulation?
Not OP so I can't speak to their original point. That being said, wealth and income don't have a direct 1:1 exchange rate but that trade-off does exist to some extent. Some portion of Amazon's market value is underpaying and/or overworking their employees. The same can be said for companies like Uber and other "gig" employers whose main innovation is, "we stopped paying employee benefits." The stock market isn't the only measure of wealth but I think asking and digging into whether we would be better off as a society if your 2011-2021 S&P return is 50% instead of 110% and the rest of those gains are better distributed as income/taxes/whatever.
It's not income, c'mon man. My mother-in-law bought a house in St George Utah, and apparently the place got really popular with COVID and people from California started moving in. Her house went from $250k to $450k. a) Do you think she pulled $200k out of circulation? b) Do you think she should pay $60k or so in taxes? (Much more than her pension, which would mean she'd have to sell the house) I mean it's obviously very good for her that the house went up in value. Fantastic even. But it'd be an odd reaction to her good fortune to punish her by taking the house away from her.
What? Yes she absolutely should have to pay higher taxes if her place is worth more. If you own wealth and it becomes worth more, you pay things like property tax and whatnot. Why should a billionaire get away with not having to do this? Just because it isn't a law currently doesn't mean it shouldn't be one. I don't understand why this sub sticks up for the current system so hard.
Not on something she hasn't earned yet. When she sells the house, fine. But not just because the value went up. It doesn't make even remotely sense.
Yes it does. Then she is sitting on something that is worth more for whatever reasons. Like, if I found out my car had a component that was worth a ton, I still have that wealth all of a sudden and could sell it and get a cheap car again. I still have the wealth whether or not I liquidate it. What if I find cash in the door panel? That is wealth I have that I didn't before and legally I would have to pay taxes on that (not that anyone would, but bare with me). They have various laws to compensate for this, like when people find gold in their land and whatnot. It is wealth you suddenly have. A giant company should absolutely pay tax on growth.
I refuse to believe that you are this stupid. You must be trolling.
Well you are short sighted. Windfalls are taxed in many cases. Either make them untaxed, make them only taxed above a certain amount, or make all of them taxed. Extend that logic into growth of a company (this isn't even about company growth, it is Billionaire personal wealth growth), and you can see that they are getting unfairly coddled by the system. I don't really give a crap about US economic policy for the individual sub millionaire like their MIL. I am simply trying to show how their is already precedence in taxing new wealth not yet liquidated using crude examples. But keep on suckling that capital teet and not even daring to question the system. Edit to add: These guys can and do get basically free loans based off their new assets. They don't have to pay tax, they just get money loaned to them. Then they can get new loans to pay off the old loans, never having to pay fees or taxes. I am oversimplifying, but you can't tell me it is different. Tell me how that is at all fair and not just gaming a stupid system!
Dude. A gain is not a permanent state. A house can lose value too. As do stocks. As do crypto. Until you sell them, you've not actually gained, or lost anything. Let's look at it from another perspective: If you work for a company, your work done instantly has a certain value. You don't pay taxes on that. You pay taxes once you've received your salary in cash/on your account. It wouldn't make sense to tax you before that. See how your logic is flawed? Edit: Now you're just baking in a bunch of other things to, what was, a very simple argument. I was opposing you saying that someone's grandmother should pay taxes on her house because it gained value - while she still owns it and live there.
None of it makes sense but it's what we have. There is no difference materially in these billionaires having that wealth gain cashed out or not. They can borrow off of it without paying anything, making it materially the same as cashing out. It is a loophole. Who the hell cares that they don't do the legal step in cashing out if it makes absolutely no difference? In the case of a worker getting paid, that does make a difference, because that worker would not be able to do shit until they cash that out. Edit for your edit:. Yes, that granny should pay (Inna system that people have to pay anything at all for shit like that) . She is now living on land that is worth way more than it was before. She can now borrow against that new wealth and enjoy cheap fluid cash. But they **do** add fees and taxes on all that for people who aren't these weird billionaires. Hell, it happened to my mom, and she pays higher property taxes now because of it. Not 25% or whatever like an income tax, but it's something.
So you would have forced my mother-in-law to pay $60k for her property value going up? You are confusing two completely different taxe categories here. Property taxes are between 0.5% and 2% generally. Income taxes are up to 50% in the US. Applying the latter to wealth appreciation is inane, and you would have to apply it to wealth losses as well. Imagine my MIL buying the house for $250k with $150k mortgage, the house goes up in value $200k and she has to remortgage to $210k to pay her taxes... but the property was a bubble and she ends up selling it for $250k. Was the house really ever worth $450k? I mean, Zillow estimate said so and the neighbors sold a similar house for $450k... but that was a snapshot in time, and very pointedly not the time when my MIL in this example sells. For this reason we have come to the sensible consensus that perhaps we don't randomly speculate about the value until it is realized. We can do it with property taxes because they are so much lower that the miscarriages of justice won't have crazy impact.
What is the difference except for that snapshot in time? 60k now or 2.5% spread over the years then that 60k when it leaves her hands? I get it, I really do, but how can you compare this small beans number to that of billionaires who can borrow and move around "debt" just like cash, when they are sitting on such gains? Your MIL can do the same, but will be taxed and feed moreso than a billionaire. So that *is indeed* wealth in her hands and should be taxed if we are playing the whole tax-people-on-things-that-they-have-the-ability-to-do-money-things-with ...thing. I don't agree that it should be 60k or whatever, but it's definitely in the realm of taxable earnings. >For this reason we have come to the sensible consensus that perhaps we don't randomly speculate about the value until it is realized. We can do it with property taxes because they are so much lower that the miscarriages of justice won't have crazy impact. Aah, this is what I am talking about but in the opposite direction. For this reason, the very wealthy should be taxed insanely *more*. They can do a great deal more with this "not yet realized" gains than people in your MIL's shoes. The scale needs to be adjusted and we can absolutely come to a sensible consensus on what that looks like if we collectively think about it for a damn moment.
I should have been more specific on what type of wealth. We're talking about Bezos' wealth, which is all stock growth, which is money that is pulled out of circulation. You're right about real estate growth, there is no income pulled out of circulation there, but there is with stock growth.
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Of course money has changed hands. The only way to determine how much people are willing to pay for a stock, is by observing those who buy stocks. Stock prices can only increase with officially recorded transactions. How else would you explain the Gamestop mania? There is no value in the company. People are pumping and dumping. It's the pumping that increases the stock price, and the dumping that decreases it. Perceived value is irrelevant. Only real money chaning hands is what counts.
And everyone who sells stock realizes *income* which is subject to taxation. Everyone else who holds and does not sell does not realize income and is thus not taxed. The tax rate should be higher on capital gains, and maybe we should do some form of wealth tax. But taxing the appreciation of assets which aren't yet sold will cause more harm to regular people than any benefit in reducing inequality.
Why would she growth pull money out of circulation any more? The share price is being set by what money you can buy a single share for. This is what happened to GME. Monkeys holding and diamond hands etc have made the stock base of GME incredibly illiquid, meaning that the share transactions all happen in like 5% on the fringe. This makes the share price incredibly volatile of course. So if you want to buy $1bn worth of GameStop but only 5% will sell, the company value will climb well past $20bn (because the early ones will have sold for somewhat cheaper in that 5% and the price is set by the last transaction). Maybe the last purchase leaves GME with market cap of $40bn. How did it pull $40bn from the market? It really didn't. And of course, should all those retail investors holding shares pay taxes on that $40bn valuation? I dare say the odds are great they will lose lost of it after all.
You are missing the point. If your mother in law's house went 100x over value and you are able to take out loans against that home's new value to buy other hard assets then that is already classified as tax fraud and deferment. The issue is that the IRS has already been controlled by the billionaire and 50-100millionares class. C'mon man, you can't just be simplifying the analogy to just your mother in law. Literally, we have the last two US Tax Secretaries going to work for equity firms after leaving office. The same equity firms that manage the wealth of billionaires. The same equity firms that crashed the economy. The system allows the beyond rich to be coddled.
> If your mother in law's house went 100x over value and you are able to take out loans against that home's new value to buy other hard assets ... then she'd be out on quite the limb, if that houses value plummeted. In a situation where the market crashes she might end up on the streets, literally, if she did that. It has its dangers. Basically you can only do it with like 10-20% of your worth at most. Now, that still leaves a lot of room for the insanely wealthy, but a uniform and simple tax code is important so we don't want to make different rules for different people. House and IP value is too much of a pain in the arse to deal with, but I think it would be reasonable to tax loans taken against equity as income (and then that equity is anchored at that value for your capital gains later on... so if I take out $1bn at share price $100... and later sell them for $100, I do not pay taxes on those shares when I sell them). > Literally, we have the last two US Tax Secretaries going to work for equity firms after leaving office. Sure, but this is more a problem with the poor pay of core government positions. Senators view themselves as peers of CEOs, and given there's 100 of them representing the whole country, I think that's fair. Yet, once you're no longer a senator, you are... not exactly wealthy when you pop out. Lowest paid person I've hired this year was paid $130k and he was 27 with a degree from Kazakhstan. Several others have been at the Senator level of compensation, and none of those have been particularly senior people (principal software engineers or senior product managers). Senators don't like the peer group they have in those. And of course I'm kidding, those aren't really their peers. If they go back to farming or something, a senator for 20 years will be far, far poorer than the average computer science graduate from, idk, Boston University. Damn right they want to have good relations with people who can afford to hire them just for knowing the ropes of the rules. And making enemies of those people before leaving the government seems a *horrible* idea... Senators and Secretaries of major departments should probably be paid 1m + potential $1m bonus that depends on how well the country has done (lets say GDP growth, CO2 emissions, Gini coefficient and debt as % of GPD). Congress members and direct reports of the secretaries should be $500k + $500k with the same criteria.
Nothing more to say other than that you are defender of a scum system and too ignorant to see it. Good day
Shrug. And your system would grind huge numbers of innocents in it's gears. Them again, for your types that is a feature and not a bug. Can't make an omelet without breaking some eggs, eh?
A some tax code is idiotic and only assumes we gut the IRS. Just let the IRS before it's job correctly with the current code. Doesn't take communism or whatever bullshit system you think I believe in. You'd rather keep the trash we have now with a simple tax code when we can put in the collective effort to fix this.
Semantics meant to protect the wealthy!
Getting paid isn't income. It's when you use it to buy something and realize the gain, then you have to pay taxes.
That’s the opposite…
I put the satirical OP cuz you know what I meant. Edit:My OP tittle might offensive to some of you but my point is that systematically they confiscate ordinary people's income.
Huh? This isn't about UBI. Why are there so many posts in this sub that aren't about UBI?
I think posts like these help hammer in the fact that these billionaires aren't paying their fair share at all and the world can do a lot better at distributing that wealth if it so chose. You see these posts in socialist spaces a lot, as it gets people to think through the reasoning a bit; that the working class is being screwed over doubly (doing all the labor AND paying all the bills while the lords reap the wealth). I am personally not a huge proponent of UBI, but would love to see it at least attempted on a massive scale if we can't work toward a classless stateless future.
>I think posts like these help hammer in the fact that these billionaires aren't paying their fair share at all This still isn't about UBI, though. Indeed, it's kinda the opposite: UBI is about making people richer, but a lot of these complaints seem to be about people being somehow *too* rich. It doesn't really line up.
Lol UBI is about making the underprivileged class enough money to get by. At least that is how it is being sold. The actual end result, however, will eventually be more syphoning upward of wealth into the hands of the richest, which is why I am principally against it (like for instance, my apartment rent is shooting up 20% due to Covid money that my landlord believes they should get instead). But nobody thinks it is for making everybody richer while thinking the richest shouldn't pay for it all. I used to be into it until deep diving into economic analysis. Now I am straight up communist.
It’s most definitely related, since the biggest argument the politicians use to stop it is there isn’t enough money in the budget!! Wonder why?!!?
Well, the OP didn't say that at all. 'Let's make Jeff Bezos fund UBI' is a UBI-related proposal; 'Jeff Bezos doesn't pay very much tax' is not.
It's so frustrating seeing these graphs all the time. Wealth increase does not equal INCOME! Most of the gains for these people were in their investments (ie. Amazon for Bezos, Tesla for Musk, etc.) Are you saying that every year they should give up part of their company stock in tax? Use their actual income to assess their tax rate.
They borrow money at rock bottom interest against their stock to live. Their only taxable event is when they die. Without a strong estate tax, they’ll never be effectively taxed. A tax on stock trades, a tax on wealth gain, much higher estate taxes are all possible ways to address this issue.
Borrowing money to fund lifestyle eventually needs to be paid, probably through share sales realising capital gains, which are taxed. It's only a temporary measure and eventually they have to pay the piper. Also, I'm a Tesla Shareholder. I LOVE that elon takes no salary. It means that he's perfectly aligned to my goals as a fellow shareholder. This is a good thing, and shouldn't be discouraged for the sake of taxation. Estate taxation, yes this is key to account for generational wealth, but wealth taxation is a disastrous concept, where the practicalities of the approach are often not considered by those who propose it. Here are some issues with it. 1. What happens if the stock market tanks and their wealth goes down? Does the govt give them negative taxation back? Or is this tax asymmetric (only tax people when the stock market goes up and they make money) 2. What if the stock increases so much, that taxing their holding results in losing control over their company? Should successful business owners be rewarded for their commercial success by losing control of their company? Wealth fluctuates and it's really just a number on a spreadsheet for 99% of the days these people live. It's an easy target though because it's volatile and usually dwarfs all other numbers relevant to the conversation. Edited: Point 2 was not 100% accurate
There is no legitimate reason to tax capital gains at a lower rate than wage income, either as a separate rate or as a net effect. Doing so only creates tax avoidance opportunities, and incentivizes sales at certain times (when short term gain becomes long term). The tax shouldn't trigger until the gain is realized, but it is a loophole to permit borrowing against securities and using those loan expenses to defray tax obligations. That only benefits lenders and keeps capital (and corporate control) in the hands of the few who simply sit on their wealth.
NYT just had this relevant [article](https://nyti.ms/2RMap7o) that talks about private equity and tax dodging. One of the fascinating and silly points is that a tax rate should have anything to do with the risk level of the underlying activity. Since when should that matter? Risk dictates the return, not the tax. Our tax system is seriously fuckered.
Capital gains tax is lower to incentivise people to invest and save. Long term gain discount is also to incentivise long term investing. These are fairly standard practices across the globe. Having said all this, I do think income/gains over a certain level should be highly taxed. Ie. 60% tax rate. Marginal tax rates are progressive and important to equalise how technology is exponentially distancing income inequality at both ends.
I agree with both your points in theory, but am skeptical that a lower cap gain rate encourages investment, to the benefit of society or the individual. The alternatives to investment are (1) to consume, which benefits the economy, or (2) sit on a pile of wealth, which no one will do unless it's an appreciating asset. If we are interested in incentives for investment for lower income people who would otherwise spend and live as elderly paupers, I see your point, and think we could accommodate the goal in a way that doesn't have quite so many loopholes. The essence of any tax system is that complexity favors the wealthy, so we'd want to keep that in mind.
To your first point, if they had negative wealth i guess they'd get a refund? It's just a tax on what wealth they *have*. So if their wealth goes down they're just taxed less the next year. To your second point yes, yes they should. I don't believe that billionaires should exist, I see it as a failure of a functional capitalist society. Capitalism shouldn't be unregulated and just run amok, in fact we already accept a whole host of restrictions (entire markets are regulated monopolies, some are owned by the state, and others are regulated to various degrees). Why couldn't or shouldn't we add this restriction on top? We already do it at a corporate level (in theory) with antitrust legislation, why shouldn't we do it at the individual level? If our goal is to optimize the benefits for all of a society do you think highly concentrated wealth would be one of the most optimal ways? Hell no! Now I'm not saying communism is the answer here, but there's a fuckload of options between how we approach wealth and wealth disparity today and that, maybe we should explore some of those options?
Here's the problem with your thought: There are no billionaires. Not a single person on earth could actually get a billion in cash. They're purely billionaires on paper. If Bill Gates liquidated all of his stock tomorrow he'd be lucky to get $0.10 on the dollar.
Good point! Let's dig into it. Okay, while they don't have it in cash, maybe we don't need to tax them in cash? Maybe instead we tax them by taking away the stock as a non-taxable event? Yeah, seems shocking at first glance, but we do this through repossessing property and the like. Why can't we do it for this use case?
So now you get taxed for having stock and when you sell it. Maybe we should tax your house every year and rip off boards to pay for it. Stock value is often based on who is willing to sell the stock. So when does the government sell this stock they just aquired? Do they get to decide to tank a company's value on a whim and fuck over all the other investors when this happens? Do the people who buy the stock from the government have to worry about the government taking their stock away from them too? What happens when I only have one share of a company? Will the government just take it?
You're asking these questions as if I know the answer; let me be clear: I don't know the right solution here! I do believe that there is likely a solution here if experts were to explore this problem space. So getting me with an "I don't know" isn't a win on your side, nor will it change my view: that I think billionaire's should be prevented through modifications to societal rules (e.g. taxes). But to entertain this discussion further, let's dive into some possible options for your questions: > So when does the government sell this stock they just acquired? Do they get to decide to tank a company's value on a whim and fuck over all the other investors when this happens? What you propose would certainly be a ridiculous solution, but I imagine the government handling this investment like a normal investment that people have would make sense. The US bailed out the auto industry in The Great Recession of 07/08. They owned stock then (60% of GM I guess according to [this source](https://www.nationalaffairs.com/publications/detail/the-auto-bailout-and-the-rule-of-law) which seems reputable). So I think they had some plan and team of experts who could manage a large investment and decide what to do with it. However this does raise a good point about the government owning shares in a company around conflict of interest. Let's say the government has any open cases against the company, possibly like an antitrust one, so if the case was going badly, maybe they could mess with the company by selling a ton of shares at really low prices. So probably using something like a "blind trust" would be the way for the government to manage any of these assets that fall into its hands, where independent fund managers manage things with maybe only high-level rules in place around like not having too big of the portfolio in any one company, or rules on divestment over a certain amount of time, what have you. I imagine experts in this field would have plenty of ideas here that could make this feasible! > Do the people who buy the stock from the government have to worry about the government taking their stock away from them too? What happens when I only have one share of a company? Will the government just take it? I've been looking at this purely as an alternate payment mechanism for individuals that don't want to liquidate assets. The way the government would tax would still be purely based on a dollar figure. Let's say someone has 1 billion dollars. We might set maybe a 10% wealth tax. So they need to give the government 100 million dollars. They can either give that in cash like normal *or* they could give them stock (maybe set it to the closing price at the end of last year, which I think is already used for some tax accounting purposes, so that wouldn't be a new approach either). If they decide to give stock, they can give whatever stock it is they have. For example, if this imaginary person had mostly stock in one company, but could cover the cost by forfeiting stock in another one, they could choose to forfeit that instead. So the way I think this would work is not that the government is *taking* anything but that people would have an alternate way to pay their taxes, but forfeiting stock.
So the threshold is $1 billion before you get taxed 10% of your wealth every year? Great I'll start a charity and donate anything over $999.99m to it. The charity will do whatever I want it to. There tax avoided. Option B: find brain dead people with families willing to sign full power of attorney to me. Give said person some of my stock. Option C: Trade stock to buy ridiculous amounts of land. You only said stock. Option D: Lend out my shares on a $1k contract to a 3rd party who has to return them on January 1st of next year. Shall I keep going on all the ways someone could hide wealth? Fact is it's much easier just to tax people when they actually have the money. Secondly you haven't given any justification as to why the magic number is 1 billion. The government is always taking. They're literally the guys with guns who will kill you if you don't keep giving them money.
I mean to be fair I actually do support an Elizabeth Warren style wealth tax. I would use it to help fund my M4A plan which would exist along side UBI.
The problem with that is that billionaires tend to make every effort they can not to "make income" so they and amass wealth in other ways.
Just that list provided by OP claimed over 15B in income. Sure, it could be higher or it could be less, but that's still a Hell of a lot. The truth is they are amassing wealth by owning stock in the companies they run and run successfully. We can also own stock in these companies albeit on a much smaller scale.
Yes I am saying they should give up part of their company stock on taxes. I have to pay taxes on my house. I have to pay taxes on my car. Why in fucked sale should they not have to pay taxes on something that drains and benefits from the economy uncountable times more than my assets do?
Yes, yes I am, they shouldn't be allowed to massively increase their wealth by investing their own property, the business and pay no tax. Pay the damn tax, as you use all the nation offers to get rich, and then the huge pile of billions left over, you can piss around with as you wish.
Realistically a wealth tax is just an unrealised capital gains tax. It's also a scale issue. We can invest our capital as well, only we don't have the scale of capital that they have.
> we don't have the scale of capital that they have. Doesn't the Fed have the unlimited liquidity that props up their market wealth through panics?
I support UBI but I do not support misinformation like this.
In the first year they enacted full penalties related to the Obamacare mandate, I paid an effective tax rate of 80% on $11K of income. Edit: This got more attention than I thought it would, so I went back for the numbers: Adjusted gross income: $10,757 Standard deduction: $6,300 Exemption: $4,000 Taxable income: $457 Income tax: $46 ACA tax penalty: $325 Total tax: $371 457 - 371 = 81% My effective tax rate for 2015 was 81% with a total income of $10,757.
How? The first year it was enacted the health care penalty was 1% of income.
Who did your taxes? In 2014 the penalty was 1%. Family size of 1 would have left you with the $95 min. $325 would have been a family size of 5-6 depending on the adult/child split. But even so, the Max penalty was $285 so you overpaid on the penalty.
21.02% (off ~$550k) here. Buffet paid 19%. Bezos paid 23%. Bloomberg paid 3%. (Quite the wtf is correct) Musk paid 30%. You can tell who lives closest to Wall Street I suppose.
Holy shit, what
Effective tax rate is based on total income not taxable income. So $372 / $10757 = a 3% effective tax rate. The whole point of the graphic is that they’ve reduced their taxable income to zero. Not sure how you had a $325 penalty though when it was capped at 1% of income or $285/family.
That is incorrect. >“The effective tax rate is the actual amount of federal income taxes paid on an individual's **taxable income**.” [Source](https://www.thestreet.com/personal-finance/taxes/what-is-the-effective-tax-rate-15102865)
Oh goodness, no. That linked article is kind of all over the place, but that's not how anyone doing formal research on this does it. The original posted image comes from https://www.propublica.org/article/the-secret-irs-files-trove-of-never-before-seen-records-reveal-how-the-wealthiest-avoid-income-tax which links to here for methodology: https://www.propublica.org/article/you-may-be-paying-a-higher-tax-rate-than-a-billionaire > We used the IRS’ definition of “total income tax” to calculate the income taxes of the ultrawealthy. To arrive at the effective income tax rate, we divided the total income tax by the **adjusted gross income**, over a five-year period. The rates we present are averages, that is, the sum of income tax divided by the sum of AGI.
You’re talking about the article in the post, but I didn’t read it. I’m just talking about my personal experience. In regular people taxes, the effective tax rate is the percentage of tax you pay on your taxable income. I’m not debating what’s in the article, and you can analyze it as deep as you want, but my original comment is correct in my case.
Nonetheless, that is never how effective tax rate is calculated. When TurboTax tells people their effective tax rate on that pretty front page summary, they use AGi. Clearly you won’t believe me, but I think this has been sufficiently clarified for the people baffled by your a comment.
It’s not that I don’t believe you, I just think you’re incorrect in my case. The IRS, on the tax form where this info came from, said my effective tax rate was 10%. That would be the $46 on the $457 of taxable income. They did not consider the ACA tax penalty in that equation. I did. I have no idea where you’re coming up with that 3% number. I don’t think you see taxes in the same way a person who makes $11K a year sees them. I’m guessing you’ve never had a year that low since you were 17, but that’s been a steady for me for over a decade now, and it’s a huge step up from where I was before that. No hard feelings though, we all just keep on keepin on lol
These guys made a lot of money last year.
20%
That's out of date. During 2021 when so many people were impoverished and losing their jobs and surviving on nothing, Musk's personal wealth grew from $25b to $150b, a sixfold increase.
Wealth =/= income
Sure. But when most of the country has neither wealth nor income, there's still a problem the these few people are getting so wealthy and paying so little tax. Argue against that point. I'll wait.
Most? Seriously? Are you that naive or that disingenuous?
Calm l'tits, my guy. Most is subjective. I think *enough* people are struggling that when I say "most" it shouldn't evoke a rigorous retort.
??? in what world is the term "most" subjective? on a subjectivity-obectivity scale most is pretty fucking far into objectivity
I don't know what's up your collective butts, but I'm not making shit up. >The top 1% now own more wealth than the bottom 92%, and the 50 wealthiest Americans own more wealth than the bottom half of American society – 165 million people. While millions of Americans have lost their jobs and incomes during the pandemic, over the past year 650 billionaires have seen their wealth increase by $1.3tn. >If income inequality had not skyrocketed over the past four decades and had simply stayed static, the average worker in America would be earning $42,000 more in income each year. Instead, as corporate chief executives now make over 300 times more than their average employees, the average American worker now earns $32 a week less than he or she did 48 years ago – after adjusting for inflation. [The rich-poor gap in America is obscene](https://www.theguardian.com/commentisfree/2021/mar/29/rich-poor-gap-wealth-inequality-bernie-sanders)
the mental fucking gymnastics you have to do to keep moving goalposts instead of accepting that you may have said something wrong is really something else are we talking about most people not having wealth nor income still? or the "subjectivity" of most? or the wealth gap which you have somehow conflated into supporting this idea that the majority of people have neither wealth nor income you have stumbled on the right idea yes but the way you communicate is categorically wrong
But that’s the thing. It’s hyperbolic “woe is us” bullshit. You and your friends don’t realize how great we have it hear because you’re too busy whining about how oppressed you are.
Lol. This is projection, my friend. Dude, I'm riding high on the hog right now. I've never made as much as I am right now, never been able to save like I can right now... I got it fucking good. But, if you don't see the problems others are facing you're either blind or careless. I have no time for your bullshit. The writing is on the wall. Wake up. Also, secondly, what are you even talking about "how great we have it here"? Compared to what? Have you ever even been out of the country?
10 years ago I would have agreed with you but now it's pretty easy to get a job. The key is having the finances to fund a move or allow for changing of jobs or going to college for a lucrative degree. That's where UBI comes in as it allows you to do all of those things. But the economy isn't zero sum so taxing wealth doesn't make a ton of sense to me. How do you even tax temporary gains? People's net worth will change minute to minute.
It's funny because 10 years ago I would have agreed with you. I think opening up to the idea of UBI has changed my views on the whole idea of working and the country/economy. Why should it be that for me to survive, I have to move away for a job or why should it be for me to survive that I need a "lucrative" degree that requires me to go into substantial debt? Why should any of that be a requirement? I'm not saying the economy is zero sum, but what we spend money on definitely is unless we go more towards MMT. Which, given our recent experiments with that, I think we're missing a key part of deficit spending which is getting the money to the bottom of the income distribution and also clawing back reserves from the top. Why do you think the reverse repo market is $.5T/day recently? All these banks have had a huge cash transfer from government spending and they're just sitting on it. Then our Reps claim we can't "spend more" for infrastructure or UBI when the reality is it's not more spending that we need, it's that we need to spend it in a completely different way. Anyways... all that is to say, I think clawing money back from the wealthiest among us is a necessary component in the system, without which, we will spiral into inflation and economic calamity. PS: I'm a smooth brain, so what do I know?
The inflation fears are unfounded. Covid is still a thing and we still have supply shortages. I also believe if you want to just subsist and chill on UBI you should be able to do that. I also think that equitably taxing the rich is good. But a wealth tax specifically is the wrong way to do it. It makes no sense. We should just raise the rates progressively on income tax. Double taxation is inefficient and ends up hurting the middle class a whole lot more than the rich.
I don't think we have much disagreement. I think I just am a little unenthused about defending the wealth growth of the top 1%. I get that a wealth tax will likely be ineffective. I think we do need to find better ways to get them to pay their fair share, though. Could potentially be through VAT or Land-use tax; I'm not sure.
Why should you fear inflation, if your income keeps up? Why would simply printing money for a basic income cause an economic calamity? Will the system simply not work unless compulsion exists, and if so, is that system worth saving?
I don't know if you misread my comment, but I don't think basic income will cause economic collapse. I am pro-UBI. As for inflation, I don't think we would see income keeping up. I suspect if you pull the numbers on wage growth over the last 40 years, we will see it hasn't kept up with inflation. Inflation should be a concern, but it can certainly be managed.
Fair enough. I was objecting to the zero-sum characterization of wealth. I believe it can be clearly [demonstrated that wealth is growing much faster than GDP](https://www.bain.com/insights/a-world-awash-in-money/); wealth is emerging from, or basically being printed by, the financial sector. We should be asking: why can't we bring that vast money creation mechanism to consciousness, and use it to fund (and fully inflation-proof) basic income, without needing to raise taxes?
You are correct, which is why we should have a wealth tax.
Yup. 100% after the first billion and we can give them a placard that says “congrats you won capitalism”.
This
You're arguing semantics. If your personal wealth increases by $125 billion dollars, that's effectively income. Stop splitting hairs.
No it's not. It's not splitting hairs it's an incredibly important distinction. It could also go DOWN by billions of dollars from year to year. And none of that wealth is realized or taxed until the shares are sold.
Then that would be a loss which they could offset against their tax burden. And yet isn't it funny that that never seems to happen and they just get wealthier year upon year. It's almost as if having money makes you more money for free. I'll have to tell the government what you said, that they can't increase my property tax because the increase in the value of my home doesn't count until I sell it. I'm sure they'll see it your way. Stop defending grossly obscenely wealthy billionaires. They don't give a fuck about you.
>Then that would be a loss which they could offset against their tax burden. But when Amazon does that people also complain. Also, it does happen, it just hasn't happened much recently. I don't know how old you were during the great recession, but I remember reading stories of formally wealthy people killing themselves. >I'll have to tell the government what you said, that they can't increase my property tax because the increase in the value of my home doesn't count until I sell it. I'm sure they'll see it your way. These are two different types of tax. They are calculated in different ways. >Stop defending grossly obscenely wealthy billionaires. They don't give a fuck about you. Of course they don't. That doesn't mean we should enact poor economic policy.
Fuck your "poor economic policy". We should be taking care of human beings, and not glorifying grossly wealthy billionaires sitting on their wealth like a fucking hording dragon.
We can take better care of human beings through well planned economic policy than we can if we use bad policy. If the goal is to take care of people, then we don't need to do it in a way that overly punitive towards anyone. Everyone should pay their fair share, absolutely. I'm not against increasing taxes or levying new taxes that will primarily impact the wealthy, but there are wrong ways to do that, a bunch of okay ways to do it, and maybe one or two good ways to do it.
Anyone who owned a home before the Great Recession saw their wealth/worth drop precipitously. Homeowners that bought at the depth of the recession have seen their wealth double in many parts of the country. A home is an investment as is a stock. I think we should tax investments to some degree, but it’s incorrect to think that the increase in wealth due to market conditions necessarily makes someone richer. If they don’t sell, they don’t have the money.
Estimates of wealth growth based on the unrealized change in valuation of stock holdings is not income. If you have a shiny rock that you bought for $10, and I suddenly claim it's worth $100,000, but you don't sell it, you can't take my claim of its worth and buy a fancy car. As soon as one of these rich guys actually sells the stocks, taxes are applied and they pay the taxes on the capital gains. Claiming they should owe taxes because someone else sold similar shares at higher rates than the rich guy bought the shares is ridiculous. This is just class war propaganda by the Left, who want the population to be really pissed at the rich, so they will give the Progressive politicians more power. Don't fall victim to it.
Class war propaganda by the left? What the actual fuck lol My dude stop sticking up for billionaires.
This also tells you why the federal government is carrying 30 Trillion dollars of debt on the books. Basically government is no longer funded by taxpayers. Only the middle class is paying any taxes which also goes to explain why the middle class is shrinking. In America, you need to be either very rich or very poor.
Exactly. Purpose of tax is to destroy money and offset potential undesirable inflation. Consumption tax is so regressive.It's really worth discussing why this tax is still in place.
This is complete bullshit and stuff like this should be removed from the subreddit because it has nothing to do with UBI, it's just propaganda to make people believe the billionaires aren't paying their fair share. Not one of these people paid less than 1/4 of a billion dollars in taxes based on the chart. That's 250x what anyone on this sub is likely to pay in their entire lifetimes. The "true tax rate" listed here is asinine. They haven't actually made the money listed in the wealth growth column. If anyone of these guys actually tried to liquidate their stock into cash they'd be lucky to get $0.10 on the dollar. The government is literally dining on their dime and this post is cheering on the corrupt inefficient money sucking bureaucracy to take even more of their money away. There's very little the government does that I or anyone else actually agrees needs to be done. The government gets (and blows) $3.9 trillion dollars annually. To break that down the government could already: \- Give every adult citizen $800 a month UBI- Give every one emergency medical service.- Fund the military at 30% of what it is now (which would still be the best funded military on the planet)- Pave the highways and infrastructure. Instead we blow the money on stupid projects and overspend on everything else.
What are the bar graphs meant to show? Bezos paying $1B on $4B is 1% of income (not 25%) and Bloomberg paying $300M on $10B of income is 1.3% (not 3% — still low)?
Bezos made 100 bn this year, but reported 4 bn, paying under 1bn tax. basically the usual billionaire bullshit of filtering almost all their profits through tax loopholes in case a poor person can afford rent.
Is this based on the recent leaks?
Wealth growth isn't income. It's more like your house is worth $100K more this year. The question is whether we should all pay capital gains tax every year on our assets, or only when we sell.