$5 million is far too low for a wealth tax but maybe ok for an income tax
In context here, I was sorta referencing a capital gains tax. Note the comparison with homestead sale exemptions.
70% is also too high.
Not sure whether I agree or disagree. It’s in line (if a little on the high end) for the highest marginal rate in a lot of Europe. After a certain point, no human can claim to actually need the money they’re making anymore, with a logarithmic return. As such, sharp taxation increases after that logarithmic point of return make sense from a strict “utility per dollar” mindset.
I think everyone could agree that a wealth tax of 2% on amounts over $1 billion would be fine
I simply don’t think that’s true. I think it’s a no-brainer. But I don’t think it’s true. Wealth taxes terrify people who will never see that kind of wealth.
All unearned income over $500K could be taxed at 30% as well
I’m assuming you mean unrealized income? Yeah, that’s where the problems start, and what my whole comment was about. Are you accounting for liquidity? For risk? Sometimes people simply have hundreds of thousands in unrealized income that they will never be able to realize because it will coincide with equivalent losses in past/future years. Again, the Bitcoin example I used elsewhere. Some people who genuinely do not have a lot of money were hit with some massive “unrealized gains” taxes greater than their entire net worth, possibly greater than they’d ever earn in their lives, due in part to the unregulated and volitile nature of bitcoin.
In fact, Bitcoin is the perfect example why we need to be incredibly careful with unrealized gains taxes. They’re called unrealized for a reason, and realizing gains can be incredibly costly. You tax a single-owner business for sudden growth and the owner might find themselves owing more in taxes than money made, but selling the business to realize those gains would also involve destroying their source of income. In fact, the wrong capital gains tax would (as always it seems) decisively benefit large businesses and superwealthy individuals. They would go around buying those “taxed out of business” companies for pennies on the dollar because they could afford the taxes.
That’s why it’s complicated.
Corporate income taxes are what really need to rise. 35% at least
ALSO complicated. But I agree. There is a real risk of corporate flight, but I’m not convinced Delaware-Based corporations that primarily employ people in third-world countries are really providing much value in the US.
I don’t care if Apple says their IP is all owned by a tiny company in Ireland. They need to pay US taxes on all income generated in the US.
…they already do “pay US taxes on all income generated in the US”. Apple pays a majority of their taxes to the US. The Ireland thing was largely about 10 years of crazy tax breaks back in the 80’s based on loopholes that the EU cracked down on. Yes, their $170B profit is disgusting, and the $35B in taxes they pay are merely 20% of their margins… but it’s not going away by just expecting them to pay based on US income. Corporate taxes are a complicated game with hundreds of deductions and thousands of defensible reasons for those deductions.
I’ve never loved that businesses pay taxes on profit, but individuals pay taxes on income. It’s “understood” that hitting a business on the bottom-line is unreasonable, but individuals are often taxed on the very remediation techniques taken to deal with overwhelming debt (yes, in the US, debt forgiveness is taxed as income!)
No, I meant unearned income. “Earned income” is income from a W-2 or 1099-Misc or something similar. “Unearned income” is dividends, interest, distributions from a trust or partnership, etc.
Basically it’s income you don’t work for and it’s taxed less than income from your job. You don’t pay FICA taxes on it (and conversely you don’t get credit for social security in the future). This is part of the reason why wealthy people pay lower % taxes than people who work. And it should be addressed.
So are you saying we need to add an oppressively high tax on retirement accounts? Or are they going to be an exception?
and it’s taxed less than income from your job
Oh I agree. Realized capital gains really should differentiate estate gains or home appreciation vs stock. As long as we’re careful.
This is part of the reason why wealthy people pay lower % taxes than people who work
Not wealthy, but I pay less taxes because a percent of all my assets and expenses are used in my 1099 job. My boss (the owner of the company) pays far less than I do because almost everything he does with his vehicle (for example) is work-related. My experience with wealthy people is that being able to deduct their (sometimes expensive) lifestyle is a huge part of why they pay less in taxes. That’s not the ultra-wealthy, but it is the 1%.
The ultra-wealthy it’s because of unrealized gains, not unearned gains. If we do not solve unrealized gains, Bezos will still have years where he nets $80,000 in income while his net worth doubles. He’s already not taxed on his unrealized gains, so raising the capital gains rate will just disincentivise him from liquidating some of it. Flip-side, I have known a few “lifestyle investors” who invest just enough to live but live super-small to do. Programming retirees mostly. Looking at them (and the taxes they pay), the issue seems more about needing to raise the top gains rate cutoff, not just raising capital gains across the board.
In context here, I was sorta referencing a capital gains tax. Note the comparison with homestead sale exemptions.
Not sure whether I agree or disagree. It’s in line (if a little on the high end) for the highest marginal rate in a lot of Europe. After a certain point, no human can claim to actually need the money they’re making anymore, with a logarithmic return. As such, sharp taxation increases after that logarithmic point of return make sense from a strict “utility per dollar” mindset.
I simply don’t think that’s true. I think it’s a no-brainer. But I don’t think it’s true. Wealth taxes terrify people who will never see that kind of wealth.
I’m assuming you mean unrealized income? Yeah, that’s where the problems start, and what my whole comment was about. Are you accounting for liquidity? For risk? Sometimes people simply have hundreds of thousands in unrealized income that they will never be able to realize because it will coincide with equivalent losses in past/future years. Again, the Bitcoin example I used elsewhere. Some people who genuinely do not have a lot of money were hit with some massive “unrealized gains” taxes greater than their entire net worth, possibly greater than they’d ever earn in their lives, due in part to the unregulated and volitile nature of bitcoin.
In fact, Bitcoin is the perfect example why we need to be incredibly careful with unrealized gains taxes. They’re called unrealized for a reason, and realizing gains can be incredibly costly. You tax a single-owner business for sudden growth and the owner might find themselves owing more in taxes than money made, but selling the business to realize those gains would also involve destroying their source of income. In fact, the wrong capital gains tax would (as always it seems) decisively benefit large businesses and superwealthy individuals. They would go around buying those “taxed out of business” companies for pennies on the dollar because they could afford the taxes.
That’s why it’s complicated.
ALSO complicated. But I agree. There is a real risk of corporate flight, but I’m not convinced Delaware-Based corporations that primarily employ people in third-world countries are really providing much value in the US.
…they already do “pay US taxes on all income generated in the US”. Apple pays a majority of their taxes to the US. The Ireland thing was largely about 10 years of crazy tax breaks back in the 80’s based on loopholes that the EU cracked down on. Yes, their $170B profit is disgusting, and the $35B in taxes they pay are merely 20% of their margins… but it’s not going away by just expecting them to pay based on US income. Corporate taxes are a complicated game with hundreds of deductions and thousands of defensible reasons for those deductions.
I’ve never loved that businesses pay taxes on profit, but individuals pay taxes on income. It’s “understood” that hitting a business on the bottom-line is unreasonable, but individuals are often taxed on the very remediation techniques taken to deal with overwhelming debt (yes, in the US, debt forgiveness is taxed as income!)
No, I meant unearned income. “Earned income” is income from a W-2 or 1099-Misc or something similar. “Unearned income” is dividends, interest, distributions from a trust or partnership, etc.
Basically it’s income you don’t work for and it’s taxed less than income from your job. You don’t pay FICA taxes on it (and conversely you don’t get credit for social security in the future). This is part of the reason why wealthy people pay lower % taxes than people who work. And it should be addressed.
So are you saying we need to add an oppressively high tax on retirement accounts? Or are they going to be an exception?
Oh I agree. Realized capital gains really should differentiate estate gains or home appreciation vs stock. As long as we’re careful.
Not wealthy, but I pay less taxes because a percent of all my assets and expenses are used in my 1099 job. My boss (the owner of the company) pays far less than I do because almost everything he does with his vehicle (for example) is work-related. My experience with wealthy people is that being able to deduct their (sometimes expensive) lifestyle is a huge part of why they pay less in taxes. That’s not the ultra-wealthy, but it is the 1%.
The ultra-wealthy it’s because of unrealized gains, not unearned gains. If we do not solve unrealized gains, Bezos will still have years where he nets $80,000 in income while his net worth doubles. He’s already not taxed on his unrealized gains, so raising the capital gains rate will just disincentivise him from liquidating some of it. Flip-side, I have known a few “lifestyle investors” who invest just enough to live but live super-small to do. Programming retirees mostly. Looking at them (and the taxes they pay), the issue seems more about needing to raise the top gains rate cutoff, not just raising capital gains across the board.