Exactly, I think we’re saying the same thing. I don’t think you can just say “X percentage of your wealth is fair” and apply it across the board to rich and poor alike. At some point of net worth, you live an entirely different life than lower earners, and your own wealth has a concentrating and self-multiplying effect, and I think that needs to be corrected somehow.
For varying values of “Your.” I’m Gen X, my retirement is entirely in 401k and stock investments. Hands off. Thus, again, the Warren/Sanders threshold which was 50 million or something.
Again, I think we agree. Bezos only “made” a couple of million maybe, on paper. But his net worth increased by billions. Which isn’t liquid cash, and like you said, brings us back to whether unrealized gains should count as income.
Yep, and I’m down with that, just leave us non-millionaires alone. Though to be clear, not income, wealth. No need to blur further, it’s a wealth tax unless he unloads his majority share in Amazon, where taxes are already in place.
Banzai
2839
Sure, and I welcome ideas on how to decide that. I know that billionares who pay less in taxes than I do is not their fair share. Warren Buffet’s secretary paying more in taxes than Warren Buffet is not ok.
It seems like income is a bad way of determining taxes, since we can see how it has been abused by the wealthy to not pay taxes. I don’t know what the wealth tax rate should be, but the general idea would be that people below a certain level of wealth do not pay at all - ie. a standard deduction. Above that level of wealth the system should be progressive. Income should count as wealth, so it would be taxed through the wealth tax rather than through an income tax.
I have no idea what level of wealth tax would be needed to ne equivalent to what the current income tax generates, but that’d be a good starting place.
I’d be open to pretty much defining it as anything although with both real estate and investments I would suggest that some method of automatically realizing both gains and losses in the year they happen without any carried losses would be better. For the same reason that many locations already have homestead exemptions on property taxes I’d suggest that the personal deduction would need to be adjusted to cover some reasonable amount of more or less inflationary gain of primary residencies. Which of course could also be used to cover investment gains if you rented or if your house didn’t appreciate in a given year.
Banzai
2841
All sounds like reasonable details.
Seems reasonable, but the idea upthread is a pure wealth tax that ignores ups and downs, if I own 500k of stocks in 2021, I pay a percentage, and if I get wrecked in 2022 and only have 300k in value, I still get taxed. That’s the idea before us. (offset of course by the very high limit of the Sanders/Warren plan.)
Just to clear, Buffett’s secretary did not pay more than him in taxes; she paid a higher percentage of her income in taxes than he did, which makes sense because her earnings are income and his earnings are capital gains. And even then, I think the calculation was that she was making over $350,000 a year to pay that higher rate, so it’s not like she was hurting to being with.
Well said! What did Buffet make that year, and what did he pay? And what was his net worth?
I know. It’s a messy situation to me. I think the most logical and morally defensible argument is to tax all realized gains as income. But I am very aware that trimming the many loopholes and special exemptions makes that probably a political impossibility. Taxing all gains by more or less realizing all gains when they occur but also allowing some level of yearly losses is sort of the even more idealized version of this. Possibly more logical, harder but not at all impossible to track, and even more politically impossible because it is harder to describe in a sound bite.
Sure, but that’s essentially what is already happening. Gains are taxed, either short or long term, and I would argue at not particularly generous rates. Not what we’re talking about.
It’s not new, and some people make it the whole thing, but valuating things doesn’t work that well. But using the idea of limited resource, we could at least tax actual habitated space more leniently than investments, say. And it’s a lot harder to benefit from while pretending you don’t.
And, yeah, it is different, we call it a fee here. So are carbon credits. It’s being creative or hoping problems go away, though. Within some agreed common principles, sure. Although that might make it not entirely transposable to the issue at hand.
Kind of, yes, but there’s a lot of practical issues there, though, of what money and wealth actually are, and how to keep real needs being provided for everyone who wanted them, or we’d just crash everything overnight.
Yet this discussion started with the report that low and behold the rich aren’t paying taxes on their gains because they are using various avoidance schemes and loopholes to end up with little to no taxable income. One solution to that is to tax wealth. Another is to remove the various schemes and loopholes and simply continue to tax income.
Taxing wealth has a sort of double jeopardy aspect but basically because of that it will slow the concentration of wealth quickly. Note that I use quickly as in it would start to work rapidly not that it would actually decreases the concentration of wealth very fast if at all.
Taxing income with lots of trimming of schemes and loopholes seems like a better way to slow the concentration of wealth over time but won’t do much to decrease the wealth concentration that already exists because, as people have noted, the rich can often defer the realization of gains.
Politically the idea of the wealth tax is on the table but I’m not convinced it is actually any better long term.
Slight disagree, the discussion was around taxing unrealized capital gains as wealth. And I’m not necessarily a proponent of taxing wealth, it’s just an idea among others to try and fill gaps. Income avoidance is already a big issue, I don’t see how increasing it, regardless of how thoroughly you do it, even scratches the wealth of the .1%, if that’s what we’re after.
My suggestion was to eliminate all other taxes and rely solely on a board property tax on all individuals and corporations.
I do think certain assets should be immune from a wealth tax, like your least expensive car (capped at 20k) , least expensive home (capped at say 250k), and family farms (up to 1 mil) should be exampt.
Then Bezos gets his appraiser friend to value his five hundred million dollar mansion at 250k while respectfully paying the tax for the 260k house he bought in Bumfuck, Alabama.
As long as there are exemptions that can be broadly claimed, the wealthy will exploit them to a much greater degree than normal folks. The exempt should be those with minimal wealth, ie everyone less wealthy than the like 300 most egregious billionaires.
Timex
2853
Well, this would be tax fraud.
This is another unexamined premise: that it’s wrong to tax somebody for something for which they have already paid a tax. Why is it wrong? And, by counter example, I pay property taxes every year.
I can’t speak for anyone else, but I’d be happy to see the taxes I pay now increase. I vote for that all the time, though I seldom get it. Anyone with a middle class or higher income who is voting for progressive politics is probably voting for higher taxes on themselves.
I would repeat that a lot of people have no wealth at all, or even negative wealth, and most people have a trivial level of wealth. For most of those people, they live on their income; their income is their wealth. A person of wealth says “I’m going to take some of my assets and use them to buy that yacht.” A normal person says “I’m going to use my income and buy that car.” Why is it just and proper to tax the income of the poorer person but not the wealth of the richer one?
Our tax system, and our approach to compensation, tilt in favor of those with accumulated wealth; so much so that the wealth becomes more concentrated in the hands of fewer people each generation. The wealthy can grow their wealth effectively forever without ever being taxed on that wealth. They can even transfer it to the next generation largely without having it be taxed, through the kinds of trusts highlighted in that Disney article. Even if they decide to realize a capital gain, the tax they pay is calculated at a lower rate than ‘ordinary’ income, because we have decided that it ought to be so; and that continues the cycle of wealth accumulation.
We aren’t ever going to solve that problem with higher marginal income tax rates and closing loopholes, because these fortunes accumulate and grow without income. The only way to stem the flow of wealth accumulation is to tax the actual wealth. And countering that argument with unexamined premises like ‘taxing wealth is bad’ or ‘taxing something twice is bad’ strikes me as just reflexive objection.
