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We are publishing the tax secrets of the .001%

propublica.org

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Re: We are publishing the tax secrets of the .001%

#171

Post by BarkMore »

breakfastduck wrote: post #149
dvh wrote: post #128

Earlier quoted context omitted.

How about removing income tax (hard to measure, easy to avoid by rich) and increasing vat by the same amount. Vat could be even added to stocks (buying $5000 of Tesla stocks? Pay 20% vat. This could probably end all short term speculations as well). Definitely to yacht and houses, vacations, butlers and gardeners, gold doorknobs, Ferraris, swimming pools, 200" LCDs, hotel stays, massages, anything that is consumption…

Because this would absolutely shaft everyone other than the well off? Because there would be no way at all of scaling the tax based on income / wealth? So someone earning almost nothing with no wealth would be expected to pay the same tax as a billionaire?

See the Fair Tax proposal for one way to address this problem. https://en.wikipedia.org/wiki/FairTax

Re: We are publishing the tax secrets of the .001%

#172

Post by Wowfunhappy »

realce wrote: post #159
Wowfunhappy wrote: post #134

Earlier quoted context omitted.

> Every time someone tries to make a tax targeting the ultra rich, it ends up hurting the moderately wealthy instead. Every. Single. Time. Could you please share some of the situations you're thinking about here? I'm not familiar.

If you have just enough assets to be "rich" but don't have enough to purchase tax assistance, you've become unprotected prey. Everyone that can afford this tax assistance has a lower cost of business than you, everyone poorer has a lower tax burden.

I'd love to see some data on how big a deal this really is, because I would normally assume that by the time you've reached the levels of wealth we're talking about, "tax assistance" is a trivial expense.

Re: We are publishing the tax secrets of the .001%

#173

Post by 34679 »

jvanderbot wrote: post #86

What I don't understand is: If I (a wage slave) find a football sized diamond in my back yard, I'm suddenly very "wealthy". Should I be forced to pay taxes on that find because my wealth has increased? What if I want to keep that diamond but cannot afford to because of the taxes? Isn't that how business owners gain wealth: By the valuation defined by others to the thing they "found". Should we force Bezos et al to se…

Should you be able to take out a million dollar loan against the diamond, use the loan to buy stocks, and claim a loss on the year? Then the stocks increase in value, you're able to take out a new loan against them, and use that to pay off the diamond loan. Now you have a diamond, stocks, and no taxable income. Of course, you rinse and repeat.

Maybe we need to re-examine the definition of "realized gains".

Re: We are publishing the tax secrets of the .001%

#174

Post by jtdev »

ipython wrote: post #164
whiddershins wrote: post #92

Every time someone tries to make a tax targeting the ultra rich, it ends up hurting the moderately wealthy instead. Every. Single. Time. The worse tax situation is always the person who makes 500k in a good year, or sells a house they held for 25 years which went up a bunch in value. I suspect this is a significant factor in social mobility. Our tax system is punitive to people who try to leave the working class.

I agree with your general point, but your specific example of selling highly appreciated real estate is a poor one, since you incur no tax when selling your primary residence (up to something like $500k gain - over your cost basis which includes any capital improvement you made to the property) as long as you lived there for two of the last five years. It’s a huge tax advantage for homeowners. One could argue that it…

It also encourages liquidity in the residential real estate market… which seems to be a net good thing.

Re: We are publishing the tax secrets of the .001%

#175

Post by Wowfunhappy »

tomerico wrote: post #165
whiddershins wrote: post #92

Every time someone tries to make a tax targeting the ultra rich, it ends up hurting the moderately wealthy instead. Every. Single. Time. The worse tax situation is always the person who makes 500k in a good year, or sells a house they held for 25 years which went up a bunch in value. I suspect this is a significant factor in social mobility. Our tax system is punitive to people who try to leave the working class.

Another point is that $500k is not in the 1% everywhere. In the Bay Area, it wouldn’t even put you at the top 5%. https://www.nytimes.com/interactive/2019/08/01/upshot/are-yo...

But the Bay Area's high prices are driven by scarcity + demand, not intrinsic cost. So if everyone had a higher tax burden, I'd expect costs to come down.

Re: We are publishing the tax secrets of the .001%

#177

Post by scott_w »

jvanderbot wrote: post #114
scott_w wrote: post #97

Earlier quoted context omitted.

This is a strawman argument. Bezos did not stumble across Amazon while digging weeds in his back garden. He built a successful business through a mixture of hard work, risk, his contacts, laws and infrastructure that we collectively paid for. It’s not downplaying his efforts to point out that he now contributes proportionally less to the country than he benefits from. This isn’t an accident, either. Bezos pays smart…

No, it was a question, not an argument. Let me restate it: Buying a stock (or bitcoin) uses gobs of the same regulated, government-funded infrastructure. If that stock/coin becomes immensely valuable, that (the fact that I now have a high net worth) makes me "wealthy". What I'm asking is: Please clarify whether the intent is to tax people based on their net worth (wealth), not their income. The articles are not clear…

Look at the countless issues raised by people being unable to exercise stock options for tax reasons. It’s clear that taxing stock is NOT unprecedented.

We’ve seen repeatedly over the past 50 years that Bezos will NOT be taxed of that wealth under the current system.

There’s nothing sacred about different types of wealth. The question is whether society can benefit more from taxing and redistributing that wealth, or whether Bezos can by hoarding it.

I don’t just mean the raw tax receipts either. Tax policy influences behaviour, too. This has ups and downs but arguing about finding diamonds in the dirt isn’t a remotely similar analogue to the discussion at hand.

Re: We are publishing the tax secrets of the .001%

#178

Post by Mc_Big_G »

Wowfunhappy wrote: post #134
whiddershins wrote: post #92

Every time someone tries to make a tax targeting the ultra rich, it ends up hurting the moderately wealthy instead. Every. Single. Time. The worse tax situation is always the person who makes 500k in a good year, or sells a house they held for 25 years which went up a bunch in value. I suspect this is a significant factor in social mobility. Our tax system is punitive to people who try to leave the working class.

> Every time someone tries to make a tax targeting the ultra rich, it ends up hurting the moderately wealthy instead. Every. Single. Time. Could you please share some of the situations you're thinking about here? I'm not familiar.

GFY

Re: We are publishing the tax secrets of the .001%

#179

Post by btilly »

Retric wrote: post #78
btilly wrote: post #69

Earlier quoted context omitted.

Per The Millionaire Next Door (see https://www.amazon.com/Millionaire-Next-Door-Surprising-Amer... for the link), most wealthy are those who have a reasonable income but good financial discipline. Which means that a shocking number of millionaires live in poor neighborhoods and have modest lifestyles. Those aren't the super-wealthy, of course. But most wealthy people can't be identified by where they live.

The millionaire next door uses an artificially low threshold for wealth. It’s not a book about the wealthy, it’s largely a book about retirement. 1M is only generating ~40k per year, if that’s your savings you can’t afford to live in an affluent area without a job.

That book was originally written decades ago. Its threshold corresponds to about $1.7 million in savings in today's world. Their median was $1.6 million, or about $2.7 million in today's dollars.

And given that the people who attained that status on average lived in cheap neighborhoods, the fact that their income wouldn't stretch long in an affluent neighborhood isn't really a concern for them.

Re: We are publishing the tax secrets of the .001%

#180

Post by 34679 »

imtringued wrote: post #136
f38zf5vdt wrote: post #103

It seems like this is missing the obvious focal point: loans taken out by individuals against assets like stock options and equities should be taxed as income. It's trivial to evade income tax when you have accumulated wealth in equities by taking out a loan against the equities and then progressively liquidating them at capital gains tax rates to fulfil the loan payments. If every loan taken out by Elon Musk or Jeff…

Why does this matter? The real problem is that the capital gains tax rate is below the income tax you would have to pay for the same income. Either you adjust the capital gains tax upwards to match income taxes or you replace it completely with income taxes. You don't need a complicated loan tax.

They explain it well in the full article:

https://www.propublica.org/article/the-secret-irs-files-trov...

>So how do megabillionaires pay their megabills while opting for $1 salaries and hanging onto their stock? According to public documents and experts, the answer for some is borrowing money — lots of it.

>For regular people, borrowing money is often something done out of necessity, say for a car or a home. But for the ultrawealthy, it can be a way to access billions without producing income, and thus, income tax.

>The tax math provides a clear incentive for this. If you own a company and take a huge salary, you’ll pay 37% in income tax on the bulk of it. Sell stock and you’ll pay 20% in capital gains tax — and lose some control over your company. But take out a loan, and these days you’ll pay a single-digit interest rate and no tax; since loans must be paid back, the IRS doesn’t consider them income.

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