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Wealthiest Americans pay just 3.4% of income in taxes, investigation reveals

theguardian.com

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Re: Wealthiest Americans pay just 3.4% of income in taxes, investigation reveals

#41

Post by lotsofpulp »

belval wrote: post #25

Disregarding the misleading headline, it is overall a tough problem to define if and how to tax wealth. Most people would agree that applying a blanket tax on unrealized gains is problematic (since it would force you to sell to pay for gains), but at the same time most people also agree that having $100B in TSLA/AMZN stocks and borrowing against those assets while paying less taxes than people in the $5M income brack…

The solution is marginal sales taxes.

It would require tracking everyone’s expenses on a federal, or even global level. But then you can really redistribute wealth based on how “richly” someone is living. And also tax them proportionate to their consumption, which kills two birds with one stone. And you don’t have to worry about borrowing against assets to sidestep income taxes.

First $50k you spend is at x% sales tax, next $50k is at x+y%, and so on.

Re: Wealthiest Americans pay just 3.4% of income in taxes, investigation reveals

#42

Post by lhorie »

marcusverus wrote: post #20
lhorie wrote: post #13

Earlier quoted context omitted.

Reading the article, it says that the figures are looking at actual income, not changes in asset prices. It says the low figures come from a) lower tax rates from realized capital gain and b) deductions through charitable donations. Capital gains in the US are taxed at a maximum rate of 20%[0] for long term holdings, vs income tax rates, which can go up to 37%. Donations are also something that anyone can use to lowe…

> Reading the article, it says that the figures are looking at actual income, not changes in asset prices. They used actual income... but not for the 3.4% figure that's in the headline. When using actual income (i.e. personal income and cap gains) to calculate tax rate, they ProPublica article said: > Collectively, the top 400 paid an average tax rate of 22% from 2013 to 2018. So... where did they get the 3.4% figure…

Interesting. I hadn't read the Propublica article (frankly the parallax BS was annoying as hell) and I was going by the 4.1% figure for Michael Bloomberg in the linked article, which for all intents and purposes is close enough of a tax rate.

But yeah "We’re going to call this their true tax rate" is amateur hour. Who even allowed this crap to be published?

Re: Wealthiest Americans pay just 3.4% of income in taxes, investigation reveals

#43

Post by rufus_foreman »

feoren wrote: post #35
rufus_foreman wrote: post #10

So 0.001% of Americans pay 3.4% of income taxes? How the fuck is that fair?

Setting aside the gross misunderstanding of the actual article here, even if that were what the title said, you really don't understand wealth distribution in America if you think that number would be too high . There's an estimated $150 trillion in total household wealth in the united states, and the 400 richest Americans own $3.2 trillion of that, or 2.1%. But also realize that the wealth of the super rich is growi…

>> you really don't understand wealth distribution in America

A false statement. I really do understand "wealth distribution in America". Using your terms. Although "distribution" there is a propaganda term. Wealth isn't distributed.

>> the wealth of the super rich is growing faster than the wealth of the bottom 90%

"Super rich" is another propaganda term. During stock market downturns your assertion is simply false. If the S&P falls by 50% will you say that the wealth of the "super rich" is collapsing so something needs to be done?

No, no you will not. Because that would be ridiculous.

>> Even with a flat tax, the top 400 Americans should be paying at least 3.4% of all income taxes in America

Don't agree. When you tax something, you get less of it. Don't tax success, tax failure.

>> But given that a flat tax is morally abhorrent

Don't agree.

>> You, like so many, vastly under-estimate how much richer the ultra-wealthy are than everyone else. Vastly.

False.

Re: Wealthiest Americans pay just 3.4% of income in taxes, investigation reveals

#44

Post by rufus_foreman »

feoren wrote: post #36
rufus_foreman wrote: post #28

Earlier quoted context omitted.

So 0.001% of people paid 0.18% of income taxes? How the fuck is that fair?

As per my other comment: vastly, vastly, vastly , VASTLY underestimating the size of the wealth gap in America. https://mkorostoff.github.io/1-pixel-wealth/

"Gap" is a value judgement. I don't share your values.

Re: Wealthiest Americans pay just 3.4% of income in taxes, investigation reveals

#45

Post by whakim »

lhorie wrote: post #13
missedthecue wrote: post #2

FWIW, the only way Pro Publica could derive the 3.4% figure was by pretending that the value of a stock going up is income, and then dividing the amount of tax paid by that amount. Warren Buffett is worth $100B. So if Berkshire Hathaway stock went up 10% in 2022, they'd say Warren Buffett made $10 billion in income, even if he didn't sell a single share. Obviously extremely misleading and if I were more cynical, I'd…

Reading the article, it says that the figures are looking at actual income, not changes in asset prices. It says the low figures come from a) lower tax rates from realized capital gain and b) deductions through charitable donations. Capital gains in the US are taxed at a maximum rate of 20%[0] for long term holdings, vs income tax rates, which can go up to 37%. Donations are also something that anyone can use to lowe…

Putting aside the way these figures are calculated (addressed in sibling comments), I'm always surprised at the lack of interrogation of the charitable contribution deduction in these conversations. The way that the tax code is currently structured, everyone who doesn't itemize their deductions effectively subsidizes the charitable preferences of the ultra-wealthy. If we wanted to promote charitable giving in a more equitable manner, why not simply eliminate the charitable deduction entirely and then use all the extra revenue to give each individual a "charity voucher" which they could donate to a charitable organization of their choosing?

Re: Wealthiest Americans pay just 3.4% of income in taxes, investigation reveals

#46

Post by JumpCrisscross »

nautilius wrote: post #39
AnimalMuppet wrote: post #24

Earlier quoted context omitted.

What this does to John Smith, Dirt Farmer, is that his land went up $500/acre, and he's got 1000 acres, and now he's got an "income" of $500,000 this year, which he can't actually get until he sells the land, which he doesn't want to do until he retires. So the options are: - He sells some of the land to pay the taxes. - He takes out a loan to pay the taxes. - We make a special carve-out for people in that situation…

> - We make a special carve-out for people in that situation so that the tax doesn't apply to them. Tax law does that all the time. Maybe you've heard of tax brackets. It's so that people who earn less pay a smaller tax rate. I don't see the trouble with that. It's applied in the other direction as well, e.g. with a maximum dollar value with medicare.

Zero chance a wealth tax goes into effect in America without excluding farmland. That or the Electoral College does.

Re: Wealthiest Americans pay just 3.4% of income in taxes, investigation reveals

#47

Post by cowvin »

One thing to note is that the wealthy will never pay any capital gains tax on their stock holdings.

While they are alive, they simply take out low interest loans against their stocks.

When they die, they pass on their stocks to their children taking advantage of the step up in basis: (https://www.investopedia.com/terms/s/stepupinbasis.asp)

So now their kids possess a ridiculous amount of stocks and will never need to pay any capital gains on them.

So yes, rich people who make a lot of money in unrealized capital gains are vastly underpaying taxes on their income. We should close the step up in basis tax loophole.

Re: Wealthiest Americans pay just 3.4% of income in taxes, investigation reveals

#48

Post by nautilius »

JumpCrisscross wrote: post #46
nautilius wrote: post #39

Earlier quoted context omitted.

> - We make a special carve-out for people in that situation so that the tax doesn't apply to them. Tax law does that all the time. Maybe you've heard of tax brackets. It's so that people who earn less pay a smaller tax rate. I don't see the trouble with that. It's applied in the other direction as well, e.g. with a maximum dollar value with medicare.

Zero chance a wealth tax goes into effect in America without excluding farmland. That or the Electoral College does.

Oh, I'm not talking legislative probability. I was responding to the comment that it's somehow an unfathomable thought to have different 'carve outs' for different people in tax law (or anywhere, really) when that is standard practice in reality already.

Re: Wealthiest Americans pay just 3.4% of income in taxes, investigation reveals

#49

Post by weezin »

lhorie wrote: post #13
missedthecue wrote: post #2

FWIW, the only way Pro Publica could derive the 3.4% figure was by pretending that the value of a stock going up is income, and then dividing the amount of tax paid by that amount. Warren Buffett is worth $100B. So if Berkshire Hathaway stock went up 10% in 2022, they'd say Warren Buffett made $10 billion in income, even if he didn't sell a single share. Obviously extremely misleading and if I were more cynical, I'd…

Reading the article, it says that the figures are looking at actual income, not changes in asset prices. It says the low figures come from a) lower tax rates from realized capital gain and b) deductions through charitable donations. Capital gains in the US are taxed at a maximum rate of 20%[0] for long term holdings, vs income tax rates, which can go up to 37%. Donations are also something that anyone can use to lowe…

Can someone explain the charitable donations deduction thing? I get the art appraisal example of getting it appraised more than its worth and getting a deduction for it. But assuming a person isn't doing that, how are charitable deductions even worth noting? Should you have to pay taxes for donating to charity? Am I missing some way of making money off donating?

Re: Wealthiest Americans pay just 3.4% of income in taxes, investigation reveals

#50

Post by closeparen »

missedthecue wrote: post #2

FWIW, the only way Pro Publica could derive the 3.4% figure was by pretending that the value of a stock going up is income, and then dividing the amount of tax paid by that amount. Warren Buffett is worth $100B. So if Berkshire Hathaway stock went up 10% in 2022, they'd say Warren Buffett made $10 billion in income, even if he didn't sell a single share. Obviously extremely misleading and if I were more cynical, I'd…

If your endpoint for inequality is “X% of people have Y% of wealth” and you also want to talk about income, then the income you talk about had better be “change in wealth.” Otherwise we get all kinds of intellectually dishonest equivocation about how to deal with the problem of billionaires, we need to tax the shit out of doctors and engineers. The incomes behind our staggering wealth inequality aren’t wage incomes!

If on the other hand you think unrealized gains aren’t important, then you should be thinking of inequality in terms of something else, like consumption. But consumption inequality is both much smaller absolutely and much slower growing than wealth inequality; it doesn’t make a good political rallying point.

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