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Billionaires should face a minimum tax rate, report says

bbc.com

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Re: Billionaires should face a minimum tax rate, report says

#81

Post by jandrewrogers »

antisthenes wrote: post #72
jandrewrogers wrote: post #34

Earlier quoted context omitted.

In the US, the tax code is such that you pay taxes on capital when you've lost capital too, not just on the gains. This doesn't happen with normal wage income hence why it is treated differently. The lower tax rates on capital reflect the reality that you are paying taxes on the losses too. Tax rates ideally should be flat for all sources of income net of risk, loss, and inflation . To achieve this you either allow d…

> The lower tax rates on capital reflect the reality that you are paying taxes on the losses too No, you don't. You actually get a tax credit (e.g. you pay LESS taxes), if you incur certain types of capital losses.

The tax reduction against income for capital losses rounds to zero for all practical purposes. Long-term inflation losses are not deductible at all in the US even though they can often exceed notional returns.

Re: Billionaires should face a minimum tax rate, report says

#82

Post by jandrewrogers »

seanhunter wrote: post #39
pclmulqdq wrote: post #7

Unrealized capital gains are not income. This article wants a wealth tax because they think this is "income" that is going untaxed.

It may be surprising, but wall street firms (for example) don't have a concept of "Unrealized capital gains". They mark to market on a daily basis and book the pnl and pay whatever tax. I know that at Goldman (where I worked) this is almost a religion, and I would expect it is the same at JPM and Morgan Stanley. One reason the author is probably suggesting this is that there are a wealth of schemes whereby income can…

The mark-to-market value is notional, it is not a realizable gain. Having a vast amount of assets is precisely the part of the market where the gap between notional and realizable becomes quite large.

Re: Billionaires should face a minimum tax rate, report says

#83

Post by RhysU »

baronswindle wrote: post #36
eli wrote: post #16

Earlier quoted context omitted.

Only because of how we've chosen to define income.

The proposal in the article is to tax wealth at an annual rate of 2%. Not realized gains. Not unrealized gains. Wealth. Under such a system — unless I've badly misunderstood something — if a billionaire's assets decreased in value over the course of a year, they would still pay 2% on their assets. I can't think of any sense in which a decrease in the value of one's assets would be defined as income. I have an opinion…

> The proposal in the article is to tax wealth at an annual rate of 2%.

It is already! It's called the Fed's target inflation rate. Currently, everyone's net wealth is getting reduced at over twice that rate.

Re: Billionaires should face a minimum tax rate, report says

#84

Post by ndsipa_pomu »

dbsights wrote: post #80
ndsipa_pomu wrote: post #63

Earlier quoted context omitted.

> There's nothing inherently being wrong with a billionare I disagree. The amount of money that a person can effectively use (or need) during their lifetime is likely to be less than half a billion. The people who have any kind of social conscience would reach their desired amount of wealth and wouldn't want to continue accumulating it as they know it's purely at the expense of other people and invariably the rich pe…

> wouldn't want to continue accumulating it as they know it's purely at the expense of other people > Therefore, having a billion dollars is a clear sign that millions of people have been exploited by that billionaire. When two people enter a trade freely, they both come out richer. How is that at the expense of other people? You sound like a communist.

> When two people enter a trade freely, they both come out richer. How is that at the expense of other people?

Firstly, there's the myth of a "free trade" - that requires both parties to have sufficient knowledge about the deal/product and to have equal bargaining power. That's a very rare thing with Capitalism as the richer party will have much better access to information (and also the influence to bury certain information) and will have a much better bargaining position in any negotiation.

Secondly - even though two parties trading with each other can both obtain an advantage from the deal, that's often at the expense of parties not involved with the deal e.g. I can go and buy cheap groceries at a discount supermarket, and would consider that both the supermarket and I benefit, but that will often be at the expense (or due to the exploitation) of the food producers and workers.

> You sound like a communist.

Thank you, but maybe "socialist" is a more acceptable political term

Re: Billionaires should face a minimum tax rate, report says

#85

Post by deepfriedchokes »

dbsights wrote: post #80
ndsipa_pomu wrote: post #63

Earlier quoted context omitted.

> There's nothing inherently being wrong with a billionare I disagree. The amount of money that a person can effectively use (or need) during their lifetime is likely to be less than half a billion. The people who have any kind of social conscience would reach their desired amount of wealth and wouldn't want to continue accumulating it as they know it's purely at the expense of other people and invariably the rich pe…

> wouldn't want to continue accumulating it as they know it's purely at the expense of other people > Therefore, having a billion dollars is a clear sign that millions of people have been exploited by that billionaire. When two people enter a trade freely, they both come out richer. How is that at the expense of other people? You sound like a communist.

That’s the thing, though, labor isn’t entering into an agreement “freely”, they are entering into an agreement under economic duress.

You can’t freely consent if someone has power over you, and in a Capitalist system Capital has power over labor. Capitalism is therefore abusive and exploitative, by design.

For the record, I am not, nor have I ever been, a Communist.

Re: Billionaires should face a minimum tax rate, report says

#86

Post by influx »

ragestorm wrote: post #61
influx wrote: post #58

Earlier quoted context omitted.

What happens if they are forced to sell stock in companies they founded and control, and after the sale they no longer have a controlling interest?

They pay 2% on their wealth.

Their wealth is usually stock in companies they founded.... Billionaires don't sit around with a billion dollars in their checking accounts.

Re: Billionaires should face a minimum tax rate, report says

#87

Post by claudiulodro »

pclmulqdq wrote: post #54
claudiulodro wrote: post #26

Earlier quoted context omitted.

Why is it unthinkable to make billionaires generate some income to pay taxes? I pay property taxes on the "unrealized capital gains" of my house, and somehow I make it work.

You don't pay property tax on unrealized gains in your house. You pay it on the appraised value of your house. If you don't like that appraised value, you can appeal it (and many people do), and it often doesn't rise nearly as much as the actual value of the house.

I do pay it on the unrealized gains though! As the value of the neighborhood/property increases, the appraised value goes up and my property taxes go up. This increases my taxes based on the increasing value of a non-income-producing asset.

Re: Billionaires should face a minimum tax rate, report says

#88

Post by pclmulqdq »

roflyear wrote: post #76
pclmulqdq wrote: post #54

Earlier quoted context omitted.

You don't pay property tax on unrealized gains in your house. You pay it on the appraised value of your house. If you don't like that appraised value, you can appeal it (and many people do), and it often doesn't rise nearly as much as the actual value of the house.

I don't know what you're arguing. You can contest the appraised value but rarely will you win unless it's egregious.

The appraised value is rarely very tightly linked to the actual value of the house. It gets adjusted once in a while, and if it's too high you can bring it down, but otherwise the appraisal tends to adjust with inflation while the house price tends to float relative to it.

Re: Billionaires should face a minimum tax rate, report says

#89

Post by pclmulqdq »

seanhunter wrote: post #60
chollida1 wrote: post #42

Earlier quoted context omitted.

> It may be surprising, but wall street firms (for example) don't have a concept of "Unrealized capital gains". This is just false in my experience, well atleast for how you've stated it. It may be true for some particular company but I don't know a single fund that doesn't track unrealized cap gains. Specifically around this time we start to look at how to defer realizing these gains till next year to push off the t…

To be clear I wasn't talking at all about buy-side. I was talking about big broker-dealers. They are all MTM as far as I know. My point was that finance in and on itself doesn't depend on a concept of unrealized gains. It's perfectly possible to devise a system of taxation that just says you have to mark to market and then pay tax on that. There would for sure be complications around how you get valuations for illiqu…

Broker-dealers often have a short holding period anyway, so the use of MTM accounting is basically a wash and I imagine it's a lot easier than tracking exactly when you bought each security.

Things that banks and financial companies hold for a long time get a lot more care in terms of their accounting, in general.

Re: Billionaires should face a minimum tax rate, report says

#90

Post by antisthenes »

jandrewrogers wrote: post #81
antisthenes wrote: post #72

Earlier quoted context omitted.

> The lower tax rates on capital reflect the reality that you are paying taxes on the losses too No, you don't. You actually get a tax credit (e.g. you pay LESS taxes), if you incur certain types of capital losses.

The tax reduction against income for capital losses rounds to zero for all practical purposes. Long-term inflation losses are not deductible at all in the US even though they can often exceed notional returns.

That's not what your original comment said at all.

You still haven't pointed out which capital losses get you taxed more. If you were referring to inflation, then why not just say that directly?

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