Yes... it's a call to increase the taxation on the extremely rich, obviously.
We're doing the tax thing again....
- Thread starter Trunkage
- Start date
You might have a point screeching about liquid assets except that everyone realizes that there isn't a significant barrier between their actual liquid assets and their undertaxed assets that they can make liquid at a moment's notice, and have plenty of ideas on how to deal with that that does cut to the core issues in talks right now.
Tstorm already covered most of it but this type of article are really not helping since they're conflating different things. Tax on rich need to go up, absolutely, but taxing assets is definitely not the way to go. If you want to talk about tax evasion, the type of tax that can cover asset (wealth tax) is by far the easiest to avoid since it involve pricing things that are really hard to price. Yes currently share in company are worth a lot so you could tax them based on their sale price, but that's under the current taxation system. If a new system was implemented with a wealth tax the sales value of shares would plummeted and the system would reorganize itself in a way that those would be worthless on paper and people who owned them wouldn't really pay more taxes.
To collect more taxes on rich you need to massively simplify the tax system to remove loophole, remove exemption (like religious and charity that are easy to exploit and don't help society anyway), fund the authority in charges of collecting and impose high inheritance taxes. Attempt that involves making the tax system more complex (like wealth tax) are at best wasting time and at worst counterproductive since they cost a lot to administer/audit and divert fund away from administering other form of taxation.
To collect more taxes on rich you need to massively simplify the tax system to remove loophole, remove exemption (like religious and charity that are easy to exploit and don't help society anyway), fund the authority in charges of collecting and impose high inheritance taxes. Attempt that involves making the tax system more complex (like wealth tax) are at best wasting time and at worst counterproductive since they cost a lot to administer/audit and divert fund away from administering other form of taxation.
Based on income tax. And you can tax Jeff Bezos' income at 1000% and hardly slow him down. And the author's of the piece understand that. So if it's calling for an increase in taxation on the super rich, it's doing so it a way that is stupid and dishonest.
Even if I were to concede that all their assets are effectively liquid (which, to be clear, I'm not conceding that), comparing that wealth to their federal income tax is still stupid and meaningless, because income tax isn't what taxes people when they liquidate assets.
It's not stupid because the talks that people make, right now, here and elsewhere, are on reforming the tax system to catch these things that aren't caught by income tax but are in essence income. The article you're complaining about does just that in fact. So trying to frame the conversation as "people are only talking about income tax when that's not the issue" is you looking like you're underprepared for the conversation that's happening.
I was taught, over a DECADE ago, by economists, from neo-keysenians to Chicago school to the Austrians, that income taxes dont tax the rich. It was then reinforced by what happened in the GFC. This is NOT new or revelatory. This article does confirms this for me.
Yes, increasing income taxes would not effect the rich whatsoever. This shows me that DECREASING income tax would not effect them whatsoever. In fact, it would hugely benefit the little guy, as its designed to target them
Edit: Shit. The GFC is now well over a decade old. I'm getting old
I seriously question how much the company is giving you to keep this up. It’s impressive.
I think it would help if you actually read the article, because from that I'm not sure you have.
It addresses a wide range of mechanisms by which billionaires effectively earn without paying tax: e.g. paper deductions on properties, dubious use of loans, etc. Some of them seem bizarre. Did I really read this right, that one of them took out a loan, bought stuff (which can appreciate) with it, and deducted the interest repayments from tax liabilities? Fucking hell - does that sound like any loan the likes of you and I can get? They discuss estate tax, the option of wealth tax, ending numerous loopholes and near the end say "What it would take for a fundamental overhaul of the U.S. tax system is not clear."
So that's why I say if you think this is about income tax, you mostly demonstrate that you haven't read it.
Did this surprise you? They do this with every loan. Musk or the Google guys pretending they only gets paid a $1 as a salary is a complete lie. And no, I'm not just talking about the money they get from their stocks.
Don't be silly. I'm the one making that conversation happen at all. Or at least trying to, while people get lost in the weeds on income tax deductions.
The entire article is comparing various numbers to income taxes paid, start to finish. It doesn't matter in the slightest how much they delve into why someone might have no income or what methods might be suggested to fix the problem if their analysis of what is a problem is so deeply flawed. "We need estate taxes and wealth taxes to do this and that because rich people aren't paying taxes based solely on income tax data" means nothing, because they don't actually know how much tax was paid by these people.
Right. But the article points out that the wealth that the vast majority of Americans receive is gained through labour, and labour is subject to income taxes, which let's assume is in the region of 20-30%. So every dollar you earn, about that much is whisked away immediately.
But these guys have extensive ways of avoiding any income tax. Jeff Bezos is apparently paying himself a "salary" $80,000 a year. So if all his wealth is tied up in illiquid assets like you say, he should be living an extremely modest lifestyle. It doesn't seem that way to me. So he definitely is getting something from Amazon that isn't official "salary" and is conveniently not subject the taxes. And not only that, but even on $80,000 I'd expect him to paying income tax... but several years he's not even paying that. In fact, at least one he's so poor that paid no tax at all and claimed child benefits. You do understand that this indicates something is very seriously wrong, irrespective of anything else?
I do get your argument that they are likely to be paying some form of capital gains tax some years. That if Bezos wants to sell his ~$200 billion stock, he's going to have to pay some tax on it. Albeit potentially a lot less than we might like to think, because there are lots of ways of getting out of that, too, never mind it's much lower than income tax. One could point out that in the USA, the labour:capital ratio for income is 57:43, but the labour:capital ratio for tax revenue on incomes is ~70:30. That means that labour income is taxed about twice as heavily as capital income.
In summary, in terms of the tax system, work does not pay. It's for suckers.
Jeff Bezos' wealth is not all tied up in illiquid assets, but it is mostly tied up in illiquid assets, as he can only sell a certain amount of his stock holdings at a time, both contractually and practically since dumping all at once would Catch22 all his wealth away by tanking the price of Amazon stock. To be clear, Bezos definitely has billions in liquid assets, maybe even tens of billions, definitely not $150,000,000. And he is not getting his money from Amazon, he is getting his money from people who want to own a piece of Amazon.
He didn't claim benefits, he got a tax credit. For a household that files jointly with a single income and a child, if your income is less than $112,500, they knock $4000 off your income taxes. He wasn't given that money, he just didn't have to pay it, just like everyone else. It's not like it's a rich person loophole, based on his stated salary, if Bezos had filed using free TurboTax it would have applied that credit for him. Like, that's not in addition to not paying income tax, that's how one doesn't pay income tax in the first place. But that is also how poor people don't pay federal income tax, so it's very important that we don't disassemble those tax credits just to make Jeff Bezos pay more tax on his meaningless $80,000 salary.
Like, on Trunkage's point, income tax by default disproportionately effects poorer people, which is why we have progressive tax brackets and tax credits designed to decrease income tax burden for people who can't really afford it. For the handful of "low-income" rich people who end up paying less income tax because of those things, it's less than a rounding error. But those things are huge for the people who need them.
If Jess Bezos gains $10 billion from the sale of stock, you can safely say he's paying over $1 billion dollars in capital gains even with tax avoidance. That's not "some". Like, even in the articles deliberately chosen time frame, he paid $973 million on $4.22 billion in income, which is nearly spot on the 20% tax that goes on capital gains. It doesn't seem like he was "getting out" of anything.
Why would the super rich liquidate stock if they have access to unlimited credit? They can borrow against credit and deduct this on their tax return. Unlimited credit lines aren't considered income. He has access to all the money he ever wants or needs without selling any of his stock or paying any taxes over liquidities and debt from credit can be deducted including the interest rates. That is why capital gains or income tax can be avoided by them other than a marginal gesture.
Bezos reported 4.22 billion but his wealth grew with 99 billion so like the article mentions that isn't even 1% of his income. Like Bezos' salary it's just a minimum amount to put something on his tax return. The reality of the situation is that the super rich pretty much don't pay tax.
The real problem ofcourse is that the super rich have access to credit that no one else has. But this is also an institutional problem facilitated by the central banks that print money in unlimited supply and suppress the interest rates. That's why we can expect very little to change as it allows governments to borrow cheaply on the capital markets to fund their state deficits. No one will ever suggest a tax on credit.
That seems a straightforward consequence of their wealth (and the existence of banking and so on). The real problem is that they have that wealth to begin with; that there exists a class of super rich.
This is some weird-ass analysis. Who cares precisely where he gets his money from? He still gets it. And that's the problem: the means extremely rich people have of getting paid that avoids taxation.
Dude, it's welfare. You can call it a "tax credit", and it might be available to the relatively well off, but it's welfare.
No, the loophole is what allows one of the richest men in the country to - completely absurdly - write off so much tax that they receive welfare that they absolutely do not need. The other factor of course is that the reason that child benefits are available to people with salaries that high is precisely the manipulation of the welfare system to the advantage of people who don't need it. This happens all the time: welfare systems set up as ways of shunting government money to middle classes who don't remotely need it, but are perfectly happy to take it.
Let's remember those progressive tax brackets, shall we...
What, exactly, is progressive about a man getting $4.22 billion and paying ~20% tax on it? Can we safely assume poorer people are paying less tax as a proportion? They really aren't, are they. Buffet paid an income tax rate under 20%. That's kind of interesting when the top rate income tax band is something like 35-40%.
One might suggest the bare minimum we could start with is approximately doubling capital gains tax. Of course, that has been put forward by the current administration. Just wait until the Republicans (possibly plus Joe Manchin and maybe one or two others) squash it.
That's not what happened, nor is it a thing that can happen. He didn't write off so much that he qualified, you can't write off so much you qualify, qualification for that credit is dependent on gross income. In that calendar year, he made little enough money to qualify. Which makes perfect sense if he took an $80,000 salary and didn't liquidate any stock holdings that calendar year. It feels dumb for someone to qualify for tax credits when they already have a pile of money to their name and their net worth is rising rapidly, but as far as cold hard cash, Bezos pocketed little enough that year to qualify for that tax credit. It's not loopholes, it's not writeoffs, if anything, qualifying for that credit is strong evidence he genuinely didn't gain much wealth that year in currency.
Because capital gains is taxed at a different rate, and I've said several times that it could stand to be taxed more heavily. But that's not even the discussion, because they aren't talking about the $4.22 billion in income he paid taxes on, but instead the ~$100 billion in imaginary money his assessed wealth increased. "20% is a little low, don't you think" is something I can agree with. "Holy crap, he paid like 3% taxes!" is the stupid, dishonest nonsense. And trying to tax unrealized assets is destined to screw over regular people, the sort of person who has little income but owns their house in a developing area, who "gains" $500,000 in net worth just due to market changes, and wouldn't be able to afford taxes on their home based on nothing they have any control over. Imagine a company becoming successful, the stock prices increases 100x over, and the people who helped got it going from the ground floor are effectively forced to sell off their shares just to afford the wealth taxes. That's the end result when you take their premise to the logical conclusion.
Cool. Do it. That is a tax that could stand to be more progressive. It's still not going to stop billionaires from legitimately owing no tax some years. Getting upset at that is silly.
Unlimited credit lines charge interest. You need real money to pay that interest. To get that money when all your wealth comes from stock ownership, you need dividends or you need to sell. The billionaire class famously avoid dividends. They have to sell. When they sell they pay tax. And then interest on their loans. It's not free money. It's the sort of thing someone does when they contractually aren't allowed to sell off but have something they want funds for in the short term, and can guarantee they'll have the money to pay back the loan in the future when they can sell. Loans are bad, avoid them.
Only Tstorm can look at someone sending themselves into space as a joke, buys a newspaper company to spin information in his favor, has a dozen homes worth at least $500 million dollars, and can say with a straight face that he doesn't make much money and he pays his fair share of taxes.
Explain again for the people in the back how Bezos isn't exploiting any terrible tax code to qualify for government handouts, I liked that part. It made me laugh.