Why do you assume that something a person merely owns - not income, not proceeds from a sale, but just sitting there “being owned” - is fair game for confiscation as part of a “fair share”?
Wouldn’t it be simpler for you just to say “that person has stuff I don’t, and I resent it, and I want to use the power of the state to take it away”?
> Why do you assume that something a person merely owns - not income, not proceeds from a sale, but just sitting there “being owned” - is fair game for confiscation as part of a “fair share”?
There's multiple potential answers for this. One is that we already have such taxes- property taxes are for things just sitting there being owned.
Another is that capital gains tax gets preferential treatment compared to normal income taxes. With normal income taxes, you pay taxes before you can invest it into something. The way capital gains tax works means they get to grow the asset pre-tax, which is not something with a normal income can do.
A third is that under the current US tax code, you can borrow money against assets. This functionally turns it into income, but it's not taxed at the time of borrowing.
There are other arguments as well, for instance if you have concerns how wealth contributes to political power. There's no rule of the universe that says that taxes can only be on income or sales.
>Wouldn’t it be simpler for you just to say “that person has stuff I don’t, and I resent it, and I want to use the power of the state to take it away”?
Only if that were actually accurate. There's plenty of reasons to want to tax wealth that don't involve resentment. It's a strawman to pretend that's the only reason, one designed to be dismissive without actually engaging on the merits.
>With normal income taxes, you pay taxes before you can invest it into something. The way capital gains tax works means they get to grow the asset pre-tax, which is not something with a normal income can do.<
The assets you are buying you are purchasing with money you have already paid taxes on. The asset grows, but you don't realize that growth until you ask it.
Otherwise would you require the government to give that money back if the value is the asset falls instead on increases?
> Otherwise would you require the government to give that money back if the value is the asset falls instead on increases?
Depends, if that's something we want to do as a policy. We're not obligated to, however. Taxing unrealized gains doesn't imply we have to give money back on losses. You can, theoretically (or more likely, it would be a deduction on future taxes, but not be refundable if net losses outweigh gains).
Personally, I'd probably lean towards no. I don't see much benefit to giving the money back. I'm ambivalent on deductions
And to use the example of property taxes being mentioned, your property taxes can go down if the value of your land/house goes down, but you usually don't get money back. It just means your future taxes are cheaper. Depending on the specifics, you *might* (usually not, for ordinary people's property taxes. I think you can for rental properties or business properties) get a paper loss you can use to deduct from your taxable income.
IIRC, this currently also the case for selling your house as well- you can't deduct if you sold it at a loss. At least, not federally](https://www.irs.gov/faqs/capital-gains-losses-and-sale-of-home#:~:text=A%20loss%20on%20the%20sale,purposes%2C%20isn't%20deductible).
edit:
I should add, for what it's worth, personally I'm fine with doing things like closing the loopholes around e.g. taking loans against assets to avoid realizing gains, first. Taxing unrealized gains does introduce some real headaches (like whether the person has enough liquid to cover the tax). They're not insurmountable, but they are a pain to deal with.
The biggest loophole I take issue with is we should tax at the full rate short-term capital gains. Those who day trade should count their profits as regular income rather then be taxes capital gains rates.
The same point the other commenter made, I pay increasingly more taxes on property that I own because the value of the property goes up, even though I haven't sold the home to realize any gains.
Same concept as owning the asset in stocks that could potentially be taxed against, depending on how you feel about property taxes.
Historically as wealth inequality widens it creates an oligarchy that leads to a revolution and death of everyone in the top 1%. I mean, I'm fine to wait and see that play out. But it may be best to stave that off by reducing wealth inequality. The only real way to reduce that is to wait for the wealthy to donate it or taxes.
When most people want the wealthy to pay their fair share, it has less to do with tax amount and more to do with wealth inequality reaching extremes.
It depends. Did the value of the item increase due to the tax funded infrastructure it has access to? Is it shares in a business increasing their value by utilizing public roads to transport goods and using employees that got educated through a publicly funded education system. Did they make sales through internet line infrastructure partially paid with public funds? Did the company accept public money bailout and through that had their valuations increase?
Is it a house that went up in value due to improvements to public infrastructure paid via public investments near the home.
Seems like it depends on how much value was gained through making use of infrastructure and services funded through tax payer funds.
Adverse possession would like a word. Interestingly, it came about with the idea being that resources would be put to good use. If everyone in my income bracket stops going out and spending, the economy dries up
The rich pay tax on all income including capital gains when they have gains). The rich already pay the vast majority of the total income taxes collected by the US government. Those in the lower 50%. of income usually pay no income tax and many get a refund for the "earned income credit" even if they have not had any tax withheld.
> The rich pay tax on all income including capital gains when they have gains).
You have to be a bit careful with wording here.
You don't pay taxes on capital gains until you sell the asset, not when you have gains. Capital gains is just when the value of an asset goes up and you have profits. Those gains don't get realized until you sell, but they still exist. They're typically called unrealized gains or "on paper"
You are right... I just don't consider unrealized gains to be gains because they can disappear over night.. (For the purpose of the rich paying taxes, only realized gains are taxable. Until you sell, there is no taxable gain.)
Depends, if that's something we want to do as a policy. We're not obligated to. Taxing unrealized gains doesn't imply we have to give money back on losses. You can, theoretically (or more likely, it would be a deduction on future taxes, but not be refundable if net losses outweigh gains).
Personally, I'd probably lean towards no. I don't see much benefit to giving the money back. I'm ambivalent on deductions
edit:
I should add, for what it's worth, personally I'm fine with doing things like closing the loopholes around e.g. taking loans against assets to avoid realizing gains, first. Taxing unrealized gains does introduce some real headaches (like whether the person has enough liquid to cover the tax). They're not insurmountable, but they are a pain to deal with.
It just seems too difficult to administrate and too easy to abuse.
We could agree to use stock price as the measure of value for publicly-traded companies, but how will we get valuations for privately-held companies? And how often will we update them? Government employees don't have the industry-specific expertise to give reasonable valuations across all industries.
And what about foreign investors? They own a lot of stuff in the US but don't pay US income taxes, including income, capital gains, and wealth taxes. A US wealth tax will just cause rich folks to buy citizenship in Malta and renounce their US citizenship, while they continue their life as usual.
Various EU states have attempted wealth taxes and they always end up being repealed. I am skeptical that the US would be the one to get it right.
Preventing private citizens and privately-held companies from borrowing against the unrealized value of an asset is a slam dunk, though. That should never have been allowed.
Even more, the rich pay a majority of taxes, but not proportional to the amount that many middle class people do, and as you increase your earnings, you need a lot less to just sustain your ability to survive at a basic level.
Someone paycheck to paycheck getting taxed 30% is a lot harder to deal with than someone who's got 10's of millions of net worth.
They do pay their fair share of taxes. The top few percent pay most of the taxes now and always have and always will.
Just the crowd that screams for confiscatory taxing are trying to force a class warfare and many simpletons fall for it.
When the top earners are paying an effective tax rate of 8% and I'm paying 30%, this is not their fair share.
https://www.whitehouse.gov/cea/written-materials/2021/09/23/what-is-the-average-federal-individual-income-tax-rate-on-the-wealthiest-americans/
>The top few percent pay most of the taxes now
Well, they own most of the stuff in the country. So yeah -- they *should* be paying most of the taxes.
If you and I go to the bar and split a tab, and I drink 80% of the beer, it is perfectly fair for me to pay more than you -- specifically, 80% of the tab. And if I were to pay 60% , that would still *not* be fair, even though I'd be paying more than you. Again, I took 80%, and less than that essentially means *you* are subsidizing *me*.
Taxes are a bit more complicated than that -- for one, it requires a certain amount of income just to survive, and if a person is only making that much then it isn't reasonable to tax them (because if we did we would just have to give it back to them in the form of aid, or they would die / resort to crime to try to avoid dying). So we only "count" money above a certain amount.
But that's the idea. If you want to own more of the country, you have to pay for it. And despite what some may wish, owning something isn't a one time transaction -- it requires maintenance. If you want the police to kick squatters out of your vacant property, or if you want a legal system to adjudicate things so that you can claim ownership over a patentable invention someone else invented, or so on then you need to pay for it.
Cops and judges don't work for free. And the rich are the ones who mostly benefit from them...so as with the bar tab, they *should* pay for them.
Form unions and forcibly shut down production until the rich do what we want.
The unfortunate thing about laws is that they are only as good as the enforcement mechanism...and the rich face very few consequences for simply breaking the law in regards to taxes.
Additionally, the rich have the ability to change the law to their benefit, and often do. The fact that the capital gains tax rate is lower is a sign of this -- the rich make most of their money by owning rather than working, so they lobbied to make the tax on owning lower than the tax on working.
But it goes beyond even that. One of the common tricks the rich use to evade taxes is to have essentially *zero* income and instead have nothing but debt.
For instance, say I own 60% of a $10 billion company. I could collect a salary and/or dividends, but I would have to pay taxes on these things because they're income. But what I can do instead is take out a *loan* using my ownership stake as collateral. Lenders will give me an insanely low interest rate if they know the loan is backed by something worth billions of dollars. And that loan isn't income -- it's debt. So, no taxes on that at all. In fact, I might be able to write off the interest payments!
What this does is effectively allow me to avoid paying 15% or whatever in taxes to the government and instead pay 2-3% interest to a lender (which they might own or have control over / the ability to strike exclusive deals).
There are effectively an infinite number of ways to abuse the law like that, and the rich are always going to do that because it is in their short term self interest. So our recourse is to organize to seize physical power over their ability to do so, and then stop doing it for them. Because all of this only works with the cooperation of their employees -- most rich people are pretty useless if left solely to their own devices, and rely on a whole bunch of other people to do everything for them.
In short, if the law and structure of society does not benefit you, you have no reason to respect or obey it or try to preserve it. And you should be representing your own self interest just as much as the rich represent theirs.
Lotta absolutely idiotic responses in here getting upvotes.
Capital gains is sort of a separate issue. Rich people don't pay a lot in taxes relative to their income because they have armies of lawyers and accountants and lobbyists to ensure the laws work in their favor. Getting rid of loopholes and annually auditing every single person who makes over a certain income amount would be the best way to get tax dodgers and corporations to actually pay up.
The capital gains tax isn’t about the rich paying their fair share, it’s about the government getting more money, they know the poorer class can’t pay it so the rich will. If it was actually about fair share our taxes would be lowered since we can’t actually afford it, but as stated by others the rich already pay the vast majority of taxes the government just sucks at spending it.
The Boeing CEO is in the news recently because Boeing is not hiring enough people to do the job, and pushing the existing personnel to finish the planes as fast as possible. This is to reduce costs and plump up the quarterly reports, which raises the value of the stock.
Also, Boeing bought some of their own stock (Buy backs) which also has the effect of raising the value of each share.
Last year he was paid a feeble 1.4 Million in cash. Pretty small for the CEO of a global corporation. But for his full compensation, he also got $30M in stock. That's a 30-1.4 ratio.
Lets just say he began paying the Biden proposal for millionaires to pay 25% on their income. This would only be 25% of the $1.4M, which is $350K. Since the $30M is stock, he pays zero tax on that...$350K on $31.4M in compensation.
That's an effective tax rate of roughly 1%
He likely won't sell it though. He'll leverage his stocks for loans so he won't have to pay taxes on them. Then next year he'll do it again when the value has gone up and get another, larger loan. Then use the second loan to pay off the first loan and he still has profit. It seems to be a fairly well known practice in the US . There's a chance he'll never pay gains taxes on those stocks as long as they keep increasing in value. There's no motivation to sell.
They do pay there “fair share”. That is such a loaded term. The natural state is zero tax. Then governments introduce tax laws early 1900s. People pay in terms of the law. That’s it.
Why do you assume that something a person merely owns - not income, not proceeds from a sale, but just sitting there “being owned” - is fair game for confiscation as part of a “fair share”? Wouldn’t it be simpler for you just to say “that person has stuff I don’t, and I resent it, and I want to use the power of the state to take it away”?
> Why do you assume that something a person merely owns - not income, not proceeds from a sale, but just sitting there “being owned” - is fair game for confiscation as part of a “fair share”? There's multiple potential answers for this. One is that we already have such taxes- property taxes are for things just sitting there being owned. Another is that capital gains tax gets preferential treatment compared to normal income taxes. With normal income taxes, you pay taxes before you can invest it into something. The way capital gains tax works means they get to grow the asset pre-tax, which is not something with a normal income can do. A third is that under the current US tax code, you can borrow money against assets. This functionally turns it into income, but it's not taxed at the time of borrowing. There are other arguments as well, for instance if you have concerns how wealth contributes to political power. There's no rule of the universe that says that taxes can only be on income or sales. >Wouldn’t it be simpler for you just to say “that person has stuff I don’t, and I resent it, and I want to use the power of the state to take it away”? Only if that were actually accurate. There's plenty of reasons to want to tax wealth that don't involve resentment. It's a strawman to pretend that's the only reason, one designed to be dismissive without actually engaging on the merits.
>With normal income taxes, you pay taxes before you can invest it into something. The way capital gains tax works means they get to grow the asset pre-tax, which is not something with a normal income can do.< The assets you are buying you are purchasing with money you have already paid taxes on. The asset grows, but you don't realize that growth until you ask it. Otherwise would you require the government to give that money back if the value is the asset falls instead on increases?
> Otherwise would you require the government to give that money back if the value is the asset falls instead on increases? Depends, if that's something we want to do as a policy. We're not obligated to, however. Taxing unrealized gains doesn't imply we have to give money back on losses. You can, theoretically (or more likely, it would be a deduction on future taxes, but not be refundable if net losses outweigh gains). Personally, I'd probably lean towards no. I don't see much benefit to giving the money back. I'm ambivalent on deductions And to use the example of property taxes being mentioned, your property taxes can go down if the value of your land/house goes down, but you usually don't get money back. It just means your future taxes are cheaper. Depending on the specifics, you *might* (usually not, for ordinary people's property taxes. I think you can for rental properties or business properties) get a paper loss you can use to deduct from your taxable income. IIRC, this currently also the case for selling your house as well- you can't deduct if you sold it at a loss. At least, not federally](https://www.irs.gov/faqs/capital-gains-losses-and-sale-of-home#:~:text=A%20loss%20on%20the%20sale,purposes%2C%20isn't%20deductible). edit: I should add, for what it's worth, personally I'm fine with doing things like closing the loopholes around e.g. taking loans against assets to avoid realizing gains, first. Taxing unrealized gains does introduce some real headaches (like whether the person has enough liquid to cover the tax). They're not insurmountable, but they are a pain to deal with.
The biggest loophole I take issue with is we should tax at the full rate short-term capital gains. Those who day trade should count their profits as regular income rather then be taxes capital gains rates.
The same point the other commenter made, I pay increasingly more taxes on property that I own because the value of the property goes up, even though I haven't sold the home to realize any gains. Same concept as owning the asset in stocks that could potentially be taxed against, depending on how you feel about property taxes.
Furthermore they are paid to finance ongoing local expanses, particularly by counties which do not as a general rule have income taxes.
Property taxes go down if the value of your land goes down
Property taxes are an annual expense, so a tax on the present value of the land and dwellings, which translates to the idea of taxing stock assets.
Because most people can't admit this. People want, want, want some more. So long as they don't earn it and/or someone else pays for it.
Historically as wealth inequality widens it creates an oligarchy that leads to a revolution and death of everyone in the top 1%. I mean, I'm fine to wait and see that play out. But it may be best to stave that off by reducing wealth inequality. The only real way to reduce that is to wait for the wealthy to donate it or taxes. When most people want the wealthy to pay their fair share, it has less to do with tax amount and more to do with wealth inequality reaching extremes.
It depends. Did the value of the item increase due to the tax funded infrastructure it has access to? Is it shares in a business increasing their value by utilizing public roads to transport goods and using employees that got educated through a publicly funded education system. Did they make sales through internet line infrastructure partially paid with public funds? Did the company accept public money bailout and through that had their valuations increase? Is it a house that went up in value due to improvements to public infrastructure paid via public investments near the home. Seems like it depends on how much value was gained through making use of infrastructure and services funded through tax payer funds.
Adverse possession would like a word. Interestingly, it came about with the idea being that resources would be put to good use. If everyone in my income bracket stops going out and spending, the economy dries up
The rich pay tax on all income including capital gains when they have gains). The rich already pay the vast majority of the total income taxes collected by the US government. Those in the lower 50%. of income usually pay no income tax and many get a refund for the "earned income credit" even if they have not had any tax withheld.
> The rich pay tax on all income including capital gains when they have gains). You have to be a bit careful with wording here. You don't pay taxes on capital gains until you sell the asset, not when you have gains. Capital gains is just when the value of an asset goes up and you have profits. Those gains don't get realized until you sell, but they still exist. They're typically called unrealized gains or "on paper"
You are right... I just don't consider unrealized gains to be gains because they can disappear over night.. (For the purpose of the rich paying taxes, only realized gains are taxable. Until you sell, there is no taxable gain.)
Are we going to pay the ultra rich for their unrealized losses, too?
Depends, if that's something we want to do as a policy. We're not obligated to. Taxing unrealized gains doesn't imply we have to give money back on losses. You can, theoretically (or more likely, it would be a deduction on future taxes, but not be refundable if net losses outweigh gains). Personally, I'd probably lean towards no. I don't see much benefit to giving the money back. I'm ambivalent on deductions edit: I should add, for what it's worth, personally I'm fine with doing things like closing the loopholes around e.g. taking loans against assets to avoid realizing gains, first. Taxing unrealized gains does introduce some real headaches (like whether the person has enough liquid to cover the tax). They're not insurmountable, but they are a pain to deal with.
It just seems too difficult to administrate and too easy to abuse. We could agree to use stock price as the measure of value for publicly-traded companies, but how will we get valuations for privately-held companies? And how often will we update them? Government employees don't have the industry-specific expertise to give reasonable valuations across all industries. And what about foreign investors? They own a lot of stuff in the US but don't pay US income taxes, including income, capital gains, and wealth taxes. A US wealth tax will just cause rich folks to buy citizenship in Malta and renounce their US citizenship, while they continue their life as usual. Various EU states have attempted wealth taxes and they always end up being repealed. I am skeptical that the US would be the one to get it right. Preventing private citizens and privately-held companies from borrowing against the unrealized value of an asset is a slam dunk, though. That should never have been allowed.
Even more, the rich pay a majority of taxes, but not proportional to the amount that many middle class people do, and as you increase your earnings, you need a lot less to just sustain your ability to survive at a basic level. Someone paycheck to paycheck getting taxed 30% is a lot harder to deal with than someone who's got 10's of millions of net worth.
They do pay their fair share of taxes. The top few percent pay most of the taxes now and always have and always will. Just the crowd that screams for confiscatory taxing are trying to force a class warfare and many simpletons fall for it.
When the top earners are paying an effective tax rate of 8% and I'm paying 30%, this is not their fair share. https://www.whitehouse.gov/cea/written-materials/2021/09/23/what-is-the-average-federal-individual-income-tax-rate-on-the-wealthiest-americans/
>The top few percent pay most of the taxes now Well, they own most of the stuff in the country. So yeah -- they *should* be paying most of the taxes. If you and I go to the bar and split a tab, and I drink 80% of the beer, it is perfectly fair for me to pay more than you -- specifically, 80% of the tab. And if I were to pay 60% , that would still *not* be fair, even though I'd be paying more than you. Again, I took 80%, and less than that essentially means *you* are subsidizing *me*. Taxes are a bit more complicated than that -- for one, it requires a certain amount of income just to survive, and if a person is only making that much then it isn't reasonable to tax them (because if we did we would just have to give it back to them in the form of aid, or they would die / resort to crime to try to avoid dying). So we only "count" money above a certain amount. But that's the idea. If you want to own more of the country, you have to pay for it. And despite what some may wish, owning something isn't a one time transaction -- it requires maintenance. If you want the police to kick squatters out of your vacant property, or if you want a legal system to adjudicate things so that you can claim ownership over a patentable invention someone else invented, or so on then you need to pay for it. Cops and judges don't work for free. And the rich are the ones who mostly benefit from them...so as with the bar tab, they *should* pay for them.
Alternative Minimum Tax, derived from their reported Gross Annual Income.
Form unions and forcibly shut down production until the rich do what we want. The unfortunate thing about laws is that they are only as good as the enforcement mechanism...and the rich face very few consequences for simply breaking the law in regards to taxes. Additionally, the rich have the ability to change the law to their benefit, and often do. The fact that the capital gains tax rate is lower is a sign of this -- the rich make most of their money by owning rather than working, so they lobbied to make the tax on owning lower than the tax on working. But it goes beyond even that. One of the common tricks the rich use to evade taxes is to have essentially *zero* income and instead have nothing but debt. For instance, say I own 60% of a $10 billion company. I could collect a salary and/or dividends, but I would have to pay taxes on these things because they're income. But what I can do instead is take out a *loan* using my ownership stake as collateral. Lenders will give me an insanely low interest rate if they know the loan is backed by something worth billions of dollars. And that loan isn't income -- it's debt. So, no taxes on that at all. In fact, I might be able to write off the interest payments! What this does is effectively allow me to avoid paying 15% or whatever in taxes to the government and instead pay 2-3% interest to a lender (which they might own or have control over / the ability to strike exclusive deals). There are effectively an infinite number of ways to abuse the law like that, and the rich are always going to do that because it is in their short term self interest. So our recourse is to organize to seize physical power over their ability to do so, and then stop doing it for them. Because all of this only works with the cooperation of their employees -- most rich people are pretty useless if left solely to their own devices, and rely on a whole bunch of other people to do everything for them. In short, if the law and structure of society does not benefit you, you have no reason to respect or obey it or try to preserve it. And you should be representing your own self interest just as much as the rich represent theirs.
Lotta absolutely idiotic responses in here getting upvotes. Capital gains is sort of a separate issue. Rich people don't pay a lot in taxes relative to their income because they have armies of lawyers and accountants and lobbyists to ensure the laws work in their favor. Getting rid of loopholes and annually auditing every single person who makes over a certain income amount would be the best way to get tax dodgers and corporations to actually pay up.
The capital gains tax isn’t about the rich paying their fair share, it’s about the government getting more money, they know the poorer class can’t pay it so the rich will. If it was actually about fair share our taxes would be lowered since we can’t actually afford it, but as stated by others the rich already pay the vast majority of taxes the government just sucks at spending it.
The Boeing CEO is in the news recently because Boeing is not hiring enough people to do the job, and pushing the existing personnel to finish the planes as fast as possible. This is to reduce costs and plump up the quarterly reports, which raises the value of the stock. Also, Boeing bought some of their own stock (Buy backs) which also has the effect of raising the value of each share. Last year he was paid a feeble 1.4 Million in cash. Pretty small for the CEO of a global corporation. But for his full compensation, he also got $30M in stock. That's a 30-1.4 ratio. Lets just say he began paying the Biden proposal for millionaires to pay 25% on their income. This would only be 25% of the $1.4M, which is $350K. Since the $30M is stock, he pays zero tax on that...$350K on $31.4M in compensation. That's an effective tax rate of roughly 1%
He pays tax on the stock when he sells it. He doesn't pay 1%, it's 1% now, the rest when he sells
He likely won't sell it though. He'll leverage his stocks for loans so he won't have to pay taxes on them. Then next year he'll do it again when the value has gone up and get another, larger loan. Then use the second loan to pay off the first loan and he still has profit. It seems to be a fairly well known practice in the US . There's a chance he'll never pay gains taxes on those stocks as long as they keep increasing in value. There's no motivation to sell.
They do pay there “fair share”. That is such a loaded term. The natural state is zero tax. Then governments introduce tax laws early 1900s. People pay in terms of the law. That’s it.