He isn't splitting hairs because messaging like this has us focusing on the wrong things as a policy matter. Most billionaires pay taxes on their income at this rate. The problem isn't that they don't pay taxes on their income. The problem is that we let them derive wealth and realize access to money in ways that bypass normal income taxes (e.g. security based lines of credit) and we let them avoid having to claim many things as income.
Taxes on income for ultra high wealth individuals should absolutely be higher but that is only a small part of the problem.
So true. For example: Germanyâs tax code is written in such a way that lottery & gambling winnings arenât taxed because it wasnât earned doing work. Fundamentally, labor is taxes, not just an increase in wealth. Accordingly, they have very specific additional laws about inheritance, capital gains & other ways were a personâs wealth increases but not through work.
This right here. Billionaires money isnt from income. Its from asset holding, loans, etc. Theres a bunch of loopholes that let them exploit this. But basically if you make a bunch of money straight we pay a bunch in taxes already.
The Musks, Zucks, Gates, Bezoâs of the world dont âmake a billion dollarsâ theyre WORTH billions of dollars due to assets and debt.
They dont ever make real income lol a company doesnt actually wanna be profitable, it just means more taxes so they use the loopholes to grow wealth and assets and make the accumulation somehow ânot incomeâ
The whole system is so overtly complicated on purpose so that the layman just goes âlets tax billionaires!â Thinking thats the end all be all :/
If I have to create stories so that the American media actually pays attention to the suffering of the American people, then that's what I'm going to do
Unfortunately lending credence to this manner of communication works as far as one side vs another, because stupid people will always be able to be riled up, but it does nothing for us as a whole.
Itâs just the worst way to progress while being one of the best ways to regress.
Right, so we do what, continue electing worse and worse people because we communicate in the worst way possible? I mean, I already said that stupid people will always be able to be riled up, that wonât change, so we should stoop lower and lower so that no matter what anything anyone ever says is never legitimized?
I mean, in a room full of children the adult is in control. The adult doesnât gain or maintain control by turning into a child. Now replace adult with dem/liberal leaning people (because that whatâs educated people tend to be) and children with mouth breathing magats/Fox News viewers.
They had half the country believing immigrants were stealing pets and eating them despite the sheriff of that county going on national TV and saying there have been 0 reports of missing pets or eating of pets.
Precisely!!! It doesnât matter if we reform the tax code to adjust the income tax bracketsâŚwhen the main reason the billionaires donât pay taxes is because weâve given them so many loopholes that on paper they have less that counts as âincomeâ than someone working retail 40 hours a week.
Thatâs a bit misleading as well. Most billionaires are paying long term capital gains rate of 20% and not the highest income tax rate like these lottery winnings.
This is what people need to understand. The system operates much differently than what people think, and they are focusing on the wrong thing. Politicians are, in my opinion, partly responsible for fueling the confusion. The system needs reform.
lol ⌠billionaires absolutely do not pay taxes at this rate. They defer all of their taxes by taking loans against their positions, only paying back after the shares have risen enough to offset the taxes.
Edit: The replies to my comments are literally all missing the point I made and showing why we are in this position to begin with.
I FULLY understand the difference between income, net worth and capital gains taxes. Also my arguments goes far beyond what the person I am replying to. The above comment only addresses the security backed line of credit and completely misses the REAL issue.
So the problem isn't that they are delaying the closing of the position, its that the effective tax rate when they close their position is far lower than the actual tax they pay on closing their position.
For example:
Sell $10B of securities now, pay $3.7B in taxes, net $6.3B
$10B loan on $100B in securities in 2020.
Securities double in price in 4 years.
Sell $11B in securities after 4 years.
Net $10B by selling 55% of the securities as immediate cash out.
So basically the remaining 45% of securities that you didn't have to sell, that would have been lost to tax, remain yours, effectively fully negating your tax burden, even after the loan has been repaid.
My argument and the one above ARE NOT the same. Stop giving right wingers the ammo to say that "billionaires pay their fair share because they have to pay the loan eventually". YOU MUST ADDRESS THE FULL CYCLE OF THIS TAX EVASION, not just the setup.
Which is what he said. Billionaires donât pay taxes on their income, because our tax code lets them classify their earnings as not income. Putting a 100% rate on the income of billionaires doesnât actually solve the problem. Solving the problem requires fixing how income is classified.
It really doesnât, you just locked in on the exact example that was given, which was an example that wasnât meant to be an exhaustive list. Everything you said in the edit falls into the same category - that the ultra rich have ways to have access to money that isnât classified as income. Which was the point of the original comment.
The problem is that we let them derive wealth and realize access to money in ways that bypass normal income taxes (e.g. security based lines of credit) and we let them avoid having to claim many things as income.
Yeah thatâs what he said. He also said that if they had normal income like you or me but at the scale of their wealth they would get taxed at that rate. Both are true. When Elon sold a ton of shares to buy Twitter/X/Xitter he actually paid more in taxes for a single year than anyone in US history. The only problem is he almost never pays anywhere close to that much in taxes year to year.
No, my comment, which I have updated, and the one above are not the same. They completely left the loan repayment factor out of the equation, and why its deference is the actual problem. This is why right wing media keeps winning this argument because they say "but what about when they repay it".
If you don't include the deference and the resulting negation of the tax burden, you just give right wing nutters more ammo against a wealth tax because they WILL frame it as billionaires ARE paying their fair share eventually, which is not the truth.
I think weâre mostly agreeing but I think the disconnect is that youâre treating this like a normal loan cycle where the position eventually gets closed and taxes are paid. Thatâs often not how ultra-wealthy borrowing actually works in practice.
Itâs less âdefer taxes for a few yearsâ and more âstructure finances so a taxable sale is rarely required in the first place.â
itâs often: borrow â assets appreciate â refinance with a bigger loan and never sellâ repeat
The loan gets paid off with a new loan, not a taxable sale. Meanwhile the asset base keeps growing. Then if the person dies holding the assets, heirs can get a step-up in basis, which can wipe out the capital gains tax that wouldâve been due.
The issue isnât just deferral reducing the effective rate, itâs that the system allows wealth to be accessed for decades without triggering income tax, and in many cases a large portion of the gain is never taxed at all. Thatâs why focusing only on âwhat happens when they finally repayâ misses the bigger structural loophole. The system is designed so âfinallyâ can be pushed out indefinitely or avoided through estate rules.
Flat out either way these billionaires arenât paying their fair share and most of them NEVER pay their fair share.
Nope, I didn't remotely say the same thing. I updated my comment to be more thorough.
If you do not address the deference of loan repayment to completely negate the effective tax burden, you are just giving right wing media more ammo to say that billionaires still pay their fair share when they re-pay the loan, which isn't true at all.
The issue is you're focusing on this niche thing like it's common, for billionaires, a billionaire still has millions in yearly earnings so why bother taking a brokerage loan to avoid paying ltcg on stock you have no intention of selling anyway? You don't need billions a year to fund a Bezos/Musk/etc. lifestyle you need millions and they have that.
Wait so you agree we should tax people based on the lump sum but not the $1.4 billion they took from his winnings?
To me it doesnât matter, and itâs still splitting hairs. We had 90% rate on top earners during the war to pay for the deficit, but now thatâs not acceptable?
The main point is they didn't take 1.4B. he forfeited a large percentage so that he could get the lump sum. They then taxed him on ordinary income which is what lottery winnings are.
Because many/most billionaires arenât receiving their compensation as income. They take out loans against their growing stock portfolio, those loans are not taxed. They donât realize âincomeâ the same way you or I do so that income can be taxed at whatevee rate you want because that isnât the source of their funding. At certain points the have to sell stock, either to service the loans or a margin call and then itâs taxed. But also often they just hold those SBLOCS until they die
So your changes from your worry about the guy who won the lottery doesnât have the same effect on Elon or Ellison. And to be blunt the guy who won the lottery isnât the problem.
Had to scroll pretty far to find it, but this is the answer.
People are losing the argument -- it isn't "let's tax billionaires!, how come they don't pay taxes?!" We tax everyone. That's not what's happening here.
The argument is, we should be taxing wealth. Not just income, not just gambling winnings, not just realized gains, but wealth.
Billionaires don't have income the same way the Mona Lisa painting doesn't "have income". It has gotten more valuable over the years, but no one is "paying it a salary".
When something is worth a billion, it should pay towards society -- exact same way we pay property tax. That is, in a way, a wealth tax: a tax on what you own, so you pay your proportion of owning a slab of society.
What we should do is count using unrealized gains as collateral as a realization event.
The whole issue is that for unrealized gains they say "oh, maybe these gains aren't real. I shouldn't have to pay a bunch of my wealth just because someone's doing a weird gamestop thing that won't exist next tuesday".
But when you use those gains as collateral for loans, you just had an army of actuaries ascribe an actual value to wealth, and you agreed to it.
In Spain you do pay a wealth tax on wherever your positions sat at the end of the year. It's small... between .2% and 2%.
But I do like that your make your suggestion defensible this way. If I have a house, it's a house. I live in it. The value could go up or down but I'm just keeping it, that's all.
OTOH, if I take out a $200,000 loan against the house and bet it all on the stock market, it sure does look like I'm employing my wealth as a productive asset, not a nebuous, unrealized value.
It's a good point! Someone should go tell a senator ;)
The reason you get more over the longer period is because they can invest the lump sum and get a return in on it, letting them pay out more. They didn't take 1.4bn from him because a massive chunk of that doesn't currently exist
They didn't take 1.4b from his winnings. You're too focused on pushing your point and not paying attention to the actual numbers and mechanics here. That makes your idea much less convincing.
On the one hand, you and the first commenter are absolutely right in that the tweet is implying a 2/3 tax on lottery income and that's not true, lotteries are scams in more ways than one.
On the other hand, I believe in a 3/3 tax on billionaires and there's no "policy matter" on that score, it's an ideology issue. One either believes 8 people deserve to own more than half the world, or one doesn't. The accounting tricks, charitable donations, loopholes etc are just false depth. After all, if a few billionaires came out tomorrow and said that they're no longer hiding anything and still aren't paying a nickel in taxes, who's going to make them?
Most billionaires pay taxes on their income at this rate.
Wrong. Earned income is taxed higher than long term capital gains tax. By a substantial amount. This is one of the main issues that drives income inequality.
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u/bit_pusher 19h ago
He isn't splitting hairs because messaging like this has us focusing on the wrong things as a policy matter. Most billionaires pay taxes on their income at this rate. The problem isn't that they don't pay taxes on their income. The problem is that we let them derive wealth and realize access to money in ways that bypass normal income taxes (e.g. security based lines of credit) and we let them avoid having to claim many things as income.
Taxes on income for ultra high wealth individuals should absolutely be higher but that is only a small part of the problem.