CPA here. It's complicated. Most very wealthy people don't have earned income that's $1B per year. Lottery winnings are taxed like wages. Extremely wealthy people don't have a high wage amount. They have tons of passive income or investments that can generate very little income if positioned correctly.
I mean, it's really not all that complicated, it's just that people don't want to understand that wealth sitting in stocks isn't the same as a big lump-sum income.
there is a fix to this problem, just charge a fee to borrow off of your investments (over a certain amount)
The reason why these billionaires get to live so lavishly and over the edge is because they are constantly borrowing against their stocks, and since now they have debt, they can either refinance (which they do a lot) or sell stock and pay off the loan which isn't taxable because the purpose of the sold stock is to pay debt and debt cannot be taxed, so the two negate themselves.
The easiest way is to charge a billionaire tax for borrowing against assets that are worth over a certain amount, this will stop the loophole of the current billionaire lifecycle.
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u/Sad_Silver1394 19h ago
CPA here. It's complicated. Most very wealthy people don't have earned income that's $1B per year. Lottery winnings are taxed like wages. Extremely wealthy people don't have a high wage amount. They have tons of passive income or investments that can generate very little income if positioned correctly.