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Virtually nobody making 10 million a year pays a 39% tax rate. They likely take most of their comp as stock and pay the long term capital gains rate. If they'
by aliston 10y ago
Virtually nobody making 10 million a year pays a 39% tax rate. They likely take most of their comp as stock and pay the long term capital gains rate. If they're in finance/VC, they are taking full advantage of carried interest. They have financial planners who structure their portfolio to favor low-tax investments. They form S-Corps and trust funds to defer tax liability, get paid in distributions, write off all sorts of business expenses, use real estate to offset gains with depreciation, carry forward every conceivable loss, tax loss harvest etc. etc. etc. This is how Warren Buffett, Mitt Romney and Trump end up paying < 20% effective rates.
The people hit hardest by "tax the wealthy" politicians are folks making large salaries (engineers, doctors, lawyers...). The mega-wealthy like Mark Zuckerberg make $1 a year in salary. If you really want to go after the wealthy, you need to tax wealth, not ordinary income and go after the complexity of the tax code.
- RealGeek 10y ago> If you really want to go after the wealthy, you need to tax wealth, not ordinary income Trump has promised several more yuuge tax breaks and loopholes to wealthy: - Repeal alternative minimum tax - Repeal estate tax - Reduce capital gains tax - Reduce business tax rate to 15% eliminate the corporate alternative minimum tax. A wealthy individual could just make an LLC, and funnel all his money into it and enjoy the 15% tax rate while working folks pay regular income tax of 33%.
- emagdnim2100 10y agoMaking an LLC costs a few hundred bucks a year, so there's no reason any benefits would only accrue to wealthy individuals. To the extent that Trump's business tax proposals actually become law (the 15% business tax with no personal tax applied is a massive change from how it currently works), I predict a shift away from salaried employment and towards independent contracting / small business ownership. Tastes may vary on whether this is a good thing.
- bduerst 10y agoTaxing wealth is a terrible idea, because it means every asset has to generate income each year to offset taxes.
- eppp 10y agoWhy is that bad? Asking purely out of ignorance.
- salamisultan 10y agoIt skews asset creation. You do not want to macro the econmy like that
- bduerst 10y agoJust off the top of my head: - It causes wealth to consume it's own base, depreciating all assets faster even in lieu of inflation - It disproportionately punishes seniors, who are asset rich and income poor. - It encourages the wealthy to move and hide assets offshore just like they do with income. - Double taxation: Wealth is already taxed when it is created - Punishes asset rich, low income businesses like grocery stores, farms, etc.
- everlost 10y agoI think it's a great idea. Every asset not being put to use, is similar to hoarding cash under the mattress - a waste of capital.
- bduerst 10y agoExcept that it isn't. Generating income isn't a prerequisite to putting assets to use.