8 ms·

What "loophole" is being closed here? Having wealth?

toomuchtodo 7y ago
Excessive wealth (and therefore, power) is a bug. A wealth tax is a hotfix. Foundations can be addressed through the requirement that donations and control of the non profit receiving the gift is arms length, with punitive penalties for a failure to abide by said requirement. Gates and Buffett can still donate to a foundation, but then they aren't able to control it. Most Americans will never be a millionaire or a billionaire. This is statistics, not feelings. There's no point in them supporting policies enabling such disparity in the economic system.
- deleted 7y ago
  [deleted]
- manigandham 7y ago
  Who defines excessive? How will this solve disparities by giving more money to the govt to spend poorly?
  - toomuchtodo 7y ago
    Democracy. I'm actually fairly happy with how government operates for the most part. If you take issue, get involved. Complaining is free, but not impactful.
    - manigandham 7y ago
      This is a discussion forum. How is the government going to solve wealth disparity with more money?
      - toomuchtodo 7y ago
        Labor regulations (an example would be increasing the minimum wage, $15 an hour gets thrown around and would provide workers with a living wage). Universal healthcare, preventing destitution from medical expenses and increasing worker mobility. Subsidized education preventing the need to go tens of thousands of dollars into debt for a degree employers can require at no cost to themselves. Big fan of a Green New Deal; the country needs a massive infrastructure overhaul, and it'd provide quality jobs to participants. You squeeze more from capital (who has been raking labor over the coals for the last 40 years) for labor. What's capital going to do, leave the country? We'll tax it on the way out, and we still get to keep the market if you want access to it from the outside. Disclaimer: My politics are firmly in the democratic socialist camp. Allow success, but not too much, and make failure cheaper and less painful.
        manigandham 7y ago
        All of those things can be done with the money we have now, while probably costing less. Taxes and insurance are already socialist. I see no point in "democratic socialism" that isn't just better spending like I talked about, outside of some extreme views on limiting wealth. My point remains that if these policies don't change now, more taxes will change nothing while concentrating more money/power into a few political hands that have proven to be bad at spending it.
        lightedman 7y ago
        "an example would be increasing the minimum wage, $15 an hour gets thrown around and would provide workers with a living wage" Not in most of California or any other 'wealthy' state, it wouldn't. I know people making $18/hr and more than half of their post-tax income is going to rent ALONE.
        toomuchtodo 7y ago
        Super HCOL locations aside, it’s a solid start for most of America.
        jki275 7y ago
        No, unfortunately for that idea raising the minimum wage simply raises the cost of living commensurately.
        toomuchtodo 7y ago
        That has not been born out in data from Seattle and Washington DC where the minimum wage has been raised.
        lightedman 7y ago
        It certainly bears out here in California where every year our wage increases are immediately followed with a rent increase. I'm the person paying literally the cheapest apartment rent in the entire county, because of being grandfathered in due to long tenancy. $1300/mo. Everyone else in the same complex, for fewer or the same amenities, pays easily $300 more. Rent everywhere else runs about $1800 and quickly rising.
  - logfromblammo 7y ago
    I volunteer. $10 million is enough that you can take 2.5% every year as $250k of income, and spend 0.5% on the fiduciary wealth manager's fees, and still have investment distributions and interest on the principal that outpace inflation in the long term. A household of one or two people can live its entire lifespan on that, without ever trading hours of labor for cash again, and then pass the same privilege down to a single heir, until civilization collapses. $250k/year is a reasonable and sufficient retirement income. $10M is a plausible sum to accumulate through labor-selling alone, for one or two people each working for 2000 hours/year over 40 years, at an average combined rate of $175/hr, all while spending $100k/year on expenses and devoting $250k/year to savings. It does not blatantly flaunt the "diligent and/or intelligent work generates wealth" story. The temporarily embarrassed millionaires all around the US can plausibly get there, if nothing else goes wrong, and they don't even have to cut expenses down, if they get paid enough per hour. $250k/year is about 4x the median household income in the US. It can support most lifestyles less profligate than a person addicted to luxury travel, high-stakes gambling, top-shelf companionship-for-hire, or ultra-pure cocaine. And $250k/year can still be spent wisely and effectively by one household. The thing about the government spending the money poorly is that they are still actually spending it. Spending is better for the poor than investing. When you spend money, the person you trade it to can go on to spend all of it themselves. When you loan it to them, or invest it, they have to give it back someday; it has strings attached. So the advantage of the wealth tax is in taking money that is not being spent, and putting it back into genuine circulation. So then I take this reasonable number, and pad it by one order of magnitude, to absorb the edge cases that are still reasonable in person, but look bad on paper. Start the tax at $100 million in accumulated wealth, and tax 2.5% of everything in excess of that. Then deduct from that tax the payer's total spending (not loans or investments) in excess of $2.5 million, which is money that will count as someone else's income. If they can spend that much, the government doesn't have to spend it for them, and that spending will get taxed at a higher rate anyway, as income.
    - manigandham 7y ago
      How does wealth that is not being spent affect you at all? How is it better for the poor? What do they gain exactly?
notus 7y ago
Having a disproportionate amount of wealth while others can't even meet basic physical needs in the same country.
- tluyben2 7y ago
  Yes, but how? I agree and have spent a lot of (essentially useless) time on thinking about that, but this is complex unless you are a despot. If we have no privacy left, you monitor all that you do on any foreign or local card/transfer etc (you ban crypto and put insanely high fines/prison on using it) and if that seems not to match what you reported as income/capgains/etc, you get an audit. What is the point of being rich and evading taxes if you cannot spend it? And if you move it to foundations etc, at least you cannot get to it, nor can you family if they live in this (fictional?) country as they would have to explain the same things. In a society (probably a democracy?) where people value privacy and non-draconian laws, I cannot figure out how to make this work. Besides having educated and patriot people who actually would choose to pay taxes for the greater good. But these people do not start on their own (Bill Gates example of not minding to pay more tax) and they usually believe they can do better things with their money (for humanity). And that is usually not the case or way too biased; their right if taxing is paid fairly, but if evading, a problem.
- manigandham 7y ago
  How is that a loophole? Wealth inequality is inevitable in any society. The problem is how govt spends money, not how much it collects.
- foogazi 7y ago
  What’s the link between those two? And how does taking money from the billionaire help the people that can’t meet physical needs?
pmoriarty 7y ago
The loophole is that the largest taxes paid in the US are paid on income rather than wealth, which allows the most richest citizens to evade taxes by having a relatively small income while having an amount of wealth that is so large that it's hard for most people to wrap their brains around. The US used to have an income tax that was over 90% for the highest income bracket. Bringing it back would be a step in the right direction, but not enough, as non-income-based wealth would be untouched. If it was up to me, I'd tax wealth over $1 million at 90%. It's laughable that these billionaires are complaining at being taxed a mere 6% on wealth over $1 billion.
- manigandham 7y ago
  Wealth is just a static number. It goes up through income. You're talking about a double taxation for maintaining what you have which was already taxed on the way in. There are different kinds of incomes like capital gains which is a different discussion and one that many people agree with raising. > "I'd tax wealth over $1 million at 90%" You'll lose most tax income. Every entrepreneur will leave. And the middle class (which builds up more than that over a lifetime) will be decimated. It's a great way to crash a nation.
  - pmoriarty 7y ago
    "Every entrepreneur will leave." It's been a long time since I looked in to this, but it used to be the case that if you gave up your US citizenship while having a net worth of over $100,000, it was assumed by the government that you were doing so for the purposes of tax evasion, and they'd continue to tax you for the next ten years. The same could be done here, with the government getting 10 bites of 6% at wealth over $1 billion if the billionaire tries to run away. Taxation could also be made retroactive, if there was a political will to do it. If some entrepreneurs leave others will step in to take their place. As for the middle class being "decimated", I doubt it, as the median net worth in the US is only around $70k. The majority of Americans won't be affected by taxes on millionaires.
    - manigandham 7y ago
lidHanteyk 7y ago
Basically, yes. Imagine maximum salaries or maximum wages; it's along the same lines. At some point, when that much wealth is concentrated into so few people, the people invariably become so big that they cannot help but distort society with their whims and preferences. Philanthropic foundations are certainly preferable to estates or family businesses, because of the implied external benefits to the public at large. However, wouldn't it be even better if the benefits were not just received by the public, but steered by the public as well? In fact, if we imagine public management of such funds, then we need only have a political process in order to establish a management policy. But, as you can see, that's just taxation! So we are not really so far off from an improved alignment of incentives. Why are you interested in keeping billionaires rich? They are orders of magnitude richer than you, and you are to them as an ant, or perhaps a cute kitten, and yet you defend them. Are you really so insulted at the idea of sharing the wealth of our nation with its people?
- DuskStar 7y ago
  > However, wouldn't it be even better if the benefits were not just received by the public, but steered by the public as well? In fact, if we imagine public management of such funds, then we need only have a political process in order to establish a management policy. I think this assumes far higher governmental competence and efficiency than is warranted.
  - lidHanteyk 7y ago
    Ah, yes, and what have the Romans done for us recently? If you want something steered by the public, then we are talking about politics. The messiness is inherent to the problematic nature of large-scale planning and logistics, and a corporate veneer of neat tidiness is probably not good for transparent finances and accounting.
- mrep 7y ago
  > maximum salaries or maximum wages Yah, we tried that in WW2 and now we are stuck with employer paid healthcare. I'd rather not.

Excessive wealth (and therefore, power) is a bug. A wealth tax is a hotfix. Foundations can be addressed through the requirement that donations and control of the non profit receiving the gift is arms length, with punitive penalties for a failure to abide by said requirement. Gates and Buffett can still donate to a foundation, but then they aren't able to control it. Most Americans will never be a millionaire or a billionaire. This is statistics, not feelings. There's no point in them supporting policies enabling such disparity in the economic system.

deleted 7y ago
[deleted]
manigandham 7y ago
Who defines excessive? How will this solve disparities by giving more money to the govt to spend poorly?
- toomuchtodo 7y ago
  Democracy. I'm actually fairly happy with how government operates for the most part. If you take issue, get involved. Complaining is free, but not impactful.
  - manigandham 7y ago
    This is a discussion forum. How is the government going to solve wealth disparity with more money?
    - toomuchtodo 7y ago
      Labor regulations (an example would be increasing the minimum wage, $15 an hour gets thrown around and would provide workers with a living wage). Universal healthcare, preventing destitution from medical expenses and increasing worker mobility. Subsidized education preventing the need to go tens of thousands of dollars into debt for a degree employers can require at no cost to themselves. Big fan of a Green New Deal; the country needs a massive infrastructure overhaul, and it'd provide quality jobs to participants. You squeeze more from capital (who has been raking labor over the coals for the last 40 years) for labor. What's capital going to do, leave the country? We'll tax it on the way out, and we still get to keep the market if you want access to it from the outside. Disclaimer: My politics are firmly in the democratic socialist camp. Allow success, but not too much, and make failure cheaper and less painful.
      - manigandham 7y ago
        All of those things can be done with the money we have now, while probably costing less. Taxes and insurance are already socialist. I see no point in "democratic socialism" that isn't just better spending like I talked about, outside of some extreme views on limiting wealth. My point remains that if these policies don't change now, more taxes will change nothing while concentrating more money/power into a few political hands that have proven to be bad at spending it.
      - lightedman 7y ago
        "an example would be increasing the minimum wage, $15 an hour gets thrown around and would provide workers with a living wage" Not in most of California or any other 'wealthy' state, it wouldn't. I know people making $18/hr and more than half of their post-tax income is going to rent ALONE.
        toomuchtodo 7y ago
        Super HCOL locations aside, it’s a solid start for most of America.
        jki275 7y ago
        No, unfortunately for that idea raising the minimum wage simply raises the cost of living commensurately.
        toomuchtodo 7y ago
        That has not been born out in data from Seattle and Washington DC where the minimum wage has been raised.
        lightedman 7y ago
        It certainly bears out here in California where every year our wage increases are immediately followed with a rent increase. I'm the person paying literally the cheapest apartment rent in the entire county, because of being grandfathered in due to long tenancy. $1300/mo. Everyone else in the same complex, for fewer or the same amenities, pays easily $300 more. Rent everywhere else runs about $1800 and quickly rising.
- logfromblammo 7y ago
  I volunteer. $10 million is enough that you can take 2.5% every year as $250k of income, and spend 0.5% on the fiduciary wealth manager's fees, and still have investment distributions and interest on the principal that outpace inflation in the long term. A household of one or two people can live its entire lifespan on that, without ever trading hours of labor for cash again, and then pass the same privilege down to a single heir, until civilization collapses. $250k/year is a reasonable and sufficient retirement income. $10M is a plausible sum to accumulate through labor-selling alone, for one or two people each working for 2000 hours/year over 40 years, at an average combined rate of $175/hr, all while spending $100k/year on expenses and devoting $250k/year to savings. It does not blatantly flaunt the "diligent and/or intelligent work generates wealth" story. The temporarily embarrassed millionaires all around the US can plausibly get there, if nothing else goes wrong, and they don't even have to cut expenses down, if they get paid enough per hour. $250k/year is about 4x the median household income in the US. It can support most lifestyles less profligate than a person addicted to luxury travel, high-stakes gambling, top-shelf companionship-for-hire, or ultra-pure cocaine. And $250k/year can still be spent wisely and effectively by one household. The thing about the government spending the money poorly is that they are still actually spending it. Spending is better for the poor than investing. When you spend money, the person you trade it to can go on to spend all of it themselves. When you loan it to them, or invest it, they have to give it back someday; it has strings attached. So the advantage of the wealth tax is in taking money that is not being spent, and putting it back into genuine circulation. So then I take this reasonable number, and pad it by one order of magnitude, to absorb the edge cases that are still reasonable in person, but look bad on paper. Start the tax at $100 million in accumulated wealth, and tax 2.5% of everything in excess of that. Then deduct from that tax the payer's total spending (not loans or investments) in excess of $2.5 million, which is money that will count as someone else's income. If they can spend that much, the government doesn't have to spend it for them, and that spending will get taxed at a higher rate anyway, as income.
  - manigandham 7y ago
    How does wealth that is not being spent affect you at all? How is it better for the poor? What do they gain exactly?

notus 7y ago

Having a disproportionate amount of wealth while others can't even meet basic physical needs in the same country.

tluyben2 7y ago
Yes, but how? I agree and have spent a lot of (essentially useless) time on thinking about that, but this is complex unless you are a despot. If we have no privacy left, you monitor all that you do on any foreign or local card/transfer etc (you ban crypto and put insanely high fines/prison on using it) and if that seems not to match what you reported as income/capgains/etc, you get an audit. What is the point of being rich and evading taxes if you cannot spend it? And if you move it to foundations etc, at least you cannot get to it, nor can you family if they live in this (fictional?) country as they would have to explain the same things. In a society (probably a democracy?) where people value privacy and non-draconian laws, I cannot figure out how to make this work. Besides having educated and patriot people who actually would choose to pay taxes for the greater good. But these people do not start on their own (Bill Gates example of not minding to pay more tax) and they usually believe they can do better things with their money (for humanity). And that is usually not the case or way too biased; their right if taxing is paid fairly, but if evading, a problem.
manigandham 7y ago
How is that a loophole? Wealth inequality is inevitable in any society. The problem is how govt spends money, not how much it collects.
foogazi 7y ago
What’s the link between those two? And how does taking money from the billionaire help the people that can’t meet physical needs?

pmoriarty 7y ago

The loophole is that the largest taxes paid in the US are paid on income rather than wealth, which allows the most richest citizens to evade taxes by having a relatively small income while having an amount of wealth that is so large that it's hard for most people to wrap their brains around. The US used to have an income tax that was over 90% for the highest income bracket. Bringing it back would be a step in the right direction, but not enough, as non-income-based wealth would be untouched. If it was up to me, I'd tax wealth over $1 million at 90%. It's laughable that these billionaires are complaining at being taxed a mere 6% on wealth over $1 billion.

manigandham 7y ago
Wealth is just a static number. It goes up through income. You're talking about a double taxation for maintaining what you have which was already taxed on the way in. There are different kinds of incomes like capital gains which is a different discussion and one that many people agree with raising. > "I'd tax wealth over $1 million at 90%" You'll lose most tax income. Every entrepreneur will leave. And the middle class (which builds up more than that over a lifetime) will be decimated. It's a great way to crash a nation.
- pmoriarty 7y ago
  "Every entrepreneur will leave." It's been a long time since I looked in to this, but it used to be the case that if you gave up your US citizenship while having a net worth of over $100,000, it was assumed by the government that you were doing so for the purposes of tax evasion, and they'd continue to tax you for the next ten years. The same could be done here, with the government getting 10 bites of 6% at wealth over $1 billion if the billionaire tries to run away. Taxation could also be made retroactive, if there was a political will to do it. If some entrepreneurs leave others will step in to take their place. As for the middle class being "decimated", I doubt it, as the median net worth in the US is only around $70k. The majority of Americans won't be affected by taxes on millionaires.
  - manigandham 7y ago

lidHanteyk 7y ago

Basically, yes. Imagine maximum salaries or maximum wages; it's along the same lines. At some point, when that much wealth is concentrated into so few people, the people invariably become so big that they cannot help but distort society with their whims and preferences. Philanthropic foundations are certainly preferable to estates or family businesses, because of the implied external benefits to the public at large. However, wouldn't it be even better if the benefits were not just received by the public, but steered by the public as well? In fact, if we imagine public management of such funds, then we need only have a political process in order to establish a management policy. But, as you can see, that's just taxation! So we are not really so far off from an improved alignment of incentives. Why are you interested in keeping billionaires rich? They are orders of magnitude richer than you, and you are to them as an ant, or perhaps a cute kitten, and yet you defend them. Are you really so insulted at the idea of sharing the wealth of our nation with its people?

DuskStar 7y ago
> However, wouldn't it be even better if the benefits were not just received by the public, but steered by the public as well? In fact, if we imagine public management of such funds, then we need only have a political process in order to establish a management policy. I think this assumes far higher governmental competence and efficiency than is warranted.
- lidHanteyk 7y ago
  Ah, yes, and what have the Romans done for us recently? If you want something steered by the public, then we are talking about politics. The messiness is inherent to the problematic nature of large-scale planning and logistics, and a corporate veneer of neat tidiness is probably not good for transparent finances and accounting.
mrep 7y ago
> maximum salaries or maximum wages Yah, we tried that in WW2 and now we are stuck with employer paid healthcare. I'd rather not.