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Yes, these billionaires take collateralized loans, but that doesn't change the fact that they will eventually HAVE to pay taxes. At some point, Bezos has to rea

by bhupy 6y ago

Yes, these billionaires take collateralized loans, but that doesn't change the fact that they will eventually HAVE to pay taxes. At some point, Bezos has to realize some gain somewhere to have cash to pay back the loan — and odds are, that will be taxed as capital gains, the rate for which has been essentially constant since WW2.

sudosysgen 6y ago
Sure, but in practice the actual tax rate for the upper echelon of the world right now is much, much lower than that for common people or for the upper echelon back in WW2.
- bhupy 6y ago
  That's factually incorrect. https://taxfoundation.org/taxes-on-the-rich-1950s-not-high/ https://taxfoundation.org/taxes-on-the-rich-1950s-not-high/
  - sudosysgen 6y ago
    That is only factually incorrect if you look at the 1% in terms of households and in terms of income. In reality, a multi-millionaire might not qualify as the top 1% in household income due to their reliance on capital growth instead of straight income. One might see a million dollar increase in net worth, while paying no taxes on it, and then using that million dollar as collateral to help finance more and more growth. The only tax you might end up paying might be capital gains tax of 20%, or even 15%, eventually, while if it was household income you would pay 45% in taxes. The shift of income from dividends to capital gains for the wealthiest is not reflected in your statistics, and so I don't think they can be used to answer my earlier comment. The data in your source indeed does not seem to consider capital gains tax, as they seem to reflect the top tax bracket on average for different states and locales, whereas if capital gains were considered in relation to the state in which they are realized, it would certainly be much lower.
    - bhupy 6y ago
      > In reality, a multi-millionaire might not qualify as the top 1% in household income due to their reliance on capital growth instead of straight income. One might see a million dollar increase in net worth, while paying no taxes on it, and then using that million dollar as collateral to help finance more and more growth. The only tax you might end up paying might be capital gains tax of 20%, or even 15%, eventually, while if it was household income you would pay 45% in taxes. The shift of income from dividends to capital gains for the wealthiest is not reflected in your statistics, and so I don't think they can be used to answer my earlier comment. Except this was true during WW2, also. You have to do an apples-to-apples comparison of what the top 1% of income earners paid then vs now. The shift in income to capital gains tax doesn't matter since the capital gains tax is the same, and the shift would have simply happened quicker with income taxed the way it was. Also, collateralized loans don't change anything besides simply delaying when the tax is paid. One needs to realize some gain somewhere to be able to pay back the loan eventually. > The data in your source indeed does not seem to consider capital gains tax, as they seem to reflect the top tax bracket on average for different states and locales, whereas if capital gains were considered in relation to the state in which they are realized, it would certainly be much lower. Yes, but capital gains taxes have been the same, so in effect this source undercounts the intensity of this effect. It doesn't matter if there are more multi-millionaires today that do not qualify as the "top 1% of income earners", because they would pay the same capital gains tax then vs now.

by bhupy 6y ago

sudosysgen 6y ago

Sure, but in practice the actual tax rate for the upper echelon of the world right now is much, much lower than that for common people or for the upper echelon back in WW2.

bhupy 6y ago
That's factually incorrect. https://taxfoundation.org/taxes-on-the-rich-1950s-not-high/ https://taxfoundation.org/taxes-on-the-rich-1950s-not-high/
- sudosysgen 6y ago
  That is only factually incorrect if you look at the 1% in terms of households and in terms of income. In reality, a multi-millionaire might not qualify as the top 1% in household income due to their reliance on capital growth instead of straight income. One might see a million dollar increase in net worth, while paying no taxes on it, and then using that million dollar as collateral to help finance more and more growth. The only tax you might end up paying might be capital gains tax of 20%, or even 15%, eventually, while if it was household income you would pay 45% in taxes. The shift of income from dividends to capital gains for the wealthiest is not reflected in your statistics, and so I don't think they can be used to answer my earlier comment. The data in your source indeed does not seem to consider capital gains tax, as they seem to reflect the top tax bracket on average for different states and locales, whereas if capital gains were considered in relation to the state in which they are realized, it would certainly be much lower.
  - bhupy 6y ago
    > In reality, a multi-millionaire might not qualify as the top 1% in household income due to their reliance on capital growth instead of straight income. One might see a million dollar increase in net worth, while paying no taxes on it, and then using that million dollar as collateral to help finance more and more growth. The only tax you might end up paying might be capital gains tax of 20%, or even 15%, eventually, while if it was household income you would pay 45% in taxes. The shift of income from dividends to capital gains for the wealthiest is not reflected in your statistics, and so I don't think they can be used to answer my earlier comment. Except this was true during WW2, also. You have to do an apples-to-apples comparison of what the top 1% of income earners paid then vs now. The shift in income to capital gains tax doesn't matter since the capital gains tax is the same, and the shift would have simply happened quicker with income taxed the way it was. Also, collateralized loans don't change anything besides simply delaying when the tax is paid. One needs to realize some gain somewhere to be able to pay back the loan eventually. > The data in your source indeed does not seem to consider capital gains tax, as they seem to reflect the top tax bracket on average for different states and locales, whereas if capital gains were considered in relation to the state in which they are realized, it would certainly be much lower. Yes, but capital gains taxes have been the same, so in effect this source undercounts the intensity of this effect. It doesn't matter if there are more multi-millionaires today that do not qualify as the "top 1% of income earners", because they would pay the same capital gains tax then vs now.