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> Unfortunately articles like this which conflate things actually make it harder for us to fix the real loophole. While I would consider that a loophole, I'm n

> Unfortunately articles like this which conflate things actually make it harder for us to fix the real loophole. While I would consider that a loophole, I'm not sure it's the main problem. I feel that for all the complaints and logic of the substack piece, it misses the point of the propublica one, the kind of underlying feeling that's driving it: that it's unfair that the wealthiest people in the world pay so little tax compared to people in the 10% to .1% bracket, and even compared to people in lower brackets. It's unfair that they can gain extraordinary amounts of wealth, to such a degree that it's impractical for them to even use, and yet not be taxed on any of it, unrealized or no. Because from my perspective, my monetary gains (eg. salary) don't really feel realized until I use them to buy something. Cash in the bank doesn't do much but make me feel financially safer - so why is taxing income considered reasonable, but wealth is not? And why, exactly, is it apparently reasonable to have sales taxes that don't exceed 12% (disclaimer - in the states, as far as I know); capital gains at 15%; but my income at 25%, 35%, 45%? Why is considering taxing wealth like company shares "far left end" but taxing other wealth, like my house, considered acceptable? Heck, we even have assessments and appraisals for real estate for the purpose of determining value without selling, for more accurate taxes and associated financial instruments - but taxing something that has a constant active market is the thing that's weird? The way that the substack article fails to mention Warren's millionaire wealth tax proposal is a further disappointment, and leaves me feeling like it is also a fairly weak piece of journalism, not unlike the one it criticizes. It also makes little mention of the ever-higher bracket of the estate tax, and has bits like > Sometimes stock prices go down, and that's generally not a write-off. So taxing the upside at an arbitrary point is unfair and kind of just silly. Just because it isn't a write off now doesn't mean it couldn't be if some sort of wealth tax was implemented; this a poor-faith considering of the policy. In short, while I wouldn't consider the original article to be of much merit, and certainly below propublica's usual standard, this rebuttal is hardly any better.

teakettle42 5y ago
> Cash in the bank doesn't do much but make me feel financially safer - so why is taxing income considered reasonable, but wealth is not? Your cash in the bank is guaranteed to not be erased tomorrow, up to the FDIC coverage limit. Stock has no inherent value until it's sold at whatever price the market is willing to pay. Claiming that I've acquired "wealth" simply because of an increase in the current market price is an extreme stretch. I don't have that money – I simply have the potential to sell my stock for some estimated, potential price.
- md_ 5y ago
  So why tax physical property? :)
  - teakettle42 5y ago
    Why indeed? I think increasing property taxes based on unrealized gains estimated by tax assessors is fundamentally unjust.
    - md_ 5y ago
      Maybe. This guy Arnold seems to take the position that the ProPublica piece is somehow invalid because…you can’t tax unrealized gains? 1. I don’t understand how the latter follows from the former. 2. Of course you can. Property taxes are just that. 3. Wealth taxes are also just that, though elsewhere in this thread I see Arnold has argued that they aren’t really that. Whether you should tax unrealized gains is a policy debate, but it’s not an outlandish or ignorant position to say you should—though ProPublica doesn’t say that, so I’m still not sure the relevance.
    - whakim 5y ago
      While I disagree that property taxes are unjust, most date back 200+ years to a time when almost all wealth was in the form of land. If a state wanted to tax wealth, they taxed land. (Though this sounds progressive in theory, such taxes were almost universally levied at very low rates. Combined with very low inflation, this meant was it was very easy for the wealthy to accumulate capital by living off the rents of their land.)
  - makomk 5y ago
    The way the US taxes physical property based on its current market value is pretty unusual these days, and I'm not sure it's a good idea. It seems to have all kinds of weird distortive effects on the market like encouraging train companies to rip up serviceable track to reduce their tax, incentivizing manufacturers to keep the bare minimum supply of components and materials in stock, and either causing increases in paper wealth due to a house price boom to mean people can no longer afford to keep a roof over their heads or leading to Proposition 13-like measures to prevent this that have their own negative effects. Everyone ultimately seems to pay the price for all these consequences of the US tax structure.
InTheArena 5y ago
Or simply tax things based on consumption. But then the tax breaks that each party worked for its citizens (both rich and poor) to not pay income tax goes away as a advantage for the parties.
yanderekko 5y ago
>It's unfair that they can gain extraordinary amounts of wealth, to such a degree that it's impractical for them to even use, and yet not be taxed on any of it, unrealized or no. If someone earns a lot of money and just sits on it, they're essentially just reducing the money supply and redistributing purchasing power to other owners of dollar-denominated assets. What is fundamentally "unfair" about this? Why obsess over income inequality if there's admittedly not much consumption inequality? Why is it more "fair" for the government to marshal this purchasing power via taxation than for other holders of cash? Is the implicit assumption here that there's a monotonic relationship between government revenue and fairness? The article reflects the worst sort of moralized economic illiteracy.
paulpauper 5y ago
yeah not a good rebuttal >Successful companies induce enormous tax receipts for governments at all levels (corporate taxes, income taxes, property taxes, payroll taxes, headcount taxes, etc). If Bezos is paying less percentage-wise today because he's holding his Amazon stock, where said holding makes Amazon more valuable, that's a good net deal. The alternative world where he’s routinely trimming his shares and thus reducing his economic stake in Amazon's future isn’t really ideal for anyone. I think my being allowed to pay 0-3% taxes and holdng on to more of the cash I earn would make the world better too and is a good deal. Try using the same logic as this author does with the IRS and see how far it gets you.
- ameister14 5y ago
  >I think my being allowed to pay 0-3% taxes and holdng on to more of the cash I earn would make the world better too and is a good deal. Except that's not what the author said. You don't earn the cash, see - it's not realized gains. If you make a cryptocurrency and then get a friend to buy one coin for $10 and now say your cryptocurrency has a market cap of $50,000,000,000, almost all of which you own, you shouldn't get taxed on 50 billion dollar income this year - you should be taxed on the $10 worth you actually sold because that's the cash you earned. But that $10 plus you making even $1,000,000 in income means you pay taxes at a 0.00000009% rate. So...yeah. You are allowed to do that, and it will get you far with the IRS.
makomk 5y ago
As others have pointed out, your cash in the bank is actual money in a sense that (say) Musk or Bezos' wealth isn't - you can actually buy things with it, whereas if they want to sell their shares to buy something else they need to find someone with enough actual money who's willing to trade it for shares which may or may not be worth something down the line. The really big problem is that regardless of where the money comes from on paper, in an important sense all the big government spending has to be paid for out of that actual money in the form of people's income. Suppose the government carries out a big series of infrastructure projects, or even say AOC's plan for mass upgrading of home insulation. That will use a huge amount of scarce resources like raw materials, workers' time, equipment etc which then cannot be used for other things. Which means that whatever would've otherwise been made with those resources no longer exists to be consumed, and that everyone overall is worse off in terms of stuff they can buy with their income by the amount required to offset this cost. This real tax on the actual real value of everyone's income cannot come out of Bezos and Musk and the other multi-billionaires' wealth, because the amount of stuff they consume is tiny compared to their paper wealth. It has to come from ordinary people. (A similar argument applies to the cost of shuttering all those businesses and paying their workers to sit around doing nothing during the pandemic.) Now of course, a lot of big companies do themselves use a bunch of resources, but take those away and you lose whatever the company is supplying. No Amazon warehouses? Suddenly a lot less stuff is available to be ordered online. No Tesla factories? Say bye-bye to clean electric cars and hello to more pollution and CO2. Etc, etc.
- akiselev 5y ago
  > As others have pointed out, your cash in the bank is actual money in a sense that (say) Musk or Bezos' wealth isn't - you can actually buy things with it Your cash in the bank is actual money in the sense that... > No Amazon warehouses? Suddenly a lot less stuff is available to be ordered online. No Tesla factories? Say bye-bye to clean electric cars and hello to more pollution and CO2. Etc, etc. ...you can buy stuff from Musk and Bezos.
  - makomk 5y ago
    No. The problem here isn't that Musk and Bezos are the only people you can buy stuff from, it's that in order to pay the real resource price of all that government spending using their factories and warehouses those factories and warehouses must not exist at all. They can't simply become Walmart warehouses or Toyota or GM factories, they have to go away altogether - along with whatever they're supplying. Which means a lot less clean electric cars and a lot less capacity to buy stuff online. (The secondary problem is that the big multi-billionaire winners often get that way by figuring out how to satisfy the same consumer demand with less real resources. Which means that if you get rid of those companies, guess what? Everyone is worse off because the overall size of the pie has shrunk, and there's no clever redistribution of slice sizes that'll fix it. For example, without Tesla we'd have to burn more non-renewable oil and use more of our CO2 budget to fill the same transportation demand.)
throw0101a 5y ago
> And why, exactly, is it apparently reasonable to have sales taxes that don't exceed 12% (disclaimer - in the states, as far as I know); capital gains at 15%; but my income at 25%, 35%, 45%? Sales taxes tend to be regressive. Someone making $50K a year pays the same sales tax as someone making $500K. You're throwing out percentages for income tax, but those are progressive: the 40,000th dollar earned is taxed differently than the 140,000th dollar. A wealth tax, especially in the US, would go a long was. Something like 2% on net wealth above (e.g.) $500M or $1B would slow inequality; below $10M it'd be 0%, from $10M to $100M it'd be 0.5%, then 1%, then the top rate. See Piketty's book: * https://en.wikipedia.org/wiki/Capital_in_the_Twenty-First_Century https://en.wikipedia.org/wiki/Capital_in_the_Twenty-First_Ce...

teakettle42 5y ago

> Cash in the bank doesn't do much but make me feel financially safer - so why is taxing income considered reasonable, but wealth is not? Your cash in the bank is guaranteed to not be erased tomorrow, up to the FDIC coverage limit. Stock has no inherent value until it's sold at whatever price the market is willing to pay. Claiming that I've acquired "wealth" simply because of an increase in the current market price is an extreme stretch. I don't have that money – I simply have the potential to sell my stock for some estimated, potential price.

md_ 5y ago
So why tax physical property? :)
- teakettle42 5y ago
  Why indeed? I think increasing property taxes based on unrealized gains estimated by tax assessors is fundamentally unjust.
  - md_ 5y ago
    Maybe. This guy Arnold seems to take the position that the ProPublica piece is somehow invalid because…you can’t tax unrealized gains? 1. I don’t understand how the latter follows from the former. 2. Of course you can. Property taxes are just that. 3. Wealth taxes are also just that, though elsewhere in this thread I see Arnold has argued that they aren’t really that. Whether you should tax unrealized gains is a policy debate, but it’s not an outlandish or ignorant position to say you should—though ProPublica doesn’t say that, so I’m still not sure the relevance.
  - whakim 5y ago
    While I disagree that property taxes are unjust, most date back 200+ years to a time when almost all wealth was in the form of land. If a state wanted to tax wealth, they taxed land. (Though this sounds progressive in theory, such taxes were almost universally levied at very low rates. Combined with very low inflation, this meant was it was very easy for the wealthy to accumulate capital by living off the rents of their land.)
- makomk 5y ago
  The way the US taxes physical property based on its current market value is pretty unusual these days, and I'm not sure it's a good idea. It seems to have all kinds of weird distortive effects on the market like encouraging train companies to rip up serviceable track to reduce their tax, incentivizing manufacturers to keep the bare minimum supply of components and materials in stock, and either causing increases in paper wealth due to a house price boom to mean people can no longer afford to keep a roof over their heads or leading to Proposition 13-like measures to prevent this that have their own negative effects. Everyone ultimately seems to pay the price for all these consequences of the US tax structure.

InTheArena 5y ago

Or simply tax things based on consumption. But then the tax breaks that each party worked for its citizens (both rich and poor) to not pay income tax goes away as a advantage for the parties.

yanderekko 5y ago

>It's unfair that they can gain extraordinary amounts of wealth, to such a degree that it's impractical for them to even use, and yet not be taxed on any of it, unrealized or no. If someone earns a lot of money and just sits on it, they're essentially just reducing the money supply and redistributing purchasing power to other owners of dollar-denominated assets. What is fundamentally "unfair" about this? Why obsess over income inequality if there's admittedly not much consumption inequality? Why is it more "fair" for the government to marshal this purchasing power via taxation than for other holders of cash? Is the implicit assumption here that there's a monotonic relationship between government revenue and fairness? The article reflects the worst sort of moralized economic illiteracy.

paulpauper 5y ago

yeah not a good rebuttal >Successful companies induce enormous tax receipts for governments at all levels (corporate taxes, income taxes, property taxes, payroll taxes, headcount taxes, etc). If Bezos is paying less percentage-wise today because he's holding his Amazon stock, where said holding makes Amazon more valuable, that's a good net deal. The alternative world where he’s routinely trimming his shares and thus reducing his economic stake in Amazon's future isn’t really ideal for anyone. I think my being allowed to pay 0-3% taxes and holdng on to more of the cash I earn would make the world better too and is a good deal. Try using the same logic as this author does with the IRS and see how far it gets you.

ameister14 5y ago
>I think my being allowed to pay 0-3% taxes and holdng on to more of the cash I earn would make the world better too and is a good deal. Except that's not what the author said. You don't earn the cash, see - it's not realized gains. If you make a cryptocurrency and then get a friend to buy one coin for $10 and now say your cryptocurrency has a market cap of $50,000,000,000, almost all of which you own, you shouldn't get taxed on 50 billion dollar income this year - you should be taxed on the $10 worth you actually sold because that's the cash you earned. But that $10 plus you making even $1,000,000 in income means you pay taxes at a 0.00000009% rate. So...yeah. You are allowed to do that, and it will get you far with the IRS.

makomk 5y ago

As others have pointed out, your cash in the bank is actual money in a sense that (say) Musk or Bezos' wealth isn't - you can actually buy things with it, whereas if they want to sell their shares to buy something else they need to find someone with enough actual money who's willing to trade it for shares which may or may not be worth something down the line. The really big problem is that regardless of where the money comes from on paper, in an important sense all the big government spending has to be paid for out of that actual money in the form of people's income. Suppose the government carries out a big series of infrastructure projects, or even say AOC's plan for mass upgrading of home insulation. That will use a huge amount of scarce resources like raw materials, workers' time, equipment etc which then cannot be used for other things. Which means that whatever would've otherwise been made with those resources no longer exists to be consumed, and that everyone overall is worse off in terms of stuff they can buy with their income by the amount required to offset this cost. This real tax on the actual real value of everyone's income cannot come out of Bezos and Musk and the other multi-billionaires' wealth, because the amount of stuff they consume is tiny compared to their paper wealth. It has to come from ordinary people. (A similar argument applies to the cost of shuttering all those businesses and paying their workers to sit around doing nothing during the pandemic.) Now of course, a lot of big companies do themselves use a bunch of resources, but take those away and you lose whatever the company is supplying. No Amazon warehouses? Suddenly a lot less stuff is available to be ordered online. No Tesla factories? Say bye-bye to clean electric cars and hello to more pollution and CO2. Etc, etc.

akiselev 5y ago
> As others have pointed out, your cash in the bank is actual money in a sense that (say) Musk or Bezos' wealth isn't - you can actually buy things with it Your cash in the bank is actual money in the sense that... > No Amazon warehouses? Suddenly a lot less stuff is available to be ordered online. No Tesla factories? Say bye-bye to clean electric cars and hello to more pollution and CO2. Etc, etc. ...you can buy stuff from Musk and Bezos.
- makomk 5y ago
  No. The problem here isn't that Musk and Bezos are the only people you can buy stuff from, it's that in order to pay the real resource price of all that government spending using their factories and warehouses those factories and warehouses must not exist at all. They can't simply become Walmart warehouses or Toyota or GM factories, they have to go away altogether - along with whatever they're supplying. Which means a lot less clean electric cars and a lot less capacity to buy stuff online. (The secondary problem is that the big multi-billionaire winners often get that way by figuring out how to satisfy the same consumer demand with less real resources. Which means that if you get rid of those companies, guess what? Everyone is worse off because the overall size of the pie has shrunk, and there's no clever redistribution of slice sizes that'll fix it. For example, without Tesla we'd have to burn more non-renewable oil and use more of our CO2 budget to fill the same transportation demand.)

throw0101a 5y ago

> And why, exactly, is it apparently reasonable to have sales taxes that don't exceed 12% (disclaimer - in the states, as far as I know); capital gains at 15%; but my income at 25%, 35%, 45%? Sales taxes tend to be regressive. Someone making $50K a year pays the same sales tax as someone making $500K. You're throwing out percentages for income tax, but those are progressive: the 40,000th dollar earned is taxed differently than the 140,000th dollar. A wealth tax, especially in the US, would go a long was. Something like 2% on net wealth above (e.g.) $500M or $1B would slow inequality; below $10M it'd be 0%, from $10M to $100M it'd be 0.5%, then 1%, then the top rate. See Piketty's book: * https://en.wikipedia.org/wiki/Capital_in_the_Twenty-First_Century https://en.wikipedia.org/wiki/Capital_in_the_Twenty-First_Ce...