3 ms·

What frustrates people is the percentage paid of income, not the absolute total. People don't like that a person earning $100k pays more as a percentage in tax

by sfblah 5y ago

What frustrates people is the percentage paid of income, not the absolute total. People don't like that a person earning $100k pays more as a percentage in tax than does someone earning $10M a year. I realize the document you shared shows a 25.4% rate paid of AGI for top 1% versus 14.6% for the top 50%. There are a bunch of problems with this though. For starters, people earning under $100k a year have social security tax applied to their entire incomes. High earners also are very likely to shield large amounts of their AGI from taxation in various ways. Poorer people also pay property tax, sales tax, etc. Anyway, no one is going to argue that a person making $10M who pays $4.5M in tax (or whatever the federal + state statutory rate is) is paying too little. The issue is super-rich people who basically pay nothing. Even the page you linked indicates to me that those in the 90-99 percentile are paying a higher percentage than those in the top 1%, when you count the factors I mentioned above. FWIW I'm in the top 1%, but I'm not Mark Zuckerberg. I know some of the tricks, because I use them.

refurb 5y ago
Beyond just anecdotes of the rich “paying no tax”, do you have a data source to show it’s widespread? All I see are individual examples that are often “off years”. The latest data I saw from the IRS showed a consistent progressive tax rate right up to the top 0.1% (who pay the highest effective tax rate). Even the Propublica article showed that Elon paid $500M in taxes when he sold $1.5B in shares.
- sfblah 5y ago
  I mean, at this level we're only talking about a few thousand people. So, studies are going to be hard to come by. Really, all you need is a thought experiment and to read about how it works for super-rich people. They typically never sell their stock. Instead, they borrow against it and use that for spending money. There was a recent article about Zuckerberg's estate planning, which was similar to what Sheldon Adelson apparently used. Some sort of complicated trust that projects returns on assets to avoid taxes or some such.
  - refurb 5y ago
    Again, just a number of anecdotes. I heard Bezos just borrows money to avoid taxes but then read he sold tens of billions of Amazon stock a couple years back paid taxes on it. So which is it? And of course we have data. These rich folks files taxes with the IRS. And the top 0.01% would be tens of thousands of tax payers, not a handful.
_nalply 5y ago
A question to you: Would it help if we gave up income taxation and switched to expense taxation of natural persons? I am trying to think long-term and visionary. The idea behind this: even the super rich consume. One might have a big yacht which costed a few hundred million dollars. If the state can enforce taxation of expenses of natural persons, the man with the yacht would have to pay a percentage of his expenses with the yacht. I know there are many loopholes, but let's think about them and try to close them. One of them is pushing expenses abroad. To close the loophole declare that moving money abroad to a country which doesn't do expense taxation counts as expense. And let's try to this in many countries of the world. I also know that super rich tend to consume less as a percentage to their wealth. But surely they consume a lot more and more expensive things than the general populace. After all, people are people and it doesn't really matter what complicated structure of incorporations they have created to evade taxes. It doesn't matter, too, whether something is a salary or capital gain. Finally they will use part of the money to consume. Then strike hard and extract a percentage as tax. I know there's value-added tax, this is similar, but the target is different. And I know this idea is somewhat vague. I just wanted to outline the principle here: expense taxation.

by sfblah 5y ago

refurb 5y ago

Beyond just anecdotes of the rich “paying no tax”, do you have a data source to show it’s widespread? All I see are individual examples that are often “off years”. The latest data I saw from the IRS showed a consistent progressive tax rate right up to the top 0.1% (who pay the highest effective tax rate). Even the Propublica article showed that Elon paid $500M in taxes when he sold $1.5B in shares.

sfblah 5y ago
I mean, at this level we're only talking about a few thousand people. So, studies are going to be hard to come by. Really, all you need is a thought experiment and to read about how it works for super-rich people. They typically never sell their stock. Instead, they borrow against it and use that for spending money. There was a recent article about Zuckerberg's estate planning, which was similar to what Sheldon Adelson apparently used. Some sort of complicated trust that projects returns on assets to avoid taxes or some such.
- refurb 5y ago
  Again, just a number of anecdotes. I heard Bezos just borrows money to avoid taxes but then read he sold tens of billions of Amazon stock a couple years back paid taxes on it. So which is it? And of course we have data. These rich folks files taxes with the IRS. And the top 0.01% would be tens of thousands of tax payers, not a handful.

_nalply 5y ago

A question to you: Would it help if we gave up income taxation and switched to expense taxation of natural persons? I am trying to think long-term and visionary. The idea behind this: even the super rich consume. One might have a big yacht which costed a few hundred million dollars. If the state can enforce taxation of expenses of natural persons, the man with the yacht would have to pay a percentage of his expenses with the yacht. I know there are many loopholes, but let's think about them and try to close them. One of them is pushing expenses abroad. To close the loophole declare that moving money abroad to a country which doesn't do expense taxation counts as expense. And let's try to this in many countries of the world. I also know that super rich tend to consume less as a percentage to their wealth. But surely they consume a lot more and more expensive things than the general populace. After all, people are people and it doesn't really matter what complicated structure of incorporations they have created to evade taxes. It doesn't matter, too, whether something is a salary or capital gain. Finally they will use part of the money to consume. Then strike hard and extract a percentage as tax. I know there's value-added tax, this is similar, but the target is different. And I know this idea is somewhat vague. I just wanted to outline the principle here: expense taxation.