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The top 50% of earners already pay 97% of all the income taxes. The US has one of the most progressive tax systems in the world. How much more progressive of

The top 50% of earners already pay 97% of all the income taxes. The US has one of the most progressive tax systems in the world. How much more progressive of a system do you want? Unrealized capital gains are imaginary. It is just like reporting your sales pipeline as revenue.

alecst 5y ago
The US is progressive when it comes to income tax, but if you consider all contributions to tax revenue the US is basically a flat tax system. At least that's what the book Triumph of Injustice led me to believe. Like Warren Buffett literally said: “The wealthy are definitely undertaxed relative to the general population." And if someone has a billion dollars or more in unrealized wealth, forcing them to realize some of that wealth in order to pay taxes on it does not bother me much.
dragonwriter 5y ago
> The top 50% of earners already pay 97% of all the income taxes. Personal income taxes are about 58% of taxes on personal income. The other 42% are the much more regressively-distributed payroll taxes, where the middle and upper classes pay less-to-none while the working class pays heavily. > The US has one of the most progressive tax systems in the world. [citation needed], but even if so then it more than makes up for it with the distribution in spending; considering taxes and spending together, the US has consistently been near the bottom at policy progressivity (measured by post- vs. pre- transfer change in Gini coefficient.) > How much more progressive of a system do you want? At a minimum, not giving preferential tax treatment to a form of income received predominantly by the super-rich (long-term capital gains); while there is an argument that income earned over multiple years but realized all at once should get taxed in a way that reflects that in a progressive system, a step reduction for long-term capital gains is not a sensible way to do that, as it both reduces tax on income for which that doesn't make sense and misses much where it does. Allowing options time-shift income for tax purposes (free advance recognition and limited deferral) does that better, handles thing like artistic projects that are developed over years and then realize income over a shorter period later as well as long term capital gains, but doesn't give tax cut for long terms gains that wouldn't change tax brackets even if spread out over the full term the asset was owned. It is much more fair as well as more progressive. > Unrealized capital gains are imaginary If that's really true, the LTCG are just windfall income that should be fully taxed in the year received. It’s not, though.
- greenail 5y ago
  Maybe we should get rid of the payroll taxes? The operating assumption underlying all of your arguments is that bigger government is better. I do not agree. It seems to me that government has passed the tipping point where it's primary motivation is to sustain it's own growth. It may be better for society to rebuilt the reliance on local community and family vs continuing to make bad investments in growing our mega bureaucracy.
  - dragonwriter 5y ago
    > Maybe we should get rid of the payroll taxes? I have, indeed, made that argument before. > The operating assumption underlying all of your arguments is that bigger government is better. No, the operating basis is that – completely independent of either the desired size of government or the desired target tax revenue (you’ll note I’ve not talked about the desirable absolute rates of any taxes, only the relative treatment of different kinds of income and the mechanisms for handling income that depends on something happening over more years than those over which it is actually realized) – it is undesirable to systematically provide favorable tax treatment to kinds of income disproportionately concentrated in the super-rich rather than taxing all income as income.
    - greenail 5y ago
      Do you think lower rates for long term capital gains incentivizes investment? With the current proposal a windfall of inheritance would not be taxed but a unicorn founder would. if the goal is to grow the economy so everyone can see the gains I would think the capital gains incentive makes up for the lack of revenue with economic growth.
      - dragonwriter 5y ago
        > Do you think lower rates for long term capital gains incentivizes investment? I think the degree to which you want to incentivize investment is highly variable over time and a central focus of monetary policy, not something you want to blindly bake into income tax policy, especially in a way which actively exacerbates inequality, when relative deprivation manifestly is a much greater source of disutility in the developed world than absolute deprivation. > With the current proposal a windfall of inheritance would not be taxed but a unicorn founder would. We have an estate tax for windfalls of inheritance; but, yes, I agree that it would be better to abolish estate and gift taxes in favor of taxing those as income to the recipients, too. (As with other income sources, allowing spreading via advance and/or deferred recognition).

alecst 5y ago

The US is progressive when it comes to income tax, but if you consider all contributions to tax revenue the US is basically a flat tax system. At least that's what the book Triumph of Injustice led me to believe. Like Warren Buffett literally said: “The wealthy are definitely undertaxed relative to the general population." And if someone has a billion dollars or more in unrealized wealth, forcing them to realize some of that wealth in order to pay taxes on it does not bother me much.

dragonwriter 5y ago

> The top 50% of earners already pay 97% of all the income taxes. Personal income taxes are about 58% of taxes on personal income. The other 42% are the much more regressively-distributed payroll taxes, where the middle and upper classes pay less-to-none while the working class pays heavily. > The US has one of the most progressive tax systems in the world. [citation needed], but even if so then it more than makes up for it with the distribution in spending; considering taxes and spending together, the US has consistently been near the bottom at policy progressivity (measured by post- vs. pre- transfer change in Gini coefficient.) > How much more progressive of a system do you want? At a minimum, not giving preferential tax treatment to a form of income received predominantly by the super-rich (long-term capital gains); while there is an argument that income earned over multiple years but realized all at once should get taxed in a way that reflects that in a progressive system, a step reduction for long-term capital gains is not a sensible way to do that, as it both reduces tax on income for which that doesn't make sense and misses much where it does. Allowing options time-shift income for tax purposes (free advance recognition and limited deferral) does that better, handles thing like artistic projects that are developed over years and then realize income over a shorter period later as well as long term capital gains, but doesn't give tax cut for long terms gains that wouldn't change tax brackets even if spread out over the full term the asset was owned. It is much more fair as well as more progressive. > Unrealized capital gains are imaginary If that's really true, the LTCG are just windfall income that should be fully taxed in the year received. It’s not, though.

greenail 5y ago
Maybe we should get rid of the payroll taxes? The operating assumption underlying all of your arguments is that bigger government is better. I do not agree. It seems to me that government has passed the tipping point where it's primary motivation is to sustain it's own growth. It may be better for society to rebuilt the reliance on local community and family vs continuing to make bad investments in growing our mega bureaucracy.
- dragonwriter 5y ago
  > Maybe we should get rid of the payroll taxes? I have, indeed, made that argument before. > The operating assumption underlying all of your arguments is that bigger government is better. No, the operating basis is that – completely independent of either the desired size of government or the desired target tax revenue (you’ll note I’ve not talked about the desirable absolute rates of any taxes, only the relative treatment of different kinds of income and the mechanisms for handling income that depends on something happening over more years than those over which it is actually realized) – it is undesirable to systematically provide favorable tax treatment to kinds of income disproportionately concentrated in the super-rich rather than taxing all income as income.
  - greenail 5y ago
    Do you think lower rates for long term capital gains incentivizes investment? With the current proposal a windfall of inheritance would not be taxed but a unicorn founder would. if the goal is to grow the economy so everyone can see the gains I would think the capital gains incentive makes up for the lack of revenue with economic growth.
    - dragonwriter 5y ago
      > Do you think lower rates for long term capital gains incentivizes investment? I think the degree to which you want to incentivize investment is highly variable over time and a central focus of monetary policy, not something you want to blindly bake into income tax policy, especially in a way which actively exacerbates inequality, when relative deprivation manifestly is a much greater source of disutility in the developed world than absolute deprivation. > With the current proposal a windfall of inheritance would not be taxed but a unicorn founder would. We have an estate tax for windfalls of inheritance; but, yes, I agree that it would be better to abolish estate and gift taxes in favor of taxing those as income to the recipients, too. (As with other income sources, allowing spreading via advance and/or deferred recognition).