28 ms·

One thing I've noticed consistently, is when politicians talk about "taxing the wealthy", they almost always follow that with "earning more than $xxxk a year".

One thing I've noticed consistently, is when politicians talk about "taxing the wealthy", they almost always follow that with "earning more than $xxxk a year". This is conflating wealth with income. Being within this tax bracket myself, I do not deny that I am biased, but I do hope this bullshit gets called out hard whenever someone brings up yet another underhanded measure to milk us (typical SFBay SWE) above and beyond the ~40% levels we're already facing...

nemo44x 4y ago
Is this a new form of NIMBY taxation? “Tax the rich but not rich people like me!”?
- bmitc 4y ago
  I think it's more that the upper middle class gets hammered while those above do not, so it feels like punishment and adversarial. The way things are right now, everyone has to play the "get as much capital as possible" game because it's the only way to support your family and progeny, but as soon as you hit a relatively low threshold, you start receiving a huge amount of tax pressure. If we redistribute wealth, we redistribute infrastructure, homes, education, medical care, etc. this pressure could be relieved by not forcing personal capital to be deployed and responsible for such support structures.
- smilekzs 4y ago
  You too are conflating wealth ("rich people") and income ("me").
  - nemo44x 4y ago
    Why should wealth be taxed? It already has been and it is immaterial until it is realized. At that point the profits are taxed. Lots of income may not make you wealthy but it lets you live a rich lifestyle. Move somewhere cheaper if you aren’t meeting your savings goals.
    - danaris 4y ago
      How do you tax someone buying favorable press coverage? How do you tax someone buying a Congressperson? How do you tax someone using their wealth as a threat, as a shield, so that they don't have to participate in the same kind of society as the rest of us, and can enjoy "privilege" (lit. "private law")? Wealth at rest is not immaterial, and taxing profits or consumption will never work to reduce wealth inequality or the disproportionate power the wealthy have over the rest of us.
  - mrguyorama 4y ago
    At a certain point, a high enough income IS wealth. How many american's become millionaires? How many SF software developers can become a millionaire in just a few years? If you make $400k a year, you are rich/wealthy. If you don't feel it, re-examine your lifestyle and whether you are actually spending your money well, maybe you're buying too much avocado toast /s
    - smilekzs 4y ago
      For folks without significant generational wealth or hitting the startup jackpot, feeling rich <=> having lots of disposable income. Before we even talk about personal finances, here are some hurdles I could see: 1. TC numbers (hypothetically ~$400k as you quoted, which generally agrees with levels.fyi) are not real income. We know what happened to (tech) equity this year --- this (unfavorable) gap between grant price/share and vesting price/share has deflated a lot of the TC, much more so if the grant date happens to be right before the onslaught. (Personally I landed almost square in this territory due to a somewhat forced job switch but that's another can of worms I'm not opening today). 2. Whatever is left from that TC number, tax man takes ~40% of it period. Deductions are for most cases a rounding error. 3. TL;DR housing costs scales with salary over here too. Long version: The kind of housing that (transplanted) SWEs and their families would reasonably consider in SFBay has generally been priced (by "the market") right up to the limit of their income-derived affordability, most of which is calculated (by the underwriters) straight from SWE base salary, which we know is constrained by BigTech paybands (which propagates to startups too). 4. Okay, now an inevitable personal finances bullet point: Educated responsible adults as we are, a significant savings (incl. investments) rate surely sounds prudent eh? Say (temporary) goodbye to another xx% of whatever's left at this point. 5. Adding insult to injury, avocado toasts are now about 1.5x to 2x their price compared to early 2020. I feel compelled to add that this agrees with the larger trend of any kind of prepared food. 6. Elephant in the room: Kids. ----- I can go on and on, but hopefully I am getting the point across. The "salary man" of today has not only his theoretically big TC "pie" shrink over time, but an increasingly larger slice of it becomes marked as non-disposable. Assuming reasonable (not necessarily optimal) personal finances management and maintaining a reasonably high QotL (nothing excessive), I don't see me or my similarly positioned peers feeling rich / upper-middle-class-y any time soon.
- wiseowise 4y ago
  Middle class is not rich by definition.
- int_19h 4y ago
  I think it's fair to complain when the "tax the rich" schemes that are actually implemented all still end up placing most of the new tax burden on people who get paid for working (even if it's a lot more than the average worker), and not on their bosses who get most of their money from economic rents. Basically, I'm fine with paying more taxes, but only if those wealthier than me pay more still.
bawolff 4y ago
As a practical matter, it is very difficult to tax wealth (and even harder to do it fairly.) I don't think the issue is lack of will but lack of plan that actually works in the face of assets with unclear value and/or difficult to liquidate. And this doesn't just affect the ultra rich but people like SWE too. How much is the stock you have in the non-public company you work at really worth? SWE are probably one of the groups most likely to be "paper millionaires" and hence screwed by such a system.
- dontreact 4y ago
  It’s hard problem that can only be solved through attempts and iteration. The fact that a wealth tax is difficult is not a good enough reason to not try, because the problem of wealth inequality is so severe now.
  - dumpsterlid 4y ago
    Bingo
  - aqme28 4y ago
    There are also some things that do work decently well that we don't do anymore for political reasons, such as estate taxes.
    - r00fus 4y ago
      political reasons being: wealthy have gamed the politics and made those options "political".
    - bawolff 4y ago
      Yeah, but that isn't a wealth tax, its a tax on the heir's income. There is lots of ways to improve taxes on income and capital gains, but that is really different from a general wealth tax.
  - mindslight 4y ago
    The problem with this hollowing out of the regulations government used to have, is that people react by jumping for extreme, impractical things like "wealth tax". Nobody is going to go for the idea that the government comes around and explicitly collects a significant percentage of everything you own every year. (And they already do much of what they can get away with through inflation and real estate taxes). Rather, to continue the spirit of the top level comment, what is also now missing is the estate tax, which is/was around 40% (it's graduated too, but it tops out quickly). IIUC, the federal threshold used to be around $1M a few decades ago, and is now $10M - this was the anti "death tax" political issue you might vaguely recall. Furthermore, due to wider use of trusts, it's been basically eliminated unless your family is extremely unlucky. Fundamentally, I'd rather just tamp down the amount of money given away to the rich - stop the government giving trillions of dollars to the financial industry to prop up the fictitious asset bubble pyramid scheme, and either let natural technological deflation happen or at least spend the money deliberately ala MMT. But either way, something is required - the system we have right now has the government continually giving away gobs of money to asset holders, while doing very little to collect it back. This is exactly why these personal wealth bubbles continue to grow.
foldr 4y ago
Only the super-rich in America feel wealthy. Everyone else is trapped in an unwinnable game of keeping up with the Jonses. I can almost guarantee that if you actually listed the concrete reasons that you don’t think of yourself as wealthy, they would seem ridiculous to the majority of middle class Americans. (Although obviously I don’t know your personal circumstances. I am thinking of the general case of a seniorish software engineer working for a big tech company in SF.)
- est31 4y ago
  > Only the super-rich in America feel wealthy. Everyone else is trapped in an unwinnable game of keeping up with the Jonses. Tbh even the super-rich feel poor. If you own 10 million, you might have a social network in which there is a guy who owns 100. If you own 100 million, you might know a billionaire. And the billionaire might have met someone like Bezos or Musk. Usually the richer you get, the higher is the wealth differential you are exposed to. You might be proud of your 3 supercar collection, but a guy you know has a hangar full with 200 supercars.
seunosewa 4y ago
They want as many voters as possible to feel that they won't be among those who will be taxed. You're in the minority.
- SyzygistSix 4y ago
  The people who vote are indeed more likely the ones to be taxed. It's not the business and homeowners who are the 80%+ skipping every single primary election since they were established. But then considering the ideas I'm seeing on this page, that isn't necessarily a bad idea.
dismantlethesun 4y ago
If you are wealthy and refuse to earn an income, then your savings will eventually deplete and you’ll become bankrupt. Additionally they wealth already taxed in a previous era, and is currently taxed in this era any time they spend it via sales tax. If of course you are spending all your money on personal groceries as a billionaire, then I’m 100% fine with not taxing you.
- bmitc 4y ago
  I don't think any individual should be a billionaire. There's no conceivable reason for a single person to need or have the right to be a billionaire.
  - underdeserver 4y ago
    [flagged]
    - deleted 4y ago
      [deleted]
  - simonswords82 4y ago
    I'm not saying I agree or disagree with this stance but at a practical level it's interesting to think about. Let's say life is a computer game, and once you max out at $1bn in earned wealth (presumably this includes liquid and illiquid assets such as properties, cars etc), you cannot accumulate more wealth. How does a government enforce this stance? You cannot stop say Bill Gates shorting Tesla and earning millions from the trade, can you? Can you stop a landlord renting out their properties to block further income from them? What about interest generated from bonds or savings accounts? Do you simply tax the shit out of people if they have over £1bn in wealth? The big challenge I see for all of this is that rich people have the best (and most expensive) accountants/lawyers money can buy. If you try to tax the shit out of them, their accountants and lawyers will find a way around it. Also, if one government is too heavy handed, they'll just move assets to another more lenient government.
dr_dshiv 4y ago
Come to the Netherlands! 52% kicks in early and plus there is the 2% worldwide wealth tax on all non-real estate investments. Is it worth it, just to live in a shockingly civilized society under a highly functional government?
- 9991 4y ago
  > Come to the Netherlands! LOL, no thanks!
- rsj_hn 4y ago
  You mean the shockingly civilized society that is a drug trafficking capital of the world with a recent spate of mafia murders? The one with 1.55 births per woman? I always laugh at dying European societies that consider themselves "civilized" vis-a-vis the rest of the world and can't help but lecture everyone else about how to structure their society. It reminds of Borrell's "Europe is a garden, the rest of the world is a jungle" remarks, which went live before his recent bribery scandal.
  - dr_dshiv 4y ago
    Where are you based?
nootropicat 4y ago
That's because the actual point of progressive taxation is to prevent class mobility.
LatteLazy 4y ago
Well said.
willcipriano 4y ago
The politicians make money via insider trading, so of course they propose a income tax as opposed to a capital gains tax to "tax the rich". Many of them have been in power for 40+ years, if they were going to tax themselves it would've already been done.
deleted 4y ago
[deleted]
thrwawy74 4y ago
I could see tax brackets working by how your income compares to the area you live in. "If your income is 30% above the average income for this area or the national average (whichever is lower), that >30% is taxed at this rate..." So then you can't have rich folks disappearing to less-taxed areas. It could make rich people communities where they all stick together. looking forward to the future where currency is time (the movie In Time), and we can tax rich people to death.
jermaustin1 4y ago
For the majority of the time there has been a Federal Income Tax, there have been top brackets in the 70% range. This was a burden begrudgingly borne by the wealthy for many generations. It funded the US leaving an agrarian lifestyle and becoming a superpower. Did a 70% top-tax bracket force any of the uber-high earners to stop earning money because they didn't want to give 70% to Uncle Sam? No, the super rich will always want more money/property/dividends/etc no matter how burdensome the tax bracket they fall in might be.
throw__away7391 4y ago
Exactly, this is going on every single day. They run stock reels of Bezos and mega yachts and private jets and then introduce their plan to raise taxes on people who have enough income to renting a 1 bedroom apartment without roommates and have a reasonable chance at saving up enough to buy a home someday.
mrguyorama 4y ago
FYI, if you make several hundred thousand dollars a year, because you are a SFBay SWE, you are SIGNIFICANTLY different from an average american, and you should realize that. You ARE the wealthy that would and possibly should get taxed. It's not poor people's fault California refuses to do anything about having enough housing. It's not poor people's fault that google and facebook require you to live in california for no reason. Making hundreds of thousands of dollars in salary per year is a very privileged position. Don't get mad at average americans trying to make the world a better and more fair place, get mad at google and facebook that make several million dollars off the code that you write and kick back a pittance of a salary, and coordinate with each other to keep your compensation low. Even at $400k a year, you are literally being underpaid.

nemo44x 4y ago

Is this a new form of NIMBY taxation? “Tax the rich but not rich people like me!”?

bmitc 4y ago
I think it's more that the upper middle class gets hammered while those above do not, so it feels like punishment and adversarial. The way things are right now, everyone has to play the "get as much capital as possible" game because it's the only way to support your family and progeny, but as soon as you hit a relatively low threshold, you start receiving a huge amount of tax pressure. If we redistribute wealth, we redistribute infrastructure, homes, education, medical care, etc. this pressure could be relieved by not forcing personal capital to be deployed and responsible for such support structures.
smilekzs 4y ago
You too are conflating wealth ("rich people") and income ("me").
- nemo44x 4y ago
  Why should wealth be taxed? It already has been and it is immaterial until it is realized. At that point the profits are taxed. Lots of income may not make you wealthy but it lets you live a rich lifestyle. Move somewhere cheaper if you aren’t meeting your savings goals.
  - danaris 4y ago
    How do you tax someone buying favorable press coverage? How do you tax someone buying a Congressperson? How do you tax someone using their wealth as a threat, as a shield, so that they don't have to participate in the same kind of society as the rest of us, and can enjoy "privilege" (lit. "private law")? Wealth at rest is not immaterial, and taxing profits or consumption will never work to reduce wealth inequality or the disproportionate power the wealthy have over the rest of us.
- mrguyorama 4y ago
  At a certain point, a high enough income IS wealth. How many american's become millionaires? How many SF software developers can become a millionaire in just a few years? If you make $400k a year, you are rich/wealthy. If you don't feel it, re-examine your lifestyle and whether you are actually spending your money well, maybe you're buying too much avocado toast /s
  - smilekzs 4y ago
    For folks without significant generational wealth or hitting the startup jackpot, feeling rich <=> having lots of disposable income. Before we even talk about personal finances, here are some hurdles I could see: 1. TC numbers (hypothetically ~$400k as you quoted, which generally agrees with levels.fyi) are not real income. We know what happened to (tech) equity this year --- this (unfavorable) gap between grant price/share and vesting price/share has deflated a lot of the TC, much more so if the grant date happens to be right before the onslaught. (Personally I landed almost square in this territory due to a somewhat forced job switch but that's another can of worms I'm not opening today). 2. Whatever is left from that TC number, tax man takes ~40% of it period. Deductions are for most cases a rounding error. 3. TL;DR housing costs scales with salary over here too. Long version: The kind of housing that (transplanted) SWEs and their families would reasonably consider in SFBay has generally been priced (by "the market") right up to the limit of their income-derived affordability, most of which is calculated (by the underwriters) straight from SWE base salary, which we know is constrained by BigTech paybands (which propagates to startups too). 4. Okay, now an inevitable personal finances bullet point: Educated responsible adults as we are, a significant savings (incl. investments) rate surely sounds prudent eh? Say (temporary) goodbye to another xx% of whatever's left at this point. 5. Adding insult to injury, avocado toasts are now about 1.5x to 2x their price compared to early 2020. I feel compelled to add that this agrees with the larger trend of any kind of prepared food. 6. Elephant in the room: Kids. ----- I can go on and on, but hopefully I am getting the point across. The "salary man" of today has not only his theoretically big TC "pie" shrink over time, but an increasingly larger slice of it becomes marked as non-disposable. Assuming reasonable (not necessarily optimal) personal finances management and maintaining a reasonably high QotL (nothing excessive), I don't see me or my similarly positioned peers feeling rich / upper-middle-class-y any time soon.
wiseowise 4y ago
Middle class is not rich by definition.
int_19h 4y ago
I think it's fair to complain when the "tax the rich" schemes that are actually implemented all still end up placing most of the new tax burden on people who get paid for working (even if it's a lot more than the average worker), and not on their bosses who get most of their money from economic rents. Basically, I'm fine with paying more taxes, but only if those wealthier than me pay more still.

bawolff 4y ago

As a practical matter, it is very difficult to tax wealth (and even harder to do it fairly.) I don't think the issue is lack of will but lack of plan that actually works in the face of assets with unclear value and/or difficult to liquidate. And this doesn't just affect the ultra rich but people like SWE too. How much is the stock you have in the non-public company you work at really worth? SWE are probably one of the groups most likely to be "paper millionaires" and hence screwed by such a system.

dontreact 4y ago
It’s hard problem that can only be solved through attempts and iteration. The fact that a wealth tax is difficult is not a good enough reason to not try, because the problem of wealth inequality is so severe now.
- dumpsterlid 4y ago
  Bingo
- aqme28 4y ago
  There are also some things that do work decently well that we don't do anymore for political reasons, such as estate taxes.
  - r00fus 4y ago
    political reasons being: wealthy have gamed the politics and made those options "political".
  - bawolff 4y ago
    Yeah, but that isn't a wealth tax, its a tax on the heir's income. There is lots of ways to improve taxes on income and capital gains, but that is really different from a general wealth tax.
- mindslight 4y ago
  The problem with this hollowing out of the regulations government used to have, is that people react by jumping for extreme, impractical things like "wealth tax". Nobody is going to go for the idea that the government comes around and explicitly collects a significant percentage of everything you own every year. (And they already do much of what they can get away with through inflation and real estate taxes). Rather, to continue the spirit of the top level comment, what is also now missing is the estate tax, which is/was around 40% (it's graduated too, but it tops out quickly). IIUC, the federal threshold used to be around $1M a few decades ago, and is now $10M - this was the anti "death tax" political issue you might vaguely recall. Furthermore, due to wider use of trusts, it's been basically eliminated unless your family is extremely unlucky. Fundamentally, I'd rather just tamp down the amount of money given away to the rich - stop the government giving trillions of dollars to the financial industry to prop up the fictitious asset bubble pyramid scheme, and either let natural technological deflation happen or at least spend the money deliberately ala MMT. But either way, something is required - the system we have right now has the government continually giving away gobs of money to asset holders, while doing very little to collect it back. This is exactly why these personal wealth bubbles continue to grow.

foldr 4y ago

Only the super-rich in America feel wealthy. Everyone else is trapped in an unwinnable game of keeping up with the Jonses. I can almost guarantee that if you actually listed the concrete reasons that you don’t think of yourself as wealthy, they would seem ridiculous to the majority of middle class Americans. (Although obviously I don’t know your personal circumstances. I am thinking of the general case of a seniorish software engineer working for a big tech company in SF.)

est31 4y ago
> Only the super-rich in America feel wealthy. Everyone else is trapped in an unwinnable game of keeping up with the Jonses. Tbh even the super-rich feel poor. If you own 10 million, you might have a social network in which there is a guy who owns 100. If you own 100 million, you might know a billionaire. And the billionaire might have met someone like Bezos or Musk. Usually the richer you get, the higher is the wealth differential you are exposed to. You might be proud of your 3 supercar collection, but a guy you know has a hangar full with 200 supercars.

seunosewa 4y ago

They want as many voters as possible to feel that they won't be among those who will be taxed. You're in the minority.

SyzygistSix 4y ago
The people who vote are indeed more likely the ones to be taxed. It's not the business and homeowners who are the 80%+ skipping every single primary election since they were established. But then considering the ideas I'm seeing on this page, that isn't necessarily a bad idea.

dismantlethesun 4y ago

If you are wealthy and refuse to earn an income, then your savings will eventually deplete and you’ll become bankrupt. Additionally they wealth already taxed in a previous era, and is currently taxed in this era any time they spend it via sales tax. If of course you are spending all your money on personal groceries as a billionaire, then I’m 100% fine with not taxing you.

bmitc 4y ago
I don't think any individual should be a billionaire. There's no conceivable reason for a single person to need or have the right to be a billionaire.
- underdeserver 4y ago
  [flagged]
  - deleted 4y ago
    [deleted]
- simonswords82 4y ago
  I'm not saying I agree or disagree with this stance but at a practical level it's interesting to think about. Let's say life is a computer game, and once you max out at $1bn in earned wealth (presumably this includes liquid and illiquid assets such as properties, cars etc), you cannot accumulate more wealth. How does a government enforce this stance? You cannot stop say Bill Gates shorting Tesla and earning millions from the trade, can you? Can you stop a landlord renting out their properties to block further income from them? What about interest generated from bonds or savings accounts? Do you simply tax the shit out of people if they have over £1bn in wealth? The big challenge I see for all of this is that rich people have the best (and most expensive) accountants/lawyers money can buy. If you try to tax the shit out of them, their accountants and lawyers will find a way around it. Also, if one government is too heavy handed, they'll just move assets to another more lenient government.

dr_dshiv 4y ago

Come to the Netherlands! 52% kicks in early and plus there is the 2% worldwide wealth tax on all non-real estate investments. Is it worth it, just to live in a shockingly civilized society under a highly functional government?

9991 4y ago
> Come to the Netherlands! LOL, no thanks!
rsj_hn 4y ago
You mean the shockingly civilized society that is a drug trafficking capital of the world with a recent spate of mafia murders? The one with 1.55 births per woman? I always laugh at dying European societies that consider themselves "civilized" vis-a-vis the rest of the world and can't help but lecture everyone else about how to structure their society. It reminds of Borrell's "Europe is a garden, the rest of the world is a jungle" remarks, which went live before his recent bribery scandal.
- dr_dshiv 4y ago
  Where are you based?

nootropicat 4y ago

That's because the actual point of progressive taxation is to prevent class mobility.

LatteLazy 4y ago

Well said.

willcipriano 4y ago

The politicians make money via insider trading, so of course they propose a income tax as opposed to a capital gains tax to "tax the rich". Many of them have been in power for 40+ years, if they were going to tax themselves it would've already been done.

deleted 4y ago

[deleted]

thrwawy74 4y ago

I could see tax brackets working by how your income compares to the area you live in. "If your income is 30% above the average income for this area or the national average (whichever is lower), that >30% is taxed at this rate..." So then you can't have rich folks disappearing to less-taxed areas. It could make rich people communities where they all stick together. looking forward to the future where currency is time (the movie In Time), and we can tax rich people to death.

jermaustin1 4y ago

For the majority of the time there has been a Federal Income Tax, there have been top brackets in the 70% range. This was a burden begrudgingly borne by the wealthy for many generations. It funded the US leaving an agrarian lifestyle and becoming a superpower. Did a 70% top-tax bracket force any of the uber-high earners to stop earning money because they didn't want to give 70% to Uncle Sam? No, the super rich will always want more money/property/dividends/etc no matter how burdensome the tax bracket they fall in might be.

throw__away7391 4y ago

Exactly, this is going on every single day. They run stock reels of Bezos and mega yachts and private jets and then introduce their plan to raise taxes on people who have enough income to renting a 1 bedroom apartment without roommates and have a reasonable chance at saving up enough to buy a home someday.

mrguyorama 4y ago

FYI, if you make several hundred thousand dollars a year, because you are a SFBay SWE, you are SIGNIFICANTLY different from an average american, and you should realize that. You ARE the wealthy that would and possibly should get taxed. It's not poor people's fault California refuses to do anything about having enough housing. It's not poor people's fault that google and facebook require you to live in california for no reason. Making hundreds of thousands of dollars in salary per year is a very privileged position. Don't get mad at average americans trying to make the world a better and more fair place, get mad at google and facebook that make several million dollars off the code that you write and kick back a pittance of a salary, and coordinate with each other to keep your compensation low. Even at $400k a year, you are literally being underpaid.