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Wait till you do the math on how much money that 1% has relative to the 99%.

Wolfenstein98k 4y ago
That doesn't matter. You don't get taxed on how much you have, you get taxed on every dollar as it comes in. What they have is post-tax. You can't just eye up what they have left over as if it has never been taxed.
- voisin 4y ago
  > What they have is post-tax. What? No. Net worth amounts are quoted in approximate pre-tax amounts. The vast bulk of which, for the 1%, are deferred capital gains taxes. The rest of us don’t get the ability to defer taxes until we feel like it, and capital gains are taxed at a lower rate too because… just because.
  - WalterBright 4y ago
    You can defer taxes with 401ks, IRAs, Roth IRAs, and investing in stocks, a house, anything you have that appreciates in value. 40% of Americans have investments in stocks, it is hardly confined to 1%.
    - Retric 4y ago
      Contributions to a Roth IRA are not tax-deductible and early withdrawals are both taxed and penalized. You don’t just pay taxes as normal income when you take an early withdrawal from a 401k they also tack on a 10% penalty making such investments unusually risky. Untaxed capital gains on the other hand is just a free zero interest loan. Anyway, having stocks is irrelevant here. What matters is for tax burden is what percentage of people’s income comes from capital gains.
      - vouaobrasil 4y ago
        Interestingly, that's not true in Canada's version of the Roth, the TSFA (tax-free savings account). There, you can make early withdrawals without being taxed, but that counts as a penalty towards future contributions. The total contribution amount is added to each year.
      - AmericanChopper 4y ago
        The capital gains you’re talking about are not “untaxed”, they simply don’t exist. An unrealized capital gain is one that hasn’t occurred. It’s very intellectually dishonest to pretend that unrealized gains are real, and extremely so to pretend that they are income.
        skiddo 4y ago
        Okay - but said “unrealized gain” could have dividend payments or be used as collateral for a loan.
        deleted 4y ago
        [deleted]
        AmericanChopper 4y ago
        Dividends are taxable income my dude… kinda showing how well you understand the topic here.
        Retric 4y ago
        I notice you ignore the collateral on a loan argument that points to just how real these gains are. His point was these Dividends payments exist due to unrealized gains. A better example is zero-coupon investors must report a pro-rated portion of interest each year, as income, even though interest hasn’t been paid out. Aka you own a bond and haven’t been paid yet but you still owe money due to the increase in value. So to be clear simply owning a bond can be a taxable event while stocks are given an interest free loan on their gains.
  - lvass 4y ago
    How could a pre-tax quote be what a person has, if legally they can't have it all? I know clickbait articles love equating those, but we can do better.
  - Wolfenstein98k 4y ago
    Not "just because", there are l ok Ng and detailed reasons why, which is why various wealthy and well-run countries do it. Also, just because you eye up their holdings before they sell and incur a tax liability, does not mean that they have tax-free wealth. Paper wealth is empty. That's why Musk "lost $200,000,000,000" but you can't name who he lost it to - it didn't go anywhere because it effectively never existed. It's only when he sells that it is realised - and taxed - and that's when he gains access to it. You can eye it up all you like before he sells, but it's not real money.

That doesn't matter. You don't get taxed on how much you have, you get taxed on every dollar as it comes in. What they have is post-tax. You can't just eye up what they have left over as if it has never been taxed.

voisin 4y ago
> What they have is post-tax. What? No. Net worth amounts are quoted in approximate pre-tax amounts. The vast bulk of which, for the 1%, are deferred capital gains taxes. The rest of us don’t get the ability to defer taxes until we feel like it, and capital gains are taxed at a lower rate too because… just because.
- WalterBright 4y ago
  You can defer taxes with 401ks, IRAs, Roth IRAs, and investing in stocks, a house, anything you have that appreciates in value. 40% of Americans have investments in stocks, it is hardly confined to 1%.
  - Retric 4y ago
    Contributions to a Roth IRA are not tax-deductible and early withdrawals are both taxed and penalized. You don’t just pay taxes as normal income when you take an early withdrawal from a 401k they also tack on a 10% penalty making such investments unusually risky. Untaxed capital gains on the other hand is just a free zero interest loan. Anyway, having stocks is irrelevant here. What matters is for tax burden is what percentage of people’s income comes from capital gains.
    - vouaobrasil 4y ago
      Interestingly, that's not true in Canada's version of the Roth, the TSFA (tax-free savings account). There, you can make early withdrawals without being taxed, but that counts as a penalty towards future contributions. The total contribution amount is added to each year.
    - AmericanChopper 4y ago
      The capital gains you’re talking about are not “untaxed”, they simply don’t exist. An unrealized capital gain is one that hasn’t occurred. It’s very intellectually dishonest to pretend that unrealized gains are real, and extremely so to pretend that they are income.
      - skiddo 4y ago
        Okay - but said “unrealized gain” could have dividend payments or be used as collateral for a loan.
        deleted 4y ago
        [deleted]
        AmericanChopper 4y ago
        Dividends are taxable income my dude… kinda showing how well you understand the topic here.
        Retric 4y ago
        I notice you ignore the collateral on a loan argument that points to just how real these gains are. His point was these Dividends payments exist due to unrealized gains. A better example is zero-coupon investors must report a pro-rated portion of interest each year, as income, even though interest hasn’t been paid out. Aka you own a bond and haven’t been paid yet but you still owe money due to the increase in value. So to be clear simply owning a bond can be a taxable event while stocks are given an interest free loan on their gains.
- lvass 4y ago
  How could a pre-tax quote be what a person has, if legally they can't have it all? I know clickbait articles love equating those, but we can do better.
- Wolfenstein98k 4y ago
  Not "just because", there are l ok Ng and detailed reasons why, which is why various wealthy and well-run countries do it. Also, just because you eye up their holdings before they sell and incur a tax liability, does not mean that they have tax-free wealth. Paper wealth is empty. That's why Musk "lost $200,000,000,000" but you can't name who he lost it to - it didn't go anywhere because it effectively never existed. It's only when he sells that it is realised - and taxed - and that's when he gains access to it. You can eye it up all you like before he sells, but it's not real money.