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False, we never stopped taxing the rich. We reduced top marginal income tax rates though, so they moved more money into income and stopped hiding as much in sh

by 00ff 3y ago

False, we never stopped taxing the rich. We reduced top marginal income tax rates though, so they moved more money into income and stopped hiding as much in shell companies and inventory. The top 1% earn 20% of national income, but their taxes comprise 40% of federal income tax revenue. US Gini coefficient (inequality measure) decreases by a third after accounting for taxes and transfers.

karpierz 3y ago
You start by saying that wealthy people can pretty freely manipulate the amount of income they show for tax purposes. The follow-up is that based on the manipulated income data, wealthy people pay disproportionately more taxes?
- twoodfin 3y ago
  Right. The current low rates provide much stronger incentives to accurately report income vs. less efficient tax shelters and in-lieu-of-cash benefits. So we expect taxable income statistics to more accurately capture real earnings than under earlier tax regimes (particularly pre-1986).
Swenrekcah 3y ago
Assets should be taxed progressively. Capitalism results in the power coming from capital. Therefore capital taxes should be the primary taxation mechanism. There are issues with it such as cashflow problems and more, but all systems have issues and they can be overcome.
- jcfrei 3y ago
  Exactly, taxing assets instead of income is a no-brainer. All income that is not used for consumption becomes an asset itself and if people cant consume all their income then that should be taxed. The reason it isnt done is that any country that introduces wealth / assets taxes experiences immediate wealth flight (see Norway for a recent example). A wealth tax can only be done at a global level for example through the OECD.
  - LeonB 3y ago
    Yes - the root problem is lack of international tax treaties. There’s no simple solution, but acknowledging that this is the root cause is a vital step 0 in making any progress. We’re fortunately at an inflection point where there are some (though not many) governments large enough to challenge mega international companies. Sadly they are somewhat captured by the largest international companies — so it’s hard to see any solution. Simple example — Australia was trying to participate in the construction of international tax laws. The only companies capable of understanding the existing Byzantine laws were hired as consultants and immediately turned around and marketed their insider knowledge on the topic to their rich clients. There was nothing remarkable about the story - ie its occurrence was not remarkable. The fact that the media ignored it as a story for 18 months was not remarkable. The slightly remarkable thing is that for a few weeks a small slice of the media reported on it at all. https://amp.theguardian.com/business/2023/jul/26/pwc-scandal-pwc-australia-reached-confidential-settlement-with-ato-months-before-tax-scandal-became-public-documents-reveal https://amp.theguardian.com/business/2023/jul/26/pwc-scandal...

by 00ff 3y ago

karpierz 3y ago

You start by saying that wealthy people can pretty freely manipulate the amount of income they show for tax purposes. The follow-up is that based on the manipulated income data, wealthy people pay disproportionately more taxes?

twoodfin 3y ago
Right. The current low rates provide much stronger incentives to accurately report income vs. less efficient tax shelters and in-lieu-of-cash benefits. So we expect taxable income statistics to more accurately capture real earnings than under earlier tax regimes (particularly pre-1986).

Swenrekcah 3y ago

Assets should be taxed progressively. Capitalism results in the power coming from capital. Therefore capital taxes should be the primary taxation mechanism. There are issues with it such as cashflow problems and more, but all systems have issues and they can be overcome.

jcfrei 3y ago
Exactly, taxing assets instead of income is a no-brainer. All income that is not used for consumption becomes an asset itself and if people cant consume all their income then that should be taxed. The reason it isnt done is that any country that introduces wealth / assets taxes experiences immediate wealth flight (see Norway for a recent example). A wealth tax can only be done at a global level for example through the OECD.
- LeonB 3y ago
  Yes - the root problem is lack of international tax treaties. There’s no simple solution, but acknowledging that this is the root cause is a vital step 0 in making any progress. We’re fortunately at an inflection point where there are some (though not many) governments large enough to challenge mega international companies. Sadly they are somewhat captured by the largest international companies — so it’s hard to see any solution. Simple example — Australia was trying to participate in the construction of international tax laws. The only companies capable of understanding the existing Byzantine laws were hired as consultants and immediately turned around and marketed their insider knowledge on the topic to their rich clients. There was nothing remarkable about the story - ie its occurrence was not remarkable. The fact that the media ignored it as a story for 18 months was not remarkable. The slightly remarkable thing is that for a few weeks a small slice of the media reported on it at all. https://amp.theguardian.com/business/2023/jul/26/pwc-scandal-pwc-australia-reached-confidential-settlement-with-ato-months-before-tax-scandal-became-public-documents-reveal https://amp.theguardian.com/business/2023/jul/26/pwc-scandal...