5 ms·

This is correlated though. If someone has $100MM in investments, then it's probably producing eight figures a year in interest and dividends, which are "income

This is correlated though. If someone has $100MM in investments, then it's probably producing eight figures a year in interest and dividends, which are "income". Nevermind, a person at this wealth level likely has a high-income job. I personally treat all capital appreciation as income for the purposes of net worth tracking.

triceratops 3y ago
So what's the problem with taxing a deci-millionaire?
- lazide 3y ago
  Why do you think they aren’t currently taxed?
  - triceratops 3y ago
    Why do you think they're taxed enough?
  - lotsofpulp 3y ago
    Passive income (rent from assets) is taxed less than active income. That makes no sense. Society benefits by rewarding people who work. And society benefits by dissuading people from not working and collecting rent.
    - lazide 3y ago
      Cite? Not true anywhere I know. They can write off expenses in some cases, and capital gains are rightfully treated differently, but those are not the same situation.
      - lotsofpulp 3y ago
        Why are capital gains not passive income? In the US, we even have a lower tax rate (the capital gains tax rate) for dividends if you have held the asset for more than a year. Even step up basis when assets get inherited is a bad incentive, not to mention the $13M federal gift tax exemption. If you want people to swing hammers and perform surgeries, then don’t tax swinging hammers or performing surgeries (or tax it less). And if you don’t want people living off their or their ancestor’s hoarded wealth, tax it so they either do something with it or dump it so someone else can. This segways into significantly higher land value taxes. In the US, we even reward people who just sit on unproductive real estate by deferring all taxes via 1031 exchanges (you sell one property and buy another, and there’s no tax). And on top of that, you pay excessively low land value taxes for this store of wealth that the rest of society maintains and protects for you.
        lazide 3y ago
        Because capital gains can only occur when you sell something you bought. It’s a one time event, specific to a given asset. income occurs without a change in control of some asset, due to dividends, pass through profits, wages, etc. They’re fundamentally different types of things happening. For example: rent == income. Selling the house? Capital gains. As to if they are or should be taxed at different rates is orthogonal to if they are different types of events. I can assure you, anyone that owns a home or stocks really would like to avoid treating them the same way. Which is a huge portion of the population, not just some random 1%’er somewhere. And ‘unproductive’ real estate still pays property taxes. There is no such thing as a free lunch, but there definitely are places that will make you broke if you eat there every day.
        triceratops 3y ago
        > They’re fundamentally different types of things happening. Long term capital gains and dividends are taxed at the same rate in the US. If a company doesn't currently pay dividends its stock price goes up because of a combination of: a) inflation b) the expectation of future dividends c) stock buybacks (a dividend by another name) So long term capital gains are mostly either dividends or the expectation of dividends. > capital gains can only occur when you sell something you bought The ultra-rich can borrow against appreciated assets and never sell. Their heirs inherit much of it tax free and with a stepped up cost basis.
- Symbiote 3y ago
  The prefix for hundred is hecto, deci means tenth.
  - triceratops 3y ago
    I know that. I said what I meant. Every hecto millionaire is a deci millionaire too.
joshuaissac 3y ago
Dividend taxes are lower than income taxes in the UK. So a person getting paid £100k in wages will end up with £68k after taxes, whereas someone getting paid the same in dividends will end up with around £80k, which is around 17% more than the wage earner.

triceratops 3y ago

So what's the problem with taxing a deci-millionaire?

lazide 3y ago
Why do you think they aren’t currently taxed?
- triceratops 3y ago
  Why do you think they're taxed enough?
- lotsofpulp 3y ago
  Passive income (rent from assets) is taxed less than active income. That makes no sense. Society benefits by rewarding people who work. And society benefits by dissuading people from not working and collecting rent.
  - lazide 3y ago
    Cite? Not true anywhere I know. They can write off expenses in some cases, and capital gains are rightfully treated differently, but those are not the same situation.
    - lotsofpulp 3y ago
      Why are capital gains not passive income? In the US, we even have a lower tax rate (the capital gains tax rate) for dividends if you have held the asset for more than a year. Even step up basis when assets get inherited is a bad incentive, not to mention the $13M federal gift tax exemption. If you want people to swing hammers and perform surgeries, then don’t tax swinging hammers or performing surgeries (or tax it less). And if you don’t want people living off their or their ancestor’s hoarded wealth, tax it so they either do something with it or dump it so someone else can. This segways into significantly higher land value taxes. In the US, we even reward people who just sit on unproductive real estate by deferring all taxes via 1031 exchanges (you sell one property and buy another, and there’s no tax). And on top of that, you pay excessively low land value taxes for this store of wealth that the rest of society maintains and protects for you.
      - lazide 3y ago
        Because capital gains can only occur when you sell something you bought. It’s a one time event, specific to a given asset. income occurs without a change in control of some asset, due to dividends, pass through profits, wages, etc. They’re fundamentally different types of things happening. For example: rent == income. Selling the house? Capital gains. As to if they are or should be taxed at different rates is orthogonal to if they are different types of events. I can assure you, anyone that owns a home or stocks really would like to avoid treating them the same way. Which is a huge portion of the population, not just some random 1%’er somewhere. And ‘unproductive’ real estate still pays property taxes. There is no such thing as a free lunch, but there definitely are places that will make you broke if you eat there every day.
        triceratops 3y ago
        > They’re fundamentally different types of things happening. Long term capital gains and dividends are taxed at the same rate in the US. If a company doesn't currently pay dividends its stock price goes up because of a combination of: a) inflation b) the expectation of future dividends c) stock buybacks (a dividend by another name) So long term capital gains are mostly either dividends or the expectation of dividends. > capital gains can only occur when you sell something you bought The ultra-rich can borrow against appreciated assets and never sell. Their heirs inherit much of it tax free and with a stepped up cost basis.
Symbiote 3y ago
The prefix for hundred is hecto, deci means tenth.
- triceratops 3y ago
  I know that. I said what I meant. Every hecto millionaire is a deci millionaire too.

joshuaissac 3y ago

Dividend taxes are lower than income taxes in the UK. So a person getting paid £100k in wages will end up with £68k after taxes, whereas someone getting paid the same in dividends will end up with around £80k, which is around 17% more than the wage earner.