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Richest Americans Now Pay Less Tax Than Working Class in Historical First
- aklemm 2y agoNot much appetite to discuss up in here?
- ch4s3 2y agoIt seems kind of like clickbait, and to the extent that you should care about the Newsweek "fairness meter" at the bottom of their own articles, this one is labeled as "unfair". It seems that the times article it references is conflating unrealized stock gains and income.
- Retric 2y agoTax loopholes are still loopholes even if you agree with them.
- SpicyLemonZest 2y agoI don't think that's true. Would you call the EITC or child tax credits loopholes?
- ceejayoz 2y agoIntentional provisions with intentional results aren't really loopholes. (Some will argue they're bad policy.) The fact that Jeff Bezos can manage to quality for a child tax credit is a bit of a loophole, though. https://www.propublica.org/article/the-secret-irs-files-trove-of-never-before-seen-records-reveal-how-the-wealthiest-avoid-income-tax https://www.propublica.org/article/the-secret-irs-files-trov... > In 2011, a year in which his wealth held roughly steady at $18 billion, Bezos filed a tax return reporting he lost money — his income that year was more than offset by investment losses. What’s more, because, according to the tax law, he made so little, he even claimed and received a $4,000 tax credit for his children.
- SpicyLemonZest 2y agoAlmost all tax loopholes people talk about are intentional policies with intentional results. The thing you're quoting is very much an example - it's very much by design that capital gains are offset by capital losses and you're taxed only on the net. (I should note that the article is being imprecise, and ordinary income is much harder to offset this way.)
- ceejayoz 2y agoThe people who wrote in the $200/400k income limits almost certainly did not plan for that to be used by Jeff Bezos. You might argue that they considered the possibility and decided closing the loophole would do more harm than good (means testing frequently does this), but it certainly wasn't the intention of the credit to give $4k to the world's second wealthiest person.
- ryandrake 2y agoI think we can all agree legislators need to better "red team" their laws, and try to predict how people will get around the spirit of the law by using technicalities in the wording of the law, so that better words can be enacted. If they did not intend for Bezos to take advantage of income limits, they should have written the law better so that he couldn't.
- Retric 2y agoYes. Again agreeing or disagreeing with policy doesn’t change if something is a loophole or not. Handouts because someone is installing rooftop solar are still handouts even if they get baked into tax policy.
- orangecat 2y agoNot paying taxes on money you haven't received is not a "loophole".
- Retric 2y agoIn other situations taxes apply to money you haven’t received. Exercise an options contract and you’re taxed before you sell the shares. At that point you could still ultimately lose money just as with capital gains.
- seanmcdirmid 2y agoRSU grants are taxed even if you haven't sold the stock you are granted. But they commonly deal with this by selling some stock right away to cover tax liabilities. The problem with exercising an option is that the stock might not be traded or can't be sold, then you have to pay the tax out of pocket, since Uncle Sam doesn't want some private non-traded stock.
- Retric 2y agoSure, but in comparison the unrealized capital gains loophole just becomes more clear. Property taxes based on assessed value are common for other asset classes like cars and land.
- javagram 2y agoUnrealized capital gains aren’t income, so it’s not a tax loophole.
- ceejayoz 2y agoThe ability to borrow virtually indefinitely against them (and other tax deferment techniques) is a tax loophole. https://www.propublica.org/article/the-secret-irs-files-trove-of-never-before-seen-records-reveal-how-the-wealthiest-avoid-income-tax https://www.propublica.org/article/the-secret-irs-files-trov... > So how do megabillionaires pay their megabills while opting for $1 salaries and hanging onto their stock? According to public documents and experts, the answer for some is borrowing money — lots of it. After decades of avoiding taxes on it, there's a final loophole! > The notion of dying as a tax benefit seems paradoxical. Normally when someone sells an asset, even a minute before they die, they owe 20% capital gains tax. But at death, that changes. Any capital gains till that moment are not taxed. This allows the ultrarich and their heirs to avoid paying billions in taxes. The “step-up in basis” is widely recognized by experts across the political spectrum as a flaw in the code.
- wmf 2y agoStep-up in basis is capped (somebody forgot to mention that) so it benefits the rich but doesn't save much taxes for billionaires.
- ceejayoz 2y agoDo you have a a cite for this? Googling "step-up in basis cap" finds very little supporting the assertion, at first glance, and https://en.wikipedia.org/wiki/Stepped-up_basis https://en.wikipedia.org/wiki/Stepped-up_basis doesn't mention such a thing. I think you're may be confusing it with estate taxes. (Which the ProPublica article addresses in the subsequent few paragraphs.)
- wmf 2y agoThe step-up itself is not capped but the tax savings are capped by the estate tax limits. If your estate is less than $12M you pay no estate tax and your heirs pay no capital gains tax either; that's the loophole. But if your estate is much larger than $12M it has to pay back your loans, then pay estate tax, then the basis gets stepped up for whatever's left. There's little or no savings. AFAIK.
- marcellus23 2y ago> this one is labeled as "unfair" I was surprised to see that arrow 100% of the way to the left — but then after I voted, it changed to say "Most Readers Rated This Article CENTER / FAIR". So I'm not sure why it defaults to left, but I don't think that represents the actual rating.
- _DeadFred_ 2y agoMy house has an 'unrealized' value yet I have to pay taxes on it based on that unrealized value, which is also a value I can't unlock unless I become homeless (a much more difficult situation to be in than being 'stockless'). I can also lose that asset (which is my shelter) if I don't pay that tax on it's 'unrealized' value.
- ch4s3 2y agoA critique of property tax structures as they exist is not an argument for considering unrealized gains as income. One does not logically follow from the other. To steel man property taxes, land is immobile and requires certain government services even when it is unused (perhaps even more-so). Taxing that property is a direct an efficient(from a taxation perspective) way to fund the government services associated with that property.
- jonathankoren 2y agoNothing stops someone from selling a 3 million dollar Cupertino home and buying a $300,000 home someplace else. So it’s a bit disingenuous to say that person is “homeless”. They’d have a different home and a pile of cash.
- itsdrewmiller 2y agowith few exceptions it is even easier for rich people to realize their unrealized capital gains, but they don’t pay tax on them.
- voisin 2y agoI for one would love to know why people are downvoting you as I think you’ve made a good argument. I’d love someone to pipe up with the counter argument.
- slowmovintarget 2y agoHe did not make a good argument. Property taxes are the cost of the city's government; they include city infrastructure, police, and fire coverage. A poster below answered this. See https://news.ycombinator.com/item?id=40321399#40322190 https://news.ycombinator.com/item?id=40321399#40322190
- NegativeLatency 2y agoPretty depressing, also on you always get people crawling out of the woodwork playing devils advocate, saying people should try harder to not be poor, attacking the stats with minor flaws, or that "this is fine actually" I'm trying to be more involved in my local community, but we need some change on the national level, and I'm concerned things wont get better until they gets worse first.
- commandlinefan 2y agoOr just "maybe the government shouldn't be spending so much anyway".
- dantheman 2y agoYeah I completely agree, we need to cut spending significantly and reduce taxes for all.
- ardme 2y agoIts because it's false and misleading. What is "more", the wealthy are paying more in terms of dollar amounts. We have very high marginal tax rates in America, and we have very rich people paying a lot of taxes. In percentage terms the middle class is overtaxed the most of course. But percentage terms are an extremely misleading way to look at this. Being middle class I'm more angry that the bottom 50% on net pay no income taxes and I'm a net payer into their lifestyle.
- deleted 2y ago[deleted]
- gotoeleven 2y agoThe article conflates unrealized stock gains with income to come up with the same dumb story you've read a million times before.
- ethbr1 2y agoIt's difficult to argue that future tax and present tax are the same.
- _DeadFred_ 2y agoI have to pay taxes on my house based on unrealized gains, and to unlock those gains I would have to become homeless (which sucks worse than becoming stockless). If I don't pay the tax on that 'unrealized value' I lose the actual asset. But please tell me how unreasonable taxing unrealized stock gains would be, and how doing taxing unrealized gains is unheard of, irrational, and would destroy the market that created those gains (I guess like how property taxes have decimated housing prices?).
- dantheman 2y agoCompletely agree - we should end property taxes; or make them a based on size of the property.
- MattPalmer1086 2y agoSounds like a mad system to tax property based on potential current value. Do you get tax refunds if the house price falls?
- megaman821 2y agoYou pay a value tax on your house, but you did not and not paid a tax on the gains of your house.
- jondwillis 2y ago[flagged]
- wordpad25 2y agoThis is deceptive by using percentages... Top 1% of earners pay like 50% of all taxes Top 10% pay 80% of all taxes Bottom 50% pay 0% or negative amount of taxes after benefit transfers.
- mschuster91 2y ago> This is deceptive by using percentages... It's not. Relatively speaking, the rich do pay less % of their share of income in taxes, despite them obviously being way more able to pay taxes than the lower castes. Warren Buffett infamously paid (and likely still pays) less of his income than his own secretary. This is beyond ridiculous. And that doesn't even take into account the obscene gains in wealth that aren't taxed at all (partially, because taxing unrealized gains is hard). The rich just evade that tax (or practically, they shift the payment date towards infinity) by taking ultra low-interest loans on their stock and pay the interest from dividends. [1] https://money.cnn.com/2013/03/04/news/economy/buffett-secretary-taxes/index.html https://money.cnn.com/2013/03/04/news/economy/buffett-secret...
- ardme 2y agoHe didn't though. He paid billions of dollars and she paid a few thousand.
- swivelmaster 2y agoBy percentage, not absolute.
- ceejayoz 2y agoWould you rather pay $0 taxes on $10 annual income, or $99B taxes on $100B annual income? Which will leave you better off?
- wang_li 2y ago>Relatively speaking, the rich do pay less % of their share of income in taxes, despite them obviously being way more able to pay taxes than the lower castes. It's not entirely clear what you are trying to say, but as a share of income earned, the rich earn 20% of the income, they pay 40% of the income taxes collected by the government. They objectively pay more than a fair share.
- yadaeno 2y agoThis also doesn't account for inflation, which is effectively a regressive tax.
- jan3024 2y ago[dead]
- fnord77 2y agoWhat seems worse to me is the rich seem to just sit on most of their money rather than putting it to work. I guess taxes are supposed to deal with this
- Izkata 2y agoMost of their wealth isn't money, it's investments. It's not sitting idle, it's being used by whatever they invested in.
- canucker2016 2y agoWhere's the data to back up your assertion about the rich "sit on most of their money"? I think many of the top tech billionaires have their wealth in company stock (in the case of Jeff Bezos and Steve Ballmer, Bill Gates has diversified away from just MSFT stock, Elon Musk is mostly TSLA and SpaceX) If the rich actually sit on most of their wealth (all cash - 0% interest, no income, no interest-bearing instruments/bonds, no selling stocks) then they'd pay no taxes on their wealth in the USA. But inflation would hit them hard, especially in the past couple of years.
- ceejayoz 2y ago> I think many of the top tech billionaires have their wealth in company stock... That would be sitting on it, yes.
- Jensson 2y agoWhat do you think happens with the money when they do something with it? They turn it into a company, and now it is company stock.
- ceejayoz 2y agoThat really isn’t how the stock market works. Bezos hasn’t given $200B in cash over to Amazon. Amazon gets money when they sell new shares in a public offering. Subsequent exchanges don’t affect their cash on hand.
- 13of40 2y agoThe annoying thing about these articles is it feels like someone is trying to shape my political opinions, but I'm not sure to what end. How am I supposed to finish the sentence, "I'm mad as heck at the b-b-b-billionaires, and therefore I'm going to..." Or is it just that they get a penny for my click?
- yodon 2y agoVote
- wang_li 2y agoThey want you to start supporting redistributionist policies by making you feel it's unfair that someone who is a lot older than you and has worked many more years than you and pays a greater share of the tax burden than their share of the income has more money than you.
- Dove 2y ago... support policies that punish and ultimately eliminate rich people. Privately rich people have the power to change the world, sometimes for good and sometimes for evil. The dream is to eliminate the Bill Gateses, Elon Musks, Donald Trumps, and George Soroses of the world, so that only those connected to government and The Party have real financial power. Draw the line low enough, and it might eliminate the Paul Grahams of the world. Or even, as in Russia, small time independent farmers (https://www.britannica.com/topic/kulak https://www.britannica.com/topic/kulak ). I obviously think this is a terrible idea. Destroying the wealthy out of jealousy is a bloody impulse without a bottom that leaves everyone powerless. But it does greatly empower those who can make themselves exceptions to the rule, which is the actual point.
- dantheman 2y agoThis is nonsense, unrealized gains are not income.
- _DeadFred_ 2y agoI pay taxes on the 'unrealized gains' relating to the value of my home. If I don't pay that tax, every year, I lose the asset. But please tell me again how taxing 'unrealized gains' is nonsense and has no precedent in the American tax system.
- ComputerGuru 2y agoYou really don’t. Even setting aside income tax vs property tax, people misunderstand property taxes in the US considerably. A budget is normally set and it is funded by property taxes as a ratio of the asset value compared to all other asset values in the county. If your home didn’t increase in value nor did anyone else’s you’d pay the same amount because that budget has to be realized one way or the other. Some jurisdictions make this less transparent by taxing at a flat rate (x% of assessed home value) but that’s misleading because they determined that rate to set their budget to begin with. If there were a downturn in property values across the board that didn’t happen at the same time as a recession somehow such that the monetary outflow remained high (high employment for the local government, high costs, no deflation, etc) then there would be a budget crisis and they’d revisit that percentage.
- abdullahkhalids 2y agoCould the same work for financial assets, in principle? Ignoring second order effects on the economy. The federal government sets a budget. Then taxes everyone's financial holdings in the same way as you describe (in the second paragraph) to meet that budget? If I understand you correctly, the way it would work is that federal government sets a budget of $100. Alice has $1000 of stocks and Bob has $500 dollars of bonds. So Alice pays $66 of taxes and Bob $33. If next year Alice has $2000 dollars of stocks and Bob has $500 dollars of bonds. Then Alice pays $80 and Bob $20.
- 2OEH8eoCRo0 2y agoThe article quickly lays out three very interesting points: 1) The rich have never paid less 2) The bottom half of earners have never paid more 3) The Carnegies and Rockefellers existed despite the oppressive tax rate of the past So what gives?
- NegativeLatency 2y agoGovernment systems captured by the wealthy, tuned to serve the wealthy while we bicker over social issues (which are important) but also serve to distract from the people at the top screwing us all over so they can buy a Nth mega-yacht or vacation property.
- ryandrake 2y agoPeople making $200M have convinced people making $200K and $20K that each other are the bad guys.
- JohnCClarke 2y agoRather than react to the clickbait how about listing what you think an ideal tax system would be.
- ceejayoz 2y agoFor this particular case: https://en.wikipedia.org/wiki/Wealth_tax https://en.wikipedia.org/wiki/Wealth_tax
- thrill 2y agoMake complicated tax system, get complicated tax results.