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Billionaires Have Sidestepped a Tax Aimed at the Rich

19 points by srameshc 2y ago

mikestew 2y ago
The NIIT, for high-income taxpayers (defined as $250,000 and up for a married couple), subjected investment income to a 3.8% rate. Raise your hand, HN, if you (and your spouse, if applicable) make >$250K/year. Wow, that's a lot of hands. Now, leave your hand up if you've ever heard of this "NIIT". Hmm, just the two of you, huh? Or have I just not been paying attention?
- alaxhn 2y ago
  Anyone with gains on stocks who makes $250k (200k single) and sells shares at a capital gain pays NIIT. This has been the case since 2013 and the threshold is not indexed to inflation. I would guess a significant fraction of commenters here have indeed paid this tax (myself included).
  - nwellinghoff 2y ago
    That’s what really blows my mind. Why aren’t all thresholds automatically indexed to inflation by default. Especially in tax matters!
    - xyzzy123 2y ago
      It means that every few years politicians can roll out "tax cuts" which are actually just bracket adjustments.
    - Arnt 2y ago
      Because inflation ≠ inflation and what do you want to index it to? Seriously: If it's related to investment, what makes the price of tomatoes more appropriate than the Dow Jones index as a basis for the threshold? One good answer there is to trust your future self to choose better than some simple mechanism would do. So that's what legislatures often do.
jameslk 2y ago
> “It becomes a pretty glaring problem when you have ultra-rich individuals layering loopholes on top of loopholes to dodge both the NIIT and Medicare taxes,” said Sen. Ron Wyden, chair of the Senate Finance Committee, in a statement. Those evil ultra rich! How can they get away with this?… > Behind closed doors, Democratic leaders hashed out a compromise that carved active business owners out of the tax.
ungreased0675 2y ago
There aren’t loopholes. Those exceptions were put in the law intentionally.
- idiotsecant 2y ago
  That's what a loophole is.
legitster 2y ago
> The NIIT was targeted at “high-income people who lived off investments,” remembered Andrews. It was designed to hit “someone who is day-trading, someone who is arbitraging the market,” he said, referring to the practice of exploiting mismatched prices of securities, like stocks or bonds. Nearly all of the examples in this article were people who were not day-trading or arbitraging the market and didn't qualify for the tax. So it sounds like the tax is working exactly as intended and the journalist just doesn't like it.
stevenalowe 2y ago
The larger lesson here is that soak-the-rich laws will never, ever work as intended.
- idiotsecant 2y ago
  They will do exactly as intended. Mollify the serfs for another little bit while simultaneously allowing the real owners of the system to maintain status quo.
  - stevenalowe 2y ago
    lol yes that is the intention, i should have said "will never work as pretended"

19 points by srameshc 2y ago

The NIIT, for high-income taxpayers (defined as $250,000 and up for a married couple), subjected investment income to a 3.8% rate. Raise your hand, HN, if you (and your spouse, if applicable) make >$250K/year. Wow, that's a lot of hands. Now, leave your hand up if you've ever heard of this "NIIT". Hmm, just the two of you, huh? Or have I just not been paying attention?

alaxhn 2y ago
Anyone with gains on stocks who makes $250k (200k single) and sells shares at a capital gain pays NIIT. This has been the case since 2013 and the threshold is not indexed to inflation. I would guess a significant fraction of commenters here have indeed paid this tax (myself included).
- nwellinghoff 2y ago
  That’s what really blows my mind. Why aren’t all thresholds automatically indexed to inflation by default. Especially in tax matters!
  - xyzzy123 2y ago
    It means that every few years politicians can roll out "tax cuts" which are actually just bracket adjustments.
  - Arnt 2y ago
    Because inflation ≠ inflation and what do you want to index it to? Seriously: If it's related to investment, what makes the price of tomatoes more appropriate than the Dow Jones index as a basis for the threshold? One good answer there is to trust your future self to choose better than some simple mechanism would do. So that's what legislatures often do.

jameslk 2y ago

> “It becomes a pretty glaring problem when you have ultra-rich individuals layering loopholes on top of loopholes to dodge both the NIIT and Medicare taxes,” said Sen. Ron Wyden, chair of the Senate Finance Committee, in a statement. Those evil ultra rich! How can they get away with this?… > Behind closed doors, Democratic leaders hashed out a compromise that carved active business owners out of the tax.

ungreased0675 2y ago

There aren’t loopholes. Those exceptions were put in the law intentionally.

idiotsecant 2y ago
That's what a loophole is.

legitster 2y ago

> The NIIT was targeted at “high-income people who lived off investments,” remembered Andrews. It was designed to hit “someone who is day-trading, someone who is arbitraging the market,” he said, referring to the practice of exploiting mismatched prices of securities, like stocks or bonds. Nearly all of the examples in this article were people who were not day-trading or arbitraging the market and didn't qualify for the tax. So it sounds like the tax is working exactly as intended and the journalist just doesn't like it.

stevenalowe 2y ago

The larger lesson here is that soak-the-rich laws will never, ever work as intended.

idiotsecant 2y ago
They will do exactly as intended. Mollify the serfs for another little bit while simultaneously allowing the real owners of the system to maintain status quo.
- stevenalowe 2y ago
  lol yes that is the intention, i should have said "will never work as pretended"