8 ms·

Doesn't this tax only apply to "net investment income"/realized gains? Billionaires technically already have to pay it at a higher rate. And well they generally

by pqtyw 2y ago

Doesn't this tax only apply to "net investment income"/realized gains? Billionaires technically already have to pay it at a higher rate. And well they generally do? I mean when they personally actually sell stock and or receive dividends and interest.

peterbecich 2y ago
Agreed. For the revenue tax activists want from billionaires, it would necessitate a wealth tax, which I believe is unconstitutional. The non-profit tax exemption fight is about "income taxes" which billionaires already have to pay (but avoid). So it is an apples-to-oranges comparison.
- deleted 2y ago
  [deleted]
- nrclark 2y ago
  what is unconstitutional about a wealth tax?
  - zeroonetwothree 2y ago
    It’s not totally clear if it would be but here’s a summary: https://city-countyobserver.com/the-constitutionality-of-a-wealth-tax-a-legal-analysis/ https://city-countyobserver.com/the-constitutionality-of-a-w...
  - peterbecich 2y ago
    I'm not a lawyer but my reasoning is this: - as far as I know, double taxation by any given entity (Federal Gov) is unconstitutional - a given dollar is taxed once as income. A federal wealth tax on the remainder of that dollar would be double taxation. That does not prohibit the Federal Gov from taxing once, and your residential state from taxing you a second time. There are other arguments about "direct taxation" I don't fully understand.
    - vel0city 2y ago
      "Double taxation" is absolutely constitutional. Tons of things are double, triple, quadruple and more taxed. I make a W2 salary. I pay federal income taxes on it. I pay FICA taxes on it. My employer pays payroll taxes on it. I might pay state income taxes on it. One event, tons of taxes. I take that quadruple taxed money and buy a dinner with a beer. Sales taxes on the overall sale, additional taxes on the alcohol, additional sales tax riders because I bought it in the touristy night life area. Triple taxes on my quadruple taxes, good lord! Unconstitutional! Worthless phrase, "double taxation". > That does not prohibit the Federal Gov from taxing once, and your residential state from taxing you a second time. Once again, the several different taxes applied to my salary income. Then on that I go buy a gallon of gasoline, uh oh, federal gas taxes on that. Or I buy a plane ticket and that gets Federal Excise Tax (7.5% of the base fare), the Federal Segment Fee (currently $5.20 per segment), the TSA Security Fee ($5.60 per passenger), and more. Oof, "double taxation"! Even at the federal level!
  - rufus_foreman 2y ago
    >> what is unconstitutional about a wealth tax? Article I, Section 9, Clause 4: "No Capitation, or other direct, Tax shall be laid, unless in Proportion to the Census or Enumeration herein before directed to be taken" A wealth tax is generally considered to be a direct tax. If you wanted to enact one at the federal level, my understanding is that it would have to be done in proportion to the census. So, given that Mississippi is around 1% of the total US population, Mississippi would have to pay 1% of the wealth tax. Mississippi is the poorest US state, so that would be a very regressive tax. An income tax is also considered to be a direct tax, that's why it took an amendment to the Constitution to enact one. The Constitution applies to taxes at the federal level, not state. States could enact a wealth tax the same way they enact property taxes now (depending on their state Constitutions). The problem for them is that wealth is a bit more mobile than property. And yes there are arguments about what a direct tax really meant in the language at the time the Constitution was written, there are arguments that the income tax should have been legal without an amendment. But that's not how it went down.
- triceratops 2y ago
  > it would necessitate a wealth tax, which I believe is unconstitutional I take it you haven't heard of property taxes.
  - peterbecich 2y ago
    I'm not a lawyer but I do not consider a property tax to be the same thing as a wealth tax. If I own a house or condominium in San Francisco, at a fundamental level I do not own the land or space the residence is sitting on. "Ownership" is basically a lease of the parcel from the city. The house structure is an improvement on leased land; this ties the property tax calculation to the value of the structure. The property tax is the rent on the land/space. I believe this is the constitutional justification for property taxes (no opposition from me).
    - thaumasiotes 2y ago
      > If I own a house or condominium in San Francisco, at a fundamental level I do not own the land or space the residence is sitting on. "Ownership" is basically a lease of the parcel from the city. It's interesting to me that medieval European peasants "renting" the land they farmed had much stronger ownership rights than Americans who "own" land do today. > I believe this is the constitutional justification for property taxes It isn't. The constitutional justification for property taxes is that they're assessed by the states, not by the federal government. The federal government is free to assess property taxes too, except that it must apportion them between the states: https://constitution.congress.gov/browse/essay/artI-S9-C4-1/ALDE_00013592/ https://constitution.congress.gov/browse/essay/artI-S9-C4-1/... > An 1861 federal tax on real property illustrates how the rule of apportionment operates. Congress enacted a direct tax of $20 million. After apportioning the direct tax among the states, territories, and the District of Columbia, the State of New York was liable for the largest portion of the tax [...] What this meant was that the federal government delegated tax quotas to the states and the states were responsible for collecting them as they saw fit.
      - killjoywashere 2y ago
andoando 2y ago
Most of the wealth being in stock is really tricky. You can't really tax stock ownership, but at the same time stock can be leveraged against business deals (Musk for example bought Twitter with largely stock, without having to sell it first and therefore being subject to tax), and you can take out loans with stock as collateral.
- arrosenberg 2y ago
  It's not that tricky. All you have to do is make it a taxable event to collateralize stock.
  - phkahler 2y ago
    How? That makes little sense to me from an implementation standpoint.
    - NewJazz 2y ago
      Lenders would have to report loan origination for secured loans where some specific asset classes are acting as the collateral.
    - _DeadFred_ 2y ago
      If I get something of worth, non-related to the stock/ownership, for the current value on my stock/ownership, I should pay taxes on that amount. I am using the stocks value to gain something. If I take out a loan for businesses needs, that is in the interest of the thing I own. If I take out a loan to buy a separate thing, I have leveraged the current value and have therefor realized the current value and should pay accordingly.
    - arrosenberg 2y ago
      When I bought my home I had to sell $XXX,XXX of stock to make the down payment. If Jeff Bezos wants to buy the same house, he would use a line of credit from the bank, collateralized by his Amazon shares (or whatever source of wealth) and pay with that. I paid 15% in long-term capital gains, he pays 0%. Under my plan, he would pay 15% LTCG for collateralizing his stock,. If I had to pay it, then it's entirely fair and reasonable that we expect him to pay his fair share too.

by pqtyw 2y ago

peterbecich 2y ago

Agreed. For the revenue tax activists want from billionaires, it would necessitate a wealth tax, which I believe is unconstitutional. The non-profit tax exemption fight is about "income taxes" which billionaires already have to pay (but avoid). So it is an apples-to-oranges comparison.

deleted 2y ago
[deleted]
nrclark 2y ago
what is unconstitutional about a wealth tax?
- zeroonetwothree 2y ago
  It’s not totally clear if it would be but here’s a summary: https://city-countyobserver.com/the-constitutionality-of-a-wealth-tax-a-legal-analysis/ https://city-countyobserver.com/the-constitutionality-of-a-w...
- peterbecich 2y ago
  I'm not a lawyer but my reasoning is this: - as far as I know, double taxation by any given entity (Federal Gov) is unconstitutional - a given dollar is taxed once as income. A federal wealth tax on the remainder of that dollar would be double taxation. That does not prohibit the Federal Gov from taxing once, and your residential state from taxing you a second time. There are other arguments about "direct taxation" I don't fully understand.
  - vel0city 2y ago
    "Double taxation" is absolutely constitutional. Tons of things are double, triple, quadruple and more taxed. I make a W2 salary. I pay federal income taxes on it. I pay FICA taxes on it. My employer pays payroll taxes on it. I might pay state income taxes on it. One event, tons of taxes. I take that quadruple taxed money and buy a dinner with a beer. Sales taxes on the overall sale, additional taxes on the alcohol, additional sales tax riders because I bought it in the touristy night life area. Triple taxes on my quadruple taxes, good lord! Unconstitutional! Worthless phrase, "double taxation". > That does not prohibit the Federal Gov from taxing once, and your residential state from taxing you a second time. Once again, the several different taxes applied to my salary income. Then on that I go buy a gallon of gasoline, uh oh, federal gas taxes on that. Or I buy a plane ticket and that gets Federal Excise Tax (7.5% of the base fare), the Federal Segment Fee (currently $5.20 per segment), the TSA Security Fee ($5.60 per passenger), and more. Oof, "double taxation"! Even at the federal level!
- rufus_foreman 2y ago
  >> what is unconstitutional about a wealth tax? Article I, Section 9, Clause 4: "No Capitation, or other direct, Tax shall be laid, unless in Proportion to the Census or Enumeration herein before directed to be taken" A wealth tax is generally considered to be a direct tax. If you wanted to enact one at the federal level, my understanding is that it would have to be done in proportion to the census. So, given that Mississippi is around 1% of the total US population, Mississippi would have to pay 1% of the wealth tax. Mississippi is the poorest US state, so that would be a very regressive tax. An income tax is also considered to be a direct tax, that's why it took an amendment to the Constitution to enact one. The Constitution applies to taxes at the federal level, not state. States could enact a wealth tax the same way they enact property taxes now (depending on their state Constitutions). The problem for them is that wealth is a bit more mobile than property. And yes there are arguments about what a direct tax really meant in the language at the time the Constitution was written, there are arguments that the income tax should have been legal without an amendment. But that's not how it went down.
triceratops 2y ago
> it would necessitate a wealth tax, which I believe is unconstitutional I take it you haven't heard of property taxes.
- peterbecich 2y ago
  I'm not a lawyer but I do not consider a property tax to be the same thing as a wealth tax. If I own a house or condominium in San Francisco, at a fundamental level I do not own the land or space the residence is sitting on. "Ownership" is basically a lease of the parcel from the city. The house structure is an improvement on leased land; this ties the property tax calculation to the value of the structure. The property tax is the rent on the land/space. I believe this is the constitutional justification for property taxes (no opposition from me).
  - thaumasiotes 2y ago
    > If I own a house or condominium in San Francisco, at a fundamental level I do not own the land or space the residence is sitting on. "Ownership" is basically a lease of the parcel from the city. It's interesting to me that medieval European peasants "renting" the land they farmed had much stronger ownership rights than Americans who "own" land do today. > I believe this is the constitutional justification for property taxes It isn't. The constitutional justification for property taxes is that they're assessed by the states, not by the federal government. The federal government is free to assess property taxes too, except that it must apportion them between the states: https://constitution.congress.gov/browse/essay/artI-S9-C4-1/ALDE_00013592/ https://constitution.congress.gov/browse/essay/artI-S9-C4-1/... > An 1861 federal tax on real property illustrates how the rule of apportionment operates. Congress enacted a direct tax of $20 million. After apportioning the direct tax among the states, territories, and the District of Columbia, the State of New York was liable for the largest portion of the tax [...] What this meant was that the federal government delegated tax quotas to the states and the states were responsible for collecting them as they saw fit.
    - killjoywashere 2y ago

andoando 2y ago

Most of the wealth being in stock is really tricky. You can't really tax stock ownership, but at the same time stock can be leveraged against business deals (Musk for example bought Twitter with largely stock, without having to sell it first and therefore being subject to tax), and you can take out loans with stock as collateral.

arrosenberg 2y ago
It's not that tricky. All you have to do is make it a taxable event to collateralize stock.
- phkahler 2y ago
  How? That makes little sense to me from an implementation standpoint.
  - NewJazz 2y ago
    Lenders would have to report loan origination for secured loans where some specific asset classes are acting as the collateral.
  - _DeadFred_ 2y ago
    If I get something of worth, non-related to the stock/ownership, for the current value on my stock/ownership, I should pay taxes on that amount. I am using the stocks value to gain something. If I take out a loan for businesses needs, that is in the interest of the thing I own. If I take out a loan to buy a separate thing, I have leveraged the current value and have therefor realized the current value and should pay accordingly.
  - arrosenberg 2y ago
    When I bought my home I had to sell $XXX,XXX of stock to make the down payment. If Jeff Bezos wants to buy the same house, he would use a line of credit from the bank, collateralized by his Amazon shares (or whatever source of wealth) and pay with that. I paid 15% in long-term capital gains, he pays 0%. Under my plan, he would pay 15% LTCG for collateralizing his stock,. If I had to pay it, then it's entirely fair and reasonable that we expect him to pay his fair share too.