8 ms·

This made me research how much taxes would a wealthy californian pay assuming: - 2.5M worth of real estate bought recently - 1M of job income - 1M selling sh

• Yizahi 9mo ago
  I can't say how much such a person should pay in taxes, but it is kinda funny that I'm paying the same amount 39.5-40% with my five digit salary and no property. I don't know who should pay what amount, but I'm pretty sure that me and that millionaire should have different tax brackets. Let alone people with tens, hundreds of millions or more. PS: I'm in EU, not USA, but here I'm in a highest tax bracket so the point still stands, my tax rate is the same as for any local millionaire. Maybe even more, since those people are aggressively utilizing tax loopholes, shell corporations and offshore tax havens.
  • apelapan 9mo ago
    You pay the same proportion, not the same amount. 40% of 1M is 10x more than 40% of 100k. Disregarding all technicalities about what proportion people actually end up paying after performing clever tax planning. Why are you sure that someone earning 1M should have higher proportion of their income taken away than someone earning 100k? At some sufficiently low level of income I think it stops making sense collecting taxes, but beyond that I'm not so sure from a fairness-perspeective. I could perhaps get on board with a hard cap on wealth, for preserving democracy. It is dangerous to have single individuals and families attain too much power. But up to that cap, I don't see any inherent unfairness or inefficiency in that people of moderate to high wealth pay the same proportional rate.
    • JKCalhoun 9mo ago
      > I could perhaps get on board with a hard cap on wealth, for preserving democracy. Well, a progressive (also wealth?) tax should help to accomplish that.
      • apelapan 9mo ago
        What I am trying to disagree with, is the notation that it is unfair if high-earners and very-high-earners hand the same proportion of their wealth and income over to the government. My take on the wealth-cap is that it isn't about fairness at all. Actually I think it would be mostly unfair, but that it would be good for society anyway. Fairness is an important value, but it is not the only value.
        • JKCalhoun 9mo ago
          You and I differ on the meaning of "fair" then. With regards to taxation "fair" is often taken to mean "what one can afford". I think it's safe to say that those with over $100M will still have a plenty of dosh left even at a much higher tax rate than someone living paycheck to paycheck. If tax revenues are seen as a pie chart—sliced based on contributions from the wealthy and the paycheck-to-paycheck, moving away from a progressive tax system means the poor will be asked to contribute more, the wealthy less. That seems like the opposite of fair to me. I mean, quit being so poor then, I guess?
          • apelapan 9mo ago
            No need to bring the poor into the discussion. Of course they can't afford paying an equal share of their income as someone with average or above average income. In the grandparent post I was first replying to, the poster stated that they were in the highest tax bracket that existed in their country, but said there should be more brackets for people who were even more well off. My opinion is that it isn't unfair to the top 1% that the top 0,1% have the same tax rate, even though they are richer. I do think it is unfair if the bottom 25% have the same tax rate as the top 25%.
    • 9mo ago
• pants2 9mo ago
  This doesn't seem quite right. Even using SmartAsset's income tax calculator for a city in California, I'm getting around a 45%+ tax rate for someone making one million a year of income. It's actually pretty easy to pay an 80%+ tax rate in California if you consider taxes that your employer pays, sales tax (11%+ in some areas), local assessments, capital gains tax, etc.
  • epolanski 9mo ago
    In cali capital gains are part of income. Taxes paid by your employer aren't taxes you pay. I'm quite sure your calculator is very basic and stops at 401ks and little more, there's stuff like mortgage interest, being married with kids, backdoor roth, etc. But yeah, wouldn't change the number you said dramatically, maybe it would lower it to 45%ish on a 2M income.
    • vikingerik 9mo ago
      Taxes paid by your employer are indeed paid by you. If your salary is X and the company is paying Y worth of payroll tax, then they're really paying X+Y for your services, which would all be salary going to you if not for the payroll tax.
      • tom_ 9mo ago
        But the value Y could also be put towards hiring somebody else to do an additional job, giving somebody else a pay rise, or giving money to the shareholders.
        • necovek 9mo ago
          In market dynamics, a worker becoming cheaper means that some employers will fight to hire/keep an employee on that surplus, thus driving the employment cost up for everybody else. Yes, it probably would depend on positions and available talent, but overall and over a longer period, if applied universally to a market (say state like CA), it will be reasonable to expect salary increases (but not increase of how much is that worth because of increasing purchasing power, and increase in prices due to higher willingness to pay).
• ponector 9mo ago
  >> taxes are complicated to implement, I'm not sure how can you implement a progressive yet fair system without loopholes It's hard, but possible. However the goal of people who created current tax code is exactly opposite: to create system with loopholes. US tax code is a mess, there should be less amount of different taxes, more unified taxes.
• atmavatar 9mo ago
  > sales taxes (probably the fairest of all taxes). Just curious: what makes you come to this conclusion?
  • Pet_Ant 9mo ago
    I’m assuming they think that rich people spend more so they pay more. This is a fallacy, because poor people spend a higher portion of their income (over a 100% a lot of the time).
    • Reimersholme 9mo ago
      [dead]
    • epolanski 9mo ago
      Most economists agree that sales taxes are the fairest because they are always proportional to consumption.
      • thisislife2 9mo ago
        I don't get it - what about "taxing consumption" makes it "fair"? Poor people aren't poor because they spend more money than others. They are poor because they don't have enough money to live a "decent" life (assume a middle-class lifestyle) or to even save it. Right?
        • MichaelZuo 9mo ago
          Consumption has real negative externalities on the environment and other people… i.e. A burger wrapper doesnt care about economic status.
          • genocidicbunny 9mo ago
            Until you get to things like Vimes Theory of Boots. Not all consumption is equal. Not all consumption can be reduced. A burger wrapper might not care about economic status, the bag of beans and rice might.
• _DeadFred_ 9mo ago
  I mean Capitalism's solution to labor movement is to create company towns and using scrip to prevent it's workforce from freedom to leave. Maybe we can apply similar Capitalist principles/established solutions in this scenario?
• RobotToaster 9mo ago
  >I'm not sure how can you implement a progressive yet fair system without loopholes Georgism, a single tax on the unimproved value of land
  • danny_codes 9mo ago
    Obviously, but then what would the feudal lords sorry I mean landlords do? /s
  • cbolton 9mo ago
    Would that help in any way with the increasing concentration of wealth? It doesn't seem to be particularly tied to land.
    • RobotToaster 9mo ago
      Some variants also tax contrived monopolies like IP.
• paulsutter 9mo ago
  Just make borrowings above the basis taxable as gains, its not hard
• popalchemist 9mo ago
  Sales tax is one of the most UNFAIR, being a flat tax, it affects people in indirect proportion to their wealth (poorest hit hardest, proportionately).
  • epolanski 9mo ago
    This is the only counter argument, and in fact the consensus is that they are the fairest (they tax consumption rather than production, we tend to tax producing wealth more than spending it) if you offer rebates or lower them on essentials (bread, milk, eggs, healthcare). They also have the effect that everybody has to pay them, including tax evaders, tax loophole abusers, criminals with undeclared incomes, etc, everybody has to pay it. But yes, without offering sales tax rebates or with taxing essentials then your argument is true and they become less fair. Albeit, the elephant in the room is always the definition of fairness itself.
    • nrabulinski 9mo ago
      In my eyes they are not fair, because while they tax consumption, they very disproportionately affect buying power the less wealth you have. For a millionaire, paying let’s say 30% more for new shoes is not going to meaningfully change how much money they’re left with. If I’m poor and I need new shoes (because you can’t just afford a new shoes when you want them so it by necessity implies you’re in desperate need of them), that extra 30% means one less grocery trip. Or heck, even 30% on groceries potentially means one less grocery trip. Which is to say, being poor is expensive, and sales tax only makes it more expensive, while literally not affecting the bottom line of those in higher income brackets.
      • Manuel_D 9mo ago
        But wealthier people tend to consume more. The top 10% of earners account for~50% of consumer spending. It's more like the low income person pays $5 of sales tax on a $50 pair of shoes, and a high income person pays $50 of sales tax on a $500 pair of shoes.
• hcknwscommenter 9mo ago
  I agree with your overall point. But I find it odd that you consider sales taxes to be the "fairest". Similarly, I find it odd that you put "progressive" taxes in some tension with "fair" taxes. Folks in the highest income range arguably benefit the most from govt services (e.g., infrastructure, defense, R&D, rule of law). They also have a much higher ability to pay well beyond basic survival needs. And, they can reduce sales tax burden by saving versus consuming, a choice that is not available to lower-income.
  • JKCalhoun 9mo ago
    I agree that a regressive tax like sales tax is not "fair" at all. I had a coworker that argued for a flat tax—considered that fair. I explained that anything less than a progressive tax was going to make the poor pay more and the wealthy pay less. Really, that's fair? You should be so lucky to have enough that you're in the highest tax bracket.
    • michtzik 9mo ago
      > I explained that anything less than a progressive tax was going to make the poor pay more and the wealthy pay less. Here's a formally-verified proof in Lean that with a flat tax, if you have more income, then you pay more tax: https://live.lean-lang.org/#codez=JYWwDg9gTgLgBAWQIYwBYBtgCMBQOAmApgGZwxIAeA+lsOunABTnVQqFwBccguIQCUTYADsAxhBAdu/LgF4ccMpSpsYHAFRxhYiXjSFohEHBAQqJoYQCeZ02CgQs6QwGcmxdCiotl7LrwGMkAZQVFrikv5MUMAiqIQhYRJ+0oyofu6e3iocAHxwAAwCnPJwQVDxoaLhcAA8cNGxFYkcgEmEitS09HAZMF5K2aUQwZXaHHXenQw9fay+DXEJVUmcMnBYliXCMPZwqMAlAK5CxBDo+O00dOglzqBgVEhdEELolnAA2gDmvcDExFToGAAGmMB3QAN6IDBoT+ymAn1QMEAAQQAXRwQA https://live.lean-lang.org/#codez=JYWwDg9gTgLgBAWQIYwBYBtgCM... The theorem uses one important assumption: that the flat tax rate is positive.
      • necovek 9mo ago
        I believe everybody understands that a percentage means exactly that. But if you account for minimum living expenses M, if you are under M, 30% of M is "more" than if you are at 10x M for the quality of your life. What scheme is "fair" is harder to figure out, though. Yes, I object to that type of language too, but let's not ignore the context.
• readthenotes1 9mo ago
  Even Georgism style taxes will face the problem that if the tax is high enough, it will be worth hiring some really smart person to figure out how to work around it. Of course, you're also going to have to face the problem that representative democracy includes the ability to buy loopholes. And then, there are unintended consequences because representatives aren't necessarily the most financially savvy. I'm thinking about the 401k program that disproportionately advantages high income people when it was touted as a savings route for middle class people.
  • OkayPhysicist 9mo ago
    The 401k statute didn't actually grant any additional abilities to people: It set limits on a tax dodge you could already do. If I'm a CEO at $MEGABUCKS, and I make vastly more money than I need each year, I'm paying in a high tax bracket. I could instead strike a deal with my employer: cut my pay in half, and then keep paying me after I stop working here (pausing payments if I get another job), until the difference between what I would have made and have made is eliminated. All perfectly legal. But what I've done is taken money that was destined to taxed at a high tax bracket, and deferred it into a lower one (by spreading it across multiple years). 401k identifies this loophole and sets limits. Setting contribution caps, limiting withdrawals until retirement, etc. Then they incentivized offering it to the poors, too, because working out an ad-hoc agreement like that is the sort of shit only really high power people in a company have the opportunity to do. In short, the primary purpose of 401ks wasn't to benefit the middle class, it was to slightly reign in the rich.
    • jjav 9mo ago
      > 401k identifies this loophole and sets limits This loophole is very much alive today. I've recently worked at a large public company where the company allowed any percentage of pay to be deferred into the future. The regular workers couldn't afford to do this of course, but the executives making many millions would defer most of their pay into the far future (presumably after retirement) to pay very little tax today.
    • readthenotes1 9mo ago
• knowitnone3 9mo ago
  California is not a safe place
  • Bolwin 9mo ago
    Compared to?
• JuniperMesos 9mo ago
  > And every time you decide to cut on services, you are just moving money elsewhere: more inequality -> more social tensions and criminality, you just end up paying way more to live in a safe place and pay for private and public security and prisons. There's no reason to think that the amount of taxpayer-funded services in a political jurisdiction has inversely proportional relationship with amount of crime that that happens there (nor any particular relationship with what kinds of crime, how serious the specific crimes are, and so on). Same thing with social tensions - social tension are caused by a lot of things, many of which aren't particularly related to the raw amount of taxpayer-funded services that exist. Would a more redistributive welfare state have made the partition of India between (mostly) Hindus and (mostly) Muslims less likely, for instance?
  • epolanski 9mo ago
    There are multiple social studies linking welfare with security. https://ideas.repec.org/p/cge/wacage/548.html https://ideas.repec.org/p/cge/wacage/548.html https://www.researchgate.net/publication/263466102_An_analysis_of_the_criminogenic_effects_of_terminating_the_Supplemental_Security_Income_SSI_impairment_category_for_drug_addiction_and_alcoholism https://www.researchgate.net/publication/263466102_An_analys... https://www.sciencedirect.com/science/article/abs/pii/S004727271830210X https://www.sciencedirect.com/science/article/abs/pii/S00472...
• arjie 9mo ago
  Selecting the precise threshold where a marginal point kicks in is pretty funny, though I'm sure you didn't intend it. Above a million there's also the MHSA tax. Marginal at over a million is 50% or more unless you optimize.
• cherrycherry98 9mo ago
  I also like the idea of sales taxes over income and especially wealth taxes for a number of reasons. 1. It limits the opportunities for the government to use force on the general population. Today, if you do not file your annual taxes, men with guns come and put you in jail. A sales tax does not require this level of enforcement to be inflicted on the average citizen. 2. It's voluntary to a degree. Today if you don't like what the government is doing and want boycott paying taxes you cannot practically do so because of point 1 above. With a sales tax you can decide to defer unnecessary spending as a form of protest. 3. In theory it's vastly simpler to reason about and plan for. The myriad of tax advantaged accounts that have proliferated over the years in the US is daunting: IRAs, 401k/403b, 529s, FSAs, HSAs, Trump Accounts, Roth variants. We ask citizens to best guess how to allocate investments between these vehicles for goals decades in the future. If you need emergency access you're often looking at paying penalties. Not to mention the poor user experience baked into many of the designs. 401ks put the burden on your employer to restrict your investment options to their curated choices and their chosen plan administrator. You have to leave your job and roll it into an IRA to finally have the freedom to pick your own investments and who you have the account with. FSAs have the annoying use-it-or-lose-it rules. 529s are bizarrely state sponsored but you can choose a plan from any state. Like your state's plan but want to have the account at your broker? Too bad, you have to use the administrator your state chooses. 4. It's widely understood that if want less of something you should tax it. By taxing income and wealth it discourages work and saving. A sales tax discourages consumption instead, which encourages saving and is also pro environmental. 5. Changing asset allocation is free. Today, changing investments in a taxable account, where there are gains, triggers a taxable event. This discourages the movement of that capital to other investments. 6. In theory it's harder to dodge taxes as the simpler system has less loopholes. 7. On average, people with more wealth should have more expensive lifestyles which translates to them paying higher taxes. I understand the arguments that sales taxes are regressive, let rich people dodge taxes by living frugally, etc. I accept all that may be true and I'm ok with it. Many seem fixated on using the tax code as a mechanism to level inequalities, as if that were its primary function, and a sales tax doesn't advance that goal enough for them. I think I can accept that some people are going to be vastly wealthier than me and are going most likely live a much easier life because of it; much like I can accept that some people are going to much prettier than me, taller than me, less genetically disposed to certain medical conditions, have been born to better families/circumstances and those things can all provide significant advantages in one's life.
• JackSlateur 9mo ago
  But tax may be easy to implement I think reversed-VAT is the good way to do The overall idea with VAT is that you are taxed when you buy things The reversed-VAT is the idea that you are taxed when you earn money (not "income" as in "salaries": every time some wealth are earned somehow) Fixed rate, money's origin is of no concern, nor is money's usage Say, you have a 40% tax on everything (using the same rate is important): - your company sold random stuff: you keep 60% - you earned money from interest / investment / etc: you keep 60% - income from your job: you keep 60% - a gift from your uncle: you keep 60% - inheritance: you keep 60% - exchange some money between your companies: you keep 60% - you borrow something: you keep 100% (it will fall back to 40% tax if that borrow is transformed into a gift) - you earned something of value (non-money gift), in one form or another: you have to pay 40% of its value The root of all evil is the thinking that tax are made to make "a better world", that it is a tool a (social) justice or whatever But it must be the same for everybody. Because only then it can be simple. And the more complex it is, the more loophole you have ("whack a mole" style as we have today) Now, one person could keep all his money. Is it an issue ? No ! First, because he would have been taxed to 40% already. And then, because everybody dies someday. And that day, 40% of this person's riches will be retrieved: which would, again, be nice to the society as a whole: it would damage multi-generational wealth (while not void it).