www.newsweek.com/richest-americans-pay-less-tax-working-class-1897047
Richest Americans now pay less tax than working class in historical first
"In the 1960s, the 400 richest Americans paid more than half of their income in taxes, according to the Times. By 2018, America's wealthiest individuals paid just 23 percent of their income in taxes. Meanwhile, the bottom half of income earners paid 24 percent of their income in taxes."
One would think that this would generate a call for real change. However, that doesn't seem to be case which is baffling. And I'm not just talking about online discourse. Does anyone think that this is sustainable?
I think anyone with a brain paying taxes can realize this isn't sustainable. It's beyond fucked.
Meanwhile I’m still dealing with coworkers who think they’re getting a paycut if they jump up a bracket.
So when will this change?
It will change when we pass a constitutional amendment that says giving unlimited amounts of money to influence election results is not protected free speech. Citizens United completely destroyed our political system.
So never, since the very same people getting paid off are also the ones needed to pass an amendment.
I’d say when we start improving public education, but I don’t see that happening anytime soon.
Even before citizens united it was clear campaign contributions were a black hole of doom. Once you head down the dark path of allowing money into politics, you end up with a system where no one can get elected without equivalent cash as their opponent, and you spend 100% time fundraising. Glhf.
Why would Congress allow that? They're making too much money to pass a bill against citizens united.
That’s literally what they did with the BRCA bill that SCOTUS ruled unconstitutional in citizens united. In order to overrule that you have to amend the constitution which is obviously much more difficult than passing a bill.
When the GOP doesn’t have enough control to stop Dems from changing it. Every time Republicans get control of DC they pass massive tax cuts for the rich. Dems have only been marginally successful in rolling them back.
Every time Republicans get control of DC they pass massive tax cuts for the rich.
Most Republican voters I know are working class people who are very much voting against their interests (What's the Matter with Kansas thesis) because of "moral values". The economics of the situation are hardly considered if at all.
It's important to note, because the 'Project 2025' conversation keeps coming up, that it's much deeper and more sinister than simple tax cuts for the rich or laymen voting against themselves.
It's a steady and intentional decline, defunding and outright dismantling of public services that are designed support an informed, educated and politically/legally protected people. Additionally, we've been consistently propagated on various societal issues that keep the average person subdued to ignore apropriate change for their own creature comforts. Hell, The United States inspired the Nazis when developing their propoganda machine during World War 2 because we'd so effectively driven the average person to support the 'economic machine' during the first war. We 'invented' psychological marketing. We own the MBA. We have a whole subculture about 'rise and grind', we're a country of professional psychological manipulation.
Anyone who thinks administrations since then have decoupled from such tactics or abandoned such troves of knowledge ar entirely deluded. The 'MAGA Syndrome' and the QANON theories are intentionally driven madness by decades of uninformed and poorly educated voters being deeply convinced that they are both more intelligent and more moral than they truly are.
Why was the old trope of high school bullies crunching nerds ever a thing? Why have we ever meme'd "USA USA MURICA #1"? Where did this deeprooted, ignorant bigotry come from? Who are Americans to have such a stereotyped culture of "innocently" mocking the cultures, accents, histories, race, lives and circumstances of other countries (anyone ever heard that joke about French tanks during WW2? 3 [insert race/gender/culture] walk into a bar joke?)
We are a deeply broken people and tax cuts are only another of many slaps in the face.
I hope I live long enough to see rich people dragged into the streets and given they deserve for what they’ve done to us.
That's the thing though right? You want to see it, but people will have to actually do it, that's never going to happen if we're all waiting for someone else to go first
That’s why the rich people are so afraid of young people refusing to have children. People with children won’t step out of line, even in desperate times.
Naw, they're worried the labor force will diminish and impact their bottom line.
I'd say we need to start "taking life before making it", but I refuse to afford the invalid ghouls in right wing political parties, lobbyists, or corporate rats any level of humanity. They're nothing more than a parasite on society
Even just the figurative dragging - seizure of disgustingly wealthy assets.
Wouldn’t it be funny if a whole marina full of superyachts caught fire and sank at the same time?
I wish I was as enthusiastic of a supporter of committing voter fraud as Republicans are so that I could vote for this more than once.
Corporate Democrats aren’t raising taxes on themselves either. Support for avoiding taxing the rich is bipartisan, except for the socialist Democrats like AOC and Bernie Saunders.
Despite this claim, one party consistently cuts taxes for the wealthy, while the other has been the primary party responsible for preventing them and rolling some back.
Republicans are known for increasing our spending too. They just move the burden around.
The majority of Democrats support raising taxes on the wealthy. But a small minority of Democrats -- the Sinemas and Manchins of the world -- don't. It's not that Democrats don't want to raise taxes on the rich. It's that not a single Republican does.
So when you have largely evenly split Congresses, a minority of Democrats with all of Republicans will usually beat out the vast majority of Democrats standing alone.
Listen, I hate the GOP as much as the next sane human being. But we can't act like the Dems aren't in the pocket of the billionaires/corporations too. They are corrupt AF too, they just generally aren't trying to literally murder people or force them into child marriages or force them to carry rape babies to term even if it means the mother dies, etc.
When the GOP doesn’t have enough control
And financially influenced/compromised Democrats. There are plenty that are protective of corporate interests.
And yet they raised taxes on the largest corporations via the IRA. What did the TCJA do?
Don’t get it twisted. Even when Dems had full control of the WH and Congress, they didn’t do anywhere nearly enough to address this issue. They love to CLAIM they’ll bring change because that’s what gets them votes.
It took every single Democrat uniting under that extremely rare instance to get the watered down ACA passed because Republicans universally oppose any and every government activity that helps, or could even potentially help, working people. This is a very lazy and disingenuous comment on your part.
They passed it without any Republican support though lol. Dems compromised with themselves and their donors.
Obama ran on a government option, which fell off as soon as the lobbyists helped write the bill.
User deleted comment
21d
Dems had control of senate, house, and presidency from 2021-2023. Did taxation of the ultrawealthy change?
The democrats are compromised by corporate interests.
If not for Manchin and Sinema, they would have put a bill on the floor of The Senate that would have reversed many of the 2017 tax cuts. Having exactly 50 seats requires no dissents, which is not going to happen when two of those are very wealthy and don't want their taxes raised.
Right, on top of that there was a pandemic recovery which is a different scenario. Now that things have recovered....
"Biden Tax Proposals Would Correct Inequities Created by Trump Tax Cuts and Raise Additional Revenues
President Biden’s fiscal year 2024 tax proposal would impose new taxes on unearned income, while improving the child tax credit."
.
Let’s be real - the tax on unearned income will never pass. It is a logistical nightmare to properly enforce and prime fodder for the courts. Even Biden knows it won’t pass. It’s just a way for him to buy votes.
People also fail to realize taxing unrealized gains or “wealth” at the federal level won’t pass the constitutional sniff test… if getting 50% of senate votes is an uphill battle amending the constitution will take an overwhelming support for a wealth tax to become law
If not for Manchin and Sinema
So, Democrats.
Citizens United did them in.
They like to get re-elected, and our govt doesn’t run flawlessly when you have control of all three. You have to have supermajorities to be able to do whatever you want. Which Dems didn’t have.
As many people pointed out, both sides are in fact, not the same. All Republicans are hardliners. Democrats are diverse.
Let’s be honest, the left is filled with a bunch of neo libs. I’m not hating on Joe Biden but he said to Rich donors “nothing will fundamentally change“ before last election.
You're leaving out crucial context. He said that to mean the ultra-wealthy could afford higher taxes and that being subject to higher tax rates would not alter their quality of life, but it would make a huge difference to the working class.
That just isn't true. Taxes on the rich have been relatively flat, while they have been falling for everybody else.
https://www.taxpolicycenter.org/statistics/historical-average-federal-tax-rates-all-households
In fact, if you back of out social security taxes, effective tax rates for the bottom 3 quintiles is are actually negative.
Thanks for sharing that table of effective tax rates. I interpret u/froandfear to be referring to marginal tax rates. So both things are likely true.
But marginal rates have been falling on the middle class as well (a married couple now needs an income of over $100k to get above the 12% marginal tax rate) while they have been relatively steady on the rich (mid to high 30%s since 1993)
Yes you are correct. However, the very wealthy receive preferential treatment on a majority of their income, namely long-term capital gains, carried interest, and deductions on pass-through income. The marginal rates on those incomes are much less than their earned income marginal rate.
Which is why we concentrate on effective rates, which capture all of these.
Clinton incentivized businesses with tax benefits when compensating their CEOs over $1 mil with company stock, setting off the enormous gap between CEO and average worker pay while lowering both CEO and corporate effective taxes.
Obama (along with the Democratic Senate) made the "Bush tax cuts" for the rich permanent in 2013, thereby making them the Obama tax cuts for the rich. The ACA raised taxes in everybody, while making healthcare and pharmaceuticals more expensive - and they did that with a supermajority.
I wouldn't be so quick to say the Democrats actually care about you any more than the Republicans do.
This is just a blatant lie. Obama let the Bush tax cuts expire for high-earners under the Byrd Rule, while extending the cuts for everyone else.
Just more nakedly political talk on "economics." Democrats in congress trade stocks and get rich just like everyone else. This has nothing to do with the GOP. This will never change because no one in charge (democrats included) will push for higher taxes for themselves and their friends.
I want to agree, but the Dems like to suggest ideas that won't actually do anything meaningful.
The dems serve the wealthy over the working class too
Show me a piece of tax legislation passed by Dems in the last 40 years that supports this argument.
I mean California Democrats keep raising the local sales taxes which we all know is regressive and anti-poor people.
When damn near half the population doesn’t respond to calls to raise taxes on the ultra rich by screaming about communism.
There are a lot of very gullible poor and middle-class people out there who have been propagandized into acting as the first line of defence for the ultra rich. These unwitting (or witless as the case may be) pawns do real damage to all of their peers and loved ones by enabling the ultra rich in this way, because they provide enough political power to obstruct any attempt to raise taxes on them. Only when they pull their heads out of their asses and realize that it’s not immigrants, “welfare queens”, public service workers, and labour laws and regulations keeping them down but rather economic subjugation by the ultra rich in every facet of society, will things improve.
When the culture finishes consuming the media in the dish.
It's as sustainable as any other society. Which is that it will just be terrible for most people, while others live in luxury/elite social hell.
with a brain
There's your problem.
"Think of how stupid the average person is, and realize half of them are stupider than that." - George Carlin
Agree. When half+ like today pay nothing the other half- gets screwed as it’s never enough for those that pay nothing.
It's literally a money pump. From the bottom to the top.
This is just flat out false. The article is using a paper that redefines income, and doesn't account for all taxes paid. The fact of the matter is that effective federal tax rates for the rich (both the top 1% and the top quintile) have been flat to slightly up since 1982 (and are only about 5 percentage points lower than they were in the 1960s), while tax rates on the lower 4 quintiles have been decreasing.
https://www.taxpolicycenter.org/statistics/historical-average-federal-tax-rates-all-households
The facts are that taxes on the rich haven't changed much while going down for everybody else. In fact, if you back out social security taxes (from which lower income workers get higher benefits relative to their contributions), federal tax rates are negative for the bottom 3 quintiles of households.
Yes. Mostly because this article is cherry picking data and misrepresenting what's going. It's propaganda for credulous suckers.
They are ignoring the fact that the government typically gives back all the money the bottom 50% pays in taxes, in the form of credit and other transfers. Once you account for transfers, the tax rate of the bottom 50% is zero, or negative, meaning you are receiving more from the government than you are paying them in taxes.
The bottom 50% pays basically nothing. Often less than nothing. The top 5% of income earners pay about 2/3 of all income taxes. The bottom 50% pays 2.3%. The United States has one of, if not the most progressive tax codes on Earth. If you make median income or below, you have very little tax burden. Especially compared to our peer nations.
https://taxfoundation.org/data/all/federal/latest-federal-income-tax-data-2024/
To be honest, this article is so inaccurate it should be called out for lying. Either the author is completely ignorant, or they expect their audience to be.
Yeah... Mostly true... But the relatively highest payers aren't the absolute richest people, they're the "normal" upper and upper middle class... People who make too much for government benefits but who make all their wealth through ordinary income.
But yes, on raw dollars, the rich pay more than anybody... By far. One of the problems with politicians saying they want to cut working class taxes and make the rich more and stuff is that there's not much you can actually cut from those folks.
I wish we'd instead focus these discussions on more practical issues. For example, we could make the system much more efficient by just moving to a negative income tax or UBI rather than having all the administrative burden of so many of these programs... And the themes around that show up all over. We should be asking how we can make it less costly - both to the government and the program participants - to use federal support programs.
The rich pay more in raw dollars and I'm terms of percentages. Which is what you would want and expect in a progressive tax code.
The highest tax payers, in raw dollars or percentages, are not the upper middle class or anyone most people would describe as normal. It's a vague definition, but upper middle class household income caps out around 200k-275k. That would put you in the upper end of the fourth quintile of income. The fourth quintile pays a tax rate of 15.9%. The fifth quintile pays a rate of 30.7%.
The highest income earners pay a rate almost twice what the upper middle class parts. There are a lot of tax breaks you can take to shield a significant portion of your income, when you are upper middle class. Retirement deductions, for instance. Those ways of deferring tax protect a lot less of your income when you are upper class. Hence the higher rate.
It's a common misconception that the middle class and upper middle class pay the most taxes. But that's mostly because it's a convenient lie to tell when you want to cut taxes. Gotta convince the majority of people getting a good deal that they are actually getting a bad deal, so they will support something that will benefit the rich more than themselves.
No... You mistook my comment... I mean very rich people... People who don't make income. Their percentages drop because they make their money from capital gains and loans.
User deleted comment
21d
It's accurate. Overall tax burden is lower than many European countries , but the rich okay a larger share of taxes in the US than they do in Europe.
No VAT tax alone makes the US taxes progressive af
No VAT tax alone makes the US taxes progressive af
No VAT tax alone makes the US taxes progressive af
How many times do I have to prove, by going to the tax code, that this left-wing talking point "the wealthy pay a lower tax rate than the working class"! is complete nonsense, and a total lie?
Now we may need to hike taxes on the wealthy, but let's stop with the lies
The statistics the left is trying to use, including the guy with the graph, is that rich people pay in the 15% capital gains bracket, have no additional income through bond interest or unqualified dividends, and never take a salary
this is total bullshit
the wealthy pay
20% capital gains on qualified dividends and long-term stock sales
3.8% additional NIT (net investment tax)
(23.8% LTCG)
37% tax rate on income, bond interest, and unqualified dividends
a middle-class family making like 80-100k would have an effective-tax-rate of around 14-15%
a wealthy person making 800k a year from dividends, bond interest, etc. would have a rate above 25%
This ignores that said wealthy individual has an army of accountants and lawyers on their side setting up loopholes and tax havens.
They invest a large portion in municipal bonds (no taxes) have A Corps and Trusts set up to receive said income, pay expenses and pay out to the owner at a substantially reduced rate (Yeh I made $500k last year through my fund, but we spent $400k on management (me), rent to myself, costs to operate etc)
That guy in your scenario making $800k/yr in bond interest has a bond portfolio worth $16,000,000.
A middle class family paying an effective rate of 15% is laughable. I've never had an effective rate below 20% since I've been making >$80k/yr.
Not to mention, said middle class family has all of their network in either an IRA or in their home. Their home they pay annual property taxes on its current value. So the middle class family actually has a wealth tax, while your poor rich guy with $16m in bonds is complaining about paying $200k/yr on $800k/yr coming in for doing nothing.
Why are you paying taxes on your labor when taxes on capital is non existent to barely registering?
The rich need to pay more. That's why there's absurd wealth disparity right now.
Effective federal tax rate for a single person making $80k is 12.33%. it's just under 20% including FICA.
That's not including deductions, e.g. 401k/IRA, benefit contributions so on and so forth.
Congrats on being the useful idiot as Lenin would say. Just keep voting the way you do and keep watching your pocket book crumble.
What the rich do is create shell companies. The shell company is what receives the income through bond interest, and dividends. The shell company pays next to nothing in taxes. So the question becomes how do the rich get access to their earnings?
The trick is that they use capital gains from the shell company for the income they need. Let's say you are a billionaire. Do you really need your billions? Not really. So you only take what you need. So lets look at Bezos and his mega yacht. You think he owns it? Most likely a shell company owns it.
But here is where it gets amazing. So Bezos owns this yacht and he uses it maybe 3 times a year? So let's say it costs X dollars a week to maintain. If he uses it for 5 weeks then he has to pay 5 times X dollars as he gets a benefit. This he pulls from the shell company and declares it as income. Of course as capital gains.
Here is the rub. The yacht is not used for 47 weeks of the year. This means the costs are tax deductible because well he has to run the yacht. So his tax attornies will come up with some scheme that the monies used will be paid using a loan and everything is tax deductible. The monies Bezos paid is then returned to him because of the costs of the yacht.
In other words because you keep defending the rich you ARE the useful idiot and keep voting in politicians that just keep giving these tax breaks. I keep shaking my head when read opinions like yours and how misguided they are.
You have absolutely no idea what you are talking about lol
case-in-point:
"Shell companies" cannot receive dividends --individual owners and stock holders receive dividends (qualified or unqualified)
Shell companies do not receive bond interest unless there is some unorthodox scheme involving a junk bond offering, and even then I have never heard of such a thing.
Purchasing private assets through a shell company and writing it off as a business expense is tax evasion
If the billionaire gets a dividend from the shell company, it would be taxed just like a dividend from the primary company --like how is that even different lol
dude just stop
The IRS would immediately see through this set up and disallow it all. Someone with the capacity to hire lawyers at this level wouldn’t even bother as all the lawyers wouldn’t bet their licensees on a clearly fraudulent scheme.
User deleted comment
21d
Are you really bitching that a an economics sub deleted a thread that linked to an X tweet without sources to back its claim? Yeah, it's this sub that's moronic...
Here’s another source that disputes this narrative.
“the top 1 percent of taxpayers accounted for more income taxes paid than the bottom 90 percent combined. The top 1 percent of taxpayers paid more than $1 trillion in income taxes while the bottom 90 percent paid $531 billion.”
All this did is prove 1% earns >double what the bottom 90% combined earns. If anything it shows the disparity is so face melting bad.
Doesn't dispute it at all, the top 1% earn a higher proportion of incomes then they did.
The title says the richest Americans pay "less tax" not "a lower proportion of their income in tax"
If Bezos buys a $1 million home and the average worker buys a $300k home, would it be accurate to say that Bezos paid less because he earns more?
Sorry maybe what I should have said is, “here’s another perspective on who is paying taxes and how much”
Yeah, it really goes to show just how rich the richest are if they're paying that much even with such low rates. Just bloody oceans of capital under the control of a bunch of mostly anonymous petty kings.
If you make 1 million in income, depending on the State, you will take home around 53% of it.
You can get around this by generating capital gains income or getting loans backed by existing wealth. That’s the whole game of tax avoidance
Loans have to be paid, and the income to pay them is taxed.
Taking loans for liquidity purposes is only beneficial from a deferral perspective, it lets you time when you pay taxes, not if you pay them at all.
Heirs get a step up basis to repay estate loans if you die with loans due. You may have life insurance to cover loans too. You can avoid tax indefinitely, though your estate may owe the death tax.
No, it’s not sustainable because the truth is the top 1% pays almost 50% of all taxes collected. The effective rate is a mere statistic that reflects income mix. It is generally used by those with an agenda against high earners and who want wealth distribution. When one percent of the population population carries the burden of approximately half of government income tax revenue, that is not sustainable or even remotely fair. The bottom 50% pays approximately 5% of total taxes collected. Everyone should have skin in the game and should carry responsibility for funding the government. Right now, half of the country isn’t carrying much weight at all and half the country is not truly poor.
Ok so I’m your system how do we deal with the fact that money can and does buy you direct political influence. Let’s be honest, if I want to have a sit down lunch with my congress representative, but also the CEO of Comcast wants the same lunch meeting, which invite gets accepted?
This is a super simple question but it’s drives directly to the root cause of these issues.
Which lunch invite will the rep accept? A single voter in their district, or the CEO of a major corporation?
Now let’s take it a step further -
If the rep takes my lunch date, I get to bend their ear and talk about all the things I like and dislike. At the end of the lunch everyone will shake hands and maybe, just maybe, I’ll end up voting for that rep next election.
If the rep takes the Comcast invite - they’re going to very very likely talk about things that Comcast Inc. likes and doesn’t like. And at the end of that lunch, the CEO and the rep will shake hands. But also, there might be more. Because a company like Comcast averages roughly $11 million dollars (that’s the actual number) in lobbying dollars spent to ensure the things they talked about liking and not liking at their lunch, turn into (or don’t) political action they prefer.
And later when Comcast has an issue they’re interested in up for review by the FCC - regardless of the millions of public comments that will get put in front of the board of non-elected council members,shockingly (not really) Comcast will have had lunch with all of those people (metaphorically) and the millions of public commenters will have had the pleasure of submitting an online form.
So back to the original issue - tell me how the government (paid for by billionaires) is supportive of keeping the playing field fair so “to each his own”.
Are you really that oblivious? First rig the game and widen the wealth gap to insane levels. Make half of the country piss fucking poor while being astronomically rich as the top 1%. Then blame it on the poor fucks their broken backs your wealth is build upon that they don't pay taxes. Meanwhile skimp the slightly less poor 'middle class' to pay taxes for you instead.
Great job, you should be embarrassed.
If you can’t even deal in basic facts and there’s no point in having a discussion. Half the country is not poor and you’re not a victim and nor are most Americans.
Why is half the country working poor? I perfectly understand that they are and the tax contribution is, logically, low to non existent. That's no rocket science.
But it's easy to blame people right? Blame them for having jobs that keep them poor and a government that's in the pockets of the corporate overlords that 'provides' those jobs. Getting shafted in 2 ways and people like you blame them for that.
The half of the country that isn't poor but not the 1% is also victim of this, because they need to pick up the bill for the half that can't and the 1% that won't. For the rest you can leave me out of it as I'm not American (now you can just post about my view being irrelevant because of that, nice strawman incoming!) and you don't know anything about my financial situation.
5% isn't even local sales tax for most people, yet billionaires don't even have to pay that. The very bottom federal tax rate on income is 10% and that's on $10,000 a year!!! And you think the billionaires have it bad?
Why do people like you spread lies like this? Poor people do have skin in the game. Most of them aren't dealt the same cards as billionaires and upper classes, so they never even have the opportunities to become one of the cherished producers that poor haters like you put on a pedestal.
You realize that people like Paul Ryan never would have made it to Congress without government programs to "leech" on, right? The very kinds of programs he and the Republican party want to cut. If we're gonna talking about carrying weight, let's at least have an honest discussion about WTF is actually going on, not the Fox Business perspective regurgitated everywhere. It's bullsh*t.
I haven’t lied one time; I’ve used data. I’m sorry that you live in a world where you think truth is a lie. But that’s your burden to bear not mine.
And don’t talk to me about hating the poor when I’m the one that is in favor of empowering them while people like you almost always want to get them addicted to government handouts. You’re not helping them even if you feel like you’re do-gooding.
I would argue without handouts like food you run a risk of children and old people dying in the street and middle aged people engaging in more crime.
The rich pay so much because they have so much. If one person has a thousand and another person has a dollar should we tax both at 25%? What will happen to the person with a dollar?
I’m fine with safety nets. So much of the nanny state demands aren’t safety nets.
They pay so much because they have so much…at least you said it out loud:
From each according to his ability, to each according to his needs - Karl Marx
Yes. We should tax both at 25%. Similar proportion for all. I would carve that out for the truly poor. A flat tax would be a big improvement over the mess we have now.
Incredibly stupid. The same percentages for vastly different wealth levels obviously will feel vastly different. A billionaires life is changed negligibly by a 90% tax. Someone on minimum wage paying 10% measurably impacts their quality of life.
Their singular source is a damn Twitter tweet. No actual data or even calculations on their end that supports this claim.
Using the latest data on AGI, which is 2021 at the latest, the top 0.001% of income earners (1,536 people at that time) made $118,014,696. Using the 2021 tax rates, they paid an effective rate of 38.55% of their income in federal taxes while the median income earner ($46,637 at that time) paid an effective rate of 8.845% in federal taxes. The richest Americans pay over 4x more in taxes than the median, let alone the bottom 50%.
And before the wave of downvotes from the 'tax the rich!!!!" crowd: I support having higher taxes. I made my own tax brackets going up to 90% and managed to come up with almost $4T in income tax revenue using the same IRS data. But it also required significantly higher taxation on the middle and upper class.
If you genuinely care about the working class, then come up with more than just "tax the rich". Taxing rich people isn't the magic wand y'all think it is. We need to restructure our federal budget so that we can run a sustainable deficit, and so that our services are more efficient and beneficial to people. You should not be taxing just for the sake of taxing. You should be taxing so that you can provide better services to the people. Affordable healthcare, tuition free college, federal high speed rail network, universal SNAP benefits for minors, widespread public housing, etc. That is what I'd do to help the people.
Tax as much as you need to, not what you want to.
I'm trying to understand the source of their data as well, and the best I could come up with is this NYTimes article which includes this bit:
The simple answer is that while most of us live off our salaries, tycoons like Jeff Bezos live off their wealth. In 2019, when Mr. Bezos was still Amazon’s chief executive, he took home an annual salary of just $81,840. But he owns roughly 10 percent of the company, which made a profit of $30 billion in 2023.
If Amazon gave its profits back to shareholders as dividends, which are subject to income tax, Mr. Bezos would face a hefty tax bill. But Amazon does not pay dividends to its shareholders. Neither does Berkshire Hathaway or Tesla. Instead, the companies keep their profits and reinvest them, making their shareholders even wealthier.
Unless Mr. Bezos, Warren Buffett or Elon Musk sell their stock, their taxable income is relatively minuscule. But they can still make eye-popping purchases by borrowing against their assets. Mr. Musk, for example, used his shares in Tesla as collateral to rustle up around $13 billion in tax-free loans to put toward his acquisition of Twitter.
You'll forgive me if it sounds like they're arguing for a wealth tax--that is, to force people above a certain wealth or income threshold to pay tax on unrealized capital gains.
In February, I was invited to a meeting of Group of 20 finance ministers to present a proposal for another coordinated minimum tax — this one not on corporations, but on billionaires. The idea is simple. Let’s agree that billionaires should pay income taxes equivalent to a small portion — say, 2 percent — of their wealth each year.
The problem with unrealized capital gains tax is simple: what value does a thing have? With stocks, we assume stocks sell at the last trade value--but if a billionaire suddenly dumps $4 billion in stocks to satisfy a tax bill, does the price of that stock remain the same?
And who buys the stock?
China?
All of this seems like a line of bullshit to push a very ill-thought out proposal.
All of this seems like a line of bullshit to push a very ill-thought out proposal.
Right. So much focus on making people "pay their fair share", yet not enough focus on actually providing legislation that provides services to people who need them. My current list of proposals to help people are:
- Universal Minor's SNAP Benefits ($300/mo/child)
- Universal Healthcare
- Tuition-Free College at all public educational institutions
- Expand the EITC to become a Semi-Negative Income Tax system (It'd be set at 5x the moderate food budget as calculated by the USDA)
- Enact a federal public housing program, where it's goal is to maintain enough housing supply that it equals 5% of the total population. Each rental unit will charge 25% of your after-tax income (this creates a natural phase out of the net benefit between being in public housing and private housing, ensuring that the people who really needs this housing, will be able to get it
- Gradually set the minimum wage to 75% the median wage, based upon an 1560 hour work year (Latest data on that was in 2022, so adjusted for inflation it would be $21.23/hr currently)
Edit 1: I feel like I should provide a better explanation behind what I mean by "Semi-Negative Income Tax". By that, I mean it'd provide benefits up to X income, but if you earn more than that, you won't be subject to taxes based upon the NIT, you'd just be subject to normal income taxes via the normal brackets. This effectively works as a Basic Income Guarantee.
I have no problems with debating any of these issues on their own merits, though I'd argue some of these are not as cut and dry as proponents think, mostly because behind a simplistic proposal lies a lot of weird complexity.
("Universal healthcare," I'm looking at you on this one. To summarize my problem: changing how we pay for a thing doesn't make that thing necessarily cheaper. And having the government pay for a thing turns an economic problem into a political one--and it doesn't guarantee the political solution won't be hijacked via regulatory capture or through rent seeking.)
And that, I think, is my problem with a 'wealth tax' on the 'rich': we see what we think is a pile of money. We think that pile of money can be used "better" for other things. We seek to take that pile of money to spend it on "more important" stuff--then wonder why whatever that money was funding somehow dries up, or wonder how it is those rich people we were targeting moved somewhere else.
Life is complex. I fundamentally enjoy thinking about economics because it requires us to think about complexity.
And to me, the simplicity of what we think of as "moral" arguments pretty much wrecks this.
Yes, I recognize there is more to the issues with our healthcare system. By "universal" in this case, I guess I should specifically say "affordable", because when a good and service becomes cheaper, it becomes more "universally" available.
True; the problem with the very phrase "universal healthcare" is that it's become a proxy for the phrase "single-payer healthcare."
Life is complex. I fundamentally enjoy thinking about economics because it requires us to think about complexity.
And to me, the simplicity of what we think of as "moral" arguments pretty much wrecks this.
Thank you for saying this. This seems to be the crux of many of the major problems we are facing in our societies. Shit ain't easy. If it was, it wouldn't be a problem.
There's a difference in what you're describing, highest income earners, and what the article/tweet discussed, 400 richest individuals. If you have a hypothetical person with a trillion dollars that just sits on the pile of cash, they'd be one of the richest individuals while also being a bottom income earner.
And that's where the tweet/article gets it wrong. We tax people based off the speed they climb the mountain, but those 400 richest people have either stopped climbing or found a different path to the top.
That I can understand. But I still find it quite silly to pretend that the richest people and the working class pay similar amounts in taxes. Ofc, not saying you are trying to say that, you explicitly state the flaw in the article.
I used to be one of the "tax rich people and all will be solved" people. I've moved on from that. And it annoys me how that group of people don't seem to accept that maybe, just maybe we do in fact tax enough, we just need to restructure our budget and implement policies that better help the people. I even created my own federal budget proposal consisting of $5.76T in spending, with a an $6.66T fiscal limit (it was based upon a federal income tax bracket proposal, which raised taxes, 25% VAT, and a deficit spending limit of 75% of previous year GDP growth). It provided significantly more funding to many major agencies, and effectively locked 7% of any budget to scientific research and space exploration.
I know people who demand to tax the rich more have genuinely good intentions, but the hyper focus on it is what turns me off and disappoints me.
I admire your analysis and applaud you for posting it. I’m sure the anti-high income earner, anti-achievement crowd will downvote you into oblivion. I gave you one in the other direction for what that is worth.
I do disagree with you on higher taxes, however. We pay enough tax. The government spends far too much. I want less revenue flowing to the government so it is harder on them to spend and waste it on nanny state handouts and other big government agenda points. I realize that they will just borrow most of the difference after we are allowed to keep more of what we earn, but I have accepted that the only way to stop the profligate spending of Washington may be for us to have a serious debt crisis at some point down the road.
So let them borrow and keep running the debt up to unsustainable levels and eventually there will come a reckoning. It may bring down the country, but it will simply be the chickens coming home to roost. It’s not like we’re on a road that isn’t destroying the fundamental heritage and culture of this country anyways. I’m tired of caving in to the big government crowd that does nothing more than attack our economic liberty, which attacks our political liberty, and takes the money that Americans work so hard to earn and redistributes it to buy votes, usually for things the government has no business involving itself with whatsoever.
Debt is used as a leverage for growth. Having debt isn't inherently bad so long as your total wealth grows faster than it.
And yes, we do tax enough. I agree there. Our biggest problem is the tax gap, which results in a 3% loss in GDP in taxes. The problem isn't really spending, it's the fact that we lose hundreds of billions due to people not paying their due taxes. If we had closed the tax gap then we'd have been in a fiscal surplus several times the past few decades.
Historically, federal tax revenue to GDP has been 17%. Spending has historically been 20%. I think you can do the math here and see the results.
And before the wave of downvotes from the 'tax the rich!!!!" crowd: I support having higher taxes.
Tax as much as you need to, not what you want to.
Well, which is it? The federal government collected $4.71 trillion in tax revenue last year alone. How can anyone look at that amount and think "We need higher taxes, not cutting wasteful spending"?
Well, which is it?
You act like those are mutually exclusive. They are not. On top of that, it is completely ignoring the entire context and point of my comment: Tax enough to maintain a sustainable deficit, and to properly provide services to the people.
The federal government collected $4.71 trillion in tax revenue last year alone.
No idea where you got that from.
How can anyone look at that amount and think "We need higher taxes, not cutting wasteful spending"?
What I clearly stated:
We need to restructure our federal budget so that we can run a sustainable deficit, and so that our services are more efficient and beneficial to people. You should not be taxing just for the sake of taxing.
Maybe try reading what people are saying next time, instead of trying to find something to attack? Thanks.
It doesn't because it's propaganda
The thing that many people are missing is that the capital gains tax is 15%, maxing out at 20% for the highest earners. So if I have $1B in stocks and get a return of $50M a year, I only pay 20% on that $50M, while salaried doofuses like me pay 25% on our earnings.
if you're paying 25% in Federal income taxes, congrats... you're in the top 50%
The highest gross income earners receive so much more gross income than ordinary people that they end up paying a larger share of the tax burden despite paying a lower effective rate.
For example, if the tax base consists of two people, Person A has GI of $10,000,000 and pays a tax rate of 1 percent, and Person B has GI of $40,000 and pays a tax rate of 50 percent, then the total tax collections are $120,000, and Person A has paid 83 percent of the tax burden.
Your logic and numbers here and correct, but the rich don’t pay a lower effective rate. There’s a reason Zucman had to completely redefine what he considers an effective tax rate in order to get the math to show what he wanted
Ok but your numbers here just aren’t correct. The wealthy aren’t just paying more taxes, they’re explicitly paying a higher percentage of taxes as well. The bottom 50% of earners pay essentially 0 federal income tax at all. If you re-run your scenario using real numbers you’d find they don’t actually pay a lower effective rate after all
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Richest 1% earn 20% of national income, but pay 40% of all income taxes — by far more progressive than Northern European countries. They certainly don’t need to pay more.
Completely fake but ok. Literally a declaration made without any of their actual tax returns, just based on guesses and estimates lol but people will click it so it works
Historical first?
That implication is the only misinformation here.
The ultra rich have been paying lower effective tax rates than working class Americans for ages. Here's a 2011 oped from Warren Buffet lamenting it—one of the wealthiest people in the world taxed at just over 17%.
https://www.nytimes.com/2011/08/15/opinion/stop-coddling-the-super-rich.html
I've never had a lower tax obligation in my life than when I lived off of investment income alone. Actually working for money earns me a higher tax rate.
If the commenters claiming that everything is fine and we shouldn't tax the wealthy aren't astroturfing on behalf of billionaires, I'd be shocked. There is no justification for this imbalance. And yes, I also believe that we should have a balanced federal budget, and I've always hated modern monetary theory. These beliefs are not mutually exclusive, as the astroturfers would like for you to believe.
I don’t know about yall but I can’t wait for that trickle down economics to start trickling, I bet it will be amazing…. 😂🤣 (as major corporations are buying up all the housing and inflating it)
This is straight up fake news misinformation. If you read the article, they are paying a lower effective rate which would reflect the weighted average weight across the various types of income. That is not a statutory value, this is a statistic and it is only useful for those who want to try to tell a story with that statistic. That is usually one of an imagined world where high income earners are not carrying their weight for taxation.
The truth of the matter is that they pay more tax than the middle class, I.e. dollars flowing to government not tax rate that this misleading headline;one omits. The top 1% pay nearly half of all income taxes collected. That is a fact, and the data is readily available. On any given type of income, high earners pay the same rate or higher since rates are progressive for many types of income.
Given the huge imbalance in the amount of taxes that higher earners pay, I’m not much worried that their effective statistic is lower. They are carrying the bulk of the burden which allows the bottom 50% of income earners to pay only about 5% of total taxes collected. That is a hugely disproportionate distribution of tax burden.
If my kid got an allowance of $5, but was taxed at 99%, that's unfair, even though I paid $5000 in taxes compared to my kid and I paid 99.90% of total tax from my household.
This is not about absolute dollars collected, it's about the percentage collected and what percent of their income they are able to keep.
only literal stupid people argue for absolute amount over percentage
The media didn’t inform us of how the 2017 tax bill would play out. But since the people who own the media outlets were given massive tax breaks, no wonder they kept it quiet.
The rich fat cats have been getting away with not paying their fair share for to long!
The top 1% pay almost half of all income tax. The top 5% pay 2/3rds. The bottom 50% pay less than 2.5%. Also, about 20% of federal spending is on means-tested programs providing payable credits, free food, free medical insurance, etc that are only given to people on the bottom 50%.
Eat the rich!
Everyone focuses on the "rich" as if that's where the problem is. There was a short period where taxes were very high. That's not the norm and that's not good economic policy either.
They also didn't generally actually pay rates that were that high. Those rates are too high and there's always exceptions. If land isn't taxed as highly then everyone becomes a "farmer".
It doesn't make sense to complain that the average person effectively pays 25% and then be upset when the "rich" pay about the same amount in terms of a percentage.
That's just cherry picking facts. How about something like "it's not fair that the average person pays $20k in taxes and the average rich person pays $200k". No one says that however the rich currently pay most of the federal income taxes.
How can you argue that they aren't paying their fair share? It makes no sense.
There aren't a lot of rich people, there are a lot of average people and the spending largely goes to those average people. If you want more services, it's the average person who needs to pay for it. There aren't enough rich people to do it anyway.
The problem isn't the level of taxes. The problem is the spending. Balance the budget and then don't spend more than you take in.
When you try to blame the problem on some other group, nothing gets done. You just keep spending and it's the other groups fault.
No group has enough money to pay for our current level of spending. That's the fact that needs to be faced and not scapegoating the "rich".
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How are you gonna do that since it’s not income? The tax code taxes income not debt. You can’t just declare something to be income.
The basis step up is such a boogeyman on reddit. The reality is, it actually allows us to maximize the estate tax levied on super wealthy individuals. Removing the step up would likely decrease tax revenues overall.
I think buy, borrow, die was more tied to interest rates than anything. Rich used it as the effective rates on borrowing were historically low and you could not receive any type of yield for years. I’ve seen data SBLOCs and they are way down post fed rate raises.
Not to say the strategy is still utilized, but the short term nature of such borrowings has always made it rate and lender sensitive. I know post regional bank failures of last year the market for SBLOCs is ice cold.
The easier way would be to create a taxable event, taxed at income rates, when stock is used as collateral.
and I dont pay SS tax for a good part of the year unlike most working folks.
I am fine with congress fixing that tax break for me and everyone who does not pay SS taxes on any income.
The neoliberal agenda have won to a baffling degree. Even in the Nordic countries the idea of lowering taxes for the wealthiest as a trickle down benefit for the poorest have taken hold across the political spectrum. It’s strange to say the least.
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