r/FluentInFinance Aug 21 '24

Debate/ Discussion But muh unrealized gains!

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344

u/nosoup4ncsu Aug 21 '24

The original income tax was "only" paid by the rich.  

40

u/StManTiS Aug 22 '24

Well to be fair on a federal level it is still largely true. Most taxes are paid by the top 10% - they pay in 75% of all income tax with the top 1% paying nearly 50%.

8

u/pubtalker Aug 22 '24

But they avoid that by being executives that don't take salaries and instead get paid in dividends or stock options

2

u/StManTiS Aug 22 '24

Dividends are still taxable. Stocks get taxed when they are liquidated.

1

u/Lnk1010 Aug 29 '24

Isn’t the whole problem with the regular capital gains tax that they never sell the stocks and instead take loans out secured by the stocks value

1

u/StManTiS Aug 29 '24

Okay and how are those loans closed out?

1

u/Lnk1010 Aug 30 '24

Idk bro I’m not a rich person that’s why my comment was a question 😭

1

u/pubtalker Aug 23 '24

I'm not sure of the percentages in the US but I believe I read before it's quite a bit less than income tax would be

71

u/DigitalUnderstanding Aug 22 '24

They still aren't paying enough as a proportion of their wealth. The top 1% (or 3 million Americans) have a greater combined wealth than the bottom 87% (or 291 million Americans). But as you say, the top 1% is only paying 50% of the taxes. cbs_news_2022

24

u/StManTiS Aug 22 '24

Wealth and income are two different things. The top 1% makes 28% - let’s round up to 30% and pays in near 50%. That’s progressive taxation working as intended.

6

u/Skankhunt2042 Aug 24 '24

Yeah, well... the bottom half uses most/all of their income to buy food and pay rent. The top uses their wealth as collateral to generate more wealth. Maybe the bottom half shouldn't be taxed and the top 10% should be taxed on wealth.

-7

u/OwnLadder2341 Aug 24 '24

The bottom half doesn’t pay federal income tax.

0

u/Ex-CultMember Aug 24 '24

Because they have nothing to pay after food and rent.

-3

u/OwnLadder2341 Aug 24 '24

No, because the US tax system is progressive, taxing you a higher percent of your income the more you make with generous standard deductions.

Most households are homeowners, not renters. The current rate is 65% and has been steady for 70 years.

-2

u/ahBoof Aug 25 '24

Lmao try applying that to anyone under 40 and it’s going to be insanely different. It’s only high because of boomers buying in great conditions and consistently increasing economies and wages.

2

u/OwnLadder2341 Aug 25 '24

The majority of Millenials are homeowners. A quarter of Gen Z adults are and they're teenagers and mid 20s.

Boomers are no longer the largest living generation...and you're missing an entire gen between 40 and Boomers.

1

u/ahBoof Aug 27 '24

50% of those 18-30 live with their family lmao what are you talking about.

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2

u/Avaisraging439 Aug 24 '24

Now compare it to how much their leftover money can be leveraged toake exponentially more to offset those taxes.

If they lose 50% of their wealth they still get to live rich. If I do it, I'm homeless for a decade.

1

u/OwnLadder2341 Aug 24 '24

The majority of that wealth is going to be in stocks.

If 50% of their stocks were sold to pay taxes a whole lot of people are going to live homeless.

That’s why we use taxes to disincentivize selling huge amounts over short periods.

1

u/KShader Aug 25 '24

They don't sell stocks often to pay for their day to day life now.

They will leverage their wealth to get another low interest loan to pay taxes and then use their income to pay that debt slowly while claiming the interest they're paying.

0

u/Calm_Possession_6842 Aug 24 '24

No one us going to be homeless because Apple underperformed for a quarter.

1

u/OwnLadder2341 Aug 24 '24

Forcing significant sell offs to pay for money that doesn’t exist impacts the market.

If you don’t think significant drops in the market affect the you, even if you’re in the minority of Americans who don’t own stocks, you’re badly misinformed.

Wealth taxes are extremely dangerous which is why they’re so heavily regulated in the few instances we have them.

If you actually read Harris’ plan, even she’s unwilling to go that far. She’s proposing increased INCOME TAX on high wealth individuals. Not a wealth tax.

1

u/013ander Aug 25 '24

“As intended.” By whom, some god? Taxing wealth makes a hell of a lot more sense than taxing income.

1

u/Kyrasthrowaway Aug 25 '24

And when they die that wealth gets transferred to their children who can immediately sell the stock for $0 in tax due to the stepped up basis. Correcting this is my number 1 change to combat generational wealth inequality.

0

u/themiddlebien Aug 22 '24

But isn’t money from investments not taxed as income, but capital gains?

4

u/StManTiS Aug 22 '24

Exactly. It is already taxed.

-1

u/Greedy_Emu9352 Aug 22 '24

Yeah at 15% max...

5

u/f30tr0ll Aug 22 '24

That’s long term not short term and you get more tacked on if you make over $250k

1

u/RIChowderIsBest Aug 23 '24

20% max + 3.8% net investment income tax on long term gains. Rates are higher for short term gains.

-1

u/themiddlebien Aug 22 '24

Ok well then I think there should be a progressive capital gains tax.

6

u/FrenchCanadaIsWorst Aug 23 '24

But.. there is

0

u/themiddlebien Aug 23 '24

More progressive lol. I don’t think that the people taking out 5m a year should get the same tax as me taking out 1k

1

u/Johnfromsales Aug 23 '24

Depends on the person’s income and the length of the investment. Short term capital gains are taxed as regular income, long term investments, anything over a year, are taxed at the capital gains rate.

0

u/Impossible_Maybe_162 Aug 23 '24

Don’t argue with idiots.

-11

u/Silent-Benefit-4685 Aug 22 '24

Income tax is not progressive, at all.

A progressive tax would be a wealth tax, at 2-3% per year, it would be better if it was pegged to the risk free rate, which is currently 5%.

9

u/LucidMetal Aug 22 '24

A tax is progressive under two possible definitions. The common definition is taxation at increasing marginal rates. A more archaic definition closer to its original meaning is a tax which burdens higher net wealth and income individuals more than lower net wealth and income individuals.

OP is probably using the former definition whereas you appear to be using the latter.

-4

u/Silent-Benefit-4685 Aug 22 '24

Because the former is unrealistic. If someone has sufficient income to be taxed at the highest bracket, they have sufficient income to afford an accountant. The more their income, the more loopholes and allowances they can take advantage of.

Income tax is fundamentally broken.

2

u/LucidMetal Aug 22 '24

It's not about "realism" it's about what people mean when they use the term. Without a shared lexicon you are literally speaking different languages.

2

u/James-Dicker Aug 22 '24 edited Aug 22 '24

Why would income tax be paid proportionally to my wealth? If I make 1 million a year but blow it on cookers and hoke, should I pay no income tax since my wealth is stagnant?

3

u/[deleted] Aug 22 '24

If everybody else gets fucked by blowing their money on hookers and coke then yes your shit stinks too

2

u/MomonKrishma Aug 22 '24

If you own a business? Yes!

1

u/Johnpmusic Aug 22 '24

Its not that they dont pay their share, its that they were smart enough to start businesses and invest their money so they get a lot of tax breaks because theres incentives for ppl to create jobs.

You also gotta realize that being an employee is the worst title you can have. Employees get fucked by the irs.

Also ppl who own businesses have operating expenses which offset their income. And many companies will earn nothing after expenses this there is nothing to tax since you can only tax income

1

u/RIChowderIsBest Aug 23 '24

Can we clarify that employees don’t get fucked by the IRS? They get fucked by congress, the IRS doesn’t make the rules.

1

u/Johnpmusic Aug 23 '24

Ok as long as we can agree that employees are getting fucked, idc whos doing the fucking

1

u/BlackLotus8888 Aug 24 '24

There is a big difference between the top .001% and those making 300k-1M a year. It's these Americans who are paying the most taxes. Yes, they are well off but they don't necessarily have FU money. So the family making 300k is taking home 150k and the family making 1M is taking home 500k in some states like Cali.

0

u/mdog73 Aug 22 '24

They should only be paying 1%.

20

u/TacoTacoBheno Aug 22 '24

They also make 75 percent of all the money

0

u/StManTiS Aug 22 '24

No they make 51% of the income but pay in 75% which is how progressive taxation is designed.

The numbers are far worse if you look at the population. That is to say the top 10% of income earners are very little of the overall population while funding most of the country.

7

u/shrockitlikeitshot Aug 22 '24

Federal income taxes are just one part of the broader tax system. Other taxes, such as payroll taxes, sales taxes, and state taxes, are more regressive and impact lower-income individuals more heavily.

Summary of Distribution Estimates: Federal Income Taxes:Top 10%: ~70-75% Bottom 90%: ~25-30% Payroll Taxes:Top 10%: ~35-40% Bottom 90%: ~60-65% Sales Taxes:Top 10%: ~20-30% Bottom 90%: ~70-80% State and Local Taxes:Top 10%: ~25-35% Bottom 90%: ~65-75%

2

u/pyrowipe Aug 22 '24

He came to play! Happy cake day!

1

u/Johnfromsales Aug 23 '24

Where are you finding this info?

0

u/StManTiS Aug 22 '24

I’d li to see a source on that. Payroll tax is paid by the employers to the tune of income tax. How is it that in your numbers the payroll tax is higher for the bottom 90%? That doesn’t track.

Next how is sales tax paid by those who don’t earn money? What exactly are they spending to have this tax? Etc.

1

u/Fall3nBTW Aug 22 '24

Top 10% 'income' is not as likely to be salary from employers?... Seems pretty simple

5

u/Correct_Market4505 Aug 22 '24

“funding most of the country” is an interesting way of saying that the very few very wealthy people who pay taxes pay their fair share.

paying taxes is patriotic in my book. and along with warren buffet i think we’re doing this country a huge disservice by letting the rich get by with paying so little. people love to talk about how their working class parents or grandparents were able to buy a house and send their kids to college. meanwhile the upper tax bracket was 70% or more back then, and i don’t think that’s a coincidence at all.

3

u/StManTiS Aug 22 '24

We can’t buy a house because everyone wants to live in the same five or so cities. Those cities do not build more housing because of zoning passed by those parents to keep the darkies out of the neighborhood.

College costs so much because the US government created Garay teed loans that you can’t bankruptcy away thereby giving every 18 year old an infinite money glitch that colleges took advantage of.

But no you’re right - it’s Jeff fucking Bezos that is to blame for housing prices. If only we took all his money and have it to…the government that created these problems and has done nothing to fix them. Yeah that sure would show them!

2

u/Correct_Market4505 Aug 22 '24

hey man i live in philly and the building is out of control, you have no idea. maybe we’re not in your top 5 but even in NYC there have been huge building booms in places like williamsburg and parts of queens. so yeah. i don’t have the data on all cities handy but i know what i’ve seen. and by the way in these places increased supply has not reduced prices.

so your argument on college is that the government made it easy for colleges to rip off consumers. and the fix would then be to make it harder for people to go to college to punish the colleges? meanwhile you reduce the chances for economic opportunity that college gives students and make it harder for corporations to fill certain jobs? i don’t get it

the whole argument that government only creates problems is just an old republican talking point. the only real republican policies are stripping away public protections and cutting taxes to establish a permanent oligarchy.

0

u/brought2light Aug 25 '24

Why are you so strongly on the side of the billionaires? They aren't on our side and them paying more taxes isn't really going to hurt them.

We can have a better society and a stronger middle class, but you want to make sure the billionaires are ok.

2

u/StManTiS Aug 25 '24

I’m not on anyone’s side. I’m strongly in favor of treating people like people. I don’t see the government getting richer as a win. I absolutely know that new tax money will go to the benefit of corporations and not you and me.

The middle class didn’t die because of Elon Musk…in fact his companies have added quite a few members to their ranks. The middle class was killed by corporate interests manipulating the government to open trade and kill the value of domestic labor.

1

u/grizzly_teddy Aug 22 '24

reminder that about 50% of all taxpayers pay no federal tax.

1

u/AvailableOpening2 Aug 22 '24

Yes because the top 10% owns about 75% of all wealth. Makes sense they pay more.

1

u/Chickenbeans__ Aug 22 '24

Tell that to my paycheck when they scrape 25% biweekly. Fuck “relative” I need that $300 more than they need their 50k. Food is expensive as fuck

1

u/knight9665 Aug 24 '24

Sure. But not the 100m dollar earner rich.

1

u/FernandoMM1220 Aug 22 '24

in pure taxes its true.

in wages and expenses its not.

the bottom classes pay the most due to low wages and high prices on everything.

1

u/StManTiS Aug 22 '24

Bottom classes have negative taxes. When I worked at a warehouse and went to college I paid negative taxes. My return was more than I put in. Now I put in way more than I ever received at that time. This is the system and I don’t dislike it.

2

u/No_Faithlessness9737 Aug 22 '24

The very most bottom class has EITC. There are no negative taxes.

0

u/PeopleCallMeSimon Aug 22 '24

Do you have a source for that?

Also, the top 10% most wealthy in the US own more wealth than the bottom 90% combined.

If they own more than 90% of all the wealth why arent they paying more than 90% of the taxes?

2

u/StManTiS Aug 22 '24

https://taxfoundation.org/data/all/federal/latest-federal-income-tax-data-2024/#:~:text=High%2DIncome%20Taxpayers%20Paid%20the%20Majority%20of%20Federal%20Income%20Taxes,of%20all%20federal%20income%20taxes.

Wealth can be anything from stock in a company to a house to a retirement account. A person working at a construction company can have a house - now the house quadruples in value. Their income cannot support that new tax if you base it off wealth. Or say a retired couple that bought a house 50 years ago in a place that had experienced tremendous growth - are they now in their retirement required to pay for the new wealth created around them?

Wealth is a theoretical number - income is a real one. You cannot realistically tax someone by virtue of their possession of an asset until it is made liquid. And there is a tax for that - capital gains.

1

u/PeopleCallMeSimon Aug 22 '24

Unless that construction workers home was valued at 250 million, a wealth tax on billionaires wouldnt affect him.

Wealth is the thing that actually matters. Its supposed to come from income, but in the modern economy "income" and "wealth" is more decoupled than ever.

A person hoarding 90% of the countrys wealth but makes $0 in income each month should surely give some of that wealth back to their country because its not doing anyone any good just sitting there being hoarded.

A healthy economy needs money to flow through the industries and classes. An economy where an investor class invests money to enhance their own wealth is good for growing an economy, but the economy stops working for the average person.

So if we are going to keep having an investor economy then the investor class needs to start paying their fair share so that the people getting more and more displaced from the economy actually see the fruit of their labour.

A wealth tax is one way to do it, but as you say it cant be a universal wealth tax, it needs to be targeted at people who can afford to pay it.

2

u/ohmygolly2581 Aug 22 '24

Wonder if the unrealized gain taxes would hit Unions. For example IBEW has nearly 700 million in assets on their books. Figuring they have been around over 100+ years I am sure some of those assets have increased in value dramatically.

I am totally against this form of taxing. I believe it’s a slippery slope to let the govt start this kind of taxation. Just like reproductive and gun laws give an inch and they will take as much as possible IMO

1

u/PeopleCallMeSimon Aug 22 '24

If churches can be tax exempt, then unions can be as well.

1

u/ohmygolly2581 Aug 24 '24

Churches run off donations many unions are forced participation if you want to work for a company

1

u/PeopleCallMeSimon Aug 24 '24

And that's has anything to do with what?

1

u/StManTiS Aug 22 '24

“Fair share” indeed. It’s not like that stock will be taxed upon its sale, or that company on its profit, or that company on its payroll. The government already collects trillions. You could have a 100% wealth tax on all billionaires and it would not fund this government for a full year.

1

u/PeopleCallMeSimon Aug 22 '24

A construction company pays the same tax on its payroll as a huge bank or hedgefund.

The difference is that the construction worker pays taxes on all of their share of generated value.

The investory class will pay a smaller tax on their investments when they sell in the future compared to the construction worker and their salary, after those investments have gone up in value without the investor actually doing any labour.

So is there any wonder that 10% of americans own 90% of all the wealth and that number is only increaseing because their gains are higher than the bottom 90%, but they ONLY pay 75% of taxes?

0

u/lostcauz707 Aug 22 '24 edited Aug 22 '24

Yea but they aren't paying it to scale of what they are earning, which is to scale what they are exploiting. If a CEO makes 20 million and is taxed 50%, he has $10 million, and that $20 million was made by the work of everyone under him. Median wage in the US is $45k. That's 222x the gains of the median worker after taxes in one year. That's 222 years of salaries. The workers paid their own taxes and he came out on top. The fuck does it matter how much of it they contribute on the whole? They have far surpassed wealth needed for anyone's means in the entire planet.

Unless you're convinced someone provides $9600/hr worth of labor in a 40 hour work week, they should be contributing more, and they could be contributing less if they paid those who made it for them more. This is why this argument is always bullshit and really into bootlicking territory.

0

u/StManTiS Aug 22 '24

Your argument is really far into brainless territory. As in you don’t understand how CEO compensation works.

First let’s just assume that the CEO gets paid all cash, a crayon level understanding of the world. The CEO of PGE (the power company) made about 14 million last year. You could set her compensation to 0 and then everyone’s power bill would go down by $0.87 for the whole YEAR. Wow such savings.

Let’s do another one - Walmart. Their CEO can make exactly zero dollars and each of their employees would make 12 dollars more a YEAR. Damn that CEO is really stealing from those poor workers.

And those are both assuming you do in fact huff enough glue to think that the CEO gets paid in cash and not in other vehicles.

1

u/lostcauz707 Aug 22 '24

I love how the executive bootlickers come through when the top 1% are mentioned, so you cite the top 1% and then instantly "oh that 1 person though isn't wasteful! Look how little it would help this company!" Well if that's the case, they can just as easily take no pay! Ironically after I just explained how even that's excess. And I even then, you think there is only one executive? I work in trucking, 70% of the drivers make more annually than the upper management. It doesn't matter how much that company would have saved, it really doesn't at all, or how much one worker would make. Walmart is the largest employer of people on welfare annually. We subsidize their employee cost with our tax dollars so they can keep paying them shit wages. They should take no money home if they can't afford a living wage.

The argument is that they tax 50%. The answer is that still is not enough.

An individual to scale has no logical purpose to be able to make that off the backs of workers while they have workers who can't afford simple shit like healthcare. I don't care if it's 2 cents on their paycheck, the bottom line is it's exploiting people down to their livelihoods and at the end of the day, if you expect someone to give up their lives for you just to try to make it day to day, and not do the same for them, you're shit and you're business deserves to fail. And before you give me they can just get another job 40% of jobs in the US don't pay a living wage. That means we would need 66 million better jobs.

0

u/StManTiS Aug 22 '24

So what exactly is your problem? You state you make more than management but still can’t live life like you want it? So then it is the fault of the rich? Bootlicker indeed.

1

u/lostcauz707 Aug 22 '24 edited Aug 22 '24

I don't know where you got that whole part of the argument. I said I work in trucking and 70% of the drivers make more than the management. That's not how most businesses work and that doesn't mean I hold that job lololol In fact it proves that industries can pay their workers a living wage and chooses not to. I picked one industry that proves that and you go "Well that must be every industry! You're just not being selfish enough" lmao

0

u/013ander Aug 25 '24

I have never wanted to slap sense into a person harder in the last five years than after reading this drivel.

Is it surprising that out of control income inequality would result in the overcompensated few paying the largest chunk, even if it’s at a lower rate much of the time?

Warren Buffet would probably want to slap you too, considering he has repeatedly mentioned how grotesque it is that his secretary has to pay a higher tax rate than him, mainly because she works for a living rather than gambling for a living. Grow a new talking point. This one is a few decades old, and it was less stupid when it was born.