“The 50 richest Americans now hold almost as much wealth as half of the U.S.” - Bloomberg - https://archive.vn/25Bz4
Is there any reason to think bitcoin is that much different from ownership ratios of other financial assets?
Is there any reason to think bitcoin is that much different from ownership ratios of other financial assets?
Say all you want about the efficacy of the above measures, they are absolutely not perfect. But it's completely different to bitcoin where none of the above applies, and often the opposite occurs.
Regulated by them, so in practice not all that regulated
Specific examples: UK capital gains tax is lower than income taxes. This means if you are born in to a wealthy family and given a £1MM index fund, you will pay less yearly tax on your capital gains while chilling at home all day than someone with a £50K job working hard and contributing to society
Ok - so the rich have decided on regulations which are not the ones that are best for everyone. So…missing regulations? By definition, if we have the wrong regulations, then we’re missing the correct ones.
Capital gains taxes are lower for a specific reason: the capital that was initially invested was already taxed. These laws benefit average people much more than they do the rich on a relative basis. Go model out a retirement portfolio that is taxed/compounded at ordinary rates vs capital gains rates.
What people really want is higher capital gains for rich people which is fine, but you fundamentally misunderstand why they’re lower in the first place, which is double taxation.
Additionally, the higher the capital gains tax, the higher the expected returns have to be. Lower capital gains incentivizes riskier investment, which, within reason, is a net positive for society.
And I don't think we need to incentivize even more investment, given where things are at the moment. All it does is concentrate more market in the hands of the same people (who already have enough money to throw it around). It doesn't actually benefit the society as a whole, unless your metric for that is some mindlessly averaged metric like GDP.
CGT generally has the same rate as income tax: the reason why the rich are better off earning through capital increases than wages is that they get to decide when the capital gains happens, which means that their wealth managers and tax accountants can optimise their affairs to minimise tax.
The fundamental misunderstanding is yours.
If by “CGT generally” you mean “short-term capital gains tax”. But, that's not true of long-term capital gains that kick in at a year and a day of holding the asset.
That's an excuse, not a meaningful explanation. When I pay sales tax at the store, the money I pay it with has already been taxed when I was paid my wages.
These laws benefit the ultra-rich more so than everybody else for the simple reason that most of the former' income is capital gains, while most of the income for average people is wages.
That is not a sensible reason for capital gains (which apply only to gains) to be taxed lower, since the gains have not already been taxed.
It also doesn't explain why the reduced rate (compared to “regular” income) applies to long-term gains, since the original capital was taxed regardless of whether the gain is long or short term.
The best fairness-grounded argument I’ve seen for reduced LTCG taxes is that, in a progressive annual income tax system treating gains earned over multiple years but realized at the end as single-year income at full tax rates overtaxes compared to what would have occurred if the income was spread out over the time it took to accumulate before realization, unless the recipient would already have been at the max marginal rate every year before the gains at issue were considered.
This is a valid point, but allowing free voluntary advance tax recognition of income and deferring tax recognition after realization for windfalls (say, spreading amounts above the middle actual realized income of the last three years over up to ten subsequent years) deals with that problem more comprehensively (not just for capital income) without undertaxing those who would be at the maximum marginal rate even without the particular long-term gain, or who are continuously rolling out long-term gains year after year repeatedly.
Favorable LTCG rates are a way to use a poor approximation of fairness for middle-class earners with occasional long-term gains to sneak in wildly favorable treatment forn the super-rich, instead of just treating income fairly all around.
(There's also a trickle-down economics argument for low capital gains rates, that is not fairness-grounded: “we want to encourage the already rich to invest and make more money, because positive side effects of this will trickle-down on the lower socioeconomic classes”.)
If all non-rich people took that view, then only rich people would be arguing about what the rules should be, and thus they will represent what rich people want.
Self-fulfilling.
Well, I absolutely don’t.
Nice try though.
Now the question about "fairness" that rich people can structure to pay less tax than others - they don't -
The top 1 percent in America earn 20 percent of the income but pay 40 percent of the tax.
We can generate top 50 lists of the more-regulated wealth, but there is also significant wealth hiding with little accountability.