Senate Democrats unveil a plan for a new tax on billionaires
npr.org
npr.org
That said, the more I read about the low or no interest loans against investments that seem to be the primary “income” of the mega-rich, it seems more and more that something needs to be done here.
Or am I wrong? Thoughts?
Let’s say I had a complete set of Picasso’s paintings for a year. Every painting he did that year, I have.
Who is qualified to say how much each painting individually is worth (other than an auction), and who can say what the total set value is in comparison to the individual value?
Of course this proposal isn’t quite the Wealth Tax that Warren originally wanted but I could see even this tax not being enough in the future.
Physical goods can be taxed on sale though, that's easy.
If the assets in question are equities listed on a public market it's actually quite easy for the government to assess the value.
Treating the lien itself as something created by the loanee and sold to the loaner, I suppose.
I don't see the problem here. Slowly breaking up ownership like that would be a net good to society.
But, I'd be curious to hear what do you (and people in general) consider wealthy-but-less-so, if that makes sense. Can we try to assign very rough dollar ranges on these categories?
Probably the simplest way to assign ranges of income is to apply statistics to the unadjusted pretax income in the US. It would probably make sense to adjust it based on COL too. I'm not sure what numbers and adjustments the following distribution used. I did not expect to see 10% of households making over $200k. That seems insanely high to me, but maybe that's an effect of HCOL places like Silicon Valley and dual income families.
https://www.statista.com/statistics/203183/percentage-distri...
1) employees, especially low-wage employees such as Amazon delivery and warehouse workers, Walmart employees or "gig workers" get exploited (e.g. Walmart is infamous for workers being paid such pittances that they require food stamps to survive)
2) customers are exploited by having to bear the cost of bad products (e.g. getting hacked because Microsoft can't be bothered to do proper QA)
In the meanwhile of that, the companies rake in billions - and many of them are owned to a large part by extremely rich individuals and thus gain (depending on corporate structure) wealth by dividend payments or stock price growth: Jeff Bezos, the Walton family, Elon Musk, Bill Gates to name a few.
The average employee in contrast doesn't see anything from that paper wealth gain: the poorest class doesn't even have enough money to put in a 401k or other investment vehicles, 70% of all stock investments is held by the 10% top earner class (per https://www.forbes.com/sites/teresaghilarducci/2020/08/31/mo...), and wage increases have been scarce prior to the current COVID-resulting crunch.
An implicitly forced break-up would at least redistribute the wealth gain to a broader class of people, and if it were done by levying taxes against the super-rich, the government would actually have money to provide services to its citizens: a decently trained, competent police force, health care access, housing cost assistance, public transport, to name those where the last two years showed the worst issues.
Let's face the truth: Elon Musk alone is worth 288 billion $. Taxing off half of that would still leave him with more money than he can reasonably spend in ten life times and provide money desperately needed to fix a lot of issues. The usual counter-point is that this eliminates the control the owners hold over their company and with it, the driver for success goes away - however that can easily be bypassed by converting the sold-off shares to simple capital-interest-only shares without voting power.
You answered your own question, but to add more context the answer isn't "For many types of property" but for most people the answer is an emphatic yes. For the vast majority of people the only piece of property they own in this sense is their home, and if they cannot pay the property taxes on that, the state sells it on tax sale. So yes, absolutely, we already do this.
The fact that ownership of businesses is exempt from this is part of the inequitable structure of our laws that benefits the wealthy at the expense of everyone else. Because the primary property of the wealthy is currently exempt from property taxes (we only tax the gains, not the assets themselves), but the primary property of the middle class is taxed.
This will hurt the middle class who have 401ks or pensions. I get wanting to tax the rich, but this is absolutely going to hurt more than just the wealthy.
> The tax proposal would apply to just about 700 taxpayers, Democrats say — people who earn more than $100 million per year or who have more than $1 billion in assets for three straight years.
If you have $1 billion in your 401k, you can probably afford the taxation.
>Most of the gains on tradeable assets like stocks would be taxed at the existing capital gains rate, which is currently 20% for individuals earning over $445,850.
I agree with what you said, and just wanted to make a minor(ish) correction: if you exclude homes bought w/ a mortgage which is still ongoing, probably the "vast majority" part does not hold, anymore.
I actually don't like property tax on homes/land. I dont like the idea of the government forcing people out of their homes (usually the elderly). I prefer taxing based on income/gains because they actually have money coming in and largely removes the government seizure aspect.
Otherwise, I am not sure how taxing land will increase consumption, unless you're saying people will make land productive in order to offset tax liability? In some cases maybe, but certainly not on low-density residential plots.
Just because something is already being done doesn't make it right. Kick someone out of their house which they bought with their hard earned work and money is immoral and abusive and abhorrent.
These tend to be political and symbolic measures as in general they are neither really fair nor beneficial (in Europe the main result in countries like France has been to make people move to Switzerland, Belgium, London, etc).
Edit: A fair way to tax is to tax all incomes equally and not to offer any loopholes. But politically an issue (or not) is that people will still be able to claim that e.g. Bezos only pays x in tax although he is worth zillions, which plays on people not understanding that they are comparing apples and oranges...
If you qualify and feel it's unjust, you could simply go and buy your own country.
I'd rather see us get rid of the like kind exchange and also modify how we handle capital gains. Get rid of the long term rate. How about any time you make money, you have to pay tax on it. It seems more reasonable and simple. Additionally, we should start adding VAT on certain kids of revenue, especially digital advertising. It is far too profitable to propagate hate today. I'd also like to see additional taxes on real estate with an exception for everyone's personal residence. We need to make it too expensive to just sit on an asset everyone needs. I know some places like Vancouver have started programs like this but we need it more broadly. Personally, I'd also like to see an additional tax on buybacks. Companies should have to pay the corporate tax rate plus and additional rate to buyback their own stock.
Looking at you Bezos…
And it’s true stocks are quite liquid, but if the person never sells to realize gains, they will never be taxed…
The problem isn't that people don't pay taxes on unrealized gains, the problem is that people pay low taxes on realized gains, and usually no taxes on the very large gifts and estates. A tax on unrealized gains of billionaires raises a little bit of money without dealing with the giant structural unfairness in the tax system—which, really, is why it might be politically viable.
Actual tax fairness would be simple and not require a tax on anyone's unrealized gains: special taxes (with low rates and broad exemptions) on long-term capital gains and estates and the givers of gifts would be eliminate, and all of those things would be regular income to the recipient. Windfall gains and gains requiring long-term effort/ownership would be addresaed by allowing everyone the option of advance tax recognition of future income and deferring windfall gains over a period of years, both tools to smooth income.
Or have I misunderstood your point?
To the extent that is a real issue, it's not even approximately just for billionaires; again, the point of this bill isn't to deal with structural problems rewarding the rich at the expense of the working class, its to raise a little money making a symbolic gesture at a handful of people while preserving the features benefitting the wealthy at the expense of the working class. The action does not match the problem is that it supposedly addresses.
If you wanted to fix that problem in the system I describe upthread (and you’d do basically the same in the status quo system, leaving the broader problems the system upthread fixes in place), you’d tax non-cash assets as income at market value less purchase price at the death against the estate after subtracting any unused advance-recognized income (and likewise adding in any leftover deferred income.) Nothing is then “unrealized forever” for tax purposes. Not for billionaires. Not for hundred-millionaires. Not for anyone.
Not that strange, really. If your income tax at the end of the year leaves you in the red, you might sell some of your property to balance your accounts.
Just like how plenty a corporation, or rental property, has been sold because it was too expensive to hold profitably. In the case of land in particular, people who make poor use of it and fail to extract a profit probably should be forced to sell it. That's the market correcting their inefficient use.
This could also help resolve the issue with taxing non-liquid asset values (like homes), in that you hit wealth when it is utilized (easy to judge) rather than when it is generated (often difficult to judge).
2. Kill GRATs. I personally know of at least one person who has been passed a gain of over a billion dollars through that nonsense. And that was a decade ago.
Oh, but wait, both of those things affect major donors...
Yeah, never mind, let’s just waste lots of time distracting the populace with something with a catchy name — “the Billionaire’s Tax” — that will keep lots of polarized discourse going while absolutely nothing gets accomplished.
That said, I'd like to see an analysis of what the financial system would look like if we applied that sort of logic to all asset classes and included various entities like corporations, trusts, etc., before I'm fully sold on it.
I really appreciate the desire to reign in the massive wealth inequality in the world today. I'm just wary of these sorts of 'hackish' approaches. I think of the law like I think of source code. It should be clear, consistent, analyzable, and come with a clear set of testable goals and intentions.
Let's penalize urban gardening co-ops, dog parks, arboretums, and anyone else who thinks preserving some semblance of nature in urban environments is nice to have.
Let's not rest until every urban area is paved completely over into a high-density, lifeless, brutalist hellscape.
Screw species diversity. Homo sapiens is #1!
This sounds overly complicated. Why not just fix the capital gains tax structure to match better with the standard tax rate for higher earners? Keeping track of individual's wealth seems a little tricky, especially once people start hiding assets.
I'm at the point of telling all the billionaires who somehow can't figure out what their assets are worth for a wealth tax (yet seem to always know their total net worth down to the dollar or so) to tell us what their assets are worth, whatever their hearts desire it should be and pay taxes on that value. Except now all such assets go on to an exchange where anyone can buy it immediately for that price. Thank you Robert Heinlein for that idea.
If they are legitimate businesses, then I don't see the problem with having a portfolio of them. Each one can be a significant risk. If they aren't legitimate, then additional regulations should be formed. If you still think it's a problem to have a portfolio, then they could change the language to use the limit as an aggregate of all businesses owned/sold.
"I'm at the point of telling all the billionaires who somehow can't figure out what their assets are worth for a wealth tax"
It's not just them. Forbes has this issue when ranking them. The IRS needs to be able to validate the numbers too, which is unlikely.
You’d see home shortages end at light speed. And yes home prices may crash but it’s a long term fix. People would probably appreciate it long term much more than this plan.
Or maybe it phases in over a 5 year period. Something though.
" The tax proposal would apply to just about 700 taxpayers, Democrats say — people who earn more than $100 million per year or who have more than $1 billion in assets for three straight years. It would require them to give the IRS a detailed account of how much the assets they own gained or lost each year, a process called mark to market."
That the Federal Income Tax is responsible for the United State's brief stint at Pax Americana, 80 years after it was instituted, is highly debatable to say the least.
But this time around, I challenge anyone to confidently say the US will maintain it's "global hegemony" within the next few decades. But at least the middle class will be poorer, and the government more powerful and burdensome than ever.
Of course we can't do either of these things (gov debt and people with power have money -> own land -> love strict zoning)
There's no abstract plan that lets Bill Gates own all of the nation's farm land, and lets Blackrock clear-cut all of the forests of the Amazon jungle, and lets Michael Bloomberg mass-arrest protesters of his political party after buying his way into office, and/or lets Google cover the landscape with armed ai-drone protected company towns.
That said, the only reason DNC senators have proposed such a thing is that they have Manchin and Sinema to prevent it from actually being voted on by the 30 other DNC senators who would also oppose it for the sake of their donors.
No the only reason this bill is being proposed is because Sinema was a hard "no" on the corporate tax rate hike that was in the original bill, but she was amenable to Warren's 'Billionaire tax.'
And she'll be off to have a fundraiser with the people who want her to oppose this directly, I'm sure. And collect half on behalf of DNC PACs.
Quit layering more laws on top of other laws. Review the current system because it's _obvious_ it's not working - and update the tax system. Too bad the government has so much corporate money baked into it's procedures that it'll never happen.
I glanced at the article and I'm not sure if I'm incorrect/misremembering, or if it's the classic NPR spin, but wasn't this part of the whole "taxing unrealized gains" plan as a way to pay for this?
How are you defining "figured out"? It sounds like you are expecting that to mean consensus, but the nature of politics is that every politician has "figured out" their own solution. So the only way to consensus is compromise, and that is what we are seeing here.
However much we tax Elon Musk is too much, because he is the driving force for many fantastic companies in the USA.
However much we tax Mark Zuckerberg is too little, because he has weaponized the social network for politics and profit.
You’ll have to do some adjusting for inflation, but this document lists every federal income tax bracket over the past 150 years:
https://files.taxfoundation.org/legacy/docs/fed_individual_r...
I'm not convinced.
Tax rates seem to more closely track actual government funding requirements than they do any sort of moral justification of such. The only reason congress is considering this is that TSY yields are starting to creep up, making government funding through debt more expensive.
If 10y yields were still tracking around 1%, none of this noise would be here.