go lookup the tax rates in the 60s/70s. we used to
The highest bracket was taxed at 70% until Reagan’s first plan in 1981 lowered it to 50%.
It’s currently at 37% under Trump’s 2018 tax plan.
https://taxfoundation.org/data/all/federal/historical-income-tax-rates-brackets/
eyup
I like Bernie's idea of taxing every trade on the stock market.
Why that would be huge:
It would incentize the rich to hold stocks long term, this would lead to corporations thinking more than what profits are in 3 months.
Which translates to greater stability for other investors and job security for the people who work there.
But it's never going to happen as long as
SmaugPelosi and people like her who's main priority is personal wealth is running the Dem party. Because we all know Republicans will never support it.But if we don't purge the Dem party of neo liberals, and fast, we're all fucked. We can't keep walking down the path of "the rich always get richer" like nothing is wrong.
Wealth is finite. And without taxes and regulations the people who already have a lot will always accumulate more faster than they can spend it.
With them hoarding all that wealth, no one else has any.
Not only that. It stops a lot of the AI micro trading bullshit
Meanwhile down on earth, you've just caused an entirely new class of derrivatives traded on sketchy and unregulated markets, increasing the risk of fraud to all, including small individual investors.
Wealth is finite
The size of the observable universe is ~93 billion light-years. So, you're technically right, but...
Even a 1 or 2% per trade would bring massive amounts of money, not even trying to make it progressive or anything.
Not even that; 0.1% per trade would bring in a huge windfall. Even something negligible like 0.01% would bring in nontrivial amounts of revenue.
The problem is that being above paying tax has become part of the identity of being rich, and the very idea of even a negligible amount of one’s wealth being taken away to be given to your inferiors is unacceptable, and the rich will defend every fluctuating cent of their wealth as a non-negotiable matter of honour, even if it means burning down the world.
Years ago they tried to pass a minimum amount of time you had to hold a stock before selling...
It was a fraction of a second and neoliberals and Republicans immediately united to tell everyone how antithetical to America that was.
For some reason, that wasn't enough to show people that both groups have the same priorities and we can't fight an oligarchy with fucking oligarchs.
We'll never win if only a handful of politicians are actually on our side.
But it's almost impossible to compete against dark money in a primary, and the people running the DNC know that. So they'll never agree to get dark money out of primaries. It's the only reason they're still holding back progressives.
It's possible, but usually harder because what makes the uber wealthy uber wealthy is that they own assets rather than have huge income.
So when they say Bill Gates, Elon Musk, Bezos or whoever has "X" billions, they're talking about the value of assets they own (usually large stakes in successful companies) which has more of a parallel with how the middle class talk about their house (an asset) now being worth (whatever). It's not liquid cash.
Taxes on assets are typically realised when those assets are sold or transferred because their value goes up and down and all over the place. And the uber wealthy do pay tax whenever they sell stock because they're buying this mansion or that yacht. It's just usually comparatively small to their full fortune which remains in stock.
So the difficult thing about taxing stock while it's owned is, like I said, the value goes up and down quite dramatically at times. Should the government collect taxes on the buoyant times but then refund them during market downturns? That would be a nightmare. No government wants to be on the hook for refunds during a downturn.
And it can't (I don't think) just collect taxes when super valuable stocks are on the way up because that's not actually cash. It's just the market value if that stock were to be sold. So the most a government could do would be either to receive some of the stock as a tax payment (not much use to a government that wants to spend it) or force the owners of companies to sell stock and make a cash payment just because they're successful.
Which sounds fine on the surface, but this messes up how ownership of companies works. Let's say some good guy CEO (they do exist) has managed the growth of a multi billion business and to do so has brought in investors which now own 49% of the company, and he - the founder - owns 51%. If the company's value on the market rose 20% you'd get news articles about how the founder now has "XX billion" since last year and that they "earn" so many hundreds of thousands a day compared to your average working class person. If the government forced the owner to part with 3% of their ownership of the company in order to pay this "growth tax" then the founder no longer has overall control of the company. It would be 48% founder owner, 49% investors and 3% whoever the government sell the taxed stock to in order to realise a cash value.
So it erodes ownership. Again I'm sure there are plenty reading this who think "so what?". But I can tell you that much of the market value of stock, the reason it has the value it does, is in many cases because the market trusts the management of the ownership of the companies to continue to make profit. If you force the erosion of that just because the company did well then you destroy the way the market trusts and ascribes value to things. Which is why the way governments tax company is via profits and stock sales, where the value is already realised or where the decision to sell is not forced in the same way.
So what to do about this?
Well you can just increase the taxes on stock sale, or on dividend income. But what happens there is you snare the wealthy middle class with the same rope you were aiming at the uber wealthy. Again some might not think that a bad thing, but it's unlikely to be as effective as people would like it to be. You'd generally be raising dividend tax by a percentage point or two on people receiving low six figure sums. Which would get some extra from the Elon Musks, but also would get the same amount from, say, a consultant surgeon, or a recent tech startup founder etc. My point being, there are not huge numbers of these people, compared to the rest of the population that government spending is spread over. The amount you end up raising is not huge compared to what seemed to be on offer when you look at Meta's total net worth or something like that.
The ultimate answer is about ownership. But it has to be organic (personal opinion) so that it doesn't cause disruption to the markets that end up hurting the most vulnerable (via job losses).
And the best way this is done is to simply suck it up and pay a little more for a non mega corp solution to something. Want Bezos to have less of the pie? Stop buying through Amazon just because it's cheaper. Want Gates fortune to be more wide spread? Save yourself a ton of cash by using Linux instead of windows + office licences. Don't like Elon musk? Stop using twitter, don't buy a Tesla.
If you've done all these things I personally think it's as much as you can do. You should put your efforts into making these boycots as easy for others to follow as possible (support your favourite FOSS project) etc. Pay for the online services you like so they don't feel the need to resort to Google ads and on. Unfortunately in a free market such as the ones many of us live in (thinking Western world) the uber wealthy are mainly that because of the millions and millions of micro choices by consumers who are free to go elsewhere but just often don't choose to.
While the ultra wealthy don't have billions on hand, they do take loans against their assets, which we could tax more.
Why? Are any loans ever taxed?
There were tax evasion schemes in the UK where wealthy people could take loans from an offshore entity they contributed to and never pay the loans back. But this was shutdown fairly quickly by HMRC (British IRS) and a bunch of people were fined / went to jail. Don't know if the same is true in America?
so, going back to your analogy of thinking of stock like homes, we pay property tax on our homes if we own them. Not much, comparatively, but we pay tax on it nonetheless. If stocks are an asset like a home, they should be taxed based on the value of those stocks.
Companies do pay other taxes roughly comparable to their size, I was just simplifying for the sake of explanation. Employee tax is one example. Don't know how it works in the US but in the UK all businesses will pay a "national insurance" tax contribution for every employee they have. This is a level that can be turned by the treasury. But increasing any tax burden discourages the activity that leads to it. Taxes on employees, although paid by companies, are seen as "anti job" taxes. Taxes on profits are seen as "punishment" for honestly raising a profit in the home country (rather than various offshore licensing schemes). The raw market value of a company could be taxed, but that sort of perversely encourages a company to downplay its value.
Ultimately we want companies to be successful, the only issue with it is when the ownership is concentrated in the hands of the very few. Unfortunately that appears to be what drives success in many cases. Small ownership = focussed quick decision making. Sometimes that really is what's led to an American company seeing the success it does rather than some Chinese competitor gaining the edge.
That's why I throw a lot of this back on consumers. We're the democratic force in all this, and we have a lot of power when we act en masse. Why is there one Amazon instead of two? Because people also choose cheapest and they fail to properly value the fact they can have all sorts next day (even same day) when that service never existed ten plus years ago. If they valued that properly then they'd be more able to see competitor B at $10 is still providing them good value service even if Amazon is selling the same at $7.
I'm not sure that's it's healthy to stop people having free choice of where to shop. People being able to vote with their money is what makes capitalist countries the innovation experts of the world.
The issue is what happens when that capital concentrated into a small number of hands starts to wield anti-choice power and / or political power. So I think people building successful companies and being wildly rich (on paper) is fine, but legislation should stop them hoovering up smaller competitors (anti trust laws). And money should certainly be capped and prevented from undue influence in political processes.
The US and UK are quite different in that regard. Our anti trust laws could be better, but at least our political processes are relatively short and the use of money in them held to a reasonably high level of disclosure. Both could be improved.
And I think they will when the population elects a social-good minded government that's pro business. Typically in the past I'd personally say this mostly lines up with what used to be called New Labour. They certainly did some social good but they made some appalling mistakes trying to partner with business.
I don't know that the equivalent hope in the US is. I see the democrats gets criticised a lot of not being well connected to working class people and too cosy with big business. But campaign finance laws would need to change before the way in which money and politics interacts could ever reasonably change.
Which all feels a bit far off, which is why I come back to what small actions individuals can do... Buy local, from small businesses, be prepared to spend more to spread wealth a little more evenly, buy domestic, not foreign, avoid the services of megacorps wherever you can, enable others to do the same. Who knows? Can you imagine a community run Amazon that cost a bit more but funneled profits back into the local community? Things like this can be tackled by a relatively small band of motivated individuals regardless of what's going on in the halls of power.
Assets are taxed all the time (real estate tax, car tax.. ). So taxing the value of a share portfolio at the 31st of December each year is perfectly doable. And if it has depreciated since last year, you get a tax deduction.. which is capped by the income tax to maximally reach 0... No carrying over till next year.. or maybe 1 year.. whatever, that's implementation details.
How much do you tax these assets is the point that needs consideration.. it's not fully income... But a percentage is only fair. And if this means people need to realize gains to pay for it.. that's fine... Why would it not be?
And borrowing against an asset portfolio should mean that it counts as realizing gains of the asset portfolio and the amount is seen as income and thus taxed. (You loan 10 million against your shares, that's income) And to avoid fallout for the normal people you can build in a threshold and exclusions for example for the first million in your lifetime.. or for the mortgage on your primary residence with a cap at the median house price or .. something. So for these people borrowing against assets means they can keep the assets… but pay interest on the loan. Alternatively they can actually realize the gains and pay cash.
It's not hard at all, it's a matter of political will, and writing proper laws that state your objective and exceptions.
There’s also the very important concept of a capital gains tax. Why does their income from stock sales get to be taxed at a special low rate, as if it weren’t income? That’s ridiculous
We’d go a long way toward evening it out just by deciding
- income is income. No special categories of income for the wealthy
- when your company or trust spends money on your personal life, that’s also income
- tax brackets keep going. They don’t even have to be specially high, but why does it top out so early? Why is my doctor’s income taxed at the same rate as the richest man in the world’s income?
How dare you come up with a nuanced take on this topic instead of screaming “eat the rich”!
If we disallowed margin loans from brokerage accounts then the uber wealthy would be forced to pay more taxes. We can easily avoid impacting the middle class with marginal tax brackets.
In point of fact, mark to market taxation already does exist for various individuals and certainly for large numbers of businesses. Your long comment suggests that you don't know what that is, and if you're interested you could read up on it.
The short story is that depending on the situation, a person or a business might pay taxes each year on the value of their assets, assuming said assets had been purchased on January 1st and sold on December 31st, even though in reality nothing was bought or sold. This system is already in place in various ways. It exists. There's no theoretical problem with expanding it.
Thanks. Yes will certainly read up on it. I've come to finance somewhat backwards, having to learn very specific technical things for working in IT and I'm now working backwards to some generalities I might have totally missed.
Is this a tax on the market cap of the company though? Or is it a tax on assets it holds?
I believe the general sentiment is "Bezos / Amazon is worth XX billion why can't the state have a slice of that for social good?" But I think various existing taxes are smaller and too far removed from the headline value of the market cap of the business. And there isn't anything that would enrich the public purse to that degree short of having a comparable stake in the ownership of the business.
I think Germany actually does something like this but I don't know much about it.
Ultimately I think it's right that something feels a bit 'wrong' about one man like Musk, Bezos, Gates having control over such huge wealth, but as I was saying above those complaints generally ignore that this is a value of an asset not cash and it's not like the government could do something with Amazon shares if it has them other than just sell them. The complaints also generally ignore that these uber wealthy are paying tax whenever they sell stock to have more cash on hand, and that one day whenever they cash out of the company entirely, that'll be a windfall tax take for the government too.
I get that the inequality feels wrong. But it's hard not to feel like it's "we the people" that make Amazon (or whatever) so value by continually choosing to trade with it. Same way professional footballers have an absurd amount of money. But then millions of people are all willing to spend $x to watch them specifically play. If we don't like it we have other choices, but we don't want to.
Should the government collect taxes on the buoyant times but then refund them during market downturns? That would be a nightmare. No government wants to be on the hook for refunds during a downturn.
AFAIK Danish tax on stock gains/losses works like this. Stock gains are heavily taxed while stock losses give you a tax rebate.
Most of the rich cannot just move to a tax haven. Sure someone who inherited multi-generational wealth can hide it in the Caiman island.
But if you own a canned tomato factory, or even if you're a business consultant, you get rich because of very local things, and can't easily move-it away.
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Yes.
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They would fight back, buy all our media sources, and buy our governments to make sure 1 didn't happen.
Sounds familiar... oh wait....
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In Finland fines are based on percentage of yearly income.
We’re still waiting for Bezos to come here and get a massive speeding ticket to fix our budget for the next decade
Hahaha that's great. I love Finland, thanks for the sauna's!
It’s probably not possible at this point. If there was some kind of revolution, poor people could have access to healthcare, education, shelter, and food. You know, basic dignity and hope for a better future. But the problem is that hopeless wage slaves are better for capitalism.
Has that been tried since 1790 when the french decided to behead all the rich people?
most effective tax reform
Yeah they only wanted the top 10% of the top 10%
Certainly. Most of the 20th century, the top tier tax rate was set at a level that can only be described as "punitive". It was higher than 90% to kill off the robber barons.
While I am not morally opposed to beheading rich people, we really need to go back to the tax rates we had in the 50's. And add a securities tax, payable in shares of that security, that the IRS can liquidate slowly over time.
they would threaten to move all operations to somewhere like the Cayman Islands which makes no fucking sense
They can threaten all they want, it's simply not possible. If it actually was possible, they'd have done that a long time ago.
Like it or not they have assets here. If they move their operations overseas and evade taxes they can enjoy having their assets seized and their IP confiscated.
In theory - sure. In practice - all countries in the world have to agree to raise taxes, even though individually they are better off betraying this agreement and lowering them, thereby attracting the rich and ending up with more, not less, money.
And if all countries agree to tax the rich the way they should, we might as well go and build socialism everywhere, because not having everyone onboard is a main issue there too.
Why are you arguing against reality? In the world today, some states and countries tax the rich at higher or lower rates than other states and countries, and it's certainly not true that the rich all leave the high tax rate places. The data doesn't lie. You can argue about why they don't all leave, but the facts are there for you to see.
You don't need uniformity around the United States or the world in order to tax the rich effectively. But people like to say what you said, so that you don't even try to tax them.
But I think it would be fun to run an experiment. Why don't we jack up taxes on the ultra-rich across the United States. If the ultra rich move to Venezuela, then all of the savings they have in the US stock market will be taxed at an even higher rate and we will actually get more money from them. And if they were working any cushy CEO jobs, those jobs will now be open for other American citizens, and I'm sure there were plenty of people willing to apply... Of course it doesn't have to be the US. Pick any country, try the same experiment, and get back to us.
Yes, because at the same time they offer a better business environment. US, for example, can do pretty much anything, being de facto commercial center of the world, with highest scale operations historically based there and interconnected to the point they can't just "leave".
Should you run this "experiment" in aforementioned Venezuela instead, you're unlikely to enjoy the result. Although it wouldn't benefit the US in the long run either.
They write the tax laws and buy the politicians to pass those tax laws. So no, we cannot tax the rich.
The newly elected government is actually quite cost efficient in this regard. Since they already are all crooked business men, they don't need to pay anyone to get those tax laws passed.
Yes.
Theoretically, sure. Pragmatically, we just elected a fascist insurrectionist, and it's not going to happen in the near future.
We?
Yeah, that's fair. US mindset, I'm just still processing our shitshow.
I doubt it, at least in the US. The rich have a lot of influence over how laws are made, and I don't really see any appetite to pay a greater share.
Every country would have to do it. A party here in Switzerland wanted to drastically increase inheritance tax for certain large inheritances, and the rich people threatened so hard to leave the country that everyone believed them and now nobody supports it anymore. (They said their children would not be able to pay the tax because most of their wealth is supposedly in company shares, so if they died their children would have to sell off the companies to Cineese companies which nobody in Switzerland liked to hear)
Of course that's not true. We have data from around the world showing it's not true. It's not even true within the United States if you look at state taxes.
Why not pay in shares?
Yeah, then the corporations would gradually become public too, which would be beneficial.
In my limited understanding, yes, it's possible. But it would require significant international effort to get the super rich, the ones that can pay fabulous amounts of money to
money laundererslegal tax experts that know just the right loophole to ensure that mr. billionaire will pay only 500k in taxes rather than 10 million, because tax havens only exist thanks to certain countries' very lax rules on banking.There are already large numbers of treaties in place for countries to cooperate in tracking down tax evasion. It might not be as expensive as you think. If you think of it from a practical standpoint, we have lists of the richest people in the world. That's an excellent starting point, isn't it?
If some billionaire is claiming that they actually aren't a billionaire, and that the lists are wrong, when some government is trying to tax them at an exorbitant rate, it's likely that they will give all of their banking details to said government to prove it. Or they will hide those banking details, and they'll be forced to pay the taxes.
even if we did (because we used to, after big fights), the burgeoise would reverse it because they are the ones in power rn.
The rich don't earn money from an income. They earn it from investments. We tax investments at the same rate as the top bracket (37%). If we raised the top income bracket to 38%, it would push more rich to receive their income via investment. However, raise the investment tax (capital gains), and we drive foreign investment away. A lot of foreign money is in America because we have a long history of stability and a low possibility of the people rising up and nationalizing ownership of foreign property. Drive that money away and everyone suffers, but that also makes it impossible to raise taxes on the rich.
I should of said "makes it impossible to raise taxes on the rich" ... without them passing on the hurt to the poor. Sort of like how Trump thinks a tariff on foreign goods will only be paid by foreigners.
No. If someone's rich they can lobby if they can lobby they will act within theyre best interest.
