What do you think is the proper amount of taxes billionaires should pay? I personally think low taxes are good as billionaires stimulate the economy and low taxes incentivize them to stay in the US. I’m no expert though - what do you think?
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I think these never-ending bait topics are low effort and lame.
Making an entire thread to say "Low taxes are good!" on a Wall Street forum just so 17 year olds give you internet points is just kind of sad.
This is a big issue. Not sure how it is a bait topic. Why don't you think about an answer instead of patronizing? Also 35-40% of people on WSO are voting for Kamala per the recent poll on here. The left largely believes in higher taxes for billionaires. I am interested to know why. Which means that almost half of the people aren't giving me 'internet points'. I just want answers and you have not helped at all.
Bro honestly first of all I'm like a net negative 3 or 4 on this thread so I'm obviously not getting any points for this. Secondly, I've been thinking about what you said today, and I don't come to WSO to rack up points. I am constantly seeking stimuli and frequent about 7 different outlets 24/7. I thirst for knowledge; I seek answers. I cover a variety of different topics during the day including poker. The posts on WSO are about relating to people and learning for me. Going for points or something is just a byproduct of my significant activity. But, I probably spend more time on Twitch and Discord and have many friends including poker pros through there in the poker community.
Sometimes you gotta stir the soup you live on
I think llc pass through taxation and intangible amortization need to be very granularly analyzed with some rigorous AMT or even revenue based taxes or something and stringent restriction on NOL utilization and intangible amortization. But besides that I think the current system of taxation is generally fine.
oh and end the disproportionately attractive treatment of real estate taxes eg allowing 30 year depreciation on properties, like kind tax deferral etc
A regressive taxation would be best, where billionaires are tax-exempt and the lower class pays much more. As it stands now our society punishes success, innovation, job creation, and progress. This way, poor people actually have an incentive to do better instead of collecting welfare checks.
RIP rags to riches stories on WSO then
Honestly can't tell if this is bait or not
This is actually a very interesting school of thought, it pops up in local and regional development as well. There were a whole host of papers and studies published in the UK in the late 2000s looking at how the economy could be more evenly distributed; one of the ways that was suggested runs along the same methodology and claimed that all investment should be put into London. Essentially they claimed that in time market forces would drive some firms/ industries out of London on a pure cost basis, thus levelling the economy.
This is actually a very interesting school of thought, it pops up in local and regional development as well. There were a whole host of papers and studies published in the UK in the late 2000s looking at how the economy could be more evenly distributed; one of the ways that was suggested runs along the same methodology and claimed that all investment should be put into London. Essentially they claimed that in time market forces would drive some firms/ industries out of London on a pure cost basis, thus levelling the economy.
Bad topic. Try again.
This is a clickbait-y topic but it is one worth discussing.
Billionaires should obviously pay more in taxes. The "stimulating the economy" argument is bullshit on its face and anyone making that argument is being fundamentally dishonest.
I don't know how to find a reasonable way to tax people who hold most of their worth equities, though. Restrict how much can be borrowed against those shares? Tax those loans? I don't think either of those are workable and have obvious implications for people who aren't billionaires or even close to it. Have some very small incremental tax on share price appreciation? There seems an obvious misalignment of incentives in general for people who own controlling stakes in publicly traded companies to not pay out dividends (which are taxed) and just allow cash to pile up, raising stock prices and then borrow against those shares in a tax free manner.
I don't know that any of that is feasible. I guess the simplest and probably most egalitarian answer is to limit the ability to establish trusts so that estate taxes kick in and it isn't possible to shield assets for generations.
Billionaires (and other wealthy people) should be paying a higher proportion of their income/wealth back to society - they have an obligation to preserve and enhance the conditions which allowed them to thrive in the first place. I don't know that there is a fair or defensible way to do that, and especially not one that doesn't have rebound effects on a lot of other people who maybe aren't meant to be impacted in the first place.
I thought when you transfer assets to a trust it counts as a gift to the trust taking away from gift cap and 40% tax above the gift tax and main benefit of trust is to control how the proceeds go to the beneficiary eg age limits and to limit access to creditors etc
ie you're not evading taxes. There's other complex insurance strategies as well as GRAT strategies but it's quite marginal from my understanding.
i strongly believe pass through taxation and real estate taxation in this country is a scam and should be wholesale relegislated
Thank you. I created the topic as I yearned for more information on it.
Fair points.
I would disagree where you conflate moral obligation, versus a legal obligation, regarding the noblese oblige.
Also, the rich due pay more in taxes, frankly anyone who owns a share of any company pays a pro-rata percentage of corporate taxes. I'm not sure why we should double, tripple, and quadruple tax people. And then hand it off to people whose job it is to spend the money(gobment).
I think both exist. There is a moral obligation (you should strive to preserve, or even enhance, the opportunities you had for others), a legal obligation (someone needs to fund all the services that government provides, and someone with $1mm is getting 10x the value from having a robust system of property rights as someone with $100,000), and a mandate that is a combination of both, which is self-preservation. If you don't think the wealthy have an obligation to help support others, then logically you also don't think that the poor have an obligation to the wealthy. Which means nothing stands between you and a ravening mob bent on taking your shit.
A lot of wealthy people don't understand this, that you don't get to pick and choose what government provides and act like the rest is crazy. The wealthy should want to pay a little more now to fund a world in which most people feel bought in to the existing system. Because the alternative is that when the greater mass of people feel that they have no chance of advancement, they'll turn around and take what they want. Why shouldn't they? If I look ahead at my life and think "I'm going to be stuck in grinding poverty forever, but my neighbor has a pool and a tennis court and is eating caviar three times a day" why shouldn't I just reach over and take some of that? When you get enough people who feel that way, you get revolution.
The wealthy have a lot of ways of avoiding taxation. The original question of this thread is how to tax billionaires who have a lot of wealth but little income. Some lawyer making $500,000 a year isn't the subject of this discussion. The tech billionaire with $5b in net worth and who never has taxable income but just borrows against his shares is the subject. That is, fundamentally, not fair. I don't know that there is a great way to remedy it, but it's frankly absurd that someone like Elon Musk can monetize billions of dollars without being taxed.
I disagree.
The way I see it is that, they (billionaires) thrived despite the conditions. If the conditions were so beneficial for those who became billionaires, what did everyone else do in those favorable conditions?
Why shouldn't those who have accumulated wealth try to shield those assets for their own generation? How people spend/save their money they earned legally shouldn't be of anyone else business and government's business, no?
All in all, so many taxes make little sense to me.
1. Property taxes at local levels (city, state) makes the most sense as these go into making the lives of people who live in the area better
2. Income taxes makes sense in a way that in today's world, you're benefitting from all the public infrastructure in your vicinity to generate the income (commute, bridges, parks, etc.) - should be a flat rate not progressive rate.
3. Tax on investment income & capital gains makes absolutely no sense - If you bought a stock, that company already paid taxes and whoever bought these stocks bought them with taxed dollars what the heck is the rationale for taxing this other than to redistribution of wealth by force? All institutions involved in allowing for investment into stocks and other investment vehicles aren't funded by tax dollar and make their own money... so why tax investments?
4. Estate / gift tax - also makes absolutely no sense - taxes were paid as the wealth was being accumulated. If someone made money off of good investment - good for them, it's no one else's business really.
5. Consumption tax (excise tax?) also doesn't make sense. Consumers already paid taxes on the dollars spent to make the purchase. Business/Corporation will pay taxes on the income made from sales of these taxes.
In my opinion, all of the taxes beside property and income tax doesn't make sense and is riding behind socialist idea of wealth redistribution. Billionaire's really have no obligations to society. If they made money illegally, justice system should catch them and punish them. If they made money legally, that means there was a market that demanded products/services made by these people and the consumers were WILLING to pay for them. If anything, these products and services did already DO GOOD to the society.
Not be as lucky? Being a billionaire is luck. That's it. Yes, it requires intelligence and hard work, but there are plenty of people who work hard and are really smart and didn't succeed.
More to the point, wealthy people thrive because of the conditions society creates, not despite them. Elon Musk wouldn't be worth anything more than his father's fortune without educated workers, without roads for them to get to work on, without the billions of dollars of government handouts that form the basis for all his companies.
Personal computers wouldn't have been commercially viable without government policies that allowed businesses to depreciate them. Every tech company wouldn't exist without the federal government developing the internet.
At every stage, at almost every level of wealth, you can find that it's government which is providing the conditions under which people/businesses thrive. There is a reason you don't see tech giants coming out of Somalia.
Why should they? The estate tax exemption is over $13mm. More than enough to establish your kids in comfort.
Why should property be taxed? After all, you were taxed on your income and then you bought land, why should it be taxed again?
But if I'm a business owner, I get more benefit out of roads and bridges and parks. Why should other people pay to make my business more attractive to employees?
Then we should raise corporate taxes much higher.
Are they? Does Elon Musk pay taxes on the wealth he's accumulated? Obviously not, so maybe it's time to think about another justification, because this one is simply wrong.
Right, but once again, you pay for a different service, which is to assist in getting those goods to a place where you can actually buy them.
OK. That means society has no obligation to billionaires. So let me make this really simple, and you can tell me if I'm using small enough words.
If you have a lot, and I have very little, why shouldn't I take what I want from you, if I can? If 99% of people have very little and 1% of people have a lot, the math is even more damning - why should the majority live in penury while the small minority lives large? This is basically the entire reason we have human societies, it's the reason wealth redistribution is a good idea, and what pea brains like you seem to never really grasp. The wealthy are not owed the protection of the state, they buy it by paying more of their income in tax. There is absolutely no rule or natural law that says that I am bound to respect your property rights. When the rich get too greedy and take this simple fact for granted, you end up with violent expropriation.
As a wealthy person, it is in my best interest to make sure that the majority of my fellow citizens are sufficiently content with the way the system works, because if enough of them feel like they're trapped in some hopeless cycle of poverty, they're just going to take my shit, and yours. When you spout off about how billionaires have "no obligation to society" you are basically telling the poor that they should eat cake. Because you are holding on to an extremely hypocritical double standard.
Except the justice system is perverted by money. This isn't some mystery or hypothetical, people with money escape punishment that gets meted out to the poor on a regular basis. Or go look at more plutocratic societies and see that there it's even worse.
Really? Your argument is that every wealthy person got that way by providing useful services. This is so obviously false that it shouldn't even need to be said. What good did the LTCM guys do? They got paid a ton of money, lost everyone else's, and had to be bailed out. They imposed a net cost and yet most of the principals walked away with tens of millions. Or to take a more recent and widespread example - what "good" did Wall Street bankers do when they got paid millions upon millions of dollars to issue crappy loans to naive borrowers? The borrowers lost their homes, the state took on the losses, and the individuals who acted unethically got rich.
How about Don Blankenship? You know, the man whose greed resulted in the deaths of 29 people? Who served a single year in prison? Sounds about right, huh? Who made tens if not hundreds of millions of dollars by dumping waste in public watersheds, by allowing such unsafe working conditions that again, 29 people died, who ran a company that is unquestionably a net negative to society and which required millions if not billions of taxpayers dollars of subsidy just to stay afloat.
I can keep giving you examples for days. This is such a crappy argument; are you 14? Because this is the level of analysis and thought I expect from a teenager, not a grown adult.
"Billionaires should obviously pay more in taxes. The "stimulating the economy" argument is bullshit on its face and anyone making that argument is being fundamentally dishonest."
A flat tax would accomplish this. So would any number of consumption taxes on various goods. The most ironic thing in the world is that carbon taxes actually make a ton of sense for equitable taxing, and yet they're the most hated tax.
Billionaires (and other wealthy people) should be paying a higher proportion of their income/wealth back to society - they have an obligation to preserve and enhance the conditions which allowed them to thrive in the first place.
This argument can be flipped on its head more logically to state that those who benefit the most from social services should pay the most. We all accept that this won't happen because most people aren't cruel and want to help those with less. But more tax revenue doesn't equal a better society. It just means more revenue for the government. But if you, like me, don't believe the government effectively helps the poor, then I'd rather rich people donate to churches which run soup kitchens rather than donate to the government which employs/overpays useless bureaucrats.
I mean, this is the argument that people have made throughout history, and it leads to the poor rising up and taking everything from the rich (including, often, their lives). Learn a little history.
Besides, a person worth a billion dollars benefits a billion dollars worth from having a stable society in which property rights are respected. The only way your argument makes sense is if you define "benefit from" in the most narrow possible sense.
I mean, government certainly helps the poor more than churches. You've basically demonstrated your fundamental unreadiness to have this argument if you think that churches are the vehicle through which social good should be accomplished. Lol.
And can you cite some proof that government "overpays/employs useless bureaucrats"? This feels like an unsubstantiated bias and not a real opinion. Once you can prove that, we can discuss whether or not government waste is more or less than private sector profit or nonprofit (e.g. religious institution) waste or whatever.
This is where the application of tax law diverges quite a bit. These billionaires have their money tied up in net worth and often have stated salaries that are optimized for tax efficiency. So applying a greater personal income tax doesn't really work out. If we were to be more restrictive in the ways large corporations pay taxes so threre aren't as many legal loopholes to pay small percentage of their EBT as tax, then they would reasonably just place that cost burden on their employees or customers.
If we were to apply this to capital gains appreciation, then how would we address the counterargument of tax deductions in a downturn market? Would we apply a progressive system in which you're taxed more or less favourably dependent on the dollar value of your total equity investments? It would likely require a whole new body of text to determine what basis makes sense and what taxable dollar amount would not cause a liquidation of equity positions (especially for folks who have tens of millions or greater in capital appreciation).
My personal belief is that if we apply said tax law, then they will simply find the next tax-optimized investment strategy such that the net cost of implementation is less than the tax sum under the old strategy. Simply put, they have means and motive to mitigate taxes, so they will find ways to do so.
Applying these changes will likely curb capital market investments and might cause the market to be marginally less liquid in the short run with minimal effect in the long run.
I mean, we're generally in agreement about the difficulty of implementing this kind of tax. In this instance, I think you would just argue that you have to adjust your basis every year. If I have 1 million shares of OzyCo worth $100 a share, and they appreciate to $110/share next year, then I get taxed on that "gain". My new basis is $110/share. If the year after they decline to $105/share, then I pay no tax. If I liquidate any shares, I take a loss on that sale of $5/share. None of this seems particularly difficult.
I suppose there is an argument that this will retard innovation and R&D spending, since spending dollars that both generate share value and also don't cover tax costs seems uneconomical, but I imagine there is a way around that.
Look, I think there is a real problem with the fact that the ultra wealthy effectively don't pay taxes. That demands a solution. If that solution requires some short term pain, then so be it. Every time anyone suggests regulating or reforming capital markets investors cry foul and say it'll destroy confidence in the markets, and it never does.
I think, progressive tax in and of itself is not a good idea. At a flat tax rate (without the considerations for tax loop holes), wealthier / higher earners pay more in taxes anyways. What's the point of penalizing the drive to earn more? Government isn't efficient, less tax to everyone (billionaire or poor) would be better. Get rid of over burdened bureaucracy, remove stupid programs that incentivize stupid behavior, spend on items like defense & public safety & public goods and get out of marriage, healthcare/insurance, education.
If people feel they need to help the poor and needy, go for it - volunteer, give money, give food, give shelter or do whatever you think will help out of your own pocket - good for you - don't force altruism on other people.
And whether billionaires stimulating the economy is true or not, it's none of anyone else's business on what they do with the money they earned by providing goods and services that is deemed worth the price by the market.
Close the loopholes to taxes (+ change the political donation rules so that politicians aren't incentivized to create/keep these tax loopholes) and apply the tax code to everyone regardless of current wealth/income.
This is absolutely true when i realized I would get taxed 37% on every dollar past 609k instead of 35% it killed all my motivation to progress my career
Are you 12 years old?
How is "taxes are gay" a serious comment?
It was 1 of 3 adjectives used to describe taxes in a 2 paragraph statement with actual commentary, but go ahead and be offended by the intentionally inflammatory statement and lose the forest for the trees.
They are that AND theft.
Fair share is a very arbitrary concept. Lowering taxes for people who make billions would not likely have a material impact on the economy. People who make billions have a very inelastic demand for good and services. Lowering a tax rate from 37% to 35% will have almost no impact on people who are worth billions. A tax cut for low/middle income people would have a significant impact on the economy because elasticity of demand is high.
Most economists disagree with you and think capital taxes (only way to really tax the people in question) tend to create significant deadweight loss
If you are going to say something like "most economists," you should reference a study that supports your claim.
I don't think it is. To get to a specific number is not easy, of course, but the idea that those with more should pay more is pretty engrained in human ethics. Even if it's an absolute number (e.g. everyone pays a set percentage and that is more or less based on wealth/income/whatever). Even beyond that, one of the most persistent forms of taxation in human history is a consumption tax, which is usually levied on luxury goods. There were other reasons for those, of course, but one of them was to reach the wealthy.
I doubt there are many serious people in this country, or anywhere with a functioning representative state, who disagree with the notion that the rich should pay more than the poor in both relative and absolute terms, even if few people seem to do any critical thinking about why. Obviously there is a great deal of disagreement about what a fair rate is, but there aren't many people on either side of the aisle calling for the abolition of the progressive income tax.
This, to me, is unfair. Taxes should go up or down on everyone, not just the class of people for whom it is politically expedient to demonize. Fairness is saying "everyone should chip in for the goods and services that are provided to us." It also means saying "the people who have gotten the most value out of the conditions we've created to breed financial success have the largest responsibility to ensuring those conditions exist for future generations."
Perhaps subjective is a better word than arbitrary. Higher income people have to pay more in taxes because the government could not function without collecting lots of money from these people. I do not know what fair share would be. Over the past 100 or so years. the marginal tax rate in this country has been as high as 94% and as low as 7%. How do arrive at the correct percentage? Obviously, the tax system is more complicated than a marginal tax rate. I guess one fair way to approach taxes would be to structure the tax system to allow more poor and middle class people to live comfortably while still maintaining an incentive to reach high income levels. How do you do it?
I am not sure what you are disagreeing with regarding elasticity. I think it is just common sense to think that wealthy people would have a more inelastic reaction to minor changes in tax rates compared to people who makes less money.
Concepty like "fairness" are wildly random and can be easily shaped by early childhood experiences. For example children of the wealthiest of society go on to be socialists at a rate that is 10x that of the middle and lower classes because they realize they are useless to the world at large and therefore the only way they can maintain their station in life is to force that outcome on society as a whole. It is easy to be at the top of society as an overly educated idiot when success maxiums are defined by overly educated idiots.
The top is also entirely manufacturable by limiting how much people can obtain.
The reason redistribution fails is because you quickly get to a place where people do not feel they are benefiting fairly for their forced contributions. This is what leads to hollowouts of the tax base. If you want an eye opening example of this take a look at what happened to New Jersey when a single person decided that they had enought of being taken advantage and they moved to Florida. This single person threw the entire state budget into chaos. Numberous economists and left leaning think tanks are finally coming around to the realization that California has also hit its peak ability ot collect taxes from it's rich.
If we're just here to talk hand-wavy political theory, the answer is simple: nobody should be paying taxes.
Federal spending has not been a function of taxation for many decades (since 1971). Washington is entirely funded through inflation and a heavy lean on its dollar reserve status. Whoever rises to power and where they want to draw the arbitrary tax line is entirely a function of which cohorts of society they want to reward or punish; it's literally all theater.
We need an American Milei to come in dramatically reduce the size of the Federal Government, then fund the new smaller version on flat corporate tax rates, VAT, and maybe some import tariffs. Any other bloated high-cost state programs should be offered by the individual states, who can then choose to reinstate income tax and cap gains if their citizens elect to do so.
Lol.
Taxes should be lowered for anyone earnings under $1ml. We can save money by cutting the military budget, gutting social security payments, and taking an axe to govt spending / jobs (75% of which can easily be cut). Common sense stuff but it will never happen
The real problem with progressive taxes is that it allows government grifters to promise people shit for votes. No one complains about paying taxes when they feel they recieve a comensurate benefit with their tax payments. The issue now is that outside of the bottom 50%, no one feels like they are getting their money worth. This is the exclusive domain of progressive welfare policies. Do conservative pet projects consume significant resources? Yes. However, anyone who thinks that these things are what drives deficit spending are delusional. The welfare system is what drives that.
I am a firm believer that we can 100% have a progressive taxation system. Just one of a completely different kind. We get rid of income taxes completely. We only tax capital gains and wealth that is derived from inheretance. This way we do not penalize success, we allow people to grow fortunes, and we do not punish people who take their good fortune and continue to be risk on. If their wealth is going to be taxed away in 10 - 15 years anyway this encourages them to go out and do new things and take new risks. The problem we have now is our risk taking is totally constrained to the 1st and to some extent 2nd generation of the wealth. There is zero real world reward for taking risks with the money. Force people to do so. This solves all of the societal issues assocated with wealth and gets us of the track of becoming that shit hole that is Europe.
High taxes entrech wealth. There are zero examples in history where high taxes have actually redistrubuted wealth. It only tamps down on growth and creates a semblance of "equity". In reality it just evens out income but does nothing to fix wealth gaps.
Allow people to easily build wealth and punish those who try to coast on it. We need more billionaires not less. We need more success not more mediocre people just coasting through life. Make falling short of your potential punishable by punative suffering.
interesting thought experiment, with no/low income taxes you'd also take away rent seeking behavior solely because of tax deductions (QOZ, interest on debt, depreciation, etc.)
the fair share argument is retarded, the issue is not the rate, it's the code. I say eliminate all tax deductions, treat all income exactly the same and see where the chips fall, it's impossible to know ex ante because behaviors will change
I'm also of the opinion that most of our growth over the past generations was because of money/credit creation, so I don't buy the growth argument per se. entrepreneurs absolutely create the most jobs, but our growth has been in large part due to proliferation of credit, public & private, and I don't think you can get out of that just by cutting expenses, as much as I'd like for that to be the case
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