The "Billionaire Tax"
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Guardian buried the lede I suspect.
The newspaper quoted the administration document as saying: “The billionaire minimum income tax will ensure that the very wealthiest Americans pay a tax rate of at least 20% on their full income …
10 bucks says it’s an unrealized capital gains tax. And damn right it’ll never pass the senate.
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@Klaus because you're taxing an asset.
In the US, once I purchase something, a car, computer or a pair of shoes, there's no tax owed on it, other than the obligatory sales tax at time of purchase.
How many times can you tax an automobile once it's in your garage. Assets should be the same. If you sell at a profit, then pay the tax. If you sell at a loss, and that can happen, you should not be penalized for the value of said asset x years ago.
"Now look here, you Baltic gas passer... " - Mik, 6/14/08
The saying, "Lite is just one damn thing after another," is a gross understatement. The damn things overlap.
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@Klaus said in The "Billionaire Tax":
Why does it make a big difference in tax income whether unrealized gains are taxed or not?
Shouldn't this merely be a matter of timing? That is, the tax may be paid later, but eventually it will be paid?
Well probably not much of the time for the super rich. They often end up donating much of the appreciated stock to their foundations to fund their philanthropy. The other reason, a bit harder to justify IMO, is what we call the “step up basis”. Say I own 100MM of stock in that I paid 1MM for. If I sell it, 99% is capital gains. If I leave it to my kids in my will, they get to reset the cost basis to 100MM (meaning that capital gains of future sales would be calculated as if they bought the stock for 100MM). So if they sold it immediately there’d be no tax liability at all.
I think there’s a good case to be made for changing that later law, but it’s quite different than taxing unrealized gains generally.
Also taxing unrealized gains has all the problems a wealth tax does - it’s really hard to value businesses that aren’t publicly traded.
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@George-K said in The "Billionaire Tax":
Not to argue with you, because I agree…
However, Loudoun County taxes me every year on the car that I bought 6 years ago. The Commonwealth of VA also taxes me based on the current value of my home, not the price I purchased it for. In addition, they will continue to tax me in perpetuity.
You're totally correct in your criticism. However, the difference is that in return for the taxes on your home, you get something in return - fire, police protection and school funding.
Justifying the tax for a vehicle license is more difficult, of course.
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@jon-nyc said in The "Billionaire Tax":
Well probably not much of the time for the super rich. They often end up donating much of the appreciated stock to their foundations to fund their philanthropy.
Hm, ok. I assume contributing to a "worthy cause" gives you a tax excemption, so if, instead of donating to their own fund they'd sell the stocks and donate it all to some other charity they also wouldn't have to pay taxes. The main difference seems to be control/power over the money.
The other reason, a bit harder to justify IMO, is what we call the “step up basis”. Say I own 100MM of stock in that I paid 1MM for. If I sell it, 99% is capital gains. If I leave it to my kids in my will, they get to reset the cost basis to 100MM (meaning that capital gains of future sales would be calculated as if they bought the stock for 100MM). So if they sold it immediately there’d be no tax liability at all.
That sounds clearly broken. Either you inherit everything - including liabilities to pay taxes etc., or you refuse to inherit anything.
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@LuFins-Dad said in The "Billionaire Tax":
Justifying the tax for a vehicle license is more difficult, of course.
Not sure how this tax is justified in the US, but over here, we have to pay an environmental tax each year on a car. The more polluting the engine, the higher the tax.
But such taxes could also be used to fund road infrastructure, traffic safety, etc? -
“Don’t make me repeat myself”
- history
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@jon-nyc said in The "Billionaire Tax":
@Klaus It is. It’s a loophole that means the great fortunes of founders are never actually taxed.
Sounds like it is even better than that (for the heirs): The heirs can then actually use the money to buy a yacht, which the owner could not (without paying taxes first). So they are better off than their parents.
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@LuFins-Dad said in The "Billionaire Tax":
@George-K said in The "Billionaire Tax":
Not to argue with you, because I agree…
However, Loudoun County taxes me every year on the car that I bought 6 years ago. The Commonwealth of VA also taxes me based on the current value of my home, not the price I purchased it for. In addition, they will continue to tax me in perpetuity.
You're totally correct in your criticism. However, the difference is that in return for the taxes on your home, you get something in return - fire, police protection and school funding.
Justifying the tax for a vehicle license is more difficult, of course.
Hey @Klaus @George-K that wasn’t me that made the reply. My bet is @George-K or @jon-nyc made the reply, but it is showing as me?
As to the point, it’s not about justification for the taxes. There’s almost always a way to justify the tax. (In exchange for the unrealized capital gain tax you get childcare, infrastructure, a 30% larger IRS), but that’s not the discussion. The discussion is can I be taxed for an unrealized gain. The answer is “we already are”.
The Brad
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@LuFins-Dad said in The "Billionaire Tax":
Hey @Klaus @George-K that wasn’t me that made the reply. My bet is @George-K or @jon-nyc made the reply, but it is showing as me?
That's strange. It wasn't me. And I don't even know how to masquerade as another poster - moderators can edit posts, but not make new posts under a different name (I think).
edit: OK, I was wrong. This was posted by Klaus, but I could change the owner of this post to Jon.
Maybe Jon or GK hit the "Change owner" button by accident?
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@Nunatax said in The "Billionaire Tax":
@LuFins-Dad said in The "Billionaire Tax":
Justifying the tax for a vehicle license is more difficult, of course.
Not sure how this tax is justified in the US, but over here, we have to pay an environmental tax each year on a car. The more polluting the engine, the higher the tax.
But such taxes could also be used to fund road infrastructure, traffic safety, etc?Supposedly those are paid for by gasoline taxes. If I bought Corvette, that is probably not going to be my daily driver. My daily driver would be my $20K GMC. That 20K GMC is racking up 25,000 miles per year, while the Vette is probably racking up 2000 at most. Yet, that Vette is going to be taxes thousands of dollars more for an infrastructure it barely uses while the GMC has very low taxes and consumes a lot more resources.
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@jon-nyc said in The "Billionaire Tax":
@LuFins-Dad said in The "Billionaire Tax":
Hey @Klaus @George-K that wasn’t me that made the reply. My bet is @George-K or @jon-nyc made the reply, but it is showing as me?
That's strange. It wasn't me. And I don't even know how to masquerade as another poster - moderators can edit posts, but not make new posts under a different name (I think).
edit: OK, I was wrong. This was posted by Klaus, but I could change the owner of this post to Jon.
Maybe Jon or GK hit the "Change owner" button by accident?
Wasn't me.
However, in my post I might have changed the "quote level" in replying to LuFins Dad. That's probably where the confusion is. A quote more than 2 levels deep, I think, is obscured.
