Tax the Rich, Trump edition, 2025

[LuFins Dad]

@taiwan_girl said in Tax the Rich, Trump edition, 2025:

Is income considered all monies coming in, or just from work? Because I think most rich people - the yearly money comes from other than a "salary"

All realized gains.

[Axtremus]

@LuFins-Dad said in Tax the Rich, Trump edition, 2025:

@taiwan_girl said in Tax the Rich, Trump edition, 2025:

Is income considered all monies coming in, or just from work? Because I think most rich people - the yearly money comes from other than a "salary"

All realized gains.

But, still, long term capital gains are taxed at a much lower rate than earned income.

[taiwan_girl]

I wonder if President Trump is thinking of raising the tax on things like capital gains, etc., rather than just work in come?

[LuFins Dad]

@taiwan_girl said in Tax the Rich, Trump edition, 2025:

I wonder if President Trump is thinking of raising the tax on things like capital gains, etc., rather than just work in come?

Doubt it.

[taiwan_girl]

Then probably the "net affect" will be close to zero. From my understand, if you look at something like CEO pay, 90+% is non salary.

[Horace]

@taiwan_girl said in Tax the Rich, Trump edition, 2025:

Then probably the "net affect" will be close to zero. From my understand, if you look at something like CEO pay, 90+% is non salary.

Stock based compensation is taxed as income. If you get a million dollars of stock, it is taxed at a million dollars of normal income. If you then happen to hold that stock, rather than sell immediately, then whatever profit you eventually make would be cap gain. Or you could lose, if the stock goes down after it is granted.

[jon-nyc]

The exception being founder shares of it’s a someone like Zuck or Gates

[Axtremus]

Not necessarily limited to "founder's shares." Any share that appreciates bigly and held longer than one year (after vesting) will provide big tax savings by being taxed at long term capital gains rates vs. ordinary income rates.

More likely than not, those in senior management in big corporations benefit from this.

[Horace]

@Axtremus said in Tax the Rich, Trump edition, 2025:

Not necessarily limited to "founder's shares." Any share that appreciates bigly and held longer than one year (after vesting) will provide big tax savings by being taxed at long term capital gains rates vs. ordinary income rates.

More likely than not, those in senior management in big corporations benefit from this.

There's nothing special about such capital gains, as compared to having been given cash compensation and then investing it in one's own company. In both cases, the original compensation is taxed as income, and the gains or losses are at the whim of the market that the general public can also participate in if they choose to.

[Axtremus]

More likely than not, senior management in big corporations get pay packages that include substantial amounts of restricted stocks, and more likely than not, they cannot negotiate to say "give me cash instead of stocks" or "give me that other company's stocks instead."

Fastest they can convert the restricted stocks into something else is to cash out as soon as they vest -- in that case ordinary income tax rates apply.

[jon-nyc]

@Axtremus But I was mentioning the exception to Horace’s post, you were simply providing an example of what Horace covered in his post.