Income taxes are a distraction. Bill Gates is not filing income tax on 40B worth of stock. Real wealth comes from owning assets that appreciate and pay dividends, and our capital gains tax rates are even less progressive than the income ones (there are only two capital gains tax brackets and they cap out less than half of income - which should then mean its no surprise people who get paid in income get poorer and people who profit off capital gains get richer).

If anything should be progressively taxed its individualized capital gains. It is simultaneously very healthy to incentivize everyone to invest a bit in capital, and extraordinarily detrimental to the health of civilization to let capital concentrate without any impediment.

I'm not sure I agree but in any case, I'd rather see removal of like kind exchange for stocks (and maybe other things too?). Constantly buying and selling doesn't add to our economy in any real way when it can be deferred forever. Tax a percentage of the gain on any transaction and use that money to fund programs. Let money have velocity and get taxed lots of times per year instead of zero.

True- Capital gains should just be counted as income, IMHO.

It's really hard to do this on an administrative level with the way that the price mechanism currently works. Prices are set at the margin, based on the most recent transaction. If I decide I'm willing to pay $72,000 for a single share of Microsoft stock, then Microsoft stock will momentarily be worth $72k, at least until the next transaction, and Bill Gates will be 1000x richer on paper. Similarly, if I turn around and sell that one share for 1 cent, Microsoft's value (and the net worth of everyone who owns it) will momentarily be cut by 7200x.

When do you assess the tax? If it's at any predictable interval of time, it opens the market up to massive manipulation schemes where people crash their own stocks to avoid paying taxes and bid up their rivals so they'll be forced to owe a massive tax bill.

You could I guess take an average over time to avoid the manipulation efforts, but then you still run into the issue many dot-com paper millionaires faced, where they were assessed a tax bill based on the paper value of their options but when it came time to pay it, the stock wasn't worth enough money to cover the taxes.

That's why we have the current system, where capital gains are taxed as income (though at a lower rate), but only when you sell them. That's the only time when you can put a fair value on the asset being sold, when it's convertible into the currency you actually plan to pay the taxes with.

You could tax capital gains as income at the time of realization of the gains.

IE, buy all the stock you want. It doesn't matter. The dividends you get, and any payout you get from selling those stocks (even for immediate reinvestment) count as income.

Right- what I'm saying is we keep taxing capital gains upon conversion to currency, but tax them the same as any other income.

I agree with that (you're talking about Piketty's direct redistribution), but there is a tinge of "tax the other guy more because he's making more than me and it's not fair and I'll never be in his bracket anyway so I won't have to deal with it" to your argument.

It's more like "tax the guy whose work is being disproportionately rewarded in comparison to everyone else". I wouldn't argue with the idea of a doctor making more than a dishwasher, or possibly even a good hedge fund manager making more than a doctor. But 1,000 times more? No way!

Fortunately, this isn't communism and you're not a dictator.

People aren't awarded money arbitrarily... Nobody will pay you more than you're worth. If a good hedge fund manager is able to make 1000x as much as a good doctor, he is worth 1000x as much as a good doctor, by definition, no matter how distasteful that might seem.

You and @utexaspunk may be talking about different things.

I believe @utexaspunk is saying that salary should be tied to the amount of social good you do.

You are saying that the market sets salaries based on how much value you create, as measured in dollars.

>> it's not fair and I'll never be in his bracket anyway so I won't have to deal with it

And he wouldn't be in my bracket so he doesn't have to deal with struggles either.

> Tax the shit out of the ultra-rich and spread it around.

That would be great but think of the difficulties. Firstly, which politicians would support it? Most politicians spend their time fundraising ( begging the wealthy for money ).

https://www.theatlantic.com/politics/archive/2013/06/the-hum...

Can you imagine the future of such politicians?

Especially now that corporations can donate as much as they want?

https://en.wikipedia.org/wiki/Citizens_United_v._FEC

Secondly, the ultra-rich will simply move money/assets offshores in hidden accounts. A lot of them already do that to avoid paying taxes. If it were to increase, a lot more money will go underground.

Thirdly, citizenship is something that can be bought and sold in modern society. The ultra-rich will buy citizenship in countries with lower taxes and simply move their companies/assets there. Look at what the pharmaceutical industry has been doing the past 10 years.

https://en.wikipedia.org/wiki/Tax_inversion

The problem is that the international world order is corrupt and the wealthy write the rules/laws. Even if there was a raise in taxes, they would add a loophole for the wealthy to bypass it.