Wait till you do the math on how much money that 1% has relative to the 99%.

That doesn't matter. You don't get taxed on how much you have, you get taxed on every dollar as it comes in.

What they have is post-tax. You can't just eye up what they have left over as if it has never been taxed.

> What they have is post-tax.

What? No. Net worth amounts are quoted in approximate pre-tax amounts. The vast bulk of which, for the 1%, are deferred capital gains taxes. The rest of us don’t get the ability to defer taxes until we feel like it, and capital gains are taxed at a lower rate too because… just because.

You can defer taxes with 401ks, IRAs, Roth IRAs, and investing in stocks, a house, anything you have that appreciates in value.

40% of Americans have investments in stocks, it is hardly confined to 1%.

Contributions to a Roth IRA are not tax-deductible and early withdrawals are both taxed and penalized. You don’t just pay taxes as normal income when you take an early withdrawal from a 401k they also tack on a 10% penalty making such investments unusually risky.

Untaxed capital gains on the other hand is just a free zero interest loan.

Anyway, having stocks is irrelevant here. What matters is for tax burden is what percentage of people’s income comes from capital gains.

Interestingly, that's not true in Canada's version of the Roth, the TSFA (tax-free savings account). There, you can make early withdrawals without being taxed, but that counts as a penalty towards future contributions. The total contribution amount is added to each year.

The capital gains you’re talking about are not “untaxed”, they simply don’t exist. An unrealized capital gain is one that hasn’t occurred. It’s very intellectually to pretend that unrealized gains are real, and extremely so to pretend that they are income.

Okay - but said “unrealized gain” could have dividend payments or be used as collateral for a loan.

> said “unrealized gain” could have dividend payments or be used as collateral for a loan

Dividends are taxed. There is a real albeit complicated scam in the step-up basis with loans, though.

Dividends are taxable income my dude… kinda showing how well you understand the topic here.

I notice you ignore the collateral on a loan argument that points to just how real these gains are.

His point was these Dividends payments exist due to unrealized gains.

A better example is zero-coupon investors must report a pro-rated portion of interest each year, as income, even though interest hasn’t been paid out. Aka you own a bond and haven’t been paid yet but you still owe money due to the increase in value.

So to be clear simply owning a bond can be a taxable event while stocks are given an interest free loan on their gains.

Zero-Coupons do have a peculiar tax obligation. But they also have a face value and a maturity date. Something stocks, and most other classes of asset don’t have.

There is no interest free loan on stock. Capital gains and income derived from trading securities is fully taxed. What you’re arguing for is a wealth tax, a completely seperate category of tax from income tax. But you’re making this argument using highly deceptive language, and what seems to be a rather poor understanding of how the existing tax system works.

Houses are taxed based on unrealized gains, so their real enough.

Houses are not taxed based on any gains at all. Houses are taxed based on a government issued current valuation. People complain about the accuracy of these valuations all the time, but the taxation has nothing to do with capital gains. If it was a tax on capital gains, then you’d only be paying a tax on the difference in valuation from year to year. Which isn’t how it works at all. It’s more of a wealth tax.

I said unrealized gains not capital gains.

The government doesn’t limit it’s valuation of the house to a demonstrated sales price but instead uses an estimate for the market price. Doing the same with stock is easy, they just hand out a tax break instead.

> I said unrealized gains not capital gains.

Unrealized (capital) gains…

In California, home valuation increases are capped to 2% per year via Proposition 13 and decreases follow the market. If your house doubles in value, most of that growth is still unrealized until you decide to sell.

That’s still unrealized gains even if it’s not the fair market price.

Agreed.

How could a pre-tax quote be what a person has, if legally they can't have it all? I know clickbait articles love equating those, but we can do better.

Not "just because", there are l ok Ng and detailed reasons why, which is why various wealthy and well-run countries do it.

Also, just because you eye up their holdings before they sell and incur a tax liability, does not mean that they have tax-free wealth.

Paper wealth is empty. That's why Musk "lost $200,000,000,000" but you can't name who he lost it to - it didn't go anywhere because it effectively never existed.

It's only when he sells that it is realised - and taxed - and that's when he gains access to it.

You can eye it up all you like before he sells, but it's not real money.

The forms of taxation vary significantly with income, the important comparison is tax burden. The top income earners pay a higher percentage in income taxes but payroll and gas taxes etc effectively cap out. Net result America has a surprisingly flat tax curve that only drops for ultra high or ultra low income earners.

Critically the definitions get warped so stock appreciation for example doesn’t count unless you sell it. And when you finally do capital gains isn’t taxed as normal income. You can even give stock away without ever paying any form of income taxes on these gains.

Whatever they’re paying, it’s not enough, because inequality is increasing. In other words, they’re paying an outrageous amount of the taxes because they make an extraordinarily amount of the income (and wealth). I’m not talking about someone who got a bunch of RSUs and paid 50% on their $2m payday, it’s the billionaires like Trump who treat tax evasion as a game because the consequences are lower than the expected rewards.

I will speculate there is a completely different mechanism for inequality than taxation policies. Let’s call it crony capitalism and specifically originating within the financial system. Federal reserve policies and bailouts and socialized losses with privatized gains are what cause inequities, imho.

I can give a few specific examples that might help.

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

https://www.newyorkfed.org/markets/programs-archive/large-sc...

Central banks engage in civilization level money laundering and cause the inequality increases. These programs are crony capitalism that is specifically directed to an established globalist western oligarchy. That’s not capitalism even remotely, it’s global oligarchy.

$80B/month was regular dispensed in exchange for collateral which was worth significantly less. That’s 80 modern skyscrapers per month.

It will be interesting if censorship can be successfully reigned in and someone more articulate and with public credibility can attempt to explain the outright theft mechanism that was and continues to be obfuscate by jargon and games and corruption.

Of course The Fed is a generator of inequality, but if taxes were set properly, it could be counterbalanced. We can see this in European countries with much lower rates of inequality because of high taxes on excessive wealth and income. They also have central banks printing money at insanely low interest rates (or even negative rates)… until recently… perhaps they have raised their rates in tandem with the US.

There was an analysis which showed that lower european inequality vs the US is attributable to immigration at both the bottom end and the top end. No European nation has even remotely similar levels of poor and rich immigrants. The analysis showed if you exclude those populations the US inequality is lower.

I can’t find the paper done on US data but this is one discussing similar idea:

https://warwick.ac.uk/fac/soc/economics/research/centres/cag...

But we can’t exclude those populations. They’re here regardless of whether they’re convenient for our Gini coefficient, and the immense inequality is leading to structural problems with our society. We spend a lot more on health care for much worse overall results, for example.

Anyway I’m under no illusion that inequality can be fixed with tax policies alone… but let’s at least try to do better. What Trump got away with shouldn’t be possible. It’s not like he was a sneaky mastermind, he was vulgar and brazen and open about it. God only knows what actual clever wealthy people are getting away with.

Maybe for a start, we don’t change any tax policy. Instead, we make all tax returns public, or at least any returns involving seven figures or more. Watch the roaches scatter in the sunlight.

Inequality is not a great target alone. Look at inequity measures - it tends to improve during recession because equity holders (which makes up much of the wealth of the rich) takes a massive hit.

Can anyone really claim that the lower income people are better off when inequality drop during a recession?

My argument was that in absolute terms, the 1% already pays ~100x more than the median tax payer, which seems pretty close to stating that the median tax payer reaps the benefits of modern civilization essentially for free.

Regarding inequality, this can't be the metric for taxation policy. Would you rather the 1% pay all taxes but inequality be 100x worse ? Are you optimizing for a better standard of living for the median, or for imposing the psychotherapeutic sentiment of "if I can't make that much money, nobody should" ?

Capitalism has been around for a long time. The argument of "whatever they’re paying, it’s not enough [..]" has already been played out. In the 70s UK, investment income was taxed at a rate of 98% (after an inflation-adjusted income of 221k). It didn't work.

Thatcher had famously summarized the inequality argument here: [1].

[1] https://youtu.be/pdR7WW3XR9c

That covers federal income tax, which is only one of many forms of taxation. It isn't even the only federal tax on income (FICA is not included).