Who pays taxes?

Many of the US billionaires don't according to Pro Publica. Expect an investigation to how Pro Publica was able to get 15yrs of tax returns from some of the wealthiest people in the US.

Our tax system is without a doubt skewed to support our wealthiest citizens.

 

I agree with the general premise that the very wealthiest in the US underpay (though the general upper class does not). However, some of the points made by these guys are pretty goofy.

For example, they highlight that some gains are being offset by losses which lowers the tax bill. Well, is that really unfair? If I make a $20K gain by selling Stock A but also sell Stock B and have to take a $5K loss, is it really unfair to tax me on $15K (which is really how much money I made) rather than $20K? Seems pretty obvious to me. The net amount you make should be the basis for your tax liability.

They also highlight that these folks' "fortunes" grew by huge amounts but weren't taxed in line with those increases. Well, that's because we don't tax according to the value of your property. We tax according to your income. Would we really want to change that? Suppose I own $10K in stock A. It appreciates to $12K, but I think it's going to go even higher over the years, so I hold it. Should I really get taxed on the $2K in increased value even though I've made no actual money on it yet? What if I had to sell the stock to pay the taxes? That would likely force me to make an economically stupid decision just to pay taxes on it, and something like this would hit "poorer" investors the hardest. Should we do this with people's homes? We'd completely destroy some people's finances.

And what happens if Stock A ends up being the Enron stock of today? It goes from $10K to $40K in 5 years, but then in year 6, we find out that everybody at Stock A is a crook, the company folds, and my stock is now worthless. Not only will I take the 10-incher with no KY jelly on the stock value, but I've also paid a crapload in taxes on it because it soared in value for awhile, which didn't benefit me, because I didn't know the company was going to flop. Where's the fairness in that?

Honestly, both sides play games with this stuff. Democrats play the anecdotal billionaire who paid no taxes and use that as a reason to increase taxes. Well, that doesn't make a whole lot of sense. If Warren Buffet got taxed at 39.6 percent instead of 37 percent, would it really change his tax bill very much? No, because the reason his taxes are so low isn't because the rates weren't very high. It's because a lot of his money isn't getting hit at the top bracket, and because he's not cashing out. And we want him to cash out based on economic decisions, and we don't want that wildly distorted by tax implications.

Republicans play a game with it, because they go to the stat that shows how much of the overall federal income tax burden is paid by the wealthy. They are right which is why I at least generally agree with them on tax policy, but they disregard how high the rich guy's effective tax rate is compared to those who aren't as wealthy.

My view is that our tax rates should be low but that the tax base should be extremely broad and that no preferential treatment should be given according to how you made your money. Nobody should get a free pass (wealthy or poor). You shouldn't get taxed harder because you made your money with a job rather than buying and selling assets. I'd tax capital gains like any other income, but I would require the gain to actually be realized. If Bezos makes a billion dollars selling some of his stock, then he should pay taxes on that billion just as he would if his company paid him a billion in salary. But should he be taxed on the billion just because stock that he didn't sell grew in value by a billion (at least for now)? No. That's absurd on its face.

Finally, I don't like any of these billionaires and am pretty unsympathetic to them - both financially and politically. However, the IRS employees who decided that it was their place to break their oaths and breach the confidentiality of these guys' tax returns to push a political agenda should go to jail. This sort of crap can't be OK just because they thought their cause was "righteous."

 

This guy.

 

We've codified "it takes money to make money" into our income tax system. You are correct that wealth doesn't equal income.

It's not covered in that article but in other articles I've seen the explanations for why these individuals go full years without paying any taxes or in Bezo's situation actually qualify for child credits even with his enormous wealth. These enormously wealthy individuals have many investments. Though many are held in stocks other investments they have lost money. Layer on any charitable donations and they quickly offset any income, especially if they go a year without cashing in any stock. Additionally, there is a strategy I wasn't aware of. These individuals largely live off borrowed money. They borrow against their wealth and get to deduct the interest.

I'm not sure what the solution is but do recognize that the effective tax rate these wealthy pay should NOT be less than the person making $60k. How we tax/account for stock gains needs to be reevaluation. Maybe the AMT can be tweaked to account for the paying taxes. Regardless, in the interest in fairness, Elon Musk, the #2 or #1 wealthiest person in the world paid $0 in income tax in 2018. Regardless of how he arrived at that number, the tax laws need to be updated to correct that.

 

I don't know why you're wasting your time applying logic and providing examples. SH just wants to create a straw man that Republicans are rich and don't pay any taxes and thus are bad.

The fact is most billionaires are democrats and are the ones that have created what they themselves call this unfair system. They control the media, social media and virtually every brainwashing platform. Their objective is to continue making their cash cow fatter and fatter while keeping the poor on the government drug and voting democratic.

I once did some contract work for a billionaire. He was a big democratic supporter. Worst experience of my life. Did nothing but make me poor while he loaded his pockets with more millions.

 

He actually didn't mention Republicans at all in his initial post or in his reply. He obviously takes a point of view often echoed by Democrats, but he never actually made it a partisan issue at all. That's why I offered logic and examples.

 

This guy a lot. I reduce my taxes every place I can. Simply the ultra rich are set up as businesses/trusts etc and employ the best accountants, attorneys and financial planners to eliminate their tax burden.

What’s silly is all the ones they highlight vote Democrat. One ran as a Democrat presidential candidate.

Simplify the tax code. Everyone pays 10% with no deductions. Have employers remove it from each paycheck and reduce the size of the IRS by 90%.

 

I'm open to suggestions, but this seems to be an inherent problem that goes with basing our revenue almost entirely on the taxation of income. At some point, you have to define what "income" means, and once you do, people are going to try to learn ways to avoid that definition. Will it eventually catch up with them? Probably sometimes it will, and sometimes it won't. For example, if Bezos is living on credit, he'll eventually have to pay that off and likely with after-tax money.

One of the things that complicates the challenge is that once you try to tax beyond income, you run into constitutional limits on direct taxes without apportionment equally among the states. That's why Elizabeth Warren's wealth tax is probably a nonstarter even if Democrats had the votes to pass it.

Here in Europe, I think the VAT helps get around this issue. You may avoid income taxes on some things, but when you spend, you're going to pay.

 

I don't have a problem with this, but it doesn't get around the issue he's raising.

 

I always laugh when people like Buffet and Gates bemoan secretaries pay more in income tax and call for changes in tax law. They have said they would pay more.
They have never said why they don't.

 

This isn't a political issue but rather a wealth distribution issue. I don't care whether it's George Soros (on the list) or Donald Trump (not listed). Our Capitalist system and tax laws are at a crossroads. The tax rules are built to support the investing class, protect them from losses (by offsetting any taxes they pay on gains) and this data shows they pay a smaller % of their income than the lower classes.

The system as it stands centralizes the wealth in a smaller and smaller percentage of our citizens with a growing % landing in the welfare class. The ones paying the greatest taxes are the high income earners without the benefit of heavy investing in other businesses to capture losses to offset their income tax. Without looking at the data, I'd wager those in the 80-98% income levels are no paying the lions share of tax burden.

The American Dream of pulling yourself up by your bootstraps and raising up in economic class may have been true in the past but it's becoming less attainable the year for those on the lower rungs of the ladder. It's now easier to slip down a rung than climb one.

I'd argue that we need to update our tax system to pull those top 2% into the fold. Maybe a VAT gets us there. I'm not advocating for a marxist system but rather progressive tax schemes are less skewed to protecting the uber-wealthy. On the current path where the wealth gap continues to accelerate at historically high rates our Capitalist system is in dangerous ground, areas that typically sees a revolt from the lower classes.

Right not the only thing saving our system is the willingness to add on debt and the political divides that have the lower classes pointing the fingers at each other rather than the system.

My goal is to preserve our system before it falls.

 

That doesn't bother me in the slightest.

 

You should be forced to change your voter registration immediately based upon that statement.

 

Maybe this will help you understand-
In 1 Chart, How Much the Rich Pay in Taxes | The Heritage Foundation

 

I can actually agree with you on a lot of this, amazingly, but a person doesn't buy a stock thinking, "I'm going to buy this stock to loose $ to offset my gains on the other one" any more than Chevrolet says I'm going to make the Malibu to loose $ in order to offset my profits on the Corvette. (Hypothetical) A person, just like a company, should pay taxes on their net profit and if there's a net loss then they shouldn't have to pay any taxes.

I agree it's harder for the lower classes to raise themselves up out of a poor situation than it used to be, but most of the reason the difficulties imposed by more government regulation and a wider expense budget. But it seems like a lower % of people in the lower class are willing to put forth the effort to move to a higher class as they're addicted to the welfare drug or are just brainwashed into believing they can't succeed and certain people are intentionally holding them down.

It's actually easier for a poor minority to raise themselves up out of poverty than a poor white person due to all the incentives, grants and scholarships available to them, but a smaller and smaller number are willing to do so because they become shunned in their community and even threatened. Just like a union worker working really hard gets threatened for making everyone else "look bad".

 

Ia
Great facts.
Wonder how lefties will spin it.

 

Here are some more facts:
-From 1996 to 2005 the income for the top 1% dropped. In addition, 1/2 of the people in the top 1% at the beginning of the decade were not there at the end.
-Folks in the bottom 20% of income in 1996 had their incomes increase by an average of 91% by 2005. That doubling took almost 1/2 of the lowest earners out of the bottom 20% category
-In 2001, cash and in-kind transfers together accounted for 77.8% of the economic resources of people in the bottom 20%. The alarming income statistics spouted by Libs is only addressing 22% of the actual economic resources of the bottom 20%.

A glimpse of the "poor" in 2001:
-75% had air conditioning (only 33% had A/C in 1971)
-97% had a color TV (less than 50% had a color TV in 1971)
-73% owned a microwave (less than 1% did in 1971)
-98% had a VCR or DVD player (nobody did in 1971)
-72% owned a car or truck

In 2007 the poverty rate among full time, year round workers was 2.5%.

Who is the poorest? Those with mental conditions, illegals, which the Dems are letting in by the thousands, and those with drug addictions.

 

The reason it doesn't bother me is because of your bretheren:

Most Democrats want to permanently send $300 to families per month, but some centrist senators may push big cuts in Biden's infrastructure plan

They are out of control and the last thing they need is gamesmanship to pull in more money just because it doesn't sound right.

 

Flat tax, zero exemptions I’m in. Sales tax, no income tax; I’d heartily support. I hate the govt thinking they’re owed a certain %age of my income. For whatever reason this rubs me the wrong way, always has.

 

Nash, as long as it is 0%.

 

Ok, I will play the part of a lib. 10 years ago I think the percentage the top 1% paid in tax revenue was 46%. So the year and percent may be off by 1-2 points. But now they are only paying 40% of tax revenue, matter of fact it’s probably less since that data is from 2018.

 

That is incorrect.
Summary of the Latest Federal Income Tax Data, 2020 Update

https://files.taxfoundation.org/202...-progressive-federal-income-tax-data-2021.png