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Man its really annoying to see people constantly make up this whole "rich people dont pay taxes" nonsense.. If you review their actual tax records you'll see Elon paid about 1/3 of his income as taxes and Bezos about 1/4, which is actually quite high. But yea lets just make shit up instead and manipulate the numbers to show some "true" tax rate that is really just some fantasy as close to 0 as we can distort, cant just make up fake numbers and think its useful to addressing any problems that might exist.
@Acer Normally you cant, in this case it was mentioned as part of the leak.
@freemo The question here is how much of their wealth growth is actually part of their income?
Sure Jeff Bezos can’t/doesn’t just dump $99 Billion worth of stocks in a year given market considerations.
But how much of it does he?
0? 2B? 10B? 30B?
Should that be included in his effective tax rate?
That’s a fair question to raise, don’t you think?
@freemo
I do agree with you that the hyperbolic statements such as “Elon musk pays 0 taxes “ make it harder to take an argument seriously if that statement is demonstrably false.
@freemo but the issue isn't the taxes paid vs the reported income. The issue is that the reported income is so much less then the wealth growth.
Yes Bezos paid about 1/4 of his reported income in taxes, which I guess would be his "actual tax records", but his reported (taxable) income is only about 4% of what he actually made.
That is the issue at hand. That these mechanisms are in place that allow for the taxable income tobe a small fraction of their actual income.
@ejg Can you be more specific. What source of income does he have that is 25x greater than the one he reported and doesnt show as income?
@freemo the image you posted seems to be from this article from ProPublica
https://www.propublica.org/article/the-secret-irs-files-trove-of-never-before-seen-records-reveal-how-the-wealthiest-avoid-income-tax
They state that they got the wealth growth numbers from this Forbes estimate
https://www.forbes.com/billionaires/
@ejg That didnt answer my question.. where did this mysterious wealth growth that didnt show as tax income (supposidly) actually come from. The link you posted does not state it.
@freemo @ejg I agree with what @freemo points out. People get outraged about how rich somebody is. And that is true. Except huge part of that wealth is only on paper in the fluctuating value of financial (and other assets). But nobody pays taxes over their net worth increases, we pay taxes from realised income.
Anyhow, these concepts have issues. For instance where I live, it can happen that you own say 50 shares of a startup (let it be 50%) which is worth 1000 bucks starting capital, then the next day investor comes along, buys another half for 1Mio bucks and the third day you have the tax office on your neck to pay taxes from a wealth increase (income) of 999k bucks, while all along your cash position did not change at all.
What I am trying to point out is this: Whenever people complain about rich people not paying tax on their wealth increases, the real question to them should be:
1. So how exactly will you legislate it so as not to harm everybody along the way?
2. And suppose if we all pay taxes even over wealth increases which are only on paper (because the stock you own or control went up due to market fluctuations, or geopolitics), what will we do when next year a person's net worth actually decreases? Will the tax office reimburse us, or what?
These are just headlines to cause outrage, nothing else. What actually helps is to tighten up the laws about income taxation and also classification what constitutes income and what does not. If e.g., Bezos has a salary of 1000 bucks and that's all he lives off, he shall pay taxes as a 1k income guy. But if he besides that lives in a house owned by Amazon Inc, drives a car owned by Amazon Inc. and flies Amazon-owned aircraft in his private capacity, then those effects should be counted as his income too. There are countries where this is sorted (at least on smaller scale) better.
@FailForward @freemo @ejg
People like to get mad
@FailForward @freemo @ejg
In France we used to have a tax on absolute wealth, it has been transformed and now has become a tax on real estate wealth only and starts when you own above 1 Million € of real estate
That's a scary precedence to say the least. The very fact that people think someone owning a lot is somehow a problem that needs to be corrected is already worrisome in its own right. Wealth is not a pie, someone having more doesnt mean you have less. Its not a zero sum game.
@freemo @FailForward @ejg
The idea behind this tax was that you need to make money out of your wealth otherwise it will deflate. It is supposed to limit speculation in some way.
Yes, e.g., the Netherlands has that too. Over about €60k the government assumes that you had capital increase of 4% annual interest (whether that's true or not does not matter) and then tax you 30% of that (fictional) increase. Effectively it means 1.2% tax on capital wealth per year. That is, typically cash savings. In other EU countries, you have a tax applied directly on the interest you gain in the bank. But note, all these are taxing capital gains of a person when you had cash and then you receive interest in money too. If you own shares of a company worth $100 one year and $1Mio the next year, these "wealth" taxes are not touching that. And actually when we speak about Bezos, ro Buffet, we speak about their wealth stored mostly in their shares in various companies.
@FailForward interesting
As I wrote in another comment to the original toot, the issue really is this:
* Warren Buffet and Bill Gates are on the record that they actually SHALL and WANT to pay more taxes. C.f., e.g., here: https://www.forbes.com/sites/cartercoudriet/2019/10/15/billionaires-more-taxes-gates-buffett-bloomberg/
* the thing is, their wealth is stored in shares, and other perfectly legal and practical constructions which serve a legal and positively pragmatic purpose
* even if they wanted to, they cannot just send an invented gift bill to the state. Even without tax optimisation tricks, they pay the max they can and it ends up being a paltry figure
* so it actually is the society/state which fails to extract the money from them
* and here we go with outrage at filthy rich billionaires.
Seriously, if somebody owns most of their wealth only on paper, how shall we tax them?
Personally I think it's the fault of the mid-level wealthy people (your usual backyard millionaires, which is maybe you, or your neighbour) who are blocking the right laws to be passed because they are afraid that their small nest egg will diminish.
> Warren Buffet and Bill Gates are on the record that they actually SHALL and WANT to pay more taxes
They can donate more taxes then they owe if they want, nothing stopping them. No reason they have any right to speak for all rich people.
Moreover it is telling that the 2 people who are rich and ok with more taxes are the ones who are very old and on the verge of dying, and care a lot about their legacy and how they will be seen on their way out. But it will be the younger generation of rich who will bear this burden, not them.
> even if they wanted to, they cannot just send an invented gift bill to the state.
Of course they can, they can donate whatever they want to the state.. why not?
> Seriously, if somebody owns most of their wealth only on paper, how shall we tax them?
The same way we always have, by taxing a percentage of that wealth when it "moves"... rich eople are already taxed for the money they gained when it was income.
> Personally I think it’s the fault of the mid-level wealthy people (your usual backyard millionaires, which is maybe you, or your neighbour) who are blocking the right laws to be passed because they are afraid that their small nest egg will diminish.
More like we care about fairness and justice. Being taxed the extraordinary rate anyone in the upperclass already is, isnt fair and it isnt solving anything.. what problem is it your even trying to solvE? Most of the answer to this question make it clear that the problems being imagined are in some cases non existent and in others arent a problem where the solution is "we need to make rich people less rich"
In the end people are trying to solve a problem that doesnt exist and in doing so would make things worse IMO
@FailForward @freemo I think this is better explanation of the issue at hand and what I'm trying to express. And some of the articles on the subject do try to go into this, just in a very click-baity way.
I'm also using net worth/wealth growth/income too interchangeably. Perhaps it should be looked at more like:
- Who/what owns any given asset.
- Who benefits from that asset
- How is that asset taxed
- Who/What pays that tax
The very mentality that asset ownership need be taxed is diseasterous to say the least. It relies on the zero sum fallacy of economics for one.
@freemo @FailForward I pay property taxes on my house and car. It's a PITA, but far from "disastrous". I suppose if I had the legal resources, I could create an off shore shell company, and transfer ownership of my house/car to them. Then I wouldn't have to pay those taxes.
I would disagree.. I think the fact that you can never truly "own" your home, that even if you buy it you have to pay for it perpetually is very much disastrous.
A person should have the right to work hard, buy themselves a home, and then be free of that financial obligation, thats the point.
Taxing on assets, like a home, is just a way of saying you can never truly own anything, a government ill forever tax your assets and eventually should you ever fall on hard times financially loose everything you own and get nothing for it as it will all go to just cover the taxes you were unable to pay (and should have never hard to).
Yes taxing ownership of property is particularly heinous IMO.
@freemo @FailForward
Maybe is is heinous that I pay taxes on my house and car, but comparing my assets to Bezos is like companion an apple to an apple orchard.
IMO is is particularly heinous that one person can sit on $190B
https://www.forbes.com/profile/jeff-bezos/?list=billionaires&sh=3a7ab77f1b23
and collectively, 2,755 people can sit on $13T,
https://www.forbes.com/billionaires/
while others go without homes, food, or healthcare.
All the while, they will use whatever legal loophole they can to avoid paying the same types of taxes that others a subject to.
Sit on? That money isnt sitting in a big vault of gold he goes swimming in every day like duck tales.
He literally has that money in businesses employing countless people and **creating** new wealth both for him and the country.
Again money isnt a zero sum game, him having more doesnt mean you have less, in fact, it means you have more as he is ultimately using it to generate ew wealth.
@freemo @FailForward Perhaps I was being a bit too spiteful with "sit on".
He is creating wealth for him and a select few people in the county.
At a macro level, money isn't a zero sum game. For a large portion of people in the US, including his employees, it **is**.
They will never own the types of assets that appreciate in value, and will not be able to obtain financial wealth or benefit from the wealth he is *creating*.
The wealth he is creating is for all americans, some just less directly than others. If overnight you took everything he owned and destroyed it (not took it from him, but destroyed the thing he created) a lot of people will be out of work and starving, little old ladies wiith reiterment funds will go bankrupt, a lot of people would be effected.
@freemo @FailForward Taxing assets isn't destroying them. (I know it's not the point you are making)
Employing people doesn't necessarily generate wealth for them. The $15/hr they get lets them rent an apartment, own a car and pay for food.
That little old lady needs a better financial advisor, and to not put her entire retirement in one company.
Amazon being gone would allow others to grow to fill the void left behind, generating wealth for them.
> Employing people doesn't necessarily generate wealth for them. The $15/hr they get lets them rent an apartment, own a car and pay for food.
Actually it does, relatively speaking. If those people had no work at all they would be generating negative wealth (destroying wealth). So while keeping them emloyed may generate very little wealth individually, perhaps even 0, it is still significantly more than if they had no job or income.
> That little old lady needs a better financial advisor, and to not put her entire retirement in one company.
Never claimed she had all her money in one company. Even if her portfolio is 1% amazon overall when you consider that money across **all** little old ladies with retirement funds its a huge amount. Also, presumably if the whole fallacy of "someone having a lot of money is bad" were true we would be talking about far more than amazon and bezos.
> Amazon being gone would allow others to grow to fill the void left behind, generating wealth for them.
Certainly true, and then you have brand new multi-billion dollar companies so it solved nothing. But more importantly this statement misses the point.. the point is simple, he isnt just generating wealth for him and his select cohort of friends.. he is generating wealth that old ladies, and minimum wage workers share in as well.
It's fair to say that we have very different definitions of wealth.
> whole fallacy of "someone having a lot of money is bad"
Here is a Forbes breakdown of average/median Net Worth of Americans
https://www.forbes.com/advisor/investing/average-net-worth/
I think it's fair to say anyone on that list would consider $190M "a lot of money"
1000 x $190M should be considered something other then "a lot of money"
Should that be considered "bad"?
With 34M people living below the poverty line (2019) maybe there should be some negative ethical implications for people who accumulate that kind of net worth.
https://www.statista.com/statistics/233138/number-of-people-living-below-the-poverty-in-the-us/
It simply doesnt work that way.. the amount of money they have did not cause people to live below the poverty line. In fact quite the opposite, them having earned as much as they have is a symptom of the fact that there are far fewer people below the poverty line than would have been there if they never earned that money.
If a multibillionair had stopped at a few million when he had himself and all he could want sorted out and just retired rather than going on to be a multibillionair, there would be more poverty, not less.
Not sure how many times I need to repeat this but economics is **not** a zero sum game. No matter how much money one person earns that does not mean that it was at the expense of others, in fact, most of the time it is to the benefit of others.
We cant have different definitions of wealth, the term is very well defined for us already. Perhaps you are using an incorrect definition of wealth you coined yourself, I dont know, but I am just using the established definition.
For starters, net worth is not wealth, though they have a relationship.. someone with 100$ in 1910 doesnt have the same wealth as 100$ in 2020, nor does a person with 100$ in NYC in worth have the same wealth as 100$ of someone in alabama. So lets be clear about that since you seem uncertain about how we are using our terms...
Second yes, some people on that list have a lot of money, some have something far greater than a lot of money... so? No matter how much money some people might have doesnt turn into a bad thing, again, how much they have, even when its a lot, doesnt imply you have less as a consequence of it. There is no "problem" there to solve just because someone has a lot of something.
Sure we can!
https://www.merriam-webster.com/dictionary/wealth
I pick option 1.
You seem to be closer to option 3(a).
With my definition someone with a net worth of $14,000 doesn't have wealth. (They don't have an abundance of valuable possessions/resources)
With you definition, the value of their shirt, count's toward there *wealth*
Maybe 3(a) is more appropriate with in the context of economics, and 1 is more appropriate in the context of social justice.
1 and 3a are just linguistically relevant, not technically so.. a sentence using definition 1:
"While looking at the man's collection of rare antique paintings it is clear the man has wealth" (a fancy way of saying your rich, as in wealthy).
The 3a definition is closer to the technical one, usage: "The man was clearly poor owning only the shirt off his back and his collection of copper ingots the wealth of which might only ironically sustain him for a month"
The definition of wealth you are using is a non-technical one, and clearly not helpful since we are well within the weeds now. The only real technical definition for wealth is closer to 3A, namely the value of everything a person owns
The real question is if you understand and are using the correct technically definition. In other words, do you understand the earlier point that stating a money value or net worth is not an accurate way to express wealth, walth is more abstract than that. Your ideas and time, particularly when famous for example has a wealth since people will pay you to talk to you
@freemo @FailForward "A person should have the right to work hard, buy themselves a home, and then be free of that financial obligation, thats the point."
I agree. But there are plenty of people will will work hard all their lives, and never have the resources to buy themselves a home.
Sure, and that should be addressed, you dont address it by taxing assets and make such a dream impossible though, thats for damn sure.
@freemo @ejg I think the attitude to these issues really depends on cultural context. In the US obviously people think from their own perspective and if that society decides it's OK, it's OK for them. In EU and neighbouring countries the cultural view takes into account also the relationships of that wealth to everything else. You are having a house as a sovereign. The position is that the truly fundamental assets like land, air, water is owned by "the society" regardless of who currently has the right of use. Since your using the asset (house, land, what you have) has effect on the environment which belongs to all, the societies took the view that it's also fair to cover your share on costs your use of the asset create (access roads, pollution mitigation, water management, etc.). The view is that the more you own, the more you shall contribute to the society's wellfare.
From US perspective it might sound crazy, but in most EU countries people do not object that much and agree to pay their fair share. Different societies make different decisions, I personally do not see that there is any objectively "right" way to do this. Of course that view comes to its head when highly liquid financial assets are moved cross-border, etc. Hence the new corporate taxation ideas discussed at G7, etc. I personally this we indeed need to resolve this better than it is now. It will take time, but we'll get there.
@freemo Actually there is another interesting angle on all this. Suppose everybody including those persons (Bezos, Buffet, et al) agrees that indeed they need to be taxed more (BTW, e.g., Buffet and Gates are on the record saying exactly that). Beyond certain level of wealth you cannot expect these people to have a savings account in a bank. So it's natural that they store their wealth in shares of companies, holdings, etc. So the question becomes: _How to create a tax setup which will cover these perfectly legal schemas?_ Or will we really force these people to own everything as a person?
@FailForward Huh? Those schemes are already taxed at extraordinary amounts. Owning something and taking all the risks of loss that entails and then needing to pay half of all your incom as tax is simply unacceptable IMO and relies on the fallacy of money being a 0-sum game. The false idea that some people having more money must means others have less as a result.. its not how money works
@freemo Well, what is "extraordinary" is relative.
Anyhow, I do not know all the details of e.g., USA, but where I know how things work (EU mostly), transfers of shares between corporate entities are not taxed. Only when you convert those shares into money you get taxed either as revenue, or capital gains, or such. And here we speak about wealthy people owning primarily shares of companies which trade with the world.
@FailForward That is somewhat moot becauSE eventually shared get sold, the longer you held them before selling and the more value the accumulated the more tax you spend when you liquidate. So all profit will eventually be taxed, not to do so means you never have the money to buy anything anyway. Even if you try to pull out dividends on your shares youd get taxed.
@freemo
where can I find some original tax rates they have as numbers close to 1/3, 1/4