Billionaires pay a lower tax rate than the rest of America's taxpayers, new study finds

[Bomb#20]

A market price is the monetary value offered for an item or service and accepted.

An unaccepted offer is not a market price since it is not accepted.

Fair point. Google tells me the bid/ask on Amazon stock is $232/$235. So if some hypothetical Asset Assessor Service tries to use market conditions to assess the worth of Bezos's 900 million shares, they'll figure out would-be buyers would rather have Bezos's stake than $209 billion, whereas would-be sellers would rather have $212 billion than Bezos's stake. So the AAS would presumably assess Bezos's stock for tax purposes at somewhere between those numbers. Which is to say, an offer to buy that is not accepted is a lower bound on what an asset will be assessed to be worth. And both the upper bound and the lower bound are measures of how much other people want Bezos's stuff.

Wouldn't it be better to use stock valuation?

I'm not following you. The procedure I described is stock valuation. What method of stock valuation do you have in mind?

 

[Playball40]

Well, duh, higher on the ladder generally means a higher percentage of their income is from capital gains.

This still comes down to the basic issue that you are paying tax on "gains" that are just keeping up with inflation.

Gains are gains. I don't see why gains you don't put in any actual effort to realize should have lower taxes than the alternative. I think it should be the reverse.

Agree. They should be at a HIGHER tax rate, not a LOWER one.

 

[Loren Pechtel]

A market price is the monetary value offered for an item or service and accepted.

An unaccepted offer is not a market price since it is not accepted.

So anything not on the market doesn't have value?

Our house is AFIAK unique. (Normal builder house, but to the best of our knowledge nobody else took all the room options we did.) Does that mean it has no value and I shouldn't be paying $4k/yr in property tax??

 

[ZiprHead]

Read it and weep.

USA - WID - World Inequality Database

USA The source for global inequality data. Open access, high quality wealth and income inequality data developed by an international academic consortium.

wid.world

 

[ZiprHead]

A market price is the monetary value offered for an item or service and accepted.

An unaccepted offer is not a market price since it is not accepted.

So anything not on the market doesn't have value?

Our house is AFIAK unique. (Normal builder house, but to the best of our knowledge nobody else took all the room options we did.) Does that mean it has no value and I shouldn't be paying $4k/yr in property tax??

Your house value is based on the sales prices of houses similar to yours in both type and neighborhood.

 

[laughing dog]

A market price is the monetary value offered for an item or service and accepted.

An unaccepted offer is not a market price since it is not accepted.

So anything not on the market doesn't have value?

Our house is AFIAK unique. (Normal builder house, but to the best of our knowledge nobody else took all the room options we did.) Does that mean it has no value and I shouldn't be paying $4k/yr in property tax??

Your house value is based on the sales prices of houses similar to yours in both type and neighborhood.

That represents an estimated value. Whether it the eventual market price is another issue.

LP’s response conflates market price with “value” which is a reasoning error. My home is not on the markrt, ergo it has no price. Of course my house has value, both in use as a comfortable home to my household and as a potential marketable asset.

 

[RVonse]

SS was created to appear to be something earned rather than a straight welfare payment in order to gain support in Congress. Means testing was explicitly avoided in order to keep SS appear more like an insurance plan. That also somewhat insulated it from having benefits cut if it was viewed as pure welfare.

That strategy has been successful up for 90 years.

When SS was created, the cap on taxable wage earnings was instituted to avoid the optics of paying out large benefits to very high income retirees.

Can you think of any government program that has ever been discontinued after congress has created it? I know I can't. Not even unpopular programs that most would consider fraudulent can be stopped. Look at all the blow back Elon Musk suffered during his DOGE efforts for example.

And I while I do generally agree with you about the original optics that helped put social security in place for 90 years. As poster Toni correctly points out, social security has been slowly transformed into a different animal today. There are many disabled children being paid by social security today. Furthermore, it is easy to locate many young people now collecting social security early due to their supposed disabilities that can not be proven otherwise. There has and will continue to be a lot of evolution of the program towards welfare rather than insurance retirement.

With that in mind, it starts to make a lot of sense to also tax this program more progressively especially since future funding is predicted to come up short in the near future. In my lifetime I have been in both camps. It is very difficult paying FICA as a minimum wage earner. But paying FICA as a high wage earner is extremely easy in comparison. Sure it is nice when you done paying FICA early and it feels like a raise not having it withdrawn on your paycheck during the rest of the year. But FICA withholding is not a life changing event for high income earners the same way FICA is a burden to the minimum wage earners. It just isn't. Removing the cap for high income earners is the fastest and least painful way to keep social security solvent in the future IMO.

 

[laughing dog]

The official name of Social Security is Old Age, Survivors , and Disability Insurance (OASDI). Rather than taxing higher labor earnings, it makes more sense to fund the SDI part out of general revenues and raise progressives taxes on all forms of income. In 2024, SS outlays were around $1.6 trillion with $1.3 trillion on retirement.


Since there are relatively few high earners from labor income compared to the total, their rates would gave to be significantly higher to really help. I expect such rates would give many the incentive to restructure their remuneration to avoid those taxes. So while raising their rates sounds good, I doubt the efficacy of it.

Separating the programs allows the SDI funding to be spread out more fairly over a larger base while reducing the gap between retirement spending and revenue to a more manageable difference. It stills allows fir raising their rates income cap on SS taxes.


Off the top of my head, the WPA, and the Interstate Commerce Commission cone to mind as 2 programs/agencies that no longer exist.

 

[bilby]

Can you think of any government program that has ever been discontinued after congress has created it? I know I can't.

Lend-Lease.

Took me less than two seconds, and I am not American, nor do I know much about US Government programs.

That you can't think of any says more about your ignorance than it does about your nation.

 

[Emily Lake]

Taxing assets is a great way to deprive people of assets. In theory it sounds great... but in practice it can go result in people having to sell the asset in order to pay the tax on the asset. Consider a retiree whose house is paid off after years of mortgage, with a modest pension. Then the housing market in their area takes off... and the market value of their house skyrockets. If you're taxing the value of the asset, the tax on that house would also increase substantially, and it could very reasonably result in them having a tax bill higher than their pension. Then they have to sell their house in order to pay their tax bill.

Property tax already does this, btw. It's a tax on the value of the property, the direct asset. And it resulted in me and my brothers paying my disabled dad's property tax for three years so he didn't become homeless.

I really don't think that wealth taxes are reasonable, and they run the risk of producing the opposite outcome that you're looking for.

On the other hand, I've never understood why capital gains aren't taxed the same as any other income when they're realized.

 

[Elixir]

in practice it can go result in people having to sell the asset in order to pay the tax on the asset.

It would be a shame if that should befall some multi multi billionaires, eh?
Maybe add up everything that is owned by every American, divide that by the number of Americans and tax everything owned above the average, at a graduated rate. It should be fairly easy at the millionaire level, and kick in harder at the billionaire level, with trillionaires becoming almost a mathematical impossibility. People with that much money have obscene incomes produced by their massive holdings (rather than any action they perform that benefits anyone), and any taxation of property should be affordable without effecting their quality of life.
Personally don't think we need multi-billionaires at all (in today dollars - maybe in a few years when dollars are are worth the same as Rubles thanks to Trump), let alone trillionaires, and I believe that their very existence is evidence of the greatest structural flaws that afflict American society.

On the other hand, I've never understood why capital gains aren't taxed the same as any other income when they're realized.

I don't understand what it is you don't understand.
There area short term and long term flat rates when they are realized. Kinda like, well, anything else.

 

[laughing dog]

Taxing assets is a great way to deprive people of assets. In theory it sounds great... but in practice it can go result in people having to sell the asset in order to pay the tax on the asset. Consider a retiree whose house is paid off after years of mortgage, with a modest pension. Then the housing market in their area takes off... and the market value of their house skyrockets. If you're taxing the value of the asset, the tax on that house would also increase substantially, and it could very reasonably result in them having a tax bill higher than their pension. Then they have to sell their house in order to pay their tax bill.

Property tax already does this, btw. It's a tax on the value of the property, the direct asset. And it resulted in me and my brothers paying my disabled dad's property tax for three years so he didn't become homeless.

I really don't think that wealth taxes are reasonable, and they run the risk of producing the opposite outcome that you're looking for.

On the other hand, I've never understood why capital gains aren't taxed the same as any other income when they're realized.

Every tax runs the risk of producing the opposite outcome. The issue in each case is the scale and likelihood of the opposite outcome vs the expected benefits.

 

[Shadowy Man]

Look at all the blow back Elon Musk suffered during his DOGE efforts for example.

I think that may have had more to do with how he was doing it illegally.

 

[laughing dog]

Look at all the blow back Elon Musk suffered during his DOGE efforts for example.

I think that may have had more to do with how he was doing it illegally.

And mindlessly.

 

[Shadowy Man]

Look at all the blow back Elon Musk suffered during his DOGE efforts for example.

I think that may have had more to do with how he was doing it illegally.

And mindlessly.

That, too.

 

[Swammerdami]

Can you think of any government program that has ever been discontinued after congress has created it? I know I can't.

Lend-Lease.

Off the top of my head, the WPA, and the Interstate Commerce Commission cone to mind as 2 programs/agencies that no longer exist.

Here are some more:

Civil Aeronautics Board
Office of Economic Opportunity (War on Poverty)
General Revenue Sharing
Aid to Families with Dependent Children
Clinch River Breeder Reactor
Yucca Mountain Nuclear Waste Repository
Alaskan Natural Gas Pipeline
Various space programs, science programs and weapons programs. These include programs now outsourced, e.g. to SpaceX or Blackwater. or canceled, e.g. the Superconducting Super Collider (SSC)

It would be too painful to list the programs essentially destroyed during 2025, e. g.
the Consumer Financial Protection Bureau (CFPB) which was essentially shut down by Elon Musk after he stole their confidential data.
(There is ongoing litigation but AFAIK CFPB is no longer serving any consumer financial protection function.)

 

[Shadowy Man]

USAID?

 

[bilby]

Is the Strategic Defence Initiative still going? I presime a lot of programs (including that one) got the axe when the USSR dissolved.

 

[Toni]

SS was created to appear to be something earned rather than a straight welfare payment in order to gain support in Congress. Means testing was explicitly avoided in order to keep SS appear more like an insurance plan. That also somewhat insulated it from having benefits cut if it was viewed as pure welfare.

That strategy has been successful up for 90 years.

When SS was created, the cap on taxable wage earnings was instituted to avoid the optics of paying out large benefits to very high income retirees.

Can you think of any government program that has ever been discontinued after congress has created it? I know I can't. Not even unpopular programs that most would consider fraudulent can be stopped. Look at all the blow back Elon Musk suffered during his DOGE efforts for example.

And I while I do generally agree with you about the original optics that helped put social security in place for 90 years. As poster Toni correctly points out, social security has been slowly transformed into a different animal today. There are many disabled children being paid by social security today. Furthermore, it is easy to locate many young people now collecting social security early due to their supposed disabilities that can not be proven otherwise. There has and will continue to be a lot of evolution of the program towards welfare rather than insurance retirement.

With that in mind, it starts to make a lot of sense to also tax this program more progressively especially since future funding is predicted to come up short in the near future. In my lifetime I have been in both camps. It is very difficult paying FICA as a minimum wage earner. But paying FICA as a high wage earner is extremely easy in comparison. Sure it is nice when you done paying FICA early and it feels like a raise not having it withdrawn on your paycheck during the rest of the year. But FICA withholding is not a life changing event for high income earners the same way FICA is a burden to the minimum wage earners. It just isn't. Removing the cap for high income earners is the fastest and least painful way to keep social security solvent in the future IMO.

One of the very saddest articles i read years ago and did not save a link to was one detailing how in some places, parents would try to get their kids termed disabled because it allowed them to collect funds they needed to put food on the table for their families. It was horrible strategy but understandable in the face of starvation and/or homelessness.

I do NOT oppose providing financial support to families ( or individuals) to enable them to eat and have a roof over their heads and health care and access to education and job training to help them on their feet. I definitely do not oppose helping families and individuals with disabilities with the same. I just think those things should be funded separate from Social Security which should help adults past working age and minor offspring of deceased parents.

I very much support raising the cap on contributions to SS for those who are high wage earners.

 

[Elixir]

I very much support raising the cap on contributions to SS for those who are high wage earners.

+1
I would levy a MUCH higher “contribution” on people with huge incomes that have nothing to do with ”wages”, and remove all caps on SS contribution.