If they weren't able to train 70 million people to get outraged about that sort of thing then there wouldn't be a Republican party.
The trouble though with taxing unrealized capital gains is in the implementation.
For instance, somebody might own a huge amount of shares in a private company that is valued at a certain price. That might be almost all of the wealth.
If they are taxed on the capital gain they are going to have to (1) find some price the government believes is the real price of the asset, (2) sell some of the asset to get the money to pay the tax.
Since it is a private company, (2) might be very hard to do, particularly if you want to get the price (1).
The tricky part is def the implementation. The question is how to tax billionaires and discourage hoarding of such wealth, and instead encourage spending and investment.
Because it won't stop at 1000 people. It won't raise enough money. So it will expand to cover more people, not all of whom are billionaires, and some of whom may be you.
I don't buy the slippery slope argument here, but I'll take it at face value. Good. Taxes have been declining for decades -- in the 1950s the highest marginal tax rate was like 95%. Now, even with a progressive tax system, in practice when all the dimes are counted it comes out to basically a flat tax[1][2] except for the billionaires who pay less than the rest of us -- now even lower than working class workers[2]. If increasing taxation reduces wealth inequality, so be it, even if it affects me. We all pay a price to reap the benefits of our society.
I’m not convinced taxation will reduce wealth inequality. My own city spends a fortune annually on fighting homelessness. It’s now just a bloated government and homeless industrial complex that exists to “solve” homelessness, but they have no incentive to do anything about the problem because they’d work themselves out of a job.
But going to my main point - your argument is predicted on a belief that more taxes will solve problems. I think we disagree insofar as the government is competent or even really cares to solve important issues.
And I'll add that many people are less likely to support increased taxes if they think it's being wasted or used for things that go against their ideals. The more divided the country is, the more this becomes a prominent part.
Taxes fund schools, universities, fire and police departments, public health measures, and plenty of other things that make life more livable -- and with greater potential -- for the poor. Without taxes, only the wealthy would have access to health, education, and safety.
In your example the government is dropping the ball on solving the homeless problem. But I'd rather live in a world where at least my government tries to solve problems, rather than one where it says, "well, we can't do a perfect job, so we might as well do nothing."
I'm also pretty unconvinced that
> they have no incentive to do anything about the problem because they’d work themselves out of a job.
since it's their job to do something about the problem. I'm plenty cynical about the US, but even I find it hard to reason that everyone here is just sitting on their hands and collecting their paychecks instead of actually trying to do a job that basically everyone (homeless, housed, and politicians) wants done.
> In your example the government is dropping the ball on solving the homeless problem. But I'd rather live in a world where at least my government tries to solve problems, rather than one where it says, "well, we can't do a perfect job, so we might as well do nothing."
The homelessness call out was meant to be an example. It’s not the only inefficiency. My own city has had more and more innovative taxes - on both businesses, and on individuals. As a tax payer, taxes are increasing for me, yet I don’t see any meaningful improvement. And I’m not talking about a 6 month or 2 year timespan but 10-15 years. In the same time, the government apparatus has gotten larger and larger. There are more ways the government has found to extract revenue from workers. But what are we getting in return? Our public schools aren’t great. Teacher salaries are a joke.
Bridges and roads require maintenance, but these contracts seemingly go to specific bidders who are on a revolving door - they deliver such a low standard service that we’re doing the same repairs a year later.
There’s a mixture of corruption and incompetence. But the government has unlimited authority to increase taxes, giving the appearance they’re doing so to help the less fortunate. In reality, it’s basically an industry of jobs that doesn’t have to compete. If they had to compete, they would have failed as a business a very long time ago.
Would you mind saying what city you're talking about? It's a bit alarming that a city could be steadily increasing tax rates while offering almost nothing in return.
"Taxes fund schools, universities, fire and police departments, public health measures, and plenty of other things that make life more livable" emphasis mine
It seems this premise is debatable and subject to variable weight depending on how much value an individual sees in those institutions, and more importantly what that money is actually spent on.
What is the threshold for a government to be incompetent? It seems the government operations and day to day activities change very little based on the president.
In the USA we're just predisposed to elect bad people, a significant segment of the voting public think electing a game show host is a good move, this sort of voting population will have effects at all levels.
Some of that is dictated at a system level. Because states have different primary dates, many states are left with limited, if any, choice for who to put on the general ballot because so many drop out. The voter turn out for primaries is abysmal, so it could be considered "significant" depending on how you want to look at it, but the percentage number could be as low as single digits out of the overall population.
Then you have the game mentality that you have to pick the candidate with the most chance of winning that still shares some of your views, or that the polling shows your higher pick will lose. Ranked choice could really help here.
By the time you get to the general election it's basically a choice between a shit sandwich and a shit sandwich without the bread.
I don't disagree. I will add that the "system level" is itself legislated by elected officials. Its an interesting thing, like a series of games where the winner gets to redefine rules for the next match in the series. At some point the game can become rigged.
The top 50% of earners already pay 97% of all the income taxes. The US has one of the most progressive tax systems in the world. How much more progressive of a system do you want? Unrealized capital gains are imaginary. It is just like reporting your sales pipeline as revenue.
> The top 50% of earners already pay 97% of all the income taxes.
Personal income taxes are about 58% of taxes on personal income. The other 42% are the much more regressively-distributed payroll taxes, where the middle and upper classes pay less-to-none while the working class pays heavily.
> The US has one of the most progressive tax systems in the world.
[citation needed], but even if so then it more than makes up for it with the distribution in spending; considering taxes and spending together, the US has consistently been near the bottom at policy progressivity (measured by post- vs. pre- transfer change in Gini coefficient.)
> How much more progressive of a system do you want?
At a minimum, not giving preferential tax treatment to a form of income received predominantly by the super-rich (long-term capital gains); while there is an argument that income earned over multiple years but realized all at once should get taxed in a way that reflects that in a progressive system, a step reduction for long-term capital gains is not a sensible way to do that, as it both reduces tax on income for which that doesn't make sense and misses much where it does. Allowing options time-shift income for tax purposes (free advance recognition and limited deferral) does that better, handles thing like artistic projects that are developed over years and then realize income over a shorter period later as well as long term capital gains, but doesn't give tax cut for long terms gains that wouldn't change tax brackets even if spread out over the full term the asset was owned. It is much more fair as well as more progressive.
> Unrealized capital gains are imaginary
If that's really true, the LTCG are just windfall income that should be fully taxed in the year received. It’s not, though.
Maybe we should get rid of the payroll taxes? The operating assumption underlying all of your arguments is that bigger government is better. I do not agree. It seems to me that government has passed the tipping point where it's primary motivation is to sustain it's own growth. It may be better for society to rebuilt the reliance on local community and family vs continuing to make bad investments in growing our mega bureaucracy.
> The operating assumption underlying all of your arguments is that bigger government is better.
No, the operating basis is that – completely independent of either the desired size of government or the desired target tax revenue (you’ll note I’ve not talked about the desirable absolute rates of any taxes, only the relative treatment of different kinds of income and the mechanisms for handling income that depends on something happening over more years than those over which it is actually realized) – it is undesirable to systematically provide favorable tax treatment to kinds of income disproportionately concentrated in the super-rich rather than taxing all income as income.
Do you think lower rates for long term capital gains incentivizes investment? With the current proposal a windfall of inheritance would not be taxed but a unicorn founder would. if the goal is to grow the economy so everyone can see the gains I would think the capital gains incentive makes up for the lack of revenue with economic growth.
> Do you think lower rates for long term capital gains incentivizes investment?
I think the degree to which you want to incentivize investment is highly variable over time and a central focus of monetary policy, not something you want to blindly bake into income tax policy, especially in a way which actively exacerbates inequality, when relative deprivation manifestly is a much greater source of disutility in the developed world than absolute deprivation.
> With the current proposal a windfall of inheritance would not be taxed but a unicorn founder would.
We have an estate tax for windfalls of inheritance; but, yes, I agree that it would be better to abolish estate and gift taxes in favor of taxing those as income to the recipients, too. (As with other income sources, allowing spreading via advance and/or deferred recognition).
"The other 42% are the much more regressively-distributed payroll taxes, where the middle and upper classes pay less-to-none while the working class pays heavily."
And the outflows (benefits) from those taxes are capped, right? It's a single payer paradigm. If were talking about a paradigm shift not mentioned in the prior comments then I think we need to point that.
The US is progressive when it comes to income tax, but if you consider all contributions to tax revenue the US is basically a flat tax system. At least that's what the book Triumph of Injustice led me to believe.
Like Warren Buffett literally said: “The wealthy are definitely undertaxed relative to the general population."
And if someone has a billion dollars or more in unrealized wealth, forcing them to realize some of that wealth in order to pay taxes on it does not bother me much.
Why don't you buy the slippery slop argument? Recent history seems to show taxes increase or new taxes are added. If you listen to your parents and grandparents about the increase in the scope of various taxes (or research their history) one can easily identify taxes that fit the slippery slope. It's hard to trust that it won't happen to this one, and nobody can guarantee that it won't.
So while slippery slope arguments aren't great, it seems there is some support for it based on past government actions.
> Recent history seems to show taxes increase or new taxes are added.
Over the last several decades taxes on pretty much everything have decreased, with the result being that we have a non-progressive tax system that favors the ultra-wealthy. Check out the footnotes on my original post.
I don't see that. It seems it's all about income and corporate tax. There are certainly some changes that could be made around capital gains.
They started taxing alcohol in my state to recover from a disaster and decided to keep taxing it. They didn't previously tax gains from property sales, now they do. They started a state income tax that they promised would only be about .5%, now it's over 6x that and they are talking about raising it more. Federal gas tax has stagnated, but many states have substantially increase fuel taxes. The property rates increase despite the promise that money from casinos will reduce property taxes. Taxes on cigarettes have substantially increased over the years and have simply become punitive. Sales tax previously excluded the first $10k of a vehicle purchase, but not anymore. The list goes on and on.
The promise is that the tax money will be used to fix some issue and that there will be no need to extend it, yet those promises are consistently broken. They are always looking for new taxes, expanding the current ones, and yet we still face the same issues and budget shortfalls.
It's about taking slightly more money from the top 1,000 people who have the most money. This is completely different from targeting ethnic minorities.
Progressive taxes are supposed to handle this in a broad-based way, but billionaires can afford to finagle the system so that they pay less in taxes than the rest of us.
In my opinion, people seem very generous and creative in matters that concern other people's money.
Whether it is someone stealing from people who "can afford it", or increase taxes for certain categories that don't include them, people are in no shortage of 'arguments' and seem to find things 'obvious'.
I'm not sure that logic holds. Perhaps if "justice" is only point in time. There have been plenty of times in history when minority groups have been subjected to what we today would call an injustice. Simply having broad support would mean that they were just during the time in question and only considered unjust at a later time.
We shouldn't have laws that target N number of people. The law should be fair and unbiased.
Suppose for example that N=1. Would it be ok to target one person with tax increases? What about 10, 100, or 1000 people?
I'm not part of the 1% and never will be. But we should make just laws.
Some people will think "yeah, but the rich people don't pay taxes" which is exactly my problem with it. Again, we've created a situation in which the law only applies to some. The solution isn't to reverse the situation, but to balance the law.
This doesn't target N people. It targets wealth above a certain limit, and notably wealth that is typically in an asset class that makes it easy to avoid taxes. This is exactly what you describe -- a way of balancing the law so that the rich pay taxes. Maybe you don't agree with the implementation but you've expressed exactly the sentiment behind the law so...
> "Again, we've created a situation in which the law only applies to some."
That is partly the problem. The law definitely needs to be changed to address the fact that the people who have generated massive amounts of wealth have done so by avoiding taxes, and then lobbying for favorable outcomes for themselves that are in direct contradiction to the welfare of society—e.g. increasing the price of insulin making it difficult for people to afford it, when the cost has not increased and it is purely for profit.
The law only ever "applies to some". That is the point. Driver's license laws only "apply to" people over a certain age. Accredited investor regulations only apply to people of certain means. Citizenship laws apply under a specific set of conditions. The list goes on. That is literally the point of "law". Conditioned restriction on behavior to sustain order and welfare amongst mass amounts of human beings.
I just looked it up. Why would I get outraged over something that affects less than 1,000 people, all of which who are billionaires?
The trouble though with taxing unrealized capital gains is in the implementation.
For instance, somebody might own a huge amount of shares in a private company that is valued at a certain price. That might be almost all of the wealth.
If they are taxed on the capital gain they are going to have to (1) find some price the government believes is the real price of the asset, (2) sell some of the asset to get the money to pay the tax.
Since it is a private company, (2) might be very hard to do, particularly if you want to get the price (1).
[1] from the book Triumph of Injustice. If I recall correctly, all taxes added up comes out to about a 30% flat tax for everyone except billionaires. https://www.goodreads.com/book/show/45894166-the-triumph-of-...
[2] https://sven-giegold.de/wp-content/uploads/2020/03/europe-ca...
But going to my main point - your argument is predicted on a belief that more taxes will solve problems. I think we disagree insofar as the government is competent or even really cares to solve important issues.
In your example the government is dropping the ball on solving the homeless problem. But I'd rather live in a world where at least my government tries to solve problems, rather than one where it says, "well, we can't do a perfect job, so we might as well do nothing."
I'm also pretty unconvinced that
> they have no incentive to do anything about the problem because they’d work themselves out of a job.
since it's their job to do something about the problem. I'm plenty cynical about the US, but even I find it hard to reason that everyone here is just sitting on their hands and collecting their paychecks instead of actually trying to do a job that basically everyone (homeless, housed, and politicians) wants done.
The homelessness call out was meant to be an example. It’s not the only inefficiency. My own city has had more and more innovative taxes - on both businesses, and on individuals. As a tax payer, taxes are increasing for me, yet I don’t see any meaningful improvement. And I’m not talking about a 6 month or 2 year timespan but 10-15 years. In the same time, the government apparatus has gotten larger and larger. There are more ways the government has found to extract revenue from workers. But what are we getting in return? Our public schools aren’t great. Teacher salaries are a joke.
Bridges and roads require maintenance, but these contracts seemingly go to specific bidders who are on a revolving door - they deliver such a low standard service that we’re doing the same repairs a year later.
There’s a mixture of corruption and incompetence. But the government has unlimited authority to increase taxes, giving the appearance they’re doing so to help the less fortunate. In reality, it’s basically an industry of jobs that doesn’t have to compete. If they had to compete, they would have failed as a business a very long time ago.
It seems this premise is debatable and subject to variable weight depending on how much value an individual sees in those institutions, and more importantly what that money is actually spent on.
Then you have the game mentality that you have to pick the candidate with the most chance of winning that still shares some of your views, or that the polling shows your higher pick will lose. Ranked choice could really help here.
By the time you get to the general election it's basically a choice between a shit sandwich and a shit sandwich without the bread.
Personal income taxes are about 58% of taxes on personal income. The other 42% are the much more regressively-distributed payroll taxes, where the middle and upper classes pay less-to-none while the working class pays heavily.
> The US has one of the most progressive tax systems in the world.
[citation needed], but even if so then it more than makes up for it with the distribution in spending; considering taxes and spending together, the US has consistently been near the bottom at policy progressivity (measured by post- vs. pre- transfer change in Gini coefficient.)
> How much more progressive of a system do you want?
At a minimum, not giving preferential tax treatment to a form of income received predominantly by the super-rich (long-term capital gains); while there is an argument that income earned over multiple years but realized all at once should get taxed in a way that reflects that in a progressive system, a step reduction for long-term capital gains is not a sensible way to do that, as it both reduces tax on income for which that doesn't make sense and misses much where it does. Allowing options time-shift income for tax purposes (free advance recognition and limited deferral) does that better, handles thing like artistic projects that are developed over years and then realize income over a shorter period later as well as long term capital gains, but doesn't give tax cut for long terms gains that wouldn't change tax brackets even if spread out over the full term the asset was owned. It is much more fair as well as more progressive.
> Unrealized capital gains are imaginary
If that's really true, the LTCG are just windfall income that should be fully taxed in the year received. It’s not, though.
I have, indeed, made that argument before.
> The operating assumption underlying all of your arguments is that bigger government is better.
No, the operating basis is that – completely independent of either the desired size of government or the desired target tax revenue (you’ll note I’ve not talked about the desirable absolute rates of any taxes, only the relative treatment of different kinds of income and the mechanisms for handling income that depends on something happening over more years than those over which it is actually realized) – it is undesirable to systematically provide favorable tax treatment to kinds of income disproportionately concentrated in the super-rich rather than taxing all income as income.
I think the degree to which you want to incentivize investment is highly variable over time and a central focus of monetary policy, not something you want to blindly bake into income tax policy, especially in a way which actively exacerbates inequality, when relative deprivation manifestly is a much greater source of disutility in the developed world than absolute deprivation.
> With the current proposal a windfall of inheritance would not be taxed but a unicorn founder would.
We have an estate tax for windfalls of inheritance; but, yes, I agree that it would be better to abolish estate and gift taxes in favor of taxing those as income to the recipients, too. (As with other income sources, allowing spreading via advance and/or deferred recognition).
And the outflows (benefits) from those taxes are capped, right? It's a single payer paradigm. If were talking about a paradigm shift not mentioned in the prior comments then I think we need to point that.
Like Warren Buffett literally said: “The wealthy are definitely undertaxed relative to the general population."
And if someone has a billion dollars or more in unrealized wealth, forcing them to realize some of that wealth in order to pay taxes on it does not bother me much.
So while slippery slope arguments aren't great, it seems there is some support for it based on past government actions.
Over the last several decades taxes on pretty much everything have decreased, with the result being that we have a non-progressive tax system that favors the ultra-wealthy. Check out the footnotes on my original post.
They started taxing alcohol in my state to recover from a disaster and decided to keep taxing it. They didn't previously tax gains from property sales, now they do. They started a state income tax that they promised would only be about .5%, now it's over 6x that and they are talking about raising it more. Federal gas tax has stagnated, but many states have substantially increase fuel taxes. The property rates increase despite the promise that money from casinos will reduce property taxes. Taxes on cigarettes have substantially increased over the years and have simply become punitive. Sales tax previously excluded the first $10k of a vehicle purchase, but not anymore. The list goes on and on.
The promise is that the tax money will be used to fix some issue and that there will be no need to extend it, yet those promises are consistently broken. They are always looking for new taxes, expanding the current ones, and yet we still face the same issues and budget shortfalls.
If new government spending is really justified, it should be popular enough to fund it in a broad-based way.
Progressive taxes are supposed to handle this in a broad-based way, but billionaires can afford to finagle the system so that they pay less in taxes than the rest of us.
Whether it is someone stealing from people who "can afford it", or increase taxes for certain categories that don't include them, people are in no shortage of 'arguments' and seem to find things 'obvious'.
Suppose for example that N=1. Would it be ok to target one person with tax increases? What about 10, 100, or 1000 people?
I'm not part of the 1% and never will be. But we should make just laws.
Some people will think "yeah, but the rich people don't pay taxes" which is exactly my problem with it. Again, we've created a situation in which the law only applies to some. The solution isn't to reverse the situation, but to balance the law.
That is partly the problem. The law definitely needs to be changed to address the fact that the people who have generated massive amounts of wealth have done so by avoiding taxes, and then lobbying for favorable outcomes for themselves that are in direct contradiction to the welfare of society—e.g. increasing the price of insulin making it difficult for people to afford it, when the cost has not increased and it is purely for profit.
The law only ever "applies to some". That is the point. Driver's license laws only "apply to" people over a certain age. Accredited investor regulations only apply to people of certain means. Citizenship laws apply under a specific set of conditions. The list goes on. That is literally the point of "law". Conditioned restriction on behavior to sustain order and welfare amongst mass amounts of human beings.
N=1 is not a hypothetical example.
https://news.ycombinator.com/item?id=29013201
I think the implementation of the plan is stupid and inefficient. It won't affect me (nor most people) directly.