Rich people don't pay much in taxes (now in CR) - ProPublica

[Hmmm 155]

Ah ok, that makes sense.  I'd be curious to see how invested he is in those less fortunate (non-profit legit).  That's very hard to decipher.  I don't want to bring in Bill Gates to the conversation but here he is.

[washparkhorn 9935]

8 hours ago, bschoolprof said:

What a silly article. 

 

 

[52-80 19096]

Just fucking tax net wealth.  Set the threshold really high and really obvious so the fucking 2nd year big law associate don't mistakenly think they're the target.  What is the UHNW really gonna do?  Offshore more of the money that they haven't already?  Rescind citizenship and take up residency in fucking Brunei? 

Skim off the top.  Do it.

[washparkhorn 9935]

59 minutes ago, 52-80 said:

Set the threshold really high and really obvious so the fucking 2nd year big law associate don't mistakenly think they're the target

You identified the crux of the problem. Seriously. 

Edited June 9, 2021 by washparkhorn

[Neonmoon 38127]

The tax system is set up in a way for rich people to game the system. I will leave the CR response of who set it up this way out of it 

[babysdaddy 2718]

What a hack article.  This whole stunt of leaking these and publishing them was with political purpose in mind so no idea why it's in DT.

[NeverMarryAStripper 21781]

No mention of Trump's returns?

[babysdaddy 2718]

29 minutes ago, NeverMarryAStripper said:

No mention of Trump's returns?

Those were already leaked and published by the NY Times last year at some point. 

[Guest Lobo]

It's a relative non-story when people who aren't that wealthy don't pay that much in taxes.  

[ZB'Tejas 593]

2 hours ago, Neonmoon said:

The tax system is set up in a way for rich people to game the system. I will leave the CR response of who set it up this way out of it 

Each party had had time in office to fix if they so desired. All the politicians benefit from this so I don't think anyone really wants it differently. Plus think of all the big accounting firms that would be in trouble if we simplified the tax codes.

[Armybrat 40744]

13 hours ago, Lobo said:

Always cracks me up when people think Warren Buffet pretends to be in favor of more progressive taxation systems.  He does...for me and you...not for him.  

If you're ever listening to John Mackey give a speech around Texas...ask him about his conversation with Buffet about taxes at the big-time CEO retreat they were both on in the early 2010's.  

Remember, he said he would be leaving the bulk of his massive fortune to the Gates Foundation instead of letting the IRS suck it up with the inheritance taxes.

[Bevo 13527]

15 hours ago, Newdoc said:

The middle class always gets fucked. It is just a matter of which side's lies they believe.

[Dahobbs 17449]

17 hours ago, hornbri said:

That article is pretty misleading, we don't have wealth tax we have a income tax.

Using unrealized gains to then try and illustrate a low tax rate is not really fair.

I live in Austin, do I have to count all the unrealized gains in my house value this year and pay taxes on that?

Yes, you do in the form of state property taxes. Oddly enough, Texas has a more progressive tax system because property taxes are inherently more progressive than income taxes. 

14 hours ago, Texaskimo said:

This is a discussion about federal taxes, not state taxes. Try to keep up.

The answer is no, I don't pay income tax to the federal government for my net worth increase associated with my house appreciating in value. This is also why Jeff Bezos doesn't have to pay taxes when the Amazon stock he owned before the year started and still owned at the end of the year became more valuable during the year. The same people saying it's unfair that he "gained wealth" that he didn't pay taxes on would be pissed off about getting an income tax bill from the federal government because their local housing market got hot.

I think most understand that our tax system allows him to do this. The question is whether that is fair to everyone else that can't. See below:

14 hours ago, burntorangebongos said:

That is fair. But Jeff Bezos has the ability to borrow from his stocks, even the new ones that  "gained wealth" and live on that loan just fine. And you don't pay income tax on that loan. That is the issue with the very rich. They declare income when it advantages them to claim it, not every year on us regular people that can't play that game. That is what sucks.

Yup, you put your assets in the investment arm of the bank and then the bank gives you prime or subprime rates on a line of credit. Your interest rate will be significantly below the average return on your assets. And if you are self employed/business owner, you can actually deduct the interest on the gains you do realize (e.g., dividends). There is no technical reason why you ever have to pay it down so long as your investments are performing as expected. Effectively, you never have to pay taxes on any earnings. 

6 hours ago, 52-80 said:

Just fucking tax net wealth.  Set the threshold really high and really obvious so the fucking 2nd year big law associate don't mistakenly think they're the target.  What is the UHNW really gonna do?  Offshore more of the money that they haven't already?  Rescind citizenship and take up residency in fucking Brunei? 

Skim off the top.  Do it.

Yup. A progressive wealth tax rather than an income tax makes a lot of sense and would be, in my opinion, a much more fair solution to taxation. 

[bschoolprof 6232]

This thread is cloak fucked and should be moved there ASAP. 

A federal income tax on unrealized gains (at ~15 to 30% rates) would be idiotic policy and unworkable.  The liquidity issues alone (selling shit to pay the tax) would be a total clusterfuck. Not to mention all the downstream disincentives it would lead to.

Also, lulz at the property tax analogy.  Even in states where property taxes are crushingly high (Texas), rates are like 1-2%.  And they hurt poor and middle class people far more than rich people, due to the "wherewithal to pay" notion.  In Austin, for example, just who do you think is being priced out of homes/apartments due to the tax burden when "wealth" increases due to rising property values, but income necessary to pay the wealth tax does not?  Change the rates to 15-30% and see if this is workable.  

Finally, tax is paid on these unrealized gains, either when they are realized through sale (and cash can be used to pay the tax) or at death via the estate tax.  It's a timing issue. 

[Sbbruin 21738]

9 minutes ago, bschoolprof said:

This thread is cloak fucked and should be moved there ASAP. 

A federal income tax on unrealized gains (at ~15 to 30% rates) would be idiotic policy and unworkable.  The liquidity issues alone (selling shit to pay the tax) would be a total clusterfuck. Not to mention all the downstream disincentives it would lead to.

Also, lulz at the property tax analogy.  Even in states where property taxes are crushingly high (Texas), rates are like 1-2%.  And they hurt poor and middle class people far more than rich people, due to the "wherewithal to pay" notion.  In Austin, for example, just who do you think is being priced out of homes/apartments due to the tax burden when "wealth" increases due to rising property values, but income necessary to pay the wealth tax does not?  Change the rates to 15-30% and see if this is workable.  

Finally, tax is paid on these unrealized gains, either when they are realized through sale (and cash can be used to pay the tax) or at death via the estate tax.  It's a timing issue. 

Yeah, the whole "bombshell leak" on this is stupid.  Paper gains are taxed eventually.

[Don Johnson 4745]

Bezos net worth went up because his Amazon stock went up.  His taxes were paid on income.  If Amazon stock goes down next year, is the author writing the same story treating it as a huge loss where Bezos is so generous that he's still paying taxes(on income)?

[JimmyJames 12271]

22 minutes ago, bschoolprof said:

This thread is cloak fucked and should be moved there ASAP. 

A federal income tax on unrealized gains (at ~15 to 30% rates) would be idiotic policy and unworkable.  The liquidity issues alone (selling shit to pay the tax) would be a total clusterfuck. Not to mention all the downstream disincentives it would lead to.

Also, lulz at the property tax analogy.  Even in states where property taxes are crushingly high (Texas), rates are like 1-2%.  And they hurt poor and middle class people far more than rich people, due to the "wherewithal to pay" notion.  In Austin, for example, just who do you think is being priced out of homes/apartments due to the tax burden when "wealth" increases due to rising property values, but income necessary to pay the wealth tax does not?  Change the rates to 15-30% and see if this is workable.  

Finally, tax is paid on these unrealized gains, either when they are realized through sale (and cash can be used to pay the tax) or at death via the estate tax.  It's a timing issue. 

I’m no tax attorney but it’s my understanding that there are so many loopholes to the estate tax that basically renders it useless. So when you die your kids get to do the same thing you did, which is basically borrow at fantastic rates off what you own and voila, never pay taxes since the gains are never realized. Am I wrong? 

[Dahobbs 17449]

1 minute ago, bschoolprof said:

This thread is cloak fucked and should be moved there ASAP. 

A federal income tax on unrealized gains (at ~15 to 30% rates) would be idiotic policy and unworkable.  The liquidity issues alone (selling shit to pay the tax) would be a total clusterfuck. Not to mention all the downstream disincentives it would lead to.

I don't think anyone is proposing that a wealth tax be at the same rates as an income tax. I agree that would be unworkable. But some sort of progressive wealth tax with lower rates (maybe between 0 and 2%) seems doable and reasonable to me. 

Quote

 

Also, lulz at the property tax analogy.  Even in states where property taxes are crushingly high (Texas), rates are like 1-2%.  And they hurt poor and middle class people far more than rich people, due to the "wherewithal to pay" notion.  In Austin, for example, just who do you think is being priced out of homes/apartments due to the tax burden when "wealth" increases due to rising property values, but income necessary to pay the wealth tax does not?  Change the rates to 15-30% and see if this is workable.  

 

See above. You're fighting against a strawman. And there is no reason why a wealth tax couldn't incorporate the same sort of exemptions and limits we have now such that those with limited income would have no higher tax burden. 

Quote

Finally, tax is paid on these unrealized gains, either when they are realized through sale (and cash can be used to pay the tax) or at death via the estate tax.  It's a timing issue. 

No, not really. See my post above. You can effectively take withdrawals without ever having to pay taxes. And the estate tax is comically easy to avoid by putting the money in a trust. Beneficiaries can take advantage of the same scheme above and almost never receive actual taxable disbursements. 

[Dahobbs 17449]

21 minutes ago, Sbbruin said:

Yeah, the whole "bombshell leak" on this is stupid.  Paper gains are taxed eventually.

No, they really aren't. Not if you are wealthy enough. I don't think people understand this. 

Edited June 9, 2021 by Dahobbs

[ABSR 5289]

19 hours ago, Wally Fairway said:

ProPulica - Secret IRS Files report

https://www.propublica.org/article/the-secret-irs-files-trove-of-never-before-seen-records-reveal-how-the-wealthiest-avoid-income-tax

Buffet is the king of tax efficiency - paying 0.10% on his wealth gains 2014-2018 (well no shit - its unrealized gains)
Bezos had the largest wealth increase - and payed less than 1% on his wealth gains

ProPublica uses the term "True Tax Rate", but taxes haven't been paid on unrealized gains; that said they say there will be follow up article(s) going into how the fat cats avoid taxes, exploit loopholes and escape federal scrutiny.

 

Keep the CR comments to a minimum, so this doesn't get move to that shithole 😉

 

So to be clear, the 2014-2018 taxes paid (as reported in the article) are:

Buffet paid $23.7in taxes, Bezos paid $973M, Bloomberg paid $292M, and Musk paid $455M.

The Surly .00001%er who has paid more than $23.7M over that period shall cast the first stone!

Or per the article we should punish/tax people for investing or growing investments when they have not realized a gain for that investment.  This would definitely encourage investments, commerce and the financial ruin of our economy.  Sound great!

 

[TwiceHorn 31283]

3 minutes ago, JimmyJames said:

I’m no tax attorney but it’s my understanding that there are so many loopholes to the estate tax that basically renders it useless. So when you die your kids get to do the same thing you did, which is basically borrow at fantastic rates off what you own and voila, never pay taxes since the gains are never realized. Am I wrong? 

No, you're pretty much right as concerns estate taxes.

The fundamental notion is to place assets in a trust at death so they're not titled in your name and subject to estate tax.  The assets of the trust are available to beneficiaries/heirs, but any distributions are taxable as income to the recipient.  Growth/income of trust assets is taxable pretty much the same way as individuals.

I suppose a trustee could loan to a beneficiary without creating immediate tax consequences, but I'm not sure that's common.

 

[Dahobbs 17449]

3 minutes ago, TwiceHorn said:

No, you're pretty much right as concerns estate taxes.

The fundamental notion is to place assets in a trust at death so they're not titled in your name and subject to estate tax.  The assets of the trust are available to beneficiaries/heirs, but any distributions are taxable as income to the recipient.  Growth/income of trust assets is taxable pretty much the same way as individuals.

I suppose a trustee could loan to a beneficiary without creating immediate tax consequences, but I'm not sure that's common.

 

Trustee doesn't loan to the beneficiary. The bank managing the Trust's investments does. 

[JimmyJames 12271]

8 minutes ago, ABSR said:

 

So to be clear, the 2014-2018 taxes paid (as reported in the article) are:

Buffet paid $23.7in taxes, Bezos paid $973M, Bloomberg paid $292M, and Musk paid $455M.

The Surly .00001%er who has paid more than $23.7M over that period shall cast the first stone!

Or per the article we should punish/tax people for investing or growing investments when they have not realized a gain for that investment.  This would definitely encourage investments, commerce and the financial ruin of our economy.  Sound great!

 

Yeah the economy would be ruined if Warren Buffett paid more taxes because obviously he would just fold up his tent and go home. 

[lmao 178]

18 hours ago, Chewbacca said:

Yeah, not surprising at all.  Buffett has always bothered me on this issue.  He laments his low rate, but he doesn't pay extra (that is always an option).  He only pays exactly what he owes.

 

I also don't buy his "aw shucks I love Waffle House and live in the same house in Omaha" schtick. The things that dude needs to get off would probably make Hitler blush.

[Neonmoon 38127]

I don’t buy “they paid exactly what they owe” line of thought because they all intentionally work the system to pay the least amount of taxes. They all get paid nominal salaries if at all to avoid the higher income taxes. Bezos gets paid an 80K salary for this purpose. I’m not saying what they do is illegal or wrong. They work the system that both sides of the aisle set up and won’t change because it benefits them. Americans have never had a ruling class or a monarchy, so there is no entrenched hatred for the wealthy, most Americans believe they will be rich one day. So the system ain’t changing. 

[TwiceHorn 31283]

1 minute ago, Neonmoon said:

Bezos gets paid an 80K salary for this purpose.

That's fucking annoying.  I think most of his actual income is taxed, but he is paying a pittance on FICA, relatively speaking, because of that.

[MNLonghornFUKM 8799]

No mention of Trump's returns?

Millionaire returns aren’t as juicy as billionaire ones

[midtown 3342]

[UncleSonny 6560]

21 hours ago, hornbri said:

Using unrealized gains to then try and illustrate a low tax rate is not really fair.

I live in Austin, do I have to count all the unrealized gains in my house value this year and pay taxes on that?

 

1 hour ago, Neonmoon said:

I don’t buy “they paid exactly what they owe” line of thought because they all intentionally work the system to pay the least amount of taxes. They all get paid nominal salaries if at all to avoid the higher income taxes. Bezos gets paid an 80K salary for this purpose. I’m not saying what they do is illegal or wrong. They work the system that both sides of the aisle set up and won’t change because it benefits them. 

The salary thing is one reason (among others) that an average citizen not paying unrealized gains on their house in Austin is a pretty bad analogy. Hornbri made a good investment, is seeing the value of his house grow every year and that is contributing to his "wealth growth" but nobody here is advocating that he should be paying taxes on those gains before they are realized. 

Unless he is a Surly .000001% playing coy, I'm going to guess that wealth growth is not approaching 11 figures in five years. It's likely a couple hundred thousand dollars at best. I'm also going to guess he's not in a position to bring down his annual taxable income by taking a nominal salary and sheltering the majority of his income through a myriad of perfectly legal avenues. 

It's just not even close to the same. I would bet good money that hornbri's effective income tax rate is substantially higher than any billionaire's despite him being protected from paying taxes on his unrealized gains of his house in Austin. I don't have the answer but I'm always shocked that so many average Americans are so blasé about the richest among us paying substantially lower tax rates than us (whether you are using true tax rates or effective income rates).     

[Bernard 879]

1 hour ago, TwiceHorn said:

That's fucking annoying.  I think most of his actual income is taxed, but he is paying a pittance on FICA, relatively speaking, because of that.

FICA is an issue that needs about 1000x more discussion when it comes to federal taxes. The rich have done an amazing job keeping it out of the conversation when it comes to federal taxes.

A self employed couple making $100,000/year pay 15.3% in FICA taxes. A couple of working stiffs pay the exact same amount, but they don't know it because half the outlay is paid by their employer directly to Uncle Sam so it's hidden from their view.  Luckily for to top earners, the rate drops dramatically above $137,700 (2020 threshold), so the guys making $10 million a year end up paying about 4% per year in FICA.

Social Security and Medicare are each doling out about $1 trillion per year in welfare to the olds. It's a HUGE percentage of Uncle Sam's annual budget, and most of it paid by people who are certainly NOT wealthy.

Bernard

[pacman 7330]

Agree to the general sentiment, these articles do little and enact no change.

I think all agree our current taxation system is unfair due to its unnecessary, yet intentional, complexity. Due to policy, the current brunt of taxation is carried by the lower(seen more in sales tax states) and middle class(federal income tax). Taxation should be the burden of those who most benefit from current society, that currently being the corporation and the ultra-wealthy.

Edited June 9, 2021 by pacman

[TwiceHorn 31283]

1 minute ago, Bernard said:

FICA is an issue that needs about 1000x more discussion when it comes to federal taxes. The rich have done an amazing job keeping it out of the conversation when it comes to federal taxes.

A self employed couple making $100,000/year pay 15.3% in FICA taxes. A couple of working stiffs pay the exact same amount, but they don't know it because half the outlay is paid by their employer directly to Uncle Sam so it's hidden from their view.  Luckily for to top earners, the rate drops dramatically above $137,700 (2020 threshold), so the guys making $10 million a year end up paying about 4% per year in FICA.

Social Security and Medicare are each doling out about $1 trillion per year in welfare to the olds. It's a HUGE percentage of Uncle Sam's annual budget, and most of it paid by people who are certainly NOT wealthy.

Bernard

Yes, it's very regressive.  And I am pretty sure "drops dramatically above 137,700" means to zero.

[Bernard 879]

3 minutes ago, TwiceHorn said:

Yes, it's very regressive.  And I am pretty sure "drops dramatically above 137,700" means to zero.

The 12.4% paid to Social Security drops to zero above that threshold. The 2.9% paid to Medicare does not ever drop, in fact it steps up to 3.8% over $200,000. It's not quite zero, but it's a huge tax break for high earners.

Bernard

Edited June 9, 2021 by Bernard

[Bernard 879]

Of course no discussion of regressive taxes is complete without looking at how the State of Texas funds itself...

Spoiler Alert: The poors pay more...

 

[Bigbend1812 12890]

Fuck taxes

[Trey3216 15325]

21 hours ago, JimmyJames said:

In the best year I ever had my effective income tax rate was around 38 percent and it’s because I’m not a zillionaire. That’s pretty rage inducing. But I’m not surprised at all. This one is a truly both sides issue.

Do you own your own company?  Do you pay yourself in salary or in distributions?  

[LABEVO 928]

bUt ThE wEaThlY pAy AlL tHe TaXeS !!

in reality, it is the middle and upper middle class who pay all the taxes and get fucked the most by our tax system

[Trey3216 15325]

15 hours ago, Hmmm said:

I see it as him playing by the rules.   And perhaps, he might not also agree with the rules.  But, all I know is from what I've read on this thread.

He's also making sure the rules are never changed.   Don't be a dolt  

[Wally Fairway 5524]

6 minutes ago, LABEVO said:

bUt ThE wEaThlY pAy AlL tHe TaXeS !!

in reality, it is the middle and upper middle class who pay all the taxes and get fucked the most by our tax system

well of course, because the ultra-wealthy can afford to bribe lobby legislators and get the loopholes that they drive the Brinks trucks right through

[Sbbruin 21738]

3 hours ago, TwiceHorn said:

The fundamental notion is to place assets in a trust at death so they're not titled in your name and subject to estate tax.  The assets of the trust are available to beneficiaries/heirs, but any distributions are taxable as income to the recipient. 

 

Which, as I understand it, is only beneficial if the estate is greater than $11 mil, because less than $11 mil is not taxed at all.  

[You don't know me 1161]

I am of the firm, yet uninformed opinion, that no matter what they do to tax a specific income group, I'm going to be the one getting fucked.

[Sbbruin 21738]

2 minutes ago, You don't know me said:

I am of the firm, yet uninformed opinion, that no matter what they do to tax a specific income group, I'm going to be the one getting fucked.

[TwiceHorn 31283]

54 minutes ago, Bernard said:

Of course no discussion of regressive taxes is complete without looking at how the State of Texas funds itself...

Spoiler Alert: The poors pay more...

 

I guess property tax doesn't make a dent there because the state gets so little of it?  Or is it that the state portion isn't considered general revenue, since it is earmarked for education and is really a district-by-district thing, I guess.

[TwiceHorn 31283]

40 minutes ago, Sbbruin said:

Which, as I understand it, is only beneficial if the estate is greater than $11 mil, because less than $11 mil is not taxed at all.  

Yes, and because you can transfer unlimited amounts to a spouse at death, you put $11M into a trust for the benefit of your spouse and the spouse on death can transfer another $11M estate tax free, for a total of $22M.

[Cheeseweasel 26437]

1 hour ago, Bernard said:

Spoiler Alert: The poors pay more...

You think the poors pay more sales tax than anyone? Not sure I understand.

[Bernard 879]

6 minutes ago, TwiceHorn said:

I guess property tax doesn't make a dent there because the state gets so little of it?  Or is it that the state portion isn't considered general revenue, since it is earmarked for education and is really a district-by-district thing, I guess.

I've reviewed plenty of property tax bills in my time and I've never seen a line item for the State of Texas. Local schools take >50%; remainder to other local jurisdictions.

Property taxes are also regressive. Poors pay a higher percentage than the rich. My property taxes are $10,000/year. Bob McNair's (RIP) River Oaks mansion has a $152,000/year tax bill. I guarantee you makes (made) more than 15x my earnings.

Bernard 

[elfenix 34172]

6 minutes ago, Bernard said:

I've reviewed plenty of property tax bills in my time and I've never seen a line item for the State of Texas. Local schools take >50%; remainder to other local jurisdictions.

Property taxes are also regressive. Poors pay a higher percentage than the rich. My property taxes are $10,000/year. Bob McNair's (RIP) River Oaks mansion has a $152,000/year tax bill. I guarantee you makes (made) more than 15x my earnings.

Bernard 

there's also the matter of poors housing having lots of comps so rather accurate pricing, vs. bob's which has like 10 other mansions on river oaks blvd as comps, so nearly no pricing info.  as well as mcnair challenging his property taxes definitely being worth his lawyer's jr associate's time.  think that was discussed in the last taxing thread somewhere around here. 

Edited June 9, 2021 by elfenix

[Bernard 879]

4 minutes ago, Cheeseweasel said:

You think the poors pay more sales tax than anyone? Not sure I understand.

Yes, and it's not just sales tax. It's fuel taxes, motor vehicle taxes and fees, alcohol, cigarettes, etc.

Poors spend a higher percentage of their income on taxable items than the rich. 

Bernard

[52-80 19096]

3 hours ago, TwiceHorn said:

That's fucking annoying.  I think most of his actual income is taxed, but he is paying a pittance on FICA, relatively speaking, because of that.

I like during austere business times a CEO with 1M salary and total target comp of 20M will announce hes cutting his salary to a buck for the year and everyone celebrates.  

[Bernard 879]

3 minutes ago, elfenix said:

there's also the matter of poors housing having lots of comps so rather accurate pricing, vs. bob's which has like 10 other mansions on river oaks blvd as comps, so nearly no pricing info.  think that was discussed in the last taxing thread somewhere around here. 

Yes. That's a whole other problem. His house is probably worth $20 million, but it's on the tax rolls for $10 million. Poors like me have tax appraisals that are >90% of actual value. 

Bernard