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The Stealth Wealth Tax

Discussion in 'North American Politics' started by Revoltingest, Oct 27, 2021.

  1. Revoltingest

    Revoltingest Abnormal before it was fashionable
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    Democrats' tax on billionaires targets about 700 people - InvestmentNews
    Excerpted...
    Much of appreciation is simply due to inflation, which the government
    intentionally creates by expanding the money supply faster than
    economic growth. (I once even heard a government economist
    admit this on NPR.) They consider it good economic policy because
    people experience wage growth, & home price appreciation...or
    at least the appearance thereof. Note though that as your wages
    rise, & you move to a higher tax bracket, you can't really buy more
    (because prices also rise).

    The problem with capital gains tax?
    Much (sometimes all) of the gain you realize upon selling an asset
    isn't growth in value...it's growth in the number of devalued dollars
    needed to realize your initial investment (which didn't appreciate).
    So when the IRS taxes capital gains, they benefit by not adjusting
    the supposed gain for inflation. Essentially, it's an opportunity to
    take wealth even when there's no economic income.

    Some quantification (approximate)....
    At 7% inflation, a dollar is worth only 50 cents 10 years later.
    At 10% inflation, a dollar is worth only 50 cents 7 years later.

    This new policy proposed by Democrats would tax "unrealized
    gains" every year by treating assets as having been sold.
    For now, it's just 700 or so billionaires. There are a couple
    constitutional problems too...
    - Is it really income (under the 16th Amendment) if the gain
    is due to devalued dollars?
    - Is an asset not sold really income simply because it's
    traded by others at a higher price?

    Finally, how long til this wealth tax applies to us lesser folk?
     
  2. AlexanderG

    AlexanderG Active Member

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    1. The annual inflation rate has been around 1.5% on average in recent years, varying between .1% and 3.1% in the last 10 years. It has been under 3.5% for the last 30 years.
    2. The stock market has grown much more than that annually, at an average of 10% per year over the last 30 years. People who invest wisely can achieve an ever higher rate.

    This discrepancy establishes that these investments are true income, not just "keeping up with inflation." And it leaves a very wide margin to tax this income, which is income derived from doing no work at all and contributing nothing to society other than owning the rights to take a share of other people's productivity who work at companies you partially own.

    3. Billionaires pay approximately an 8% federal tax rate on their income. Some pay nothing. The ones who benefit the most from our collective efforts are the ones contributing the least share of their wealth to the common good, and to the public works that enable our collective efforts like highways, our legal and judicial system, utilities, and military defense.

    Your slippery slope argument is a fallacy. You might as well argue that "the government has decided to imprison murders, and if they can do that, then how long will it be until they just imprison everyone?" Anyway, come back when you're a billionaire, and maybe then I'll listen to your claims of injustice and feel sorry for your workless income being taxed slightly more equally compared to everyone else.
     
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  3. Nakosis

    Nakosis Time Efficient Lollygagger
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    The wealthy will just have to come up with new ways to keep their money.
    https://www.cnbc.com/2021/09/20/the...-billion-in-annual-taxes-how-they-do-it-.html

    Maybe that's how the rich stay rich. They are smarter than the rest of us at avoiding taxes.
    Politicians get brownie points for giving the illusion they are going to get the rich to pay for everything.
     
  4. Twilight Hue

    Twilight Hue Twilight, not bright nor dark, good nor bad.

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    I heard about this on NPR this morning.
     
  5. Suave

    Suave Simulated character

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    The standard deduction and tax brackets are typically adjusted for inflation, I'm guessing the threshold for taxable unrealized capital gains to be taxed would also be adjusted for inflation.

    IRS provides tax inflation adjustments for tax year 2021 | Internal Revenue Service
     
  6. Twilight Hue

    Twilight Hue Twilight, not bright nor dark, good nor bad.

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    There's also the matter of wealthy elites withholding contributions as a lever. That alone assures the taxation will not be on them, but elsewhere. Politictions will never risk their benefactors.

    Watch the ammendment to this proposal go through real quick. I think most of us know who is really going to pay.
     
  7. Stevicus

    Stevicus Veteran Member
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    My grandfather bought a house in Santa Ana in 1971 for $28,000. That very same house (no additions or add-ons; it's the same exact house) is now estimated at $832,000, according to Zillow. According to the rate of inflation, it should only be worth $189,646. That's a difference of 642,354.

    There is no "appreciation." That's just a perception - a state of mind. It's like people who spend a million on a bottle of wine that no one will drink. Where is the value in that? It's all imaginary.

    I see nothing wrong on taxing people who presume to benefit from an imaginary economic system.

    If they "think" ("imagine") that their property, goods, or services are "worth it," then they should have no problem with being taxed extra on it. The fact that they balk about it and complain is evidence of their fear that people might find out that they're not worth as much as they think they are.
     
  8. Stevicus

    Stevicus Veteran Member
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    I don't see it as a matter of "avoiding taxes." Thing is, taxes in the U.S. have never been that bad. The rich still seem to enjoy living in the lap of luxury even in some of the heavily taxed countries of Europe. Taxes are surely no great hardship for the wealthy, yet they act like a tax increase is the end of the world.

    The rich become rich through their skills in manipulation and con artistry. They are able to use this skill to persuade and convince people that a pile of excrement is actually "worth" something, and this is how wealth is made in the modern era. It's a con game, and while some socialists can see through it, there are too many who get fooled and/or try to fool others (because they think they can benefit from the great lie).
     
  9. Revoltingest

    Revoltingest Abnormal before it was fashionable
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    The income tax was based upon income, not wealth.
    Even we lesser folk avoid being taxed on appreciated assets.
     
  10. Revoltingest

    Revoltingest Abnormal before it was fashionable
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  11. Orbit

    Orbit I'm a planet

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    I'm not particularly concerned about 700 billionaires being taxed. They *should* be taxed.
     
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  12. Kooky

    Kooky Freedom from Sanity

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    The alternative, of course, is to just ditch taxes and expropriate the one percenters' wealth entirely.
     
  13. Revoltingest

    Revoltingest Abnormal before it was fashionable
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    That appears to be the Democrats' strategy, ie, seek money
    from a despised small class that few care about. But if they
    have the power to tax wealth of that 700, then this power
    extends to everyone. How far will they go?
    And as to ethics....is it good for government to devalue
    the dollar, & tax us upon the increased dollars it takes
    to represent value?
     
  14. Suave

    Suave Simulated character

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    Unrealized gains though are not actual gains, somebody does not actually make a profit until he has sold his investment asset at a greater price than the price he paid for his investment asset. Suppose somebody paid $40,000 for a bitcoin, then at the end of the year, his bitcoin has a market value of $60,000 but he is still holding on his bitcoin at the end of the year into the following year, then let us suppose his bitcoin's market value decreases to $30,000 at which time he sells his bitcoin. This person, actually lost $10,000, but he would have to pay taxes as though he had profited $20,000. I don't think it's fair to tax a transactional loss as though it had been profitable. What do you think?
     
  15. Suave

    Suave Simulated character

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    Well, there should be. Right?
     
  16. Revoltingest

    Revoltingest Abnormal before it was fashionable
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    I wonder if Democrats would allow the seller to recognize
    the loss by carrying it back to the prior year's taxes?
    Or will it be like a ratchet...taxing every gain, yet ignoring
    every loss. The current system operates that way to an
    extent (it's complicated).
     
  17. Revoltingest

    Revoltingest Abnormal before it was fashionable
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    I agree.
    Pay on actual income....not on currency devaluation.
     
  18. Nakosis

    Nakosis Time Efficient Lollygagger
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    Or perhaps reduce government waste and spend the other wised used money on social programs.
     
  19. Kooky

    Kooky Freedom from Sanity

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    I am also in favor of abolishing the military in addition to the public re-appropriation of capital, yes.
     
  20. Revoltingest

    Revoltingest Abnormal before it was fashionable
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    And when that's used up in a few months,
    go after the 2 percenters. And then the
    3 percenters. And so on.

    Such wisdom.
    You must live somewhere in Europe.
     
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