I genuinely wonder what would be the best way to deal with the unrealized gains + taking out loans as untaxable income loophole. It seems like the current Democratic party strategy would be taxing unrealized gains over a certain amount but that still doesn't quite feel right..
Possibly: tax the interest on those loans at the bank. Possibly count such loans against assets (reducing banks' lending capability).
I'm not positive this works out, but:
- Banks tend to be well-established, identifiable entities.
- They are highly regulated and audited.
The question I'm not certain of the answer is what the result of such a tax would be. I suspect such loans would tend to be crowded out or inerest rates increased (raising costs to the billionaire utilising this cash-out option).
This seems to me along the lines of an HFT transaction tax, possibly operating similarly.
Alternatively, tax consumption over a certain threshold as though spending is income. Effectively instate a federal sales tax after one has spent $X dollars.
> Amazon founder and CEO Jeff Bezos paid a true tax rate of 0.98% as his wealth grew by a staggering $99 billion between 2014 and 2018; he reported just $4.22 billion in reported income during the same period.
I'm curious how I should rationalize that this is not in fact a giant loophole for billionaires. Bezos' wealth increased immensely such that he is now one of the richest people in the world, and yet his effective tax rate is far lower than anything you or I will ever see. If he needs "income", he can simply take out a low interest loan with his stock as collateral to pay for whatever he needs (yachts, spurious lawsuits against NASA, etc.). His stock is effectively cash, loans effectively "realize" his gains, and yet we don't treat any of it as income.
There's a vast difference between the unrealized gains of not-filthy-rich people with 401ks / middling stock portfolios and the unrealized gains of filthy rich people who primarily take stock as income (which they do for the exact purpose of paying lower taxes).
First, you can look at "true tax rate", which has nothing to do with how taxes are calculated (as described in your linked article).
.98% sounds like he paid just under 1 billion on 4.22 billion of reported income (or just under 25%). I guess it sucks to be Bezos, because he spent more in one year on taxes than I'll have to pay in my life.. I'm going to go out on a limb and suspect that figure is not AGI, but total income. I suspect he had many deductible expenses like donations to charity, though 25% isn't that low since the top marginal bracket for capital gains is 20%.
I guess I'm curious how he paid so much in taxes...
I mean I don't know what to say here - the whole entire point here is that he makes a fuck ton more than his reported income and should (probably somehow) pay taxes on that. This graph IMO shows pretty clearly how not optimal the current tax system is: https://i.imgur.com/jcO8KgO.png
Taxing capital gains at nark-to-market values, with a flat rate (maybe 20-25%) and without exemptions or deductibles would go a long way towards fiscal equity.
The concept of “capital gains” in the U.S. is a joke, unless you buy stock directly from the company, or buy when the company goes public, there is no capital investment. Once the company sells stock to the public, further purchase or sale of stock is nothing more than buying/selling goods. When I buy stock on the stock market the company doesn’t get the money, the person who sells me the stock gets the money, and that’s not capital investment.
Sale of stock should be taxed at each states tax rate, because it’s the buying and selling of a good, it’s not capital investment.
