Why Is It So Hard to Tax the Ultra-Rich?

[Hume]

How do billionaires accumulate so much wealth?

Much if not most of their wealth is held in stocks and is taxed differently than income.
Consider Mark Zuckerberg. Between 2013 and 2019, his fortune increased by 368 percent, thanks primarily to the 342 million shares of Meta he owns.
During that period, his declared income — taxed at a rate of 13.7 percent, similar to that for the average taxpayer — was much smaller than his net worth and resulted in a tax bill of $536 million.

If you recalculate his tax rate based on his wealth growth, his “true” tax rate was only 1.1 percent.

A Look at California's Billionaires vs. the Rest of the World

See how America's billionaires can accumulate so much wealth without drawing a significant salary.

www.nytimes.com

 

[Valentino]

The tax cod was written to allow complicated loopholes.

 

[ZenMode]

How do billionaires accumulate so much wealth?

Much if not most of their wealth is held in stocks and is taxed differently than income.
Consider Mark Zuckerberg. Between 2013 and 2019, his fortune increased by 368 percent, thanks primarily to the 342 million shares of Meta he owns.
During that period, his declared income — taxed at a rate of 13.7 percent, similar to that for the average taxpayer — was much smaller than his net worth and resulted in a tax bill of $536 million.

If you recalculate his tax rate based on his wealth growth, his “true” tax rate was only 1.1 percent.

A Look at California's Billionaires vs. the Rest of the World

See how America's billionaires can accumulate so much wealth without drawing a significant salary.

www.nytimes.com

Taxing income isn't that difficult. It's much more difficult to tax wealth, which is generally in the form of unrealized capital gains.

Kamala Harris 's financial plan, and the way that she was allegedly going to balance her budget, was by taxing unrealized capital gains that is an insane idea.

 

[Hawkeye10]

Because wealth can generally be moved....the wealthy thus only can be taxed at a rate they are willing to pay. Oligarchs can be stripped, as Putin and MBS (Saudi) have done, but that requires a lot of power and is rare.

 

[Crepitus]

How do billionaires accumulate so much wealth?

Much if not most of their wealth is held in stocks and is taxed differently than income.
Consider Mark Zuckerberg. Between 2013 and 2019, his fortune increased by 368 percent, thanks primarily to the 342 million shares of Meta he owns.
During that period, his declared income — taxed at a rate of 13.7 percent, similar to that for the average taxpayer — was much smaller than his net worth and resulted in a tax bill of $536 million.

If you recalculate his tax rate based on his wealth growth, his “true” tax rate was only 1.1 percent.

A Look at California's Billionaires vs. the Rest of the World

See how America's billionaires can accumulate so much wealth without drawing a significant salary.

www.nytimes.com

Why? Because they own the people who make the laws. It really is just that simple.

 

[Walt]

Taxing income isn't that difficult. It's much more difficult to tax wealth, which is generally in the form of unrealized capital gains.

The problem with that theory is that people like to buy things; what is the point to being a billionaire if you never use that money? To buy things they need income. Now the rich can move around that income to lower, or even eliminate the taxes.

For instance, they can make the income capital gains. That lowers the taxes significantly. Or they can make the income appear in a foreign country, which lowers the taxes even more. Or they can buy, borrow, die... Where they buy (never sell), borrow against the assets, repay the loan from the income(so never make any profit), and finally die(have the assets reset in value for taxes). This means they never have to pay taxes.

If we close the loopholes, we get the taxes we are owed.

 

[Hawkeye10]

The problem with that theory is that people like to buy things; what is the point to being a billionaire if you never use that money? To buy things they need income. Now the rich can move around that income to lower, or even eliminate the taxes.

For instance, they can make the income capital gains. That lowers the taxes significantly. Or they can make the income appear in a foreign country, which lowers the taxes even more. Or they can buy, borrow, die... Where they buy (never sell), borrow against the assets, repay the loan from the income(so never make any profit), and finally die(have the assets reset in value for taxes). This means they never have to pay taxes.

If we close the loopholes, we get the taxes we are owed.

I saw a claim yesterday that Musk has a $billion in such tax avoidance loans.

 

[Walt]

I saw a claim yesterday that Musk has a $billion in such tax avoidance loans.

Many years he goes without paying any taxes. He has so much money, you would think paying a little taxes would be nothing to him, but it is a game to him. He likes to see how much he can steal from the peasants. One day he discovered a whole other level of stealing when he ran up the deficit while crashing our government services using an illegal program he called DOGE. He even named it after a ripoff to rub it in on us.

 

[Hawkeye10]

Many years he goes without paying any taxes. He has so much money, you would think paying a little taxes would be nothing to him, but it is a game to him. He likes to see how much he can steal from the peasants. One day he discovered a whole other level of stealing when he ran up the deficit while crashing our government services using an illegal program he called DOGE. He even named it after a ripoff to rub it in on us.

Musk is not unusual....the oligarchs own Washington so they publish low tax rates, but there is constant cheating on top of that.....both tax avoidance scams and stealing from the treasury.

 

[Walt]

Musk is not unusual....the oligarchs own Washington so they publish low tax rates, but there is constant cheating on top of that.....both tax avoidance scams and stealing from the treasury.

Musk is an unusually big asshole. I mean he threatened to destroy a company that he had a fiduciary responsibility for unless they made him a trillionaire. It is like having a taxi cab driver threaten to crash the car and kill all within if you do not give him a hundred dollars.

Musk is bad for now, but he got away with everything, so ten years from now all the rich people will be as bad as he is. That is why we need to stop letting Musk get away with it... Maybe the next President.

 

[T. A. Gardner]

How do billionaires accumulate so much wealth?

Much if not most of their wealth is held in stocks and is taxed differently than income.
Consider Mark Zuckerberg. Between 2013 and 2019, his fortune increased by 368 percent, thanks primarily to the 342 million shares of Meta he owns.
During that period, his declared income — taxed at a rate of 13.7 percent, similar to that for the average taxpayer — was much smaller than his net worth and resulted in a tax bill of $536 million.

If you recalculate his tax rate based on his wealth growth, his “true” tax rate was only 1.1 percent.

A Look at California's Billionaires vs. the Rest of the World

See how America's billionaires can accumulate so much wealth without drawing a significant salary.

www.nytimes.com

It's simple. The more money you have, the options you have. Billionaires simply diversify their portfolios in ways that they make money that isn't taxed. Unrealized capital gains is an obvious one. They buy, say, stock and then hold onto it. It rises in value giving them potentially a huge pile of cash if they sell it. But until they sell it, that value is illusory. It doesn't exist. Real Estate is the same way.

 

[Hume]

Why? Because they own the people who make the laws. It really is just that simple.

It is the same class.

 

[ZenMode]

The problem with that theory is that people like to buy things; what is the point to being a billionaire if you never use that money? To buy things they need income. Now the rich can move around that income to lower, or even eliminate the taxes.

For instance, they can make the income capital gains. That lowers the taxes significantly. Or they can make the income appear in a foreign country, which lowers the taxes even more. Or they can buy, borrow, die... Where they buy (never sell), borrow against the assets, repay the loan from the income(so never make any profit), and finally die(have the assets reset in value for taxes). This means they never have to pay taxes.

If we close the loopholes, we get the taxes we are owed.

The One loophole that is going to be difficult to close is loans. People like Elon, whose wealth is 99% in stock and company valuation, borrow money against that wealth, which means they don't have to pay taxes. Just the interest.

 

[Hume]

The One loophole that is going to be difficult to close is loans. People like Elon, whose wealth is 99% in stock and company valuation, borrow money against that wealth, which means they don't have to pay taxes. Just the interest.

Yes, and who writes those laws? The oligarchy.

 

[Walt]

The One loophole that is going to be difficult to close is loans. People like Elon, whose wealth is 99% in stock and company valuation, borrow money against that wealth, which means they don't have to pay taxes. Just the interest.

The exact rules are complex, but there is a way to make repaying loans for personal consumption not tax deductable.

Musk borrows money for a factory, and, of course, repaying that loan should be a business expense. The loan was for a business expense.

Musk borrows money for a yacht, and repaying that loan should not be deductible as a business expense. The loan was for something that was not a business expense. Right now, Musk can deduct the payments on the loan as business expenses.

 

[Hume]

The exact rules are complex, but there is a way to make repaying loans for personal consumption not tax deductable.

Musk borrows money for a factory, and, of course, repaying that loan should be a business expense. The loan was for a business expense.

Musk borrows money for a yacht, and repaying that loan should not be deductible as a business expense. The loan was for something that was not a business expense. Right now, Musk can deduct the payments on the loan as business expenses.

And Trumps tells the IRS to never audit Musk.

 

[Nordberg]

The wealthy wrote the laws. The tax code has all the loopholes because the rich are allowed to pay for political campaigns. The lobbyists actually wrote the bills as directed by wealthy and corporations, and handed them to congressman. Slip the bill into a huge bill like defense, and your campaign money is assured,
Nobody is charged with cleaning those bills out of the system, So they stay forever.

 

[Hume]

The wealthy wrote the laws. The tax code has all the loopholes because the rich are allowed to pay for political campaigns. The lobbyists actually wrote the bills as directed by wealthy and corporations, and handed them to congressman. Slip the bill into a huge bill like defense, and your campaign money is assured,
Nobody is charged with cleaning those bills out of the system, So they stay forever.

Tax law is not exciting. But it is where real politics take place.