Help the billionaires

[FLaw47]

I keep hearing that billionaires don't pay tax because they don't sell and realize the gain on their appreciated assets. How would you get more of Elon Musk's money net worth by increasing the capital gains tax rate and removing the stepped up basis?

It was my 4th bullet point.

Increasing the Estate Tax and removing step up basis does help get that money at some point (just not now).

EDIT: With Musk in particular, I believe he did some voodoo where he gave himself a whole bunch of shares in his Roth IRA at no cost and then let the value explode on them without owing any taxes on the growth. Whatever he did there was certainly not the intent of that account.

 

[bdgan]

It was my 4th bullet point.

Increasing the Estate Tax and removing step up basis does help get that money at some point (just not now).

Higher capital gains rates and no stepped up basis would hit the middle/upper class more than the billionaires.

I've said that I consider the estate tax to be immoral but that I wouldn't get rid of it because we can't afford the revenue loss. Sometimes I wonder if lowering the estate tax rate would generate more revenues. 40% federal tax + maybe a 10% state tax encourages people to take extreme measures to avoid it. Billionaires keep those assets in a corporate structure or trust because those things never die. That's why I called for LB's opinion on possible changes.

 

[baltimorened]

I keep hearing that billionaires don't pay tax because they don't sell and realize the gain on their appreciated assets. How would you get more of Elon Musk's money net worth by increasing the capital gains tax rate and removing the stepped up basis?

so I personally don't care if we tax some of the people paying 40% of the overall federal tax revenue...

But we're having a discussion about singling out and targeting about 800 people who don't actually earn $1billion/year but have $1billion in net worth. So that means we need to go after Bill Gates, Warren Buffett, Elon musk, McKenzie Scott, mark Zuckerberg, Larry Ellison and others who have signed a pledge to give away half their wealth. And we're not targeting them because they haven't paid taxes based on our existing laws, we need to create new laws in order to get at their wealth.

And so far we haven't laid out how the additional taxes will be spent, how we will actually determine the net worth, and what the tax would be., and the potential impacts on either they companies they own or the overall state/national economies in which they operate

But we know that billionaires have more than us..they have money and we want it

 

[FLaw47]

Higher capital gains rates and no stepped up basis would hit the middle/upper class more than the billionaires.

I'm not sure I agree but fine. The current set up is bad policy anyways. You know what, see my edit below because you're just wrong on this.

I've said that I consider the estate tax to be immoral but that I wouldn't get rid of it because we can't afford the revenue loss. Sometimes I wonder if lowering the estate tax rate would generate more revenues. 40% federal tax + maybe a 10% state tax encourages people to take extreme measures to avoid it. Billionaires keep those assets in a corporate structure or trust because those things never die. That's why I called for LB's opinion on possible changes.

I asked ChatGPT how we could tax more and here are the suggestions it's made (can't say that I fully understand all of them"

1. Eliminate or limit "stepped up basis" (Huh, what do you know?!?!)
2. Tighten rules around trusts
3. Tax unrealized gains (I don't support)
4. Reduce valuation discounts (seems reasonable)
5. Stronger anti-avoidance enforcement (more IRS? Yes please)

I asked about the "Buy, Borrow, Die" thing and it says that it's all possible because of your best friend, Stepped Up Basis.


Edit: I asked "how (because I can't spell) benefits most from step up basis?"
The biggest winners tend to be:

• Ultra-wealthy families with concentrated stock holdings
• Owners of successful private businesses
• Real estate investors with decades of appreciation
• Multi-generational family wealth structures

See what this chat’s about

Open this chat to take a look.

chatgpt.com

 

[FLaw47]

so I personally don't care if we tax some of the people paying 40% of the overall federal tax revenue...

But we're having a discussion about singling out and targeting about 800 people who don't actually earn $1billion/year but have $1billion in net worth. So that means we need to go after Bill Gates, Warren Buffett, Elon musk, McKenzie Scott, mark Zuckerberg, Larry Ellison and others who have signed a pledge to give away half their wealth. And we're not targeting them because they haven't paid taxes based on our existing laws, we need to create new laws in order to get at their wealth.

And so far we haven't laid out how the additional taxes will be spent, how we will actually determine the net worth, and what the tax would be., and the potential impacts on either they companies they own or the overall state/national economies in which they operate

But we know that billionaires have more than us..they have money and we want it

For the sake of this conversation, you should just assume it's to pay down the debt.

 

[hawkeyetraveler]

Do you think people should have their homes appraised every year and be taxed on the gain in value?

Do you think you should be taxed on $400k if your parents leave you their home they paid $100k for a home they lived in for 30+ years and was worth $500k when they died?

Can I play?

First question: no

Second question: we should only tax liquidity events (or inherited cash that is already liquid) and the person should pay capital gains based on their cost basis. If they inherited the home they should be taxed on a $500K capital gain.

 

[bdgan]

so I personally don't care if we tax some of the people paying 40% of the overall federal tax revenue...

But we're having a discussion about singling out and targeting about 800 people who don't actually earn $1billion/year but have $1billion in net worth. So that means we need to go after Bill Gates, Warren Buffett, Elon musk, McKenzie Scott, mark Zuckerberg, Larry Ellison and others who have signed a pledge to give away half their wealth. And we're not targeting them because they haven't paid taxes based on our existing laws, we need to create new laws in order to get at their wealth.

And so far we haven't laid out how the additional taxes will be spent, how we will actually determine the net worth, and what the tax would be., and the potential impacts on either they companies they own or the overall state/national economies in which they operate

But we know that billionaires have more than us..they have money and we want it

 

[baltimorened]

For the sake of this conversation, you should just assume it's to pay down the debt.

I'm happy to do that, but some leaders of the movement Bernie, AOC and elizabeth Warren have already identified programs where they propose to spend money raised

 

[FLaw47]

I'm happy to do that, but some leaders of the movement Bernie, AOC and elizabeth Warren have already identified programs where they propose to spend money raised

Ok, and? I happy to think there's good stuff we could buy with the money too but I'm not sure why that should be a conversation killer about the topic.

 

[baltimorened]

Ok, and? I happy to think there's good stuff we could buy with the money too but I'm not sure why that should be a conversation killer about the topic.

I'm not trying to kill the conversation. Like I posted I'm more than happy to assume we put the money directly into deficit reduction. And, I could think of good stuff to buy with the money also.

 

[FLaw47]

I'm not trying to kill the conversation. Like I posted I'm more than happy to assume we put the money directly into deficit reduction. And, I could think of good stuff to buy with the money also.

So I guess I just don't understand the value in bringing it up. It seems like we can mostly agree that some of these taxes are better than what we're already doing, yeah?

So maybe we pursue them and reduce other taxes, or in addition to to pay down debt or to invest in the country in some way.

 

[baltimorened]

So I guess I just don't understand the value in bringing it up. It seems like we can mostly agree that some of these taxes are better than what we're already doing, yeah?

So maybe we pursue them and reduce other taxes, or in addition to to pay down debt or to invest in the country in some way.

I'm all for that.

I suggested a while ago that IMO we could use a complete "zero based" review of the entire tax code.

The only value in bringing it up is that when the concept of using any additional funds to reduce the deficit is brought up, that's not the only option that our leaders are proposing. Some want the deficit reduction solution and others want to use the additional resources for new or expanded programs. And, I'm not against either of the options, but in the interest of transparency, it would be nice if we knew where the money was going to go. J

 

[m.knox]

LOL...

Democratic Socialists Endorse Billionaire Steyer for California Governor’s Race​

https://www.nysun.com/article/democ...lionaire-steyer-for-california-governors-race

 

[m.knox]

Maher is 100% correct. I support a progressive tax system that taxes the ultra wealthy more than they're currently being taxed. My reason is that we have a nearly $40 trillion debt that is growing rapidly. An additional $50 billion per year from the ultra wealthy would reduce the deficit by 2.5%. That's not much but it's better than nothing. The problem is democrats would use the additional $50 billion to justify $100 billion of additional social welfare spending.

Ask any democrat, taxes collected are not to be used to reduce the deficit, but to spend on whatever pet peeve the left has at the moment.

 

[FLaw47]

I'm all for that.

I suggested a while ago that IMO we could use a complete "zero based" review of the entire tax code.

The only value in bringing it up is that when the concept of using any additional funds to reduce the deficit is brought up, that's not the only option that our leaders are proposing. Some want the deficit reduction solution and others want to use the additional resources for new or expanded programs. And, I'm not against either of the options, but in the interest of transparency, it would be nice if we knew where the money was going to go. J

That's fair and, in the context of this conversation, we really have no idea. Some might argue, though (and I'm not decided on this issue) that reducing inequality is an admirable goal in and of itself.

And I definitely take a very dim view on passing along considerable intergenerational wealth. I've heard the target amount of wealth to be passed along described as "enough so that they can do something but not enough that they can do nothing" and I think that's about right. Society is not served in any manner that I'm aware of my having a child who, at no point, needs to have a job (disability etc outstanding).

That so many small "c" conservatives hate the estate tax is absolutely dumbfounding to me. I thought we wanted people to earn things?

 

[baltimorened]

That's fair and, in the context of this conversation, we really have no idea. Some might argue, though (and I'm not decided on this issue) that reducing inequality is an admirable goal in and of itself.

And I definitely take a very dim view on passing along considerable intergenerational wealth. I've heard the target amount of wealth to be passed along described as "enough so that they can do something but not enough that they can do nothing" and I think that's about right. Society is not served in any manner that I'm aware of my having a child who, at no point, needs to have a job (disability etc outstanding).

That so many small "c" conservatives hate the estate tax is absolutely dumbfounding to me. I thought we wanted people to earn things?

well, if I recall the tax free estate amount is $15million per person. Do you think this is reasonable or no?

 

[FLaw47]

well, if I recall the tax free estate amount is $15million per person. Do you think this is reasonable or no?

I think it's too high, honestly. Maybe I'd feel differently if it weren't for stepped up basis.

 

[baltimorened]

I think it's too high, honestly. Maybe I'd feel differently if it weren't for stepped up basis.

there are only 0.2% of couples who have enough to trigger the estate tax ($30million). Only 430,000 households have wealth over 30 million.

So we're not talking about a lot of people.

 

[FLaw47]

there are only 0.2% of couples who have enough to trigger the estate tax ($30million). Only 430,000 households have wealth over 30 million.

So we're not talking about a lot of people.

That's fair, the exempt amount is far too high.

Also we're getting really close to some circular logic. "So few people are affected, is it really worth doing?" "You can't do that, it'll affect too many people!"

 

[TC_Nole_OX]

Tax them out of existence

 

[Rastafarian]

Tax them out of existence

Let them pick - 75% estate tax on any assets over $5mm, or overturning citizens united.

 

[hawkeyetraveler]

Higher capital gains rates and no stepped up basis would hit the middle/upper class more than the billionaires.

I've said that I consider the estate tax to be immoral but that I wouldn't get rid of it because we can't afford the revenue loss. Sometimes I wonder if lowering the estate tax rate would generate more revenues. 40% federal tax + maybe a 10% state tax encourages people to take extreme measures to avoid it. Billionaires keep those assets in a corporate structure or trust because those things never die. That's why I called for LB's opinion on possible changes.

I am genuinely curious what you find immoral about an estate tax. I personally find it more moral than income tax when viewed through the lens of the person getting the money.

With income tax people do actual work: digging ditches, performing surgery, sales jobs and the like. They are paid for their direct contributions. And we take some of that economic contribution in the form of tax so the market is not truly a free market.

With estate tax, someone did nothing. They could have been a bum their entire life, but because dad was rich they inherit gobs of money.

I would much rather take money someone was gifted than money someone worked hard for. To me the income tax is FAR less in line with the principles of capitalism (labor market supply and demand) than an estate tax. Let free market economics decide the winners and losers instead of birthright.

 

[scotchtiger]

Tax them out of existence

These new people suck. Confiscating all of someone’s money through heavy-handed tax policy? Gross.

 

[TC_Nole_OX]

These new people suck. Confiscating all of someone’s money through heavy-handed tax policy? Gross.

"We can have democracy in this country, or we can have great wealth concentrated in the hands of a few, but we can't have both."

Louis D. Brandeis

 

[fskillet]

MacKenzie Scott
>gets $38b in divorce from Bezos
>donates $27b over the next 6 years
>is worth between $30-$40b currently

Forgive me if I don't clutch my pearls about them getting taxed higher (and this isn't even shade towards Scott, she's a wonderful humanitarian.)

 

[AlexanderUrinis]

These new people suck. Confiscating all of someone’s money through heavy-handed tax policy? Gross.

The US spends 40% more than it makes.

Can you do that? If not, there are two choices:

Spend less - which is obviously not happening
Make more - which means the billionaires might have to actually pay some taxes

 

[bdgan]

I am genuinely curious what you find immoral about an estate tax. I personally find it more moral than income tax when viewed through the lens of the person getting the money.

You sound like Bill Clinton when he said nobody deserves to inherit wealth. I sort of understood that but then I asked myself why the government deserves to inherit wealth.

I think the inheritance (death) tax is immoral because people already paid taxes on what they earned during their lifetime. I don't like taxing what they have left over at the end. I don't care if it's your grandma's china, a house, or a small business that had been created through decades of hard work. Why shouldn't the person who built that and paid taxes on their earnings/profits be allowed to bequest that to whomever they wish?

That said I would reluctantly keep the estate tax in effect because of our debt/deficit situation.

P.S. The belief that most millionaires inherited their wealth is a myth. Only 16% of millionaires inherited more than $100k.
The Millionaire Deception: Why Inheriting Wealth Isn't the Norm for 79% of Them

 

[bdgan]

Tax them out of existence

I support campaign finance reform but taxing our most successful entrepreneurs out of existence would be insane.

 

[bdgan]

"We can have democracy in this country, or we can have great wealth concentrated in the hands of a few, but we can't have both."

Louis D. Brandeis

FYI wealth is concentrated at the top is also a reality in Canada & Europe. China too.

IMO we should be more concerned about making sure people have an opportunity to become successful than we should be about redistributing wealth. After all, we could "give" everybody food, healthcare, and an apartment and they still might not have any wealth.

 

[hawkeyetraveler]

You sound like Bill Clinton when he said nobody deserves to inherit wealth. I sort of understood that but then I asked myself why the government deserves to inherit wealth.

I think the inheritance (death) tax is immoral because people already paid taxes on what they earned during their lifetime. I don't like taxing what they have left over at the end. I don't care if it's your grandma's china, a house, or a small business that had been created through decades of hard work. Why shouldn't the person who built that and paid taxes on their earnings/profits be allowed to bequest that to whomever they wish?

That said I would reluctantly keep the estate tax in effect because of our debt/deficit situation.

P.S. The belief that most millionaires inherited their wealth is a myth. Only 16% of millionaires inherited more than $100k.
The Millionaire Deception: Why Inheriting Wealth Isn't the Norm for 79% of Them

I’m a fiscal conservative and believe we need to gut federal spending. But I also recognize some government is necessary and we must pay down our debt burden so we need taxes.

Every dollar is taxed many times as it circulates through the system, whether via income tax, sales tax, estate tax, tariffs, etc. I think some taxes are better for economic progress and some worse. That leads me to believe estate tax is a “better” form of taxation than others because I believe it has less negative incentives to productive labor than other methods.

 

[bdgan]

The US spends 40% more than it makes.

Can you do that? If not, there are two choices:

Spend less - which is obviously not happening
Make more - which means the billionaires might have to actually pay some taxes

Two things that amaze me:

1) U.S. governments continue to spend more than ever (38% of GDP) and the growth in spending outpaces inflation. Yet people think we should spend more and that it's a revenue problem.

2) The number of people who think we could balance the budget by simply increasing taxes on billionaires. The combined net worth of the 400 wealthiest Americans is $6 trillion. Confiscating half of their wealth would provide enough money to run the government for 5 months and then it would be gone. What then?

P.S. Taking half of their wealth would require liquidation of company ownership which would send the country into a deep recession.

 

[bdgan]

I’m a fiscal conservative and believe we need to gut federal spending. But I also recognize some government is necessary and we must pay down our debt burden so we need taxes.

Every dollar is taxed many times as it circulates through the system, whether via income tax, sales tax, estate tax, tariffs, etc. I think some taxes are better for economic progress and some worse. That leads me to believe estate tax is a “better” form of taxation than others because I believe it has less negative incentives to productive labor than other methods.

A agree with your first paragraph. I reluctantly support higher taxes on the wealthiest Americans but not to the point where it would cause more harm than good.

Wrt your second sentence: People go to great lengths to avoid steep estate taxes (40% + state). The biggest reason is that trusts/corporations don't die and aren't directly subject to estate taxes. I've seen studies that estimate raising the federal estate tax rate from 40% to 55% would increase revenues by $15 billion. That's nothing to sneeze at but it's drop in the bucket compared to a $2 trillion annual deficit. I think it would be better to close some "loopholes" that help people avoid estate tax than it would be to raise the rate. The problem is I don't know what could be done legally.

 

[FLaw47]

I’m a fiscal conservative and believe we need to gut federal spending. But I also recognize some government is necessary and we must pay down our debt burden so we need taxes.

Every dollar is taxed many times as it circulates through the system, whether via income tax, sales tax, estate tax, tariffs, etc. I think some taxes are better for economic progress and some worse. That leads me to believe estate tax is a “better” form of taxation than others because I believe it has less negative incentives to productive labor than other methods.

 

[bdgan]

That's fair, the exempt amount is far too high.

It's OK that you have this opinion but do the math.

A $30 million exemption is on 0.03% of the wealth of a person worth $100 billion (much less $500 billion+). Reducing the exemption would hurt the top 10% (small business owners) but not billionaires.

 

[bdgan]

Tax them out of existence

But money from Soros and Steyer is OK?

BTW Citizens United made it OK for labor unions to contribute to political campaigns. I'm 100% for campaign finance reform but it isn't a one way street.

 

[Pharcyded]

While I think my man @baltimorened is trivializing the issue a bit, I think the "money in politics" issue is overstated (at the federal level, at least) and is a little too convenient of an excuse, for my tastes. I don't think repealing Citizens United or resinstating the Fairness Doctrine are going to meaningfully improve things.

Campaign contributions influencing politicians is not some overstated conspiracy. Our elected officials spend an enormous portion of their time fundraising, and they’re not dialing for dollars from working-class Americans. They’re spending hours every day talking to wealthy donors, corporate interests, and lobbying groups.

When you spend half your professional life surrounded by people with money and power, you inevitably begin to see the world through their lens and prioritize their concerns. That’s not rocket science. It’s human nature.

The result is a political system where the donor class gets access, influence, and attention, while ordinary people are left wondering why so little ever changes in their favor.

 

[FLaw47]

It's OK that you have this opinion but do the math.

A $30 million exemption is on 0.03% of the wealth of a person worth $100 billion (much less $500 billion+). Reducing the exemption would hurt the top 10% (small business owners) but not billionaires.

Well if we do that, futz around with the rates, get ride of stepped up basis, and reform how much of this stuff can be shielded in trusts (etc), maybe we can get somewhere.

And I think you're wayyyyy off on how big estates are if you feel like that's top 10%. The old limits were ~$5.5M per person and well under 0.5% of Estates were affected.

 

[bdgan]

Well if we do that, futz around with the rates, get ride of stepped up basis, and reform how much of this stuff can be shielded in trusts (etc), maybe we can get somewhere.

I agree about trusts but I don't know how to go about it. A will can call for a trust to be created upon my death. How can a person create a trust AFTER they die? Maybe outlaw grantor trusts that allow people to benefit during their life. I know enough to be dangerous but maybe somebody has other ideas.

 

[fskillet]

But money from Soros and Steyer is OK?

BTW Citizens United made it OK for labor unions to contribute to political campaigns. I'm 100% for campaign finance reform but it isn't a one way street.

Where did he say that money from Soros/Steyer was okay? If i'm not mistaken, his "them" in "tax them out of existence" applies to all billionaires.

 

[FLaw47]

I agree about trusts but I don't know how to go about it. A will can call for a trust to be created upon my death. How can a person create a trust AFTER they die? Maybe outlaw grantor trusts that allow people to benefit during their life. I know enough to be dangerous but maybe somebody has other ideas.

I don't think that Trusts are, of themselves, a problem - I have them set up in my will for my kids (ensure they don't get everything all at once, etc). But the way they are able to shield from taxes is a problem. Like maybe a transfer to a trust has to count against the lifetime gift limit just like any other sort of transfer is.