It seems houses are not liquid assets, but are they regarded as such??? This business of paying zero or a very low tax rate on a very large income is a bit misunderstood I believe. I think the misunderstanding may stem from a Pro Publica or Forbes Story. (I can always count on Forbes for a story about something that isn't.) Unrealized gains were counted as income when computing ones overall tax rate. On the same basis some of us who have done very well in the market but are very far from being billionaires also paid a very low tax rate on "overall wealth." Also there is the often repeated claim that billionaires are living on borrowed money secured with their assets and "paying zero income taxes". Carl Icon claims to have actually done this because he had a huge interest deductible business loan (loans are not income) despite millions in taxable income. Here again there seems to be much more going on than would meet the average eye. Since the interest rates on secured loans is much lower than tax rates, at first blush we think " Aha, huge tax savings." But consider that loans must be paid back and the money for that must come from somewhere. Also consider that interest on loans used to pay for personnel living expenses is not deductible. Yes there are schemes for reducing your effective tax rate, but the less common ones are apparently not fully explainable in a sentence or two. To illustrate the gap between wealth and taxes paid by the ultrawealthy, ProPublica created what it called a "true tax rate." ProPublica defined this as the total federal income tax a person paid ... compared to how much new wealth they acquired in that same time period. America's 25 wealthiest individuals saw their net worth grow by $401 billion from 2014 to 2018, according to Forbes. But they paid a total of $13.6 billion in federal income taxes in that same period, amounting to 3.4% of that newly acquired wealth, ProPublica found. This is an example of where some of those gee whiz, eye popping, low tax rates come from: From 2014 to 2018, Musk paid $455 million in taxes on a reported income of $1.52 billion, resulting in an effective tax rate of 29.9%. But his wealth grew by $13.9 billion during that time, meaning his "true tax rate," according to ProPublica's methodology, was just 3.27%. Bottom line, this business of eye poppingly low taxes on billionaires is, it seems, mostly a result of the U.S. having no tax on unrealized gains in wealth, whereas in Europe wealth taxes are not uncommon. I personally am not in favor of taxing unrealized gains, but nor am I unalterably opposed to it, assuming it can be done fairly without undue complexities. Neither am I in favor of unlimited basis step-up on transfer of estates. I think the problem of accelerated wealth disparity is best tackled by returning the progressiveness to the income tax brackets. Most of it has been taken out, and we have seen what the result of that has been. [the quotes in italics are all from: https://www.businessinsider.com/ame...-income-wealth-borrow-money-propublica-2021-6 ]
Comments such as these are almost always due to partial information. Sometimes there is some truth in them and sometimes none.
So if someone pays tax on an unrealized gain based on end-of-year value...What happens next year if it turns into an unrealized loss? Do they get a refund for the unrealized gains they paid tax on for the previous year?
Haha. This is what I am also wondering. By the current tax law, the most you get from capital loss is 3000 to put into itemized deduction after offset the gain if you have rollover loss from the previous year. You do not get any refund back. If billionaires gets refund back, everyone else should also be treated in the same way. And this also conflicts with other things like wash sale rules, etc. I see a big mess to be introduced, then, more loopholes ...
Bernie? Same guy who has lived on the govt dole all his life except for perhaps a small handful of part time jobs and never paid child support for his son? (https://www.vettingbernie.org/2019/03/deadbeat-dad-how-bernies-craven.html) Only practical solution would be to ensure that at least people understand what they are voting for. Could be done easily, multiple choice test with each ballot which asks only very basic questions about ballot measures and what candidates support. Person's vote is then scaled by the fraction of questions they answered correctly. Will not test education or IQ, only the most basic questions about the people and measures on the ballot. The fact that yard signs only displaying a candidate's name or Yes/No on a particular measure can influence elections is a problem.
Part of me would actually like to see this thing passed, but only if it was applied to everyone. Imagine how many people would be affected by housing appreciation...your house appreciated $50k last year...we need $15k. Average person has a hard time coming up with $400.
Hehe, because you want to see a revolution in this country. I hear ya', because that is what would happen I think.
Ah, yes, I should have clarified. It would cause a tax revolt and hopefully movement towards a leaner, more efficient government. I wouldn't mind paying more taxes if it was going towards good causes and spent efficiently. It costs money to provide infrastructure and the roads around where I live could be better. Instead most of the tax revenue just gets wasted indiscriminately or spent on unproductive uses to buy votes. That's why I don't know of a single person who pays more to the government than they are legally obligated to pay. Even Warren Buffett who says he should be paying more in taxes has been involved in legal battles with the IRS over taxes. It's all just hypocrisy.
Experts say president's plan to target rich is 'bait and switch' and 'gaslighting' - and will hit middle class Americans making less than $400,000, married couples and consumers