Topic: Biden proposes new minimum tax on billionaires, unrealized gains (Read 219 times)

First, thanks for posting in these P&S threads. I've had some great discussions with you in the past, and apologies if my posts come across as combative, because that is not the intent.

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But capital gains tax affects everyone with any assets, it's not restricted to the rich. Same as income tax. Normal people tend to pay these taxes, whereas the ultra-rich don't, because they are able to pay people to employ accounting sleight-of-hand and exploit legal loopholes, and also move money/assets between jurisdictions. It is difficult to get the ultra-rich to pay any form of tax. I'm sure they would try to avoid (or evade) a wealth tax, too... but that doesn't mean we shouldn't try.




There is potentially a considerable difference between being "not very much against" and being "in favour"... but if as a theoretical game we assume that you want billionaires to pay more tax, what would you propose? A tax on assets above some astronomical threshold seems to me to be a good idea. But I would certainly be interested in hearing alternative approaches.




It's rare that we hit upon a point of difference that can be quantified, but here we have one. It is absolutely not the case that the middle class is where the money is. I think a part of the issue is that our evolutionary heritage means that human brains can't readily visualise big numbers. Please please do me the favour of scrolling across the data visual that I linked to above, you may be surprised - and it is always good to challenge our assumptions.

But if you really don't want to, then the screengrab below from this video may give a taster. It shows the ideal (apparently according to 92% of Americans) vs what they perceive as reality vs actual reality. It's 10 years old, and the situation is even more extreme now than it was back then.



It may surprise you that my personal ideal would actually be more unequal than the 'ideal' in this video. In principle I would not be overly averse to the perceived actual, if it could be adjusted slightly to move the lower end some way above the poverty line. But actual reality is just obscene.

What I was pointing out is that there is a current capital gains tax to tax the wealthy who sell stocks or buy and sell houses for example, and that Biden wants to tax people like Musk, who do not earn income from their salary but borrow against their assets to obtain liquidity. I was just making a point.


Well no, I wasn't saying that, and, in fact, if you read above:




I know what a reductio ad absurdum argument is, and the one you pull out of your sleeve does not work because the problem is that what you say has nothing to do with what I say. There are many countries where such a tax has been put in place and who it is levied on are not exactly multi billionaires like Musk. That was my point. Just as there is a worldwide tendency for taxes that initially affected only high incomes, in the end they end up affecting everyone because the middle class is where the money is.

If we could not compare anything about other wealth taxes or taxes in other countries with the U.S. we could come up with the following absurd argument (following your similarity):

There is a wealth tax in Norway.
But we can't compare what happens in Norway to what happens in the US.
Therefore, there can't be a wealth tax in the US.

LOL.

And you forget the second part of the argument: the countries that had a wealth tax and removed it. I guess according to you it will be because of neoliberal capitalist pressures or something like that, right?

No, you haven't misunderstood. Someone doesn't like the idea of billionaires being taxed, so is arguing that it won't work because when they did something completely different in a different country some other time, they taxed people down to $32k. It's not the same thing at all. It's like saying that it's not safe to fly in a modern plane, because back in the 1920s they were made of wood and string.

              It seems that I may have misunderstood it badly, apologies brother. If the rich they include are people who only have such wealth like $32k it really is wrong and can be very detrimental instead of being helpful. But looking at the bigger picture, if such taxes really did exist even of it is only for the overly rich, we can imagine how huge it would be and would result in many cases of money laundering and decrease in businesses and investments from foreign countries due to this high tax.

Yeah. Wealth inequality at the top end of the scale is utterly obscene. It's difficult to understand quite how much money these people have, as the numbers are far beyond what the human brain has evolved to understand.

Here's a decent visualisation, though, if you're interested.

https://mkorostoff.github.io/1-pixel-wealth/

Note that this is from 2021, so the numbers are a bit out of date. In particular, the wealth of the top 400 richest Americans has increased by 40% over the last year.

i'm actually not against doing it to billionaires because nothing you do to billionaires is going to stop them from having a roof over their head and food to eat. and money in the bank. so i dont have a problem with them doing it to billionaires i'd rather them go after the ultra wealthy than try and tax the middle class more.

whenever they come out with a new tax for the ultra rich and exclude the middle class, i'm like you go girl/boy.  

Mark-to-Market Taxation of Capital Gains is what it's also known as...

but yeah if they ever try and do it to the middle class then that's another story completely. that would suck. but think of it this way. they want to raise more tax revenue so they decided to bend over the ultra rich.

It starts with billionaires...  It won't be long before we're all subject to this insanity.  At this point the government is openly stealing from people.  Imagine setting off a massive inflation wave and then taxing unrealized gains...  This is the government saying that they're going to get your money.  It doesn't matter what you do.  Invest to try and keep up with inflation, taxes on unrealized gains will take you down.  Save to try and keep a good lifestyle, inflation will eat your savings alive.  I don't know if the government is run by complete idiots, if they're actively trying to bankrupt everyone to force a socialist society on us, or if they're just so greedy they want to take every penny they can any way possible to fun their appetite for government spending.  Most likely it's a combination of the three.

I don't think the billionaires will be happy about this and for sure as I write this they are moving their assets to tax-free countries or contacting tax officials to manipulate their financial statements.

The purpose of a wealth tax is to tax the ultra-wealthy, those who don't pair their fair share of tax through other means. If you want ordinary people to pay more tax, it's far simpler to just increase the income tax percentage.
If you own 1 BTC and the price goes up and you do nothing, no tax. There's an argument for taxation of PoS coins gained through staking, but that's income not capital gains.




"Let's tax the ultra-wealthy and no-one else."
"No, you can't do that, because you will change it and it will affect everyone."

That's not a great argument.




Not sure what you're saying here, but I'm aware that we disagree on some quite fundamental points, and I'm wary of getting into another essay-length debate.
With this statement, surely you are implying that either a) the ultra-rich are not getting richer relative to everyone else, because they pay their fair percentage share of tax, or b) the ultra-rich make most of their money directly from salary. I'd disagree on both points.




Yeah but Argentina did something different and it was different. Again, not a compelling argument.
Some people in Australia die from crocodile attacks.
There are some people living in Iceland.
Therefore people in Iceland need to be wary of crocodile attacks.

In my post above, which I guess you didn't read, I explained that the problem with that tax is that it ends up affecting the middle class, and in cases like Argentina people so "rich" that they only have $32k of wealth. Also, that many countries had this tax and removed it, because it is counterproductive for the economy.

But I know that many times in politics people act like hooligans and get carried away by emotions, as in this case you seem to get carried away because Biden is supposedly going to play Robin Hood, so enjoy your joy.

               Finally! A decision that I can happily agree on within the biden administration(although there are good things already nut this is something that is worthy to really be recognised)! I have been waiting for something like this to be aanounced for a looooong time. I wish other countries would also implement such taxes to the overly rich since it will be able to help the country even more without having the low-class to the mid-class people suffer even more! At least these overly rich people can truly contribute to the economy. Just hope that these people won't pull some strings to block this decision.

then these "unrealized" gains will never be nominated like they did in the past as they become a liability

june 5: you buy 1 btc for $40,000 and don't plan to sell
at the end of the year btc was at $60,000
you owe capital gains tax on $20,000 worth of unrealized gains so lets just use 20% as the tax rate for that so you have to cough up $4000 in taxes. so that forces you to sell some of your btc or risk the following:
bitcoin slowly goes back down to $40,000 over the next year. you paid $4000 out of your own pocket for nothing.

in reality taxing unrealized gains on other types of assets is even more troublesome like a house. they can hit you with a big bill anytime they want. because they determine what they think it is worth. imagine owning a house and they say the value doubled in the last year so you owe $20,000.

I don't think so.


What you say is not entirely accurate.

If the rich make money on return on investment, there is no problem, they are currently taxed on capital gains.

The people Biden wants to tax are people like Musk:

Elon Musk, short on cash, keeps borrowing more and more money even as Tesla stock surges.


The problem with these measures is that they are initially sold to the public as being only against the rich and end up affecting everyone. Let's see the origin of the income tax in the US

"The original form exempted all income below $3,000 a year if you were single, $4,000 if married. Those were the standard exemptions.

In 2013, some critics of the tax code complain that nearly half of all Americans are exempt from paying any income taxes at all, and are therefore less connected to the rest of the polity. So what was the situation when the income tax was first introduced?

It would take more time and patience than you’ve got, I would imagine, to explain all the various ways to convert 1913 dollars into dollars a century later. The best I can offer, then, is a range.


At the very least, $3000 in 1913 is the equivalent of $52,100, using the lowest possible measure of inflation, something called the GDP deflator and relying on measuringworth.com for our numbers, as we typically do.

Using the GDP deflator, the $4000 floor for married couples filing jointly would be $69,500.

Okay, what percentage of Americans make less than these amounts? For starters, the median household income in this country is about $51,000. So half of us make less than that. I can’t find a quick number for those making $69,500, but a guess would be: no more than a third. (To locate yourself in the income distribution, you might try this “What Percent Are You?” interactive graphic from The New York Times.)

The bottom line: At least 60 percent or so of Americans were exempt from the income tax when it was first introduced. But that’s the most conservative possible estimate."

I, in principle, am also not very much against taxing billionaires like Musk more, the problem is when the threshold is lowered. Let's see the different countries that already have one:

"Argentina: ...the tax is progressive from 0.50% on assets above ARS 3,000,000 (approx. US$32,000 at April 2021 official exchange rate...

France: Until 2017, there was a solidarity tax on wealth on any net assets above €800,000 for those with total net worth of €1,300,000 or more.

Spain: "Spain: There is a tax called Patrimonio. The tax rate is progressive, from 0.2 to 3.75% of net assets above the threshold of €700,000 after €300,000 primary residence allowance"

Norway: "Norway: 0.7% (municipal) and 0.15% (national) a total of 0.85% levied on net assets exceeding 1,500,000 kr (approx. US$170,000) as of 2019.[16] For tax purposes, the value of the primary residence is valued to 25% of the market value."

Switzerland: "A progressive wealth tax that varies by residence location. Most cantons have no wealth tax for individual net worth less than CHF 100,000 (approx. US$101,000)"

Belgium: The Act of 7 February 2018, which is effectively a "wealth tax," imposes a 0.15% annual tax on financial instruments kept in securities accounts worth more than €500,000."

There are several countries in Europe that had the weath tax and removed it. According to the article: If a Wealth Tax is Such a Good Idea, Why Did Europe Kill Theirs?, there are only three remaining as of today "In 1990, twelve countries in Europe had a wealth tax. Today, there are only three: Norway, Spain, and Switzerland."

The problem with this tax when the threshold is lowered is that it prevents companies from prospering in many cases because they can appear on the balance sheet with a certain equity but if you force them to sell or go into debt to pay the tax you make them less competitive.


Well, I believe that a minimum of taxes is necessary, although I do agree that taxes, which are sold as being against the rich, in the end make the poor poor poorer.

Remember Biden saying recently that Putin is to blame for inflation? LMAO. As if inflation didn't start before the war, with him in charge. Inflation is just another tax.

Tax is only useful to keep poor people poor and make them keep slaving..

Tax is completely unnecessary otherwise..

This is just lip service to appease sheep.

I think a wealth tax is inevitable at some point. The ultra-rich make money primarily from returns on investments, not from direct "income"... so changing income tax doesn't do a great deal at that level. We are seeing growing support for wealth tax around the world (as we are for a UBI)... and this is an ideal way to reduce inequality.

Agree though that taxation on all unrealised gains for "normal" people isn't practicable, but this is likely not their aim in any case.

President Biden on Monday unveiled a new minimum tax targeting billionaires as part of his 2023 budget request, proposing a 20% rate that would hit both the income and unrealized capital gains of the wealthiest Americans.

at least it's only for billionaires because if they tried taxing unrealized capital gains of everyone, that would kind of ruin investing in crypto. for americans anyway. billionaires should be ok tho... but i got a feeling if they can push this crap through, it's just gonna flow downhill and be for everyone eventually.

satoshi could be in some real trouble. maybe on the irs top 10 list   at least then craig wright would stop pretending he is the man.