NYU Professor: Billionaire tax is the worst idea ever

Trading stocks back and forth doesn't really benefit society in any productive way.

Except trading stocks doesn't cost payroll taxes, which is an additional 15%-ish cost on general middle and lower class labor. For lower and middle income, that can be way more than doubling the effective tax rate - and payroll taxes don't get an exceptions. The first $1 you earn has a 0% income tax rate but still has a 15% payroll tax rate.

That said, the larger issue is LT cap gains rates, which is where the wealthy are most effectively able to take advantage of the system.

It doesn't though - at least not directly. People proposing the billionaire's tax are proposing it to offset new spending, not lower taxes for anyone else. Maybe that results in lower interest rates and other things in the long run, but the correlation is not real clear and is certainly not direct. And this proposed billionaire's tax is not particular sustainable - its really mostly just a one time revenue bump, but since the cost-basis is bumped up, then that revenue is forfeited later. The main long-term benefit is in relation to estate taxation loopholes, I would imagine.

Basically, it still leaves it just as easy to become a billionaire, and then makes it a tax hassle but doesn't do much more. Shifting relative rates between labor and capital actually shifts the incentives and creates a more sustainable system. It's not a surprise that the shift in wealth in American society started when we started lowering capital gains taxes relative to labor - starting in the 50s/60's if I remember right and then massively accelerating in the 80's. The wealthy write the rules and they have effectively shifted the tax code to benefit them.

 

, , .

if only you understand capital market formation

if a person livelihood is based solely on trading stocks, and is profitable. that person has to pay self-employment tax. the self-employment tax is 12.4% for the FICA) portion and 2.9% for Medicare.

convenient claim, but baseless, don't think you know what ur talking about.

, lots of words put together that. when taken as a whole, say nothing,

, lots of words put together that. when taken as a whole, say nothing,

 

100% correct.

 

This thread started a great discussion except for your peanut gallerying which is just as annoying as anything here.

You and peleicubus can have the hater discussion through messaging.

Your hating only bumps threads of people you hate. You can't be to dense to understand that. You have several post of I hate tinman. Who is the idiot?

The forum becomes a lot more enjoyable when you don't read threads of someone who annoys you just to see how they are annoying you

 

tinman is an unwealthy working person defending working tax and attacking wealth tax. Truly the embodiment of turning the other cheek. We can all learn from him.

 

Did anyone tell you that you should go professional with your comedy?

 

I'm just agreeing with the statement's validity on its own... not attacking anyone here.

 

https://www.washingtonpost.com/opinions/2022/10/30/mark-zuckerberg-meta-stock-wealth-tax/

Opinion: Meta’s stock plunge shows the right — and wrong — way to tax wealth
By the Editorial Board
October 30, 2022 at 7:00 a.m. EDT

Meta’s stock price has plunged, taking founder Mark Zuckerberg’s wealth — mostly invested in his company’s shares — down with it. Having hit a peak of $142 billion in September 2021, his net worth stood at roughly $38 billion on Thursday, according to the Bloomberg Billionaires Index. And while several tech moguls have suffered big paper losses in the current market tumult (including Post owner Jeff Bezos), Mr. Zuckerberg’s 73 percent decrease appears to be the largest.

We’ll leave market commentary, and judgments about Mr. Zuckerberg’s expensive investments in virtual reality, to others. On matters of public policy, though, the episode should not be allowed to pass without noting its implications for how Americans think about taxing wealth. Specifically, it confirms the folly of plans, such as those offered by progressive Democrats, that would claim a certain percentage of ultra-rich households’ net worth each year. And, conversely, it confirms the wisdom of the existing system, which generally taxes the profits people make when they sell assets.

Last year, legislators led by Sen. Elizabeth Warren (D-Mass.) proposed a 2 percent annual levy on household net worth above $50 million — with an extra 1 percent on fortunes larger than $1 billion. This was premised on the notion that unrealized capital gains do not exist just on paper, but are actually a form of income, in part because wealthy individuals can borrow against them to finance their — sometimes lavish — lifestyles. The White House went so far as to publish an analysis last year claiming that the 400 richest families in the United States only pay 8.2 percent of their income in taxes — if you consider unrealized gains as income.

Mr. Zuckerberg’s predicament illustrates the fallacy of this sort of thinking. If an unrealized gain is income that should be taxed, then an unrealized loss should be deductible, which in his case would undoubtedly wipe out all his individual tax liability. Of course, even in a bad year such as this one, Mr. Zuckerberg or, say, more modestly rich people who hold Meta’s now-beaten-down stock, could be forced to sell to raise cash to pay the wealth tax. That, in turn, could feed a downward spiral, with negative repercussions for middle-class 401(k)s and pension funds.

The progressives are right, though, that there is a need for greater wealth equality, and that tax reforms could help achieve it. Capital gains should be taxed when they are realized — that is, when an asset is sold for more than it was bought for. But the top tax rate should be higher — 37 percent, just like ordinary income, instead of 23.8 percent, as under current law. Since higher income households are far more likely to report capital rather than wage income, this would eliminate a major source of inequality. It would also reduce the economically wasteful tax-avoidance strategies through which wealthy people convert ordinary income to capital gains. And unrealized gains should be taxable by those who inherit appreciated assets; current law shields such windfalls via the “stepped-up basis” loophole.

Legislative action on wealth taxation is admittedly unlikely, given Republicans’ opposition and Democrats’ failure to advance Ms. Warren’s proposal or anything similar in the current Congress. Still, in terms of understanding the issues, Mr. Zuckerberg’s loss could be the public’s gain.
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