Billionaires don’t pay taxes?

[CSdot]

When Politicians rant about the wealthy not paying their fair share, they point to the billionaires, but the tax laws they pass are actually intended to impact the little people like us on this forum.

Once the government showed it could just vote a few extra TRILLION dollars into existence with zero concern for how to pay for it, the curtain was pulled back on the whole "need to raise taxes on the rich" argument.

Seems the real purpose of the income tax is to prevent citizens from gaining financial independence from having to work, or said another way to keep as many as possible from breaking free of the bonds that make them slaves to the system. That freedom from having to work to survive being what many here have done, or hope to one day do.

 

[Out of Steam]

Functionally, income taxes in the US are wage taxes, with a sideline to collect deferred taxes through wages sent to retirement accounts.

Taxing businesses using this system, especially large businesses, has not been particularly successful in recent years. It imposes large compliance costs without taking in much money.

 

[stephenson]

CSDot,

I would respectfully disagree - your statement is a bit too broad wrt what the current effort to tax is about.

To your second point, all politicians in my adult lifetime, in both parties, have passed budget after budget, and law after law - that were not payed for with additional taxes. We are just exiting a 20 year period of war that was not paid for by additional taxes.

 

[CardsFan]

Sure, we can quibble about the specifics, but these folks are, to me, modern day Robber Barons.

Corner them, and tax them heavily.

Seriously? I don't know what to say.

You do know the "robber barons" of the past were some of the biggest philanthropists in recent history, right? (Carnegie, Rockerfeller, et.al.)

You do know they, and the current cohort, put hundreds of thousands of people to work?

I am not going to argue the "goodness" of these people.

Tax them fairly, according to the system we have. (and I hate to use fairly and taxes in the same sentence, but I have done that a few times today)

 

[stephenson]

Yep, seriously.

Tax policy is always changing - it needs to change to provide a semblance of fairness.

This is pretty informative: https://en.wikipedia.org/wiki/Robber_baron_(industrialist)

 

[CardsFan]

Yep, seriously.

Tax policy is always changing - it needs to change to provide a semblance of fairness.

This is pretty informative: https://en.wikipedia.org/wiki/Robber_baron_(industrialist)

Ok, you win.

Tax the rich, feed the poor
'Til there are no rich no more
I'd love to change the world
But I don't know what to do
So I'll leave it up to you

 

[CSdot]

Yep, seriously.

Tax policy is always changing - it needs to change to provide a semblance of fairness.

This is pretty informative: https://en.wikipedia.org/wiki/Robber_baron_(industrialist)

Intellectual curiosity here, but do you more fall in the camp of taxes to fund government, or taxes to drive policy? The drive policy option could include some form of equity or social engineering.

I am not making a judgment call on your post one way or the other, but interested in how you are approaching this issue.

Thinking back to my basic tax class in law school we only dealt with the former option (taxes to fund government), but I suspect my friends who went on to get an LLM in Tax took classes exploring the later option (drive policy/social engineering).

 

[audreyh1]

Only if exercised. Buy the stock. Hold it. no taxes until you sell.

You are subject to AMT on any price difference when you exercise (buy) a qualified stock option.

 

[CardsFan]

You are subject to AMT on any price difference when you exercise (buy) a qualified stock option.

I did not know that, as I was only had small options. In my case, it was only on the sale.

Learn something new every day.

 

[audreyh1]

I did not know that, as I was only had small options. In my case, it was only on the sale.

Learn something new every day.

It can be considerable and the rate is high after an initial exemption - 26% to 28%.

You eventually get it back as a credit against ordinary cap gains taxes when you sell the stock.

But if the stock goes down later - ouch! Quite a few got trapped in this with the dot.com bust.

The qualified options I am familiar with had a vesting schedule and so you couldn’t exercise them right away, but they gradually vested over several years and then you had a few more years to exercise them. If the stock has gone up a lot since the option grant, you could be paying a large tax bill.

The unqualified options I am familiar with were treated as income on the difference and you were usually better off doing a same day sale and financing the purchase that way.

 

[Time2]

Exactly. I am a landlord and I have been taking every legal deduction available to me. I have been aligning my investments for YEARS so that they will throw very little "income" during my gap years so that I take advantage of Roth conversions and heath insurance subsidies. You can't fault someone for being smart and taking advantage of the laws on the books.

I recently moved a large amount of Taxable VTI into IBKR in anticipation of possibly buying a foreclosure house my daughter was having issues getting an FHA loan approval on. The plan was to borrow against the value of my holdings at a very low interest rate. This was so I didn't have to sell and pay LTCGs on the sale but still have the money. (the point: even the little people can play) At this point the approvals have all been made, now the company managing the house for HUD got sold, they aren't processing any paperwork until the merger is complete.
So after several months delay they get a third delay and won't close until July.

 

[stephenson]

The full Ten Years After lyrics are worth posting - from a lyrics website, with breaks shown

Everywhere is freaks and hairies
Dykes and fairies, tell me, where is sanity?
Tax the rich, feed the poor
'Til there are no rich no more

I'd love to change the world
But I don't know what to do
So I'll leave it up to you

Population keeps on breeding
Nation bleeding, still more feeding, economy
Life is funny, skies are sunny
Bees make honey, who needs money? No, not poor me

I'd love to change the world
But I don't know what to do
So I'll leave it up to you

Oh, yeah

World pollution, there's no solution
Institution, electrocution
Just black and white, rich or poor
Them and us, stop the war

I'd love to change the world
But I don't know what to do
So I'll leave it up to you

 

[stephenson]

I am generally in the camp that tax structure is developed and tweaked to fund government, and to socially engineer - lots of examples, and frankly, since the US runs a deficit and has huge national debt related to not taxing enough, a case might be made that social engineering is more important?

I would also contend that social engineering extends to businesses and corporations, as well as individuals.

 

[marko]

Seems that every few years there's a drumbeat of "the rich aren't paying their fair share" and it looks like that wheel has come full circle again.

Then, there's lots of talk, tons of outrage, oodles of proposals and positioning, examples of how X could've help save the life of Y had he only paid more in taxes, and then................Nothing.

Nothing changes, nothing happens.

 

[Markola]

Seems that every few years there's a drumbeat of "the rich aren't paying their fair share" and it looks like that wheel has come full circle again.

Then, there's lots of talk, tons of outrage, oodles of proposals and positioning, examples of how X could've help save the life of Y had he only paid more in taxes, and then................Nothing.

Nothing changes, nothing happens.

That’s not really true. We’ve had capital gains cuts and income tax cuts and elimination of whole brackets. And some of that might be reversed soon.

 

[Gumby]

Seems that every few years there's a drumbeat of "the rich aren't paying their fair share" and it looks like that wheel has come full circle again.

Then, there's lots of talk, tons of outrage, oodles of proposals and positioning, examples of how X could've help save the life of Y had he only paid more in taxes, and then................Nothing.

Nothing changes, nothing happens.

As The Who told us 50 years ago:

"And the parting on the left
is now parting on the right,
and the beards have all grown longer overnight."

 

[stephenson]

I would almost posit that no one is paying enough - otherwise there would be no deficit or debt, right?

 

[travelover]

I say, if you don't like the tax laws, buy your own legislators.

 

[CSdot]

The full Ten Years After lyrics are worth posting - from a lyrics website, with breaks shown

Everywhere is freaks and hairies
Dykes and fairies, tell me, where is sanity?
Tax the rich, feed the poor
'Til there are no rich no more

I'd love to change the world
But I don't know what to do
So I'll leave it up to you

Population keeps on breeding
Nation bleeding, still more feeding, economy
Life is funny, skies are sunny
Bees make honey, who needs money? No, not poor me

I'd love to change the world
But I don't know what to do
So I'll leave it up to you

Oh, yeah

World pollution, there's no solution
Institution, electrocution
Just black and white, rich or poor
Them and us, stop the war

I'd love to change the world
But I don't know what to do
So I'll leave it up to you

You are going to make me pull out my acoustic. My recollection is it is a very straight forward Em, G, Am, C, B7 round with some easy picking.

 

[CSdot]

I say, if you don't like the tax laws, buy your own legislators.

It's funny, 'cause it's true.

 

[audreyh1]

I say, if you don't like the tax laws, buy your own legislators.

It's funny, 'cause it's true.

It’s very true! Seems to be exactly how it works.

 

[ownyourfuture]

But if the stock goes down later - ouch! Quite a few got trapped in this with the dot.com bust.

I remember that well.
Lots of rags to riches, to rags stories in the early 2000s

 

[Popeye]

I say, if you don't like the tax laws, buy your own legislators.

That’s the whole point. Well, maybe just part of the point but every tax change is an opportunity for politicians to be bribed..er… I mean lobbied.

 

[Popeye]

As The Who told us 50 years ago:

"And the parting on the left
is now parting on the right,
and the beards have all grown longer overnight."

Don’t forget the conclusion of that epic song:

“Meet the new boss, same as the old boss.”

 

[jollystomper]

While we are quoting prophetic songs related to this topic , how about the Temptations "Ball of Confusion" from 1970:
==================================

One, two, one, two, three, four, ow

People moving out, people moving in
Why, because of the color of their skin
Run, run, run but you sure can't hide
An eye for an eye, a tooth for a tooth
Vote for me and I'll set you free
Rap on, brother, rap on

Well, the only person talking about love thy brother is the preacher
And it seems nobody's interested in learning but the teacher
Segregation, determination, demonstration, integration
Aggravation, humiliation, obligation to our nation
Ball of confusion
Oh yeah, that's what the world is today
Woo, hey, hey

The sale of pills are at an all time high
Young folks walking round with their heads in the sky
The cities ablaze in the summer time
And oh, the beat goes on

Evolution, revolution, gun control, sound of soul
Shooting rockets to the moon, kids growing up too soon
Politicians say more taxes will solve everything
And the band played on

So, round and around and around we go
Where the world's headed, nobody knows

Oh, great googa-looga, can't you hear me talking to you
Just a ball of confusion
Oh yeah, that's what the world is today
Woo, hey

Fear in the air, tension everywhere
Unemployment rising fast, the Beatles new record's a gas
And the only safe place to live is on an Indian reservation
And the band played on

Eve of destruction, tax deduction, city inspectors, bill collectors
Mod clothes in demand, population out of hand, suicide, too many bills
Hippies moving to the hills, people all over the world are shouting, end the war
And the band played on

Great googa-looga, can't you hear me talking to you
Sayin' ball of confusion
That's what the world is today, hey, hey
Let me hear ya, let me hear ya, let me hear ya
Sayin', ball of confusion
That's what the world is today, hey, hey
Let me hear ya, let me hear ya, let me hear ya, let me hear ya, let me hear ya
Ball of confusion