[mars4rp]

what is not normal is he is not paying much taxes compare to his wealth! He is selling around a $1B of Amazon shares each year and if he doesn't deduct anything he is paying 15% capital gain on it. That's 1/1000 of his net worth, I am pretty sure we all are paying way more than that. How is that fair? And also the taxes supposed to be progressive, rich supposed to pay more, our dream here is to have the rich pay as much as a teacher!

[saxonww]

First: I think the tax situation with capital gains is not fair or warranted, and that we should tax long-term capital gains like regular income instead of having a separate 15% rate for it.

That said, your assertion is not true. 15% is higher than the effective tax rate of 10.5% paid by the average single teacher in the US:

Average salary: $60477 [0]

Standard Deduction for single filers: $12400.

10% bracket for $0 through $9,875 == $988 tax. 12% bracket for $9876 through $40125 == $3630 tax. 22% bracket for $40126 through ($60477 - $12400 - $40125) == $1749 tax.

This totals $6367, which is 10.5% of $60477. Less than 15%.

The numbers are different if the teacher is married, has children, interest, etc.

We can discuss whether it's fair. I said above, I think it's not; there's a "minimum overhead" to living in the US that takes up a much larger fraction of $60477 than $1B, regardless of lifestyle. But people act like Bezos et al are just not paying as much as regular people, and it's just not true. $150M is more in absolute terms, and in many cases relative terms as well.

[0] http://www.nea.org/home/74876.htm

[mars4rp]

"Bezos et al are just not paying as much as regular people" they are not! they might pay more at the $ value, but not more of their net worth. If you are making $100k and pay at least $20k in taxes, your net worth should be $20M to be in the same bracket as Bezos!

[tosers4]

Why does even capital gains have a different tax rate from dividend. I would fix that first.

[saxonww]

I'm not an economist or finance person, so I don't know why we really ended up where we are. I think a lot of people in this thread, and most of the non-investment-wealthy people in the US, would say it's because of lobbying and so forth to let the rich get richer. That may be true. But I am open to the idea that research and modeling points to this being good overall even if it appears to be (or: is) unfair to 'average' Americans.

I'd like to see some (comprehensible to a layperson) discussion about what would happen if all income - wages, tips, gifts, inheritance, interest, dividends, capital gains, etc. etc. - was treated dollar for dollar equally from a tax perspective. I don't understand why it couldn't be, or why it shouldn't be.

[rukittenme]

You've just discovered the problem with income taxes. A tax on labor favors capital. Good luck convincing any of your political allies that the income tax should be replaced with something more progressive.

[mars4rp]

Bernie/Warren wealth tax was a good idea in my opinion. It would increase Bezos's effective tax rate from 0.1% to 3%. Bezos's net worth still would increase every year, as the normal capital gain is 8% per year and it is much higher in Amazon.

[TimPC]

Wealth taxes are horrible because they'd require doing a balance sheet to determine all your assets. Things like pricing all your collectibles accurately or determining the present market value of art pieces is a huge pain in the ass. It's also really nasty having fines if the government disagrees on your assessment of values. You'd have issues like the government suing people over mispricing the pokemon cards shut away in their basement where 1st edition charizards are now worth $55,000. Doing a balance sheet every year for taxes really sucks. Income is much simpler to calculate and adjust. It might make sense for wealth above a huge magnitude but at that point it becomes a very small % of government revenue and not something that replaces income tax or truly affects the balance between capital and labour.

There are also nasty effects with start-ups stocks or options that may be worth quite a lot of money but you may not be permitted or be heavily restricted in selling the stock even if you execute the options. There may still be a possibility of the stock going to zero leaving you with a large tax bill and no value in assets.

[mars4rp]

1. It is for people with net worth above $50M. I don't think most of that net worth is pokemon cards! 2. Yes it might be a little bit harder. 3. " it becomes a very small % of government revenue" Tax is about fairness not how much money we can raise from it. 4. this is in top of income tax for high worth individuals. 5. on unliquid assets like startup options, maybe you can pay your tax with those stocks. If it went to 0, you didn't pay any additional tax, if it appreciated government(all of us) would make something on it too.

It is hard and not perfect, but we can't have everything based on income for high net worth people, they won't pay their fair share and keep getting richer and richer.

[rukittenme]

Personally I disagree with their approach. A tax on an unrealized gain is a farce. But I do agree with the sentiment. Alternative forms of taxation need to be introduced.

[voisin]

If fair market value goes down, do they get to claim an unrealized loss too? Seems like the tax is more a tax on market whims than anything.

[tosers4]

What's the issue? amazon pays taxes in multiple ways, what's left it goes into amazon stock value.

I think it's perfectly fine to only pay the tax once you sell, why should you keep paying a tax just for owning? With his portfolio, his salary wouldn't be able to cover a a simple 1% annual tax.

Now the issue is USA capital gain tax being lower than dividend tax, that's completely bonkers and encourages ridiculous uses of buybacks (which amazon has never done).

The capital gain tax should be the same as dividend tax