By stressing "federal income taxes" I assume that you mean that there are local taxes on wealth.
I do not know how it is in USA, but in most countries there are taxes on wealth, typically at least on houses, cars and land.
Wherever I have seen the amount of those taxes, they were already too high in my opinion.
Moreover, the inheritance taxes are also a kind of tax on wealth and they are also quite high in many places.
In my opinion taxes on wealth should be reduced, not increased, because I have seen cases when someone happened
to be jobless for some time, thus having no income. While without the burden of taxes on wealth they could have lived decently for a longer time, waiting for an opportunity, the necessity of paying the taxes could force them to sell their property at loss and risk becoming homeless. I do not think that is right.
On the other hand, when someone owns much more wealth than would be needed to ensure a decent life until dying of old age, then I would accept that it is right to tax the excess wealth.
However, I have seen too many cases when the introduction of taxes on wealth was justified as "tax for the rich", but in the actual law the taxation thresholds were so low that the taxes affected mostly the lower end of the middle class, not the really rich.
> However, I have seen too many cases when the introduction of taxes on wealth was justified as "tax for the rich", but in the actual law the taxation thresholds were so low that the taxes affected mostly the lower end of the middle class, not the really rich.
Don't be deluded. These taxes are targeting the middle-class and the upper-middle-class (which is considered the "rich").
The "very rich" like Bezos have most of their wealth in stocks. These stocks will considerably go down if you had a wealth tax, and as a result bring little tax income.
How much wealthier would you be if you paid no taxes at all in tax year 2020?
An example with some made-up numbers that could apply to some HN users:
Let's say your net worth was $500K at the start of the year, you earned $200K income in the year and spent $50K. Without taxes, your end of year net worth would be $650K. However, you pay $40K+ in taxes, which makes your net worth <=$610K. So effectively you paid $40K/$650K = 6.1% of your wealth in taxes.
"Regular" people build wealth through income, while wealthy build wealth through appreciating assets. The point I take from headlines like these are not "US executives illegally avoid taxes", it is "tax rules favor the wealthy". Increasing tax on appreciated assets by raising capital gains rates, removing step-up basis, or (maybe) taxing unrealized gains could shift some of the tax drag on wealth from income earners towards asset holders. All of these would need to be done very carefully to not overly hurt small business owners, perhaps through something like a lifetime capital gains exemption (similar to gift exemption, apparently existed in Canada in the 80s[0]).
I'll admit, I read it as income. But it does make me start to think about the disparities in how wealth is generated across different classes of Americans. For me, wealth is almost 100% generated by my income, so I would say my income tax is basically a wealth tax.
You could calculate your income tax to wealth ratio though right?
The reason it’s important is that these executives are not paid “income”. Their wealth increases because it’s largely in shares of their companies and then they use non (or low) taxable events to get cash to buy their stuff.
This sort of activity is not available to people whose only source of cash is income.
I’m not sure it’s worth the unintended consequences of changing the tax laws to change this but it’s not poor journalism to point it out and start the conversation.
Edit: I just calculated mine and depending on how you value my home it’s between 5-9% for 2020.
From my point of view, it is poor journalism to use a clickbait headline ($13.6 billion is not little-to-nothing) and misleading presentation of data (incomes taxes of X on wealth of Y).
It's also lazy journalism as it just piggy-backs on top of the illegally-obtained IRS data from ProPublica, and produces all of its quotes from Twitter or other news media sources.
I don't. Property that is held (which can be held in a variety of ways by a plethora of entities) is targeted separately, just as income is, just as capital gains are, which property can also generate.
Real property (houses, land, etc) derive much of their value from the surrounding context - roads, population, jobs, etc. these are paid for collectively, so a property tax to me is more like HOA dues to the city/county that help make it livable.
However, if the property tax is higher than those infra needs, then a portion of it is totally a wealth tax. Just haven’t seen that in CA.