should they pay more than 40%? i do not know the answer to this question. a lot of people say yes because even if they pay the majority of taxes, they pay less in percentage points off their income. others say that they're paying more than their fair share (60% of taxes for just 5% of earners).
The biggest mistake that people make is thinking that taxing the rich will actually fix anything.
These people are very rich because they control stuff. They control the services, everything you NEED to pay for. The more you tax them, the more they will charge YOU for these services.
It’s about the fact that it’s ok for people to be very rich, as long as they pay their fair share.
If they don’t pay their fair share then there’s good reason to argue there shouldn’t be ultra wealthy people. Then they’re just exploitative leeches on society.
I find it really hard to understand why the rich don’t make it easier on themselves by being responsible members of society instead of relentlessly focusing on keeping poor people poor.
Pay some taxes, contribute to roads and schools and hospitals.
> I find it really hard to understand why the rich don’t make it easier on themselves by being responsible members of society instead of relentlessly focusing on keeping poor people poor.
Seconding this. The idea that rich people have a target (after-tax) income and will charge whatever it takes to hit that income is absurd. The target is infinite, and they are already doing everything in their power to make their income as large as possible under current conditions. The fact that their income ever got so large is an indication that they already have too much power to increase their income at the expense of others (not least by convincing a share of the population that their wealth/income is inevitable and/or a necessary condition for the prosperity of others).
So if tax avoidance schemes were focused on and they were taxed appropriately then tax burden could be reduced on wage earners and the likes. People like you....Which in turn makes it so they have to charge their employers less for their labour according to this zero sum economy you envision.
Which then of course would impact consumer prices.
That's untrue. At some point, the richer you get, the less tax you pay for every additional $ you earn (because capital gains are usually less taxed than wages).
Also, past a certain level of income, 100% of the extra revenues is invested (not spent) so there's no VAT. The rich borrow against their wealth, too.
I'm in Europe so I can't speak of the US but the more rich I get, the less I pay tax compared to my coworkers relative to my situation (I'll be earning more from stock on which I'm paying far less tax than an extra income from work).
Also, every €10K of annual gift I get from my (living) parents are not taxed at all (idem for the first €100K from any living parent). Whereas any poor child who expect €10K at their parent's death would have to pay 5% of tax (and more for each upper tier).
I'm getting hundreds of €K year over years and not paying 1€ of tax. Most of these gift are in stocks and neither me or my parent pay any tax on the realized gains (since it's gifted, they're no realization...). Also, my parents can lend me €500K at 0% (which they themselves borrow from banks at negligible rate).
It is legal but so corrupt, I don't see how the rich can't further distancing themselves from the rest of society.
Which country is that? Because as a German, I can't follow entirely.
Capital gains: 25 %, less than wages, check.
Extra revenue invested (in stocks), hence no VAT: doesn't matter if you invest or keep the cash. You pay only VAT if you buy stuff.
> The rich borrow against their wealth, too.
Well, if they invest the money they borrow, they make more money and pay less tax, ok.
> Also, every €10K of annual gift I get from my (living) parents are not taxed at all (idem for the first €100K from any living parent). Whereas any poor child who expect €10K at their parent's death would have to pay 5% of tax (and more for each upper tier).
Not sure what you mean by that. The first €400K of an inheritance is tax free for children.
> I'm getting hundreds of €K year over years and not paying 1€ of tax. Most of these gift are in stocks and neither me or my parent pay any tax on the realized gains (since it's gifted, they're no realization...)
I don't follow. If you are gifted stocks directly and you sell them, you gotta pay tax on the gains. If you don't sell, you don't realize gains, but you also can't use the money. If you receive dividends, you have to pay tax on capital gains.
> Also, my parents can lend me €500K at 0% (which they themselves borrow from banks at negligible rate).
But how do your parents get a loan from a bank at negligible rates if it isn't for buying a house or so? Fees for buying stocks on margin are usually higher (and then you could borrow them yourself).
>Not sure what you mean by that. The first €400K of an inheritance is tax free for children.
I'm in France, the tax allowance is €100K per parent. But since a rich parent can give €100K before their death every 15 years, tax free (that was €160K a few years ago, which I benefited of), the 100K allowance is still available at death. Rich parents can give dozens of €K as gifts in addition to that as explained above, so this all adds up for me while others can only expect €100K tax free at most, and once.
>I don't follow. If you are gifted stocks directly and you sell them, you gotta pay tax on the gains. If you don't sell, you don't realize gains, but you also can't use the money. If you receive dividends, you have to pay tax on capital gains.
My parents made 10x on a few stocks, over a few years. When they gift the stock, they don't realize any gain since they never sold. I must declare their cost as their price on the day of gift. If I sell the stocks the day after and the stock stay flat, I pocket the whole x10 but neither me nor my parent paid any tax on the 10x gains.
>But how do your parents get a loan from a bank at negligible rates if it isn't for buying a house or so? Fees for buying stocks on margin are usually higher (and then you could borrow them yourself).
There is a gift tax exemption of $15k/yr, but with a lifetime cap and the total counts towards your estate taxes, so it ends up being paid in the end (assuming you die, and assuming your estate is rich enough to hit the limit, which is a fair assumption for this discussion).
In your other comment you mention how stock can be transferred "tax-free" in your jurisdiction. From your description I don't think it is actually tax-free, just tax-deferred. You still pay capital gains when you sell, no? But regardless this isn't true in the USA either. If I give appreciated stock to my kids, it is taxable by them as income at the current price.
There are trust funds and such that can be setup to gift the stock early before it appreciates and then pay it out later, but this is still a tax deferral scheme. The now-grown child still pays taxes when the fund matures and they access it.
Mitt Romney pointed out that he paid a lower tax rate than his secretary. Ultra high income individuals may pay more In dollars, but since much of their income is passive, they pay at a lower rate.
Tax deferral is not tax avoidance. If Elon Musk gets a loan backed by his Tesla shares to diversify his holdings, that isn't actually a "tax free" cash out. The tax is just deferred to if/when the bank margin calls the loan, or he dies, etc. But the taxes do get paid, eventually.
These Forbes articles and such conflate different issues and really confuse this point.
"According to the Tax Foundation's review of 2018 tax returns, the latest year for which data is available, the top 1% paid an average income tax rate of about 25.4%."
To pay an average income tax rate of 25.4% in 2018 would require an income of $165,000/yr. That would put you in the top 2%. And this is completely ignoring deductions, credits, etc. which proportionally help lower income tax brackets more due to cutoffs and phase outs.
98% of Americans have a lower average income tax rate than the top 1%, even under conservative assumptions.
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I suggest looking up facts and doing some fermi calculations yourself instead of blindly believing what you read in the news.
should they pay more than 40%? i do not know the answer to this question. a lot of people say yes because even if they pay the majority of taxes, they pay less in percentage points off their income. others say that they're paying more than their fair share (60% of taxes for just 5% of earners).