LoL - why it makes any sense to do this for universities and not billionaires is beyond me, but I'm sure half the country can explain it to me like I'm 5.
It's JD Vance's keynote speech at the 2021 National Conservatism conference. The speech, which I've just skimread, is mostly well-worn US conservative complaints about US higher education. He also talks about red-pilling because he's down with the kids, and he adds Jesus sprinkles in case you forgot he's Christian.
The speech is dull but it's bookended with two spicy statements, both of which you mostly quoted. The latter statement is not his words but a quote from Nixon.
Opening statement: «So much of what we want to accomplish, so much of what we want to do in this movement in this country, I think are fundamentally dependent on going through a set of very hostile institutions - specifically the universities which control the knowledge in our society, which control what we call truth and what we call falsity, that provides research that gives credibility to some of the most ridiculous ideas that exist in our country and so I'm excited to close this conference with this particular set of remarks, because I think if any of us want to do the things that we want to do for our country, and for the people who live in it, we have to honestly and aggressively attack the universities in this country.»
Closing statement: «I really want to end this on an inspirational note [...] and the person whose quote I ultimately had to land on was the great prophet and statesman Richard Milhous Nixon [...] there is a season for everything in this country and I think in this movement of National Conservatism, what we need more than inspiration is we need wisdom, and there is a wisdom in what Richard Nixon said approximately 40-50 years ago. He said, and I quote: "the professors are the enemy".»
EDIT: And for the context of the Nixon quote, it comes from a private conversation Nixon had with Henry Kissinger in the Oval Office on December 14, 1972, recordings of which were released in 2008: «Henry remember... we're gonna be around and outlive our enemies. And also, never forget, the press is the enemy. The press is the enemy. The press is the enemy. The establishment is the enemy. The professors are the enemy. The professors are the enemy. Write that on a blackboard 100 times and never forget it.». It's worth noting that Nixon was already keeping an "enemies list": https://en.wikipedia.org/wiki/Nixon%27s_Enemies_List
It doesn't matter what Nixon's context was Vance was quoting him literally by proclaiming it a piece of wisdom.
Posting the entire speech only bolsters my view. For example
"[To accomplish goals].. I think are fundamentally dependent on going through a set of very hostile institutions - specifically the universities..."
I'm confused about your argument. I don't consider it a smoking gun just a concise example of what Vance and MAGA Republicans belive. There's no context confusion, it's on video, and it being dull only shows how comfortable he is exposing insane views.
The spicy soundbites on their own are scary and do suggest the state wants to destroy intellectuals.
The speech they're from doesn't.
The speech defends and praises universities and their role in society. Vance even claims some academics prefer to ignore evidence that refutes their positions, and he's against that; that would be a valid pro-intellectual position if true (but it's completely nebulous and unsourced)
The thesis of his speech was he doesn't like the content of what academics profess and he thinks they ought to teach his political views (and his audience's political views) instead. That's not anti-intellectualism, i.e. "don't trust those book-learning types, look to the common man for answers". This guy still wants ivory towers provided his cronies are in them.
Also it's interesting to see where his quote came from. He clearly picked an on-theme Nixon quote just to appeal to his audience, and he seems to miss the context of the Nixon quote in that Nixon is a paranoid nutter saying it, not coming from a rational place like Vance thought he just did.
I’m not half the country, but I can explain it to you. Billionaires already pay tax on investment income. Universities are exempt but now the proposal is that they pay as well, just like individuals (including billionaires) and other profit-making groups.
Doesn't this tax only apply to "net investment income"/realized gains? Billionaires technically already have to pay it at a higher rate. And well they generally do? I mean when they personally actually sell stock and or receive dividends and interest.
Most of the wealth being in stock is really tricky. You can't really tax stock ownership, but at the same time stock can be leveraged against business deals (Musk for example bought Twitter with largely stock, without having to sell it first and therefore being subject to tax), and you can take out loans with stock as collateral.
Sure, if you exclude primary residence. We aren't trying to fuck with the middle class, just the uberwealthy. I'd be fine with only taxing collateralized stock on people with over $20M in net worth too. We just don't need to provide tax breaks to the rich to make them more rich.
When I bought my home I had to sell $XXX,XXX of stock to make the down payment. If Jeff Bezos wants to buy the same house, he would use a line of credit from the bank, collateralized by his Amazon shares (or whatever source of wealth) and pay with that. I paid 15% in long-term capital gains, he pays 0%. Under my plan, he would pay 15% LTCG for collateralizing his stock,. If I had to pay it, then it's entirely fair and reasonable that we expect him to pay his fair share too.
You could have done the same thing with a margin-enabled brokerage account, e.g. Interactive Brokers or Fidelity.
It's not particularly hard. Just have enough collateral to not get margin called. And, like the margin interest rate better than the tax hit. Shop around for rates. Notice, you don't have to pay the entire down payment this way.
If you have amassed 6 figures of stock and are buying a house, you're qualified to educate yourself on these topics. It's usually worth reading up anytime you incur that sizable a taxable event.
I am not saying this is a great idea, BTW. Just, it's an idea within many people's reach.
If I get something of worth, non-related to the stock/ownership, for the current value on my stock/ownership, I should pay taxes on that amount. I am using the stocks value to gain something. If I take out a loan for businesses needs, that is in the interest of the thing I own. If I take out a loan to buy a separate thing, I have leveraged the current value and have therefor realized the current value and should pay accordingly.
Why does it matter? It eventually gets taxed through estate tax and at a higher rate than income. This obsession with taxing them _now_ only makes sense if the point is to punish the the rich.
Agreed. For the revenue tax activists want from billionaires, it would necessitate a wealth tax, which I believe is unconstitutional. The non-profit tax exemption fight is about "income taxes" which billionaires already have to pay (but avoid). So it is an apples-to-oranges comparison.
I'm not a lawyer but I do not consider a property tax to be the same thing as a wealth tax.
If I own a house or condominium in San Francisco, at a fundamental level I do not own the land or space the residence is sitting on. "Ownership" is basically a lease of the parcel from the city. The house structure is an improvement on leased land; this ties the property tax calculation to the value of the structure. The property tax is the rent on the land/space. I believe this is the constitutional justification for property taxes (no opposition from me).
> If I own a house or condominium in San Francisco, at a fundamental level I do not own the land or space the residence is sitting on. "Ownership" is basically a lease of the parcel from the city.
It's interesting to me that medieval European peasants "renting" the land they farmed had much stronger ownership rights than Americans who "own" land do today.
> I believe this is the constitutional justification for property taxes
It isn't. The constitutional justification for property taxes is that they're assessed by the states, not by the federal government.
> An 1861 federal tax on real property illustrates how the rule of apportionment operates. Congress enacted a direct tax of $20 million. After apportioning the direct tax among the states, territories, and the District of Columbia, the State of New York was liable for the largest portion of the tax [...]
What this meant was that the federal government delegated tax quotas to the states and the states were responsible for collecting them as they saw fit.
Recommend James C. Scott's "Seeing like a State" to learn more about the evolution of property valuation and rights. The systems of land rights in up to the 1500s-1800s were quite complex. The modern state imposed a uniform system of free-hold tenure which shifted the complexity to the downstream consequences.
The Supreme Court explicitly allowed property taxes in Pollock decision. They haven’t for wealth taxes (they still might allow it but they also might not).
"No Capitation, or other direct, Tax shall be laid, unless in Proportion to the Census or Enumeration herein before directed to be taken"
A wealth tax is generally considered to be a direct tax. If you wanted to enact one at the federal level, my understanding is that it would have to be done in proportion to the census. So, given that Mississippi is around 1% of the total US population, Mississippi would have to pay 1% of the wealth tax. Mississippi is the poorest US state, so that would be a very regressive tax.
An income tax is also considered to be a direct tax, that's why it took an amendment to the Constitution to enact one.
The Constitution applies to taxes at the federal level, not state. States could enact a wealth tax the same way they enact property taxes now (depending on their state Constitutions). The problem for them is that wealth is a bit more mobile than property.
And yes there are arguments about what a direct tax really meant in the language at the time the Constitution was written, there are arguments that the income tax should have been legal without an amendment. But that's not how it went down.
"Double taxation" is absolutely constitutional. Tons of things are double, triple, quadruple and more taxed.
I make a W2 salary. I pay federal income taxes on it. I pay FICA taxes on it. My employer pays payroll taxes on it. I might pay state income taxes on it. One event, tons of taxes. I take that quadruple taxed money and buy a dinner with a beer. Sales taxes on the overall sale, additional taxes on the alcohol, additional sales tax riders because I bought it in the touristy night life area. Triple taxes on my quadruple taxes, good lord! Unconstitutional!
Worthless phrase, "double taxation".
> That does not prohibit the Federal Gov from taxing once, and your residential state from taxing you a second time.
Once again, the several different taxes applied to my salary income. Then on that I go buy a gallon of gasoline, uh oh, federal gas taxes on that. Or I buy a plane ticket and that gets Federal Excise Tax (7.5% of the base fare), the Federal Segment Fee (currently $5.20 per segment), the TSA Security Fee ($5.60 per passenger), and more. Oof, "double taxation"! Even at the federal level!
Why do you expect a billionaire to steal from billionaires? a portion of non-essential stealing comes from respct, and of course these billionaires are all a part of the same club.
The other lens is simple as well: big fish don't go after the other big fish. That just ends in two hurt fish and no food. Trump thought he was going after a small fry and underestimated the response. just because Columbia folded doesn't mean all universities will.
If they sell and incur capital gains. But they have so many better alternatives than you or me. And if they do incur capital gains they pay the same tax rate (or maybe 5 basis points higher, depending on your income) as you or me.
Borrowing against assets. Wealthy people get low, low rates, much lower than the hoi polloi would get on a HELOC or brokerage account margin loan. Banks like having them as clients.
Not only they get low rates, but if they have friends in the palace, they tend to be beneficiaries of large governmental contracts; during times of economic upset, they are the beneficiaries of large “monetary injections” that later cause inflation and prices to rise for all of us. During 2008, COVID, and the Mango recession the wealthy got much much wealthier, and all we got was expensive eggs and higher costs of living.
You don't pay back the loan. You die, your assets pass to your heirs, and their cost basis is stepped up. The heirs sell some of the assets to pay the loan back. They don't have capital gains because of the stepped-up cost basis.
There are finer points I don't understand such as:
1. Is the stepped-up cost basis available to the estate or only to the heirs? If it's to the estate, it's easier for the bank to trust they'll be paid back.
2. If the heir gets the stepped up cost basis, what legal guarantees does the bank have that the heir will pay the loan back?
And probably a lot else. I assume there's expensive lawyering and accounting involved in setting it up, so it isn't cost-effective unless you have a certain amount to shield from taxes in the first place.
First of all, prime can be pretty good vs being taxed. Secondly, who knows what kind of sweetheart deal can be pulled for a small (in the big scheme of things) "loan" when banking of billions is at stake.
> Nobody loans out money with a guaranteed prospect of below market returns
Not to you or me. Giving powerful people who can send more business the bank's way a freebie on their personal accounts might make sense as a loss leader.
An ELOC for a HNWI can be significantly lower interest than a mortgage. They can often get "fed funds rate/LIBOR + 0.5%" or so. This is because they can accept a floating rate, while mortgage rates get locked in for 10-30 years.
Only short term gains are taxed as income. Long term capital gains tax caps at 20%, wildly lower than the top income tax bracket of 37%. And it's always possible to defer short term gains (e.g. put your trading money in an IRA).
IRA contributions are drastically limited to a $7000 cap per year under 50. Whether they should be is another question, and one worth exploring.
Long-term investment is rightly seen as something to be encouraged hence the lower tax rates. You can make the argument that the rate should be more like 0% since the money invested and risked was already taxed most likely...20% is a reasonable value for the market regulating infrastructure provided by gov't entities.
IRA caps are low, but loads of people earning enough that they'd reasonably save more than 7k annually have access to 401ks or similar accounts that raise the annual cap to >30k, vastly more than the typical person is saving.
The middle class isn't taking advantage of low capital gains rates to earn more from their taxable brokerage accounts because they haven't even filled up their tax-advantaged accounts.
There are loopholes to roll all sorts of nonsense into an IRA though. There was a whole news cycle in the 2012 election about Mitt Romney's $4M "IRA" or somesuch. And IRAs are hardly the only shelter from income tax, they're just the most obvious.
The simple truth is that wealth beyond the ~$10M level in the US pays essentially zero "income tax". It just doesn't happen, no one does it. Short term gains are only taxed for small investors who don't know any better.
"Entrepreneur Elon Musk announced on social networks that this year he will pay 11 billion dollars, thus becoming the largest taxpayer in the history of the USA."
That was on a sale of Tesla stock that he'd held for much longer than the long term rate threshold. He paid 20% on it, or plausibly less. I, personally pay a higher rate than that. Big numbers notwithstanding, Elon Musk shouldn't be paying less tax than I do, sorry.
Financial policy is very specifically against people saving their money though - that's why a certain level of inflation is considered desirable to mainstream economists. Spending and borrowing is heavily encouraged at all levels, while investment opportunities are gated based on wealth and income to prevent the poor from being able to "work smarter".
We have tax-advantaged retirement accounts to enable the middle class to save a reasonable amount in order to retire without being a burden on society. A typical saver doesn't have additional extra money leftover for a taxable brokerage account that exposes them to capital gains taxes.
Low capital gains taxes aren't meaningfully encouraging somebody making 75k and saving 10k annually to continue with their saving plan.
No but their earnings are mainly in their companies, and those can hire fleets of tax attorneys and accountants to crush their tax burden.
Once the money is in stocks, it doesn't get taxed unless you draw on it, but the billionaires can use strategies like buy, borrow, die (which last I checked only really works if you're north of ~ $300M) to avoid personal taxes.
Billionaires benefit most from the largest tax exceptions. No tricky accounting needed it’s baked blatantly into the tax code. Long term capital gains are specifically lower than short term capital gains. Further gains are only taxed on sale allowing a lifetime of growth to pass to the next generation tax free.
They also operate at a scale where many tax breaks become viable. CEO owners aren’t paying themselves nominal salaries because they are actually working for free. Creating a shell company to own your 50k car isn’t useful but it’s damn well worth it if you’re buying a 50+m dollar yacht for personal use. Turning depreciation into a nominal loss offsetting capital gains etc.
Meanwhile people of lesser means get stuck with all kinds of crap like a 10% early withdrawal penalty on 401k plans.
>> College endowments are typically tax-exempt, but a 2017 law imposed a 1.4% tax on investment income for a small group of wealthy private universities.
> LoL - why it makes any sense to do this for universities and not billionaires is beyond me, but I'm sure half the country can explain it to me like I'm 5.
Because they already do it for billionaires: unlike university endowments, billionaire investment income is not tax-exempt by default, it's already subject to income tax [1].
[1] At least theoretically, ignoring the loopholes and tax-dodges billionaires can take advantage of with literal armies of accountants.
They don't pay anywhere close to that, there are tons of tricks to avoid paying that % on gains and the more money you have the more leeway for loopholes.
Very relevant in startup ecosystem as well (look up exchange funds, opportunity zones etc.)
Imagine how much federal revenue would increase if that 1% paid the same effective rate as say a typical plumber, rather than the <10% they currently pay. That might actually put a dent in the trillions of dollars this congress is about to add to the national debt.
I hear that sentiment a lot, but it doesn't seem right to me. My salary is pretty close to the median plumber's income, and my family's effective tax rate last year came in at... 1.6%. And that's with all retirement account contributions going toward Roth accounts. If we'd chosen to contribute to traditional IRA/401k accounts instead, the EITC and child tax credit would easily turn our tax bill negative.
A quick search tells me the median plumber salary is ~$60k. Your telling me your entire tax burden is ~1k? I find that hard to believe, and if true is pretty darn atypical. That's closer to what I was paying when I was making ~10/hr.
"That might actually put a dent in the trillions of dollars this congress is about to add to the national debt."
It might also result in even more spending. I don't think that there is any "natural ceiling" when it comes to willingness of politicians to spend other people's money. The only ceiling is external - how much will the system bear.
Edit: it's an honest question. Maybe the top 1% paying 40% of all income taxes is too much tax. Maybe it's not enough. Without knowing how much of all the income they make it's a meaningless number.
According to the Tax Foundation[1], for tax year 2021, the top 1% of U.S. earners—those with an adjusted gross income (AGI) of $682,577 or more—accounted for 26.3% of total AGI and paid 45.8% of all federal income taxes.
My personal opinion is that income tax should be more progressive, but I know that plenty of smart people disagree on that.
Your source leans right-center, so probably good reason to suspect their reported top 1% AGI is low and their reported federal income tax estimate is high.
There are a lot more taxes than the federal income tax. It happens to be one of the most progressive taxes. Anyone focusing on that and ignoring all the others is trying to scam you.
The top 1% of people make 20.7% of the country's income. Given progressive tax rates, they should be paying a lot more than 40% of Federal income tax revenue, but rates don't scale enough, and aren't lax enough on other classes.
Can you explain your reasoning behind "they should be paying a lot more"? I kept hearing that they didn't pay their "fair share" when in fact it appears they pay double. It just seems like whatever they actually pay, measured in dollars or as a percentage, will always be widely regarded as not enough.
There are a couple of key phrases in politics that get used because there is no actual justification. "Fair" is one of them. It is impossible to achieve fairness in the tax system under any circumstances, it is always taking from someone who - from the fact that it isn't voluntary - we can assume quite likely disagrees with how the money is about to be used. Taxes are fundamentally arbitrary.
So in practice, if "fair" is used in politics the appropriate reading is often as a euphemism for "I think we have the numbers to push this interpretation of the world on people; it'll be good for us".
Could you help me understand why an individual with one billion, needs two? At what point would you accept that someone has more money than they'd reasonably need? And if you just thought of a maximum amount, then, wouldn't the acceptable tax rate over that amount, be 100%?
Whatever it takes to restore 1960s level of inequity.
By whatever measure works, eg old school gini coefficient or something more modern.
You're right though: food fights over decimal points and gaming the rules nicely obfuscates any constructive debate about what kind of society we want.
If they don't wanna pay so much in taxes, they should stop having so much money. Taxes function to raise revenue and thus have to go where the money is.
There are no loopholes for investment gains. If you are talking about offsetting losses and delaying gains, those options would likely be available to endowment funds.
Edit:
"We need to attack the universities in this country"
"The professors are the enemy"
Specific clip https://www.reddit.com/r/ABoringDystopia/comments/1ichg58/ya...
If you want the full speech it's on YT so if you reply with "context" you should back that up