[9dev]

> some people might look at the increase in his wealth and call that money he "made" that year

What in gods name would you call that otherwise?

> But we don't have a wealth tax on a federal level at least

And that somehow justifies rich people paying less taxes, because they navigate the system better than regular people?

[phyzix5761]

He pays income tax just like everyone else. But the majority of his money is in investments, which many Americans already do as well with 401k and personal brokerage accounts. The people who can't afford to invest like that already pay close to 0% income tax as 40%-60% of households, historically, have paid 0% income tax in the US.

[9dev]

They still pay payroll taxes, among others, which disproportionately affect poor people.

[phyzix5761]

I 100% agree. Roosevelt implemented that in 1935 and it was meant as a safety net for social security. Economists estimate that by 2035 social security, as its currently structured, will no longer be able to fund the aging population.

Instead, a better alternative is to invest that same amount into an ETF that tracks the S&P 500 and after a 40 year working career the individual would have almost $5 million assuming a median wage and current employer matching on payroll tax. This would give them a yearly $200k payout which grows at 6% per year if they follow the 4% rule on withdrawals, lasting them indefinitely and leaving something behind for their children when they pass away. In contrast, social security right now, on average, pays $26k per year.

This would also generate federal taxes through transactions of the companies composing the S&P 500 which would give the government an additional tax revenue source.

[smallmancontrov]

The trouble with "investments did better" is that they did so in considerable part due to 40 years of trickle down economics that swung the pendulum away from labor and towards capital. The pendulum is slowing, so that trick is extremely unlikely to work twice. If that's not concrete enough for you, we can talk about what it would take to swing the pendulum as far in the next 40 as we did in the last 40 and this thought experiment will make it obvious that this approach makes the social security trust fund look like an exercise in sustainability.

[giantg2]

Payroll taxes were capped because the related benefits were capped. We could uncap either or both ends of that. Although removing the cap should have been unnecessary if the government acted responsibly, and the removal of the cap would not force them to act responsibly in the future.

[kube-system]

> He pays income tax just like everyone else.

He only paid income taxes on $80k while at Amazon.

The wealthy often make their money as capital gains, which if they held for at least one year, are exempt from the income tax and taxed at no higher than 20%

Billionaires literally have their own set of tax brackets in this country: https://www.irs.gov/taxtopics/tc409

[twoodfin]

The wealthy in NYC pay the top Federal 23.8% LTCG rate, + the top New York State income tax rate (10.9%) + the NYC income tax rate (3.876%) on their long-term capital gains.

[kube-system]

Not if their second home in NYC is not their primary residence .... and like bezos, has a primary residence in a state where that isn't the case

[anamax]

> The wealthy often make their money as capital gains, which if they held for at least one year, are exempt from the income tax

Not even close. As your link shows, "the wealthy" pay taxes on long-term capital gains. The lowest rate (for "the wealthy") is 15% but they can owe 20% or even 28% in certain circumstances.

[kube-system]

I didn't say they didn't pay taxes. I said the money was exempt from the income tax, which it is.

Capital gains are not taxed as income, it is taxed as a capital gain, which has significantly lower rates than income tax.

[rootusrootus]

Even though it would hurt me, I feel like eliminating the distinction between capital gains, income, and payroll taxes would be a fairer solution.

[kube-system]

I'd be happy with just a couple of brackets added to the income and capital gains taxes to target the 0.1% and 0.01%

[SoftTalker]

Capital gains are taxed lower as an incentive to make long term investments, vs. short term speculation.

[kube-system]

That is a perfectly fine goal, however, I don't think the current structure actually accomplishes that goal very well.

[SoftTalker]

Let's say you own your home and it increased in value last year. Do you feel like you "made" any money from that? Unless you sold it, probably not.

[wat10000]

Only because I live it in and can't easily sell it to raise cash.

Let's say you own some stock and it increased in value last year. Do you feel like you "made" any money from that? I did and it did and I do.

[SoftTalker]

Stock is easier to sell, yes, but it's still just a gain on paper until you actually sell it. Otherwise, those gains could be lost next year. Or tomorrow.

[9dev]

Now this is just disingenuous. As if the net worth of Jeff Bezos and the rest of the Epstein class was somehow threatened by market fluctuations or some high-risk investments.

As long as the economy continues to grow, these people will thrive. All while avoiding to pay their share for society.

[SoftTalker]

I have no doubt his investments are well-diversified. He's not an idiot.

My point was simply that income and wealth are two different things, at least for tax purposes.

[wat10000]

This is well known. The question is whether they should be. It's not some immutable law of nature, it's a deliberate policy choice to tax returns on capital differently from returns on labor.

[xenihn]

False equivalence. You're comparing liquid assets with an illiquid one here.