[whatshisface]

A much more interesting formula would be how to convert between income and income tax - you'd think it worked according to the superficial bracket system, but in fact, it works along the lines of going to 0 at the top.

P.S. a wealth tax is a property tax. They have existed in the US since before the income tax (which was originally considered unconstitutional by its opponents).

[jeffreyrogers]

I think the limit it can reach without carried forward losses is 20% because that's the top long-term capital gains tax rate. The other thing I can think of is if you sell a QSBS business, then your capital gains are taxed at 0, and you wouldn't pay income tax at all on that money either. So it's in theory possible that someone could make millions tax free from selling a business, but that's a rare case and one the tax code explicitly allows for.

[whatshisface]

You can get a loan from a bank against your assets and spend only the loan. I think that's how it goes to zero.

>So it's in theory possible that someone could make millions tax free from selling a business, but that's a rare case and one the tax code explicitly allows for.

These guys have whole offices working to figure out how their day to day expenses can be converted into stuff like "selling a business." ;-)

[jeffreyrogers]

There have been a few proposals to close that loophole. The main reason it exists is because debt isn't counted as income since it has to be repaid.

[whatshisface]

Yes, even if it never is. But you have to realize that these proposals to close loopholes are massive tax increases, not technicalities.