[goyozi]

I don’t follow the debate and situation in the US that closely but isn’t (part of) the point of wealth tax to offset the fact that rich people are routinely avoiding paying income tax and taxes in general? Thus even if we assume the simplistic conversion here, it’s not that they’re moved from 40->60 bracket but more like <10 -> <30 ?

[blackjack_]

Yes. And that wealthy individuals are avoiding taxes via things like buy -> borrow -> die, in which high stock valuations that increase but are not sold are not ever taxed, and roll over the taxation potential upon death to their current value. Thus by borrowing against them until death, the inheritor will inherit with a tax basis at the current value upon receipt and thus all taxes are avoided. In which case the tax would go from 0% to 20% (functionally a small amount may be sold to pay interest, so really assume 1% or 2% taxes default). The horror!

[HDThoreaun]

Buy borrow die as you describe still ends up with a 40% estate tax. Most uber wealthy want to avoid the estate tax so they utilize trusts, which cant die. Really the people who benefit the most from buy borrow die are those with 10-50 million. Not enough to pay serious estate tax because of the exemption. Above that everyone uses trusts which work differently. Not that the trusts dont have their own loopholes.

[verteu]

Indeed, the ultra-wealthy pay far less than 40% effective estate tax. Seems closer to 15% due to creative accounting, which is further reduced to 6.8% by charitable contributions:

> Specifically, for single decedents, estate taxes paid equal 6.8% of the value of Forbes wealth at death. The value of their gross estate is 39% of the Forbes estimate of their wealth. This large gap, already noted in earlier work (Raub et al., 2010), is likely to reflect the various techniques available to high-net-worth individuals to undervalue assets in the context of the estate tax. Taxable estate is then 45% of gross estate (due to deductions primarily gifts to charities) and on that base the tax rate is 39% (Balkir et al., 2025, Table 4 Panel B).

https://www.nber.org/system/files/working_papers/w34170/w341...

[jppope]

The wealth tax argument actually is because our current 2 party political system is set up to where politicians effectively "pay" their corporate constituency with their discretionary spending, which has increased the national debt substantially.

The only way this system can continue is if we increase the receipts (aka tax revenue).

The political class has very wisely targeted "the wealthy," who are capable of tactically avoiding taxes, but as always it will eventually include the middle class who will ultimately be paying the tax. From their standpoint they will popularize this tactic because it will work

This is being sold as class warfare, but its really the evolution of our political system into an unsustainable system of patronage with public funds.

We have plenty of other problems like "buy, borrow, die" (discussed elsewhere in this thread), but ultimately the wealth tax stems from needing more public funds, which stems from politicians spending all of our money.

[fourseventy]

The idea that rich people don't pay taxes is a myth. The top 5% richest people in America account for 60% of all of the federal income tax. The bottom 50% on the other hand only account for a total of 3%.

When Elon sold a bunch of Tesla stock in 2021 he paid $11 Billion in capital gains tax on it... That's more than entire cities worth of people combined would ever pay for the rest of their lives.

[jdauriemma]

Can you share a source? Of course the top 5% of _earners_ would pay more, but that's not necessarily the same crew as the top 5% in net worth. And 5% is a large share of the population. I'd be more interested in the top 1% of 1% in terms of wealth.

[verteu]

Indeed GP is falsely equating "wealthiest" with "highest taxable income".

They are likely referring to a stat like this: https://usafacts.org/articles/who-pays-the-most-income-tax/

[triceratops]

> The top 5% richest people in America account for 60% of all of the federal income tax

I see this repeated all the time and it's worthless without context. What percent of all income do the top 5% earn? What's their share of national wealth?

[archagon]

It’s a stupid thought-terminating quip entirely centered around a superficial “one number bigger than other” gotcha.

We live in a society where the wealthiest have orders of magnitude more wealth than everyone else. The taxes they pay are not proportional to that wealth, period.

[drivebyhooting]

5% richest includes hand to mouth workers earning $100k.

[ecshafer]

95th percentile is around $150k individual and $330k joint income.

[ryeats]

No it's just harder to accurately tax each and every form of wealth so we proxy it by taxing income.

[solidsnack9000]

Wealthy people pay a lot of taxes in the USA. If they aren't routinely avoiding paying income tax and taxes in general, how could that be the point?

It may be more realistic to view this in terms of elite power struggle. There are some constituencies that have found their way into positions of some power -- in government and public service -- that are in conflict with other elites, who have found some power in private enterprise. These groups battle for control of things. One strategy in the battle is managing the other group's access to money.

It's not clear from any kind of first principles, that we are better off with government allocation of a large portion of the society's capital. That hasn't historically been a big winner. Private ordering seems to net out a higher quality of life overall, even with income inequality.