[foltik]

Clearly that's not a good proxy either then... even the article itself says:

> Ultimately, concerns over inequality should focus on differences within labor compensation rather than the split between labor and capital.

The main issues I can see are:

- This "labor share" includes multi-million dollar executive pay packages, so it's heavily skewed towards the 1%

- It also completely ignores unrealized capital gains and loans against them, which is how the ultra-wealthy actually fund their lifestyles tax-free, with a tiny income on paper

[rayiner]

Do those factors meaningfully change the picture? For example, total compensation for Fortune 500 CEOs is only $8.5 billion, which is a rounding error compared to total labor income. And CEOs at the bottom of that range make a few million, so it’s unlikely that CEOs in non-Fortune 500 companies are making the eye popping salaries you’re talking about.

Similarly, what percentage of wealthy people take loans against their assets to fund their lifestyle? You should be able to quantify this if it’s happening at scale.

The income share of the top 1%—so including run of the mill doctors and lawyers—has grown from 15% in 1970 to 21% today: https://ourworldindata.org/grapher/income-share-top-1-before.... There is no way that delta is enough to eat up all the income growth since then.

[_DeadFred_]

Some numbers

https://www.sciencedirect.com/science/article/abs/pii/S00472...

"The income tax base captures 60 % of economic income of the top 1 % of wealth-holders.".

I would love if only 60% of my income was taxed. Heck I'm now even taxed on used junk I sell using Paypal (that I bought with taxed income dollars and paid sales tax on). But a tax that includes that other 40% of the top 1%'s economic income, guys, we can't do that. But don't forget to file your Paypal taxes or waves at threat of prison.

"Focusing on the top 1 %, while total borrowing is substantial, new borrowing each year is fairly small (1–2 % of economic income) compared to their new unrealized gains" "1 % of wealth-holders (above $14 million in 2022)"

1-2% of $14,000,000 is $140,000 to $280,000 a year. The median personal income is $45,140. They are benefiting untaxed to the tune of 3-6 times the median American income.

1-2% of 100 million is 1-2 million dollars a year untaxed benefit (44x median income). That is substantial.

I would love to benefit annually by that 'insignificant' amount goin untaxed. We should either exclude all economic income below $140,000 to $2,000,000 from taxation or change to tax this loan scheme that allows the top 1% to avoid their share on income 44x the median and even higher.

[rayiner]

That article actually proves the opposite of what you’re saying: “For the top 1 %, new borrowing each year is fairly small: 1–2 % of economic income. ‘Buy, borrow, die’ is not a dominant tax avoidance strategy for the rich.”

OP above said that billionaires pay for their lifestyle by taking loans they never pay lack, and the article says that isn’t a common approach.

> 1-2% of 100 million is 1-2 million dollars a year untaxed benefit (44x median income). That is substantial.

No, it’s not substantial because very few people make $100 million a year, while many people make the median income.

For example, billionaires last year added $1.5 trillion to their wealth, of which 56% was unrealized gains. If you take 2% of those gains as in the article, you get $16.8 billion that should be taxed as income but isn’t being taxed. I’d be fine taxing that money at the top marginal rate or whatever you want to do. But it would raise a piddling amount of money. That’s a rounding error compared to total AGI, which is over $15 trillion. The U.S. governments spend $16.8 billion every 14 hours.

[_DeadFred_]

Great, we are in agreement. It is happening, to the tune of billions of dollars, and we both are fine with it being taxed.

1-2% of 100 million is 1-2 million dollars a year untaxed benefit (44x median income). That is substantial benefit for someone to receive. They are benefiting from buy, borrow, die. You asked for proof, I gave you proof that it is happening and is providing a substantial unfunded lifestyle (44x median income is a substantial income).

Hopefully I won't see further posts from you saying it isn't happening/we don't need to tax it/we aren't loosing revenue. You agree it is happening, and you are ok with taxing it. You don't think it will fund the entire budget. OK. But we have multiple tax streams that don't fund the entire budget, and when patterns shift, we address it, such as now tracking/taxing paypal payments and in the future loans on unrealized gains.

[rayiner]

> Great, we are in agreement. It is happening, to the tune of billions of dollars, and we both are fine with it being taxed.

Yes, but that’s not the topic. The topic is the labor share of income over time. Your link proves that these loans don’t have a meaningful effect on analyzing the division of income between capital and labor over time. They amount to 0.1% of total income.

I don’t understand why people bring this up so often. There’s dozens of tax loopholes that are greater in magnitude. Eliminating the mortgage interest deduction for example would raise 5-7 times as much money as even a 50% tax on these loan proceeds.

[_DeadFred_]

One thing at a time. I think we both agree borrowing is happening and you are ok with it being taxed, so further discussion isn't really needed. But I specifically only addressed your interjection of:

>Similarly, what percentage of wealthy people take loans against their assets to fund their lifestyle? You should be able to quantify this if it’s happening at scale.

That is the topic being addressed, proof was shown, and you replied "I’d be fine taxing that money at the top marginal rate". To your 'but what about other loopholes' please show me 24 loopholes (dozens) providing individuals such high multiples of median income tax free?

>I don’t understand why people bring this up so often

You just agreed it is happening and you are fine with taxing it in your last message, so it really doesn't matter people bring it up or not, does it? And kind of makes further discussion moot. You agree it's fine to address/tax.

>I’d be fine taxing that money at the top marginal rate or whatever you want to do.

The mortgage interest deduction is not a loophole, it is government policy intelligently reached. A loophole would be when rich people abused the deduction by designating their yatch as a second home and deducting that. And that loophole was closed. The average person having to pay taxes on the old dresser that they bought with already taxed money and report the sale as paypal income earnings would be another loophole but in the other direction..

I look forward to your 24 stated existing examples of greater magnitude actual loopholes (and not intentional policy doing what it was intended, the opposite of an exploited loophole that is taking loans instead of selling stocks to avoid taxes but benefit from realized/current stock value). We can move to the next level but again you agreed you are fine taxing this behavior so kinda no further point.