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NPCampbell · 17-12-2021, 08:43

Quote:

Originally Posted by valhalla360

Sorry but so much wrong here...

Nice post! You beat me to it. I will add a couple of things though ...

Quote:

Originally Posted by valhalla360

Buffet never said that. He was talking about the percentage. He pays orders of magnitude more in taxes. If you look at the overall numbers the the top 1% pay 37% of all tax dollars.

Many of the Buffet articles are basing (incorrectly) their points off two issues:

1) Sometimes they quote Buffet's low tax percentage based off the increase in his unrealized wealth or paper gains of his stock for the year, not on his actual income.

The problem with this is that no one in the US pays income on their unrealized gains. If we did, everyone would have to pay yearly taxes on the increase in value of their home or the $6 increase of that baseball card in the old shoebox in the back of their closet.

It's a ridiculous notion.

2) As you correctly stated, sometimes the articles are referring to the fact that Buffet's tax percentage could be lower than his secretary's tax percentage.

Obviously, only the clueless believe that Buffet's secretary pays more taxes than Buffet.

However ... up until 2013, long term capital gains maxed out at a maximum of 15% while any earned income over $35k was taxed at a minimum of 25% (for a single person). Therefore, at the time, it was easily possible for Buffet's secretary to be paying a higher tax percentage than he was as most of his income was from capital gains.

I believe this is wrong ... and it's no longer possible.

Currently, due to Obama's capital gains changes and Trumps doubling of the standard deduction, it is difficult for anyone making less than $200k in earned income to pay a higher percentage in income taxes than the 20% tax rate someone pays when deriving large amounts of income from capital gains.

Quote:

Originally Posted by valhalla360

If they are given shares, it is reported as income. If they take out loans against them, they have to pay interest which would negate tax savings and their heirs pay inheritance tax.

Yes, there are ways to keep the taxes under control but this description is wildly incorrect.

Minor point.

When you receive stock options whose fair market value can't be determined at the time of the award then you don't pay any taxes until you exercise the options. That's the way it needs to be as those options may be worth nothing depending on when you exercise them.

The reason people like Musk take out loans on their options is not to avoid taxes but to avoid exercising options pre-maturely (or during a blackout period). Musk receives no salary so taking a loan against his options has been a pretty sound strategy.

It's funny how none of the "pay your fair share" articles mention that Musk paid $590+ million in taxes on $1.4 billion worth of options exercised. I think he's got that "fair share" thing covered for the rest of his life.

JBP · 17-12-2021, 09:19

Quote:

Originally Posted by valhalla360

If you look at the overall numbers the the top 1% pay 37% of all tax dollars.

This isn't really a fair statistic. It's very popular among people who want to convey the impression that the rich are burdened with supporting the lazy rest of society, but it's just comparing apples to oranges. You have to compare the INCOME of the top 1% to their tax burden. You can't simply state the tax burden and conveniently ignore the income levels. It's true that the rich, on average, pay slightly more taxes per income than ordinary Americans, but it's only slightly. The last I saw, in 2019 the top 1% collected 21% of the total income in the US and paid 24% of the total tax burden. The top 5% collected 36% of the total income and paid 40% of the total taxes.

Gadagirl · 17-12-2021, 12:39

Quote:

Originally Posted by valhalla360

If they are moving from 1 job to another, they wouldn't show up as a shortage. And I do believe that is happening but it should not result in a shortage across the labor market.

If you read the stats.... the shortage is driven by people over 55. The underlying is not actually a shortage. Just lots of people deciding that they would rather work for more money than less

Gadagirl · 17-12-2021, 12:47

Quote:

Originally Posted by valhalla360

Just departed Turkey. It's wild west economy. While it was great for us as everything was dirt cheap, for the locals it's a sh it show.

They are doing it in reverse:
- The Lira has fell by 50% this year and official inflation is up around 27% (reality is likely much higher).
- They just instituted a 50% increase in the minimum wage for 2022. 40% of employees make minimum wage (currently equivalent to about $180USD/month)

Anyone care to guess how that will work out.

If that works out than flying pigs would be a normal sighting! That form of financial extreemism is not what I personally would consider a sound solution.

How ever this is a reflection and a poor choice on your part. You choose an ultra conservative government and their policies as what not to do but you you've defended simlar albeit less draconian policies in America. Protections of corporations and religion has been the bain of society for eons.

rhumby · 17-12-2021, 14:38

Would a more progressively structured tax structure on capital gains resolve the sense of unfairness as described by Buffett? The increase of the max capital gains tax rate from 15% to 20% is a step in the right direction, but not quite enough. Why wouldn't all highly paid doctors, lawyers, etc. who make in the ball park of $500k USD and pay more than 22% on earnings over ~$80k feel upset that Elon pays only around 20%? That's seems inherently unfair to me.

AKA-None · 17-12-2021, 14:40

Quote:

Originally Posted by boatpoker

If the Bezo's and Musks were paid in wages would they take the same risks and create the thousands of jobs that they do ?

Why wouldn’t they?

That is how it used to work

Dave_S · 17-12-2021, 16:07

Why shouldn't the guy who has the talent be rewarded for the talent.

It is so for the arts and no-one seems to be grudge the artists making money.

AKA-None · 17-12-2021, 16:15

Quote:

Originally Posted by danstanford

With all due respect to the stories out there about obscene profits with little tax paid, I suggest you take a balanced look at other stories which give the other side. It is true that if you take income you will pay tax and that this rate is generally on a sliding scale where the more income you take the more tax you pay. For example, the clip circulating in this thread is from a decade ago and is Buffet making the point that Bush's tax plan was wrong headed. For that year and the following three Buffet paid approximately $24 million in income taxes on $ 125 million in taxable income.

The element missing from the conversation is that the calculation of the increase in wealth is in real estate and corporate holdings. To make this equivalent to you and I, it is like saying someone's home appreciated and making that income for the purpose of this equation. When these people take the gain into their bank accounts like income they will pay the tax.
Look at the current story of Elon Musk as he has to exercise his stock options (or lose them) and so when he does he will pay about $ 15 billion in taxes. In the last 10 years he had the wealth of these options but did not actually have the stock so he didn't pay tax on them.
I am not crying poormouth for these folks or for me just trying to balance some of the information out there.

Well actually if your home value increases you pay the increase the next year
If it goes up due to speculation you could be forced to sell due to the increase

rhumby · 17-12-2021, 16:28

To address the points made about the additional risks involved with capital gains vs ordinary income, that's what capital loss carrybacks are for - you can apply the losses in past years against the capital gains in later years. No need to have absurdly low capital gains tax rates relative to ordinary income rates.

ChrisJHC · 17-12-2021, 16:38

Quote:

Originally Posted by AKA-None

Well actually if your home value increases you pay the increase the next year
If it goes up due to speculation you could be forced to sell due to the increase

…in the USA…

Not the case in many countries (e.g. Australia) where your home (principal place of residence) is exempt from capital gains concerns.

fourlyons · 17-12-2021, 17:27

Quote:

Originally Posted by ChrisJHC

…in the USA…

Not the case in many countries (e.g. Australia) where your home (principal place of residence) is exempt from capital gains concerns.

I think aka is referring to the fact that property taxes in the US are based on assed value and paid yearly. I believe in the US the first $500k is tax free when you sell a house you have lived in for at least two years.

danstanford · 18-12-2021, 02:40

Quote:

Originally Posted by AKA-None

Well actually if your home value increases you pay the increase the next year
If it goes up due to speculation you could be forced to sell due to the increase

Most property tax systems use the relative value of homes within the grouping at a single point in time to then divide the property tax rates appropriately. If real estate values increase and your home goes up in value the assumption made is that they all went up in value so they continue to use the previous values to go against the mill rate. The principle of the system is that your taxes will only change as the municipality needs more (or less) money to conduct business.
When the periodic reassessment dates happen the mill rate is adjusted to suit so that the increase in value does not artificially inflate the tax rates you pay on your home.
There could be a system out there that works as you describe but it is not widespread nor would it work very well. Your taxes adjust based on the needs and decisions of the relevant government.

valhalla360 · 20-12-2021, 21:05

Quote:

Originally Posted by JBP

This isn't really a fair statistic. It's very popular among people who want to convey the impression that the rich are burdened with supporting the lazy rest of society, but it's just comparing apples to oranges. You have to compare the INCOME of the top 1% to their tax burden. You can't simply state the tax burden and conveniently ignore the income levels.

True...the bottom 50% of earners pay 0% and $0 taxes.

valhalla360 · 20-12-2021, 21:13

Quote:

Originally Posted by Gadagirl

If that works out than flying pigs would be a normal sighting! That form of financial extreemism is not what I personally would consider a sound solution.

How ever this is a reflection and a poor choice on your part. You choose an ultra conservative government and their policies as what not to do but you you've defended simlar albeit less draconian policies in America. Protections of corporations and religion has been the bain of society for eons.

This is actually a progressive (not conservative politically) solution. Raise the minimum wage so the "common" people have more to spend. Sure this is an extreme solution but look at Venezuela, Argentina and a few other examples of give people more money...it works out the same. The market punishes them for it.