What It Takes to Be in the 1% Around the World

[valhalla360]

Originally Posted by AKA-None

Hmmmm you know some people think that if stock prices go up the company has more money but actually the company only gets the money when the stock is first sold. After that any increase in the price of the stock does not increase the money the company has

The stock price is just a reflection of the money in the company.

It's not a direct bank account balance as there are non-liquid assets that are difficult to assess an exact value and there is value (or sometimes cost) associated with future potential money coming in or going out.

But long term, stock prices track the value of a company.

[GordMay]

Originally Posted by dannc

Yes, but YOUR post was telling only one side of the story, it is only fair for YOU to provide more information to balance out YOUR post...

Much more would be plagiarism.
I post only enough to give a very basic idea, of what the linked article is about - a teaser, if you like.
If you think my summary is one-sided, you are free to quote another side, that you think more representative [or 'acceptable'].

[letsgetsailing3]

Originally Posted by valhalla360

You missed the point. If we go to a sales tax based system, your earnings or investment returns are irrelevant, since they are never taxed.

In this scenario, there is no income tax or capital gains tax. If you don't want to pay taxes, don't spend money but of course, what's the point of making money if you don't spend it...and even if one generation doesn't spend it, almost always the next generation does, so it all gets taxed in the long run.

Estate taxes often kill off moderately prosperous family farms and businesses because there is enough "capital gain" that gets heavily taxed at the original owners death that the kids can't come up with the cash to pay the taxes without liquidating. So don't forget the unintended consequences.

I'm OK with families having to move along from farm ownership if they can't afford taxes. Taxes should be a part of their planning, just like it is for everyone else.

But if someone wants to make an allowance for that very special case, I'm OK with that, too. As it is, however, there's a massive loophole in the capital gains tax, which most wealthy people are exploiting in order to preserve their wealth from generation to generation. And that is most assuredly NOT fair. (Or for Mike O'Reilly, not equitable.)

Why are we leaving all those capital gains untaxed on death? Because the wealthy like that loophole, and they're willing to pay Congress to keep it.

[Tetepare]

Originally Posted by letsgetsailing3

I'm OK with families having to move along from farm ownership if they can't afford taxes. Taxes should be a part of their planning, just like it is for everyone else.

Most family farms don't generate enough profit to stuff it away and later pay inheritance.

Taxing inheritance, whether farm or other, is "unfair." It's already been taxed. Why tax it again?

There is also a practical ramification. Whether a farm or small business, the risk is that the inheritor cannot pay the substantial taxes, and thus the concern folds.

In the case of farms, they get gobbled up by the big industrial farming conglomerates. Food doesn't stay local, it gets sent away. And, let me suggest that industrially owned farms may be a bit loose with land and ecology management. Remember the 1980s in the Midwest?

Let's turn this toward marinas. Other threads have cried about family-owned marinas being taken up by large, multi-site firms. Nobody thus far has stood out and said "I'm so glad they sold out that little marina!" so I presume those clients who've been in that situation are less than satisfied. And what's driving this? Well, yeah, first land values, and second inheritance taxes.

[letsgetsailing3]

Originally Posted by Tetepare

Most family farms don't generate enough profit to stuff it away and later pay inheritance.

Taxing inheritance, whether farm or other, is "unfair." It's already been taxed. Why tax it again?

There is also a practical ramification. Whether a farm or small business, the risk is that the inheritor cannot pay the substantial taxes, and thus the concern folds.

In the case of farms, they get gobbled up by the big industrial farming conglomerates. Food doesn't stay local, it gets sent away. And, let me suggest that industrially owned farms may be a bit loose with land and ecology management. Remember the 1980s in the Midwest?

Let's turn this toward marinas. Other threads have cried about family-owned marinas being taken up by large, multi-site firms. Nobody thus far has stood out and said "I'm so glad they sold out that little marina!" so I presume those clients who've been in that situation are less than satisfied. And what's driving this? Well, yeah, first land values, and second inheritance taxes.

Like I said, I'm OK with some kind of carve out for real estate.

The real problem is unrealized capital gains, which gets stepped up to current value on inheritance. So someone like Bill Gates can avoid the capital gains on billions of dollars of Microsoft stock, which has NEVER been realized. Someone can inherit those without paying capital gains.

It is in no way "unfair" to tax inheritances, as by definition, the inheritor didn't do anything to earn those, except accident of birth or association. You can make all sorts of adjustments to tax law to avoid taxing the inheritances of 95-99% of the people, while still killing the loophole that protects the richest 1% from paying taxes on those.

If anything, large inheritances often trap the inheritors. Which is why people like Warren Buffet limit how much their kids will get. Still, whatever they do with that money will likely benefit from a stepped up cost basis.

[valhalla360]

Originally Posted by letsgetsailing3

I'm OK with families having to move along from farm ownership if they can't afford taxes. Taxes should be a part of their planning, just like it is for everyone else.

So you are in support of all farming moving to big corporate farms then because that's the result we've seen when inheritance taxes hit. Small/medium size businesses get hit similarly.

But again, you ignore the premise I was discussing...with no income or capital gains taxes in a pure sales tax system, it's irrelevant.

[danstanford]

Originally Posted by Tetepare

It's already been taxed. Why tax it again?

This is one of the principals behind the capital gains rules. Unlike employment income, presumably you bought your capital items with already tax paid income so gains on that capital should not be re-taxed at income rates.

To use a real world example, take the real estate I have spent the last 30 years paying off. I paid personal tax on every penny of the original purchase price as I paid down the principal amount of the mortgage. It has become my retirement fund. If I were to sell it today it would put me in the top tax bracket so 50% of that value would disappear in tax. Did I mention that I paid personal tax on all the money that it took to buy the property?
As others have pointed out, there is also the element of inflation which needs to be taken into account which is the other large element of a different rate for capital gains vs personal income.

[letsgetsailing3]

Originally Posted by valhalla360

So you are in support of all farming moving to big corporate farms then because that's the result we've seen when inheritance taxes hit. Small/medium size businesses get hit similarly.

But again, you ignore the premise I was discussing...with no income or capital gains taxes in a pure sales tax system, it's irrelevant.

I explicitly said I'm OK with some kind of carve out for those situations.


A sales tax situation would be a completely different system. I haven't studied that enough to have an opinion on it. Has that been successfully implemented anywhere, I mean where income wasn't taxed at all?

[goboatingnow]

Originally Posted by valhalla360

But is it equitable or fair:

- With regular hourly earnings, you put in an hour of effort and you get your hourly wage exactly as agreed to. Short of bankruptcy or illegal activity on the companies end, it's pretty much a given, you will get your expected pay.

- With investments and starting a business, there is a very real risk, you wind up losing some or all of your money. A large percentage of new business fail.



Investment returns are not the same as "income" as defined by tax codes, so its disingenuous to say they are the same.

Certainly where I’m from anything that results in income for me gets taxed as simple income irrespective of the source of such funds. The exception is approved retirement schemes ( which is only delayed taxation ) or occasional invest in your business schemes.

Investment can be risky or completely safe , the risk decision is yours. The tax man doesn’t and shouldn’t be a partner to your risk taking and here, isn’t. You make money you pay tax at income tax rates, whether it’s Salary, dividends , investment income etc.

[valhalla360]

Originally Posted by letsgetsailing3

I explicitly said I'm OK with some kind of carve out for those situations.

A sales tax situation would be a completely different system. I haven't studied that enough to have an opinion on it. Has that been successfully implemented anywhere, I mean where income wasn't taxed at all?

So how far does the carve out go? What about family businesses? This is the problem with our tax code, there are literally thousands of carve outs until it's so convoluted that it's easy for inappropriate carve outs to find their way into the system.

You were responding to a sales tax solution, so... As I said in my original post, the politicians want nothing to do with it because it's hard to build in those carve outs that they use to buy their next election.

[AKA-None]

Originally Posted by valhalla360

The stock price is just a reflection of the money in the company.



It's not a direct bank account balance as there are non-liquid assets that are difficult to assess an exact value and there is value (or sometimes cost) associated with future potential money coming in or going out.



But long term, stock prices track the value of a company.

Really? Like GameStop?

[goboatingnow]

Originally Posted by danstanford

This is one of the principals behind the capital gains rules. Unlike employment income, presumably you bought your capital items with already tax paid income so gains on that capital should not be re-taxed at income rates.

In a fair progressive system , all gains , should be taxed the same , irrespective of wether it’s comes from wages, salaries , investments or capital gains. The fact that you already paid tax to buy the investment is irrelevant, you are only taxed on the “ gain “.

But most tax systems , want to encourage asset transfer , and high gains taxes discourage this. So capital gains is usually a bit lower then income tax.

I’m a fan of overarching flat rate taxes , tax absolutely all income from any source at a fixed rate, with a tax free allowance at lower incomes to accommodate the lower paid

[Tellie]

Originally Posted by dannc

How much did the people pay in capital gains tax?

Later,
Dan

How many thousands of people do they give jobs to and what is that tax base amount to?

[valhalla360]

Originally Posted by AKA-None

Really? Like GameStop?

Did you read the last line of my comment "in the long run". Care to share what percentage of stocks have had similar events?

A group purposely trying to damage the system is not the same as a failed system but even then it fairly quickly came back down in line with it's underlying value because the underlying value couldn't support it.

If you want to play with stocks where the data clearly does not align with the current price, that's on you.

[goboatingnow]

Originally Posted by Tellie

How many thousands of people do they give jobs to and what is that tax base amount to?

That is not really a consideration. People employ people cause if makes them money.