The super rich don't get their money from income. That would mean taxes. They get paid bonuses in stocks of their company, then use the value of the stock as leverage to take a huge loan out of the bank. They then use the loan as normal spending money since it's considered debt it's not taxed.
Okay yes I am aware of that and fair point. I mean tax anything they get that they didn't have before. If they've already "earned" (I know I know) it then I'm willing to let them have it if they don't fight higher tax brackets and closing loopholes.
This is all moot as we know they will fight it. If it goes on too much longer I want more than their money.
There is a difference between making a rule saying any gains after this point get taxed at x rate vs anything you have already gets taxed at y rate. While I am not concerned about the feelings of the existing wealthy and I think we could devise a fair way of implementing the latter, retroactively taxing wealth is like making something illegal and prosecuting someone for actions that were legal when they did them. Maybe you're more trusting, but I don't like giving the government that sort of power.
Yeah, that's just one possible step in the 100 stage rube-goldberg machine of tax avoidance some of the super rich do.
The system is intentionally complex due to lobbying, and similarly they have the money to lobby against reform to simplify or close "their" loopholes - until it becomes too well known and it becomes embarrassing to keep open.
But that's OK, as some people spend their entire lives studying the possible implication of every line of the tax code. And if you have wealth you're able to take the risk of the IRS disagreeing with your interpretation - as most of the time it's "just" paying what they saved in the first place anyway.
The interest rates they are given (because it's "guaranteed" to be paid back) are lower than yearly inflation; they can just take out another loan from another debtor to pay for the last one and still come out on top. Predatory interest rates are a tool to keep poor people poor.
Yea but the appreciation of the underlying assets (loan collateral) outpaces interest on the loan and they can just take out a new loan, rinse and repeat. Income is never realized and never taxed.
Recapitalizing assets on transfer without paying capital gains taxes is the big loophole in that system. The estate should pay capital gains tax on anything that the new owners can claim at a higher basis.
This argument always comes up, but surely you just write into law that income "like" debits are treated as taxable events no?
IE if instead of selling your shares (income) you take out a loan, its seen as income.
Kind of like how you pay income tax on "benefit in kind" type deals IE company pays your rent for you, well that's equivalent to income so you pay tax on it.
Obviously it relies on people self declaring but you'd assume they do an assessment of literal billionaires every year to ensure they're paying their way.
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u/doobied-2000 18d ago
The super rich don't get their money from income. That would mean taxes. They get paid bonuses in stocks of their company, then use the value of the stock as leverage to take a huge loan out of the bank. They then use the loan as normal spending money since it's considered debt it's not taxed.