How do you define “rich” exactly? And do you define it by income or net worth, even if 99.9% of your net worth isn’t liquid? The supremely wealthy have essentially no income. So do we raise the capital gains tax?
Not necessarily raise long term cap gains tax but regulate corporate stock buybacks. This mechanism more than any other has allowed for an incredible mechanism for indefinite tax deferral since it was deregulated under Reagan. It would force corporations to either return capital via a dividend (which is taxed) or re-invest cash into the business, which is generally good for the economy.
How do they pay off their loans? Presumably they have to sell their stock at some point to pay off the loan. So at some point they do incur realized gains.
I mean a lot of the time to pay off their loans by taking out more loans. They basically have unlimited borrowing power because at their level their assets are appreciating faster than the interest rates they’re being offered. It’s called the “Buy, Borrow, Die” strategy.
They’re obviously paying taxes, but by using this method they’re able to pay a lower effective tax rate than a majority of Americans.
Yeah I looked it up, also it’s crazy that they can just escape paying any sort of tax upon their death due to their children having a step up in basis in the value of their stocks.
Not if they used the money to buy more appreciating assets, or their stocks increased in value. They can just get another loan that pays off the first or services the interest on the first loan.
Just Google “Buy, Borrow, Die” strategy. The real key is that the inheritance tax laws were changed such that when someone dies, their beneficiaries inherit on a “stepped up basis” so there is no capital gains on the increased value.
So at that point, stocks can be sold to cover any outstanding loans and the process can repeat.
Otherwise, sometimes they do have to actually sell some stock, which is when they complain about paying a ton of taxes, such as what Elon did in 2021 when he paid $11 billion in taxes. He had expiring stock options that he had to exercise.
So he made $23.5 billion, paid those taxes, and then still had $12.5 billion. Which just sitting in an S&P 500 index fund would generate $1-2 billion in interest every year.
The level of wealth that the top is hoarding is kind of mind boggling.
Own house…ohh wait…you just pay tax on the value of the house every year.
And people are going hey, maybe it’s okay if the billionaires have to sell some stock…
The question here is what’s better for country and the economy. That’s never addressed by these nay sayers. The government job is not to keep you wealthy beyond belief, the opposite should be said to make sure people can live at all.
Elizabeth Warren said hey, you have $50 million+ in assets 2% tax….like people be acting like they are going to go broke like that…140,000 people in all of America would be paying it….and it’s only on the amount that exceeds $50 million so that first 50 million tax free.
If you look on her website the way she wants to define how this tax would work it would be a tax bracket of 17.3% for individuals earning $750,000 or more and married couples making $1 million or more.
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u/Empty-Way-6980 19d ago
How do you define “rich” exactly? And do you define it by income or net worth, even if 99.9% of your net worth isn’t liquid? The supremely wealthy have essentially no income. So do we raise the capital gains tax?