No, the problem is that most of the truly wealthy peoples’ wealth is not in the form of income. A high income tax bracket does nothing.
It needs to be a property tax, and it needs to be on everything they own, not just real-estate. Once that happens, it doesn’t need to be 90%, or anywhere near it.
There’s a reason why the PR-friendly rich people keep talking about wanting high income taxes, but no one’s talking about a total property tax.
This is nonsense. Wealthy people do tend to have high income, though of course most of it comes from invested wealth income and capital gains instead of wages. Taxing these is known to be effective.
I do think governments should explore taxing unrealized capital gains too, though.
I do think governments should explore taxing unrealized capital gains too, though.
Oh, boy do they ever.
One big issue is that they can take out loans with stock as collateral. Yes, they eventually have to pay the loan back (and sell stock to do so, thus paying some capital gains), but they can still get around paying their fair share of captial gains (eg: sell the underperforming stocks to minimize capital gains, or just take out a new loan to repay the old one). While I can see the benefit of being able to use your stock as collateral for a loan, there needs to be changes to how capital gains are calculated in this case.
Another issue is that when they die, the inheritor of their stocks gets them with the cost basis reset (stepped-up basis). Let’s say I have stock that I purchased for $10/share. I die when the price is $100 and leave it to my sister, and she sells it when the price is $110. She only has to pay capital gains on $10/share, not $100/share. If you combine this with a cycle of taking out a loan to repay your previous loan until you die, this means that your estate can settle the final outstanding loan with virtually no capital gains tax at all, since the stepped-up basis for your stock goes into effect once it goes to probate (ie: before being distributed to creditors and beneficiaries).
No, the problem is that most of the truly wealthy peoples’ wealth is not in the form of income. A high income tax bracket does nothing.
It needs to be a property tax, and it needs to be on everything they own, not just real-estate. Once that happens, it doesn’t need to be 90%, or anywhere near it.
There’s a reason why the PR-friendly rich people keep talking about wanting high income taxes, but no one’s talking about a total property tax.
This is nonsense. Wealthy people do tend to have high income, though of course most of it comes from invested wealth income and capital gains instead of wages. Taxing these is known to be effective.
I do think governments should explore taxing unrealized capital gains too, though.
Oh, boy do they ever.
One big issue is that they can take out loans with stock as collateral. Yes, they eventually have to pay the loan back (and sell stock to do so, thus paying some capital gains), but they can still get around paying their fair share of captial gains (eg: sell the underperforming stocks to minimize capital gains, or just take out a new loan to repay the old one). While I can see the benefit of being able to use your stock as collateral for a loan, there needs to be changes to how capital gains are calculated in this case.
Another issue is that when they die, the inheritor of their stocks gets them with the cost basis reset (stepped-up basis). Let’s say I have stock that I purchased for $10/share. I die when the price is $100 and leave it to my sister, and she sells it when the price is $110. She only has to pay capital gains on $10/share, not $100/share. If you combine this with a cycle of taking out a loan to repay your previous loan until you die, this means that your estate can settle the final outstanding loan with virtually no capital gains tax at all, since the stepped-up basis for your stock goes into effect once it goes to probate (ie: before being distributed to creditors and beneficiaries).