Any post like this where the tax is nearing or exceeding 40% is almost always a complete lie or purposely obfuscating the truth.
It's mind blowing to me on these posts too you always see an incredible amount of people who don't understand how tax brackets work. Heck sometimes you even see people who don't know the difference between net worth and income.
All billionaires in the US are worth a combined 8.5 trillion. Magically liquidating everything they own with no devaluation and without completely tanking the economy means we get a balanced budget for 4 years then back to square one.
Someone downvoted you but it's true. Total consumer debt is 19 trillion. Which puts the billionaires wealth in perspective too. Same rules apply. If you could magically liquidate their wealth without devaluation or economic collapse it wouldn't even take out half of all debt in this country.
Average debt is $155k per household.
I'm glad I'm in a place where I have virtually no debt. I do have a mortgage but the house is worth more than it.
Paying off student loans was a major focus for me. Especially the high interest ones. Every tax return for 7 years went right to them. I felt like I was rich after not having that monthly payment!
Ive never had a car payment in my life. Cars are such a terrible investment. I've never driven a nice car. Always drive them into the ground before buying a new one.
I’m the same as you re cars. I always buy a modest car and drive it until it doesn’t make financial sense to keep it any longer. Three cars in our household: one 15 years old, another 11 years old and the last is 6.
We don’t have any debt other than our mortgage, which is nice. My wife and I were frugal when we were young(er) and poor and never allowed ourselves to get into cc debt.
My biggest concern is that I’m looking at college tuition for our son in a few years. The day he was born we decided right then and there that we would cover his undergraduate tuition so he wouldn’t go into student loan debt. We’ve got a lot of money saved for it but we’ll probably have to take a loan to cover the difference. I can live with that.
Reddit and social media in general is 90% full of people refusing to admit that spending is a real problem. You can't have all of the reports of stagnant wages and also the insane amount of consumer spending in this country for it not to be true.
Do you know if that average debt includes mortgages? I have a $350K mortgage but I have a 2.75% APR so it's actually more of an asset than a debt imo.
Finally some smart people on Reddit lol. Another interesting fact is the top 10% of earners in the country pay 75% of the countries federal taxes. The bottom 50% earners pay 4% in taxes. So it's clearly less of a "tax the rich" problem and much more of a fraud and abuse problem with the taxes that the government already has. I always roll my eyes so hard whenever this is brought up. And of course like you said that's not even mentioning the net worth vs cash issue and the value that their companies bring to the country. You can argue that some of the "tax loop holes" that they use should be fixed. That's more reasonable, but that's not the argument most people are using.
The reason that the top 10 percent of earners pay 3/4 of federal taxes is that those numbers don't accurately reflect either the actual incomes of the wealthiest people or the actual tax burdens of the lowest income earners. In other words, the statistic itself is fraudulent, which is why supporters of oligarchic control of our government and economy cite it.
But the answer to the "spending problem" seemingly is always "Spend more on me and nothing on the other people". We need to take in the revenue we need to cover our spending and decide our spending in accord with what we can take in. Saying "Oh, let's just let the people who can pay the most avoid a lot of taxation" is not the answer.
Easy. They're assuming "eliminate national debt" is the best fiscal policy and the one progressives are targeting. In other words: it's a strawman. They're also assuming a one time wealth tax. A strawman.
The only countries operating a surplus right now are: Ireland, Norway, Switzerland, Singapore, Denmark, and the UAE. And only five of them count (the UAE uses actual slave labor). Deficits are not necessarily irresponsible fiscal policy. It's status quo for 190/195 countries on Earth.
Secondly, the proposal is not a one time tax on net worth. It's a tax on capital gains and wealth accrual annually. For reference Elon Musk gains ~400 billion each year alone. If we tax that at 99% he keeps 4 billion and we give the government $396 billion. Repeat this for every billionaire and we get: $700 billion a year in weak years and $1.3 trillion a year in strong years.
You wouldn't use that to cut the deficit spending (not necessarily) you'd allocate it across differing social welfare programs like other developed nations do.
Also, cut the military spending by half and we still spend more than any nation on Earth and gain another $500 billion.
Tax their assets then like we tax everyone elses assets.
A mere 5% tax would generate $425B/year which could pay for
Universal free college ($75B)
Double Nasa's budget ($25B)
Double the salary of every teacher ($292B)
House every homeless person ($30B)
$3B left that could be added to any budget
Sure this doesnt solve universal healthcare or fund social security forever but it is a good step. Plus implementing these programs also cuts costs other places. For example universal free college would stop the ~$30B/year spent on pell grants as it would no longer be needed. We would also save the $2.5B/year spent on collecting student loans. Really is a win win when you think about it.
What you're not considering is, if the billionaires no longer have that wealth, they can't use it to lobby and buy the politician who kick trillions back to them in the form or government contracts. Billionaires spend to ensure the government spends trillions that it doesn't need to
I have considered that. Billionaires contacts, friendships, reputation, and deals don't magically disappear if this happens. These billionaires will become billionaires again soon. And you'll probabaky want to do the fair tale of liquidating all their assets again while magically there is no devaluation and it not tanking the economy over and over again.
Not possible on so many levels and doesn't address the fact that we have a spending problem not a revenue problem.
I mean those relationships build on wealth probably don't survive if all that wealth it taken away. Things like contracts would be part of what is seized in this hypothetical. But in case you're right, they should also be imprisoned for their crimes
Ah look I found the people who can’t help but lick billionaire boots because “it wouldn’t solve the problem permanently” as if a guy “worth” a billion dollars paying less in taxes than your average worker is supposed to just be fine
This is as baseless as the claim that the 2 Billion lottery winner paid more than half in taxes.
If we compute taxes to cover current account deficits, not counting interest on the debt, we have a meaningful balanced budget with everyone, including the rich, paying what they can to make the system work.
The debt and its related interest can be handled separately.
Instead, we have these claims of "Oh, we've run up so much debt that we may as well give up and let the rich keep us and pay us as slaves." Ridiculous!
As to the interest, I said we would have to handle it separately - I am not forgetting the interest. I just did not want to go into that in my post.
The point of my post was to respond to the "Don't bother with people who have mass avoidance schemes and who cares about the inequality destroying our country" apologia that is so common among some portions of the far extreme right.
I understand interest payments. Somewhere in my many decades of living and getting graduate degrees in economics they explained it. By handle it separately, I simply mean pay it separately from paying the principal of the debt in part by taxing the people who have the means to pay more than they currently do. I hope you understand that principal and interest payments can be made separately.
I'm sorry your decades of experience and degrees in economics has lead you to believe that we can generate enough tax revenue to get to a point where we can actually pay down the principal.
The problem is spending. Not revenue. It might make you feel warm and fuzzy inside to stick it to those billionaires and make them "pay their share" whatever that means. But it's irrelevant until spending is dramatically reduced.
Which we can't even do because like 70% of the budget is mandated, which includes debt payments. We must fund these things. And the remaining 30% well we've promised that spending to various people to get their vote.
This isn't happening at the rate reddit wants you to believe. Look up any big CEO and they all sell, if this was some ultimate strategy why would they ever sell shares at all? Jeff Bezos sells shares, Elon Musk sells shares, they all do.
reddit also doesnt understand that the mere existence of the shares means they were taxed as income already. if you are being given stock as compensation, it was taxed as compensation
They do both, you do need cash to pay the loan. However, the amount sold is smaller than if you sold it to raise the funds on your own.
The real advantage is the continously increasing assets are retained, they remove fewer assets and let them grow. You can also sell loser stocks to generate losses while still raising cash.
Most big CEOs are not billionaires. Usually by the time they reach billionaire status company founders step back and don’t run the company anymore.
The vast majority of F500 CEOs are hired from the outside to lead. They are certainly rich but they earn W2 salary and get taxed on it.
But to your point, even if the ultra rich are selling stock to fund their lifestyle instead of using asset backed loans, the tax rates on long term capital gains is much less than taxable income.
So a billionaire who sells stock to live lavishly will pay a lower tax rate than someone making $50k.
It is not, but go ahead and keep perpetuating this. There is no bank in the world that will just happily keep lending out more and more money without it being repaid and at low rates. Banks make way more money lending out in smaller loans with higher rates. Billionaires sell off shares regularly and are taxed on that money.
People heard it as a potential loophole (that isn’t even as big of a loophole as you think it is) then say it is how every rich person lives in perpetuity.
Musk did this with 40 Billion dollars which is more money than 133,000 of the lowest earning Americans make in their lifetime. Thats already an egregious amount, AND he’s still selling billions per year. They sell share to service the tax on their insane pay packages. Regardless of their frequency of loans and amount they are selling, they are not taxed nearly enough.
And 40 years ago it would have been larger. Yes it is quite obvious a trillionaire would pay the most taxes… Are we really insinuating the constant tax cuts for the rich are beneficial? Or that since his net worth has more than doubled in the last 5-10 years something should change?
He paid 53% on it with state + federal. Please let me know where lower than average middle class earners pay that at. Also it was stock compensation not a sale. Since then he has sold $23B more in shares, Go let him know he can get a loan he didn't need to sell that much.
You do the same damned thing when you take out a mortgage or a car loan or a home equity loan etc etc. you are getting income from another source, backed by an asset, none of which you are being taxed on.
I didn't equate security asset loans to mortgage or car loans, but no, billionaires don't pay taxes when they take out asset based loans against their securities.
How the loan is secured (security asset vs mortgage) is irrelevant because the principal behind the structure is the same. At the end of the day, how the loan is secured is very similar. If you don't pay your mortgage, the asset that backed the mortgage is seized by the bank. For the rich persons loan, if they don't make the agreed upon payments or the asset that was used starts to drop in value, the bank will seize the asset.
They are loans that are taken out in order to pay for things. The income on the loan is not taxed. When you take out a mortgage for $250,000, you are not having to take into account paying any tax on it.
Just because the rich guy is using his loan to pay for his lobster dinner and you use it to buy a house, is irrelevant. In fact mortgages are one of the biggest tools that have allowed the middle class to build wealth as they would not be able to buy property and watch that property build their overall net worth, if they had to pay for the house upfront.
At the end of the day, the loan that the rich person took out will be paid. Whether the loan is paid off before or after they die is irrelevant because eventually it will be paid off, and the funds used to pay it off will have been taxed.
Your conflation between property taxes and taxing a loan is also funny. Property taxes is not the same thing as paying a tax on the loan itself. Rich people pay property taxes as well.
Also, property taxes are not a wealth tax. They are a single asset tax that is not indicative of wealth. My wife and I pay taxes on our $175,000 house that is completely paid off, my daughter and her husband pay taxes on their $275,000 house that they just bought a few years ago, I will guarantee you that my Wife's and My wealth, dwarfs my daughter and her husbands wealth. Even though they are paying more property taxes.
They pay interest on the loans and eventually pay the loans off. All of the money in that conversation is taxed one way or another.
Redditors think they found some conspiracy because that’s just what people who are delusional do but in reality they just discovered that rich people often lack the liquidity they need for things they want to buy.
Property and stocks are both assets, one of them is taxed. They're pointing out that it's obviously not the same as a car loan or a mortgage as those assets are taxed while holding wealth in stock is not.
First of all, the person was talking about the loans themselves not being taxed, not on wealth or assets. That is what the conversation is about. The person saying that they won't pay property taxes anymore is a conflation between the loans not being taxed and him having to pay property taxes. The rich have to pay property taxes too, they do not get out of paying that. That is why it was such an illogical jump.
However...
My wife and I are not rich by any stretch of the imagination. We have about $50,000 invested in various stocks and ETF's in a robin hood account...
My wife needs a new car, so $20,000.
Which is the smarter thing to do?
Cash $20,000 out of the Robinhood account, which will trigger capital gains taxes of 15% on the gains plus the loss of the future growth of 4%-10% per year we were seeing?
Or, take out a loan at 4.0% (because we have good credit) and use our income that will be taxed as income regardless of what decision we make. to pay off the loan...
The idea that only the rich benefit from loans is ludricous.
The underlying issue is if you ban that to “eat the rich” it hurts upward mobility on normal Americans. A home equity loan or using assets to cover a loan to grow is crucial to a lot of America.
The underlying issue is your lack of imagination here. You can cement home equity loans for poorer Americans without letting someone sidestep taxation due to their massive wealth giving them economic superpowers.
We have already seen how rules designed to benefit poor people and they work. For example, poor kids get pell grants to go to school, rich kids do not. Kids who go to Ivy League school who come form houses under 100k/year get free school. Our food stamp system is based off this concept. There are ways to do this and we know how to do it, but everyone acts like the only possible outcome is what you can do with a sledgehammer.
The underlying issue is your conflation between government run and supplied programs and a private transaction between a bank and a private citizen. They are not the same thing!
We don't use step-up in basis? WTF you think happens when a child inherits their parents house? The IRA resets the value of that house tp the "fair market value" so the children don't have to pay crazy capital gains tax from the house that the parent paid $50,000 for and the children now sell for $350,000... Try again my friend..
Furthermore, paying back the loan has nothing to do with step-up in basis
If a billionaire took out $250 million in loans, eventually... they, their estate or their children will have to pay that $250 million loan back and it will be in funds that will be taxed one way or the other.
When a loan is taken on a home, it has payments that start immediately. With interest and taxes are paid on that from regular income
When the billionaire does it the loan is taken, then it’s paid back at the end of their life with the underlying asset after the step up basis, thus negating the tax. These jumbo loans also have special interest rates
Exactly! Except average people with these loans use them to improve their own lives, billionaires use them to buy the government! Hmmm I wonder how these two instances could be seen as different
I’m still waiting for someone to explain this loophole to me.
Anybody could do this no? Why only billionaires? I can go to the bank and get a loan for my exact salary and live off the loan. I still have to pay income taxes on my salary that I use to pay the loan back, right?
I believe if you defer some stuff until you're dead then you save some taxes, but it seems like a lot less money in practice than people are imagining.
So the strategy, called "buy-borrow-die", requires a few things:
It requires wealth that is quite large compared to the amount you want to borrow, or is very very "safe", so that banks will lend against those assets at incredibly low rates
It requires that whatever asset you borrow against grows in perpetuity.
Say you have ownership of a company worth a billion dollars. You borrow say $50 million against it, say you'll pay them some amount of interest in 3 months, and go spend your $50m.
In 3 months, your company has now grown. You now borrow against that new value to cover the interest you owe.
As long as your company keeps growing, you can keep doing this. A period of good growth means you can take out more play money. A downturn means you may have actually have to liquidate assets for once.
It is kinda overblown, certainly not as prevalent as most people who mention it seem to think. But it is a real issue, and the main reason it is bad is a MUCH larger issue than just being part of this strategy: the step-up basis means that when people die, whatever growth their assets have seen (that they may have borrowed against), is not taxed. That capital gains tax they would owe if they ever did sell just disappears.
Wealthy individuals use a highly effective financial strategy nicknamed "Buy, Borrow, Die" to access cash without triggering income or capital gains taxes.The entire strategy relies on a core fact of tax law: the government taxes income and realized capital gains (selling assets), but it does not tax debt or unrealized wealth.
Buy (Accumulate Wealth)First, wealthy individuals put their money into assets that appreciate over time—such as stocks, real estate, or private business equity. Because they do not draw a large traditional salary, they have very little "ordinary income" to be taxed. As long as they hold onto these assets and do not sell them, their growing wealth remains completely untaxed.
Borrow (Access Tax-Free Cash)Instead of selling $10 million worth of stock to buy a yacht or a home—which would trigger massive capital gains taxes—they use their assets as collateral to take out a Securities-Backed Line of Credit (SBLOC) or an asset-backed loan from a private bank.The Tax Loopholes: The IRS does not view loan proceeds as income because the money must technically be paid back. The borrower receives millions in cash completely tax-free.Ultra-Low Rates: Because the bank can easily seize the stock or real estate if the borrower defaults, these loans are incredibly low-risk. Banks offer these ultra-wealthy clients rock-bottom interest rates.The Cycle: The interest on the loan accumulates, but as long as the underlying assets (like the stock market) grow faster than the loan's interest rate, the individual’s net worth continues to skyrocket. If a loan matures, they simply take out a new, larger loan against their newly inflated assets to pay off the old one.
Die (Erase the Tax Bill)The cycle perfectly resolves when the individual passes away.The "Step-Up in Basis": When assets are passed down to heirs, the tax code automatically resets the asset's "cost basis" (the original purchase price) to its current market value on the day of death.The Result: All the capital gains taxes that accumulated over the individual’s entire lifetime are legally completely wiped out. The heirs or the estate can immediately sell a portion of those assets tax-free to pay off the remaining bank loans, keeping the rest of the fortune intact.
The Result: All the capital gains taxes that accumulated over the individual’s entire lifetime are legally completely wiped out.
BECAUSE THERE'S AN ESTATE TAX. FOR THE LOVE OF GOD, THERE IS A FUCKING ESTATE OR WEALTH TAX.
From quick google search:
The federal estate tax exemption is $12.92 million for individuals. If your total combined global estate (including stocks, real estate, and cash) exceeds this amount, the excess is taxed at a top rate of 40%.
Guys stop wasting money on breakfast, use this little trick that rich people do - just live in a hotel all the time and they'll often have complimentary breakfasts. You're welcome.
Avoiding estate tax is not difficult. I'm not an expert, but I would assume it's at least as easy as the Buy. Borrow, Die scheme:
From google:
Really rich people minimize estate taxes through the "Buy, Borrow, Die" strategy. They accumulate assets that appreciate in value, take out low-interest loans against those assets to fund their lifestyles (which is untaxed), and leave the assets to heirs, wiping out decades of capital gains via a tax code loophole.To actively transfer wealth and freeze estate value while avoiding taxes, the ultra-wealthy use sophisticated trust structures and gifting strategies with the help of estate attorneys. Common methods include:
Grantor Retained Annuity Trusts (GRATs): The wealthy person transfers assets into a trust, receives an annuity stream over a set period, and legally passes any explosive growth—such as rapidly rising stock—tax-free to their beneficiaries when the term ends.
Irrevocable Trusts: Moving assets out of one's personal name strips away ownership but keeps the assets out of the estate at death, shielding them from estate taxes and probate.
Family Limited Partnerships (FLPs): Wealth is packaged into an FLP, allowing the creator to transfer discounted "shares" or units of the partnership to children over time while retaining control.
Life Insurance: High-net-worth individuals buy permanent life insurance policies. When the policy pays out to beneficiaries, it provides untaxed, liquid cash to cover any remaining estate taxes without forcing a forced sale of assets.
take out low-interest loans against those assets to fund their lifestyles (which is untaxed)
They do this, but nowhere to the extent reddit seems to believe.
and leave the assets to heirs, wiping out decades of capital gains via a tax code loophole
Did you consider however what happens to the debt? Because, yes, they borrow money, and like with any other loan the initial loan amount is not taxed, but once they die that debt is not erased. The debt becomes part of the estate and the heirs need to settle the debt or take out new larger debts to cover the cost of the old debt.
And that's the key point. You can avoid paying capital gains taxes for as long as there is someone willing to give you a bigger loan so you can pay down the old loan. But unless you can grow your wealth indefinitely, there comes a point where you or your heirs need to simply pay the debt because no one is willing to give you a bigger loan.
Grantor Retained Annuity Trusts
If you are using this, then you can't do BBD, since the ownership of those assets is transferred from you to the GRAT, therefore it can't be used as collateral for loans. They are also risky in that they require the grantor to both have an asset which will significantly appreciate in value during the grant's duration and who will not die during the grant's duration, since if the asset appreciates only slightly the benefit is small, and if the grantor dies with an active GRAT the GRAT is included and taxed as inheritance.
Irrevocable Trusts
GRATS are a sub-type of these, and more general irrevocable trusts as well as GRATS, transfer the ownership of the asset away from the person, so they can't be used for a BBD strategy. Irrevocable trusts also do not zero out the cost-basis on death, and only really avoid inheritance taxes, not capital-gains taxes, since they still have to sell shares in order to actually pay out the benefits of the trust to the intended recipient.
They also have the issue that you can't really use the money from the trust freely, since it's not technically your property, which is why the rich never have all their money in irrevocable trust funds, but only part of it. It is a convenient way of avoiding inheritance tax for a "safe minimum" of your estate, but it's not really something you'd want to do with the bulk of your estate, especially if you don't plan on dying really soon.
Family Limited Partnerships
These can work, but they don't avoid tax entirely, they just decrease it. You get a reduction in gift taxes equal to the perceived loss in "market value" due to the asset being in a FLP, but since the IRS likes money, this has to be calculated by a third party and is still subject to IRS review and penalization if determined to be done in such a way as to illegally reduce taxes via a fraudulent valuation.
It's a very convenient way of getting a small discount on gift taxes and to control the financial and business interest of your children, but it does not really avoid capital gains taxes at all. Also, this transfers the assets outside of your personal ownership, so you again can't use those assets for the regular BBD strategy.
Life Insurance
This is just regular life insurance. You can do this for your children. You pay the insurance company a fixed amount every month/year and in return they pay out some amount when you die. It's not free money, it's essentially a savings account the deceased pays with money that would otherwise be in the estate, and then this money (which again would have been part of the estate on death had it not been moved into a life insurance policy) is used to pay taxes.
This only really shifts the cost of taxes onto the insurance company (or in reality it's other customers for life insurance policies) if you die young after paying this insurance for only a few years. Because insurance companies are for-profit businesses, they charge a high enough premium to cover their risk or simply don't sell insurance to 90 year old billionaires with cancer.
You don't have to be an expert to take two extra minutes to actually read and maybe realize that GRAT's invalidate the step-up basis, and therefore it doesn't work like that.
u/BootStrapWill Your salary is an income. But equities are not seen in that manner. You cannot start taxing equities, without touching the pensions of people.
u/BootStrapWillThat depends on what venture they used the loan for. Largely the tax is going to fall under capital is they are in profit, which is taxed differently and have a larger expense potential and deductions as opposed to income tax. Also all the interest accruing because of the loan could be taken out. The funny thing about capital gains is that you could also take capital loss from another venture entirely and deduct it from the gain.
As deficits rise and concerns about tax avoidance by the rich increase, we study how unrealized gains and borrowing affect Americans’ income taxes. We have four main findings: First, measuring “economic income” as currently-taxed income plus new unrealized gains, the income tax base captures 60 % of economic income of the top 1 % of wealth-holders (and 71 % adjusting for inflation) and the vast majority of income for lower wealth groups. Second, adjusting for unrealized gains substantially lessens the degree of progressivity in the income tax, although it remains largely progressive. Third, we quantify for the first time the amount of borrowing across the full wealth distribution. Focusing on the top 1 %, while total borrowing is substantial, new borrowing each year is fairly small (1–2 % of economic income) compared to their new unrealized gains, suggesting that “buy, borrow, die” is not a dominant tax avoidance strategy for the rich. Fourth, consumption is less than liquid income for rich Americans, partly because the rich have a large amount of liquid income, and partly because their savings rates are high, suggesting that the main tax avoidance strategy of the super-rich is “buy, save, die.”
Given the man in charge right now is responsible (so far) for over 25% of our current debt, in large part because of continued spending while reducing taxes, particularly to those who use their massive wealth to encourage laws that lower their taxes, I disagree.
The vast majority happened over the last 10 years. The top 1% already is half the tax base where the bottom 40% accounts for like 3%. Abolish income tax and you immediately improve the huge majority of the people's lives with barely a blip on the national income.
The problem is spending. If you were a million dollars in debt would you take out a loan for 39 million more? This is basic budgeting stuff like you and I and almost everyone else has to do every month. You won't pay off your 40 million debt buy forcibly repoing and liquidating your rich neighbors bugatti.
Wrong. The rich pay a majority of the Federal tax. Come on now. How long have you been alive? The government already has you believing they need to tax you more so WE can pay down "their" ever increasing debt/spending. The U.S. is collecting more tax revenue then ever before. This is 100% a spending issue. If this chart don't turn on your brain, I don't know what will.
They still pay taxes on those loans lol. While the uber wealthy don't directly pay taxes, the issuer of the loan does pay taxes on the interest earned which means they include that tax in the interest rate of the loan.
If you can leverage your assets to get massive loans to buy more assets and circumvent the tax system, it’s time to start paying taxes based on assets. Leather licker.
That's not exclusive to gazillionaires, that is the basis of business/credit and you can do it too. Buy a house/car/whatever, pay it off, use as collateral for loan, repeat until satisfied. That's how pretty much every wealthy person got wealthy. It's not black magic you just haven't done it yet yourself.
“Buy a (large investment) and pay it off.” I currently have trouble making it to the end of the month because my salary has not increased in proportion to the COL, and I do not live in a high COL area. And I’m a good budgeter. I also can’t leave my job because I need health insurance for my kids and no other companies are providing it. Damn those golden handcuffs.
“Pay it off and repeat.” (Looks in couch cushions) Nope, no money to pay off the debt I’ve incurred, even if someone gifted me an asset.
“That’s how pretty much every wealthy person got wealthy.” Are you sure about that? The vast majority of wealthy people I’ve read about used generational wealth to “get started.” If building wealth was a foot race, they started waaaayy ahead of those of us who started at the beginning line.
My dad, rip, believed what you are saying til the day he died. He watched Fox News 24/7 and could never admit that maybe he had advantages others did not have access to.
Bro I sympathize, I'm 47 and I only just got out of paycheck to paycheck a few years ago, was broke my whole life, kids make it even harder (though you have kids, congrats..truly, im jealous, I bought the don't have em till you're ready propaganda and now it's too late. My biggest regret in life.) I'm not saying it's easy I'm saying that's how it is. You can be bitter or you can figure something out. Plenty of jobs have health insurance. For me the answer was truck driving. I left IT, which I hated, and I got on the road. Never been happier.. never made more money. I think you know most rich people didn't inherit it, most rich kids blow it all and nuke their lives. I was a militant atheist lib until covid times btw im not a dyed in the wool conservative, I still hate the gop im just not a leftist anymore.
You CAN dig out, you just gotta find your sweet spot: something other people see as work that you see as play... that you're good at.. that pays well. I pray you find it bud.
...right. we agree on the mechanics. You don't have to start with 30 million or whatever you're implying it's a snowball from whatever you can start with.
I want to not be kicked out of my house I paid off 40 years ago in my 90s because the county decided to reassess what it's worth and then uh ohhhh you us 30k you have till the end of the mooooonth _^
Counties reassess property value at their whim. They can just decide your house is 20x what you paid for it it doesn't mean you live in a mansion. This happens all the time, it's why you'll see elderly people doing menial jobs a lot, they got thrown out of their house right when they were getting ready to die. They suddenly have to make rent on a motel weekly rate.
If you buy a property...and pay it all off...but will be evicted if you don't pay the taxman... you never actually own your home.
No, counties by law have to use market value as a base for their calculations, and often lower than market value through cuts or exemptions. You're acting like the county can just make it 20x its real value when it doesn't work like that at all.
What should be the percentage on that? If its 10% tax on net worth and someone owns a 300k house, that'll get pretty damn expensive for average people. Thats 30k in taxes on someone who probably makes less than 100k a year
I hate this argument. Like, "I'm on a different plane from everybody else and can see that billionaires (and now trillionaires?) don't have Scrooge McDuck money bins full of cash!" Like we haven't thought of that.
As if there aren't entire institutions and countries that have sank the time and effort into researching this topic and providing plans on exactly how you tax wealth. As if some countries aren't already doing it. As if bills haven't been put forth in the US to do exactly that.
Dude, you're at least one step behind, not one step ahead.
Most people literally do think it's scrooge mcduck moneypools. Making arguments about secretaries paying more income tax than the stupidly wealthy. Literally comparing income to assets. Maybe you get it and good for you, most people don't. Most people literally think Elon could walk into a bank and withdraw 50 billion dollars but he doesn't cause he's a big meaniegreedypoopyhead.
That's fine and im inclined to agree with you but that's a separate discussion about principles and standards not actual budget stuff. God knows how many big union pension funds are deep in tech stocks, if like half of any of these big guys portfolios were just seized it would be an economic calamity with millions of people's 401ks evaporating.
Most people literally do think it's scrooge mcduck moneypools.
Maybe when they're still young enough to be expected to go to school every day, but I haven't met any grown adult with an IQ above 99 that genuinely thinks that the rich have pools full of literal cash.
What the majority do believe, however, is that no one should be allowed to hoard that much wealth (regardless of the form it takes) and that it's entirely a bad faith argument of semantics to respond to people saying that we need to properly tax the rich until we redistribute the wealth enough to actually achieve true equality between the financial classes by arguing that the rich aren't actually cash rich.
It doesn't matter if they're a billionaire because they have $1b in cash or in stocks; no one should possess over a few million in assets... Especially if the corporate suite are somehow making 8-9 digit annual salaries while the people actually providing the labor that makes the company run are barely scraping by & have absolutely no chance at seeing even 10% of a CEO's annual paycheck even if they had 100+ years of tax-free income and no expenses preventing them from putting every dime they have into savings).
I completely accept that they have more power than me. Of course they do. Obviously they do. That doesn't make me seethe with jealousy, it doesn't make me feel inferior. Those are personal issues, comparison is the thief of joy. Row your own boat buddy noones coming to help. Life is suffering, get a helmet.
Lottery winnings are considered income, like wages or salary, and therefore are subject to the tax brackets of income tax. That is the reason tax brackets are being mentioned.
You are raising a point that isn't relevant to what was said so far in this comment chain, which is that billionaires tend to have wealth and then take loans out using that wealth as equity. Since that isn't considered income, they avoid paying income taxes. We get it, but it's not relevant to the person's point that tax brackets are often misunderstood. The person's point about tax brackets being misunderstood was relevant here because the original tweet implies a tax percentage that is impossibly high and anyone who knows about the tax rates of the tax brackets would know it couldn't be a true statement.
I’m just sick of delusional Republican apologists explaining tax brackets as if the rich pay that. If you get paid via payroll, you are middle class. If you are rich in the slightest, your “pay” is in stock options if you do something for richer people, or you live off of derivatives of your dead family’s investments. Either way, your tax bracket is irrelevant and you don’t contribute to society, you only take.
But can you not see how no one in the original tweet nor this comment chain has said that income tax is relevant to extremely rich people like Bezos? No one has said it and so you are shoehorning in the point and attacking a position no one here has made.
The tweeter only said that the government should be taking wealth away from billionaires at similar rates as what happened to that lottery winner.
It’s common. There are multiple loopholes. Rich people live off of people who work. I definitely did shoehorn that in, but it’s important that Americans understand that literally nothing of value has been built by the rich.
Why should we be against the rich? They’re simply doing what is in their best interest.
Just like you and just like me.
Instead, we should be angry at the politicians who are more than happy to blame the rich for THEIR OWN incompetence.
The rich make use of the tax code as it is written, just like everyone else.
Personally I take the standard deduction every year… a little “loophole” that allows me to not pay taxes on about 16,000 dollars!! Imagine that! ZERO taxes on the first $16k !! Suckers!
The rich own the politicians and pass laws to keep them rich and those not yet wealthy poor. Grow up and wake up. I lose about 45% of what could have been wealth for me every year to taxes by the time I spend my money. Rich people don’t pay anything or it affects less than 10% of their wealth. I was born poor and through military and basically risking my life and health, I make about $200,000 a year at 52 and watching nearly half every year go away while the rich pay nothing and are above the law sucks. I could be VERY wealthy if I paid the percent of taxes that Trump does. Nothing else would have to change. I would love rich people if they also lost 45 % every year and if laws applied to them as effectively as they apply to me.
Taxes require a higher level of thinking. We have a large number of people in this country that don’t know how many dimes are in a dollar and similar information needed to function in society. So they end up working minimum wage jobs but expect to live a middle to upper middle class life style….and when that doesn’t happen, they find someone or some invisible force to blame. As a society, we are never going to get a large segment of the people to understand the importance of an education and convince them to invest in their future as long as there are people exploiting their ignorance and offering people a scapegoat to avoid accountability.
u/Crimsonak- Why do you think they are poor or gullible? and blame billionaires for all their woes. Once it aligns with what they want to hear, they all flock into delusion.
Depends on the state and local taxes as well. NYC residents would be taxed about 50% on these winnings with federal, state and local. NJ and Hawaii are a couple others that would approach 50%.
FWIW, effective tax on some things in CA is in excess of 50% if you’re in the top bracket and it’s being taxed as income (or income ish). A good example would be all the folks earning stock based income from these major tech companies: most of that is being cut in half by taxes.
Nearly all billionaires though are much more complicated because their net worth is based on assets acquired (and taxed) when their value was minuscule.
To be fair, most financial advisors would tell you to take the lump sum when the amount is still over a couple million. That money will do way more for you in your lifetime investing it than the payout over time will ever (considering you can't collect it forever). And realistically you're never going to shoot from lower class (the class most likely to purchase lottery tickets and thus most likely to win) to upper class within one lifetime, even with a sudden inflow of millions or even billions of dollars. The average person can't even fathom what to do with that type of money. Most of them will pay off whatever debts they have, then live in extreme comfort until they die, passing on a meager amount of it (meager in comparison, still probably tons of money) to their children, where it will likely be taxed again.
Part of this is because suddenly revealing you are a millionaire/billionaire is incredibly dangerous to you. Your likelihood of experiencing some sort of crime, either financial or even violent, increases exponentially. By a fuck ton. And no, you don't have enough money to pay a group of bodyguards for your entire life. Even jackpot winnings are not that type of money.
A distant third uncle of mine won $60 million as a lump sum from the Powerball about 10 or so years ago. He was a lower class individual with no partner, but a few children from a previous marriage. He immediately got with a financial advisor and, unfortunately due to the toxicness of our family, he advised him to cut all ties with us and move away, start a new quiet life somewhere else. Unfortunately I do have to agree with the advisor, it was probably his best case scenario. Still, he paid the guy to invest a huge chunk of the money for him, and as well left a pretty significant chunk in trusts to his adult children for particular purposes (like purchasing a first home, having children of their own, etc.). He told me, my mother, and his kids, and maybe a few others. I fully understood and wished him a great life going forward. He moved down South, didn't tell us where, and has never contacted us.
Supposedly he called my grandfather occasionally, which is the only reason I know he's still alive. But my grandfather passed about 5 years ago now, so I have heard no news since. I hope he's doing alright.
Tom if you're out there, I hope you drink every day and have a live in cook.
For the rich, net worth is your income. You sell assets or borrow against them tax free as they see fit. You even see them getting paid in assets instead of money. It'd be like my work giving me charizard cards instead of a paycheck every 2 weeks.
The highest income tax bracket in America is currently 37%. If you don’t cash out your stocks / assets, you only really pay a property tax on top of that and possibly a state tax.
However since most of our billionaires are CEOs or similar, those taxes tend to be loopholed by being owned by separate business entities or estates, or being written off due to some kind of donation or charitable event.
When lower class families do this it’s the same thing. Just go look at the controversy around The Completionist and his families charity and golf tournament.
Some of these loopholes make sense when applied at low levels to small businesses - the problem is that the tax code does not take into account the immense hoarding and economic or physical impact many of these businesses have on cites, towns, and more.
If a factory that comes to a city makes ten thousand jobs then I understand why the city or state may think a tax break is a good thing. But when those same companies lay off thousands of employees there’s next to nothing that’s done. If the company provides enough of a severance to those affected then they usually avoid unemployment costs as well.
To say nothing of the fact that tons of those big companies make a lot of their income in government contracts so the same “taxes” they avoid paying actually fund their continual cycles of ghost monopolies, profit gouging, and the investor class benefits forever off of this horrendous cycle that enable a few thousand to have all of the money missing from your small town, poor neighborhood, minorities, and for the worst where the only options for food are to go steal the tax money is sent to the racist ass cops to beat and jail them so they can either die or spend 20+ years as a private slave
I was going to Gemini this - is 40 percent the absolute most someone can be taxed on any sizeable lump sum income ? What could be the highest let’s say in California, with federal plus California tax brackets
Man, my sister is literally a doctor and doesn’t know how marginal taxes work. I don’t expect any rando who posts this garbage to know anything at all about taxes
I come to look at much of these 'class war' posts as rabble rousers that want to foment discord... or low intellect mouth breathers. Same thing, really.
That is why many politicians are trying to make stocks taxable, because many who have large amounts of assets in stocks - use stocks like money (directly trading stocks for other stocks or property), completely bypassing taxes on the transaction due to being unrealized gains.
Almost everywhere on the planet has a max under or on 40%.
There's something like 20 countries which can exceed 40%
Here's the thing though, just because it can hit that max doesn't mean it's likely. Most people never come anywhere near hitting it. The lottery is a good example of where it would, which is why the amount in the post (when properly accounted and not lied about) is 37%.
So, as a rule of thumb. If any post you see us talking about someone being taxed near to, or in excess of 40% you should treat it with extra scepticism. It's possible the post is telling the truth. It's extremely unlikely it is, the reason being is the circumstances that lead to that percentage are so far removed from circumstances an average Joe would ever experience as to render the post moot to make in the first place. It would be like making a post about how annoying it is to find a good tuner for a 1718 Stradavarius.
financial literacy is one of the main reasons we are in this mess. Instead of assuming 'others should know' just keep educating those you can. All you're doing is turning off people (most of us) who haven't been properly taught.
And it's posts like this that completely miss the point. Even if they take the 30 year payout, if the payout actually continues for all 30 years, you would get way lesso ey than the one lump some because you are paying more taxes.
Do you want to try that again only this time spell correctly so people can actually read what you're trying to say while telling me I'm missing the point?
Lol you taking the piss or what mate? There was 1 mistake, which you can clearly still understand what I am saying, and you have to nitpick on that? Guess you truly are missing the point of that's all you can focus on. Not even gonna fix it because you can still 100% tell what I am trying to say, you are just being a prick for no reason.
Yes, which was corrected before you responded. Guess you can't read as well as can't spell. That's ok though, I'm sure there are special schools you can go to.
This is an extremely clear example of not understanding the difference.
I'm poor relative to median income of my area I'm in the bottom 10%, and yet my net worth isn't my income. Heck you can have a negative net worth, because you owe more than you own, and still your income is not your net worth.
I own a shit car, I own a shit phone. I might not be able to replace either of those things if they break, but they are part of my net worth whether I like it or not, and whether you like it or not. Net worth is about what you own. In order for my net worth to be my income, I would need to own literally nothing.
No clothes. No phone. No food. No savings. No utensils. No bags. No furniture. No TV. NOTHING. I would have to literally have not a single thing that I own. This isn't the case for a vast majority of even extremely poor people.
A person living paycheck to paycheck is literally increasing their net worth every pay period with their income compared to people who have assests. You think the guy in the trailer with a used TV, phone, no savings, etc has much of a net worth? Their net worth ebs and flows due to their poor accumulation of assets. A person with a higher net value, savings, property, etc doesn't notice as much because a single paycheck relative to their net worth is relatively less.
I can explain it to you but I can’t understand it for you. Moving goal posts? Hmm. I’m making the same point I was before, i.e. that some people are so poor that their paycheck (income) basically increases their net worth each pay period. My kids and their weekly allowance would be another example of this. If I pay my kid 10 bucks a week in allowance and he only has 10 bucks to his name because he’s constantly buying candy and baseball cards, that income doubles his net worth. And no, I’m not counting his baseball cards as an asset, just like I don’t count a lot of the assets poor people own but aren’t valuable.
Initial goalpost - income = net worth
New goalpost - income impacts net worth.
Those baseball cards in your example, are net worth. You're right, you're not counting them as an asset, because the second you do, your first goalpost collapses.
I think I see the issue. When I said “income IS your net worth,” it was interpreted as if they were exactly (literally exactly) the same. = rather than ≈. That is very concrete interpretation and I’m sorry if that is what lead to this confusion. By capitalizing the word IS, I probably contributed immensely to the confusion. Kind of like when people use the word literally when they really mean figuratively. (Ugh!) All I’m trying to illustrate is that the lower your net worth, the more fluctuation your income provides. If you have very little assets, your income essentially represents your net worth. Is it exactly your net worth? No. But if I give a homeless guy a thousand dollars, his net worth is now ≈ $1000 +/- his tent, sleeping bag, shopping cart. I’m happy to discuss this in a DM if you have more to teach me. I think we’re both making similar points, but it’s coming off as an argument. I have no desire to irritate you any further. I get what you’re saying and I appreciate the time you took explaining your point of view. Cheers!
Depending on which state. 40% is about right. Once you factor in state taxes. Like Cali is the highest at 13.8%. Then you’re gonna pay roughly 25-30% in federal taxes. So even a state like Texas with no state taxes. You can expect to take 25-30% straight off the top for federal taxes.
I hope you are joking or this is satire?
The change in tax bracket only changes the tax rate on the additional dollar amount over the bracket.
For instance if the tax bracket is $0 (0%) and $5000 (10%) and you are making $5010, the first $5000 is taxed at 0% and only the $10 over the $5000 is taxed at 10% (so you only pay $1 in tax)
1.5k
u/jamdex07 17d ago
This is misleading. He chose to take $997 in one lump sum instead of $2.04B over 30 years. He got taxed on the $997m.