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Comment by black6 | Hacker News Reader

> If people want to reduce the tax burden on folks with low incomes just scraping by, the way to accomplish that is by increasing taxes on corporate profits, very large incomes, large inheritances, etc. However, the wealthy in this country have largely succeeded in a 50-year campaign to redistribute wealth upward.

It's an unpopular opinion (because of the propaganda campaigns waged by the wealthy), but a wealth tax is very much needed in this country. The income tax is fundamentally designed to prevent the accumulation of wealth. So us worker bees bear the costs of financing government, while the wealthy, who owing to their accumulated wealth, do not need or have an income, get to reap the benefits.

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The wealthy paid taxes on their wealth back when it was income. And they pay capital gains tax if their wealth grows.

Only if they realize those gains.

Why should unrealized gains be taxed?

You can get interest-free loans against your illiquid assets. With enough income coming in to replace the spent money, it's essentially as if you're spending the illiquid assets themselves, without having had to liquidate (and thereby pay taxes on) them.

This is really more like using the illiquid assets as collateral, not like spending them. The loan payments still need to be made from income, or by liquidating assets, both of which would be taxed.

It's plain-old collateral if you're just spending the money normally, sure. But you can also take that loan and use it as leverage on a bet (i.e. a risky investment.) Then, your upside is more untaxed capital gains; while your downside can be immediately repaid by liquidating the assets, leaving you only with the need to pay the taxes.

There is a reason that investment firms exist: this process is a ratchet for making untaxed (or less-taxed) income.

But the monthly loan payments need to be made somehow, no matter what you use the loan for.

If you pay them with income, you paid income tax.

If you pay them by liquidating assets (including assets you purchased with the loan money and then sold), you pay capital gains tax (unless you sell for a loss).

In this case, I was assuming a risky investment that returns within the same month.

"The wealthy" generally structure their income to avoid it being "income", or hide it in jurisdictions the US can't see, or any of dozens to hundreds of other tricks to make sure they don't pay anything resembling their share.

This is a game as old as the US income tax itself; the 16th Amendment wasn't passed to legalize income taxes (they were already legal), but to make sure Congress could tax income "from whatever source derived", since wealthy people were restructuring their income streams to try to avoid taxation.

They still do that today.

That's an argument for changing the income tax rules, not for adding a wealth tax.

In any case, a wealth tax would be easy to game too. There is a lot of room for loopholes in the definition of wealth, what kind of wealth should be taxed, what the tax brackets should be, what kinds of deductions are allowed, etc.

We need to rebuild the Inheritance Tax. Hit the wealth at the moment of inheritance, when it acts as income for the next generation.

I'm worried about the decline of the inheritance tax. It's happening all over the West. In France, "the incomes attained by the top 1% of French inheritors are already higher than those attained by the top 1% of workers".

We could be headed back to a Jane Austen -esque society where ambitious young people seek their fortunes in marriage, rather than in business.

And then sales tax when they buy things and an estate tax when they die.

A lot of really wealthy people inherited their wealth, they aren't doing anything useful.

The wealthy pay the vast majority of all the income tax already.

https://www.bloomberg.com/news/articles/2018-10-14/top-3-of-...

https://www.washingtonpost.com/news/wonk/wp/2017/12/06/the-r...

> The wealthiest 1 percent of American households own 40 percent of the country's wealth, according to a new paper by economist Edward N. Wolff.

There's probably some good discussion to be had around that, but whenever anyone in the US talks about the injustice of the top 1%, I can't help but wonder: if we calculated how much of the world's wealth the 99% in America owned, would they feel contrition for their injustice?

Given that the US has 25% of the world's wealth, and the lower 99% of the US population has 60% of the US's wealth, it stands to reason that "the 99%" have a full 15% of the world's total wealth. Given that the US has ~4% of the world's population, surely resolving "the wealth disparity" is more likely to lower their position than raise it.

This is pretty disingenuous and I'll explain why. The next 1% after the top 1% owns a pretty sizable chunk too. And the next 1% after that a large chunk, and so on.

The top 10% has 75% of U.S. wealth, the top 20% has 87% of U.S. wealth. So carrying on about the 99% as if wealth is distributed in anyway evenly within that group is more than a bit silly. Especially when you look at the bottom 50% having a pittance, somewhere between 1-2% of U.S. wealth.

The next natural group after discussing the 1%'s wealth, isn't the other 99% just because 100-1=99...

So really your argument falls apart for me because most of the 99%, the bottom 70%, end up owning just about 1% of the world's wealth. And that's a fairly small slice of pie to be split between 227 million people. And before you show me the math that it's actually quite a bit per person. Don't forget that in reality the bottom 60% only has almost as much wealth as the whole next 10% and that most of the population isn't seeing the wealth you're describing.

For starters, "disingenuous" implies bad faith on my part and that's pretty uncharitable. This isn't shilling, or paid posting, or social commentating-- nor even is it me stating facts (beyond those contained in others' references). It's just a thought I've had in the past. It'd be nice if common civility meant you didn't jump out the gate assuming bad intent on my part.

In any event, I was not aware of that purported wealth distribution, but the median income in the US is $59k and the median income of the world is 9k. We can argue cost of living and so forth, but it is no exaggeration to say that nearly everyone in the US today is living on the upper crust of humanity in terms of wealth and lifestyle.

Across the political spectrum people tend to agree that keeping jobs in the US is a good thing while ignoring that that perpetuates the very form of wealth inequality they decry when talking about national politics. Not that I think they're wrong to argue that the government should favor its own citizens over others internationally, but it does seem rather hypocritical to me.

You might be interested in this article about how wealth is divided in the US, even if you don't agree with all of its conclusions:

https://www.theatlantic.com/magazine/archive/2018/06/the-bir...

I will / am reading it, but if as its title and first few paragraphs suggest its discussion is on the top 10%, it doesn't really change my statement. $59k median income means literally half the country-- 2.5% of the world's population-- is making at least 6 times as much money as literally half of the world. It is not until you get to some US income percentile around the 15th that incomes drop below the world's 50th percentile income bracket.

I do not deny that there is wealth inequality in the US nor do I have any elegant solutions to it, but I perceive a lot of self-interested hypocrisy around the issue. Surely fighting wealth inequality means cheering when manufacturing jobs are sent overseas, and the corporation's US base means that we can use economic leverage to enforce safety / wage standards on these new jobs in India / China / Mexico. This brings up the global median income, surely a good thing for anyone concerned with income equality.

Well it's more complicated than that. We mourn jobs that are sent overseas. But a lot of things can be made much cheaper elsewhere and we as consumers benefit from cheaper prices. It's just in an argument about jobs, people don't want to argue the whole picture and the complexities of trade. They want their cheaper prices, and they want all those jobs too, and they want decent wages, and they want someone else to figure out how to make that possible.

The other problem is all the people crying about jobs going overseas aren't the same people crying for wealth equality necessarily. So again, it's incorrect to lump everyone and every viewpoint together when it's really a huge spectrum.

And on top of all that I would argue that arguing wealth inequality in the U.S. is fine because it exists in the rest of the world is a red herring. For starters, no nation, not even the U.S. is solely responsible for the state of the world and economies in every other country. And secondly, no nation is under any obligation to address the world's problems before addressing its own. And it's not effective to avoid the issue by shifting the scope around arbitrarily.

To be clear, I am not arguing that inequality in the US is "fine" because it exists elsewhere. I think I've tried to make that clear in my posts.

I am arguing a few other things:

* That it is hypocrisy for anyone to argue against wealth inequality in the US, but decry jobs going overseas

* That it is wrong to not care about wealth inequality in the world while moaning that we're only in the top 95th percentile of human wealth

* That things in the US are nowhere near as bad as they are commonly portrayed

According to this Atlantic article, the divide is between the 1%, the next 9%, and the bottom 90%, with the top 1% increasing their wealth at the expense of the bottom 90%, and the remaining 9% desperately building walls to keep their wealth intact.

https://www.theatlantic.com/magazine/archive/2018/06/the-bir...

I don't get why this is always trotted out? If you have the lion's share of wealth (and the continuous compounding passive income that comes with) then this should be expected. And then its just a matter of negotiating the amount, with the society you participate in.

>>> a wealth tax is very much needed

>> The wealthy pay the vast majority [...] already

> I don't get why this is always trotted out?

Surely the context of the conversation explains why.

Regressive federal payroll taxes are almost equal to income taxes.

Yes, this is an important point. I don't even notice my social security and other taxes really, and some of the charges like for workman's comp insurance don't even show up on your paycheck, but those payroll taxes are a huge issue for low wage workers. Plus they max out - so if I make 150k, my higher income basically leads to a tax cut for high wage workers.

They max out because the benefits max out. IN THEORY, your SS and worker's comp payments pay for your own benefits, as if an insurance company was calculating odds and investing the money.

In practice of course it is politically easier for government to borrow the money and spend more than income, until Greece happens.

Anyway, charging high-income employees more for SS and then paying them less on retirement would ruin the illusion that it is a retirement plan and not simple theft from the future.

Well, by that standpoint all taxation is simple theft from the future, because you might die and get no benefit from it. Social security and medicare serve a social good. I knew that the idea behind not taxing me past the max was because I couldn't get more benefits. But I already have exposure to many other tax credits that poor people don't get, because they aren't able to make investments.

I agree with your comment that it's easier to borrow the money. Look at our current government, that was supposedly fixated on budget deficits then when Obama is gone they pass a giant tax cut, increase the deficit (with the wish and a prayer that the deficit would go away), and now that there's clearly going to be a much larger deficit their answer is not cancel or reduce the unneeded tax cut for rich people - they want to cut benefits - this was all predicated before the tax cut.

That entire article seems to avoid saying how much INCOME each of those groups are. Yes, the top 3% pay 37.5% of income taxes. But is their total income less than or greater than 37.5% of the total?

Without the numbers, its kind of meaningless.. that is like saying bill gates moves to a town of 50 people, and suddenly pays 99.999% of the taxes.. its expected, unless you give the mean, median, etc, of income.. not just of how much he paid.

It is disingenuous to say this in the context of the conversation: that little qualifier -- income in income taxes - matters.

I am paying 0 (none, nada, nothing) income tax. But I am a taxpayer.

This[1] source paints a better picture, and I didn't even bother verifying the data - at least it considers other kinds of taxes.

[1]https://itep.org/wp-content/uploads/taxday2017.pdf

That's because most of the money goes to them in the first place.

So they pay the majority. Good. They can pay more too.

The 401k and IRA are inverse wealth taxes, so naturally you want to eliminate those, right? After all, no one should be so wealthy as to not need or have an income (retire).

seems reasonable. you already can't contribute above some amount tax free, and you shouldnt have more than 30M dollars put away for retirement

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