Capitalism (1 Viewer)

[Huntn]

Capitalism- good or bad?

This is not my answer that it is bad per se, but the following is what triggered this thread. When I think of a country, I think of it’s citizens as being members of Team USA, Team Canada, or Team UK, etc, and with companies, corporations, I see issues where the emphasis is on profits, not my team. For corporations, the team is not my country, but my small group of capital collectors, and one thing that irritates me constantly is when I call a company, say a U.S. based insurance company and I end up talking to someone in India, or the Philippines. Hey profits up, but citizens (team members) are disenfranchised, the income levels of the home country is undermined, millions of jobs exported to cheap labor locations. I’ve witnessed this in manufacturing for at least the last 30-40 years. When it comes to profits there is no National loyalty. As I said, the team is the corporation, and sometimes, it’s not even the people working locally, some of those like assembly line workers are viewed as drains on the bottom line. Thoughts?

 

[Dragon]

I just said options are realized gains. You listed options and I said “those are income”.So taxable.

But not unrealized gains such as increase in stock or asset value.


“Elon Musk faces a hefty tax bill this year — possibly the biggest in U.S. history.

“For those wondering, I will pay over $11 billion in taxes this year,” the Tesla CEO tweeted on Monday.”

https://www.cnbc.com/2021/12/20/elon-musk-says-he-will-pay-over-11-billion-in-taxes-this-year.html

The amount only tells the story if it also contain the information about "on how much income"

Increase in stock or asset value would still result in a corresponding increase in wealth taxes...

 

[efil4]

Well in the U.S. a person earning $1,000 isn’t going to pay income tax.

And the top 10% of those earners who pay a percentage of their dollars earned are responsible for 72% of the income taxes paid. Simple.

And that person earning $100,000,000 is going to pay roughly $40,000,000 in come tax.

In the U.S. a family of 4 earning $65,300 pay $0 in income tax. They are still on the hook for SS/Medicare payroll taxes.

Lol there isn't a single $100,000,000 earner paying $40,000,000 in taxes.

Not a single one. Their tax bill is waaay less. Because they pay handsomely to make it so.

 

[Sendai]

The amount only tells the story if it also contain the information about "on how much income"

Increase in stock or asset value would still result in a corresponding increase in wealth taxes...

Except there are no wealth taxes. Only taxes on income.

 

[Sendai]

Lol there isn't a single $100,000,000 earner paying $40,000,000 in taxes.

Not a single one. Their tax bill is waaay less. Because they pay handsomely to make it so.

Not much they can do on stock options. Straight up income. No deferrals. No hiding. The IRS has their hand out the moment the options are exercised. HR executive compensation quickly sells off stock to cover the withholding which is usually 37-42%. This is where a substantial amount of that 72% tax revenue originates. It’s why corporate stock buybacks contribute heavily to tax revenues. Those buybacks become options.

 

[efil4]

Not much they can do on stock options. Straight up income. No deferrals. No hiding. The IRS has their hand out the moment the options are exercised. HR executive compensation quickly sells off stock to cover the withholding which is usually 37-42%. This is where a substantial amount of that 72% tax revenue originates. It’s why corporate stock buybacks contribute heavily to tax revenues. Those buybacks become options.

But they can certainly reduce income tax liability to offset the overall tax rate. ( which is the original issue...income tax. Not cap gains tax)

You already know this tho.

 

[Dragon]

Not much they can do on stock options. Straight up income. No deferrals. No hiding. The IRS has their hand out the moment the options are exercised. HR executive compensation quickly sells off stock to cover the withholding which is usually 37-42%. This is where a substantial amount of that 72% tax revenue originates. It’s why corporate stock buybacks contribute heavily to tax revenues. Those buybacks become options.

Except you can tax them when they receive them. It should be fairly easy since many billionaires use them as collateral for loans. It is basically just another "payment" done in such a way to avoid paying taxes. If the US correct its tax code so that it matches the tax code in most of Europe - then those stock options would be taxable. Currently they are just another way for billionaires to get away from paying taxes on part of their income.

 

[MT15]

I don’t think it’s wise to take Elon’s word for anything. He is a known compulsive liar who hardly ever tells the truth when he can lie to make himself or his companies look good. It’s been documented for years.

 

[TampaJoe]

The top 10% hiding some of their wealth and/or not actually paying 72% of income taxes has everything to do with whether not the top 10% are actually paying the same amount in taxes as they are benefiting from everything our soceity provides them so that they can have that wealth.

Without what we provide them as a society, they don't have that wealth, so the fair system is that everybody pitches in to pay for the cost of what society provides at the same proportion they benefit from what society provides.

That's exactly what Dragon said that you chimed in on.


We are saying it should be and it should be based on the percentage of total wealth each person has, not just their income. That's definitely what I'm saying and I think it's what Dragon was saying.


Source? I ask because I've seen people claim the top 10% are paying X% of income tax, but that's not based on what they are paying, but on what simple tax code calculations say they will pay. The wealthy rarely pay as much as the simple tax code says they should and they often don't pay anything at all.

Hiding income? Are you implying that there is a widespread problem of wealthy people illegally hiding their income? As far as loopholes are concerned, the government, democrats and republicans create these loopholes to encourage certain types of behavior. For instance, there are numerous tax preferences items that defer tax liability for investments in real estate. Why? We like real estate in this country and encourage investment in real estate as it is one of the drivers in our economy. So people who take advantage of these loopholes/tax preferences items are doing exactly what our elected representative wanted and expected them to do. We encourage real estate ownership in this country. We encourage charitable giving. We encourage savings and investment. We do all this via the tax code.

As has been stated, high income/high net worth folks already pay the majority of income tax in this country. It is a fair question to consider whether there can be improvements and simplification.

 

[TampaJoe]

The amount only tells the story if it also contain the information about "on how much income"

Increase in stock or asset value would still result in a corresponding increase in wealth taxes...

We don’t do wealth taxes in the US. That would involve taxing unrealized gains which opens up a whole different set of problems when it comes to valuation of various assets and tracking asset basis over time.

We calculate taxable income based on realized gains and losses within the tax period.

 

[TampaJoe]

Lol there isn't a single $100,000,000 earner paying $40,000,000 in taxes.

Not a single one. Their tax bill is waaay less. Because they pay handsomely to make it so.

So a 100,000 earners pays handsomely to reduce their tax liability? I doubt it.

 

[MT15]

So a 100,000 earners pays handsomely to reduce their tax liability? I doubt it.

Look at the number he posted again. He’s right.

 

[TampaJoe]

Look at the number he posted again. He’s right.

My bad. I thought it said 100k.

That said, it wouldn’t surprise me that the number is close if we are talking about taxable income.

 

[Sendai]

But they can certainly reduce income tax liability to offset the overall tax rate. ( which is the original issue...income tax. Not cap gains tax)

You already know this tho.

Options are straight up income. When options are exercised it’s the full value of the stock. It’s treated as regular income. Capital Gains don’t apply.

 

[Sendai]

Except you can tax them when they receive them. It should be fairly easy since many billionaires use them as collateral for loans. It is basically just another "payment" done in such a way to avoid paying taxes. If the US correct its tax code so that it matches the tax code in most of Europe - then those stock options would be taxable. Currently they are just another way for billionaires to get away from paying taxes on part of their income.

When the option is exercised the withholding tax is due. Stock Options are fully taxed as regular income.

 

[LA 2 L.A.]

Income tax is based on tax/dollar earned. In the U.S. the top 10% of earners(earned income) pay 72% of income taxes. Seems appropriate.

As you pointed out, income tax is just paid on income tax. Income is the least amount of benefit that the top 10% get from what we provide for as a soceity. Income taxes collected does not pay for everything we provide as a society.

As you pointed out, most of the top 10%'s wealth is non-taxable, because it's not income. That's why we should have a wealth tax instead of an income tax. The top 10% at the time were the ones who influenced how the Revenue Act of 1961 was written. They made sure that a tax to raise funds for the Civil War was based on income instead of wealth. They did that because they knew it would shield them from having to pay an equitable percentage. It saved them a lot of money.

The top 10% in 1909 were the ones who wrote the Sixteenth Amendment and got it ratified in 1913 to make sure that the majority of their wealth would never be taxed.

 

[Sendai]

As you pointed out, income tax is just paid on income tax. Income is the least amount of benefit that the top 10% get from what we provide for as a soceity. Income taxes collected does not pay for everything we provide as a society.

As you pointed out, most of the top 10%'s wealth is non-taxable, because it's not income. That's why we should have a wealth tax instead of an income tax. The top 10% at the time were the ones who influenced how the Revenue Act of 1961 was written. They made sure that a tax to raise funds for the Civil War was based on income instead of wealth. They did that because they knew it would shield them from having to pay an equitable percentage. It saved them a lot of money.

The top 10% in 1909 were the ones who wrote the Sixteenth Amendment and got it ratified in 1913 to make sure that the majority of their wealth would never be taxed.

The constitution protects against a wealth tax. You want a wealth tax get an amendment.

 

[LA 2 L.A.]

Summary of the Latest Federal Income Tax Data, 2025 Update

New IRS data shows the US federal income tax system continues to be progressive as high-income taxpayers pay the highest average income tax rates. Average tax rates for all income groups remain lower after the Tax Cuts and Jobs Act (TCJA).

taxfoundation.org

This is from the notes about the data.

"Source: IRS, “SOI tax stats - individual statistical tables by tax rate and income percentile,” https://www.irs.gov/statistics/soi-...ical-tables-by-tax-rate-and-income-percentile."​

​

Your source used the IRS's SOI Tax Stats for 2022 for their data. That was before the Trump tax cuts which heavily favors the top 10%.

The tax data is based on what tax forms showed as taxes due. It does take into account actual taxes paid. We know that some in the top 10% have gotten away with not paying their taxes in full, some have even not paid anything at all. Trump recently pardoned wealthy tax evaders. The wealthy can much more easily negotiate a settlement to pay a lower tax. Anyone can try, but with wealth comes the privilege of more success.

We don't know how much any bracket actually pays in taxes. The IRS has that data, but I've never seen them provide it. I've looked for it several times through the years, but haven't been able to find it. It could very well be out there and I just haven't found it. I can only think of one reason why the IRS wouldn't make that information available and easy to find, they don't want the 90% to know how little the 10% actually pay in taxes.

Another big clue goes all the way back to the early 80's. The top 10% has been complaining for decades that they pay a really high percentage of their income in taxes, but they have loudly shouted down every proposal of flat tax of 20% or less.

If the top 10% were truly paying a really high percentage of their income in taxes, why on earth would they shut down every single proposal of a flat income tax of 20% or less of their income in taxes?

 

[LA 2 L.A.]

And the top 10% of those earners who pay a percentage of their dollars earned are responsible for 72% of the income taxes paid. Simple.

It's actually not that "simple." First, the 72% figure comes from 2022 before Trump's tax cuts which heavily favor the top 10%.

Second, the 72% isn't what they actually paid, it's only what they are supposed to pay on paper, it is not how much they actually pay. There are legal tax mechanisms that people can use to pay less than their tax filing says they owe and there's also straight up tax evasion. Anyone can use the legal mechanisms, but the wealthier you are, the more resources you have to do it successfully. There is nothing that the wealthy don't get to negotiate, including paying their taxes.

Your source does not show that they actually paid 72% of total taxes, because it's only a taxes due number. It's not a taxes actually paid number. The reports are run on an accrual basis, not a cash basis.