Top 1% of Americans own 56% of US stock - Bottom 90% own just 12% of stock (1 Viewer)

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    superchuck500

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    It's quite a figure and the share held by the top 1% is growing. When you consider the free rein that corporations have to act politically and that those decisions are controlled almost exclusively by the extraordinarily wealthy in a board room where the corporation is legally bound to act in the interest of its shareholders (i.e. the 1%), what does that mean for the bottom 90%? Not in the top 1%? Sucks to be you.

    The wealthiest US households are strengthening their grip over corporate America. The richest 1 per cent of Americans now account for more than half the value of equities owned by US households, according to Goldman Sachs. Since 1990, the wealthiest have bought a net $1.2tn in company stakes, while the rest of the population has sold more than $1tn.

    Three decades ago, ownership was also lopsided, but the top percentage point of Americans by wealth only controlled 46 per cent of all US equities held by households. By the end of September 2019, that proportion had hit a record 56 per cent, amounting to $21.4tn, according to the investment bank’s calculations. That includes both public stock and ownership stakes in private companies.

    “The wealthiest households have been by far the biggest driver of positive household equity demand,” Goldman Sachs analysts, led by Arjun Menon, said in the report.

    “Accelerating US economic growth and rising stock prices should continue to support equity purchases by the top 1 per cent.” Recommended LexEquities World economy/stocks: Piketty is right Premium As of September 2019, the bottom 90 per cent owned $4.6tn of equities, or 12 per cent of the total, the analysts noted.



     
    But again I think you already know all of this.

    Actually I don't. It really makes no sense to me. And really, I don't think your example matters to the point at all but since you are getting snarky with me I will explain
    Let’s try this another way.

    I make (hypothetically) $225k a year owning a boutique manufacturing company. My effective tax rate would still have been at 19% even after deductions. For clarity my effective tax rate would have been set at roughly $175,000 after federal deductions, again still 19%.

    However, since all but $35k is not a salary but a dividend off of earnings, my effective tax rate on earned income is zero. Then I pay 13% on the other $195k as capital gains. So all in, I paid $25k in taxes on $225k of income, or 11%. This happens every fiscal year by everyone who owns an llc, unless they aren’t savvy enough to use TurboTax.
    First, how do you say your effective tax rate would be 19% but you pay 11% of your income in taxes? That makes no sense.

    What is the $175,000? Your adjusted gross income. You say your "effective tax rate would have been set at roughly $175,000 after federal deductions, again still 19%" That is nonsensical.

    Regardless, -so what?

    I am not going to say that no one in the top 1% pays less than 27%, or apparently the 30% that the top 1% will pay in 2019. I am sure there are many who pay less. But aggregately the facts are the facts - and the stats I am using clearly include ALL income. Earned and Unearned - which includes capital gains which is taxed at different rates.
     
    Some years, yes, but I imagine I am the top 1%.

    I'm probably the very bottom of the top 1% though so it isn't getting to the point.

    It's not the average top 1 that's the problem. It's the ones who make 100m/year and pay 18% or the Amazons that pay nothing. It's patently unfair.

    Also, the stated rate for that period of time was 39%. The average being 13% less - one third of the stated rate less than the rate - illustrates my point.

    That chart also appears to be specific to "wage earners" which isn't the same as all income, but you get my point now I'm sure.
    Where do you get that the chart is specific to "wage earners"?

    By definition an effective rate is going to be lower than the highest marginal rate. It doesn;t have to be 13% - it could be more or less, but even without deductions, credits, or adjustments any effective rate will be less than the top marginal rate paid. In fact, back in the 50s with the huge marginal rates there was an even larger discrpancy between the highest marginal rate and the effective rate of the top 1%

    Nonetheless, I think it is clear that effective rates for the top 1% and top 0.1% have come down from, say, 1980, but they are still higher than any other income cohort.
     
    Capital gains tax is 15%. If most of your income is actually capital gains, rather than wages, (i.e., in the form of equities, real estate, etc), then most of your income will be taxed at 15%.

    This is honestly pretty simple.
     
    Effective tax rate it after deductions have been taken.

    In my example, I was able to write off $50k of my earnings from $225k for What would have been an effective tax rate of 19% on 175k, or $33,250 had all my income been earned.

    but since my income was not earned income, rather dividends on shares, i was taxed 13% on $195,000 or $25350, with earned income level set where I pay no additional taxes on it ($35k). This gave me a tax savings of $8k simply by saying my paycheck was dividends instead of earned income. Regular FT employees do not have this advantage. Hell, i paid more in taxes when I made 125k as a engineer than I do now.

    And the 1%? They aren’t paying a dime on their fortunes sitting wherever they have them. Those tax rates are simply for their income each year. So when a hedge fund manager clears $40 million in a year, he pays on capital gains on that, not the $350MM in his portfolio. And that money doesn’t do anybody any good (but that is a different thread)

    and again I think you know this. I am not trying to be snarky or whatever -
    the reason I am saying you know this, is because you are quite intelligent and I feel you grasp how the brackets really work instead of the blasé graphs shown.
     
    I don't understand your point. Are you saying that Zuckerberg/BUffet is not in the top 1% of income earners? Or that they are outliers from teh top 1% of income earners? Or something else?
    Capital gains maxes out at 15%, right?

    They don't earn "income" via wages. So, their tax rate is different.
     
    That chart also appears to be specific to "wage earners" which isn't the same as all income, but you get my point now I'm sure.

    Narrator voice: He won't. (Or, to be more precise, he absolutely does but will always pretend that he does not to be contrarian.)
     
    I don't understand your point. Are you saying that Zuckerberg/BUffet is not in the top 1% of income earners? Or that they are outliers from teh top 1% of income earners? Or something else?


    What he is saying is that buffet has paid less into SS in the last 50 years than a Starbucks employee will for today's shift.

    The tax loopholes need to be shut plain and simple.
     
    Capital gains tax is 15%. If most of your income is actually capital gains, rather than wages, (i.e., in the form of equities, real estate, etc), then most of your income will be taxed at 15%.

    This is honestly pretty simple.

    Just wanted to add that in some states (like MD) they also tax capital gains....at 5.8%....another barrier for folks trying to get ahead.....
     
    Capital gains maxes out at 15%, right?

    They don't earn "income" via wages. So, their tax rate is different.
    Capital gains is still income. IF you earn income from capital gains then it goes towards counting whether you are intop 1% or not and you are taxed on it.
    And capital gains does not max out at 15%. You are taxed as regular income for any gains realized within 1 year, while gains realized after 1 year or taxed at 0%, 15%, and 20% - they are marginal rates.

    The information I have posted includes income from capital gains as well as any other sources. It does not apply simple to "wages" - it applies to income.
     
    Capital gains is still income. IF you earn income from capital gains then it goes towards counting whether you are intop 1% or not and you are taxed on it.
    And capital gains does not max out at 15%. You are taxed as regular income for any gains realized within 1 year, while gains realized after 1 year or taxed at 0%, 15%, and 20% - they are marginal rates.

    The information I have posted includes income from capital gains as well as any other sources. It does not apply simple to "wages" - it applies to income.

    I was off on the 15%, I forgot it was 20%.

    But there are also C corporation options, and various other tools that the wealthy can use to shield their capital gains from taxation, and most are going to be stocks held for over a year.


    A.
    Capital gains are profits from the sale of a capital asset, such as shares of stock, a business, a parcel of land, or a work of art. Capital gains are generally included in taxable income, but in most cases, are taxed at a lower rate.

    Then it gets into all of the nuance...

    There are special rules for certain types of capital gains. Gains on art and collectibles are taxed at ordinary income tax rates up to a maximum rate of 28 percent. Up to $250,000 ($500,000 for married couples) of capital gains from the sale of principal residences is tax-free if taxpayers meet certain conditions including having lived in the house for at least 2 of the previous 5 years. Up to the greater of $10 million of capital gains or 10 times the basis on stock held for more than five years in a qualified domestic C corporation with gross assets under $50 million on the date of the stock’s issuance are excluded from taxation. Also excluded from taxation are capital gains from investments held for at least 10 years in designated Opportunity Funds. Gains on Opportunity Fund investments held between 5 and 10 years are eligible for a partial exclusion.

    Capital losses may be used to offset capital gains, along with up to $3,000 of other taxable income. The unused portion of a capital loss may be carried over to future years.

    The tax basis for an asset received as a gift equals the donor’s basis. However, the basis of an inherited asset is “stepped up” to the value of the asset on the date of the donor’s death. The step-up provision effectively exempts from income tax any gains on assets held until death.

    C corporations pay the regular corporation tax rates on the full amount of their capital gains and may use capital losses only to offset capital gains, not other kinds of income.
     
    Those tax rates are simply for their income each year. So when a hedge fund manager clears $40 million in a year, he pays on capital gains on that, not the $350MM in his portfolio. And that money doesn’t do anybody any good (but that is a different thread)

    A "portfolio" is not actual money. A stock is a trade of partial ownership in exchange for liquidity the business needs. There is no other reason to issue public shares.

    Strictly speaking, that $350 million does not exist in a usable form for the owner of the portfolio. The owner must first sell his ownership share. If no one is willing to purchase, there is no value.
     
    A "portfolio" is not actual money. A stock is a trade of partial ownership in exchange for liquidity the business needs. There is no other reason to issue public shares.

    Strictly speaking, that $350 million does not exist in a usable form for the owner of the portfolio. The owner must first sell his ownership share. If no one is willing to purchase, there is no value.
    Strictly speaking, you know this entire post was a waste of time.

    We know how the market works. This has absolutely zero bearing on the content of the post you quoted.
     
    No, that would be a stock portfolio, and only idiots have all their money in the market.

    hedge fund manager in my example is going to be diversified as hell.

    but that had nothing to do with any discussion being had so I am not sure why you brought it up. Par for the course I suppose
     

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