We need to increase tax on dividends and long term realized gains above a threshold before we put more tax on wages.
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Taxes of stock buybacks would help too.
As would increasing taxes on compensation paid in stock
Fine with that. That’s also more of a tax on high earners, but via stock holdings rather than wages.
Can we please throw in eliminating the carried interest loophole?
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I was listening to the Ric Edelman podcast and he was talking about being unsure on who he was voting for, for president. His complaint about Harris was her proposed tax on billionaires and unrealized capital gains. I understood his complaint, but I also think this is an area that needs work. How do you tax people who have vast wealth in unrealized capital gains that they potentially never have to realize, but are able to benefit from them by taking out loans against their gains, potentially creating further tax reducing opportunities in the process? They benefit enormously from the infrastructure of the United States, but they contribute minimally to it’s upkeep.
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Canada recently increased the inclusion rate on capital gains to levels last seen in the 1980s or 90s. It will reportedly cause the world to end. This issue affects the owners of the media and most high profile opinion writers/commentators. I suspect the response will be even more heated in the US if they consider doing it
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If the risk level of your portfolio is keeping you up at night, derisk. If you’re 100% stocks maybe you should be 80/20. Or maybe you should switch to less risky stocks. If you’re soured on bonds maybe try some CD’s and do it while you can still get a decent rate.
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I guess as someone who is now accumulating earnings in after tax accounts, it feels a bit punative to be working, managing life expenses, and trying to save through a higher marginal tax rate than anything I expect to pay even if all income was treated the same in retirement. I pay a lot more in taxes than my parents even though we have similar income levels, and they are retired.
First world problems for sure.
One way or another I bet the US productivity growths its way out of any financial concern
In the sense of “what would be good for financial markets?” Sure.
In the sense of “what would be good for democracy?” It’s been 9 fucking years, how the hell anyone is still undecided about who to vote pisses me off to no end.
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I was listening to something over the weekend and the guy being interviewed said that boomers have some $110 trillion in wealth and they’re spending it enjoying retirement. Which, … they’re retired or nearing retirement, good for them, but that’s $110 trillion that’s going to take decades flowing from them back into the economy and a significant chunk of that will end up not being taxed in any way because much of it is concentrated in the upper class which has utilized and will continue to utilize all kinds of tax advantages to escape taxation.
He also echoed the comment above about how even if you slash all discretionary, non-defense spending to zero we still have a deficit and in a few years as debt gets refinanced at higher interest rates it will be a deficit even after slashing all defense spending. We can end up debasing the dollar to pay out entitlements and national debt interest, or we can slash entitlements some 40% and increase taxes to get the deficit under control and start working the debt down - and politicians are never agreeing to slash even the first dollar of entitlements.
Also recall something from earlier in the year, where someone said - and I’m paraphrasing here - “everyone worries about left-tail risk in the markets, like it’s 2007-2008. I’m more worried about right-tail risk, where the markets start going up kind of uncontrollably no matter what happens. In that scenario, they’re going up in response to structural problems with the federal budget and the national debt, and if that happens anyone in stocks will be preserving some of their purchasing power but the vast majority of Americans who aren’t in stocks will get obliterated financially.” It wasn’t a hyperinflation call, but it was a statement that the Fed can’t control the bond curve beyond very short-term rates, and at some point $2 trillion deficits and a debt/GDP ratio of 130% and climbing are going to matter.
I’m very much realizing this in a non-catastrophic but alarming way. I’m not especially close to retirement yet and realized that from January 2024-current, my investments’ growth exceeded my starting salary. Looking around at friends who might contribute 5% to their 401k if that and move on with spending, and the way the market has been for the past decade, I realized that they are setting themselves up for a difficult future.
How much worse for those working wage jobs and saving little to nothing for retirement. They’re just watching their purchasing power slip away.
Picketty was indeed correct.
Its r (rate of growth of capital) > g (rate of growth of wages)
Thats what creates inequality over time.
To me it’s like seeing a fat person eating their way to heart failure and having their foot amputated along the way
It’s been common sense to me from an early age
Don’t eat that, don’t smoke that, brush your teeth, go to bed early, and don’t waste your money
I didn’t learn until a little bit later that saving money alone is not enough (gotta invest) but still… that is a pretty easy adjustment to make
Bing, bang, boom. I’m retired before age 35
There are two types of people in the world - those who do and those who don’t. As the world becomes more and more progressive I find that the number of people who don’t skyrocket
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I think it’s time for a wealth tax in this country, but many think that might not pass constitutional muster. We should definitely put some teeth back into the estate tax for the ultra wealthy.
I’m not as sure about taxing unrealized gains. If we are just talking stocks, that would be relatively straight forward. However for assets that aren’t liquid or have complex valuation (companies, property, patents,…), it sounds like a big mess. I’m against taxing unrealized gains for now, but willing to be convinced.
Taxing unrealized gains is just a no-go. There are just too many issues with no solution.
We have swung from a really low estate tax threshold $ 675,000 in 2001 to a really high $ 13.6 million now. Additionally, there are a bunch of loopholes for those that exceed the threshold to the point that almost no-one pays an estate tax anymore. Considering the extent to which wealth has moved to the 1% someplace between these extremes makes more sense to me.
Now Congress is about 100% in the 1% so getting them to vote to tax themselves would be quite a trick.
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It would likely pass constitutional muster, since taxation is a power granted to Congress. It wouldn’t pass popular opinion, especially with poor people who think one day they’ll be wealthy and don’t want to be taxed. Or, poor people who’ll get convinced they’ll have even less if the wealthy get taxed more.
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I am no expert on this, but the argument is that the wording on Amendment 16 specifically gives Congress the power to tax income.
“The Congress shall have power to lay and collect taxes on incomes, from whatever source derived, without apportionment among the several States, and without regard to any census or enumeration.”
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True but Congress taxes other things: alcohol, gasoline…
I think taxing wealth is a bad idea, but I honestly don’t know where it would fall constitutionally.
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Out of curiosity why is taxing wealth a bad idea? I mean it might be bad, but it might be good. I don’t see how concentrated untaxed wealth is really productive for society but maybe I’m missing something.
That part comes from Article 1:
Congress has the power to “lay and collect Taxes, Duties, Imports, and Excises”
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