XPost: alt.fan.rush-limbaugh, misc.taxes, alt.politics   
   XPost: sac.politics   
   From: Ken@invalid.com   
      
   Biden stupid... wrote:   
   > Joe Biden and his administration are fiscally incompetent and ignorant.   
   >   
   > President Biden wants to raise taxes on Elon Musk, Jeff Bezos, and their   
   > cohort of Americans, who are amassing extraordinary wealth that is not   
   > taxable under current law.   
   >   
   > Biden says his plan would make the system more fair — but experts say   
   it   
   > lacks practicality.   
   >   
   > The president wants to impose a minimum 25% tax on all Americans with   
   > assets over $100 million. The “billionaire tax” would impact the   
   10,700   
   > wealthiest Americans and generate an estimated revenue of $400 billion   
   > over 10 years.   
   >   
   > The idea of levying higher taxes on those at the top of the economic   
   > ladder is not new. Yet the latest proposal raises more questions than   
   > answers.   
   >   
   > “Are you taxing the rich? Are you taxing the wealthy?” Peter   
   Ferrigno,   
   > director of tax service at Henley & Partners, a citizenship investment   
   > consulting firm, told Yahoo Finance. “They're very similar, but they   
   are   
   > not the same thing.”   
   >   
   > Furthermore, the proposed policy challenges a fundamental principle of   
   > the US tax code, which treats money earned as income differently from   
   > wealth generated through valuation growth.   
   >   
   > How could the US government tax wealth?   
   > Biden hasn’t offered many specifics, but to get to a minimum 25% rate,   
   > experts say he would have to tax unrealized gains — unsold profits   
   from   
   > increases in asset values — as part of billionaires’ income.   
   Under   
   > current law, unrealized gains aren’t taxed until the asset is sold at   
   a   
   > profit.   
   >   
   > The president says this is the proper way to calculate the true income   
   â€”   
   > and true tax rate — of the ultra-wealthy. Billionaires make the bulk   
   of   
   > their money through stock or investment growth instead of a wage from a   
   > 9-to-5 job. So, the president says, they shouldn’t be able to shelter   
   > income simply because they haven’t pocketed the profits.   
   >   
   > “Billionaires don't often have a typical paycheck,” Brandon   
   Zureick,   
   > managing director and portfolio manager at Johnson Investment Counsel,   
   > told Yahoo Finance.   
   >   
   >   
   > That may sound like a lot, but Musk’s true tax rate amounted to only   
   > 3.79%. By contrast, the median American household earned $70,800 in 2021   
   > and paid an average tax rate of 15%.   
   >   
   > Under Biden’s proposal, Musk’s tax bill would have totaled $3   
   billion   
   > for 2018 through 2022 — nearly seven times higher than what he paid.   
   >   
   > The 25 wealthiest Americans paid $13.6 billion in federal income taxes   
   > from 2014 to 2018. Meanwhile their wealth collectively increased by $401   
   > billion in that same period, ProPublica reported. This means their   
   > collective average true tax rate was 3.4%.   
   >   
   >   
   > In other words, how will the taxes work when investment values decline   
   > on paper?   
   >   
   > “When you start taxing unrealized gains rather than realized gains,   
   > you're going down a very slippery slope,” Ferrigno said. “You   
   want to   
   > tax the going up? Are you going to give money back when they go down   
   > again?”   
   >   
   > For instance, if Musk’s share in Tesla (TSLA) surges from $100 billion   
   > to $200 billion, Biden’s proposed wealth tax would cost Musk $25   
   billion   
   > in that year — 25% of the unrealized $100 billion gain. But if Tesla   
   > shares declined by $100 billion the next year, would the government need   
   > to pay Musk back?   
   >   
   > “That's where you open up a whole reason that other countries don't do   
   > this,” Ferrigno said. “Income tax has been around for centuries.   
   And the   
   > reason no one's ever done this is because it's practically imp   
   actical.”   
   >   
   >   
   > Top 1% pays nearly half of US tax   
   > Opponents of a wealth tax reason that the share of federal taxes paid by   
   > the top 1% is already adequate. In 2021, the top 1% paid over $1   
   > trillion, almost half of all tax revenue collected, according to the Tax   
   > Foundation.   
   >   
   > “The income tax system in the United States is highly progressive and   
   > redistributive,” Erica York, senior economist at the right-leaning   
   think   
   > tank Tax Foundation and author of its latest report on income tax data,   
   > told Yahoo Finance. The top 10%, she added, paid almost 76% of all tax   
   > revenue.   
   >   
   > Critics also note that there is already a separate income tax on the   
   > rich, making Biden’s proposal redundant and unnecessary.   
   >   
   > The alternative minimum tax (AMT) is a parallel system that sets a floor   
   > on what high-income individuals must pay. It removes some benefits and   
   > deductions on their tax returns, limiting the reductions to their tax   
   > liabilities.   
   >   
   > “The US has had the alternative minimum tax for about 50 years,”   
   > Ferrigno said. “They already have a tool in the toolbox to try and   
   > address [taxes on high incomes].”   
   >   
   > Ferrigno said an update to the AMT would be sufficient in taxing   
   > billionaires’ incomes.   
   >   
   >   
   > But he said the Biden administration should start with a lower tax rate   
   > on billionaires, like 10%, and progress from there before landing at   
   > 25%.   
   >   
   > After all, levying an overwhelming wealth tax on the super rich, who are   
   > also super mobile, can backfire. A number of billionaires left Norway in   
   > 2022 after the country implemented a 1.1% capital asset tax on married   
   > households with equity over the equivalent of $3.7 million.   
   >   
   > “Find out what works and import it and avoid what Norway did to drive   
   > half of [ultra-wealthy] away,” Ferrigno said. “Look at how Spain   
   has a   
   > high enough threshold that people just grudgingly accept it.”   
   >   
   > Spain has a long-standing regional wealth tax from 0.16% to 3.5%. But   
   > instead of emigration, wealthy Spaniards either accepted their wealth   
   > tax rate or relocated to a cheaper region within the country.   
   >   
   > “[Spain’s wealth tax] has been there for a long time as well,   
   so people   
   > are used to it,” Ferrigno said. “Plus the exemptions ensure that   
   few   
   > people get into the highest brackets.”   
   >   
   > Switzerland also assesses various wealth taxes at the regional level on   
   > individuals’ assets worldwide, including bank account balances,   
   > equities, boats, and airplanes.   
   >   
   > Transformative technology, such as blockchain ledgers and artificial   
   > intelligence, is transforming financial systems, yet the US tax codes   
      
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