Posted on 10/27/2021 8:26:17 AM PDT by Kaslin
This week, Democrats settled on an area of apparent commonality: the desire to eat the rich. According to Treasury Secretary Janet Yellen, "Senator Wyden and the Senate Finance Committee ... would impose a tax on unrealized gains on liquid assets held by extremely wealthy individuals, billionaires." While Yellen refused to call this a "wealth tax," House Speaker Nancy Pelosi had no such qualms: "We probably will have a wealth tax," she said.
This has long been a talking point for the most Marxist-leaning Democrats, like Sen. Elizabeth Warren, who famously proposed a 2% wealth tax on all assets of a family above $50 million and 6% on all assets above $1 billion. Elated Warren supporter Adam Jentleson told The Washington Post, "Biden's agenda was about to fall apart, but Warren had a plan for that."
So, what do wealth taxes do? They destroy value by taxing unrealized value. Say, for example, that you are a business owner who created a company now valuated at $1 billion. And say that you have built that business over the course of the last five years, paying yourself a post-tax, post-expenditure salary of $5 million per year. You would be liquid to the tune of $25 million. Under Warren's proposal, $950 million of those unrealized assets would be taxed at 2%, meaning that you would be on the hook for an annual tax of $19 million. You would have no choice but to liquidate your stock, undermining its price and endangering the growth of your company.
Wealth taxes have been tried in a variety of countries, and they have regularly failed. When France created a wealth tax, some 42,000 millionaires left; French President Emmanuel Macron eventually killed it. From 1990 onward, nine out of the 12 European countries that had a wealth tax followed Macron's lead and killed their wealth taxes.
So, what's the point of a wealth tax if, in the end, it will fail?
The point is the punishment. Biden and Warren are seeking to tax dollars that do not yet exist, because the people who have created those dollars are worthy of sanction. While Biden constantly blathers that he is a capitalist who doesn't seek to punish earners -- only to make them pay their fair share -- he's simply lying. Earners in America certainly pay their fair share: the top 1% of income earners pay approximately 40% of all income taxes while earning just 21% of all income; the highest quintile of income earners pay virtually all net taxes in America after income transfers by the government. This isn't about a "fair share." It's about disincentivizing wealth creation, demonizing it, treating it as a mark of sin.
Unfortunately, we have mainstreamed such economic and moral idiocy. When we speak of the wealthy as the "privileged," we betray our own unwillingness to speak the obvious: High-income earners provide more and better goods and services to people than lower-income earners. That is why their income is high. Income is a reflection of consensual transactions resulting in voluntary trades. Innovation and risk-taking must be rewarded in order for them to take place; to then attribute success to "privilege" or "luck" is to pretend that a free-market system is some sort of lottery. It isn't. If we decide that it is somehow more altruistic and moral to receive government benefits than to take risks that result in economic success, we destroy the economic mechanism that has generated all of our prosperity -- and the individuals who make that mechanism work.
And that's the point. What begins as a small tax on an upper crust doesn't stay that way. The original income tax contemplated in the United States was 1% applied to the lowest tax bracket, and 7% on those making $500,000 or more. Today, the top marginal income tax rate is 37%; income above $86,000 is taxed at 24%. Eventually, the agenda becomes clear: going after all earners, not merely those at the top. When achievement is punished, there are no income barriers.
Money is fungible.
Make it too expensive for ‘The Rich’ to live in the USA and they will leave and take their money somewhere more welcoming. We lose the revenue we currently get, along with the investments and jobs they create.
I got a better idea. At least half the population is paying no income tax. Lets make the ‘The Poor’ pay their ‘fair share.’
Seems we have a choice: reward those who produce and help others with their production, or reward those who consume and destroy wealth and assets by consuming it without producing it . . . namely politicians and the slugs of society.
Not a choice for me. I utterly loathe the politicians.
"Warren Buffett
berkshirehathaway.com Warren Edward Buffett is an American business magnate, investor, and philanthropist. He is currently the chairman and CEO of Berkshire Hathaway. He is considered one of the most successful investors in the world and has a net worth of over $101.1 billion as of October 2021, making him the world's tenth-wealthiest person.Wikipedia"
How can you assign value to an asset such as a stock until it is sold? It only exists as paper value until sold. Up to that point any value is arbitrary. Think about what happens when they tax his Bershire Hathaway holdings at 28%. They tax him, he has to start selling, the value of the holdings decrease, its a nightmare. Perhaps that is the point. Perhaps he has backed the wrong political party which is instituting Marxism.
https://marketrealist.com/p/unrealized-capital-gains-tax-explained/
The title is a great line against the left’s equal outcome.
“...would impose a tax on unrealized gains on liquid assets held by extremely wealthy individuals, billionaires.”
They can’t even do this right. The IRS already protects business owners at any level for this. You just make yourself an employee of the company you are involved with. The feds are idiots as they are asking for payment from liquid assets that don’t exist as companies deal with solid assets. Money is in cyberspace for these people and belongs to the company, not the owners.
When your business is classified as a partnership or a sole proprietorship you are allowed to be an employee on the payroll. You are allowed to pay yourself from the business income, though it will not be tax-deductible income. While there are multiple ways to pay yourself in a partnership, the easiest way is to take a distribution and make estimated tax payments throughout the year.
In both these business entities, you will pay your self-employment tax on the total amount of the business profit for the year which averages out to about 15 percent of the net profit. This makes it essential to make estimated tax payments throughout the year to avoid a huge tax bill at the end. While taking regular payment for yourself is not necessary it can keep you more organized than taking varying amounts out when you need it.
In a corporation, the way you pay yourself will depend on the type of corporation your business is. If you are a part owner of a C corporation, you will be considered a W-2 wage earner as an officer of the corporation and be subject to taxes based on what you make for the year. If you have an S corporation, you have the ability to pay yourself through a tax-free distribution, but you will need to take a reasonable salary which you will be required to pay taxes on. But you won’t be realized as anything but an employee, not the company and all that will happen is the company will be forced into receivership at the worst and uncle sugar gets none of that as it ends up being the process of liquidation of those assets they are trying to tax.
wy69
Why don’t they just cut to the chase and ask Elon Musk to sign a gift certificate deeding Tesla to the state?
Nothing changes the fact that if you just outright confiscated all of the wealth of every billionaire our government would still spend it in a couple of months.
...so where else does everyone think the money will come from? Especially as these folks in government consider themselves “limited” - needing even more taxes.
Yet we always have money to send over seas.
You are aware of the exit tax? Assets are marked to market as if sold, and tax is due on the capital gain. (There is some exemption, but not for the .001% they are currently talking about).
Exit applies if US citizenship is renounced. Foreign income is subject to US income tax. A conundrum.
So instead of an iron curtain, they’re trying to build a financial fence.
Agree completely.
I think the US is almost unique in taxing income of citizens who are living abroad.
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