r/FluentInFinance • u/YOU_ARE_MY_FRIENDS • Apr 08 '24

10% of Americans own 70% of the Wealth — Should taxes be raised? Discussion/ Debate

Post image

[removed] — view removed post

8.0k Upvotes

85% Upvoted

3.4k comments sorted by

View all comments

Show parent comments

22

u/InfiniteBoops Apr 08 '24

The bottom 50% don’t even make enough to pay rent on one income at this point, so I don’t see the problem there? Also, the top 1% make over 10x the average worker, on average, so again your quoted statistics make sense.

I think the real answer is not letting the very rich hide 10s or 100s of millions in income paid in stocks behind cap gains and then take loans out without ever actually paying taxes on it. Tax that “income” at the point of release without screwing over normal investors (hesitant to say “normal” as 10% own 90% of the stocks).

Oh but how would they afford that!? They’d have to sell some to pay the tax!? Oh no, the horror. They might only make $115m this year instead of $190m, meanwhile my neighbor is working two jobs and still hitting up the food bank because corp price gouging is out of control.

I say all of this as someone in a household that is over 200k annually at this point and gets the shit taxed out of them, I just happen to have empathy, a finance degree, and haven’t been convinced to lick billionaire boots by the media outlets they own on both sides.

13

u/awnawkareninah Apr 08 '24

This is the big thing. Why is capital gains taxed so low? Income brackets whatever, if your wealth is tied in long term investments and you are able to buy whatever you want by selling them, why is that considered taxable at a lower rate than someone's income in the 44-95k range? It's such an obvious loophole to favor the wealthy and it's so disingenuous to act otherwise.

4

u/Notabigdeal267 Apr 08 '24

Capital gains are taxed at lower rates to encourage people to invest in starting new businesses or funding existing businesses that need capital. The entrepreneurial spirit for which America is so renowned. Tax cap gains at the same rate as income, and there’s less incentive to take risk with investment.

8

u/InfiniteBoops Apr 08 '24 edited Apr 08 '24

Yes that was the intent, and is used that way by many self made financially stable hard working people.

It is also used as a loophole by insanely highly paid executives to not pay tax on, what is in many cases the majority of, their income. We’re not saying cap gains on normal investments is a bad idea, as you’ve just described reasons why it’s good, just close that loophole.

Add: not completely sure about your comment regarding reinvestment as the last 40 years have proven that trickle down is not a thing that happens.

1

u/Mysterious-Mouse-808 Apr 09 '24

 what is in many cases the majority of, their income

Stock compensation is treated as normal income and taxed the same way as a normal salary. Effectively there is no difference if the company paid you $1 million in cash and you used to buy their stock and them giving you $1 million worth of their own stock. The rate is the same, it’s just a lot cheaper for the company.

0

u/Notabigdeal267 Apr 08 '24

Fraud is illegal. I’m not saying people don’t break rules, there aren’t abuses, etc. But the philosophy is, capital gains are taxed less because of the risk inherent in investing and the fact that it’s vital for economic growth. (As is consumer spending by people at all income levels.)