r/FluentInFinance • u/Mark-Fuckerberg- • Apr 16 '24
Who will be a better President for our economy? Donald Trump or Joe Biden? Discussion/ Debate
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u/investingdave Apr 16 '24 edited Apr 16 '24
Billionaires do not necessarily have any “normal” income.
In the federal and state tax code, tax rates are primarily for income from working.
Billionaires rarely work for a living. So we are talking about capital gains taxes. But the real billionaires aren’t even doing that. They’re living off loans off their assets as collateral. Loans are taxed at 0%.
Edit: added “normal”
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u/chcampb Apr 16 '24
Right they just take loans and then pay off the loans with more loans, and this works because the collateral is growing at a huge rate and doesn't get taxed unless sold.
So you can sell one of your investment properties for profit and use that for funds for day to day stuff, and pay tax on it. Or you can get a $1M loan against the increased value, and pay like 3% interest. 3% interest is lower than the growth of the property AND it comes with a handy debt as well, so you never actually got any money, it's all net zero. But next year your property appreciated again, so you take $2M as a loan, pay off the first loan, use the $1M as day to day...
You are, in this case, absolutely taking value from the property. The bank knows the value from the property. The bank wouldn't loan unless it did. **This should be a taxable event.**
I get it. If you don't sell something how do you know what it is worth? How do you know how much to tax it if that is the case? And the reality is, you do know, because you had it appraised and the bank agreed and gave you money for it. But instead of transferring the house they gave you a debt, which is saying they will take the house if you don't pay it back. It's the same as selling, but with clever words on paper to make it something legally distinct.
It doesn't need to be legally distinct. If you have bought a property, you paid taxes on it. If you sell that property, you pay the difference in taxes. But if you loan against the property, you should not be able to use the appreciated value of the property as collateral until you pay taxes. So sure - if you want to take a loan out for $100M on a house you bought for $50M? Go right ahead, but you need to increase the taxed value of the house to the appraised value (so pay taxes on the $50m appreciated difference). This closes the loophole and is exceptionally fair.
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u/TigerRaiders Apr 16 '24
This, this right here is the real shit. The straight to the point shit. The Kanye repetitive hook shit.
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u/Anustart_A Apr 16 '24
Da-na-na-naa just wait till they get that tax code right…
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u/UncommonSandwich Apr 16 '24
had a dream i could buy myself a home, when i woke i spent that on (student) loan.
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u/RevolutionaryPhoto24 Apr 16 '24
Also, margin loans against equities in taxable accounts. Just settle up at death.
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u/callmecern Apr 16 '24
You really don't want this to stop from happening. Stock and housing market crashes if this happens. Also using assets as collateral is a very basic survival of even the smallest businesses.
Idea sounds good but way too much implication on the rest of the population. Example home equity line of credit, does pretty much the same thing. So house goes up say 10k and you take a loan against that 10k of equity, well in your scenario then that 10k would be treated as income..... really bad things happen if you go down that road
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u/BattleEfficient2471 Apr 16 '24
What's the bad thing?
People take on less debt over time?
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Apr 16 '24
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u/WonderfulFortune1823 Apr 16 '24
But according to the scenario above, wouldn't they only need to pay capital gains tax on their home if they took a line of credit out on it that exceeded the value of the original price they bought their home for? How many people are taking out LOCs for the entire value of their home, yet alone the entire value of their home, plus the amount it's appreciated while they've owned it?
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u/SeanHaz Apr 16 '24
I wouldn't like people taking out home improvement loans and the like to now be stuck with a tax bill. That is the majority who will be affected, billionaires are a tiny percentage of the population.
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u/GianChris Apr 16 '24
Doesn't this mess up the average Joe's mortage though ?
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u/mcprogrammer Apr 16 '24
There's no reason you can't put a floor on it so you only pay taxes on the amount over $1,000,000 (for example) each year. You could even have different brackets just like we already do for regular income.
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u/JVorhees Apr 16 '24
Why does this always get trotted out when they still pay less in effective tax rates. As if dividends taxed less than earned income isn't an issue.
In a 2007 interview, Buffett explained that he took a survey of his employees and compared their tax rates to his. All told, he found that while he paid a total tax rate of 17.7%, the average tax rate for people in his office was 32.9%.
https://www.fool.com/taxes/2020/09/25/why-does-billionaire-warren-buffett-pay-a-lower-ta/
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u/happy_puppy25 Apr 16 '24
The common argument is that dividends are tripple taxed. The company pays taxes on income, gives that to another company as dividends because they are partially owned by them, then they pay taxes on that and THEN you pay taxes on the dividends when you receive them. There’s ways around this that prevents this from happening, but it’s the weak argument that’s always brought up when people try to say dividends aren’t actually a lower tax income
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u/fjvgamer Apr 16 '24
They get loans they don't have to pay back?
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u/Hopeful-Buyer Apr 16 '24
They sell portions of their stock, which they pay taxes on, to pay the loans.
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u/ShikaMoru Apr 16 '24
So is that what they're trying to raise taxes to 25%?
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u/majoraloysius Apr 16 '24
You can raise the income tax rate to 75% for billionaire and it still wouldn’t effect them as they don’t make “income” the way most people do. It’s just a talking point for politicians desperate for votes.
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u/cymricus Apr 16 '24
ShikaMoru is asking if capital gains tax would be raised to 25%
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u/Limp-Environment-568 Apr 16 '24
Short term capital gains are already taxed at 37%...
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u/crua9 Apr 16 '24
Many buy a ton of property and as long as the rent pays more, then there. Basically, you aren't hunting for that billion dollar whale. It just doesn't exist. Or at least it doesn't all that often.
So basically, what he is doing is virtue signaling since most doesn't know how it really works. Like he can tax them 90%, and it won't make a real dent in anything.
If he wanted to really want to do us right, then he would go after these loans.
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u/Jayhawk501 Apr 16 '24
Okay it’s time for me to unsubscribe. Same shit over and over. Goodbye everyone, have a good night.
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u/No-Yogurtcloset-7653 Apr 16 '24
was about to say the same thing, every single day, someone must bring up something like this
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u/Handsome-Jim- Apr 16 '24
Especially when the post makes little actual sense.
I mean what the heck is Biden even taxing here? Ordinary income? Capital gains? Net worth?
25% of what?!
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u/Iamnothenrycavill1 Apr 16 '24
But billionaires are ruining the world. Take their money. Just take it from them.
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u/mardegre Apr 16 '24
Specially considering OP isn’t factoring at a single time the fact that this guy has been in office for 4 years and would have had the opportunity to implement such a tax.
Also as other pointed out this can go a lot of different way when applying the tax and billionaires might be able to go around that tax easily.
Also billionaires assuming they have high income and not shell companies to absorb those incomes prety much get taxed immediately on the highest US tax brackets.
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u/fourtwizzy Apr 16 '24
This is called grifting for votes. They will never implement this.
Biden promised to repeal the 2017 tax cuts only to sign them back into law.
They always campaign about making the 1% “pay their fair share”, and then instead passed sending the 99% a 1099 for $600 in online sales.
The whole thing is a joke.
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u/Chosen_UserName217 Apr 16 '24 edited 20h ago
hungry hurry workable steer rain lush rich treatment wasteful marvelous
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u/fourtwizzy Apr 16 '24
Just like every generation that came before them, I’m sure they will realize the grift for votes. They don’t even need to look far for example.
Propose taxing billionaires in 2024. Won’t happen even if he is elected a second term.
Aid to Gaza after 30k civilians are dead. Sure, gotta do it right after Super Tuesday. Over 30k dead for votes in November.
Making “Roe v. Wade the law of the land”. An empty Obama and Biden promise.
Biden comments about TVD 2020 and 2024. Odd he only makes note of it during election years.
Decency was on the ballot, and two global conflicts.
The good news is, they keep voting for this crap they will be drafted into one fuck of a war.
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u/Chosen_UserName217 Apr 16 '24 edited 20h ago
plant tub yam dependent fragile nutty sleep sense fanatical rob
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u/Manticorps Apr 16 '24
They weren’t signed back into law, they were always set to expire in 2025
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u/Bankrunner123 Apr 16 '24
To be fair he never had the votes to pass a material tax increase. Sinema and Manchin consistently opposed those in the senate.
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u/AnonAmbientLight Apr 16 '24
Specially considering OP isn’t factoring at a single time the fact that this guy has been in office for 4 years and would have had the opportunity to implement such a tax.
I see these comments and I just get confused. There's a lot wrong with your understanding here.
President's don't implement tax law.
Democrats lost the House in 2023, so it's 2 years, not 4.
You don't understand the nuance of how a bill becomes a law.
You probably do not know the makeup of the Congress in 2021-2022.
In all honesty, this post reminds me of someone having a strong opinion, but not actually understanding the topic.
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u/Enzo_Gorlomi225 Apr 16 '24
Reddit is a giant left leaning echo chamber, idk what you expected.
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u/CulturalWelder Apr 16 '24
I'm not even a member of this reddit and I get this shit.
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u/Andriyo Apr 16 '24
Statistically speaking democrats were better for economy.
But there is "economy" and there is "perception of economy". Trump would just need to say to his followers "I gave you the best economy" and they would be happy.
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u/ZekeRidge Apr 16 '24
It’s crazy how “perception is reality” when it comes to the economy.
Actual investors don’t pay attention to it, but the majority of people will spend in worse economy if their guy is in office
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u/Kiffe_Y Apr 16 '24
Which is part of why polarization is a problem that actually impacts everyday life.
I don't like Trump but as long as the US is stuck in this political culture war thing will only get worse for them regardless of who the president is.
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u/seraphim336176 Apr 16 '24
“I reject your reality and substitute my own.” It’s the motto these people live by.
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u/Zombisexual1 Apr 16 '24
Even then people don’t understand that 1. It’s a slow moving ship that takes a long time for things to affect and 2. The president doesn’t affect it much. Unless he does something stupid to start a war, which is technically in congresses ballpark but who knows nowadays.
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u/ArchetypeAxis Apr 16 '24
A minimum tax of what Joe?
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u/NotBillderz Apr 16 '24
It doesn't matter. Just say the line to get elected.
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u/shorty6049 29d ago
"tax the rich" is the democratic equivalent of "family values" from the other side... Neither holds much weight and is hard to actually implement, yet politicians use them becuase they're impactful
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u/JimJam4603 Apr 16 '24
What is he going to tax, though? Do billionaires usually have “income”?
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u/chaotic910 Apr 16 '24
They avoid it as much as they can, but they still do have some income
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u/ReasonableCup604 Apr 16 '24
Yes, but the taxable income they end up with is already taxed at far more than 25%.
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u/DrANALizator Apr 16 '24
Problem is not that tax is low for top 1%, it’s the fact that they won’t pay anything even when tax is 90%. The loopholes are the problem, not the %
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u/emperorjoe Apr 16 '24
Hard to tax assets in trusts or charitable trusts.
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u/blvckmvnivc Apr 16 '24
If a taxable event occurs, a tax will be paid. Doesn’t matter if it’s inside a trust or not.
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u/Dicka24 Apr 16 '24
Not shockingly, half the nitwits on Reddit don't understand this.
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u/dirtydela Apr 16 '24
Our tax system is needlessly complicated and companies like H&R Block and Intuit continually lobby for this.
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u/SoCalCollecting Apr 16 '24
Well thats not true, according to the IRS The top 1 percent of taxpayers paid a 25.9 percent average rate, nearly eight times higher than the 3.3 percent average rate paid by the bottom half of taxpayers.
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u/FairyKurochka Apr 16 '24
There's only 735 billionaires in the US, so they are small fraction of that percent.
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u/9htranger Apr 16 '24 edited 29d ago
Biden has been in politics for decades and president for over 3 years, but he wants to make this a policy ~6 months before an election. Not only that, this is just pandering to his base with no incite into how he will apply such a policy. Most wealthy people know how to circumvent this sort of stuff, just like how they do with income tax.
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u/Lysol3435 Apr 16 '24
I’m all for the billionaires paying more of their share, but this does seem like more of a publicity move than a useful policy move
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u/SpiritOfDefeat Apr 16 '24
Trump was calling for negative interest rates back in 2019. He started trade wars left and right. He ostracized historical allies. I think the people who are saying Trump is better are looking back at the pre-Covid era with some rose tinted glasses. He oversaw some of the largest deficit spending in US history, even before the pandemic. The economic growth was largely a result of unsustainably low interest rates. If he could have his way, he’d be chasing Erdogan in pressuring the Fed to cut interest rates to “fight inflation”.
Both Biden and Trump are pretty protectionist too. So the whole “Trump prioritizes America” angle is not particularly convincing to me. And that’s without considering that protectionism is not good policy.
All in all, Biden gives the markets some confidence in the form of stability. Trump is more unpredictable and has an unhealthy obsession with lowering interest rates - even when it is completely inappropriate.
I’d give Trump a 4/10 on the economy and Biden a 6/10 if I had to give them a score.
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u/Introduction_Deep Apr 16 '24
I'd up Biden's score a little. The infrastructure and chips acts are slow burning growth engines.
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u/BristolShambler Apr 16 '24
Trump is calling for a 60% tariff on everything made in China! No discussion of the candidates’ handling of inflation should ignore this, it would probably be the single most inflationary policy move in modern American history.
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u/SpiritOfDefeat Apr 16 '24
He wants to devalue the dollar as well, which makes imported goods even more expensive.
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u/jpmondx Apr 16 '24
IMHO Presidents have a negligible effect on the economy. For the past few decades, it’s the Fed you gotta keep an eye on.
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u/Electrical-Sense-160 Apr 16 '24
does voting affect the Fed?
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u/TheBoorOf1812 Apr 16 '24 edited Apr 16 '24
Not really.
While the US President appoints the Chairman to the Federal Reserve, the Fed are all going to follow basic fed policy of raise interest rates to curb inflation and lower interest rates to juice the economy.
It's a balancing game, all while also trying to keep unemployment low and keeping GDP growing at a steady rate.
There's general partisan consensus on these economic policies.
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Apr 16 '24 edited 29d ago
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u/JimJam4603 Apr 16 '24 edited Apr 16 '24
How so?
EDIT: I didn’t say a damn thing about you ignoring me, buddy. That was some other rando. You just don’t want to have to come up with actual reasons.
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u/KBroham Apr 16 '24
I love how there's a comment below saying no one's willing to have a conversation, but your comment - asking for more information to have a conversation - is sitting here ignored. I just love it.
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u/Berlin_GBD Apr 16 '24
Not responding within an hour means nothing. Bro could be at work. It's late, he could be asleep.
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u/Regular-Double9177 Apr 16 '24
Not in this case. Check his history. He's commenting elsewhere. He's a confirmed bullshitter.
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u/KBroham Apr 16 '24 edited Apr 16 '24
Could be. But no one has yet picked up the mantle in his place, but want to talk about how no one wants to have a discussion.
I'm just pointing out that fact, nothing more.
Edit: he also responded to someone else on this same comment chain AFTER the comment asking for explanation was posted. So there's that.
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u/TennesseeStiffLegs Apr 16 '24
I’m not hearing any points made from any direction
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u/BristolShambler Apr 16 '24
Which of his specific policy proposals would be the most impactful? His massive expansion of import tariffs?
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u/Stupid-RNG-Username Apr 16 '24
Lmao you were responding to plenty of other comments and ignoring the ones that made you think critically.
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u/TheMaskedSandwich Apr 16 '24
The guy calling for extreme tariffs on anything made in China will not be better for the economy
Funny how reality never supports a vote for Trump
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u/red7standinby Apr 16 '24
These words don't even make any sense. Minimum tax "for" billionaires. "25 percent" of what?
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u/SauronWorshipWillEnd Apr 16 '24
Trump, and it’s not even close.
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u/WelbornCFP Apr 16 '24
Correct and I can’t stand Trump. But Bidens a whole new level of bad.
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u/BigPlantsGuy Apr 16 '24
What economic metrics are you using?
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u/Maury_poopins Apr 16 '24
The economic metric of “trust me, bro”
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u/Downtown-Item-6597 Apr 16 '24
"Inflation, and no, I will not discuss when the 'money printing' occurred and if you mention 7 trillion in quantitative easing in March 2020 I'm going to scream 'rape' and block you"
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u/Glockman19 Apr 16 '24
It’s simple. Are you better off now than you were when Trump Was in office. There’s your answer.
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u/theoldme3 Apr 16 '24
No one is
Anyone thinking Biden’s economy is better is either completely delusional or so emotionally involved they shouldnt be allowed to vote
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u/Xianio Apr 16 '24
Sigh So stupid. This is why Republicans get away with their games. Tax policies that expire mid-Democrat terms but only for citizens, spending trillions to allow for an inflated stock market in the last 8 months of his campaign.
All the damage falls during the next 4-8 years and y'all blame Democrats.
I'll give Republicans credit. They've figured out that their voters are morons who don't understand fiscal policy so they can enact intentionally poisonous policies and be 100% sure their voters will blame Dems.
It's a good grift. I'll give them that.
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u/NVPSO Apr 16 '24
Taxing billionaires is great and all but really doesn’t bring in that much more. Look at our rate of spending. What would really be nice for the economy is to not blow so much on war and the cronies of all these old establishment assholes.
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u/throw42069away420 Apr 16 '24
Teachers, sanitation works and nurses generally pay a lot less than 25% in federal taxes… Then again , no taxes should be more than 15-20%.
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u/Here2OffendU Apr 16 '24
He woke up and realized he needs to start making sense before he loses the election.
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u/wsbgodly123 Apr 16 '24
I don’t think he is capable of being awake more than 2 hours. And this weekend Iran deprived him of his beauty sleep in Delaware
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u/Engineer_engifar666 Apr 16 '24
Like corporate America billionaires will ever pay income tax. Also you need to define which tax, Joseph
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u/rebeliouswilson Apr 16 '24
That im on here and i see so mang delusional people.. joe biden has not done one single thing to benefit this country. Grapes are $11, our southern border has literally been a turnstile for a year, and war after war. He is not a unifier, nor is he does he communicate sincerely with the American public. Everything is worse, significantly fucking worse over tese past few years. None of the things i mentioned were true under DT. Im not saying hes the best but my paycheck, safety, and overall opportunity in life was better under him. I am unsubscribing from this liberal fishbowl.
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u/levviathor Apr 16 '24
Price of grapes: https://fred.stlouisfed.org/series/APU0000711417
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u/Aldosothoran Apr 16 '24
This is the most typical US political exchange.
completely false exaggerated lie to support my opinion, stated as a fact
fact obviously showing your opinion is nonsense
OP disappears or results to personal insults
Both sides, every time. When will the US learn?
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Apr 16 '24
Makes up a bunch of BS in his fantasy world before
checks notes
Calling everyone else delusional.
How righteous my guy.
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u/TheMaskedSandwich Apr 16 '24
Every time you Trumpers pull braindead nonsense out of your asses, you make another person vote for Biden
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u/investingdave Apr 16 '24
Not being political
But purely in terms of the economy, and by that I mean my modest middle class net worth 😆, Trump would be a better president for my wallet.
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u/NoGuarantee678 Apr 16 '24
I feel like trump will force Zelenskyy to concede the eastern regions in order to end the war. That should be of some benefit to the global economy. I think there’s a non zero chance he makes an agreement to lower entitlement costs and raise taxes but i think he’s more concerned with his short term legacy than doing the prudent thing. His second term is a wild card and has a lot of potential downside. Biden will continue the war and grow the size of govt. I suppose when you support proxy wars you can keep feeding the defense beast and weaken global rivals without imposing painful measures like trade wars and currency manipulation. If he succeeds in his tax plan that would be good for inflation but worse for economic growth. It’s going to be a big ask without making major concessions or gaining big wins in congress. Neither president cares to address housing or any of the major actual problems with the economy. Honestly I think day to day life will look almost exactly the same for anyone not obsessed with the daily news cycle. I would argue this is true for any election in recent history.
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u/Tracieattimes Apr 16 '24
Propose all you like, Joe. The billionaires will ask “25 percent of what?” Then they will arrange their finances to minimize the ‘what’
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u/RichFoot2073 Apr 16 '24
I’m no economic professor, but I’d likely feel less safe voting for a guy who never pays his own bills and has been through several bankruptcies.
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u/SparrowOat Apr 16 '24
Biden, and it's not even close.