Bezos did not stumble across Amazon while digging weeds in his back garden. He built a successful business through a mixture of hard work, risk, his contacts, laws and infrastructure that we collectively paid for.
It’s not downplaying his efforts to point out that he now contributes proportionally less to the country than he benefits from. This isn’t an accident, either. Bezos pays smart and connected people to push for lower taxes and then avoid as many of those as possible.
No, it was a question, not an argument.
Let me restate it:
Buying a stock (or bitcoin) uses gobs of the same regulated, government-funded infrastructure. If that stock/coin becomes immensely valuable, that (the fact that I now have a high net worth) makes me "wealthy".
What I'm asking is: Please clarify whether the intent is to tax people based on their net worth (wealth), not their income.
The articles are not clear. They state that capital gains are lower than income taxes, but they are not 1%. Yet they state that Bezos paid less than 1% effective tax rate on his wealth increases. Implying that it's obvious we should have taxed that. It's not obvious. Presumably, and I'm asking for clarification here, he would eventually be taxed on that wealth when he liquidates it.
If so, forcing someone to liquidate by placing a high tax burden on them is unprecedented for stock holdings and other forms of wealth, but not unprecedented for, say, land valuations.
Look at the countless issues raised by people being unable to exercise stock options for tax reasons. It’s clear that taxing stock is NOT unprecedented.
We’ve seen repeatedly over the past 50 years that Bezos will NOT be taxed of that wealth under the current system.
There’s nothing sacred about different types of wealth. The question is whether society can benefit more from taxing and redistributing that wealth, or whether Bezos can by hoarding it.
I don’t just mean the raw tax receipts either. Tax policy influences behaviour, too. This has ups and downs but arguing about finding diamonds in the dirt isn’t a remotely similar analogue to the discussion at hand.
> Look at the countless issues raised by people being unable to exercise stock options for tax reasons. It’s clear that taxing stock is NOT unprecedented.
It is unprecedented to tax someone on the value of their unsold stock. That's what a wealth tax would be: We force someone to pay taxes on something (their holdings / net worth) simply because it is valuable, but not necessarily because it was liquidated into cash (sold). (like we do with land, but not stocks).
> There’s nothing sacred about different types of wealth. The question is whether society can benefit more from taxing and redistributing that wealth, or whether Bezos can by hoarding it.
I think the answer to my question is: Yes, taxing wealth is one way of extracting more public funds from those who are the most wealthy, and many such ways should be considered.
I don't advocate for/against this, I just want to understand and find appropriate analogies.
Propublica seems to have taken advocacy a priori, when comparing wealth to income, and that was confusing to me because it is actually a drastic change without precedent that I'm aware of (except perhaps land ownership).
> It is unprecedented to tax someone on the value of their unsold stock.
You mean unprecedented in the US, right? European countries have been trying various wealth taxes on and off for some time now, some of which count global assets including stocks.
When Jeff Bezos buys a yacht, he doesn't buy it with Amazon stock. He cashes out that stock and then buys the yacht.
I think a fair approach would be to use their total net worth as the threshhold for which wealth taxes apply, but taxes are only paid when that stock is turned into actual money, or equivalent. If you're not cashing out your company holdings, if your wealth is only "on paper", then you owe nothing. But if you try to start cashing that out, then you owe the wealth tax, and you don't get any proceeds until you pay off that tax first. Note that this would be on top of capital gains taxes.
But the article lays out wealth as a baseline, stating that taxes paid are a small percentage of the wealth increases. Wealth is mostly unliquidated because it is stock.
If I'm understanding the argument correctly, the proposition is that we should ( morally, not legally ) have levied additional taxes on these folks because their net worth has gone up as calculated by the value of things they own, like stock. I find that surprising and somewhat unintuitive. Thanks for clarifying.
I think you're correct in how you're characterizing the general consensus around wealth tax - that people should be taxed based on all accumulated wealth, including unrealized gains. I don't know how practical that is. I think an approach that frames it as 100% capital gains and/or marginal income tax rate on equivalent to the first 2-3% of your total gross wealth is more workable.
Exercising stock options is a unique case. If I as an employer give you $10m worth of stock (through grants or options), you have something akin to an "income" of $10m on the receipt of that stock. (For the record I disagree with taxing stock grants/options until they're realized and the proceeds can be used to pay the accompanying tax burden.)
If I give you $1 worth of stock and it appreciates to $10m, you have capital gains that will be taxed when you realize those gains.
Bezos did not stumble across Amazon while digging weeds in his back garden. He built a successful business through a mixture of hard work, risk, his contacts, laws and infrastructure that we collectively paid for.
It’s not downplaying his efforts to point out that he now contributes proportionally less to the country than he benefits from. This isn’t an accident, either. Bezos pays smart and connected people to push for lower taxes and then avoid as many of those as possible.