Governments say they can't tax the super wealthy more because they'll just leave the country but has any first world country tried it in the last 50 years?

[u/Discontitulated]

It would be interesting to see how raising taxes on the super wealthy actually affected a first world country's tax revenue and economy.

Are our first world economies really so fragile the rely on the super wealthy and their meager tax revenue?

[u/ThePotato363]

Capital gains are probably the biggest, simplest thing. A reform that would really help America, at least, would be to tax capital gains as income.

For some reason we decided that income you don't work for is taxed at a lower rate than income you work for.

[u/pawnman99 → u/ThePotato363]

Because the point was to encourage people to save and invest. For the vast majority of people, they were already taxed once on the money before they invested in, then they pay capital gains taxes on the same money when they sell the investment.

[u/AJX2009 → u/pawnman99]

You only pay capital gains on the money above what you put in, not the original amount you put in. Also you get to carry losses forward forever, so if you lose a bunch of money one year you can just deduct that off of future capital gains earnings. Meme stocks have saved me a few grand from my losses taking me down a tax bracket the last few years!

[u/Whiterabbit-- → u/pawnman99]

And capital gains tax is really a double tax. You as a share holder already got taxed when the company made money. Then you get taxed again on your investment.

[u/AJX2009 → u/Whiterabbit--]

That’s only true for dividends which is why most companies don’t pay them anymore. Stock price is totally separate from earnings.

[u/pawnman99 → u/AJX2009]

Nope, every dollar lost to taxes is money that could have increased the share price. Not just dividends.

[u/ldn-ldn → u/AJX2009]

Taxes are not the reason. When you're paid dividends, you're losing compounding interest. Which over long periods of time will result in a huge loss of money.

[u/Overall-Charity-2110 → u/pawnman99]

Capital gains tax brackets and while we’re making adjustments to it all, let’s toss in tax incentives to invest in shit like renewable energy && societally beneficial sectors

[u/pawnman99 → u/Overall-Charity-2110]

Those incentives already exist.

[u/Overall-Charity-2110 → u/pawnman99]

You didn’t address the main point, a capital gains tax is feasible with brackets. Your premise is faulty, “we cant have a capital gains tax so it encourages people to save and they will be taxed twice” This presents the situation as overtly simplified and without solution. But yes, Im glad social tax incentives exist. We should have more tax incentives for improving society than we currently have. Taxes are tool to improve society

[u/shareddit → u/pawnman99]

You don’t pay taxes on the same money, you’re only taxed on new gains. That’s how it always is with any income; any new money you make (gains), from any source, is generally taxable

[u/CrautT → u/ThePotato363]

While I agree, Only the extremely wealthy should have their capital gains taxed as normal income.

[u/YosemiteWolf → u/ThePotato363]

Nope… Musk and Bezos and other billionaires hardly pay any capital gains taxes. They take loans against their stocks and use that cash instead of selling the stock, so most of their gains stay unrealized (and untaxed) while they can get liquidity anyway. So changing capital gains rates still doesn’t capture this class of wealth (the .(.001%)

[u/deezee72 → u/YosemiteWolf]

The logical solution here is to say that taking loans against assets counts as realizing capital gains.

The main issues with wealth taxes is that a lot of wealth is hard to value and illiquid. If you're taking a loan against your wealth, 1) you clearly have a valuation - the lender needs one to underwrite the loan and 2) you have liquidity - you just got a loan, after all.

It also helps that this disincentives understating the valuation too much, since it will hurt you on the loan terms.

If capital gains taxes work better than wealth taxes in 99% of situations, it is better to change the rules for that 1% case than it is to replace the capital gains tax with a wealth tax across the board.

[u/presentation-chaude → u/deezee72]

The logical solution here is to say that taking loans against assets counts as realizing capital gains.

But it is not the same thing. Should your investments tank, the bank would come knocking to get that margin money.

In addition, you simply can't get a margin loan on a large stock position. Because it would take banks weeks to liquidate if the position is sizeable, and most wouldn't take such a risk, or at an extremely high interest rate to be fairly compensated.

Nothing is free.

[u/YosemiteWolf → u/deezee72]

To be clear I am not advocating for a wealth tax, just explaining why increasing capital gains tax doesn’t solve the issue for the most wealthy. I also don’t think a blanket rule saying loans against assets = realizing capital gains is the solution, as it totally defeats the purpose of not liquidating. Sometime people need short-term liquidity (e.g. cash to bridge you between selling one house and buying another). But maybe loans against assets outstanding for a certain amount of time (I’m sure someone could easily find loopholes by repaying and reborrowing in the nick of time) or above a certain dollar amount would get at the problem and not just affect the upper-middle class but leave billionaires unscathed, as many proposed solutions do.

[u/suiluhthrown78 → u/ThePotato363]

Its too distortionary, not worth it

Best is to replace most taxes with a high sales tax, cant be avoided.