We can’t control what others do and we can’t stop misfortune from striking. But we can control our own actions. Those who are financially prudent will most likely enjoy success, even if events don’t always go their way.
Not to worry, all this most likely isn’t going anywhere, but it provides a look at the thinking. As you can see, only the wealthy would be affected- initially at least.
A few points stand out in my view.
The additional revenue is to be used to expand programs, not primarily to lower deficits
There is no mention of Social Security
The myth that the wealthy can foot the bill for the rest of us – or should – is perpetuated
Most objectionable is taxing income that does not exist, specifically unrealized gains – and based on net worth no less. This so-called wealth tax is absurd. What about unrealized losses? Imagine accurately defining net worth. Isn’t there someone in court these days over the accurate valuation of property which is part of net worth?
What’s being proposed?
The budget proposal seeks to generate revenue by raising taxes on the wealthiest Americans to fund expansions of the Child Tax Credit, Earned Income Tax Credit, and Premium Tax Credit, among other spending priorities. Generally speaking, the income tax changes laid out in the budget would impact a very small number of taxpayers if they were implemented—specifically, those who earn more than $400,000 in annual income.
The top individual income tax rate would rise to 39.6% from 37% for income above $400,000 (single filers) or $450,000 (married filing jointly).
The net investment income tax rate would rise to 5% from 3.8% for those earning more than $400,000 in regular income, capital gains, and pass-through business income combined. The additional Medicare tax rate for those earning more than $400,000 would also increase to 5% from 3.8%.
Qualified dividends and long-term capital gains would be taxed as ordinary income, plus the net investment income tax, for income that exceeds $1 million.
Transfers of property by gift or death would trigger a tax on the asset’s appreciated value if in excess of the applicable exclusion.
Roth IRA conversions would be prohibited for high-income taxpayers, and “backdoor” Roth contributions, where after-tax traditional IRA contributions can be rolled into a Roth IRA despite income limits, would be eliminated.
Danger, Danger
For taxpayers with a net worth greater than $100 million, a 25% minimum tax would be imposed on total income, including unrealized gains.
The budget would also eliminate the ability to defer gains on the like-kind exchange of real property and impose limits on the duration of generation-skipping trusts. “These would be meaningful changes,” says David Peterson, head of Advanced Wealth Solutions at Fidelity. “More family wealth would be taxed, and fewer assets would be transferred to the next generation.”
It would be nice to read a proposal from a politician or party that is actually honest and tells the whole truth.
I am no expert but think the existing system is far more complex than it needs to be. And some politicians and activists exploit the fact that many average citizens don’t really understand it. Cue the outrage when an author disingenuously includes a wealthy person’s unrealized capital gains when estimating his total effective tax rate, and then concludes we need a wealth tax.
The ultra wealthy hardly need me to speak on their behalf. But I did find reading “The Myth of American Inequality” by Gramm, Ekelund and Early informative. The authors relied on statistics collected by the government, but they were more inclusive. The average income for each quintile, after taking into account all taxes (federal, payroll, state, local) and transfers revealed the income disparity between the top and bottom quintiles was not 16 or so, but 4. So, we really do have a progressive tax system.
There really is no free lunch. Citizens in certain nations have a more generous government provided safety net. And those citizens in all income groups pay considerably higher taxes for those enhanced benefits compared with US citizens. Not just their wealthy. To continue spending money as we do now, much less consider various new spending, it would be refreshing to hear that all citizens are expected to pay, not just some unpopular group like the wealthy. Otherwise, explain why its ok to add it to the debt. Many politicians attempt to “sell” us on their tax system ideas. And by “sell”, if they can tailor their package to favor, or at least appear to favor a voting majority, they win. Winners and losers. I’d rather they present their ideas to us citizens as a business proposal which makes sense for all citizens as a group and the nation.
It would indeed be nice, but the reality is Americans don’t want the truth and few have any idea how most Europeans live or what they pay to have the social programs they do. Americas seem satisfied to try and have all they can get with little concern or desire to pay for it.
Many folks in this country do know how Europeans live but it’s not their cup of tea (no pun). They reject it!
Taxes and more taxes–cost to drive a small car is prohibitive–lights that automatically shut off to save on electricity which is so expensive–so many live in homes much smaller than here as the cost to maintain is ridiculous. Take a poll of the world and ask folks if they could move where would they go? I say USA!! You can have your socialism
We see the pattern right here–blue states are losing folks and business as taxes and regulations make it easy to move to SC–NC–GA–Fla.. Those NJ property taxes must be quite the allure to folks thinking about moving in–I guess compared to NY it’s bargain. But then all that property tax money supports A+ rated schools and students who test off the charts so I guess it’s worth it.
I have visited, eaten or stayed in homes in just about every European country from Russia to Malta to Wales and yes the homes were modest by American standards, everything is more modest – cars, clothes, etc.
But they are happier in many cases, they have less stress because their high taxes relieve them of many expenses that plague Americans – health care, child care and education among them. Their cars are small because so are many roads and gas in double or more than in US.
I don’t know if there is a relationship, but the highest taxed state has the highest ranked schools.
Having the biggest and the most is not always the best.
Oh well no disappointment this morning–wake up to more mirth than one has a right to. This is right out of EPI’s playbook and in line with the philosophy of Bernie and Pocahontas . You really have to laugh when you read such garbage and to think we should eviscerate the Trump tax cuts that is a prime mover in today’s strong economy for this pie in the sky loony left proposal.
Dick Quinn should be worried about his Picasso hanging in his stately living room, the two antique cars in the garage, and his wine collection so carefully collected after his many trips overseas. I wonder how the loons will try to value that? Will they show up on Quinn’s doorstep wanting to check the contents of his house after a neighbor called the IRS to report the wealth in objects the Quinn’s are noted for?
Dick–my advice is just declare it because as a proponent of higher taxes you would not want to be left out and accused of not paying your fair share. You would be the NJ Hunter Biden and that association is too much even for you!
I wonder if Old Yeller is suggesting that when Dick sells his house to move south (not to save on taxes though) for the weather, he loses the $500,000 capital gain tax exclusion? We need to play fair here–I get no $500,000 exclusion that resets every 5-years for the gains declared by my funds–why should Dick? And the loons say we all pay at ordinary rates and, get this, no inflation adjustment.
ROTH IRA restrictions–I wouldn’t be surprised that decades from now they decide to tax ROTH redemptions or the value of ROTH accounts in the guise of equity and fairness. Let’s take DEI (didn’t earn it) to the next level.
Dividends? Aren’t they taxed once at the corporate level and then again when I pay tax? Carried interest–I see nothing about that–I believe the Trump proposal wanted to tax this but the Dems decided that it would not help their newly found rich constituents–nothing happened.
On Trump–victims??? Name a few banks that gave loans and were not repaid–took the stand to testify how much they lost and would never lend him $ again–when I refinanced a few years I was asked pages of questions by PNC–they asked for everything but blood type–they checked it all out including, of course, the value of the home .
Thanks for the levity brought by the loons who want to implement the wealth tax–you better hope sanity arrives in D.C..
You are right that it indicates the thinking and is a blueprint for the next Dem administration. It won’t necessarily fall into place in one year but give it 2 and you’ll see it all. The rest of the Dem dreamworld will fall into place. The Republican position seems to be as long as interminable wars are going on their happy.
It’s been a great run for American experience but it’s on the downhill slide now. Economically, socially, and individually. The socialist, communist, anti America of old crowd is pulling this off.
There is simply no leadership for what used to be the Conservative Party. Trump took because he was/is the only one with a big enough ego to lambast the other side. Unfortunately, he doesn’t have the ability to run a country.
The lack of conservative leadership means the death of this country as we know it. The far right never has had the influence on society as a whole unlike the far left. Forward it will be left of center and the far left wingnuts running the show.
I absolutely did miss is! Maybe I was just hoping it wasn’t there? That said how will it work? I understand the part where you and the Dems want to tax the unrealized gains. Part I don’t get is how does the tax credit Surely there’ll be one) work if that unrealized gains drops in value! Last question is what happens when other people’s money runs out?
Easy Rodger–those printing presses never stop–monetize the debt–devalue the currency–remember, Trump is a SOB and acts like a junior high student, but this is why one votes for the stupid Party–they understand some of the basics and certainly more than lefties that run the party of government.
Understood Al. Our friend Richard likes to conviently brush over critical pieces, such as taxing unrealized gains. He did in fact say it but failed to ask the question how this would work if that unrealized gains drops in value! We all know the answer, but I’m sure Richard won’t speak to it. Cause if he did he’d have to admit that there is no plan to provide a tax credit if theassest value drops off.
QUINNSCOMMENTARY 
It would be nice to read a proposal from a politician or party that is actually honest and tells the whole truth.
I am no expert but think the existing system is far more complex than it needs to be. And some politicians and activists exploit the fact that many average citizens don’t really understand it. Cue the outrage when an author disingenuously includes a wealthy person’s unrealized capital gains when estimating his total effective tax rate, and then concludes we need a wealth tax.
The ultra wealthy hardly need me to speak on their behalf. But I did find reading “The Myth of American Inequality” by Gramm, Ekelund and Early informative. The authors relied on statistics collected by the government, but they were more inclusive. The average income for each quintile, after taking into account all taxes (federal, payroll, state, local) and transfers revealed the income disparity between the top and bottom quintiles was not 16 or so, but 4. So, we really do have a progressive tax system.
There really is no free lunch. Citizens in certain nations have a more generous government provided safety net. And those citizens in all income groups pay considerably higher taxes for those enhanced benefits compared with US citizens. Not just their wealthy. To continue spending money as we do now, much less consider various new spending, it would be refreshing to hear that all citizens are expected to pay, not just some unpopular group like the wealthy. Otherwise, explain why its ok to add it to the debt. Many politicians attempt to “sell” us on their tax system ideas. And by “sell”, if they can tailor their package to favor, or at least appear to favor a voting majority, they win. Winners and losers. I’d rather they present their ideas to us citizens as a business proposal which makes sense for all citizens as a group and the nation.
LikeLike
It would indeed be nice, but the reality is Americans don’t want the truth and few have any idea how most Europeans live or what they pay to have the social programs they do. Americas seem satisfied to try and have all they can get with little concern or desire to pay for it.
LikeLiked by 1 person
Many folks in this country do know how Europeans live but it’s not their cup of tea (no pun). They reject it!
Taxes and more taxes–cost to drive a small car is prohibitive–lights that automatically shut off to save on electricity which is so expensive–so many live in homes much smaller than here as the cost to maintain is ridiculous. Take a poll of the world and ask folks if they could move where would they go? I say USA!! You can have your socialism
We see the pattern right here–blue states are losing folks and business as taxes and regulations make it easy to move to SC–NC–GA–Fla.. Those NJ property taxes must be quite the allure to folks thinking about moving in–I guess compared to NY it’s bargain. But then all that property tax money supports A+ rated schools and students who test off the charts so I guess it’s worth it.
LikeLike
I have visited, eaten or stayed in homes in just about every European country from Russia to Malta to Wales and yes the homes were modest by American standards, everything is more modest – cars, clothes, etc.
But they are happier in many cases, they have less stress because their high taxes relieve them of many expenses that plague Americans – health care, child care and education among them. Their cars are small because so are many roads and gas in double or more than in US.
I don’t know if there is a relationship, but the highest taxed state has the highest ranked schools.
Having the biggest and the most is not always the best.
LikeLiked by 1 person
Oh well no disappointment this morning–wake up to more mirth than one has a right to. This is right out of EPI’s playbook and in line with the philosophy of Bernie and Pocahontas . You really have to laugh when you read such garbage and to think we should eviscerate the Trump tax cuts that is a prime mover in today’s strong economy for this pie in the sky loony left proposal.
Dick Quinn should be worried about his Picasso hanging in his stately living room, the two antique cars in the garage, and his wine collection so carefully collected after his many trips overseas. I wonder how the loons will try to value that? Will they show up on Quinn’s doorstep wanting to check the contents of his house after a neighbor called the IRS to report the wealth in objects the Quinn’s are noted for?
Dick–my advice is just declare it because as a proponent of higher taxes you would not want to be left out and accused of not paying your fair share. You would be the NJ Hunter Biden and that association is too much even for you!
I wonder if Old Yeller is suggesting that when Dick sells his house to move south (not to save on taxes though) for the weather, he loses the $500,000 capital gain tax exclusion? We need to play fair here–I get no $500,000 exclusion that resets every 5-years for the gains declared by my funds–why should Dick? And the loons say we all pay at ordinary rates and, get this, no inflation adjustment.
ROTH IRA restrictions–I wouldn’t be surprised that decades from now they decide to tax ROTH redemptions or the value of ROTH accounts in the guise of equity and fairness. Let’s take DEI (didn’t earn it) to the next level.
Dividends? Aren’t they taxed once at the corporate level and then again when I pay tax? Carried interest–I see nothing about that–I believe the Trump proposal wanted to tax this but the Dems decided that it would not help their newly found rich constituents–nothing happened.
On Trump–victims??? Name a few banks that gave loans and were not repaid–took the stand to testify how much they lost and would never lend him $ again–when I refinanced a few years I was asked pages of questions by PNC–they asked for everything but blood type–they checked it all out including, of course, the value of the home .
Thanks for the levity brought by the loons who want to implement the wealth tax–you better hope sanity arrives in D.C..
LikeLike
You are right that it indicates the thinking and is a blueprint for the next Dem administration. It won’t necessarily fall into place in one year but give it 2 and you’ll see it all. The rest of the Dem dreamworld will fall into place. The Republican position seems to be as long as interminable wars are going on their happy.
It’s been a great run for American experience but it’s on the downhill slide now. Economically, socially, and individually. The socialist, communist, anti America of old crowd is pulling this off.
There is simply no leadership for what used to be the Conservative Party. Trump took because he was/is the only one with a big enough ego to lambast the other side. Unfortunately, he doesn’t have the ability to run a country.
LikeLike
No honest conservative leadership for sure. Just radicals left and right.
LikeLike
The lack of conservative leadership means the death of this country as we know it. The far right never has had the influence on society as a whole unlike the far left. Forward it will be left of center and the far left wingnuts running the show.
LikeLike
Richard did I miss the part of the proposed tax increases where those in the high income category would have to pay tax on unrealized gains?
LikeLike
You did. It’s in the post.
LikeLike
I absolutely did miss is! Maybe I was just hoping it wasn’t there? That said how will it work? I understand the part where you and the Dems want to tax the unrealized gains. Part I don’t get is how does the tax credit Surely there’ll be one) work if that unrealized gains drops in value!
Last question is what happens when other people’s money runs out?
LikeLike
Easy Rodger–those printing presses never stop–monetize the debt–devalue the currency–remember, Trump is a SOB and acts like a junior high student, but this is why one votes for the stupid Party–they understand some of the basics and certainly more than lefties that run the party of government.
Don’t forget, our host wants Medicare for All
LikeLike
Understood Al. Our friend Richard likes to conviently brush over critical pieces, such as taxing unrealized gains. He did in fact say it but failed to ask the question how this would work if that unrealized gains drops in value! We all know the answer, but I’m sure Richard won’t speak to it. Cause if he did he’d have to admit that there is no plan to provide a tax credit if theassest value drops off.
LikeLike