Elements of the press and the political left – far left – delight in redefining taxable income and I suspect many Americans miss the nuances.
I don’t know about you, but I have yet to pay taxes on the growth in my 401k or for that matter on any appreciation in the value of my investments. That’s a good thing because so far this year my assets have declined by $50,000 because of fluctuations in the stock market.
WHAT THE HECK IS A TRUE TAX RATE on the rise in one’s fortune? It doesn’t exist except in the mindset of those seeking to make their case to tax wealth, not income.
You and I are no different than Bezos and friends. We pay tax on income and we get to offset that income by losses. We pay no tax on some retirement income, even tax-free employer benefits. We pay lower taxes on dividends and even when we sell investments at a profit. But we don’t pay taxes on income we didn’t actually receive and which may evaporate like my $50,000.
In 2011, a year in which his wealth held roughly steady at $18 billion, Bezos filed a tax return reporting he lost money — his income that year was more than offset by investment losses. What’s more, because, according to the tax law, he made so little, he even claimed and received a $4,000 tax credit for his children.
His tax avoidance is even more striking if you examine 2006 to 2018, a period for which ProPublica has complete data. Bezos’ wealth increased by $127 billion, according to Forbes, but he reported a total of $6.5 billion in income. The $1.4 billion he paid in personal federal taxes is a massive number — yet it amounts to a 1.1% true tax rate on the rise in his fortune.
Propublica
Just because the numbers involved are massive and vastly different from ours doesn’t mean we redefine income to appreciation which may vanish the next year. Elon Musk lost $41 billion in 13 days last Fall as Tesla shares dropped.
If we want to tax the wealthy relative to their wealth, add a Value Added Tax (VAT) on any purchase of $1,000,000 or more.
QUINNSCOMMENTARY 
ProPublica used to be a good source for in-depth journalism. Now it’s just become a mouthpiece for crap like “tax the rich” (ask 1970s Great Britian how that worked out).
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This a really marginal idea that is very unlikely to pass unless some populist leader like Trump – but on the left – emerges someday. However, what is undeniable is how current income tax rates are at an historic low right now. That is a real problem that is the root cause of our huge deficit. Look at the numbers yourself. It is fascinating
https://www.taxpolicycenter.org/statistics/historical-highest-marginal-income-tax-rates
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The root cause of our huge deficit is spending more than we collect in taxes. I agree by cutting the tax rate increased the problem, but not the root cause of it.
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I understand your point. I probably would should have worded my comment as “if we had kept historically average income tax rates, we would likely not have a deficit”.
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Logically right, but i suspect that wouldn’t have stopped overspending
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You said it right, in answer to “What the hell happened in 1980?”
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Here we have a solid economy in some respects–jobs are a very positive point that one can hang their hat on. But job growth under the prior administration was also very solid–what did they have in common? Low taxes–both federal personal taxes— and corporate taxes which are now competitive with overseas taxes.
Where are the surpluses with such solid economic growth? Anyone heard any politician talk about paying down the debt? The more money you give these people the more they will spend–ever have a financial crisis in your life? ever sit down at the table with spouse and think about how to approach this issue? everyone I know starts with” what can we cut”–what can we “reduce”–here we seem to say; “who can we tax so we do not reduce our spending?”
Tax it and get less–get more by reducing taxes–right now lower taxes are a very large part of why we have a solid economy–let’s screw it up by giving the political class more of our $.
I won’t even mention property taxes–sales taxes–state income taxes–capital gain taxes–taxes on dividends–excise taxes–soon going into NYC by auto will cost an estimated $100–the working class folks will love that.
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Per Al’s comment, higher taxes aren’t necessarily correlated with lower growth. If that was so, America wouldn’t have thrived in the 20th century under such higher tax rates. The tax cuts during the Trump administration just let us have a big party for a few years so our children could pay it off.
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Who would pay those high rates on the last dollar earned? Nobody! Remember we thrived after WW 11 for a reason–we were not bombed out and devastated–we set up the Marshall Plan and they bought from us–we protected the world with our mighty defenses–the Trump tax cuts are now in effect–when Biden and the taxers were in charge did they make an effort to adjust rates? The big spenders want to rant and rave even with a solid economy–some folks just love taxes as it gives them a great sense of control–don’t you just love those property taxes–was with a guy recently from Wayland, MA who had a house worth about $1.5 million and paying over $24,000 annually in taxes–what do you get for that money said I? Schools are good he said but still he said a move to Florida is coming–save $ and it’s warm/
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Al, here is something I think we can agree on. If they want to cut taxes, then make an agreement first on corresponding spending cuts. And that is the real issue. Americans don’t want to cut Social Security or Medicare or Defense. So in the absence of spending cuts, big tax breaks are just irresponsible, unless it is a situation where there is a recession and stimulus is needed. But the last two big tax cuts, under Bush and Trump, were done during times of prosperity and so were irresponsible, greatly increasing the deficit that our children have to pay.
Regarding moving because of high property taxes, that is one way of voting with your feet. I have a lot of friends who moved fro Texas to California to get away from the high property taxes and enjoy the better public services and schools, so I can’t argue with that.
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well, the other party had control for a few years and deficits grew by quite a bit as money was pumped into the economy by both Trump and Biden–once by Trump I believe twice by Biden–I think the last one was $1,400 to most adults–they were warned it would set of inflation and it did of course — the Fed is responsible for trying to get the CPI back in the bottle just like Mr. Vockler did under Carter and Reagan–low taxes are a reason why, in my opinion, we are doing so well–in my world you keep taxes low and spend no more than what comes in–if you can grow the economy you bring in tons of money (like now) which can really help solve your problem–yes, SS and Medicare are eating up dollars as well as so many other programs, but with 49% or so of folks paying no federal income tax there is an incentive to spend and spend–again, it will take a crisis to get us to move toward fiscal sanity.
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It sounds like we basically agree, cutting taxes without spending cuts is irresponsible and causes deficits. That is yet another reason I will be voting against Trump in 2024. His proposed tax cuts for the rich, tariffs, and mass deportation of needed workers would be both inflationary – raising prices for the average Joe – as well as greatly increasing the deficit yet again.
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Articles like the one cited depend on the innumeracy of the public at large and the general lack of knowledge about income tax. People don’t stop to think about how the value of their 401k going up or down annually has no bearing on their taxes in a particular year. It’s easy to spin a good story when understanding is lacking by the reader or listener.
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