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It should be noted that once you hit about $500,000 in net worth you hit 95% and it takes a LOT of money to get much above 95%. The way our capitalist system is set up the rich really do gain net worth much faster than a working class person. With the moves in the stock market the last year a person with $10M invested will suddenly be worth $12.5M or more in just a year, while a person making $40K per year will hardly gain any ground because living isn't cheap. Meanwhile these wealthy people only have a 20% capital gains rate on all this increase. Trump might have made his tax cut sound like it was targeted at the middle class and they might have been thrown a bone but this was a cut for the top. The top 1%.. the people who make money by having money... got no appreciable increase in taxes and pay less than their fair share compared to say an upper middle class person making $125K per year because their capital gains rate is 20% while in many cases a middle to upper middle class working person can be paying, with social security and medicare, a much higher effective rate.
Though I'm in the 95th percentile largely due to crypto currencies I'm hardly at a state where I feel rich or would start to blow money excessively. It's all being put to work in investments which is more and more difficult as the stock market is reaching 2000 level valuations.
The top 1%.. the people who make money by having money... got no appreciable increase in taxes and pay less than their fair share compared to say an upper middle class person making $125K per year because their capital gains rate is 20% while in many cases a middle to upper middle class working person can be paying, with social security and medicare, a much higher effective rate.
how much is their fair share and who determined that amount is fair?
Also, you have to remember that this calculator is for households. If you're a single dude/dudette, don't feel too bad if your score is a little bit lower than what you had imagined.
Oh thanks for that. I am a singleton. Feeling a lot better. Though I got an 80%
how much is their fair share and who determined that amount is fair?
Simple.. peg the capital gains tax rate to the income tax rate. This would also encourage wealthy people to stay invested because the less they cash out in any given year, the lower their effective tax rate on what they do sell. Going to cash in $4M in stock options? You're gonna have to pay. I think that's "fair." I would have also added a 50% bracket for income of more than $2M per year. Cover those sports athlete salaries among other things. I guess I'm not as capitalist free market as I thought.. but all evidence suggests wealth actually trickles up better than it trickles down. Combine that with the fact that people on the bottom don't spend money very wisely (feeding the big sports industrial complex for example) and I don't believe there's anything particularly bad about having a high effective tax rate for the wealthiest in society. The top rate during most of the industrial revolution was something like 75% or even as high as 90% which is a little known fact people often ignore. A look at this data shows shockingly high tax rates for many wealthy people during this time. People today often equate this kind of progressive tax structure as socialist but it can work just fine though in a globalist world you have to remain competitive with other countries and offer incentive to do business here so it's a balancing act which is why the corporate tax cut was needed in my opinion.
First of all, if the stock options you're talking about are compensatory stock options, they're ordinary income anyway. Second, having capital gains tax rates equal to ordinary tax rates winds up taxing inflation effects on capital assets as well as the accumulation of after-tax earnings in the companies. Last, I happen to think the capital gains rate is fair where it is or maybe even lower. Doesn't mean I'm right, just my opinion.
Pols are saying all the time XYZ should be paying their fair share, aren't paying their fair share, etc. None of them offer up any plans for what fair is and how its fair, just that it's more.
otherwise lets all count future income from our jobs if you want to include income and not net worth . .
There is a difference. A defined benefit pension is an asset that can be sold in the capital markets. The math is straightforward to calculate the present value of a certain stream of future earnings. Yes, there are laws to restrict this for public policy reasons, but the math is simple. That is not the case for future earned income from wages.
Simple.. peg the capital gains tax rate to the income tax rate. This would also encourage wealthy people to stay invested because the less they cash out in any given year, the lower their effective tax rate on what they do sell. Going to cash in $4M in stock options? You're gonna have to pay. I think that's "fair." I would have also added a 50% bracket for income of more than $2M per year. Cover those sports athlete salaries among other things. I guess I'm not as capitalist free market as I thought.. but all evidence suggests wealth actually trickles up better than it trickles down. Combine that with the fact that people on the bottom don't spend money very wisely (feeding the big sports industrial complex for example) and I don't believe there's anything particularly bad about having a high effective tax rate for the wealthiest in society. The top rate during most of the industrial revolution was something like 75% or even as high as 90% which is a little known fact people often ignore. A look at this data shows shockingly high tax rates for many wealthy people during this time. People today often equate this kind of progressive tax structure as socialist but it can work just fine though in a globalist world you have to remain competitive with other countries and offer incentive to do business here so it's a balancing act which is why the corporate tax cut was needed in my opinion.
People respond to incentives and to disincentives. Our current system has plenty, and collectively they do quite a bit of harm.
I think a better system is a Progressive Consumption Tax. It provides no disincentive to earn more. There are several ways to set one up - but here is an overly simple one:
a) Just like today, we fill out a tax form that indicates everything we earned (wages, dividends, interest, capital gains, rental income, etc. Everything. )
b) We then fill out on a tax form everything saved or invested, backed up by bank statements, brokerage statements and the like.
c) When you subtract savings/investment from earnings, the difference by definition is consumption. This is the thing you tax to raise revenue to fund the government.
The more you consume, the more tax you owe. The more you consume, the higher the tax rate you pay on consumption. If you're a multi-billionaire and you consume $50 Million per year, you will be taxed at a very high rate and you'll pay a lot of money in taxes. If you are a low-income person who consumes little (by comparison), you'll be taxed at a low rate and won't pay much in taxes (if anything). If you're so-called middle-class who makes a good income but saves quite a bit, you'll owe low taxes at a low rate; if instead you spend everything you make living paycheck-to-paycheck, you'll owe & pay more.
The advantage of such a system is in its incentives compared to the incentives of the current band-aid approach to income taxation.
The progressive consumption tax can be made as progressive as you like.
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