Tax Derail From Musk/Twitter Thread

[Derec]

I’m a big fan of infrastructure, clean energy research and a lot of other stuff up with which Republicans will not put,

And yet the biggest and most costly planks of his ill-considered $3.5T B³ plan (really a somewhat leaner version of Bernie's $6T plan) have been tax cuts for the Blue State Rich (aka SALT deduction) and even more giveaways to people with children (in addition to all the tax credits and benefits they are already getting). Infrastructure was spun out into the bipartisan bill and clean energy, as laudable a goal as it is, was not the main focus of B³.

What does that have to do with Musk and Twitter though?

 

[Jimmy Higgins]

Remember, we can't tax wealth folks. Musk just bought a nearly $50 billion company... using his wealth.

 

[Trausti]

Remember, we can't tax wealth folks. Musk just bought a nearly $50 billion company... using his wealth.

He paid $11B in taxes for 2021. And you?

 

[bilby]

Remember, we can't tax wealth folks. Musk just bought a nearly $50 billion company... using his wealth.

He paid $11B in taxes for 2021. And you?

Yeah, did you pay less than 5% of your net worth in taxes too?

I know I paid vastly more than 5% of mine.

 

[Trausti]

Remember, we can't tax wealth folks. Musk just bought a nearly $50 billion company... using his wealth.

He paid $11B in taxes for 2021. And you?

Yeah, did you pay less than 5% of your net worth in taxes too?

I know I paid vastly more than 5% of mine.

So when the value of my equities drop the government should send me a check?

 

[bilby]

Remember, we can't tax wealth folks. Musk just bought a nearly $50 billion company... using his wealth.

He paid $11B in taxes for 2021. And you?

Yeah, did you pay less than 5% of your net worth in taxes too?

I know I paid vastly more than 5% of mine.

So when the value of my equities drop the government should send me a check?

No, that's not why I paid vastly more than 5% of my net worth in taxes. Why on earth would you think I did it so the government could send you a check?

 

[Trausti]

Remember, we can't tax wealth folks. Musk just bought a nearly $50 billion company... using his wealth.

He paid $11B in taxes for 2021. And you?

Yeah, did you pay less than 5% of your net worth in taxes too?

I know I paid vastly more than 5% of mine.

So when the value of my equities drop the government should send me a check?

No, that's not why I paid vastly more than 5% of my net worth in taxes. Why on earth would you think I did it so the government could send you a check?

Uh, okay. When should wealth be taxed? Especially as the value of that wealth can change daily. Just ask anyone with Netflix stock. Musk was taxed when he realized the value of his equities. I know you know this.

 

[Derec]

No, that's not why I paid vastly more than 5% of my net worth in taxes. Why on earth would you think I did it so the government could send you a check?

Federal income taxes are assessed on income, not net worth.

Does Australia tax wealth rather than income? Or what's your point?

 

[Rhea]

Remember, we can't tax wealth folks. Musk just bought a nearly $50 billion company... using his wealth.

He paid $11B in taxes for 2021. And you?

Yeah, did you pay less than 5% of your net worth in taxes too?

I know I paid vastly more than 5% of mine.

?

I definitely did not pay more than 5% of my net worth in a single year. My income, yes. But not my net worth.

 

[Loren Pechtel]

Remember, we can't tax wealth folks. Musk just bought a nearly $50 billion company... using his wealth.

He paid $11B in taxes for 2021. And you?

Yeah, did you pay less than 5% of your net worth in taxes too?

I know I paid vastly more than 5% of mine.

?

I definitely did not pay more than 5% of my net worth in a single year. My income, yes. But not my net worth.

Yeah, only people just starting out or those who don't save would pay 5% of their net worth in taxes. If we weren't paying self-employment taxes last year's IRS bill would be about 5% of the value of our house.

 

[Derec]

Remember, we can't tax wealth folks.

I do not know if it would be possible for US to tax wealth without a constitutional amendment (as was necessary for the federal income tax).
I do know that it is probably a bad idea, which is why most countries that have had a wealth tax abandoned it.

Musk just bought a nearly $50 billion company... using his wealth.

So? He also paid $11G in taxes last year.

 

[bilby]

No, that's not why I paid vastly more than 5% of my net worth in taxes. Why on earth would you think I did it so the government could send you a check?

Federal income taxes are assessed on income, not net worth.

Does Australia tax wealth rather than income? Or what's your point?

My point is that Trausti shouldn't expect anyone to be impressed by Musk's tax bill of 11bn. It's more affordable to him than most people's tax bills are.

Of course he would prefer to fly off on a tangent about wealth vs income taxation, rather than concede the point that Musk is not some kind of great benefactor to the US Treasury who contributes so much more than everyone else. He contributes far less of what he has than most people. His tax bills hurt him far less than yours and mine hurt us, even before you consider that he requires an utterly minuscule fraction of his income to meet his basic needs, so his disposable income is staggeringly high.

The main problem is that progressive taxation stops progressing. A person earning a million dollars pays the same rate of tax on their next dollar as someone earning $600,000, or as someone earning $30,000,000,000.

Never mind wealth; We need to make income tax genuinely progressive, at all scales. Progression to higher tax brackets shouldn't just be for the little people.

 

[bilby]

Remember, we can't tax wealth folks. Musk just bought a nearly $50 billion company... using his wealth.

He paid $11B in taxes for 2021. And you?

Yeah, did you pay less than 5% of your net worth in taxes too?

I know I paid vastly more than 5% of mine.

?

I definitely did not pay more than 5% of my net worth in a single year. My income, yes. But not my net worth.

Then I am guessing you own some real estate outright, or at least with very significant equity.

 

[Tigers!]

The main problem is that progressive taxation stops progressing. A person earning a million dollars pays the same rate of tax on their next dollar as someone earning $600,000, or as someone earning $30,000,000,000.

Never mind wealth; We need to make income tax genuinely progressive, at all scales. Progression to higher tax brackets shouldn't just be for the little people.

There are too many vested interests that make the possibility of a progressive tax system just a dream. What levels, how much, loopholes all get in the way.

 

[Jimmy Higgins]

The main problem is that progressive taxation stops progressing. A person earning a million dollars pays the same rate of tax on their next dollar as someone earning $600,000, or as someone earning $30,000,000,000.

Never mind wealth; We need to make income tax genuinely progressive, at all scales. Progression to higher tax brackets shouldn't just be for the little people.

There are too many vested interests that make the possibility of a progressive tax system just a dream. What levels, how much, loopholes all get in the way.

It is very simple. You have your wealth. If you use your wealth to borrow against, that gets taxed as income.

 

[Harry Bosch]

The main problem is that progressive taxation stops progressing. A person earning a million dollars pays the same rate of tax on their next dollar as someone earning $600,000, or as someone earning $30,000,000,000.

Never mind wealth; We need to make income tax genuinely progressive, at all scales. Progression to higher tax brackets shouldn't just be for the little people.

There are too many vested interests that make the possibility of a progressive tax system just a dream. What levels, how much, loopholes all get in the way.

It is very simple. You have your wealth. If you use your wealth to borrow against, that gets taxed as income.

The easier way would be to simply tax income received from bank loans as ordinary income when it's used for personal spending other than buying houses or vehicles.

 

[Elixir]

Musk paid $11G in 2021.

EXACTLY!! (If a G is now a billlion)
He paid that on a “wealth” gain of
$121,000,000,000.00.
About 8%
I paid about three times that rate.

You have your wealth. If you use your wealth to borrow against, that gets taxed as income.

That would be nice.

That's not response to my question.

An honest response would eviscerate his assertion, so…

 

[Jimmy Higgins]

The main problem is that progressive taxation stops progressing. A person earning a million dollars pays the same rate of tax on their next dollar as someone earning $600,000, or as someone earning $30,000,000,000.

Never mind wealth; We need to make income tax genuinely progressive, at all scales. Progression to higher tax brackets shouldn't just be for the little people.

There are too many vested interests that make the possibility of a progressive tax system just a dream. What levels, how much, loopholes all get in the way.

It is very simple. You have your wealth. If you use your wealth to borrow against, that gets taxed as income.

The easier way would be to simply tax income received from bank loans as ordinary income when it's used for personal spending other than buying houses or vehicles.

That'd work too, though house, not houses.

I'd also like to tax mortgaging newly cash bought properties... heavily. But that is less the wealthy and more the temporarily rich trying to be wealthy.

 

[Derec]

EXACTLY!! (If a G is now a billlion)

G stands for giga, i.e. a billion (short scale). Just like you may write "$40k" and mean forty thousand.

He paid that on a “wealth” gain of
$121,000,000,000.00.
About 8%
I paid about three times that rate.

People pay taxes on income, including realized capital gains.
They do not pay taxes on unrealized gains, and neither are they getting refunds on unrealized losses.
Not you. Not Musk. So your calculation is off because you are using the wrong basis.
Now, Biden wants to change that (for billionaires), but it has little chance of passing. And neither do I think it should.
Better to close down existing loopholes than to add fundamentally new taxes.

An honest response would eviscerate his assertion, so…

It would not, but thanks for playing.

 

[Derec]

My point is that Trausti shouldn't expect anyone to be impressed by Musk's tax bill of 11bn. It's more affordable to him than most people's tax bills are.

Pretty much everything is more affordable for him than for most people.

Of course he would prefer to fly off on a tangent about wealth vs income taxation, rather than concede the point that Musk is not some kind of great benefactor to the US Treasury who contributes so much more than everyone else.

That is not a tangent. When people try to pretend that Musk's (or Bezos', but never Steyer's or Soros' for some reason) tax rate is small, they always use wealth (or paper wealth gains) as the basis, even if that makes zero sense because that's not how taxation in the US (or almost everywhere) works.

He contributes far less of what he has than most people.

So? He still contributes far more than almost everyone.
And infamously 47% of people pay zero (or even have negative) federal income taxes.

The main problem is that progressive taxation stops progressing. A person earning a million dollars pays the same rate of tax on their next dollar as someone earning $600,000, or as someone earning $30,000,000,000.

At some point they have to stop progressing or else you get into confiscatory territory like the infamous Swedish >100% marginal tax rates.
But I think we could use a couple of more brackets to account for ultra-high incomes. And of course close loopholes.

Never mind wealth; We need to make income tax genuinely progressive, at all scales. Progression to higher tax brackets shouldn't just be for the little people.

Highest tax bracket starts at ~$540k for those filing single. That's hardly "little people". Not Bezos or Musk level for sure, but 1% for sure. Note also that such people would be helped the most by the SALT tax cuts for the rich that were part of Biden's B³ bill.