Dave Johnson
From comments I see people don't understand how taxes work.
If a top tax rate is 90% on 1 million dollars or pounds, you do not pay 90% on the entire million dollars or pounds, only on dollars or pounds you make ABOVE that million.
So if you make a million pus one, your tax is 90 cents or pence. NOT 900,000 dollars or pounds.
Also if you are a hedge fund manager who makes 1 billion a year, you "only" get to keep 100 million. That makes me so sad. The entire world weeps for you.
HistoPol (#HP) 🥥 🌴
I agree with your initial statement. Taxes are not linear.
However the following two statements are so incomplete, as to be wrong:
"So if you make a million pus one, your tax is 90 cents or pence. NOT 900,000 dollars or pounds.
Also if you are a hedge fund manager who makes 1 billion a year, you "only" get to keep 100 million. That makes me so sad. The entire world weeps for you."
Even though you do not pay 90% taxes on your complete income, you do pay taxes, not just 90 cts...
HistoPol (#HP) 🥥 🌴
(2/n)
...depending on the country (and the times), and lacking any loss-carried forward (or backward), the average tax rate will mostly be between 15-30% for the amount below that million (varies widely and has other factors, depending on the jurisdiction.)
Likewise, if you make 1 bn, you will not only get to keep 100 m (10%), but way more (850 mn to 700 mn. in my rough estimate.)
****
On a more political/societal note:
In a world where 26 billionaires (according to the AUW...
HistoPol (#HP) 🥥 🌴
(3/3)
...President, if true) control 50% of the wealth, there are not enough resources left for the population.
Therefore: #AbolishBillionaires. Any wealth exceding 1bn (or even 500 mn) per person (depending on the size of the country, BIP per capita, etc.) should be taxed away.
//
NoBeerToday
Well put. What a person/legal entity ends-up paying on his/her/legal entity's whole taxable income is what's the important figure. Regretfully, in my experience most people have only a simplistic understanding of the way taxes work. Often to their own detriment.
HistoPol (#HP) 🥥 🌴
Yes, and even though I know quite a bit about that, I have a feeling that it is one of the key instruments that lets the rich get richer all the time. You need excellent tax consultants/lawyers to use all the loopholes and develop successful tax(-evasion) strategies.
Tax laws are some of the most complicated there are.
NoBeerToday
"Tax laws are some of the most complicated there are." - Yep, and as soon as you believe you have good grasp of it all they change or add some...
HistoPol (#HP) 🥥 🌴
Of course, they are "updated" every year, at least, and the courts in many countries add to the complexity by nullifying laws (at least in several countries.)
Being a moving target is totaly consistent with what I postulated: the experts even need to invest time to remain experts.
HistoPol (#HP) 🥥 🌴
@amoshiashwili
Thanks for asking. I understand but disagree with the wording. To fix the 2nd paragraph:
So, if you make a million pLus one, your tax is 90 cents or pence [on that one dollar that exceeds 1 mn.]. [You do] NOT [pay] 900,000 dollars or pounds [in income tax, but a lot less, depending on your family situation etc. and the tax rates applying to the first one million of currency units. These rates usually not being the same for each interval below 1 mn., as defined by law].
@dcjohnson
Aaron Moshiashwili
@HistoPol @dcjohnson so did you just not understand what he was saying, or...?
HistoPol (#HP) 🥥 🌴
@amoshiashwili
It's just not that simple. In many countries, your tax rate for each income tax bracket has a different, usually increasing up to the top tax rate, tax rate.
You actually would need a graph to understand it, if you are not familiar with the concept IMO.
//
Dave Johnson
PS also from comments I think lot of people PRETEND not to understand tax brackets so they can argue that high top tax rates are bad.
Dave Johnson
Actually, thinking back on it, I think MOST people saying high top tax rates are bad are pretending that all your income is taxes at that rate.
I wrote a whole explainer post for nothing.
Stephen Cox Author
The same people inevitably argue
'high marginal tax rates are bad for rich people'
but
'high marginal tax/withdrawal of benefit rates should be imposed on poor people"
Aaron
@amoshiashwili @HistoPol @dcjohnson I took the whole thread as educational, including HistoPol's responses. Not a misunderstanding. A difference in communication style and intent.
HistoPol (#HP) 🥥 🌴
(1/2)
YES, communication is precisely the point.
If even specialists have issues communicating between them (and IMO, the issue at hand her is not lack of understanding, but INCOMPLETE sentences), then how are laymen supposed to understand?
A top tax rate is NOT the rate applied to every dollar below a certain threshold of income (ex. here: 1mn.) It is usually a difficult calculation and the average...
Aaron Moshiashwili
@HistoPol @dcjohnson I'm a tax lawyer, I have a passing familiarity with the concept :-)
But you're fundamentally missing what the comment you are responding to is about. It is not at all about the specific calculation of tax under a specific system. By responding to it that way, you are showing that even though you understand these important tax concepts, you misunderstand what you are responding to.
HistoPol (#HP) 🥥 🌴
@hosford42 @amoshiashwili @dcjohnson
(2/3)
...tax rate is almost always much lower in most countries.
That said, this is not true for multi-millionaires and billionaires: apart from being able to use complex tax vehicles designed by expensive tax consultants and tax lawyers ;)), they actually WOULD (!) be paying the top tax rate in a world not dominated by plutocrats, as in the US:
Example:
If you earned one billion...
HistoPol (#HP) 🥥 🌴
@hosford42 @amoshiashwili @dcjohnson
(3/n)
... a year and you had to pay 90% taxes on all income above 1 mn., you'd be paying 90% taxes on 999 mn. currency units, or 899.100.000 currency units.
(NOTE: this disregards the about 15-35 % tax on the 1st million for *educational* purposes. ;))
Apart from powerful lobbyists in Congress and a hijacked SCOTUS, what prevents governments to impose a fair tax rate for at least billionaires?
The fact that money can easily be moved between...
HistoPol (#HP) 🥥 🌴
@hosford42 @amoshiashwili @dcjohnson
(4/n)
...countries, in particular to so-called tax heavens like the Bermudas.
So, if every government loses out, why not agree at least on a minimum tax for all countries?
Actually, this has just happened, after President Biden signed the international BEPS* accord of the OECD. Negotiations had been going on in several rounds on a very high technical level but a global minimum tax chiefly had been prevented by indicted former President Trump.
*BEPS...
HistoPol (#HP) 🥥 🌴
@hosford42 @amoshiashwili @dcjohnson
(5/5)
BEPS - Base Erosion and Profit Shifting.
BEPS includes many different initiatives that enables multinational companies and super wealthy individuals (to this day) to move earnings to countries where they pay a lower tax rate (or no taxes at all.)
In 2021, 130 countries agreed at least on minimum taxes for the biggest global players:
https://kpmg.com/ie/en/home/services/tax/corporate-tax/beps-2-pillar-one-pillar-two.html
This is an ongoing global project.
//
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