If you're earning 10MM/year and unable to make ends meet, you're terrible with money and it's your fault. Maybe you can construct a far-fetched scenario in which this could reasonably be the case, but in the real world virtually anyone making 10MM/year is extremely wealthy or extremely incompetent.
If you're making 30k/year, you are just barely making enough to support a family on your income. Yes it's possible to be wealthy and low income, but it's uncommon and generally indicative of retirement or something similar.
>If you're earning 10MM/year and unable to make ends meet, you're terrible with money and it's your fault.
Maybe, but not necessarily. What if I spent twenty years putting myself in the position to make $10m in one year?
>If you're making 30k/year, you are just barely making enough to support a family on your income. Yes it's possible to be wealthy and low income, but it's uncommon and generally indicative of retirement or something similar.
Well, yeah, but so what? My point was you're making a lot of assumptions based on income alone.
If you spend 20 years setting yourself to make $10MM one year and you still can't make ends meet then you are clearly incompetent.
I don't understand what your point is with this whole argument. Yes, there are always exceptions. They aren't very interesting but the very nature of being exceptions, especially since tax laws are written for the general case.
The number of multi millionaires in your exceptional case is also much smaller than you probably think. It's vanishingly difficult to earn no money when you have millions in assets.
>If you spend 20 years setting yourself to make $10MM one year and you still can't make ends meet then you are clearly incompetent.
I don't see how you could make a statement like that. It costs money to live, and it costs money to keep a business venture going. After 20 years you may own $20m. It doesn't necessarily mean you're incompetent. It may just mean things didn't go the way you planned.
>I don't understand what your point is with this whole argument. Yes, there are always exceptions. They aren't very interesting but the very nature of being exceptions, especially since tax laws are written for the general case.
My point is you don't know enough about someone's situation to make a blanket "they can afford it" or "they can't afford it" statement, and that statement underpins the entire argument for forcing people with higher incomes to pay more taxes.
>The number of multi millionaires in your exceptional case is also much smaller than you probably think.
Or it's much larger than you probably think. Nobody knows. Why are you assuming you know?
> It's vanishingly difficult to earn no money when you have millions in assets.
Actually, with current interest rates it's pretty easy. I know people with millions in assets who put their money in safe investments, because there's no reason to take risks when you have millions and you're in your 70s. Right now the interest on safe investments is a rounding error.
> I don't see how you could make a statement like that. It costs money to live, and it costs money to keep a business venture going. After 20 years you may own $20m. It doesn't necessarily mean you're incompetent. It may just mean things didn't go the way you planned.
If you have $10 million in income and cannot make ends meet, something is wrong with you. I understand that you could also have debt. That doesn't mean you aren't "making ends meet". I have more debt than income. I'm making ends meet just fine.
> My point is you don't know enough about someone's situation to make a blanket "they can afford it" or "they can't afford it" statement, and that statement underpins the entire argument for forcing people with higher incomes to pay more taxes.
Income is extremely correlated with how much of anything one can afford, including taxes.
What is your alternative anyway? We'll just stop taxing people entirely because we can't really know what they can afford? Or are you just being pointlessly argumentative?
> Or it's much larger than you probably think. Nobody knows. Why are you assuming you know?
Because I did the math, as could you.
> Actually, with current interest rates it's pretty easy. I know people with millions in assets who put their money in safe investments, because there's no reason to take risks when you have millions and you're in your 70s. Right now the interest on safe investments is a rounding error.
Drop your millions into T Bills for 5 years and you'll earn 1.3% on the safest investment you'll get. 1.3 is a rounding error? Ok. On a million dollars it's also 13k. So if you park 5 million in this absurdly low interest investment you'll still make 65k/year.
So no, it's not easy to make no money if you have millions in assets. A few million in safe investments yields more income yearly than the average American family makes.
>If you have $10 million in income and cannot make ends meet, something is wrong with you. I understand that you could also have debt. That doesn't mean you aren't "making ends meet". I have more debt than income. I'm making ends meet just fine.
Again, it all depends on the details. Could you make ends meet with $10m when your $20m debt comes due in the same year?
>What is your alternative anyway? We'll just stop taxing people entirely because we can't really know what they can afford?
The alternative is, one, we keep the top rate reasonable. Nobody should have to pay 70% or 90% or whatever on his income, no matter how large. And everybody should pay income taxes, even if it's just a token amount.
And two, we should get more of the national income from consumption taxes. If you can run out and buy a bunch of stuff you can then I know you can afford it. I'd have a national system like California's, where things like food and clothing are exempt.
>Or are you just being pointlessly argumentative?
Don't be an ass. Seriously.
>Because I did the math, as could you.
When I "no money" I don't actually mean zero money, though I'm sure there are people who keep large amounts of money in their checking accounts. I mean no money compared to assets. What is a few tens of thousands for someone who has millions in the bank?
>Drop your millions into T Bills for 5 years and you'll earn 1.3% on the safest investment you'll get. 1.3 is a rounding error? Ok. On a million dollars it's also 13k. So if you park 5 million in this absurdly low interest investment you'll still make 65k/year.
You realize for someone who has five million dollars in the bank, particularly someone who's only going to be using it for a handful of years, $65k is a rounding error? And that the average tax rate for someone in that bracket is around 13%, so that guy with five million in the bank is going to pay somewhere in the neighborhood of $8500 in taxes.
> Again, it all depends on the details. Could you make ends meet with $10m when your $20m debt comes due in the same year?
Can you describe a realistic situation in which you receive a personal loan for $20 million that comes due at once that you cannot pay for by liquidating other assets? This isn't a real scenario. No one will give you this kind of personal loan without collateral or proof of significant unencumbered assets. And at minimum, you'd be doing this through a corporation, or again, you are incompetent.
> The alternative is, one, we keep the top rate reasonable. Nobody should have to pay 70% or 90% or whatever on his income, no matter how large. And everybody should pay income taxes, even if it's just a token amount.
No one in this comment thread said anything about raising taxes to 70 or 90 percent for anyone. You're taking against a nonexistent point.
Nor is this "alternative" an alternative. In no way does this address the fact that a specific income does not guarantee an ability to pay a specific tax rate.
> And two, we should get more of the national income from consumption taxes. If you can run out and buy a bunch of stuff you can then I know you can afford it. I'd have a national system like California's, where things like food and clothing are exempt.
Consumption taxes are effectively regressive. Exempting clothing and food is a decent idea but it's still regressive and I'm not sure foie gras and mink coats should be tax free.
> Don't be an ass. Seriously.
You're arguing against points I never made and you never even stated. You're making appeals to consider imaginary millionaires who can't pay basic taxes. It honestly feels like you're being intentionally argumentative.
> When I "no money" I don't actually mean zero money, though I'm sure there are people who keep large amounts of money in their checking accounts. I mean no money compared to assets. What is a few tens of thousands for someone who has millions in the bank?
The money you have in the bank isn't relevant to your taxes except to the extent that it produces income for you. If you are insanely wealthy and have almost no income, you'll have no trouble paying your taxes.
Are you imagining that I at some point proposed a tax on wealth?
> Can you describe a realistic situation in which you receive a personal loan for $20 million that comes due at once that you cannot pay for by liquidating other assets? This isn't a real scenario. No one will give you this kind of personal loan without collateral or proof of significant unencumbered assets. And at minimum, you'd be doing this through a corporation, or again, you are incompetent.
The most obvious situation is probably where you've invested a certain amount of money in a highly illiquid asset, that can someday (i.e. 10-20 years from now) be liquidated for a significant capital gain. This could, for example, be a business or a plot of valuable land.
How does that work? The bank gives you a noncollateralized loan so that you can buy a $20 million property and then they suddenly call the loan? They gave you the loan without proof of ability o pay? I have trouble believing that this is very plausible. It's so risky to both parties that I can't see why the bank would issue the loan.
I can't deny that it's technically possible. I just think it's extremely far-fetched.
Not really. Even if a loan is collateralized by an asset, that doesn’t mean it is easy to liquidate said asset at full value.
For example, let’s say I buy a Monet painting for X million and a bank is willing to give me a collateralised loan of up to 75% of the asset value. If a bank decides to sell that asset tomorrow (i.e. at a suboptimal time) they might not even get 75% of the value back.
Debt is a lever in business and some people make it big by leveraging big.
Sure. But the bank isn't going to give random Joe a loan to buy a Monet. That's why all this is far-fetched. There are scenarios that could result in 20MM loans being suddenly called. People with little assets generally don't get those loans though.
It's doubly far-fetched to talk about loans to individuals for $20MM. If you're applying for a $20MM loan, you should have an accountant and your accountant should have told you to put this kind of thing in a corporation. You'll still lose a lot but it shouldn't bankrupt you personally.
Well, it depends on how wealthy you are and the jurisdiction you live in. Loans are not taxable income and if you would have to pay some sort of withholding tax on a dividend (if you would want to borrow against your illiquid shares for example), then it might make sense to take out a personal loan. A bank might also be more keen to give you a loan personally.
But yes, obviously not that common. Random Joe won't be getting these. Random Joe doesn't have $20m in assets either, though.
If you're making 30k/year, you are just barely making enough to support a family on your income. Yes it's possible to be wealthy and low income, but it's uncommon and generally indicative of retirement or something similar.