There are a million different ways to ascertain "income" to evaluate whether or not a person is paying their "fair share". That we doggedly refuse to do any of them if your income is not subject to payroll taxes is a big reason why people (rightly, I think) don't trust elites.
To be honest, I have no special qualms with businesses doing their level best to minimize their tax obligations, provided they invest in their workers and/or R&D. Its just that they don't. The whole point of the old-timey ridiculously high highest marginal rate was to induce companies to do literally anything else than just pay their top executives more. Higher wages for the rank and file, investment in facilities, R&D, charitable giving, etc etc etc all have far greater impacts on society than the equivalent quantity shipped to the fed as taxes. If the ultra-rich want to avoid paying taxes by instead donating large sums of money to charities with broad socioeconomic impact, I have no problem with that either, for the same reason.
The issue is not that the ultra-rich don't pay their "fair share" (whatever that means), its that the tide that raises their ships does not raise all ships equivalently, and the ways they avoid paying that "fair share" disproportionately benefits only them. I don't really benefit if Jeff Bezos donates a lot of money to Jeff Bezos' nonprofit to manage his art collection or whatever. I do benefit if he just paid an equivalent amount into the general tax fund (or donated it to the March of Dimes or something).
I regularly pay out 20% of my annual income in the form of taxes. Its hard to be super sympathetic to e.g. Elon "I paid $11 billion in taxes last year!" Musk, when most years he pays far far less than that, and his net worth (as figured by his borrowing potential) grows proportionally a lot faster than mine does.
> I do benefit if he just paid an equivalent amount into the general tax fund
Questionable. Tax receipts that get spent on roads, bridges, other infrastructure that over time increase your and everyone's standard of living? Sure. Funding of boondoggles and sinecures for political allies? Not at all.
> his net worth (as figured by his borrowing potential) grows proportionally a lot faster than mine does
You were talking about income tax, so net worth shouldn't matter, right? And I think you're alluding to the fact that the ultra-wealthy can often temporarily avoid capital gains tax by borrowing against their stock holdings instead for their income; I don't think this matters that much in the end, because it's all taxed anyway. Interest paid to the lender is income to that lender which is taxed, and eventually the bill comes due, at which point shares will have to be sold and capital gains taxes incurred.
Stepped-up basis is weird, I agree. I don't see any good reason for it to stay, other than reducing overall tax burden. On the other hand, I don't see any good reason to be strongly against it, either, other than believing in progressive taxation as a public good. After all, it's not like stepped-up basis only applies to the ultra-rich; it applies just the same to someone who leaves behind a $500k stock portfolio or a dilapidated house worth $75k.
Having said that, upon, say, Elon Musk's passing, his estate would still owe billions of dollars in tax.
Stepped up basis just makes no sense at all. If I get $500,000 in capital gains and realize them, I pay capital gains taxes on them. If, however, I give them to my children when I die, no taxes are paid.
It would be entirely reasonable to put a cap in there if we are concerned about it hurting the middle class and wanted to just be a tax benefit.
The whole idea is that capital gains taxes are lower than income taxes because it comes from something that was already taxed, but that isn’t even true a lot of the time either. As Warren Buffett always says his overall tax bill is still lower than his secretary’s.
It’s not even just the idea that progressive taxes are better, it’s that this is a regressive tax system. One more accurately, and uneven one because two people who make the same money could end up paying very different tax bills throughout their life.
Nobody is asking you to be sympathetic. But we must design ia system, and that system must be (and in fact is) rules based.
The comment to which I was responding was suggesting some mechanism other than the tax code to determine “the full amount”. What is that and why isn’t that just the tax code?
It’s because they’re just determining “the full amount” to be something that makes them feel a certain way which isn’t really a sound basis for law. The full amount is whatever the tax code legally obligates one to pay, no more, and to suggest we should expose people’s private data simply because we don’t like the tax code is preposterous.
To be honest, I have no special qualms with businesses doing their level best to minimize their tax obligations, provided they invest in their workers and/or R&D. Its just that they don't. The whole point of the old-timey ridiculously high highest marginal rate was to induce companies to do literally anything else than just pay their top executives more. Higher wages for the rank and file, investment in facilities, R&D, charitable giving, etc etc etc all have far greater impacts on society than the equivalent quantity shipped to the fed as taxes. If the ultra-rich want to avoid paying taxes by instead donating large sums of money to charities with broad socioeconomic impact, I have no problem with that either, for the same reason.
The issue is not that the ultra-rich don't pay their "fair share" (whatever that means), its that the tide that raises their ships does not raise all ships equivalently, and the ways they avoid paying that "fair share" disproportionately benefits only them. I don't really benefit if Jeff Bezos donates a lot of money to Jeff Bezos' nonprofit to manage his art collection or whatever. I do benefit if he just paid an equivalent amount into the general tax fund (or donated it to the March of Dimes or something).
I regularly pay out 20% of my annual income in the form of taxes. Its hard to be super sympathetic to e.g. Elon "I paid $11 billion in taxes last year!" Musk, when most years he pays far far less than that, and his net worth (as figured by his borrowing potential) grows proportionally a lot faster than mine does.