I was once talking with one of my classmates and he said that in the future, there will be universal basic income implemented by entire world. I was not convinced at that time and thought he is just being stupid but given the layoffs happening and massive amount of unemployment, I am thinking about this possibility. What do you say?
I know this is a wild concept, so bear with me:
We could try taxing the owning class, too.
I know this is difficult to comprehend but everything is produced by working class. It doesn’t matter where you take money from, it’s the workers who’ll bear the burden.
If that were true the rich wouldn’t spend fortunes selling tax cuts, they’d just pass the costs directly to the workers instead. The reason the rich spend hundreds of millions to avoid paying taxes is that they know the worker makes the same they did 50 years ago, and the value of the work the rich get to keep has gone up 10x.
What tax cuts? Highest income bracket is US is taxed at like 37% while lowest is 10%.
Citation needed
Yeah rich don’t pay income tax, income tax is for the working class. Rich get money through debt (0% tax rate) and maybe dividends (0% tax on the first 100k, up to 20% tax at 600k/yr).
Here ya go:
https://www.pewresearch.org/short-reads/2018/08/07/for-most-us-workers-real-wages-have-barely-budged-for-decades/
Fair enough
You know debts need to be repaid with interest? You have to have taxable income to pay them off.
It’s a taxable income. And it comes with a risk of the business failing and your stock losing value.
That’s how debt works for poor people. Rich people do what’s colloquially known as a “buy borrow die”. But an asset, take out loans using the asset as collateral for your entire lifetime, and then die in debt, while passing the asset (minus the debt) along to your heirs.
Dividends and cap gains are not taxes as income, they have separate (lower) tax rates. And those tax rates can be further avoided using the above strategy.
And the nice thing about stock is that poor people have 401(k)s now. Which are legally required to buy certain stocks. Meaning that even if the company shits the bed, every working class person with more than two cents to rub together is still propping up the stock price.
That’s kinda why the spaceX ipo was so fucked. They specifically changed the rules so 401(k) plans would be legally required to buy shares after 15 days instead of 3 or 6 or whatever months. That allowed Elon musk to effectively pump and dump the entire US retirement system.
I agree this is a loophole that needs to be patched - in most civilized countries this is not a thing (taxes are deducted when you die and then debts are repaid)
But I doubt it’s as popular as media claim it is. If you borrow against your assets say, at 3% interest, you end up with 30% interest after just 10 years. Paying taxes is cheaper than paying interest in the long run.
First off, if you’re paying 3% interest on a collateralized loan where the collateral is earning 5-8% interest (like stock market returns) you both don’t pay taxes and come out ahead at the end of the year.
Second, I know people that are firmly working class (though earn decent money) doing buy borrow die with real estate. Its pretty much standard among the wealthy.
Further, using equity lines of credit (ELOCs) you can multiply money. The closest a normal person will get to an ELOC is a HELOC, or a reverse mortgage, which are tightly controlled. Rich people have a lot more freedom.
Say you have 100m stock portfolio. You take out an 80m loan using it as collateral, and then buy a business for that 80m. Then you use the 80m business as collateral to take out a 60m loan, to buy a jet. Then you use the 60m jet as collateral to take out a 40m loan, and use that to buy a yacht. Then you use the 40m yacht as collateral on a 20m loan…and you suddenly have 280m of leveraged assets under your control paying for the interest, and a tax free 20m loan for pocket change. As long as you don’t sell the original stock, you don’t owe taxes on any of that.
Edit: and there isn’t a single civilized country in the world that allows inheriting debt. That’s the whole point. You transfer the assets to your heirs and die in debt with no assets. Nothing to tax, nothing to reclaim.