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0 points_DeadFred_8d ago0 comments

Great, we are in agreement. It is happening, to the tune of billions of dollars, and we both are fine with it being taxed.

1-2% of 100 million is 1-2 million dollars a year untaxed benefit (44x median income). That is substantial benefit for someone to receive. They are benefiting from buy, borrow, die. You asked for proof, I gave you proof that it is happening and is providing a substantial unfunded lifestyle (44x median income is a substantial income).

Hopefully I won't see further posts from you saying it isn't happening/we don't need to tax it/we aren't loosing revenue. You agree it is happening, and you are ok with taxing it. You don't think it will fund the entire budget. OK. But we have multiple tax streams that don't fund the entire budget, and when patterns shift, we address it, such as now tracking/taxing paypal payments and in the future loans on unrealized gains.

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rayiner8d ago· 2 in thread

> Great, we are in agreement. It is happening, to the tune of billions of dollars, and we both are fine with it being taxed.

Yes, but that’s not the topic. The topic is the labor share of income over time. Your link proves that these loans don’t have a meaningful effect on analyzing the division of income between capital and labor over time. They amount to 0.1% of total income.

I don’t understand why people bring this up so often. There’s dozens of tax loopholes that are greater in magnitude. Eliminating the mortgage interest deduction for example would raise 5-7 times as much money as even a 50% tax on these loan proceeds.

_DeadFred_OP8d ago

One thing at a time. I think we both agree borrowing is happening and you are ok with it being taxed, so further discussion isn't really needed. But I specifically only addressed your interjection of:

>Similarly, what percentage of wealthy people take loans against their assets to fund their lifestyle? You should be able to quantify this if it’s happening at scale.

That is the topic being addressed, proof was shown, and you replied "I’d be fine taxing that money at the top marginal rate". To your 'but what about other loopholes' please show me 24 loopholes (dozens) providing individuals such high multiples of median income tax free?

>I don’t understand why people bring this up so often

You just agreed it is happening and you are fine with taxing it in your last message, so it really doesn't matter people bring it up or not, does it? And kind of makes further discussion moot. You agree it's fine to address/tax.

>I’d be fine taxing that money at the top marginal rate or whatever you want to do.

The mortgage interest deduction is not a loophole, it is government policy intelligently reached. A loophole would be when rich people abused the deduction by designating their yatch as a second home and deducting that. And that loophole was closed. The average person having to pay taxes on the old dresser that they bought with already taxed money and report the sale as paypal income earnings would be another loophole but in the other direction..

I look forward to your 24 stated existing examples of greater magnitude actual loopholes (and not intentional policy doing what it was intended, the opposite of an exploited loophole that is taking loans instead of selling stocks to avoid taxes but benefit from realized/current stock value). We can move to the next level but again you agreed you are fine taxing this behavior so kinda no further point.

rayiner8d ago

Please read @foltik's post upthread to understand the context of my statement. @foltik commented that the data on labor versus capital income share could be misleading, because it "ignores realized capital gains and loans against them, which is how the ultra-wealthy actually fund their lifestyles tax-free."

I asked whether that "meaningfully change[s] the picture"--i.e. the picture on the labor/capital income split. And I asked whether that practice is "happening at scale." I wasn't asking whether it was happening at all, but rather at sufficient scale that it would meaningfully skew the numbers on labor/capital income split.

Your data proved my point: loans against assets account for only 1-2% of unrealized gains, so even if you counted that as income, it would be a rounding error in the evaluation of the labor versus capital share of income.

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