In the US you can deduct the mortgage interest, which is even more of a benefit for the wealthy than the mortgage as a whole would be since the deduction decreases the longer someone stays in a home.
Social security being a flat percentage with a cap is also a form of class war.
First, let’s be clear, the reason the rich pay little tax doesn’t have much to do with the capital gains tax rate being lower.
Now the reason for the lower rate (at least ostensibly) is that while income is earned at a point in time, capital gains happens over large amounts of time. Therefore often a big part of the gain is inflation. Let’s imagine you bought a house for $100k and 20 years later you sell the house for $140k. Over that time inflation has been a steady 2%.
Due to inflation $148k is now worth what $100k was worth 20 years ago. But when you sell you have to pay tax on the $40k profit even though you actually made a loss?
Lower capital gains rates are meant to adjust for this. Basically saying we understand part of the gain is inflation, so let’s call it half inflation and half profit and we’ll account for this by setting the capital gains rate at half the income tax rate.
Remember companies (that you might have shares in) or yourself as a land lord are (ostensibly) paying tax on profits as you go. Capital gains tax is in addition to this.
This comment is already long enough so I’ll leave the conversation on whether this stuff is true in practice as an excercise for the reader, but it at least starts from a sensible place.
At least where I live (not the US), if you’re day trading stocks or flipping houses you’ll pay income tax not capital gains tax (ostensibly 😆).
There’s nothing stopping people in the lower classes from investing.
If minimum wages are so low and working hours so long that people are too busy with their day jobs and/or don’t make enough money to even think about the stock market, let’s focus on fixing that rather than going after the stock market.
I think an argument is that because many people live paycheck to paycheck, investing simply isn’t an option. Many costs in life are somewhat fixed — I buy similar groceries compared to someone who makes half what I make, and compared to someone who makes twice what I make; as a fraction of income it’s a huge spread.
What this means is that making twice as much money doesn’t mean you get to invest twice as much — you can invest way more, because the difference in income is largely disposable.
Or how about we don’t subject companies to the enshittification whims of rich assholes and base our entire society’s worth on some arbitrary values on a computer screen? If you want to gamble on line go up or down, fine, but let’s divest it from how we govern our lives, because clearly it isn’t working for the majority of us.
Rich people can buy high end homes that they know will appreciate in value, and their interest rate will be lower because they are wealthy. So if they get a good enough rate they are basically getting a tax break for what they are paying for the house and then selling it for more profit. They can do this because they are wealthy enough to decide on when to make large transactions.
As a deduction it will have a far higher impact on their taxes because whatever the amount is paid in interest is coming out of their highest tax bracket.
So if they are paying 10k in interest on a more expensive house becsuse rheir interest rate is lower and the 10k reduced their income taxed at 20+% they will get a far bigger benefit out of it than someone paying 10k at a higher interest rate that might lower their income taxed at 10% and when they sell their house they will get less of an increase from it.
Not sure I get why social security being flat with a cap benefits one class over the other.
Sure, once I meet the max contribution then my withholding goes down and my take home increases. But anything in excess of the max contribution doesn’t affect social security payouts after retirement — if you put in more, you get out more, and if you’re capped in your contributions then you’re also capped in your withdrawals.
Is it a paternalistic program? Sure, it’s essentially a forced retirement plan. Its implementation isn’t perfect, but I’m not sure I’d call it class warfare.
When wealth is concentrated because wages don’t increase with productivity, the wealthy are paying less than their fair share of taxes to society with a flat percentage that has a cap.
Look at it this way, if there is 1 million dollars taxed at 3% and there is no cap it doesn’t matter who gets what, $30k total is collected. If there is a 100k cap and one person takes in 500k and 10 people take in 50k in income apiece then only $9k is collected and the one taking in 500k is putting in the same amount as everyone else. They are also less in need for social security retirement savings because they can easily squirrel away more in savings.
Yes, the taxation is regressive, but the benefits are progressive. E.g.,
According to the non-partisan Congressional Budget Office, for people in the bottom fifth of the earnings distribution, the ratio of benefits to taxes is almost three times as high as it is for those in the top fifth.
It’s certainly not a perfect system, but personally I think it has some merit. And it’s by far not the worst aspect of USA tax structure (in my opinion).
In the US you can deduct the mortgage interest, which is even more of a benefit for the wealthy than the mortgage as a whole would be since the deduction decreases the longer someone stays in a home.
Social security being a flat percentage with a cap is also a form of class war.
Investment income being taxed less than employment income is another form of class warfare.
Why the hell do you pay more in taxes than Elon Musk?
Are you talking about capital gains tax?
First, let’s be clear, the reason the rich pay little tax doesn’t have much to do with the capital gains tax rate being lower.
Now the reason for the lower rate (at least ostensibly) is that while income is earned at a point in time, capital gains happens over large amounts of time. Therefore often a big part of the gain is inflation. Let’s imagine you bought a house for $100k and 20 years later you sell the house for $140k. Over that time inflation has been a steady 2%.
Due to inflation $148k is now worth what $100k was worth 20 years ago. But when you sell you have to pay tax on the $40k profit even though you actually made a loss?
Lower capital gains rates are meant to adjust for this. Basically saying we understand part of the gain is inflation, so let’s call it half inflation and half profit and we’ll account for this by setting the capital gains rate at half the income tax rate.
Remember companies (that you might have shares in) or yourself as a land lord are (ostensibly) paying tax on profits as you go. Capital gains tax is in addition to this.
This comment is already long enough so I’ll leave the conversation on whether this stuff is true in practice as an excercise for the reader, but it at least starts from a sensible place.
At least where I live (not the US), if you’re day trading stocks or flipping houses you’ll pay income tax not capital gains tax (ostensibly 😆).
Yup, and all of these are sold as benefitting the non-wealthy while glossing over how much more it benefits the wealthy.
There’s nothing stopping people in the lower classes from investing.
If minimum wages are so low and working hours so long that people are too busy with their day jobs and/or don’t make enough money to even think about the stock market, let’s focus on fixing that rather than going after the stock market.
Bwahahahahaha
I think an argument is that because many people live paycheck to paycheck, investing simply isn’t an option. Many costs in life are somewhat fixed — I buy similar groceries compared to someone who makes half what I make, and compared to someone who makes twice what I make; as a fraction of income it’s a huge spread.
What this means is that making twice as much money doesn’t mean you get to invest twice as much — you can invest way more, because the difference in income is largely disposable.
Or how about we don’t subject companies to the enshittification whims of rich assholes and base our entire society’s worth on some arbitrary values on a computer screen? If you want to gamble on line go up or down, fine, but let’s divest it from how we govern our lives, because clearly it isn’t working for the majority of us.
Hahaha!
Holy shit what an idiotic thing to say.
It may surprise you to find out that “lower class” people are in the lower class because they don’t have money. What are they supposed to invest?
except for the whole being poor thing
Trolls of Lemmy, you can pack your bags. You will never be able to come up with something dumber than this.
I’m honestly not sure if it’s trolling, or satirizing the trolls. It could go either way.
Poor people can easily find out about SPY. The issue is not the amount of time.
I don’t follow why the mortgage interest is better for the wealthy than the total mortgage amount?
In the USA afaik it is only the interest which is tax deductible.
Rich people can buy high end homes that they know will appreciate in value, and their interest rate will be lower because they are wealthy. So if they get a good enough rate they are basically getting a tax break for what they are paying for the house and then selling it for more profit. They can do this because they are wealthy enough to decide on when to make large transactions.
As a deduction it will have a far higher impact on their taxes because whatever the amount is paid in interest is coming out of their highest tax bracket.
So if they are paying 10k in interest on a more expensive house becsuse rheir interest rate is lower and the 10k reduced their income taxed at 20+% they will get a far bigger benefit out of it than someone paying 10k at a higher interest rate that might lower their income taxed at 10% and when they sell their house they will get less of an increase from it.
Not sure I get why social security being flat with a cap benefits one class over the other.
Sure, once I meet the max contribution then my withholding goes down and my take home increases. But anything in excess of the max contribution doesn’t affect social security payouts after retirement — if you put in more, you get out more, and if you’re capped in your contributions then you’re also capped in your withdrawals.
Is it a paternalistic program? Sure, it’s essentially a forced retirement plan. Its implementation isn’t perfect, but I’m not sure I’d call it class warfare.
When wealth is concentrated because wages don’t increase with productivity, the wealthy are paying less than their fair share of taxes to society with a flat percentage that has a cap.
Look at it this way, if there is 1 million dollars taxed at 3% and there is no cap it doesn’t matter who gets what, $30k total is collected. If there is a 100k cap and one person takes in 500k and 10 people take in 50k in income apiece then only $9k is collected and the one taking in 500k is putting in the same amount as everyone else. They are also less in need for social security retirement savings because they can easily squirrel away more in savings.
Yes, the taxation is regressive, but the benefits are progressive. E.g.,
( https://en.m.wikipedia.org/wiki/Social_Security_(United_States) )
It’s certainly not a perfect system, but personally I think it has some merit. And it’s by far not the worst aspect of USA tax structure (in my opinion).