1) The "so what" is that capital gains is a different thing than wage income from an economics standpoint. Capital gains taxes have different economic effects than income taxes. Most economists agree that capital gains should be taxed lower than income. Most countries tax capital gains far lower than wage income. For example, in Canada only half of someone's capital gains are included in income, and is then taxed at the ordinary income tax rates.
2) Worse, the article just looks at paper wealth and ignores whether there is even a capital gain. If Amazon's stock price goes up, and Bezos makes $10 billion on paper, the IRS doesn't tax him on it. Which is fine--to actually do anything with that paper wealth, he needs to sell the stock or engage in a similar realization event, in which case that gain will be taxed.
> to actually do anything with that paper wealth, he needs to sell the stock or engage in a similar realization event, in which case that gain will be taxed
The ProPublica analysis that the BBC refers to [1] explains it: you borrow with the capital as collateral and then when you die the debt is repaid by selling some of the capital. But because of the stepped-up basis on death there is never a "realization" of positive gains.
1) The "so what" is that capital gains is a different thing than wage income from an economics standpoint. Capital gains taxes have different economic effects than income taxes. Most economists agree that capital gains should be taxed lower than income. Most countries tax capital gains far lower than wage income. For example, in Canada only half of someone's capital gains are included in income, and is then taxed at the ordinary income tax rates.
2) Worse, the article just looks at paper wealth and ignores whether there is even a capital gain. If Amazon's stock price goes up, and Bezos makes $10 billion on paper, the IRS doesn't tax him on it. Which is fine--to actually do anything with that paper wealth, he needs to sell the stock or engage in a similar realization event, in which case that gain will be taxed.