Does this also hit people with large amounts of accumulated wealth, or is it mostly aimed at the middle class?
I ask because, in California, when people cash out after an IPO, they often find that they pay over 50% marginal tax. This happens even though their average earnings over the time period where they earned the stock were nowhere near the top tax bracket.
On the other hand, ultra wealthy people involved in the same IPO have all sorts of mechanisms at their disposal that make it easy to avoid the big tax hit. (Most of the strategies involve taking on positive expectation risks with $100K’s of downside, which you should not do unless you’re a multi-millionaire)
Anyway, the people in the former group are sometimes called HENRYs (high earner not rich yet), and I get the impression that one group pays a much higher percentage of their earnings in tax than any other group. When these millionaire taxes are proposed, they usually target Henry’s, but not people that are wealthier than that.
The fundamental problem is that wealthy people have their wealth in assets and their cash comes in loans.
The best I can come up with is a tax on loans larger than X with assets that meet the points ABC used as collateral.
On the other hand though, I can make a case that they shouldn't be taxed anymore as it is. The assets they hold generate the majority of the taxes collected anyway. Bezos might not pay a lot in taxes, but amazon does and the amount it generates in sales taxes and income taxes is enormous.
It's a difficult problem and it's why progress has been stagnant in this area for decades.
Consider a billionaire that doesn’t work but has passive investments that pull in about $100M per year.
They can borrow against the assets for close to 0%, or they could donate the gains to their own charities, keep the assets in shell companies that own hotels they live in, etc, etc.
This 4% millionaire’s income tax won’t touch any of that.
Does this also hit people with large amounts of accumulated wealth, or is it mostly aimed at the middle class?
I ask because, in California, when people cash out after an IPO, they often find that they pay over 50% marginal tax. This happens even though their average earnings over the time period where they earned the stock were nowhere near the top tax bracket.
On the other hand, ultra wealthy people involved in the same IPO have all sorts of mechanisms at their disposal that make it easy to avoid the big tax hit. (Most of the strategies involve taking on positive expectation risks with $100K’s of downside, which you should not do unless you’re a multi-millionaire)
Anyway, the people in the former group are sometimes called HENRYs (high earner not rich yet), and I get the impression that one group pays a much higher percentage of their earnings in tax than any other group. When these millionaire taxes are proposed, they usually target Henry’s, but not people that are wealthier than that.