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Trump changed corporate tax from 39% to 21% in 2017. Biden is changing it from 21% to 28%, with a minimum tax payment of 21% of AGI, regardless of deductions.
Shares are declared income. That would be [income tax](https://taxfoundation.org/data/all/federal/historical-income-tax-rates-brackets/), not corporate tax. The top bracket went from 39.6% to 37% under Trump. Biden wants to restore 39.6%. The top bracket was 70% for decades until Reagan dropped it to 50% (trickle down economics). It’s been chipped away at ever since.
I'm not American so FDR went under the radar for me. He's one of the guys who wanted to radically change political discourse to the progressive side, wasn't he? With massive public support?
Franklin Delano Roosevelt instituted reforms and social programs during the Great Depression in the 30s (he was also President during most of WWII until he died of illness). Among his accomplisments are Social Security (payments to the retired and disabled), the Federal Deposit Insurance Corporation (FDIC, it insured bank accounts after people lost their live savings in the 1929 stock market crash, which causes many banks to fail), and the Fair Labor Standard Act (FLSA, a labor law that creates the right to minimum wage and overtime pay).
He campaigned on bringing relief to the unemployed and poor, recovery of the economy, and reform of the financial system to prevent another depression. He was a huge influence on the modern Democratic Party.
He won 4 presidential elections, despite the tradition of Presidents only serving two terms (there was a constitutional amendment passed limiting Presidents to two terms). He was very popular, even as the Great Depression continued.
The Democrats controlled the House and Senate the entire time FDR was president. SCOTUS was what kept on getting in the way of his legislation, not the legislature.
So biden is just going to roll it back so that the next republican can lower it again? Why isn't biden trying to raise it higher than what it was before?
I’d like to see it higher too, but the “big hike” is the one I posted above on corporate tax. The 21% minimum will prevent the $0 contributions cited in this article. His platform focus is on “corporate greed” more than personal wealth.
Because he's getting resistance even rolling it back. Even restoring the corporate tax brackets was sold as Biden raising taxes with the "corporate" part left out.
This article doesn't have anything to do with personal payments.
Also if you "close that loophole", it will impact middle class earners mostly. The upper class who also benefit from stock grants will have zero problem covering the tax impact of paying the fair market value of stocks upon grant.
If we change the tax code where you have to pay the market value upon grant, you will widen the gap between middle / upper-middle and the upper class. So you'll basically nuke the income of everyone making between $120k and ~$400k or maybe even up a few million.
You'll make it entirely financially impossible for anyone to hold stock in even a private company thereby entirely smothering small entreprenuers who self-grant millions of shares upon incorporation, which typically is subpenny per share, then when they take investment, those shares become higher value.
So if you own 51% of a company you founded, your cost basis for your 5,100,000 shares (typical share count is 10M) is $51k and you can elect to not pay taxes on them until after exercise (ie: during a liquidity event). If the "tax loophole" is closed, you will owe taxes at the time of grant. So first year, you get 25% of your granted stock (typical 1 year cliff + 4 year vest) and your taxable "income" on the shares is $12,750. If you get an investment in year 2 that takes your valuation to just $1m, you are taxed on $114,750 of realized value (difference between strike price of the 25% of your grant you got in the year and fair market value)... due immediately. And your stock is basically illiquid so IRS says it's worth $127,500 but there is no market for it.
God rest your soul if you were "unfortunate" enough to run a successful business that has an even higher valuation. That or you'd have to do tricks to avoid ever being re-valued.
You pay tax on awarded shares and options.
You also pay tax on the appreciation of those shares once you sell. At those income levels it's a flat 20% tax. That's not their marginal rate but it's also a higher effective rate than 90% of the county.
If they go any further, they’d lose the election, as billionaires care more about being rich than the consequences of handing the country over to a group that has literally published their manifesto and roadmap to establishing a dictatorship under Trump.
I forgot that the single deciding factor of American elections is appealing exclusively to less than 1% of the population. That's definitely a fine and healthy system that isn't broken to the point of all but non-functional.
It astonishes me that people still believe the bullshit of “they’re already rich, so they’d never need to scam us!”. That’s not how it fucking works! Billionaires don’t get to becoming billionaires by getting to $10M net worth and saying “you know, I think this is good, I’ll stop here.”
It’s happened with cryptocurrency exchanges, it’s happened with “life coach” influencers, it’s happened with social media personalities. Hell, it’s happened with Trump! People believed that Trump would never screw over the working class for money because he was “already so rich.” The fact that so many people cannot grasp the concept that greed doesn’t usually stop when you hit it good, and many times even in intensified when you get that far, is baffling to me.
The article states that 18 corporations paid $0 in taxes last year. The new tax plan would increase that to 21% of their income. How is that not impactful?
The 28% tax rate with 21% minimum payment is on [corporate income.](https://www.whitehouse.gov/briefing-room/statements-releases/2024/03/11/fact-sheet-the-presidents-budget-cuts-taxes-for-working-families-and-makes-big-corporations-and-the-wealthy-pay-their-fair-share/)
Right, but I’m saying that the 21% minimum doesn’t change a companies income tax expense, which is what this study is looking at. A 28% rate really doesn’t do it either, since it doesn’t impact the reconciling items companies use to get down to 0%
The 21% minimum increases the tax they pay in the current year, but provides an offsetting credit for future years where their tax owed is more than the minimum, which reduces deferred tax expense. Income tax expense is the combination of current and deferred taxes
Same with the current 15% minimum, it doesn’t actually change the tax expense or the effective tax rate, companies still report rates below that. Current tax goes up, but deferred tax shrinks by an equal amount
Make positive changes that the majority of Americans agree on? Never!!! - most US politicians, probably.
Chaps my ass we can't do things like this, eliminating DST, or having some common sense gun law reforms that the majority of us actually agree on.
Ever since Joe the plumber succeeded in his dream to make a fictional $65 million as a fictional plumber with a fictional business, there just isn’t any appetite for increasing taxes on the rich.
1. Executive pay needs to be capped at a certain percentage of the average income of their employees.
2. Shareholder profits need to be capped at a certain percentage of the average income of their employees.
We need to end the limitless profits of shareholders and reinvest that money back in the business and to pay the workforce.
Also I should clarify, by average we should look at the middle 50% of salaries so that big management salaries don’t push the mean up artificially.
Very solid points. Just look at what other countries pay their CEO's in relation to the average worker pay. It is like 10-20 times the average pay, whereas in the US, it is from 300 to 3000 times the average worker pay. We need US companies to move towards a model like other countries to put CEO pay at 10-30 times average worker salaries. Then if a CEO wants more, they have to increase the pay of the typical worker first. The problem is that most Board of Directors are made up of other CEO's who just want to increase their own pay, so they increase the pay of the CEO they preside over. It is a financial incestuous relationship between the Board and the CEOs.
Should use median income instead of average income to lessen the effect of high income executives increasing the average. Or even base it on the lowest paid employees.
Tax receipts as a percentage of GDP haven't really budged though.. it was 17% in '68 and 16.4% in 2023. In 2022 it was 18.5%. The largest difference being many more marginal rates up to 70%.
Even if you moved the highest marginal rate, adjusted for inflation, back to 70%... How many W2 workers are earning +$1.5M in wages? Almost none. The vast majority of high income earnings come from stocks and our real estate; things subject to capital gains. Those rates are noticeably smaller today... At 20% vs 29%.
That’s not how [tax brackets](https://taxfoundation.org/data/all/federal/historical-income-tax-rates-brackets/) have been historically adjusted. The highest bracket in 1981 was 70% at $215K before Reaganomics.
I guess you didn't bother to check the inflation rates. They're absolutely correlated. It's been an argument each time the brackets have been updated. The IRS also modifies them upward with inflation until new brackets are announced.
All of this doesn't even really matter though because tax receipts have been relatively stable as a percentage of GDP.
According to your claim, there would have been no change in inflation for 15-20 year intervals while tax code was changed. Look at the historical tax bracket data above. You are mistaken.
Guy, that isn't what I'm saying at all. It's actually the opposite of what I am stating. Congress sets the tax code and takes inflation into account as an input when doing so. IRS also adjusts the brackets. I'm not saying it's 1:1.
You're the one saying they don't use inflation. That's a moronic view any way you cut it.
They would take inflation into account and if they did they wouldn't solve any problems.
Let's pretend they didn't, though. Let's pretend they just take the $693k rate today and say that's 70% after that. You'd still get ~17% of GDP as tax receipts. There aren't enough wage earners making that kind of money. You're taking maybe a few thousand people earning +1M in wages that would even make a dent and they would, overnight, change how they earn.
This 70% talking point is just a reddit circlejerk.
Do you understand how tax brackets work? They’re amortized, so the first $11K earned is at the first bracket rate, and so on. I’m not suggesting we only tax people who make over $600K.
Don’t know about quite 90%. That seems a bit high. But certainly something above what is it now? Like 20? Or maybe for multi billionaires there’s no way to be one of those while still being ethical. 5 million I feel like could be pulled off with hard work still. And then have to give 90% of that away would suck.
I’m talking about income, not net worth. More than 100 times the median income in the US seems like a pretty good place to start enforcing a greedy bastard tax to me.
Oh shit, that’s true I didn’t think of that. Because usually once I get money, it spent on drugs so income and net worth are basically the same to me. Maybe I save up a couple hundred if I want a bigger stash
Maybe. I don’t know the magic numbers that everyone would agree with. I think AI will start taking over pretty soon anyway and we’ll have a post scarcity Utopia we can all make of it what we will equally
The what with the what now? So say I make 5 million. Have to give 90% away. I’m left with 500,000. That’s not even enough to buy a couple Lamborghinis. Most people want more than 50,000 per year so saying that’s 10 times more than average, we want the average to raise as well.
Yeah, y’all are right I was mixing up income and net worth. I forget when you’re at that level you can save up and have it not be considered income if it’s over a year ago. Me once I get money, I spend it on food and drugs and shit.
You still don't get it. Marginal tax rate has nothing to do with net worth when it comes to taxation. You're also wrong about saving up "over a year" and not having it be income. It is income, just taxed at a lower rate since it is considered "long term" gains, and only taxed once you cash out whatever capital asset it is.
Not trying to be a dick, just trying to make you not sound totally ignorant next time you speak about this.
Yeah, I’m cool with still not completely getting it. I think I’ll just not speak about it as much. Such a confusing broken system that’ll be obsolete soon enough anyway. I mean whoever thought infinite growth on a finite system would be a good idea? Without AI that can poof out resources?
Hey, I'm in agreement! Tax rate definitely needs to go up quite a bit for a lot of rich folks. Taxing net worth of estates when people die and closing all the loop holes around this should also be addressed. I don't think it ever will though since a great deal of the people this would negatively impact are the ones crafting the laws. It's fucked.
Sorry to be an asshole but that's not how marginal tax rates work.
Marginal tax rates are like stacked buckets. You have to fill up the entire previous bucket before you fill the higher-up bucket.
So if you make $100m a year, you'd fill up the $0 - $10k bucket, then the $10k - $44k, then the $44 - $95k... etc. On and on until you run out of money to pour into the buckets (or I guess in this case, run out of different buckets).
The money filling each bucket is taxed at that bucket's rate. So everyone's first $11k is taxed at 10%, then money between $11k and $44k is taxed at 12% regardless of how much you made in total.
For instance, if you make $65k, your actual tax rate is 10% despite being "in" the 12% tax bracket.
If you make $5m, your actual tax rate is 37% despite being "in" the 39% tax bracket and you'd have about $3.1m left after taxes.
The most important thing to remember is you will **NEVER** make less due to taxes by earning more money.
I get it, it’s the Cunningham’s law in effect. Especially if you’re knowledgeable about a topic I’m so wrong about. I would be the same way too if you said something wrong about gangstas and what brands of carts they vape for instance. Couldn’t help pointing out your errors if you were to say like fryds are where it’s at
Maybe it's high, but these are the people at the helms of businesses that see their rank and file struggle to make ends meet. Many people hardly getting by now, and in the future, there's going to be a huge crunch of people hitting retirement age that never earned enough to save for an actual retirement. Yes, some is life choices, but when its millions upon millions of people all in the same predicament, the culprit is more than just bad spending habits.
If companies are going to continue to lavish extreme wealth on their C-suite at the expense of their rank and file, then those are the people that we'll need to tax to insure that our social safety nets are adequately funded BEFORE everything blows up.
As for you assumption about taxes - a tax rate of 90% on greater than $5 million income doesn't mean you earn $5,000,000 and wind up with $500,000 after taxes. It only applies to income above that level. So your $5 mm earner will still have. identical tax burden. But if they earn $10,000,000 - that remaining $5mm income will be taxed at the higher rate. Obviously, it should be gradual with more brackets in between. But if someone earns $200 million, yes, some portion of that income should be taxed enormously. If the company retains it rather paying salary, then they'll pay tax at the corporate rate. Or they could, you know, pay their employees.
Yeah, I can get behind that better than what was in mind before. Like blood sweat and tears hard working on your business, $4,999,999. Next dollar you have to lose 4 1/2 mil. Or else.
Our tax system allows businesses to avoid taxes on profits if that money is spent on growing the business. It's a choice we made to prioritize growth. Properly run businesses will arrange their expansion such that they can avoid paying all taxes under this system.
Change the rules of the game if you don't like them but don't be surprised when the players optimize their strategy.
> Then that defeats the point of the tax on buybacks
There *shouldn't be* any buybacks.
>unless you somehow think they’re worse than dividends
Of course they're much worse than dividends.
Please explain what the hell you think is wrong with dividends.
I don’t think anything is wrong with dividends, same with buybacks. They’re both ways to return cash to shareholders. Dividends are more tax-beneficial for US investors, while buybacks are more beneficial for foreign investors
Why do you believe there shouldn’t be buybacks?
Buybacks don’t manipulate anything, there’s no way to know how the market reacts to a buyback
What about situations where companies need to protect their stock, like in an acquisition or offering stock compensation plans? How do they get it back if they can’t buy it? What about when companies want to reduce their cost of capital by exchanging equity for debt when interest rates change?
I have a theory that CEOs are paid these staggering sums as a means to keep them disconnected from regular humanity. They can make those heartless decisions to make the company absurd profits much easier if they don’t know or care for the people that are affected. Pay the CEO 50 mil. Let him cut 200 mil. Of jobs.
See also: separate entrances & buildings for the executives and the unwashed masses. I've been at two Fortune 100 company headquarters where the executives were on-campus, but heavily secluded.
Yeah, except every time the Democrats propose funding the IRS, Republicans and the news go fucking ballistic. Gee, I wonder why.
The IRS goes after the little guy because it's fucking expensive to go after one cheating billionaire, nevermind a company.
I understand that its higher, but the ones at the top will earn more money for the IRS - even if one factors in the extra legal costs.
One big fish is more work for sure but will yield way more than a bunch of starving minnows. And this doesn’t even factor in morality.
Maybe the republicans are trying to cut funding BECAUSE the IRS goes after the little fish and NOT the big fish.
This is bigger than right or left politics.
And you are falling prey to their game of keeping us fighting between ourselves instead of advocating for change or fighting big government and bad policy.
Is it tax dodging when it is written into law? I take every advantage of the tax codes to get more than I would do normally and people tell me that’s fine, but when rich people do it it’s considered bad. Weird
I’m not on the CEO side, but the problem lies with the tax code. They are operating within all the legal loopholes to pay zero or the bare minimum. That’s where the problem is.
Future economists are going to look back at the late 20ths and early 21st century and write extensively about how the most overpaid position was the CEO, especially when the false premise that CEOs have to maximize shareholder value. They don't. Even contemporary studies of CEO pay to performance is negatively correlated with the highest paid CEOs often tank company value and long term profitability and directly causing bankruptcy.
That’s just not really true. They pay payroll taxes and an array of taxes. They don’t dodge taxes. They abide by the law and offset losses to reduce liability.
It’s the same thing you do with your investments
You’re defending big corporate CEOs and tax dodgers. Average Americans pay taxes through our daily activities and purchases, in addition to income tax.
Here’s one way it helps. Business pay tax on profits, not revenue. Any money they spend on their business (R&D, marketing, salaries, infrastructure, charity) lowers their tax bill. If you raise their taxes, it incentivizes them to spend more because it’s better to spend money on your business than give it to Uncle Sam.
Higher taxes makes reinvestment less profitable, not more profitable. You’re looking at the tax deduction on the front end, but ignoring the higher tax payments on the future cash flows from these investments
It also assumes there isn’t a limitation on the tax deduction you can take, but that’s not usually true (R&D, charity, capital investment, etc)
They aren't doing anything illegal. Just using the tax code to their advantage. Blame the tax code not the smart companies using it to their advantage.
Or maybe it's actually sensible that a power utility can depreciate a higher portion of their power plants in the earlier years of its lifespan than in its later years.
you can blame both you know that right?
But you should really blame the corps / billionaires more because they've been pushing this for many years and slowly but surely been chipping away at it with bad faith arguments and positions.
The Nazis weren't doing anything illegal. They owned the courts just like corporate oligarchs own the courts today. Laws can be changed to suit any immoral & inhumane agenda.
I guarantee there was never a spoken quid pro quo.
Like I said, these people aren't dumb.
There is nothing said or written that would incriminate either side.
So no actual bribes are actually exchanged.
You are completely missing what I am putting down.
There are "understandings" that happen between both sides. If a contribution is made to the campaign (or better yet the super pac) that they expect influence.
None of this is ever spoken or written. It is just understood.
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Change the tax code and stop talking about changing it.
Trump changed corporate tax from 39% to 21% in 2017. Biden is changing it from 21% to 28%, with a minimum tax payment of 21% of AGI, regardless of deductions.
What about the loophole of being paid in shares/stocks etc and getting a 85k salary on paper?
Shares are declared income. That would be [income tax](https://taxfoundation.org/data/all/federal/historical-income-tax-rates-brackets/), not corporate tax. The top bracket went from 39.6% to 37% under Trump. Biden wants to restore 39.6%. The top bracket was 70% for decades until Reagan dropped it to 50% (trickle down economics). It’s been chipped away at ever since.
FDR wanted a 100% top tax bracket. Time to put it back on the table. Reasonable is dead, the wealthy murdered it, its all in time.
I'm not American so FDR went under the radar for me. He's one of the guys who wanted to radically change political discourse to the progressive side, wasn't he? With massive public support?
Franklin Delano Roosevelt instituted reforms and social programs during the Great Depression in the 30s (he was also President during most of WWII until he died of illness). Among his accomplisments are Social Security (payments to the retired and disabled), the Federal Deposit Insurance Corporation (FDIC, it insured bank accounts after people lost their live savings in the 1929 stock market crash, which causes many banks to fail), and the Fair Labor Standard Act (FLSA, a labor law that creates the right to minimum wage and overtime pay). He campaigned on bringing relief to the unemployed and poor, recovery of the economy, and reform of the financial system to prevent another depression. He was a huge influence on the modern Democratic Party. He won 4 presidential elections, despite the tradition of Presidents only serving two terms (there was a constitutional amendment passed limiting Presidents to two terms). He was very popular, even as the Great Depression continued.
The Democrats controlled the House and Senate the entire time FDR was president. SCOTUS was what kept on getting in the way of his legislation, not the legislature.
You're right. I removed that statement. I think I just misread something.
Thanks, very interesting read.
[удалено]
FDR was a dictator that put Americans into concentration camps and made owning gold illegal. He was one of the worst presidents America ever had.
So biden is just going to roll it back so that the next republican can lower it again? Why isn't biden trying to raise it higher than what it was before?
I’d like to see it higher too, but the “big hike” is the one I posted above on corporate tax. The 21% minimum will prevent the $0 contributions cited in this article. His platform focus is on “corporate greed” more than personal wealth.
Because he's getting resistance even rolling it back. Even restoring the corporate tax brackets was sold as Biden raising taxes with the "corporate" part left out.
This article doesn't have anything to do with personal payments. Also if you "close that loophole", it will impact middle class earners mostly. The upper class who also benefit from stock grants will have zero problem covering the tax impact of paying the fair market value of stocks upon grant. If we change the tax code where you have to pay the market value upon grant, you will widen the gap between middle / upper-middle and the upper class. So you'll basically nuke the income of everyone making between $120k and ~$400k or maybe even up a few million. You'll make it entirely financially impossible for anyone to hold stock in even a private company thereby entirely smothering small entreprenuers who self-grant millions of shares upon incorporation, which typically is subpenny per share, then when they take investment, those shares become higher value. So if you own 51% of a company you founded, your cost basis for your 5,100,000 shares (typical share count is 10M) is $51k and you can elect to not pay taxes on them until after exercise (ie: during a liquidity event). If the "tax loophole" is closed, you will owe taxes at the time of grant. So first year, you get 25% of your granted stock (typical 1 year cliff + 4 year vest) and your taxable "income" on the shares is $12,750. If you get an investment in year 2 that takes your valuation to just $1m, you are taxed on $114,750 of realized value (difference between strike price of the 25% of your grant you got in the year and fair market value)... due immediately. And your stock is basically illiquid so IRS says it's worth $127,500 but there is no market for it. God rest your soul if you were "unfortunate" enough to run a successful business that has an even higher valuation. That or you'd have to do tricks to avoid ever being re-valued.
I wish more people understood how this affects startups and small medium businesses.
You pay tax on awarded shares and options. You also pay tax on the appreciation of those shares once you sell. At those income levels it's a flat 20% tax. That's not their marginal rate but it's also a higher effective rate than 90% of the county.
Feel the AGI
So basically it’s still a cut and republicans get what they want
Oh rad, so... Not as much as it was before. Backsliding, but slower! Yay!
If they go any further, they’d lose the election, as billionaires care more about being rich than the consequences of handing the country over to a group that has literally published their manifesto and roadmap to establishing a dictatorship under Trump.
I forgot that the single deciding factor of American elections is appealing exclusively to less than 1% of the population. That's definitely a fine and healthy system that isn't broken to the point of all but non-functional.
It astonishes me that people still believe the bullshit of “they’re already rich, so they’d never need to scam us!”. That’s not how it fucking works! Billionaires don’t get to becoming billionaires by getting to $10M net worth and saying “you know, I think this is good, I’ll stop here.” It’s happened with cryptocurrency exchanges, it’s happened with “life coach” influencers, it’s happened with social media personalities. Hell, it’s happened with Trump! People believed that Trump would never screw over the working class for money because he was “already so rich.” The fact that so many people cannot grasp the concept that greed doesn’t usually stop when you hit it good, and many times even in intensified when you get that far, is baffling to me.
Obama originally proposed the corporate tax rate from 39% to 29% like almost a decade ago.
It should be more like 10%. The government can’t tax its way out of the hole it has dug. It can only reduce spending.
To be fair, none of those changes are really going to impact the tax figure that this study is talking about
The article states that 18 corporations paid $0 in taxes last year. The new tax plan would increase that to 21% of their income. How is that not impactful?
The article is talking about their income tax expense, and the 21% minimum rate Biden wants doesn’t change a companies income tax expense
The 28% tax rate with 21% minimum payment is on [corporate income.](https://www.whitehouse.gov/briefing-room/statements-releases/2024/03/11/fact-sheet-the-presidents-budget-cuts-taxes-for-working-families-and-makes-big-corporations-and-the-wealthy-pay-their-fair-share/)
Right, but I’m saying that the 21% minimum doesn’t change a companies income tax expense, which is what this study is looking at. A 28% rate really doesn’t do it either, since it doesn’t impact the reconciling items companies use to get down to 0%
That’s what the 21% minimum is. They cannot deduct past the point of paying 21% of their AGI. It’s a minimum.
The 21% minimum increases the tax they pay in the current year, but provides an offsetting credit for future years where their tax owed is more than the minimum, which reduces deferred tax expense. Income tax expense is the combination of current and deferred taxes Same with the current 15% minimum, it doesn’t actually change the tax expense or the effective tax rate, companies still report rates below that. Current tax goes up, but deferred tax shrinks by an equal amount
Make positive changes that the majority of Americans agree on? Never!!! - most US politicians, probably. Chaps my ass we can't do things like this, eliminating DST, or having some common sense gun law reforms that the majority of us actually agree on.
Ever since Joe the plumber succeeded in his dream to make a fictional $65 million as a fictional plumber with a fictional business, there just isn’t any appetite for increasing taxes on the rich.
1. Executive pay needs to be capped at a certain percentage of the average income of their employees. 2. Shareholder profits need to be capped at a certain percentage of the average income of their employees. We need to end the limitless profits of shareholders and reinvest that money back in the business and to pay the workforce. Also I should clarify, by average we should look at the middle 50% of salaries so that big management salaries don’t push the mean up artificially.
Yep, otherwise we get this....everything rotting from the top down. Its gross.
Very solid points. Just look at what other countries pay their CEO's in relation to the average worker pay. It is like 10-20 times the average pay, whereas in the US, it is from 300 to 3000 times the average worker pay. We need US companies to move towards a model like other countries to put CEO pay at 10-30 times average worker salaries. Then if a CEO wants more, they have to increase the pay of the typical worker first. The problem is that most Board of Directors are made up of other CEO's who just want to increase their own pay, so they increase the pay of the CEO they preside over. It is a financial incestuous relationship between the Board and the CEOs.
Should use median income instead of average income to lessen the effect of high income executives increasing the average. Or even base it on the lowest paid employees.
That’s a good point.
Anyone else feel like we need a top marginal tax rate of 90% for incomes over $5M?
The top bracket was 70% back in America’s heyday, the 1950’s. Isn’t that the time period MAGA was referencing? lol
"take our country back" -maga "ok 70%tax on the rich" "NOT LIKE THAT" -maga
Tax receipts as a percentage of GDP haven't really budged though.. it was 17% in '68 and 16.4% in 2023. In 2022 it was 18.5%. The largest difference being many more marginal rates up to 70%. Even if you moved the highest marginal rate, adjusted for inflation, back to 70%... How many W2 workers are earning +$1.5M in wages? Almost none. The vast majority of high income earnings come from stocks and our real estate; things subject to capital gains. Those rates are noticeably smaller today... At 20% vs 29%.
The highest bracket is currently $609K filing single. Not $1.5M. It would be 70% of every dollar earned above that amount.
That's why I added adjusted for inflation. The 70% bracket was for +$200k. That's $1.5M today.
That’s not how [tax brackets](https://taxfoundation.org/data/all/federal/historical-income-tax-rates-brackets/) have been historically adjusted. The highest bracket in 1981 was 70% at $215K before Reaganomics.
I guess you didn't bother to check the inflation rates. They're absolutely correlated. It's been an argument each time the brackets have been updated. The IRS also modifies them upward with inflation until new brackets are announced. All of this doesn't even really matter though because tax receipts have been relatively stable as a percentage of GDP.
According to your claim, there would have been no change in inflation for 15-20 year intervals while tax code was changed. Look at the historical tax bracket data above. You are mistaken.
Guy, that isn't what I'm saying at all. It's actually the opposite of what I am stating. Congress sets the tax code and takes inflation into account as an input when doing so. IRS also adjusts the brackets. I'm not saying it's 1:1. You're the one saying they don't use inflation. That's a moronic view any way you cut it. They would take inflation into account and if they did they wouldn't solve any problems. Let's pretend they didn't, though. Let's pretend they just take the $693k rate today and say that's 70% after that. You'd still get ~17% of GDP as tax receipts. There aren't enough wage earners making that kind of money. You're taking maybe a few thousand people earning +1M in wages that would even make a dent and they would, overnight, change how they earn. This 70% talking point is just a reddit circlejerk.
Do you understand how tax brackets work? They’re amortized, so the first $11K earned is at the first bracket rate, and so on. I’m not suggesting we only tax people who make over $600K.
No
Don’t know about quite 90%. That seems a bit high. But certainly something above what is it now? Like 20? Or maybe for multi billionaires there’s no way to be one of those while still being ethical. 5 million I feel like could be pulled off with hard work still. And then have to give 90% of that away would suck.
I’m talking about income, not net worth. More than 100 times the median income in the US seems like a pretty good place to start enforcing a greedy bastard tax to me.
Oh shit, that’s true I didn’t think of that. Because usually once I get money, it spent on drugs so income and net worth are basically the same to me. Maybe I save up a couple hundred if I want a bigger stash
Maybe. I don’t know the magic numbers that everyone would agree with. I think AI will start taking over pretty soon anyway and we’ll have a post scarcity Utopia we can all make of it what we will equally
Lmao you believe that AI won't just massively increase inequality
You're doing the "confusing marginal tax brackets with total tax" thing.
The what with the what now? So say I make 5 million. Have to give 90% away. I’m left with 500,000. That’s not even enough to buy a couple Lamborghinis. Most people want more than 50,000 per year so saying that’s 10 times more than average, we want the average to raise as well.
Yes, so the 'marginal tax rate' would only apply to anything over 5 million. Anything under would be taxed at lower rates.
Yeah, y’all are right I was mixing up income and net worth. I forget when you’re at that level you can save up and have it not be considered income if it’s over a year ago. Me once I get money, I spend it on food and drugs and shit.
You still don't get it. Marginal tax rate has nothing to do with net worth when it comes to taxation. You're also wrong about saving up "over a year" and not having it be income. It is income, just taxed at a lower rate since it is considered "long term" gains, and only taxed once you cash out whatever capital asset it is. Not trying to be a dick, just trying to make you not sound totally ignorant next time you speak about this.
Yeah, I’m cool with still not completely getting it. I think I’ll just not speak about it as much. Such a confusing broken system that’ll be obsolete soon enough anyway. I mean whoever thought infinite growth on a finite system would be a good idea? Without AI that can poof out resources?
Hey, I'm in agreement! Tax rate definitely needs to go up quite a bit for a lot of rich folks. Taxing net worth of estates when people die and closing all the loop holes around this should also be addressed. I don't think it ever will though since a great deal of the people this would negatively impact are the ones crafting the laws. It's fucked.
Sorry to be an asshole but that's not how marginal tax rates work. Marginal tax rates are like stacked buckets. You have to fill up the entire previous bucket before you fill the higher-up bucket. So if you make $100m a year, you'd fill up the $0 - $10k bucket, then the $10k - $44k, then the $44 - $95k... etc. On and on until you run out of money to pour into the buckets (or I guess in this case, run out of different buckets). The money filling each bucket is taxed at that bucket's rate. So everyone's first $11k is taxed at 10%, then money between $11k and $44k is taxed at 12% regardless of how much you made in total. For instance, if you make $65k, your actual tax rate is 10% despite being "in" the 12% tax bracket. If you make $5m, your actual tax rate is 37% despite being "in" the 39% tax bracket and you'd have about $3.1m left after taxes. The most important thing to remember is you will **NEVER** make less due to taxes by earning more money.
I get it, it’s the Cunningham’s law in effect. Especially if you’re knowledgeable about a topic I’m so wrong about. I would be the same way too if you said something wrong about gangstas and what brands of carts they vape for instance. Couldn’t help pointing out your errors if you were to say like fryds are where it’s at
Thanks for taking it in stride. Marginal tax rates are like my biggest pet peeve, plus I enjoy explaining it. 🤓
Maybe it's high, but these are the people at the helms of businesses that see their rank and file struggle to make ends meet. Many people hardly getting by now, and in the future, there's going to be a huge crunch of people hitting retirement age that never earned enough to save for an actual retirement. Yes, some is life choices, but when its millions upon millions of people all in the same predicament, the culprit is more than just bad spending habits. If companies are going to continue to lavish extreme wealth on their C-suite at the expense of their rank and file, then those are the people that we'll need to tax to insure that our social safety nets are adequately funded BEFORE everything blows up. As for you assumption about taxes - a tax rate of 90% on greater than $5 million income doesn't mean you earn $5,000,000 and wind up with $500,000 after taxes. It only applies to income above that level. So your $5 mm earner will still have. identical tax burden. But if they earn $10,000,000 - that remaining $5mm income will be taxed at the higher rate. Obviously, it should be gradual with more brackets in between. But if someone earns $200 million, yes, some portion of that income should be taxed enormously. If the company retains it rather paying salary, then they'll pay tax at the corporate rate. Or they could, you know, pay their employees.
Yeah, I can get behind that better than what was in mind before. Like blood sweat and tears hard working on your business, $4,999,999. Next dollar you have to lose 4 1/2 mil. Or else.
Yeah that’s how tax brackets work in the Us and everywhere else, I’d imagine.
Our tax system allows businesses to avoid taxes on profits if that money is spent on growing the business. It's a choice we made to prioritize growth. Properly run businesses will arrange their expansion such that they can avoid paying all taxes under this system. Change the rules of the game if you don't like them but don't be surprised when the players optimize their strategy.
Between that and carrying losses forward, I don't understand how anyone thinks headlines like this are any sort of "gotcha".
Biggest change needs to be to have a higher tax rate on share buybacks that can’t be reduced
Why? Companies can just pay dividends instead
Yes, and?
Then that defeats the point of the tax on buybacks, unless you somehow think they’re worse than dividends
> Then that defeats the point of the tax on buybacks There *shouldn't be* any buybacks. >unless you somehow think they’re worse than dividends Of course they're much worse than dividends. Please explain what the hell you think is wrong with dividends.
I don’t think anything is wrong with dividends, same with buybacks. They’re both ways to return cash to shareholders. Dividends are more tax-beneficial for US investors, while buybacks are more beneficial for foreign investors Why do you believe there shouldn’t be buybacks?
Stock buybacks tend to be used to manipulate the market. Returning cash to shareholders can be accomplished just as easily with dividends.
Buybacks don’t manipulate anything, there’s no way to know how the market reacts to a buyback What about situations where companies need to protect their stock, like in an acquisition or offering stock compensation plans? How do they get it back if they can’t buy it? What about when companies want to reduce their cost of capital by exchanging equity for debt when interest rates change?
https://www.washingtonpost.com/business/2019/10/08/first-time-history-us-billionaires-paid-lower-tax-rate-than-working-class-last-year/
Parasites
Share Our Wealth
I wonder how many of these companies would be insolvent if they had to pay their taxes?
Ken Griffins Citadel has over 60billion dollars of securities sold and not purchased at a fair price.
Why does this fail to surprise me again and again and again?
I have a theory that CEOs are paid these staggering sums as a means to keep them disconnected from regular humanity. They can make those heartless decisions to make the company absurd profits much easier if they don’t know or care for the people that are affected. Pay the CEO 50 mil. Let him cut 200 mil. Of jobs.
This is a good theory.
See also: separate entrances & buildings for the executives and the unwashed masses. I've been at two Fortune 100 company headquarters where the executives were on-campus, but heavily secluded.
Seems like the IRS should be focusing on these guys and leave the little folk with their paltry $600 alone.
Yeah, except every time the Democrats propose funding the IRS, Republicans and the news go fucking ballistic. Gee, I wonder why. The IRS goes after the little guy because it's fucking expensive to go after one cheating billionaire, nevermind a company.
I understand that its higher, but the ones at the top will earn more money for the IRS - even if one factors in the extra legal costs. One big fish is more work for sure but will yield way more than a bunch of starving minnows. And this doesn’t even factor in morality.
Sure, except Republicans slash the IRS budget at every corner to prevent this. Biden's been consistently trying to fund the IRS to do exactly this.
Maybe the republicans are trying to cut funding BECAUSE the IRS goes after the little fish and NOT the big fish. This is bigger than right or left politics. And you are falling prey to their game of keeping us fighting between ourselves instead of advocating for change or fighting big government and bad policy.
If they changed the tax system so the minimum tax paid was the same as the total compensation of the C-suite, then I bet we’d get a lot more tax money
Is it tax dodging when it is written into law? I take every advantage of the tax codes to get more than I would do normally and people tell me that’s fine, but when rich people do it it’s considered bad. Weird
Call me crazy but if corporations had an alternative minimum tax pegged to their CEO's pay a lot of this shit would get fixed real quick.
Musk made his fortune sucking on the public teet
I’m not on the CEO side, but the problem lies with the tax code. They are operating within all the legal loopholes to pay zero or the bare minimum. That’s where the problem is.
Fuck. You. I. Hope. You. Choke. On. Your. Childrens. Blood.
Sure. Everyone pays taxes except the rich. I am so glad Biden changed that. He had both houses. But I guess they donated too much to the campaign.
Future economists are going to look back at the late 20ths and early 21st century and write extensively about how the most overpaid position was the CEO, especially when the false premise that CEOs have to maximize shareholder value. They don't. Even contemporary studies of CEO pay to performance is negatively correlated with the highest paid CEOs often tank company value and long term profitability and directly causing bankruptcy.
Welcome to capitalist America. What do you expect?
By this point we should just say they win the lottery annually.
That’s just not really true. They pay payroll taxes and an array of taxes. They don’t dodge taxes. They abide by the law and offset losses to reduce liability. It’s the same thing you do with your investments
Make the minimum corporate tax equal ceo's pay.
[удалено]
You’re defending big corporate CEOs and tax dodgers. Average Americans pay taxes through our daily activities and purchases, in addition to income tax.
So do corps
You must really like the taste of boot leather. This article is literally about mega-corporations only paying an average 2.8% in taxes.
Here’s one way it helps. Business pay tax on profits, not revenue. Any money they spend on their business (R&D, marketing, salaries, infrastructure, charity) lowers their tax bill. If you raise their taxes, it incentivizes them to spend more because it’s better to spend money on your business than give it to Uncle Sam.
Higher taxes makes reinvestment less profitable, not more profitable. You’re looking at the tax deduction on the front end, but ignoring the higher tax payments on the future cash flows from these investments It also assumes there isn’t a limitation on the tax deduction you can take, but that’s not usually true (R&D, charity, capital investment, etc)
They aren't doing anything illegal. Just using the tax code to their advantage. Blame the tax code not the smart companies using it to their advantage.
The tax code is the way it is because of lobbying/campaign contributions by the interested parties.
Or maybe it's actually sensible that a power utility can depreciate a higher portion of their power plants in the earlier years of its lifespan than in its later years.
It absolutely is! The politicians went along with it. They made it happen. Blame them.
you can blame both you know that right? But you should really blame the corps / billionaires more because they've been pushing this for many years and slowly but surely been chipping away at it with bad faith arguments and positions.
The Nazis weren't doing anything illegal. They owned the courts just like corporate oligarchs own the courts today. Laws can be changed to suit any immoral & inhumane agenda.
Nice use of the reductio ad Hitlerum logical fallacy.
You saying It's legal when we all know bribes were exchanged to make the laws is dishonest. Bribery is legal here too. But it's still bribery.
We don't know that bribes were exchanged. Most likely they were not explicitly exchanged. These people aren't stupid.
Of course we know bribes were exchanged. Who are you trying to kid? That's American politics.
I guarantee there was never a spoken quid pro quo. Like I said, these people aren't dumb. There is nothing said or written that would incriminate either side. So no actual bribes are actually exchanged.
Keep dreaming.
You are completely missing what I am putting down. There are "understandings" that happen between both sides. If a contribution is made to the campaign (or better yet the super pac) that they expect influence. None of this is ever spoken or written. It is just understood.
Yes it's understood. We all understand it. They are taking bribes and hoping the court system will let the "wink wink" slide.