@hebegede, the wealthiest people are not paying income taxes at a 39.6 percent rate.
I didn’t make up what I wrote. They are government figures I used. 
http://taxfoundation.org/article/summary-latest-federal-income-tax-data-0
The average income tax rate is pretty low.
Ok, I edited my first paragraph to say “earned income”, but I think you know that’s what I meant. The link you provided also clearly shows that the wealthy are paying a higher effective tax rate than everyone else.
Tomato/orange… dstark is using the highest marginal rate. hebegebe is referring to the average overall tax rate paid by higher income TPs. Both correct.
The more income someone makes at that highest marginal rate, the higher the overall average tax rate will be bc their deductions generally remain static.
And many wealthy ppl lose most of their personal deductions (phase out) unless they make massive contributions. (Of course their businesses have lots of deductions that do not phase out.)
@hebegebe, I didn’t know what you meant because most of the wealthiest people aren’t making their money from earned income.
I think Zuckerberg pays himself a dollar a year.
There is a lot of income never taxed.
When we look at the average income tax rates, we can see that Americans don’t pay high income tax rates on their income.
The wealthy don’t pay a high percentage of income in social security tax while wage earners do pay that tax.
I think the income tax brings in a little over a trillion a year. Tax expenditures are also a little over a trillion a year. That is pretty amazing to me. No wonder the tax code is complicated.
You keep going off the rails. Remember that the topic is Private Universities Should Stop Wealth-Hoarding and Share. But if you insist on making distorted points, I will keep responding to them.
Zuckerberg is taxed on his capital gains when he sells his shares. I already explained why capital gains has a different tax rate than earned income.
Given that Social Security is a pension scheme where benefits are capped, it naturally makes sense that contributions are capped.
The private universities should stop…
Are a subset of what I am talking about.
It is related. I didn’t make these relationships up. I am not that creative.
I don’t necessarily agree with your explanations.
A lot of these guys like Zuckerberg are never going to sell their shares.
Because the long term capital gains tax rates are lower, there are strategies to categorize income as long term term capital gains whether they are or not.
Social security can be funded in many ways.
Did you read the links I posted? You asked me questions. Some of the answers were in the links. You asked me questions so fast after I posted, I know you didn’t read the links right after I posted the links.
Did you read the link about Jim Simons and hedge funds setting up basket options?
You don’t have to read them.
There are so few schools with truly large endowments you are looking at making new laws to impact half a dozen schools. Never a good idea as some unintended consequences will arise and be worse than this small problem. . They’ll just figure a way around it anyway.
Then he doesn’t have any gains. Are you really suggesting that Zuckerberg should pay taxes without having realized gains?
I don’t know how old you are, but during the dot-com boom there were a lot of companies that were worth $10B+, that now don’t exist anymore. Some of them had billions of dollars in revenues and actual profits at the time (Nortel for example). FaceBook looks like a solid company now, but it is naive to assume that its value will always be this high.
@hebegebe, I was an options market maker on a stock exchange. I am probably older than you are.
I started working at a stock exchange in 1979.
If the guy dies without selling, the capital gains goes away. There is no capital gains tax. There is no income tax on this.
So in Zuckerberg’s case, if he owns stock at $1,000 and it goes to $100,000,000 and then he dies, the capital gains tax is zero.
He also has over $100 million in his Roth IRA.
There is no income tax, but there is estate tax, which can be up to 40%.
Do you realize just how far off into the weeds we are?
Yes, they are deciding to do that because voters continue to elect the politicians who openly continue that activity.
Incumbents win over 95% of the time, so either the taxpayers are totally ignorant or it is not something on their radar screen. Personally, I think it is the latter - taxpayers do not give a hoot about research money going to these schools because many would love to see their kids at one of those schools someday.
What is missing from this discussion is human nature - people like to support winners, not losers. Who doesn’t? And this idea of taking private money from winners and giving to people who are not even in the same league rubs people the wrong way.
“Personally, I think it is the latter - taxpayers do not give a hoot about research money going to these schools because many would love to see their kids at one of those schools someday.”
Personally I think 98% of taxpayers don’t spend one minute of their lives thinking about any of the elite schools, whether it’s admission or research dollars. They aren’t relevant to or influential on their lives in any way, except maybe if one of them does well in a sports event they watched. This board way overstates how much the average joe cares about Harvard.
You are making a construct to fit your worldview rather than dealing with the reality that exists. The “equal starting point” does exist.
The “equal starting point” is that one can get to college if one tries. Now, one may not start out at the college one wants, but one can still go. There is no entitlement to get FA to go to the school you want. Additionally, there is no entitlement that others should be paying for the college of one’s choice, which is what your premise requires.
If someone does well in high school getting a merit scholarship or free ride to a state school is rather easy actually. What is not as easy is if you do not well, then the merit money and other FA may not be awarded to you. And why should it? The money should go to the students who have proved in high school they are worthy investments. And guess what? Those students do get the money.
The public is getting fed up. If the winners don’t start sharing with the “losers”, the winners are going to become losers.
The public has a long fuse, but we can all see what is happening this year. The public is not going to know what is going on, but the public is going to strike back. Maybe in crazy ways.
The winners are taking the public money.
We can argue whether that is good or bad, but the dishonesty, the losers are taking the money, the winners don’t take the money, doesn’t wash well with me.
I wonder what is going to happen with the trillion dollars in student debt.
I understand some regard money making, beyond a certain level, as a sort of competition or sport. It hadn’t really occurred to me that they viewed those who didn’t feel the same as losers. It is sort of eye opening. I am pretty sure wanting to share with your neighbors, when you have a little extra, is basic human nature because I see it every single day where I live.
@awcntdb I have no “construct” and sharing the FA wealth does not “fit my world view”. The truth is I am very conservative. But certain things make me question the fairness of parts of our society. If certain things don’t make you question your own point of view now and then perhaps it is simply too narrow.
@dstark. You can take all of Zuckerberg’s money and all of Gates’ money and all of the other couple dozen real “winners” and divide it up among all the disgruntled “losers” and it would work out to about $200 a person. Facebook and Microsoft are not responsible for the poverty problem in the US. We have too many public figures on both sides of the aisle selling hate and blame and preaching that all your problems are someone else’s fault. Maybe if we got a little more focused on the sense of self reliance that made this place great in the first place, we would have fewer losers.
@notveryzen, The wealthy take public money.
If private colleges are self reliant, Yale is self reliant, why do they need so much government support?
The self reliant talk is bs.
When Warren Buffett becomes self reliant, I will change my mind.
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There is no income tax, but there is estate tax, which can be up to 40%. Do you realize just how far off into the weeds we are?
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No - that’s not that dstark meant.
I took my $10.9M (estate tax exemption) and bought FB when it IPOed (at $38 a share).
I am a proud owner of 286,842 FB shares which are sitting in my brokerage account.
Well, unfortunately, my spouse and I were on our wonderful vacation in Brussels and got smoked by the terrorists.
You realize that my kid just inherits these 286,842 FB shares (which is worth about $32M as of last Friday) totally tax free - isn’t step-up in basis wonderful? (but me and my spouse are still dead, though)