America's Billionaires Are Hoarding $8.5 Trillion In Untaxed Assets, Need Our Help To Lighten The Load!

And this is why we need a billionaire's tax.

What would you do with 8.5 trillion dollars? Well, if you are the 64,000 or so Americans worth $100 million or more, you would pretty much just sit on it, take loans out on it, and then pass it down to your children when you die. Oh, and you wouldn’t pay taxes on it, because taxes are for poor people.

An analysis released this week by Americans for Tax Fairness found that hundred-millionaires are hoarding, collectively, $8.5 trillion dollars in unrealized capital gains that are not being taxed and, most likely, never will be taxed.

---

---

Here’s how the scam works: The ultra-rich are, for the most part, not living off of regular, taxed income the way the rest of us are. They are living on loans taken out on their capital gains, which cannot be taxed until they are realized (you know, sold). Then, when the ultra-rich die, they pass their unsold stocks on to their children, and … well let’s outsource this to Investopedia:

In terms of taxes, the cost basis of inherited stock is the value at the time of the original owner's death, not the value when the stock was originally purchased. [So none of the original gains are taxed, ever.] The person inheriting the stock only owes taxes on the change in stock price between when it was inherited and when it was sold.

Now we’re all clear on the grift. Let’s keep going.

Via Americans For Tax Fairness:

These ultra-wealthy individuals can even use their untaxed gains to make big corporate purchases, such as when Elon Musk financed his acquisition of Twitter in large part through loans taken out against the rising value of his Tesla stock. The interest they pay on these loans is a fraction of what they would pay in taxes on the same amount of income. There’s even a clever name for this tax-dodging strategy: “Buy, Borrow, Die”. 

Because of this alternate method of tapping the economic benefit of increasing asset values, the great bulk of capital gains is never realized. Between 1989 (when the Fed began collecting such data) and 2022, $19.5 trillion of capital gains were realized, yielding $3.4 trillion of federal tax revenue. That works out to an effective tax rate of 17.5%. (Another special break for the wealthy is that capital gains are taxed at lower rates than wage income.) Over that same period, $48 trillion of unrealized capital gains was also accumulated. If the unrealized gains are added to the realized ones, the rate paid on all gains drops to just 5%. In 2022, billionaires and centi-millionaires only realized, and thus only paid taxes on, $316 billion of capital gains–which is less than 4% of their $8.5 trillion in unrealized capital gains.

This is tax evasion, sure — but at a more basic level, it’s theft. These people benefit from taxes that the rest of us have to pay without paying their own fair share.

The fact is, no one becomes a billionaire or even a centimillionaire entirely on their own. Not only do they need our labor and our money to buy whatever it is they are selling, they need our taxes to pay for the roads on which they transport goods, to pay to educate the workforce necessary for them to have whatever business they have or invest in whatever business they invest in, to pay for a police force that largely functions to protect their wealth, and, very frequently, to make up the difference between what they feel like paying their employees and the bare minimum those employees actually need just to function well enough to do their jobs.

Thankfully, Democrats from Congress to the White House are pushing to reform this obviously broken system.

President Biden and Senate Finance Committee Chairman Ron Wyden (D-OR) have each proposed reforms that would annually tax the unrealized gains of the nation’s wealthiest households. President Biden’s plan has been introduced in the House by Reps. Steve Cohen (D-TN) and Don Beyer (D-VA) with 60 cosponsors and Chairman Wyden’s plan has been introduced in the Senate with 15 cosponsors. Both plans would raise hundreds of billions of dollars in tax revenue exclusively from the nation’s very richest households, revenue that could be used to lower costs and improve services for the rest of America. 

Massachusetts did this. What was supposed to raise a billion dollars raised $1.5 billion instead. And now all the children will eat.

---

PREVIOUSLY!

In First Year, Massachusetts 'Millionaire Tax' Will Raise $1.5 Billion. Fully Automated Luxury Space Communism Still A Ways Off

---

Taxing the ultra-wealthy makes it more possible for regular Americans to increase their own wealth, because these are things that will benefit us all. Take something simple, like public transportation — you take some tax money, invest in public transportation services, you make it so people are more able to get around, go places, spend money and, if they choose not to have a car, more disposable income to spend at the places they go to (better for the environment, too!).

---

---

And no one benefits more from the money that goes to taxes than the rich. Even the tax money that goes to help the poor also helps the rich because, as mentioned, they frequently don’t want to have to pay their workers the amount that would be necessary to cover rent, food, utilities, healthcare, transportation and the cost of a phone. They also (as we all do) heavily rely on the labor of those not making enough to live on for their own survival and well-being. Never, ever forget who the “essential workers” were during the pandemic.

This is something to keep in mind when the terror of “But what if all the wealthy industrialists decide they are done with being taxed and run away to Galt’s Gulch?” sets in. Or when you see the tears welling up in the eyes of billionaires and temporarily embarrassed billionaires as they cry, “But why do you want to punish success?!?”

The fact is, we can survive just fine without the megarich (and would likely be better off) … but without us? It would be mighty hard for them to maintain the lifestyles to which they have become accustomed. Thus, it is not unreasonable to expect them to pay their fair share, even if they really, really, really don’t wanna.