7주차_경제 금융_하성재

[하성재]

제목: Why the Rich Don’t Pay Taxes 

https://youtu.be/aLKacgW6YOI?si=V-olfo3y7q6YezaL

1	Estate and gift taxes	상속 및 증여세
2	Second Estate	제2신분 (귀족층)
3	Progressive tax system	누진세 체계
4	Wealth tax	부유세
5	Taxable income	과세 대상 소득
6	Backup / Sweep-up tax	보완세 / 포괄세
7	Double tax	이중 과세

the second estate was the term that was used for the aristocracy in pre-revolutionary France.

And the thing that was notable and important about them for purposes of our work is that they were completely exempt from taxes.

The situation that we have in the United States today, we've created our very own second estate, which is the wealthiest Americans who are also exempt from paying federal taxes.

And it's interesting how this has come about because, of course, historically, the whole purpose of our tax system is to impose its greatest burdens on those who have the greatest capacity to pay.

And it's effectuated through having higher tax rates in our income tax system for those who have greater income, and also for imposing an additional wealth tax on the wealthiest 1-2% of Americans.

And you look at these two things and you think, oh, that's great.

Our American tax system is highly progressive, getting those people who have the greatest capacity to pay.

But two things have happened in recent years that has shifted this dynamic.

One of them, and the most important thing, is that the wealthiest Americans have been able to avoid having taxable income.

And so they have enormous, they've acquired enormous amounts of wealth, but not through ways that the tax system imposes taxes on.

And part of the reason for that is because it assumes that the estate tax is doing its job.

It's acting as an effective backup or sweep-up tax to capture anything that wasn't taxed under the income tax system.

Our estate tax system is supposed to impose a tax of 40% on all transfers that occur during life by gift or at death once it's over a certain exemption amount.

But the problem is that there has not been a single amendment to the estate tax since 1990.

And as a result, the loopholes have flourished.

And today, the estate tax produces hardly any revenue at all, even as our wealthiest Americans have become more and more wealthy.

The wealthy are able to avoid income taxes because their greatest sources of wealth are their investments and their inheritances.

And both of those are largely excluded from the income tax system.

The way that investments are excluded is that as property grows in value, right, as Mark Zuckerberg goes from being somebody who has a startup from his dorm room to something that's worth, you know, over $100 billion, all of that growth in value is not subject to tax unless he actually sells the stock.

And, of course, he has no interest in selling the stock because he wants to maintain control over the assets.

Now, you might wonder how is it possible for somebody to live well if they don't sell their assets, but there's another tool available to them, which is that people with wealth can borrow against those assets.

They can pledge those assets for loans and get tax-free wealth that is never subject to tax.

And this is a very common technique amongst the wealthiest Americans.

A lot of them have a lot of accumulated debt because it enables them to live off of their wealth without having to recognize any taxable income.

On the inheritance side, our income tax system totally excludes all money received by gifts, by inheritances, or by insurance distributions.

And so what that means is that wealthy people who inherit 10 million, 20 million, 100 million, or even a billion dollars, never pay any income taxes on that at all.

The only tax system that we have that applies to those types of transfers are the estate tax.

And the estate tax has become absolutely riddled with loopholes.

Part of the reason for that is this campaign that took effect in the early 1990s, which was a campaign that was designed to transform how the public viewed the estate tax as a, you know, a tax that affected a small number of people and served as a backstop to the income tax to instead being an immoral double tax that hurt family, farms, and businesses.

And this campaign was so effective that it resulted in a one year, there was a one year that there was no estate taxes collected at all.