That’s why it’s a wealth cap. That’s net worth, not income.
You exceed the 20m cap, you have to pay the excess to taxes. If it’s locked in company shares, you have to sell them and pay that in taxes.
Comment on But how would they be able to live on that?
Clent@lemmy.world 6 months agoThey’ll just claim aren’t paid in wages, see it’s a performance bonus. Totally not a wage. That’s for the poors.
Wrench@lemmy.world 6 months ago
jj4211@lemmy.world 6 months ago
The tricky part is that has implications for business control. Other people speculate the market cap into 50m and then they take over control if your company, because you are forced to sell off your stake. So an arbitrary coalition of 3 rich dudes can just take over your company on a whim, if it is vaguely important enough. A coalition of rich people is not likely going to treat the customers or employees better.
Wrench@lemmy.world 6 months ago
I think that’s a solvable problem. Theoretical value of a private company’s shares would need to be more flexible because the real worth won’t be known until selling your stake, or the company going public where there is a concrete value.
bitwolf@lemmy.one 6 months ago
Thankfully bonuses are already taxed very highly.
Clent@lemmy.world 6 months ago
That’s so missing the point, I can’t help but think you’re a cheerleader for the billionaire class.
If there is a maximum wage but no maximum bonus their income would be all bonus to get around the maximum. The thing we’re discussing.
bitwolf@lemmy.one 6 months ago
Sorry my intention was to convey my agreement with you but also point out a funny attribute of this avenue which could be interpreted to align with the overarching “tax the rich” theme of the OP
nickwitha_k@lemmy.sdf.org 6 months ago
Yeah. Every bonus that I’ve ever seen has been raced at something like 40%. We really need to both make capital gains equally taxed to earned income and have a wealth tax.
damnedfurry@lemmy.world 6 months ago
We really need to both make capital gains equally taxed to earned income
The capital gains tax isn’t lower than income tax just because. There are very specific reasons:
(TL;DR: a low capital gains rate has historically raised more in tax revenue)
The justification for a lower tax rate on capital gains relative to ordinary income is threefold: it is not indexed for inflation, it is a double tax, and it encourages present consumption over future consumption.
First, the tax is not adjusted for inflation, so any appreciation of assets is taxed at the nominal instead of the real value. This means investors must pay tax not only on the real return but also on the inflation created by the Federal Reserve.
Second, the capital gains tax is merely part of a long line of federal taxation of the same dollar of income. Wages are first taxed by payroll and personal income taxes, then again by the corporate income tax if one chooses to invest in corporate equities, and then again when those investments pay off in the form of dividends and capital gains. This puts corporations at a disadvantage relative to pass through business entities, whose owners pay personal income tax on distributed profits, instead of taxes on corporate income, capital gains, and dividends. One way corporations mitigate this excessive taxation is through debt rather than equity financing, since interest is deductible. This creates perverse incentives to over leverage, contributing to the boom and bust cycle.
Finally, a capital gains tax, like nearly all of the federal tax code, is a tax on future consumption. Future personal consumption, in the form of savings, is taxed, while present consumption is not. By favoring present over future consumption, savings are discouraged, which decreases future available capital and lowers long term growth.
Not only has a low capital gains tax rate worked to encourage savings and increase economic growth, a low capital gains rate has historically raised more in tax revenue.
nickwitha_k@lemmy.sdf.org 6 months ago
The goal in my mind is not to necessarily increase total revenue but to erode the capacity to hoard wealth. The lower rates are gamed to increase wealth disparity, giving a distinct advantage to those who are already wealthy, over those who are not.
JasonDJ@lemmy.zip 6 months ago
Bonuses don’t get taxed any differently. What happens if your employers payroll software sees additional income above your wages and without any tax-exempt lines (like health insurance) subtracting from taxable income. It ends up calculating a higher tax rate.
Come tax time a dollar of income is a dollar of income. Your tax burden is calculated in total income and bonuses are treated no differently than wages.
bitwolf@lemmy.one 6 months ago
Doesn’t Section 31.3402(g)-1(a)(1)(i) state otherwise?
Bonuses are supplemental wages and are taxed at 25% unless you net over 1 million.
Section 904(b) of the American Jobs Creation Act of 2004 (Public Law 108-357, 118 Stat. 1418)
Olgratin_Magmatoe@lemmy.world 6 months ago
We also need to end bullshit loopholes like that. Bonuses, benefits, stocks, everything and anything in-between needs to be counted as income.
Doesn’t matter if your employer pays you in bananas or bitcoin, everything the employer does to reward an employee must be counted.
jj4211@lemmy.world 6 months ago
They are counted as income. When company grants stock, it appears in W2, for example.
The rub is when their extrapolated value changes, and this would be fine if they sold, as there is a tax system for handling that too, but there are gaps with borrowing where they can game the system by borrowing against the value instead of selling. By needlessly living in debt, they can manage their tax burden in ways unavailable to mere mortals.
Olgratin_Magmatoe@lemmy.world 6 months ago
That’s the exact kind of shit we need to end.
jj4211@lemmy.world 6 months ago
Well, sure. Just have to accurately describe what to stop. Usually calls to action don’t understand the actual scheme in play, so folks ask for things that either don’t make sense or already exist. Within that context hard to fight when you don’t even know what to fight
howrar@lemmy.ca 6 months ago
It gets tricky when you get paid once and then never get paid again, but the original thing you were paid with (i.e. company stocks) goes up in value over time, effectively replacing wages. Do we count that value increase as well? What if you get paid in cash, you buy something with that cash (could be the same company stocks), and that thing goes up in value? Or you buy another asset that your company has a lot of influence over?
Olgratin_Magmatoe@lemmy.world 6 months ago
Seems to be another good reason to abolish the stock market. The difficulty of tracking that stuff vanishes if it doesn’t exist in the first place.
howrar@lemmy.ca 6 months ago
The company exists without the stock market. People will still own portions of that company. The value will just be harder for the general public to determine and can be more easily obfuscated for tax purposes.