I don't know why you say hundreds of billions of dollars isn't worth taking about, compared to trillions. $150B is 15% of $1T, a sizable chunk. And the total income of US billionaires being just $130B doesn't quite capture the complete picture, when their combined wealth is in the trillions, and their assets keep growing.
>> when their combined wealth is in the trillions, and their assets keep growing.
Because capital gains, ironically, do not apply to gains in capital assets. They have to "realize" the gains as "income", usually by selling the asset. So a millionaire (stockholder) can become a billionaire without ever paying a cent in capital gains tax. Only when they sell the stock is it subject to taxation.
This allows them to pay tax selectively. Even if they want a chunk of money all at once, they can take a loan against their capital assets. There is no income realized when taking a loan. They then selectively sell stock to pay down the loan, preferably in years when they are taking a loss in some other area, nullifying the taxable gain on the asset sale. Such tricks are why, for billionaires, paying capital gains tax is basically voluntary.
You can grow your wealth without virtually no taxable income. It's real wealth - you can buy houses and yachts with it - but you don't need to pay tax unless you choose to.
In reality most money at this level is made by speculation, and speculation is spectacularly under-taxed.
For example Forex trading in the City of London moves $6.6 trillion of money around, every single day. A Tobin Tax of 0.1% on that would raise $2.5tn a year - which would almost instantly wipe out the UK's entire national debt.
Of course you'd lose some transaction volume - you might earn "only" $500bn - but the principle remains. A lot of economic activity isn't taxed at all, mostly to the benefit of the rich. This has huge effects on the quality of life of most of the population.
There's a principle you won't find in econ books, which is that in an industrial economy basic maintenance spending isn't optional.
If you don't pay for good education, you pay for it in lost economic activity. Likewise for infrastructure. And health care.
The idea that these are somehow nice extras that the population shouldn't expect because they're "too expensive" is so wrong it's borderline insane.
Everyone pays anyway. You may as well organise this properly so the work gets done and prosperity increases, because the alternative is instability, loss of opportunity, and ultimately a real risk of complete social and economic collapse.
> For example Forex trading in the City of London moves $6.6 trillion of money around, every single day. A Tobin Tax of 0.1% on that would raise $2.5tn a year - which would almost instantly wipe out the UK's entire national debt.
Traders can just move money to other trading system, e.g. futures, or they can just stop trading and instantly gain $2.5T a year in saved taxes, which is equivalent of UK's entire national debt!
If you want to capture these $2.5T, you need to close borders and tax these traders physically, one by one, like Soviet Union, China, North Korea, etc.
"Net value taxation" may be the future. How much were you worth last year? How much are you worth today? Net = income. We would need exceptions for things like houses, but such an approach would capture all capital gains in real time.
Why do you care how much paper money someone has? As you recognize, they can’t do anything with that—buy houses, yachts, lobbyists, etc.—without realizing the gains. So why does it matter what they are worth in paper?
