It's not broken; it works perfectly: people who work get taxes deducted automatically from their paychecks, while the oligarchs pick and choose how to pay their taxes and can use various techniques to completely mitigate taxes.
That defines what is broken in the system to begin with. Ideally freedom of the citizens creates power in them which in turn creates a powerful nation.
@@christiangonzalez865I believe Ivan’s point is that the purpose of the tax system IS to exploit the poor and preserve the wealthy. Therefore, if we don’t want that outcome, something else must be broken. Probably the part of our culture that allows the wealthy to build tax systems designed to preserve their wealth. I wonder what part that is…?
@@ayathados6629 Yes, you can prepare your own taxes. That's not what I'm talking about. Your W-2 pay stub gets Federal, State, and other taxes automatically deducted from your paycheck. So, if you earn $2000$, let's say, you get Federal taxes deducted, State taxes, and Social Security taxes, so in the end, you get $1400.
@@PrabhablyAGoodUA-camr *Are You Blind? If You Look All Over The News You'd See Titles That Read "US Has Loaned Countries Money To Fund War" And That Money Comes From Taxes!* *Where Were You This Whole Time? WW3 Is On It's Way But First The US Citizens Have To Squeeze Up Some Pennys First.* ✝️ + 🪖 = 💵 + ⚔️
@scottclark7559 😂 we got the credit card because we had the income tax. Tariffs encourage a limited government because the government doesn't have the money to do anything much.
Oh YES. Another HMW video telling me more about how everything sucks and is broken and how I and everyone I know are powerless to do anything about it,
@OnlineEcosystems I guess there is a sweet spot where you can get both the votes for talking about an issue AND the campaign donations for not doing anything about it.
I think most people would expect socialists to complain about that they most, but I'm opposed to socialism and still want holding residential property as an investment to be massively restricted. It's the only necessity that people or companies purchase en masse not to use, but to hope it gets more expensive for everyone else, thus earning them money.
@@MidwestArtManAdam smith explicitly called out rent seekers, Capitalism theory is against landlords It’s just that the people in charge of governments tend to be landlords
@@MidwestArtMan constructing an economy around speculative finance/greed is not wise or sustainable. And clam down, socialism isnt against personal property. No one’s coming for ur toothbrush.
I make like no money but I always freak out about making sure I get my taxes in before the deadline. Then I heard the IRS is going to "start going after" people who make 400k+ per year and just don't bother to do their taxes because they don't feel like it
I work abroad and am under the federal threshold for paying income tax (for married couples, it’s absurdly high - like $~220k), but even *I* got an adjustment letter for what I owed, leading to this amazing line after stating that they found an error in my tax reporting: “Your estimated tax: $0 IRS estimated tax: $0”
How can we expect those in power to make a change -when the change itself would mean being unable to benefit from a broken system. Here's the big picture: Those in power need a lot to afford their current lifestyle or status. As long as the system is broken, they'll maintain and milk it for as long as possible.
We would need regulations to prevent those whom benefit from also being those in charge. Of course, you try and make a Politician give up their Stock Portfolio!
@@lostbutfreesoul that's basically impossible in any liberal system. Because unless there is accountability, people in charge would try to become those who benefit. And it doesn't make sense for them not to. And whole idea of liberalism is avoiding accountability by pushing it back to next elected person.
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In my opinion, now is not the moment to rely on hearsay. Every individual, regardless of their level of experience as an investor OR in a financial market, requires guidance at some stage.
It's often true that people underestimate the importance of financial advisors until they feel the negative effects of emotional decision-making. I remember a few summers ago, after a tough divorce, when I needed a boost for my struggling business. I researched and found a licensed advisor who diligently helped grow my reserves despite inflation. Consequently, my reserves increased from $275k to around $750k.
My CFA Melissa Terri Swayne’, a renowned figure in her line of work. I recommend researching her credentials further. She has many years of experience and is a valuable resource for anyone looking to navigate the financial market.
The truly infuriating part is they know the number!🤦♂ They know how much taxes you owe, but you have to play a guessing game...and the penalties for being wrong are stiff...
@@newagain9964 Maybe ideally, but in reality there are 10s of thousands of possible deductions. Ideally there'd be 0 deductions because there wouldn’t be any income tax.
Its not "loopholes". Complexity equals corruption. Politicians wanted that, and rich people hired lobbyists 10x smarter to get nuances inserted into mad policy that provided relief that was opaque to the average staffer writing summaries for members of congress, knowing the member never reads the bills they vote on or existing statutes incorporated by reference. To end loopholes... end progressivism codified in the tax code.
Or just go to how things were before Lincoln, small government. “Oh no they are jumping over the walls we made” … “Oh no we can’t have a cure for covid lets move those walls!” “Oh no those walls we removed are removed and now political careers ride on it and they are open to trying new stuff so much we can’t have some stuff because it isn’t proven to work despite claims!” … Why isn’t it proven to work? It takes 1 billion dollars needed of tests and 10 years wait. If you want to break down any cures such as the 5$ diabetes insulin and so on go ahead keep paying 200$. Want it nationalized and put to ‘i het promoted just by pushing buttons i don’t care’ HR management style work, sure, just don’t forget you can’t sue the government if they try to ‘meet Quota’ and cut corners. Or if they just stop making it but without sellers there are none, welcome to importing this but welcome to jail without any insulin because insulin not nationalized would be illegal. This is why a guy with aids was told he had a year or two to live, denied a medicine for it because ‘it isn’t approved’ Keynsian economics the ‘great society’ the builder of the welfare state had to make monopolies because he failed at a normal boom and bust cycle. Deregulation is treated worse than the word genocide.
and at least 75% of the populace (poor included) would do exactly the same IF GIVEN THE OPPORTUNITY. *Reprensetantive* democracy hands an absolute minority (1 in ~500k) the power to create and maintain rules that apply to all and can benefit a few at the cost of the rest - WHAT ELSE IS SUPPOSED TO HAPPEN?
The tax system is no different to the law , all an illusion with all the answers out there in plain sight. It’s only enforced by the masses who conform and bow to them and the mercenaries that police it .
thats the craziest part... i was a big 4 auditor, i worked at a real estate private equity, and then in finance for a defense contractor. the reality? i wouldn't touch my taxes w a 10ft pole!
@lifeforgod07 if I had to guess, because he was an accountant auditor and had to look thru so many financial statements day in and day out the last thing he will do is look at his own and rather pay others to do it
that - and id just rather let a pro do it. the codes change every year, and (usually) drastically each time we elect a new president. not worth the time/headache imo
The easiest way to simplify the U.S. tax system is to take everyone who has any role in make the tax laws or writing the tax code (including politicians of course) and require them to do their own personal taxes by hand without the help of software. There might not be much change in the first year, but after that things should get much simpler very quickly. If you want to guarantee it, you could also add the requirement that everyone required to do their taxes by hand will also be audited.
Aussie here, our real estate tax loopholes are properly fucked. But then so many people jumped onboard that it's pretty much impossible to reduce those incentives without committing electoral suicide. Even though I own a home and from now on will probably benefit from the rules, it sucks for anyone trying to buy their first home or afford rent
I am 75 and most of my income is from dividends which I am paying a marginal 15% rate on. I can not understand why I should pay a lower rate then people who are working. If Jeff Bezos gives his fortune to charity either during his lifetime or at death it escapes taxation, this is a very expensive problem for the U.S. govt.. I don't have a problem with his wealth not being taxed until he sells it or otherwise disposes of his Amazon stock, but at some point it needs to be taxed. One reason a lot of tax loopholes are hard to close is because members of Congress benefit for them and they are not going to vote against their own self interest.
@@HairyPixels While I do not agree with this tax law I am not stupid. I also get a property tax benefit as a long time property owner in Michigan that I do not agree with. But I am not writing a check to my city either.
If he were to donate his fortune to an *actual* charity(or charities), I won't have a problem with that. The government might have a problem, but I don't (and arguably the charity would undertake some of the public service the government otherwise would have done so that the government effectively benefit via saving money, so there is no real difference). The problem is, most of the time charitable donations are made to foundations controlled directly or indirectly by the donor that ends up benefiting the donor or family thereof somehow. This include political non-profits that turns the entire US government into a money laundering operations (you donate money to the foundation, foundation donate to campaign of the politician, politician writes law to benefit your business and/or grant you government contracts).
The only purpose for taxes is to raise revenue to pay for the govt. Unfortunately our tax code has so many social engineering caveats that it can barely serve the only purpose of having a tax. The fix requires three huge changes: 1. A flat tax on all income (probably 20%). Income is anything you can spend to buy something else. So that includes wages, winnings, dividends, interest, capital gains, gifts, inheritance, job perks (company paid for apartments for executives; car & driver; gym membership...), unemployment, welfare, etc. 2. No deductions for anything. No deductions for interest on home mortgages, children, being married, charity, etc. A single high exemption for an individual to cover the basic average cost to live (basic shelter, food, transportation, and medical; Bureau of Labor Statistics says it is ~$20k per person; MIT living wage is ~$33k). I would set it at $50k. Every dollar over $50k is taxed at the flat tax. 3. Apply the same rules to corporations. Also I would get rid of 'non-profit' as a tax loophole. Doing this would basically lower the tax rate and broaden the tax base. The govt. would stop trying to influence people's behavior with the tax code.
Its not even that. Its that we don't even get anything for the taxes we pay. Sure you pay 40-50% taxes in Europe, but at least you get something for it.
@@andreoschadlin Land Value Tax taxes you on the value of the land, excluding any property structures or improvements. Property tax is primarily on the structures "on" the lot. And yes, a land value tax, if implemented, will be in addition to any existing taxes.
Politicians only listen to special interest lobbyists if no one else is paying attentive. If enough of the public want ready file and are asking to express that desire then politicians will listen to them. Campaign contributions are only as good as the votes they can buy through advertising, but if it's costing them votes on an issue the voting public is paying attention to then the campaign contributions aren't worth it.
@@residentes8477 People aren't dumb, just either apathetic or ignorant. My point is that a grassroots information campaign for ready file or tax simplification could overcome any amount of special interest money.
Australia has a widely criticised tax loophole called negative gearing. Negative gearing lets you write off property investment losses against your salaried income. So if you buy a really big expensive house as a really highly paid professional paying the top (47.5% marginal tax rate) you can rent it out at a value significantly lower than your massive mortgage interest and take the difference off your taxable salary. Then when you retire you sell your house and only pay half the capital gains as you kept the asset for more than 1 year. It'd make sense if the write off only applied to investments so you can only defer at most the capital gains tax rate rather than the top income tax rate but the current configuration explicitly rewards very highly paid professionals for accumulating intentionally loss making investment properties.
The net effect is those highly paid professionals are subsidising rents by charging less than cost recovery in rent. What has actually driven up property values is a multi decade shortage in housing construction and a sudden spike in demand post COVID.
@@SurmaSampo But those properties are still charging rent at the market rate. They were always going to make losses until you sold them for a capital gain. What is objectionable is that the losses can be used to defray 47.5% marginal income tax rather than the more logical 30% capital gains tax on investments. Lets be clear, if we ended negative gearing rich people wouldn't just increase rents. They're already at where the market allows them to be. Rich people buy expensive properties with a low rental yield (say 3%) while paying a 6% mortgage. Negative gearing doesn't reduce the market rate for rents. That's determined by demand and supply for housing. The property lobby has lied to people that negative gearing pushes down rents. But if you asked a rich person whether they'd like to make $1000/mth on a property and have to pay 30% capital gains tax or lose $200/mth on the same property and get half of it back from negative gearing, they'd still pick making money as they'd still be $800/mth better off and also able to enjoy the same capital gain when they eventually sell. Negative gearing props up prices of the low yield property (larger houses typically) but doesn't even encourage more building since it can be applied to new and existing homes. I wouldn't mind if this negative gearing mechanism was only permitted for 15 years on new builds or if it was only able to defray other investment earnings. The former would encourage more houses to be built and put downwards pressure on market rents and the latter at least makes sense from a tax perspective.
@@xcw4934 If interest is 6% and yeild is 3% then the market rate is only covering half the cost. That means the more you pay for the property the more money the landlord loses every month. Negative gearing only offsets 47.5 of that loss at the highest marginal rate. BTW, the average landlord is middle class with 1-2 rental properties. They are not by definition "rich". If negative gearing was removed then rents would need to increase to replace the lost tax offset. This is how every market works and creates what is known as cost push inflation. The historic rate of rentals in Australia for the last 40 years is at about 90% of the mortgage cost. It is most definitely linked to costs as is every other supply constrained market. Demand exceeds supply in housing so removing negative gearing will definitely increase rents. I agree that the capital gains reductions are counter productive for house pricing but they are also designed to offset the high transfer costs of selling your house to move for work created by stamp duty.
@@SurmaSampo No if you make negative gearing go away you reduce the attractiveness of being a landlord and you reduce people's willingness to pay for houses. The rental rate is determined by the demand for housing by renters and the supply of rental homes. Eliminating negative gearing reduces the willingess to supply rental homes but then landlords wouldn't buy those loss making homes and instead they'd be bought at a lower price by people who want to live in it as an owner occupier who now no longer need to rent a similar home. You thus reduce the demand as well as supply for rental housing by 1 and thus have no impact on rental prices. Also eliminating negative gearing pretty much doesn't affect the people you describe who are middle income and not being taxed at the top marginal tax rate. If you only allow them to deduct capital losses at 30% instead of their marginal income rate at 37% or whatever it'd hardly make much impact to them so I don't understand why you're even defending negative gearing. Removing it literally only hurts the highest wage earners. I'm a trained economist so I'm super in favour of broad based land taxes with just about no exemptions replacing a stamp duty. That's what the video was talking about at the end about a Land Value Tax. Land Taxes creates no dead weight loss (fancy economics term for waste) unlike just about every other tax as it doesn't change behaviour. It does however reduce the williness to pay for land but if you no longer have to pay stamp duty it might end up balancing out. So if you want to reduce the frictional costs of people moving homes then support scrapping stamp duty in place of broad based land taxes.
@@xcw4934 As a trained economist you should have actually gathered data before forming your opinion. Prospective landlords have a lower price tolerance for houses than home buyers so removing them from the demand pool will have very little effect on market prices. The reason housing prices are so high right now despite the cost of borrowing is because demand far exceeds available supply. As you would know the fall in the average household occupancy rate fell by 20% from 2020 to 2023. That is in effect the same as adding 5 million people to the population in terms of housing demand. There isn't even close to enough available housing stock to meet that demand and there won't be for decades. This is a population level behavioural demand shift. Rental occupancy rates, from all the evidence I have seen, trends higher than owner occupied housing. The net effect here of reducing rental supply is more actual people competing for a diminishing housing pool. Your conjecture of the beneficial effect of removing negative gearing is based on nothing but hypothetical speculation. It is the sort of white room theory crafting that epitomises the academic bubble.
Depends, where are you starting over? If it's in an existing country, that's called revolting and that tends to be bloody, violent and destructive.if you can find some land in which to build a new country, it's a bit easier or at least less confrontational.
Would be significantly harder than you just learning a viable skill to live a good life, so you don't have to constantly be envious of those who are more successful than you. You're not going to be the one leading the hordes of rioters, they're going to be listening to the MSM and social media "Influencers" who are all in the pockets of the criminal ruling class. BLM for example. For all the momentum they had, what did the truly accomplish in the end? The founders bought mansions in white neighborhoods. Movements get hijacked. And movements of people who aren't particularly bright (Which is why they weren't making that much money in the first place), are going to get hijacked easily. And of course there is no guarantee that things will be better when the dust settles. In all likelihood, the system is just going to get replaced by a worse one, because again the people who will be in the streets destroying stuff aren't what you would call our "Best and brightest." They're a bunch of useful idiots, and they're never going to be anything more than pawns for the criminal ruling class.
2:14 Claiming just half the population of the US pays taxes while ignoring the facts that only 62% of the population is of working age (15-64 y.o.), the bottom 50% has less than 3% of the country’s total wealth, and the top 1% has a third of the total wealth.
I have never spend more than 10 minutes doing taxes in the netherlands. As an ordinary worker all income is already accounted for by the government and the only reason to do your taxes is to add deductables like charity/healthcare costs etc. Its really simple. Although i don't know the same can be said for bussinesses
In the netherlands, the returns can be done through browser or smartphone app, and it takes you through a plain language questionaire, knowing the numbers for you
3:58 There really needs to be a system the wildly scales up costs for owning residential property that isn't your primary residence. Turning shelter into an investment vehicle has destroyed so many lives.
Someone tried to rob you on the street, you took out a knife and said to the mob “hey let’s rob that homeless together instead ”, did you not also committed robbery?
The third reason for why the capital gains tax is lower is because there is inherent risk. I am using my already taxed income to buy a mutual fund, I am not guaranteed a return and I could lose everything. This is what I felt like was the obvious answer, its supposed to be the government supporting/incentivizing people to make investments (ideally within US companies or US markets)
In third world countries, its pretty common for investments to be fully deductible from income tax. You will only pay Capital Gains tax later that is around 15%.
Fewer people will invest, meaning less access to capital. Fewer small start ups will find loans, and the bigger companies that are already established will be the direct winners of more expensive gains. The middle class gets squeezed and one of the main drivers that moves people into higher economic classes will be removed.
I totally agree with most of the vid, specially the fact that the tax code is overcomplicated. However the reason why longterm investments are taxed lower than income is because, usually, longterm investment comes from investing income that was already taxed. Dunno if this was oversight or omission by the youtuber
That's what he said at 12:30. But it doesn't make sense, investment income is still income. The initial investment isn't double taxed, only the gain. What difference does it make where it came from? If you invest an inheritance, should it be taxed as income? Should a retailer that charges double their wholesale cost be taxed as capital gains since they bought it with post tax dollars? Trying to determine what's already been "taxed" can be arbitrary. Income is income.
If you simplify the tax system you need less IRS agents combing through tax law and less people filling ridiculous deductions. Remove basically all deductions and just tax people at a normal rate. It shouldn't be a game of who can afford the Best CPA and bamboozle the IRS.
Don't forget that a good portion of the complexity is also Congress giving special benefits to all manner of folks (not just the rich - see the EITC) that they need to hide in the tax code cause no way would voters approve of it if they actually openly voted on it.
The emphasis on the role of regulations and loopholes in exacerbating income inequality is particularly sharp. There's no doubt the system needs reform, it's simply become too complex.
I thought capital gains were lower because corporations have to pay taxes before they pay their shareholders making that top tax bracket 21% the corp pays and 20% the individual pays
Capital gains means selling an asset which increased in value( bought apple stock and you sell it later for a profit), for that, the company didn't pay any taxes, what you are referring to is dividend tax which can vary for an individual from 0% to 37%, besides the tax paid by the company
Capital gains taxes are lower because any activity that is taxed as such is one that is inherently risky. the government is trying to incentivize people to make those investment choices, rather than hoarding the money in other ways. in an ideal scenario this would feed a virtuous cycle of investment (preferably in US companies and entities) that would grow the economy. It doesn't work perfectly of course but it does have a net positive effect. Or in more simple terms, let's say you are pretty successful professional and you take home $100K in earnings a year. that money has already been taxed, so then you take some of it and decide to invest in a startup, or Mutual fund, or something, and there's always the chance that you could lose your entire investment. At the same time, The Entity that you gave that money to has a chance to grow into something that it might not have otherwise. And commensurately you have a chance to make a return on your investment. and round and around the cycle goes
The utilization of after-tax money and tax-free growth makes opening a Roth IRA very advantageous. Through a careful guidance of my FA, I did not pay taxes on my withdrawals of $2.86 million when I retired.
I don't regret the numerous financial mistakes I've made in the past since I've learnt from them. But the biggest one was planning my finances without consulting with a licensed financial counsel.
The financial market is a reliable choice. Diversify your portfolio with I-bonds, stocks (ETFs, REITs, dividend-paying stocks), and bitcoin. Given your budget, I recommend hiring a fiduciary to ensure you receive professional insights for a fee.
Indeed, I did make use of a financial counselor. As I get closer to retirement, their advice has been really helpful. I thought compound interest on index funds wouldn't be sufficient because I started late. It's amusing how I've done better than colleagues who have more years of investment experience. I've profited more than $886k tax free.
Definitely! All of this happened in less than a year after *Izella Annette Anderson* told me what to do. I started with less than $100,000, and now I'm about 17,000 short of having a quarter million dollars.
Not sure where you got this idea regarding Norquist. In fact, Steve Forbes in his Flat Tax book agreed that his side would look the other way if the government chose to spend money on re-training programs for accountants because the benefits of a flat tax would so out-weigh the costs that for once, a government program would pay for itself!
@@commentinglife6175 Norquist (along with Intuit and H&R Block) lobbied hard (ie., spent tens of millions) against these reforms -- he and his anti-income tax buddies want people to hate the tax system -- Norquist likes it when it is so hard that people hate it.
For most people the IRS should just do their taxes for them and then tell their employer how much to withhold from their pay. If the person has certain deductions they want to claim other than the standard deductions that can be on a form they send to the IRS. That would take care of most people's taxes. Only people who get most of their income in other ways than as a paycheck would still have to do their own taxes or have their tax people do them.
Which is literally how it works in at least most part of Europe - We get a form that we can look over, the company we work for provides their side of the taxation form, match the two, confirm that they are the same number and voi la! Freelancers or people working for specific digital companies, taking donations etc, do their own form on top of it or hire an accountant to make sure they submit the correct forms.
You are trusting the same idiots who can't even accurately report their own spending! At least this way, if we keep limiting how much funding the IRS has, they don't have as much money to come after people for simple mistakes! Rather than defund the police, I'd like to defund the IRS!
@@turkizno Also in Australia and New Zealand. H&R Block has (true to its name) blocked all attempts at doing this in the US -- They (and Intuit/TurboTax) spend serious millions on lobbying to make sure that taxes in the US are difficult to do.
Thats literally how it works here in Serbia. Your employer pays your taxes from your wage. Any money they give you is yours and the goverment can only take it to you via bills for government services.
I’ve watched your channel from the beginning. I get it’s not an inspirational channel. I do enjoy your views on a lot of these things and at first it was very interesting to learn why some of these things are the way they are. At this point though it just feels like learning why your car is broken but also learning there isn’t anything that can be done about it. What’s the point? I think it might be nice if there was some actionable advice or some point of progress that could be gleaned from your content because otherwise I tend just to skip it because I don’t need to be reminded of more shitty things most days.
It can be explained (Im at 4:16, havent watched it til the end). Since the order is pre-set (red-black, etc), the shuffle and subsequent order of the remaining deck tells the "magician" how to read the order of colours because the deck was pre-set. What this teaches me is that before any card trick is performed, take the deck from the magician and shuffle the deck first. Now the tricks that STARTS with the deck being handed to the audience, who get's to inspect & manipulate the deck... well, there wont be UA-cam videos on those.
abolish income tax (more dynamic sales and capital gains tax), no more corporate stock pay. A campaign to revert all exploited loopholes and sue said parties for criminal mischief and conspiracy. Such as the rich in Wyoming who "donate land" but still retain access in perpetuity. We're already in crazy debt in a system much worse than what I proposed. No matter how robust a system is if we can't bring down spending then those with influence can tell any story they want about the economy.
@@bigscores7237 What will they do with their investments - they are all still here and taxable. There's a limit to how many hotels and casinos people can buy in monaco; once you have gone through the hassle of giving up citizenship.
If the IRS already has computer records of everyone's income, why can't they just send everyone a tax bill at the end of the year? Why do people have to spend hundreds of dollars and a ton of time trying to piece together all their tax records? The IRS should just send everyone a "suggested" bill for taxes (or refund) at the end of the year, and those people who don't agree with it could then appeal it by filing an individual tax return. It's not rocket science. Why don't we have it?
The IRS wants that, the people want that, but turbo tax and other tax filing companies have lobbied so hard that now they get to make money off something that should be automatic. Finally the IRS and Biden have been able to push through a sample IRS site last year which allows you to do the super simple and normal way instead. But clearly the Republicans only allowed it in a few states to begin with.
If you actually look at the government auditing reports over the IRS, they admit the IRS has a material weakness in their computer systems. So no, they don't have that info - which is why they harass folks with audits even though the person didn't actually make a mistake (cause they don't actually know the answer). Remember too that studies have shown nearly 1/3rd the calls from taxpayers to the IRS Helpline DESIGNED TO HELP TAXPAYERS WITH QUESTIONS actually end up with the incorrect advice! If the IRS can't even know the law, how the heck are ordinary people supposed to?
The responsibility would shift to the government if this were to happen. Under the current system it’s up to the taxpayer to report all income and if they don’t then it’s tax fraud which comes with severe penalties. If we had a system you suggested then taxpayers who have unreported income would not face as severe penalties for unreported income. The IRS would need more funding in order to audit more people and to implement this system. There would also need to be more income reporting options shifted unto business owners. Mind you, I still think we should have an automatic filing system for taxpayers with simple returns, however that in itself is very difficult to determine.
Yea - so much confusion between the meaning of 'income' and 'wealth'. Wealth is a much wider category that includes income but is not income itself (this includes things that cost you money to maintain such as your car or your house that do not, inherently, give you income) while income is money earned either from selling things or working a job but does not include things (objects, essentially) that you already own that would be worth X dollars IF you sold it. Related, but very different things/concepts.
The lower 47% definitely pay income taxes, it's literally taken out of their paychecks each week. And they definitely pay other taxes to, like sales taxes, property taxes if they own a home, taxes on their interest/etc.
Three years ago, I started a garden and obtained state and federal credits, which, together with employing one gardener, rendered it profitable. I urge property owners to grow crops that are not commonly cultivated by farmers. Begin by securing a city license and strive for a state license in the subsequent season.
As far as the capital gains tax break, what if we only allow it on the seller's primary residence? If I remember correctly, there are tax advantages for primary and secondary residences, and apparently this capital gains loophole isn't restricted to that? That just seems silly to me.
if you have a single job as your sole source of income and no investments your taxes are incredibly easy to file. unfortunately very few people are in that situation while also being at the same company for more than 12 months
As someone who makes a solid six-figure income from a well-paying job, with money in the stock market (index funds above and beyond retirement accounts)- so at least top 25%, but probably not top 10%, I don't get enough in loopholes or deductions to even be worth paying someone to do my taxes. Real estate deductions or incentives shouldn't exist for anything but primary residences, and all capital gains and real estate income should be treated the same as payroll income. I don't really care if there's limits on how much someone is taxed based on how much value their primary residence increases in value while they're living in it (I think this is fair to prevent retirees from getting screwed), but if they sell it, or they die and their children sell it, any untaxed gains should be taxed then. If anything, I feel like income gained from rent should be taxed at a significantly higher rate, much less the tax-advantaged rate that it gets now, and losses from real estate should be treated the same as losses in the stock market, and neither should give any benefit on taxes (you took the risk in the investment, it's your loss if the value goes down). If you're making passive money from just owning and maintaining property, that's worth less to society than any other way of making money- in general, you're acting as a leech on the economy, making it harder for people to buy/sell/move, making the overall economy less efficient for personal gain. There's some amount of rental property that is good for society in that it provides reasonable temporary housing for people moving or working temporary jobs at a location, but the current tax system is far to advantageous for people to sit on and monetize property, with the government both defraying any losses from poor investments and ensuring that the average property value can only ever go up.
*If you are not in the financial market space right now, you are making a huge mistake. I understand that it could be due to ignorance, but if you want to make your money work for you.... prevent inflation*
Thanks for continuing updates I'd rather trade the crypto market as it's more profitable. I make a good amount of money per week even though I barely trade myself.
Hey, low income wage slave here; I only paid to have my taxes done once, it cost me 245 bucks and my return was only 230. I've never had returns over like, 500 and I make less than 30K a year. Taxes are dumb... Or at least very mismanaged and poorly implemented.
Why not tax Wages and Capital gains using a tiered proportional scale. US Tax Code has brackets for income tiers, 7 brackets. Apply the same idea to capital gains. Depending on what portion of your income is capital gains that income is taxed at a higher or lower rate. Example: For a person in the 13% tax rate if 20% or less of their is Capital Gains the rate is 11%, at 21 - 40% the rate is 13%, etc. As income levels rise the proportion is adjusted and/ or the rates are modified. In this system tax rates are adjusted p/ whatever public interest goals. Consider if the lowest tax brackets are encouraged to save and invest by not taxing their capital gains until its more than 41% of total income.
Rich people and businesses are much more likely to leave the country if they have to pay too much in taxes (and them leaving has much more impact on economy and government). I think that is a big reason why the system is skewed in their favor.
everyone talks about depreciation, but noone talks about depreciation recapture. Basically, having assets taking depreciation one year, then the assets disappear completely the following year whether of their status (sold, retain, covert)
Longtime HMW watcher here.. Just wanted to say this video was pretty hard to follow with the multiple instances of "there are x reasons for this" every time we reached a new concept. Felt like we got lost digging into russian nesting dolls.
The problem is that we tax INCOME instead of property. Income is the opportunity to acquire property. My definition of property is not just real estate, but the value of anything excluding labor that can be exchanged for anything else of value including labor. The current system of taxation has people who trade their labor for the opportunity to acquire property paying to protect the property of everyone else. The more you earn, the more you pay. But if you don’t earn, you don’t pay, even if we’re obligated to protect your rights to hold property. In my observation, the primary function of a government is to enforce property rights, thus the more property you have, the more government you consume.
My honest question(s) would be: sure, the top 1% pay 45% of income taxes according to the IRS. But how much income do they have compared to the rest of the country? If their income is 40%, then they are within margin of "fair". But if they make 20%, then it's technically unfair towards them, for sure. And as a second question: what's the percentage of wealth that they own VS the rest of us? Because let's be honest: you can't build wealth at the same rate as someone who's in the top 1% when 50% of your income is spent on rent (if you're lucky), 20% is spent on food, 10% is spent on telecom, and 20% is spent on means to actually get you to work (vehicle/public transit, gas, insurance, etc.). Alternatively, you can always get roommates to reduce some of those costs, but food and transportation won't change much. The reality is that if all you're considering is income tax, then sure, the top 1% pay disproporionately more than the rest of us. Fair enough. But in the grand scheme of things, they also spend far less than us on everything, in terms of pure ratio. So more of their income/wealth can be directed towards way of making more money, unlike us who have to spend an ever-increasing ratio of our income towards mere survival elements, all the time at gunpoint of those who own our jobs that tell us to work the way they want or else (we don't have any fallbacks, unlike the rich people that have golden parachutes in the worst scenarios).
The problem with capital gains tax isn't that it's too low - it's that it's possible to postpone paying it as long as you're alive and then make it go away completely when your kids inherit the appreciated assets but NOT the accumulated capital gains taxes.
I may not live in the "worlds greatest county" but at least at the beginning of the year the state tells me that I have to pay x ammount and explain why. Not mentioning a ~10% deduction if I pay 'till March...
As a tax consultant, aside from the loopholes, the complexity mainly keeps people like me in a job, at the expense of taxpayers and governments. I’m not complaining but it’s pretty stupid when you step back. Make it so simple that a computer can do it (it can be done, definitions and measurement issues can easily be overcome).
That’s ridiculous, if taxes are based on time of earning then people with varied incomes through the year would be liable to a higher tax rate than an equal earning individual with a consistent income. It’s a problem we have in the UK, national insurance taxes are based on income during a pay cycle (weekly, monthly or 4 weekly) so a problem I have is I pay hundreds more in NI conts then similar income earners because I only work 6-8 months (due to being a student)
@@muni5450 Unless the tax rate is tiered, you would pay the same tax rate bases on the amount of income you earn. I was speaking to US earners and US income tax with annual reconciliation.
Easy fix for the real estate tax problem: Put a new condition where the houses need to be lived in to be eligible for the tax write offs. Empty houses would gain no benefits.
3:48 Distorting the market by benefiting some businesses over others is kind of the point of deductions. When homeowners buy solar panels and use it to say... decide it makes an electric stove economical so they get that instead of a gas stove so it benefits the solar company and the electric stove company over the gas stove company, that's a feature not a bug. Is making people hoard real estate a bug? Hard to say, but in the 1920s, if you told the lawmakers that their proposed law would make people with lots of real estate assets keep their assets in real estate, they would say "great, do it" even if some people in the 3rd millennium might be scratching their heads.
I ended up paying $25,000 for taxes 😭 (live in California) I didn’t even have enough to begin with. Turbo tax also never filed my taxes even though they confirmed that they did so I got additional penalties and fees added! When I saw the number I just wanted to drop dead. I just kept thinking if I don’t have shit how is IRS gonna get anything from me. I thought I was gonna have to just lay down and do a bid in the feds 😂. The tax rates are so awful that I’d much rather serve time than give them my hard earned money. But now I’m going bankrupt so it’s all said and done now lol.
THIS! It kills me that people get manipulated into paying for tax software that should be free, or going to a professional when their taxes are as small as 1 W-2. I failed most my math classes and yet I learned how to do my own taxes. It’s not supposed to be hard. But it’s also not supposed to be something we should even have to do. Taxes are not bad, taxes should be paid so we all reap the benefits of paying for this together as a group, like roommates paying for rent together. But most importantly, we should just be given a nice bill by the IRS who should be full funded to properly handle the load, and accountants should be working for the IRS since that’s where all the work would be.
I'm a small business owner. I am also the lowest paid person in the company as everything and everyone gets paid before I do. The business has been able to keep me afloat since 1998 but I'm not wealthy - just solidly in the middle-class. The cost of government compliance is so great that without it, I could open another business or two. I could be more productive and employ more people but, instead, an insane amount of assets are pissed away to make the government happy so that it can get every penny possible out of me to give it away to people that do not deserve it.
@@Loanshark753 I manufacture electronics so I have to jump through a lot of hoops. The sanctions on Russia have been a disaster as they are a supplier of raw materials that I must have. Now I have to purchase them from the Chinese at a 25% markup. I would rather use a lead-based solder but that is a no-go because no one wants lead in their landfills but no one is going to throw my stuff away because it is stupid expensive. Lead has a lower melting point so I would have fewer problems but I have to keep uncle sam happy so I have to use more energy and I also destroy more delicate components. Also, the government allow people to own words. I had to destroy thousands of dollars worth of faceplates because I used the word "tilt" to describe a function. When you go to trade shows there are sniffers that look at every product to see if you are using a forbidden word and you either have to cough up a bunch of cash or destroy your stuff. I could go on for days.
Here in Serbia, your taxes are paid by your employer, so any money you get from your employer is the money left over from your wage after all the taxes have been paid, which is ~40-50%. It kinda makes your life easier, since any money you get is money you can spend without worrying about taxes. So accounting for bills and everything is a bit easier.
On principle, I absolutely hate income tax and want it completely abolished. But, in practice, the numerous loopholes make it pretty lucrative. It sucks when you just work a regular W2 job. But, when you own several rental properties, you can easily get back so much more. Last year was my first year with rentals. I got back so much from my tax return and had an effective rate of less than 3%. This year, I'm expecting to fall well into the negative.
the real problem is that first stat which is that only half the population pays fed taxes. That is ridiculous. I understand the drawbacks of a flat tax system but honestly the current system is so crap I think flat tax would be a simple improvement.
That’s what happens when your country becomes an inverted age pyramid. You can thank all the policies that helps the elderly and the rich while burdening the youth with the bill for it all.
Capital gains = income is wild. A wage is taking zero risk to make money. You shouldn’t be taxed at the same rate when you could lose money when investing.
Zero risk? My man, talk to a truck driver, a factory worker or a construction worker. You mean financial risk I understand this but please don’t say there’s no risk in wage labor.
Complicated tax systems are also commonly used by Tryrannical governments to make sure that no one ever files their taxes correctly, that way they will always have a reason to arrest or intimidate political or economic opponents.
At least with federal taxes, filing apps are vary buttoned down and can handle the vast majority situations. It's at the state level where you find huge gaps because their systems are a such a mess. I have to pay taxes to New York and parts of their code are so clunky and convoluted that it feels like a downright scam.
You can criticize the long term tax rate as a tax haven for the ultra-rich but those 2 justifications are there to protect unfairly taxing normal people. In other words, you can't attack it without hurting hundreds of millions.
I don't get why you say that canada offers more incentive for real estate buyers. Our mortgage interests are not tax deductables as in the us. That is a major incentive to me.
Forget that the top 1% pays 50% of the taxes. If they concentrate more than 60% of total generated wealth, they should be paying more! Besides it's the workers who generate wealth, not the owners.
If workers generate wealth, how come a group of them don't just open a factory and make cash? Yeah, that is a false statement. Of course, that was somewhat tried in the Soviet Union but amazingly enough, they still had certain folks who got benefits others didn't get. ("All pigs are equal but some are more equal than others.")
Nah, I'd rather adopt the Democrats' abortion position to taxes. According to them, men should have no say in an abortion cause they can't have one. Okay, fine - then unless you pay income taxes, you don't get a say in how they are collected or spent! Pay your share and you get a say! Simple as that.
I've even read a couple articles showing that in many European countries taxpayers don't mind paying their higher taxes because it's both easier and they see the benefits their taxes pay for (good healthcare, good social safety net, etc.). Though the rich still try to get out of paying them because of course they do.
No one is stopping Americans from paying more; there is even a line item on the tax form to do so. The question is, how many of these whiny rich people who claim they don't pay enough actually fill in that line?
this is the main reason why ceos prefer $1 salary because bu receiving such tiny salary they can then be considered a low income earner snd would be taxed accordingly like a low income earners would
There is a reason #4 that this code is a problem: everyone in convinced everyone but them is getting a free ride on taxes. Sometimes this is true, sometimes it is not, but because the tax code is impossible to understand it is easy to assume everyone else is getting over better than you. I am also surprised when dealing with the inflation issue on capital gains you didn't discuss the alternative to separate rates that addresses that directly, indexing the basis for the capital gain using the same indexing value we do for tax brackets. Finally, I'd love to see a video on the disruptive nature of lower capital gains rates with taxing dividends as ordinary income after taxing the profits they are dispersed from (the double tax issue). I'm convinced a lot of accounting fraud, Enron being the ultimate example, are eased by a tax code that favors gains (thus stock price) over dividends (actual money profits from doing business).
Your last sentence is incorrect. Both dividends and long-term capital gain (most stocks) are taxed at the reduced rates he mentions in the video. Short-term capital gain (all other stocks) are taxed just like normal income.
@@haakon_hk since when are dividends taxed at a non straight income tax rate? As recently as my filing for 2023 I had dividend income taxed as regular income.
It is meant to do that and Investment does drive the Economy BUT rich people hoard the bulk of their wealth. There’s definitely business owners out there who pay their taxes and still have a cushy enough life. However the majority of rich people in the upper rungs hoard their money more than they invest it. Even if they invest a little bit, when taken into proportion of their wealth it isn’t enough. Turbulence is also an aspect of the economy.
Im just curious how New Zealand has tax incentivises for property because i live in NZ and there seems to be no way around it as ypu cant even claim depreciation anymore.
I hate how all these billionaires insist they want to be taxed more but the only people who will feel it are the marginally "rich" like doctors and successful lawyers and small business owners.
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Rigged elections = taxation WITHOUT representation
how do you see your old new letters, i want to sign up but there are some spasific ones i want to read but dont know how
It's not broken; it works perfectly: people who work get taxes deducted automatically from their paychecks, while the oligarchs pick and choose how to pay their taxes and can use various techniques to completely mitigate taxes.
That defines what is broken in the system to begin with. Ideally freedom of the citizens creates power in them which in turn creates a powerful nation.
What is a W-4
@@christiangonzalez865I believe Ivan’s point is that the purpose of the tax system IS to exploit the poor and preserve the wealthy. Therefore, if we don’t want that outcome, something else must be broken. Probably the part of our culture that allows the wealthy to build tax systems designed to preserve their wealth. I wonder what part that is…?
You, do realise you can do your own taxes as an employee... right?
@@ayathados6629 Yes, you can prepare your own taxes. That's not what I'm talking about. Your W-2 pay stub gets Federal, State, and other taxes automatically deducted from your paycheck. So, if you earn $2000$, let's say, you get Federal taxes deducted, State taxes, and Social Security taxes, so in the end, you get $1400.
Real OG's remember when the federal income tax was a temporary emergency measure to fund the war.
really? damn, I need to learn more history
yes they had to pass a new amendment into the constitution to make it legal and that happened just over 100 years ago.
@@PrabhablyAGoodUA-camr *Are You Blind? If You Look All Over The News You'd See Titles That Read "US Has Loaned Countries Money To Fund War" And That Money Comes From Taxes!*
*Where Were You This Whole Time? WW3 Is On It's Way But First The US Citizens Have To Squeeze Up Some Pennys First.*
✝️ + 🪖 = 💵 + ⚔️
Hey, Uncle Sam needs more than just tariffs to pay the interest on the big credit card 😂
@scottclark7559 😂 we got the credit card because we had the income tax. Tariffs encourage a limited government because the government doesn't have the money to do anything much.
Oh YES. Another HMW video telling me more about how everything sucks and is broken and how I and everyone I know are powerless to do anything about it,
And then folks wonder why more and more people are choosing not to have children
do you want a lie?
@@Random17Gamehe’s not complaining lol
I like how in most videos we arrive at the conclusion that financializaiton of housing is a cancer to soceity.
@OnlineEcosystems I guess there is a sweet spot where you can get both the votes for talking about an issue AND the campaign donations for not doing anything about it.
I think that $? is a communism channel disguised as The Plain Bagel
I think most people would expect socialists to complain about that they most, but I'm opposed to socialism and still want holding residential property as an investment to be massively restricted. It's the only necessity that people or companies purchase en masse not to use, but to hope it gets more expensive for everyone else, thus earning them money.
@@MidwestArtManAdam smith explicitly called out rent seekers,
Capitalism theory is against landlords
It’s just that the people in charge of governments tend to be landlords
@@MidwestArtMan constructing an economy around speculative finance/greed is not wise or sustainable. And clam down, socialism isnt against personal property. No one’s coming for ur toothbrush.
My income is taxed
My spending is taxed
My owning is taxed
My use of gov is charged.
Wtf
But you don’t receive free healthcare 😂
I make like no money but I always freak out about making sure I get my taxes in before the deadline. Then I heard the IRS is going to "start going after" people who make 400k+ per year and just don't bother to do their taxes because they don't feel like it
I work abroad and am under the federal threshold for paying income tax (for married couples, it’s absurdly high - like $~220k), but even *I* got an adjustment letter for what I owed, leading to this amazing line after stating that they found an error in my tax reporting:
“Your estimated tax: $0
IRS estimated tax: $0”
fear mongering comment
How can we expect those in power to make a change -when the change itself would mean being unable to benefit from a broken system.
Here's the big picture:
Those in power need a lot to afford their current lifestyle or status. As long as the system is broken, they'll maintain and milk it for as long as possible.
We would need regulations to prevent those whom benefit from also being those in charge.
Of course, you try and make a Politician give up their Stock Portfolio!
@@lostbutfreesoul that's basically impossible in any liberal system. Because unless there is accountability, people in charge would try to become those who benefit. And it doesn't make sense for them not to. And whole idea of liberalism is avoiding accountability by pushing it back to next elected person.
I recognize the hardships that come with economic struggles like unemployment, job loss, inflation, housing market instability, political uncertainties, and the global impact of conflicts and wars. Making ends meet during such times can be incredibly challenging. To navigate this difficult period, considering alternative job prospects, enhancing skills through online courses, and expanding your network can heighten the chances of securing employment. Moreover, prudent budgeting, exploring available financial aid programs, and seeking assistance from community organizations can offer some relief. How are you currently tackling these challenges? Have you implemented any specific strategies to cope?
In my opinion, now is not the moment to rely on hearsay. Every individual, regardless of their level of experience as an investor OR in a financial market, requires guidance at some stage.
It's often true that people underestimate the importance of financial advisors until they feel the negative effects of emotional decision-making. I remember a few summers ago, after a tough divorce, when I needed a boost for my struggling business. I researched and found a licensed advisor who diligently helped grow my reserves despite inflation. Consequently, my reserves increased from $275k to around $750k.
How can one find a verifiable financial planner? I would not mind looking up the professional that helped you
My CFA Melissa Terri Swayne’, a renowned figure in her line of work. I recommend researching her credentials further. She has many years of experience and is a valuable resource for anyone looking to navigate the financial market.
Thanks for sharing, I just liquidated some of my funds to invest in the stock market, I will need every help I can get.
The truly infuriating part is they know the number!🤦♂ They know how much taxes you owe, but you have to play a guessing game...and the penalties for being wrong are stiff...
They don't know the number. The know the maximum number. You could have a lot of deductions to lower that number.
@@rightwingsafetysquad9872shouldn’t be any deductions or credits tho. Maybe 10 total. If that.
@@newagain9964 Maybe ideally, but in reality there are 10s of thousands of possible deductions. Ideally there'd be 0 deductions because there wouldn’t be any income tax.
Its not "loopholes". Complexity equals corruption. Politicians wanted that, and rich people hired lobbyists 10x smarter to get nuances inserted into mad policy that provided relief that was opaque to the average staffer writing summaries for members of congress, knowing the member never reads the bills they vote on or existing statutes incorporated by reference. To end loopholes... end progressivism codified in the tax code.
Or just go to how things were before Lincoln, small government.
“Oh no they are jumping over the walls we made”
…
“Oh no we can’t have a cure for covid lets move those walls!”
“Oh no those walls we removed are removed and now political careers ride on it and they are open to trying new stuff so much we can’t have some stuff because it isn’t proven to work despite claims!”
…
Why isn’t it proven to work?
It takes 1 billion dollars needed of tests and 10 years wait.
If you want to break down any cures such as the 5$ diabetes insulin and so on go ahead keep paying 200$.
Want it nationalized and put to ‘i het promoted just by pushing buttons i don’t care’ HR management style work, sure, just don’t forget you can’t sue the government if they try to ‘meet Quota’ and cut corners.
Or if they just stop making it but without sellers there are none, welcome to importing this but welcome to jail without any insulin because insulin not nationalized would be illegal.
This is why a guy with aids was told he had a year or two to live, denied a medicine for it because ‘it isn’t approved’
Keynsian economics the ‘great society’ the builder of the welfare state had to make monopolies because he failed at a normal boom and bust cycle.
Deregulation is treated worse than the word genocide.
Or you can do as a Manhattan Jew and commit the tax code to memory like it was your Torah.
and at least 75% of the populace (poor included) would do exactly the same IF GIVEN THE OPPORTUNITY.
*Reprensetantive* democracy hands an absolute minority (1 in ~500k) the power to create and maintain rules that apply to all and can benefit a few at the cost of the rest - WHAT ELSE IS SUPPOSED TO HAPPEN?
The tax system is no different to the law , all an illusion with all the answers out there in plain sight. It’s only enforced by the masses who conform and bow to them and the mercenaries that police it .
@@joansparky4439facts
thats the craziest part... i was a big 4 auditor, i worked at a real estate private equity, and then in finance for a defense contractor. the reality? i wouldn't touch my taxes w a 10ft pole!
What do you mean by that? Why wouldn’t you touch your taxes?
@lifeforgod07 if I had to guess, because he was an accountant auditor and had to look thru so many financial statements day in and day out the last thing he will do is look at his own and rather pay others to do it
that - and id just rather let a pro do it. the codes change every year, and (usually) drastically each time we elect a new president. not worth the time/headache imo
@@WhiteCarBlackWheels oh trust me I know. I'm also an accountant and do the exact same
The easiest way to simplify the U.S. tax system is to take everyone who has any role in make the tax laws or writing the tax code (including politicians of course) and require them to do their own personal taxes by hand without the help of software. There might not be much change in the first year, but after that things should get much simpler very quickly. If you want to guarantee it, you could also add the requirement that everyone required to do their taxes by hand will also be audited.
Wow you really put all of like 10 whole seconds of thought into that
And I'm sure you were today years old when it first occurred to you.😆
@@jimreed87 wow even less thought into the second comment
Aussie here, our real estate tax loopholes are properly fucked. But then so many people jumped onboard that it's pretty much impossible to reduce those incentives without committing electoral suicide. Even though I own a home and from now on will probably benefit from the rules, it sucks for anyone trying to buy their first home or afford rent
7:46 They took away my education credits because I forgot a book receipt. Yes, a $150 book. It took away my $4,000 education credit
Can you take legal action? I was going to suggest violence, but youtube loves to shadow ban me and delete my comments.
😢
So they audited you and you didn't have receipts, or what happened?
@Justsomeguyyuyu and what triggered the audit? Something smells funny.
@Justsomeguyyuyu from the video it seems like you're much more likely to be audited if you make less than 20k than you are if you make over 400k
I am 75 and most of my income is from dividends which I am paying a marginal 15% rate on. I can not understand why I should pay a lower rate then people who are working.
If Jeff Bezos gives his fortune to charity either during his lifetime or at death it escapes taxation, this is a very expensive problem for the U.S. govt.. I don't have a problem with his wealth not being taxed until he sells it or otherwise disposes of his Amazon stock, but at some point it needs to be taxed.
One reason a lot of tax loopholes are hard to close is because members of Congress benefit for them and they are not going to vote against their own self interest.
then write IRS a check bro
And when his children inherent his company the cost basis is reset and everything up to is death is tax free to his heirs.
@@HairyPixels While I do not agree with this tax law I am not stupid.
I also get a property tax benefit as a long time property owner in Michigan that I do not agree with. But I am not writing a check to my city either.
If you think you need to pay more in taxes you are free to donate to the U.S. Department of the Treasury. Pay more? You first.
If he were to donate his fortune to an *actual* charity(or charities), I won't have a problem with that. The government might have a problem, but I don't (and arguably the charity would undertake some of the public service the government otherwise would have done so that the government effectively benefit via saving money, so there is no real difference).
The problem is, most of the time charitable donations are made to foundations controlled directly or indirectly by the donor that ends up benefiting the donor or family thereof somehow. This include political non-profits that turns the entire US government into a money laundering operations (you donate money to the foundation, foundation donate to campaign of the politician, politician writes law to benefit your business and/or grant you government contracts).
The only purpose for taxes is to raise revenue to pay for the govt. Unfortunately our tax code has so many social engineering caveats that it can barely serve the only purpose of having a tax.
The fix requires three huge changes:
1. A flat tax on all income (probably 20%). Income is anything you can spend to buy something else. So that includes wages, winnings, dividends, interest, capital gains, gifts, inheritance, job perks (company paid for apartments for executives; car & driver; gym membership...), unemployment, welfare, etc.
2. No deductions for anything. No deductions for interest on home mortgages, children, being married, charity, etc. A single high exemption for an individual to cover the basic average cost to live (basic shelter, food, transportation, and medical; Bureau of Labor Statistics says it is ~$20k per person; MIT living wage is ~$33k). I would set it at $50k. Every dollar over $50k is taxed at the flat tax.
3. Apply the same rules to corporations. Also I would get rid of 'non-profit' as a tax loophole.
Doing this would basically lower the tax rate and broaden the tax base. The govt. would stop trying to influence people's behavior with the tax code.
Its not even that. Its that we don't even get anything for the taxes we pay. Sure you pay 40-50% taxes in Europe, but at least you get something for it.
Well, you guys get wars waged from your name and we have a dead economy from overtaxation over there.
The idea of a land value tax is fascinating
Yeah, regardless of whether it's a good idea or not (I don't really know), I want it just because the idea is so cool.
@@zUJ7EjVDI am dying to see some random city / county try it somewhere
How would that differ from property tax? Would it replace that or overlay it? 🤔
@@andreoschadlin I think we should have both. A land tax because obviously, and a property tax to encourage less oversized houses.
@@andreoschadlin Land Value Tax taxes you on the value of the land, excluding any property structures or improvements. Property tax is primarily on the structures "on" the lot.
And yes, a land value tax, if implemented, will be in addition to any existing taxes.
Politicians only listen to special interest lobbyists if no one else is paying attentive. If enough of the public want ready file and are asking to express that desire then politicians will listen to them. Campaign contributions are only as good as the votes they can buy through advertising, but if it's costing them votes on an issue the voting public is paying attention to then the campaign contributions aren't worth it.
so in other words, people are dumb and lobbying is king, and nothing will change.
@@residentes8477 People aren't dumb, just either apathetic or ignorant. My point is that a grassroots information campaign for ready file or tax simplification could overcome any amount of special interest money.
Lobbyists can use this too, nothing stops them creating fake organizations to make it appear larger.
@@Waldohasaskit210We're talking about americans here...
People ARE dumb.
@@Waldohasaskit210Being ignorant/apathetic is dumb though. If you don't care, you don't matter
Australia has a widely criticised tax loophole called negative gearing. Negative gearing lets you write off property investment losses against your salaried income. So if you buy a really big expensive house as a really highly paid professional paying the top (47.5% marginal tax rate) you can rent it out at a value significantly lower than your massive mortgage interest and take the difference off your taxable salary. Then when you retire you sell your house and only pay half the capital gains as you kept the asset for more than 1 year. It'd make sense if the write off only applied to investments so you can only defer at most the capital gains tax rate rather than the top income tax rate but the current configuration explicitly rewards very highly paid professionals for accumulating intentionally loss making investment properties.
The net effect is those highly paid professionals are subsidising rents by charging less than cost recovery in rent. What has actually driven up property values is a multi decade shortage in housing construction and a sudden spike in demand post COVID.
@@SurmaSampo But those properties are still charging rent at the market rate. They were always going to make losses until you sold them for a capital gain. What is objectionable is that the losses can be used to defray 47.5% marginal income tax rather than the more logical 30% capital gains tax on investments.
Lets be clear, if we ended negative gearing rich people wouldn't just increase rents. They're already at where the market allows them to be. Rich people buy expensive properties with a low rental yield (say 3%) while paying a 6% mortgage. Negative gearing doesn't reduce the market rate for rents. That's determined by demand and supply for housing.
The property lobby has lied to people that negative gearing pushes down rents. But if you asked a rich person whether they'd like to make $1000/mth on a property and have to pay 30% capital gains tax or lose $200/mth on the same property and get half of it back from negative gearing, they'd still pick making money as they'd still be $800/mth better off and also able to enjoy the same capital gain when they eventually sell. Negative gearing props up prices of the low yield property (larger houses typically) but doesn't even encourage more building since it can be applied to new and existing homes.
I wouldn't mind if this negative gearing mechanism was only permitted for 15 years on new builds or if it was only able to defray other investment earnings. The former would encourage more houses to be built and put downwards pressure on market rents and the latter at least makes sense from a tax perspective.
@@xcw4934 If interest is 6% and yeild is 3% then the market rate is only covering half the cost. That means the more you pay for the property the more money the landlord loses every month. Negative gearing only offsets 47.5 of that loss at the highest marginal rate.
BTW, the average landlord is middle class with 1-2 rental properties. They are not by definition "rich".
If negative gearing was removed then rents would need to increase to replace the lost tax offset. This is how every market works and creates what is known as cost push inflation. The historic rate of rentals in Australia for the last 40 years is at about 90% of the mortgage cost. It is most definitely linked to costs as is every other supply constrained market.
Demand exceeds supply in housing so removing negative gearing will definitely increase rents.
I agree that the capital gains reductions are counter productive for house pricing but they are also designed to offset the high transfer costs of selling your house to move for work created by stamp duty.
@@SurmaSampo No if you make negative gearing go away you reduce the attractiveness of being a landlord and you reduce people's willingness to pay for houses.
The rental rate is determined by the demand for housing by renters and the supply of rental homes. Eliminating negative gearing reduces the willingess to supply rental homes but then landlords wouldn't buy those loss making homes and instead they'd be bought at a lower price by people who want to live in it as an owner occupier who now no longer need to rent a similar home. You thus reduce the demand as well as supply for rental housing by 1 and thus have no impact on rental prices.
Also eliminating negative gearing pretty much doesn't affect the people you describe who are middle income and not being taxed at the top marginal tax rate. If you only allow them to deduct capital losses at 30% instead of their marginal income rate at 37% or whatever it'd hardly make much impact to them so I don't understand why you're even defending negative gearing. Removing it literally only hurts the highest wage earners.
I'm a trained economist so I'm super in favour of broad based land taxes with just about no exemptions replacing a stamp duty. That's what the video was talking about at the end about a Land Value Tax. Land Taxes creates no dead weight loss (fancy economics term for waste) unlike just about every other tax as it doesn't change behaviour. It does however reduce the williness to pay for land but if you no longer have to pay stamp duty it might end up balancing out. So if you want to reduce the frictional costs of people moving homes then support scrapping stamp duty in place of broad based land taxes.
@@xcw4934 As a trained economist you should have actually gathered data before forming your opinion.
Prospective landlords have a lower price tolerance for houses than home buyers so removing them from the demand pool will have very little effect on market prices.
The reason housing prices are so high right now despite the cost of borrowing is because demand far exceeds available supply. As you would know the fall in the average household occupancy rate fell by 20% from 2020 to 2023. That is in effect the same as adding 5 million people to the population in terms of housing demand. There isn't even close to enough available housing stock to meet that demand and there won't be for decades. This is a population level behavioural demand shift.
Rental occupancy rates, from all the evidence I have seen, trends higher than owner occupied housing. The net effect here of reducing rental supply is more actual people competing for a diminishing housing pool.
Your conjecture of the beneficial effect of removing negative gearing is based on nothing but hypothetical speculation. It is the sort of white room theory crafting that epitomises the academic bubble.
In Portugal we have a complex system but very accessible. There's automatic deductibles, and you just need to press a button.
How hard would it be to "start over"
very hard without really shaking up markets, but it also wouldn't be completely impossible.
Depends, where are you starting over? If it's in an existing country, that's called revolting and that tends to be bloody, violent and destructive.if you can find some land in which to build a new country, it's a bit easier or at least less confrontational.
Would be significantly harder than you just learning a viable skill to live a good life, so you don't have to constantly be envious of those who are more successful than you.
You're not going to be the one leading the hordes of rioters, they're going to be listening to the MSM and social media "Influencers" who are all in the pockets of the criminal ruling class.
BLM for example. For all the momentum they had, what did the truly accomplish in the end? The founders bought mansions in white neighborhoods.
Movements get hijacked. And movements of people who aren't particularly bright (Which is why they weren't making that much money in the first place), are going to get hijacked easily.
And of course there is no guarantee that things will be better when the dust settles. In all likelihood, the system is just going to get replaced by a worse one, because again the people who will be in the streets destroying stuff aren't what you would call our "Best and brightest." They're a bunch of useful idiots, and they're never going to be anything more than pawns for the criminal ruling class.
@@HowMoneyWorksmedia outlets would impact the markets
@@Waldohasaskit210
I think they mean a bunch of economists and whatnot get together and completely rewrite the tax code.
2:14 Claiming just half the population of the US pays taxes while ignoring the facts that only 62% of the population is of working age (15-64 y.o.), the bottom 50% has less than 3% of the country’s total wealth, and the top 1% has a third of the total wealth.
I'm a big supporter of value taxes. The problem is they need to replace existing taxes, not in addition to.
Explain value taxes and then I will try to figure out some loopholes
Am i too european to understand?
Yes.
You are, unless you are German or maybe British. Then you might understand.
I have never spend more than 10 minutes doing taxes in the netherlands. As an ordinary worker all income is already accounted for by the government and the only reason to do your taxes is to add deductables like charity/healthcare costs etc. Its really simple. Although i don't know the same can be said for bussinesses
@@papito8273because you never tried to do business. Huge plus for being a wagie.
@@TheDeveloperGuy No way you are actually calling people working wagies lmfao
In the netherlands, the returns can be done through browser or smartphone app, and it takes you through a plain language questionaire, knowing the numbers for you
3:58 There really needs to be a system the wildly scales up costs for owning residential property that isn't your primary residence. Turning shelter into an investment vehicle has destroyed so many lives.
Someone tried to rob me on the street and I said nah and they ran away, did I just find a robbery loophole?
Damn, why didn't I think of that?
top 10 secrets science still can't answer
That was you? I just wanted money for a Starbucks venti.
Someone killed me with a knife in the living room. But here I am. Lol. That guy was a fukken idiot.
Someone tried to rob you on the street, you took out a knife and said to the mob “hey let’s rob that homeless together instead ”, did you not also committed robbery?
The third reason for why the capital gains tax is lower is because there is inherent risk. I am using my already taxed income to buy a mutual fund, I am not guaranteed a return and I could lose everything.
This is what I felt like was the obvious answer, its supposed to be the government supporting/incentivizing people to make investments (ideally within US companies or US markets)
In third world countries, its pretty common for investments to be fully deductible from income tax. You will only pay Capital Gains tax later that is around 15%.
People will still make investments, and after all, they will still work despite the income tax. More money is still more money.
Fewer people will invest, meaning less access to capital. Fewer small start ups will find loans, and the bigger companies that are already established will be the direct winners of more expensive gains. The middle class gets squeezed and one of the main drivers that moves people into higher economic classes will be removed.
I totally agree with most of the vid, specially the fact that the tax code is overcomplicated.
However the reason why longterm investments are taxed lower than income is because, usually, longterm investment comes from investing income that was already taxed.
Dunno if this was oversight or omission by the youtuber
That's what he said at 12:30. But it doesn't make sense, investment income is still income. The initial investment isn't double taxed, only the gain. What difference does it make where it came from? If you invest an inheritance, should it be taxed as income? Should a retailer that charges double their wholesale cost be taxed as capital gains since they bought it with post tax dollars? Trying to determine what's already been "taxed" can be arbitrary. Income is income.
If you simplify the tax system you need less IRS agents combing through tax law and less people filling ridiculous deductions. Remove basically all deductions and just tax people at a normal rate. It shouldn't be a game of who can afford the Best CPA and bamboozle the IRS.
Okay, but the tax codes are written by lobbyists of companies that benefit from the current tax codes.
@@harrybudgeiv349 one can dream...
Don't forget that a good portion of the complexity is also Congress giving special benefits to all manner of folks (not just the rich - see the EITC) that they need to hide in the tax code cause no way would voters approve of it if they actually openly voted on it.
je make it simple 20% tax on all income.
The emphasis on the role of regulations and loopholes in exacerbating income inequality is particularly sharp. There's no doubt the system needs reform, it's simply become too complex.
I thought capital gains were lower because corporations have to pay taxes before they pay their shareholders making that top tax bracket 21% the corp pays and 20% the individual pays
Capital gains means selling an asset which increased in value( bought apple stock and you sell it later for a profit), for that, the company didn't pay any taxes, what you are referring to is dividend tax which can vary for an individual from 0% to 37%, besides the tax paid by the company
Capital gains taxes are lower because any activity that is taxed as such is one that is inherently risky. the government is trying to incentivize people to make those investment choices, rather than hoarding the money in other ways. in an ideal scenario this would feed a virtuous cycle of investment (preferably in US companies and entities) that would grow the economy. It doesn't work perfectly of course but it does have a net positive effect.
Or in more simple terms, let's say you are pretty successful professional and you take home $100K in earnings a year. that money has already been taxed, so then you take some of it and decide to invest in a startup, or Mutual fund, or something, and there's always the chance that you could lose your entire investment. At the same time, The Entity that you gave that money to has a chance to grow into something that it might not have otherwise. And commensurately you have a chance to make a return on your investment. and round and around the cycle goes
The utilization of after-tax money and tax-free growth makes opening a Roth IRA very advantageous. Through a careful guidance of my FA, I did not pay taxes on my withdrawals of $2.86 million when I retired.
I don't regret the numerous financial mistakes I've made in the past since I've learnt from them. But the biggest one was planning my finances without consulting with a licensed financial counsel.
The financial market is a reliable choice. Diversify your portfolio with I-bonds, stocks (ETFs, REITs, dividend-paying stocks), and bitcoin. Given your budget, I recommend hiring a fiduciary to ensure you receive professional insights for a fee.
Indeed, I did make use of a financial counselor. As I get closer to retirement, their advice has been really helpful. I thought compound interest on index funds wouldn't be sufficient because I started late. It's amusing how I've done better than colleagues who have more years of investment experience. I've profited more than $886k tax free.
@@maryHenokNftImpressive can you share more info?
Definitely! All of this happened in less than a year after *Izella Annette Anderson* told me what to do. I started with less than $100,000, and now I'm about 17,000 short of having a quarter million dollars.
If you don't like filing a tax return, blame Gover Norquist alongside Intuit
Not sure where you got this idea regarding Norquist. In fact, Steve Forbes in his Flat Tax book agreed that his side would look the other way if the government chose to spend money on re-training programs for accountants because the benefits of a flat tax would so out-weigh the costs that for once, a government program would pay for itself!
I blame Congress. Both parties and even Bernie Sanders insist on using the tax code for social engineering.
@@commentinglife6175 Norquist (along with Intuit and H&R Block) lobbied hard (ie., spent tens of millions) against these reforms -- he and his anti-income tax buddies want people to hate the tax system -- Norquist likes it when it is so hard that people hate it.
For most people the IRS should just do their taxes for them and then tell their employer how much to withhold from their pay. If the person has certain deductions they want to claim other than the standard deductions that can be on a form they send to the IRS. That would take care of most people's taxes. Only people who get most of their income in other ways than as a paycheck would still have to do their own taxes or have their tax people do them.
Which is literally how it works in at least most part of Europe - We get a form that we can look over, the company we work for provides their side of the taxation form, match the two, confirm that they are the same number and voi la!
Freelancers or people working for specific digital companies, taking donations etc, do their own form on top of it or hire an accountant to make sure they submit the correct forms.
You are trusting the same idiots who can't even accurately report their own spending! At least this way, if we keep limiting how much funding the IRS has, they don't have as much money to come after people for simple mistakes! Rather than defund the police, I'd like to defund the IRS!
@@turkizno Also in Australia and New Zealand. H&R Block has (true to its name) blocked all attempts at doing this in the US -- They (and Intuit/TurboTax) spend serious millions on lobbying to make sure that taxes in the US are difficult to do.
Thats literally how it works here in Serbia. Your employer pays your taxes from your wage. Any money they give you is yours and the goverment can only take it to you via bills for government services.
I’ve watched your channel from the beginning. I get it’s not an inspirational channel. I do enjoy your views on a lot of these things and at first it was very interesting to learn why some of these things are the way they are. At this point though it just feels like learning why your car is broken but also learning there isn’t anything that can be done about it. What’s the point? I think it might be nice if there was some actionable advice or some point of progress that could be gleaned from your content because otherwise I tend just to skip it because I don’t need to be reminded of more shitty things most days.
Very easy to suggest my friend but it's very hard to implement especially if the one passing the law will reduce their monetary gains.
In Australia i used a tax accountant last year, and it was more difficult, not easier. i got less back too.
It can be explained (Im at 4:16, havent watched it til the end). Since the order is pre-set (red-black, etc), the shuffle and subsequent order of the remaining deck tells the "magician" how to read the order of colours because the deck was pre-set. What this teaches me is that before any card trick is performed, take the deck from the magician and shuffle the deck first. Now the tricks that STARTS with the deck being handed to the audience, who get's to inspect & manipulate the deck... well, there wont be UA-cam videos on those.
I've been an LVT need for years.
Naturally, I'm *finally* subscribing to the Compounded Daily Newsletter
abolish income tax (more dynamic sales and capital gains tax), no more corporate stock pay. A campaign to revert all exploited loopholes and sue said parties for criminal mischief and conspiracy. Such as the rich in Wyoming who "donate land" but still retain access in perpetuity. We're already in crazy debt in a system much worse than what I proposed. No matter how robust a system is if we can't bring down spending then those with influence can tell any story they want about the economy.
Just be careful, because I guarantee all those people with intercontinental-range jets and dual citizenship aren't afraid to use both.
@@bigscores7237 What will they do with their investments - they are all still here and taxable. There's a limit to how many hotels and casinos people can buy in monaco; once you have gone through the hassle of giving up citizenship.
If the IRS already has computer records of everyone's income, why can't they just send everyone a tax bill at the end of the year? Why do people have to spend hundreds of dollars and a ton of time trying to piece together all their tax records? The IRS should just send everyone a "suggested" bill for taxes (or refund) at the end of the year, and those people who don't agree with it could then appeal it by filing an individual tax return. It's not rocket science. Why don't we have it?
Corporate lobbying from TurboTax annnd idk what others may be responsible for
The IRS wants that, the people want that, but turbo tax and other tax filing companies have lobbied so hard that now they get to make money off something that should be automatic. Finally the IRS and Biden have been able to push through a sample IRS site last year which allows you to do the super simple and normal way instead. But clearly the Republicans only allowed it in a few states to begin with.
If you actually look at the government auditing reports over the IRS, they admit the IRS has a material weakness in their computer systems. So no, they don't have that info - which is why they harass folks with audits even though the person didn't actually make a mistake (cause they don't actually know the answer). Remember too that studies have shown nearly 1/3rd the calls from taxpayers to the IRS Helpline DESIGNED TO HELP TAXPAYERS WITH QUESTIONS actually end up with the incorrect advice! If the IRS can't even know the law, how the heck are ordinary people supposed to?
Because TurboTax lobbies it into oblivion Everytime it gets introduced.
The responsibility would shift to the government if this were to happen. Under the current system it’s up to the taxpayer to report all income and if they don’t then it’s tax fraud which comes with severe penalties. If we had a system you suggested then taxpayers who have unreported income would not face as severe penalties for unreported income. The IRS would need more funding in order to audit more people and to implement this system. There would also need to be more income reporting options shifted unto business owners. Mind you, I still think we should have an automatic filing system for taxpayers with simple returns, however that in itself is very difficult to determine.
Yea - so much confusion between the meaning of 'income' and 'wealth'. Wealth is a much wider category that includes income but is not income itself (this includes things that cost you money to maintain such as your car or your house that do not, inherently, give you income) while income is money earned either from selling things or working a job but does not include things (objects, essentially) that you already own that would be worth X dollars IF you sold it. Related, but very different things/concepts.
The lower 47% definitely pay income taxes, it's literally taken out of their paychecks each week. And they definitely pay other taxes to, like sales taxes, property taxes if they own a home, taxes on their interest/etc.
Three years ago, I started a garden and obtained state and federal credits, which, together with employing one gardener, rendered it profitable. I urge property owners to grow crops that are not commonly cultivated by farmers. Begin by securing a city license and strive for a state license in the subsequent season.
Focussing on the UK, I already knew things were messed up in London's property market, but what the hell's going on in Bournemouth and Dorset?
I kinda feel like the Swiss model and the overall low taxes and not too many crazy laws helps it to be more productive and give people more money
As far as the capital gains tax break, what if we only allow it on the seller's primary residence? If I remember correctly, there are tax advantages for primary and secondary residences, and apparently this capital gains loophole isn't restricted to that? That just seems silly to me.
if you have a single job as your sole source of income and no investments your taxes are incredibly easy to file. unfortunately very few people are in that situation while also being at the same company for more than 12 months
As someone who makes a solid six-figure income from a well-paying job, with money in the stock market (index funds above and beyond retirement accounts)- so at least top 25%, but probably not top 10%, I don't get enough in loopholes or deductions to even be worth paying someone to do my taxes. Real estate deductions or incentives shouldn't exist for anything but primary residences, and all capital gains and real estate income should be treated the same as payroll income. I don't really care if there's limits on how much someone is taxed based on how much value their primary residence increases in value while they're living in it (I think this is fair to prevent retirees from getting screwed), but if they sell it, or they die and their children sell it, any untaxed gains should be taxed then.
If anything, I feel like income gained from rent should be taxed at a significantly higher rate, much less the tax-advantaged rate that it gets now, and losses from real estate should be treated the same as losses in the stock market, and neither should give any benefit on taxes (you took the risk in the investment, it's your loss if the value goes down). If you're making passive money from just owning and maintaining property, that's worth less to society than any other way of making money- in general, you're acting as a leech on the economy, making it harder for people to buy/sell/move, making the overall economy less efficient for personal gain. There's some amount of rental property that is good for society in that it provides reasonable temporary housing for people moving or working temporary jobs at a location, but the current tax system is far to advantageous for people to sit on and monetize property, with the government both defraying any losses from poor investments and ensuring that the average property value can only ever go up.
*If you are not in the financial market space right now, you are making a huge mistake. I understand that it could be due to ignorance, but if you want to make your money work for you.... prevent inflation*
Thanks for continuing updates I'd rather trade the crypto market as it's more profitable. I make a good amount of money per week even though I barely trade myself.
A lot of people still make massive profit from the crypto market, all you really need is a relevant information and some
You trade also?, I tried trading after watching some videos on < UA-cam but still keep making losses, how do you
No I don't trade on my own anymore, I always required help and assistance
From my personal financial advisor
Hey, low income wage slave here; I only paid to have my taxes done once, it cost me 245 bucks and my return was only 230. I've never had returns over like, 500 and I make less than 30K a year. Taxes are dumb... Or at least very mismanaged and poorly implemented.
Why not tax Wages and Capital gains using a tiered proportional scale.
US Tax Code has brackets for income tiers, 7 brackets. Apply the same idea to capital gains. Depending on what portion of your income is capital gains that income is taxed at a higher or lower rate. Example: For a person in the 13% tax rate if 20% or less of their is Capital Gains the rate is 11%, at 21 - 40% the rate is 13%, etc. As income levels rise the proportion is adjusted and/ or the rates are modified.
In this system tax rates are adjusted p/ whatever public interest goals. Consider if the lowest tax brackets are encouraged to save and invest by not taxing their capital gains until its more than 41% of total income.
Rich people and businesses are much more likely to leave the country if they have to pay too much in taxes (and them leaving has much more impact on economy and government). I think that is a big reason why the system is skewed in their favor.
We dont beed rich people in the ysa we need tax payers!!
everyone talks about depreciation, but noone talks about depreciation recapture. Basically, having assets taking depreciation one year, then the assets disappear completely the following year whether of their status (sold, retain, covert)
I don't know why the gov thinks it's best that a few people own all the property forcing everybody to rent.
More control over the population. When people own the home they live in they have the freedom to do what they want in life.
Longtime HMW watcher here.. Just wanted to say this video was pretty hard to follow with the multiple instances of "there are x reasons for this" every time we reached a new concept. Felt like we got lost digging into russian nesting dolls.
The problem is that we tax INCOME instead of property. Income is the opportunity to acquire property. My definition of property is not just real estate, but the value of anything excluding labor that can be exchanged for anything else of value including labor. The current system of taxation has people who trade their labor for the opportunity to acquire property paying to protect the property of everyone else. The more you earn, the more you pay. But if you don’t earn, you don’t pay, even if we’re obligated to protect your rights to hold property. In my observation, the primary function of a government is to enforce property rights, thus the more property you have, the more government you consume.
Hell yes LVT. This is what I’m talking about. Please make more videos about land use policy
It always catches me off guard when half the video goes by and then the intro pops up. Friday the 13th (2009) vibes lol. Love your work!
My honest question(s) would be: sure, the top 1% pay 45% of income taxes according to the IRS. But how much income do they have compared to the rest of the country?
If their income is 40%, then they are within margin of "fair". But if they make 20%, then it's technically unfair towards them, for sure.
And as a second question: what's the percentage of wealth that they own VS the rest of us?
Because let's be honest: you can't build wealth at the same rate as someone who's in the top 1% when 50% of your income is spent on rent (if you're lucky), 20% is spent on food, 10% is spent on telecom, and 20% is spent on means to actually get you to work (vehicle/public transit, gas, insurance, etc.).
Alternatively, you can always get roommates to reduce some of those costs, but food and transportation won't change much.
The reality is that if all you're considering is income tax, then sure, the top 1% pay disproporionately more than the rest of us. Fair enough.
But in the grand scheme of things, they also spend far less than us on everything, in terms of pure ratio. So more of their income/wealth can be directed towards way of making more money, unlike us who have to spend an ever-increasing ratio of our income towards mere survival elements, all the time at gunpoint of those who own our jobs that tell us to work the way they want or else (we don't have any fallbacks, unlike the rich people that have golden parachutes in the worst scenarios).
The problem with capital gains tax isn't that it's too low - it's that it's possible to postpone paying it as long as you're alive and then make it go away completely when your kids inherit the appreciated assets but NOT the accumulated capital gains taxes.
I may not live in the "worlds greatest county" but at least at the beginning of the year the state tells me that I have to pay x ammount and explain why. Not mentioning a ~10% deduction if I pay 'till March...
As a tax consultant, aside from the loopholes, the complexity mainly keeps people like me in a job, at the expense of taxpayers and governments. I’m not complaining but it’s pretty stupid when you step back. Make it so simple that a computer can do it (it can be done, definitions and measurement issues can easily be overcome).
Payroll Taxes should be paid at the time income is earned. Eliminate deductions and lower the tax rate. No withholding and no yearly reconciliation.
That’s ridiculous, if taxes are based on time of earning then people with varied incomes through the year would be liable to a higher tax rate than an equal earning individual with a consistent income.
It’s a problem we have in the UK, national insurance taxes are based on income during a pay cycle (weekly, monthly or 4 weekly) so a problem I have is I pay hundreds more in NI conts then similar income earners because I only work 6-8 months (due to being a student)
@@muni5450 Unless the tax rate is tiered, you would pay the same tax rate bases on the amount of income you earn. I was speaking to US earners and US income tax with annual reconciliation.
Idk my taxes are easy for my generation. I cannot afford investments, home, or children so the standard dedication for me.
Easy fix for the real estate tax problem: Put a new condition where the houses need to be lived in to be eligible for the tax write offs. Empty houses would gain no benefits.
3:48 Distorting the market by benefiting some businesses over others is kind of the point of deductions. When homeowners buy solar panels and use it to say... decide it makes an electric stove economical so they get that instead of a gas stove so it benefits the solar company and the electric stove company over the gas stove company, that's a feature not a bug. Is making people hoard real estate a bug? Hard to say, but in the 1920s, if you told the lawmakers that their proposed law would make people with lots of real estate assets keep their assets in real estate, they would say "great, do it" even if some people in the 3rd millennium might be scratching their heads.
I ended up paying $25,000 for taxes 😭 (live in California) I didn’t even have enough to begin with. Turbo tax also never filed my taxes even though they confirmed that they did so I got additional penalties and fees added! When I saw the number I just wanted to drop dead. I just kept thinking if I don’t have shit how is IRS gonna get anything from me. I thought I was gonna have to just lay down and do a bid in the feds 😂. The tax rates are so awful that I’d much rather serve time than give them my hard earned money. But now I’m going bankrupt so it’s all said and done now lol.
THIS! It kills me that people get manipulated into paying for tax software that should be free, or going to a professional when their taxes are as small as 1 W-2. I failed most my math classes and yet I learned how to do my own taxes. It’s not supposed to be hard. But it’s also not supposed to be something we should even have to do.
Taxes are not bad, taxes should be paid so we all reap the benefits of paying for this together as a group, like roommates paying for rent together.
But most importantly, we should just be given a nice bill by the IRS who should be full funded to properly handle the load, and accountants should be working for the IRS since that’s where all the work would be.
oh man. so excited you mentioned the land value tax at the end! yes! thank you.
I'm a small business owner. I am also the lowest paid person in the company as everything and everyone gets paid before I do. The business has been able to keep me afloat since 1998 but I'm not wealthy - just solidly in the middle-class. The cost of government compliance is so great that without it, I could open another business or two. I could be more productive and employ more people but, instead, an insane amount of assets are pissed away to make the government happy so that it can get every penny possible out of me to give it away to people that do not deserve it.
Taxes or something else as well?
@@Loanshark753 I manufacture electronics so I have to jump through a lot of hoops. The sanctions on Russia have been a disaster as they are a supplier of raw materials that I must have. Now I have to purchase them from the Chinese at a 25% markup. I would rather use a lead-based solder but that is a no-go because no one wants lead in their landfills but no one is going to throw my stuff away because it is stupid expensive. Lead has a lower melting point so I would have fewer problems but I have to keep uncle sam happy so I have to use more energy and I also destroy more delicate components. Also, the government allow people to own words. I had to destroy thousands of dollars worth of faceplates because I used the word "tilt" to describe a function. When you go to trade shows there are sniffers that look at every product to see if you are using a forbidden word and you either have to cough up a bunch of cash or destroy your stuff.
I could go on for days.
Here in Serbia, your taxes are paid by your employer, so any money you get from your employer is the money left over from your wage after all the taxes have been paid, which is ~40-50%. It kinda makes your life easier, since any money you get is money you can spend without worrying about taxes. So accounting for bills and everything is a bit easier.
On principle, I absolutely hate income tax and want it completely abolished.
But, in practice, the numerous loopholes make it pretty lucrative.
It sucks when you just work a regular W2 job. But, when you own several rental properties, you can easily get back so much more.
Last year was my first year with rentals. I got back so much from my tax return and had an effective rate of less than 3%.
This year, I'm expecting to fall well into the negative.
the real problem is that first stat which is that only half the population pays fed taxes. That is ridiculous. I understand the drawbacks of a flat tax system but honestly the current system is so crap I think flat tax would be a simple improvement.
You do realize that a majority of those people not paying taxes are children and the elderly who have no taxable income, right?
That’s what happens when your country becomes an inverted age pyramid. You can thank all the policies that helps the elderly and the rich while burdening the youth with the bill for it all.
Capital gains = income is wild. A wage is taking zero risk to make money. You shouldn’t be taxed at the same rate when you could lose money when investing.
Zero risk? My man, talk to a truck driver, a factory worker or a construction worker. You mean financial risk I understand this but please don’t say there’s no risk in wage labor.
Complicated tax systems are also commonly used by Tryrannical governments to make sure that no one ever files their taxes correctly, that way they will always have a reason to arrest or intimidate political or economic opponents.
Hi from Brazil!
Please, make a video about Land value Tax and Georgism.
At least with federal taxes, filing apps are vary buttoned down and can handle the vast majority situations. It's at the state level where you find huge gaps because their systems are a such a mess. I have to pay taxes to New York and parts of their code are so clunky and convoluted that it feels like a downright scam.
You can criticize the long term tax rate as a tax haven for the ultra-rich but those 2 justifications are there to protect unfairly taxing normal people. In other words, you can't attack it without hurting hundreds of millions.
So..... actually bother to FUND and STAFF the IRS? That is certainly one of the biggest problems.
I don't get why you say that canada offers more incentive for real estate buyers. Our mortgage interests are not tax deductables as in the us. That is a major incentive to me.
Everyone knows whats going on but no one will change it, especially our +$250k congressmen salary holders.
Forget that the top 1% pays 50% of the taxes. If they concentrate more than 60% of total generated wealth, they should be paying more! Besides it's the workers who generate wealth, not the owners.
Brilliant!
If workers generate wealth, how come a group of them don't just open a factory and make cash? Yeah, that is a false statement. Of course, that was somewhat tried in the Soviet Union but amazingly enough, they still had certain folks who got benefits others didn't get. ("All pigs are equal but some are more equal than others.")
Nah, I'd rather adopt the Democrats' abortion position to taxes. According to them, men should have no say in an abortion cause they can't have one. Okay, fine - then unless you pay income taxes, you don't get a say in how they are collected or spent! Pay your share and you get a say! Simple as that.
@@commentinglife6175 we already don't get a say in how it is spent even if we do pay taxes unless you're talking about the wealthy...
I don't think it's 50%, it's more like 27%, but it is definitely an outsize amount.
And irony after relying on a paid professional to do your tax return? If there’s any error you as an individual are still liable. 🤦🏻♂️
What are the ways to obtain assets other than working for thrm?
I've even read a couple articles showing that in many European countries taxpayers don't mind paying their higher taxes because it's both easier and they see the benefits their taxes pay for (good healthcare, good social safety net, etc.). Though the rich still try to get out of paying them because of course they do.
No one is stopping Americans from paying more; there is even a line item on the tax form to do so. The question is, how many of these whiny rich people who claim they don't pay enough actually fill in that line?
Europe doesn't have insane republicans ruining everything and making more micro exceptions to help their rich friends
@@commentinglife6175 None
I did not expect my country to be mentioned here
this is the main reason why ceos prefer $1 salary because bu receiving such tiny salary they can then be considered a low income earner snd would be taxed accordingly like a low income earners would
The accountants love the complex tax code. And using Turbo Tax lead to an audit because there was an error in the code
Just subbed waiting for an updated Georgism tax article!
There is a reason #4 that this code is a problem: everyone in convinced everyone but them is getting a free ride on taxes. Sometimes this is true, sometimes it is not, but because the tax code is impossible to understand it is easy to assume everyone else is getting over better than you.
I am also surprised when dealing with the inflation issue on capital gains you didn't discuss the alternative to separate rates that addresses that directly, indexing the basis for the capital gain using the same indexing value we do for tax brackets.
Finally, I'd love to see a video on the disruptive nature of lower capital gains rates with taxing dividends as ordinary income after taxing the profits they are dispersed from (the double tax issue). I'm convinced a lot of accounting fraud, Enron being the ultimate example, are eased by a tax code that favors gains (thus stock price) over dividends (actual money profits from doing business).
Your last sentence is incorrect. Both dividends and long-term capital gain (most stocks) are taxed at the reduced rates he mentions in the video. Short-term capital gain (all other stocks) are taxed just like normal income.
@@haakon_hk since when are dividends taxed at a non straight income tax rate? As recently as my filing for 2023 I had dividend income taxed as regular income.
all these years, I thought the reason for the lowered tax on capital gain is to incentivize the public to invest. Investment drives economy.
It is meant to do that and Investment does drive the Economy BUT rich people hoard the bulk of their wealth.
There’s definitely business owners out there who pay their taxes and still have a cushy enough life. However the majority of rich people in the upper rungs hoard their money more than they invest it. Even if they invest a little bit, when taken into proportion of their wealth it isn’t enough.
Turbulence is also an aspect of the economy.
Im just curious how New Zealand has tax incentivises for property because i live in NZ and there seems to be no way around it as ypu cant even claim depreciation anymore.
1890s: The Single Tax aka the Land Value Tax
2020s: ???? pages of tax codes
Thanks for the awesome video and for all the amazing content!
I hate how all these billionaires insist they want to be taxed more but the only people who will feel it are the marginally "rich" like doctors and successful lawyers and small business owners.
Every time I want to stay depressed., I watch another of your videos.............
The solution to capital gains to distinguish between short-term and long-term holdings