Students in Massachusetts will get free lunch and breakfast at school thanks to a new 4% tax put on people who earn more than $1 million.
The descriptor “free” misleads - this is exactly the type of thing taxes were always meant to pay for.
This I have always hated the “FREE STUFF!” talking point and how the mainstream bought it.
I’m not talking about demanding some middle class guy be forced to buy me an Xbox, but rather I’m asking multiple billionaires start paying just a little more in taxes (instead of ya know… constant rebates for “cReAtInG JoBs”) so that little Timmy doesn’t die of untreated pediatric cancer.
It’s mad that children could some how not deserve or accumulate debt to eat. It’s even more mad that its exactly what happens.
It’s also mad that this is also the case for adults. When you turn 18, you shouldn’t suddenly lose basic rights (like access to food and shelter), but that’s exactly what most capitalists want to happen (and so that’s how it works).
Goods with inelastic demand shouldn’t be driven by the profit motive. Food, healthcare, housing, etc. We can let luxury goods stay within the private sector for now since people don’t need them to survive, and come back to that conversation at a later date.
Let’s fucking goooo!!! I love my home state ❤️. I wish they did this sooner.
Mass is doing so many things right. There’s still a long way to go to get to European standards, but still doing a lot better than most states.
Same! We are lucky to be in one of the best states to live under the current political circumstances.
My home state too! Too bad I can’t afford to live there
A European here. Aside from going in the right direction, I have a question: Don’t the rich already pay most of their earnings as taxes? So the problem is not that they are not getting taxed, but rather that they avoid paying them through loopholes? Or is that a billionaire problem?
Yeah. The problem is that the richest people have many loopholes to avoid paying taxes. Getting a minimal salary and then just taking loans against their assets is one of them.
This.
And to add to it. If you were making 10 million dollar and someone approached and said that they could make it so that you keep 1 million in taxes if you pay them 100 thousand you would most likely be one of the ones doing it.
If you make enough money you can afford hiring people to find new ways to keep your expenses down. Tax is an expense as any other to many rich people.
“After all, you made your fortune without getting any help so why should your earnings go to p1eople who use the system”
Is this the Steve Jobs $1 special??
Yes
Part of it is loopholes, but an equally big part is that we tax the way the rich earn their money differently. Most working- and middle-class earners make their money from a wage or salary, which is taxed as income. However, the rich make almost all of their money through dividends on stocks, low- or no-interest loans backed by assets, and selling stocks through the market or companies (that they have a seat on the board) doing stock buybacks. All of the income made from the above are taxed differently as “capital gains tax,” which is usually taxed at a much lower rate than income.
Capital gains tax isn’t ‘much’ lower, it’s like 5% lower, depending on the bracket.
Loans make it possible to avoid taxes–temporarily. You eventually have to pay off the loan, at which point you’ll pay taxes. Of course, if you’re making more from your investments than you’re paying in interest (and with plenty of collateral, you can get lower-interest loans), it makes sense to just pay the interest and never the principal of the loan. Of course, if loan interest rates shoot up (which they now have), this can suddenly stop working.
And right now, there is a loophole related to carrying loans–but it requires you to die. When you die, your heir is allowed to sell assets to pay off your loans without paying capital gains tax (or not as much? I don’t quite remember).
Thanks for your answer to my question! More specific answers like this one really help reinforce what the other told me. I also appreciate you not going into politics, like a few others have.
Don’t let anyone tell you high income earners don’t pay tax. I’m a CPA (tax) and most of my individual clients are high and ultra high net worth.
One of my biggest clients is a group of four hedge fund managers in NYC for example. They earned about $50 million each in the last few years. Idk what their net worths are but I’d imagine it’s at least a few hundred million each. They pay at least 37% federal, plus investment income tax (Obamacare), plus 10% to the state of NY plus NYC. It’s a lot and winds up being over $25 million a year. I don’t shed any tears for them because they are left with $25 million to play with (each, per year), which they should be able to scrape by on.
You can certainly argue it should be higher or lower or whatever but there’s this idea out there that wealthy people don’t pay tax and it’s just absurd. Also frankly it makes my job harder because people think I’m a magic anti tax wizard that just makes it go away, I’m just sitting here like you made a fuckton of money and owe a fuckton of tax, what’s the question? ¯\(ツ)/¯
Do you ever get a sense of whether your clients ‘get’ just how disproportionate there income is compared to the median?
According to this $50 million puts them comfortably in top 1%, receiving median annual US income in just under two hours (if my math is good:
(40*52)*(46,001/50000000) = 1.91?).Yeah it’s really hard to see that in the context of kids literally starving.
Regarding your question, it’s a mix. I would say many if not most understand they are extremely successful and fortunate. The variance is how out of touch they are. Some are incredibly generous, while others are grumpy or miserable. Some actually want higher taxes, some are Scrooge types.
I once had an UHNW individual who consistently donated so much to charity that he exceeded deduction limits. I had to research ways to optimize his giving, which was refreshing.
Then there was a trust fund beneficiary worth at least $100 million, a really nice guy who lived modestly, bought the whole office lunch and dressed casually. Very down to earth. We were in the process of setting up a charity trust for him before I left that firm.
Other end of the spectrum, I had a paranoid and unstable client who repeatedly pushed us to do unethical and illegal things, making everyone uncomfortable. We fired him even though he was a ~100k/yr client for us. Easy decision.
All kinds really.
Thanks for the answer to my question! I did not really look into this for a few years. And those that I did were when I really got into US politics. Thankfully I did 180 on that, but my knowledge from that time is untrustworthy to say the least.
Your answer really clarified and added a lot rather than repeating what others said, along with it being from a professional, which is well appreciated. So again, thank you and the others for taking the time to answer my question.
The issue is more likely that taxes aren’t being used in ways that benefit the public, like they are in other countries. But also many Americans don’t want that because grrr filthy socialism
If you’re actually curious, look up “progressive tax rates”. You can absolutely still get obscenely rich in the US, even if you pay your taxes as intended. They won’t though, because psychopathy and crippling narcissism are prerequisites to “earning” enough money to even have that conversation in the first place.
Remember that billionaires…
- don’t live next to normal people
- don’t work next to normal people
- don’t commute/travel next to normal people
- don’t eat next to normal people
- don’t shop next to normal people
- don’t sweat next to normal people
They could not be further removed from the reality of their kingdoms below, unless they were on Mars. They don’t want to contribute to the social safety nets that stop the little people from freezing/starving/dying. They’ll spend a million dollars to not spend $200 in taxes that contribute to the public good.
And they are looking into that Mars thing…
While true …. We have different income tax brackets where those with a higher income pay a higher percentage, for federal tax. However Massachusetts had a flat tax rate on income: we all pay the same percentage. Now that state tax will be more progressive, at least to the extent that rich people have “income”
Thanks for your answer to my question! Simple and to the point, without getting into politics, like a few others have. I had a more general knowledge from a few years ago, so a specific for this case helped.
Again, thank you and the others who took their time to answer me.
That’s hilarious. Only the “little people” pay taxes.
Douchebag Trump hasn’t paid taxes in about a decade
Even ignoring every singly loophole, we tax the ways the rich collect and store their wealth at a much lower percent than actual income. Meaning even if the rich didn’t dodge taxes, they end up paying much less % wise.
Adding in loopholes they pay nothing or next to nothing.
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What do you propose the government should limit/stop spending on to reach over 0.5% of the real yearly earnings of Gates, Musk, Bezos, the Waltons and all their billionaire friends?
(Note that I’m not even asking about if the actual real yearly earnings of millionaires.)
It’s easier to sell a tax hike if you know exactly where it’s going :)
Unless you’re Waukesha, Wisconsin, where they specifically voted to stop giving kids handouts (i.e. free lunch). Because, you know, kids should work for their food or something instead of using their energy to learn.
It’s like the us is always 20 years behind the rest of the world when it comes to things that actually matter.
I don’t know who said it. But one of my favorite lines about america goes: “America will always do the right thing. After it has tried everything else”
It’s not a free lunch. It’s just your taxes going to something you actually benefit from.
No shit. It literally says where the money that pays for it comes from right in the headline.
I think the point of the comment was that in the last few decades the rhetoric has been: “Taxes bad” “Government provides free bus passes to underprivileged people” Always divorcing taxes from their positive effects on society. Maybe they were trying to fight that by directly uniting the fact that the government is just a coordinator, collecting taxes and using it to buy lunches for kids.
“4% tax on millionaires pays for breakfasts and lunches for all school children” unlike the above example, is a sentence that reminds people that taxes are what provides these many positive social benefits they recieve, not “the government”, not “for free”, and that taxes aren’t always “bad”.
Or maybe I’m projecting!
Which I’m ok with
Of course it is free for the children.
So you’re implying that people regularly make $1,000,000 in annual income by working? Only about 150,000 people in the US make that much. It’s their money.
And my kid will still refuse to eat it… We had free lunches here during the pandemic.
How did you do the custom font on your username? It looks awesome!!!
emojis, doesn’t look as good on iOS because half of them are tiny so it just looks like cOkANe
Lol, Thanks!
[https://www.investmentnews.com/welcome-to-the-millionaires-tax-240997](An overview for those that don’t know anything about this.)
Edit: fixed the link An overview for those that don’t know anything about this.
a 4% surtax on individual earnings above $1 million. This new provision, which comes into effect from Jan. 1, 2023, will be layered over the preexisting 5% state income tax rate.
Heads up, it’s supposed to be [text] then (link)
Thank you, that explains a lot.
Cool, but you know who isn’t getting a free lunch now? Those millionaires who worked so hard for that money. What have those kids done to earn theirs?
/s, to be clear. I wish these cool places to live (e.g, Massachusetts, Minnesota, Michigan) weren’t so fucking cold. Why can’t there be a nice liberal southern state?
Uhh, the cold isn’t the problem. It’s too expensive to live here and the real fix for housing (forced upzoning by the State) is a political nonstarter.
But I will gladly shovel snow versus face the heat, humidiity, snakes, bears, tornadoes, severe hurricanes, drought, wild fires, car oriented development, and whatever other nightmares the rest of the country has to offer. Just get a good coat, LL Bean boots, and a snowblower. It’s not that bad.
There is. It is California and a 500sqft house cost $1000000000
Thanks for the article, learning aboutnthe positives.
On another note…
In February, President Joe Biden urged lawmakers to pass his billionaires’ tax proposal, which would impose a minimum 20% tax on households with a net worth of more than $100 million.
It is a start, but may be too late in the game for the blue administration for 2024.
I have also heard of other positive things being pushed, in my bubble of politics.
Might be due to all the military conflicts around the world and union strikes, that are also starting to ramp up in the US.
Great post on the positive news. Thanks again!
I think it’s fair to wonder why policy changes like those are being pushed so late into the presidents term. Seems like primaries and elections drive policy more than anything else.
We need different terms for people who HAVE a million dollars and people who MAKE a million per year. Lots of people will read this millionaire’s tax and think it will apply to them when they are nearing retirement since they finally have a million dollars after saving all their life.
That’s what the campaign to quash the bill did. That, and tried to convince people that they might have a single multi-million-dollar transaction in their life (like selling a large successful business) and have to pay an extra 4% on it.
Always a push to get the “temporarily embarassed millionaire” to support the reach. “Yeah, yanno. My little lawmowing operation that makes me $20,000 coild sell for over a million and then I’m fucked”
Ah, the Philip J. Fry mentality
“someday I might be rich, and then people like me better watch their step”
This is fantastic news!
4% of WHAT is taxed?
Per the article, it’s an income tax on any income over a million dollars, so it’s essentially an additional state income tax bracket. So, if an entity makes exactly 1 million this year then they won’t pay any extra, but if they make 2 million, then they pay 4 percent on that additional 1 mill (40k), over whatever else they would owe before the additional tax.
Like all income tax, there are ways to avoid it or reduce your burden, but not every person/company goes to those lengths.
I personally think a wealth tax is fairer for society, but it’s pretty hard to implement and of course has a ton of very wealthy opposition.
I personally think a wealth tax is fairer for society
The most reasonable way I’ve seen so far is to assume that your wealth passively creates x% of extra income for you, and then tax that amount as income. That also simplifies the tax system, since you only need enter your assets, and not what exacts trades and profits you made.
The most reasonable way I’ve seen so far is to assume that your wealth passively creates x% of extra income for you, and then tax that amount as income.
I can make it simpler yet and close the Billionaire Income Loophole, where their “income” is taking out loans against value of their investments by simply taxing those loans. No need to value something, they’ve already done it when they took out the loan. If you borrowed 10 Million against a portfolio of 50 Million then you should be taxed on the 10 Million. That’s the value you assigned and the benefit you received.
This would also catch the “Buy, Borrow, Die” / Step-Up scheme that the ultra-wealthy use.
Free school meals should be a given since our taxes should go to what our elected officials have so thoughtfully decided where to apply them. What no one rarely brings up let alone tries to solve is the disgusting and unsafe food that the local, state and fed officials decide to make available. There’s too much politics in cafeteria food. They should focus there budget in getting healthy food not the cheapest, uncles cousins or corporate friend contract.
Reason why #3648393847 why representative democracy simply does not work.
I think what is missing is control over the representatives. When you elect someone, you give them your power, you should be able to take it back when they abuse it.
In a representative democracy, transparency and control are key and when this is not enforced, people tend to think the system is broken and does not work. It would work if that is fixed
Will simply drive more rich people out of the state.
Revenue from the new income tax is earmarked for public school meals.
As the kids get free food now, some rich people must be left in the state. Maybe the ones with an actual heart?
Looking at this from a community perspective, rich people that don’t contribute to the community is kind of worthless anyway.
They always say that and they never leave
A lot of bluster and blubbering about what would happen if so and so law passed. Never works. They’re still making plenty and once they’re done whining they stay put
