> This article does not conflates income and wealth, stop saying that.
The article repeatedly uses what it calls a "true tax rate", which is calculated from wealth. It does this knowing that people reason about tax rates as percentages of income.
With this in mind, I think it's fair to say that the article puts a fair amount of work into talking about wealth and income as different, but also willingly conflates the two in order to produce shocking numbers when it's convenient.
They explicitly calculate it based on increase in wealth, rather than total wealth, which seems like a reasonable substitution.
If you look at Scrooge McDuck's giant pit full of gold coins, and even though the pipe flowing into the room marked 'income' doesn't have any coins rolling down it into the pile, but the pipe heading out marked 'expenses' seems to be steadily draining coins... and yet the pile of coins is somehow still getting bigger...
.... maybe you have to accept that just looking at what's going on in that income pipe isn't giving you the whole picture.
You're completely right on both counts. That's precisely what they do. Income is definitely not the whole picture.
I don't disagree with anything you've written here. I just think that conflating growth in value of assets and liquid cash is misleading, and using a snappy sloganeered idiom to do so compounds the error. That this is done in pursuit of illustrating an absolutely critical and nuanced political point about finances makes it, in my opinion, all the more important to be clear.
I recognize that this is a position with which reasonable people might differ.
I think that would be a great approach. Incomes and asset values are very different and work differently. They benefit from being discussed with different vocabulary in order to make this distinction clear to the general public.
I don't understand. How that is a reasonable alternative to income? The degree to which your stock goes up or down is irrelevant for tax purposes, until you sell.
It is reasonable in this analysis, which is trying to compare normal people to billionaires. As explained in the article, wealthy people can get loans collateralized by their financial assets. Then they proceed to spend and pay back the loan (which is a deductible expense). The result is that they pay minuscule taxes compared to their worth (read more here: https://news.ycombinator.com/item?id=27447959 and here: https://news.ycombinator.com/item?id=27438941). The argument that their worth is not spendable until they sell does not stand up to scrutiny, as the example above shows.
So you end up with these wealthy people spending a ton and increasing their net worth by huge amounts, and paying small (or zero!) taxes.
I agree with you that a different tax law that calculated owed tax like this would not be completely reasonable, but it certainly shows the inequality and I believe it's a reasonable alternative. How would you measure the tax impact on the mega-rich otherwise?
Excellent advice! I read and understood the article as using this the first time. I feel my criticism stands, though again I understand that others may feel differently.
The article repeatedly uses what it calls a "true tax rate", which is calculated from wealth. It does this knowing that people reason about tax rates as percentages of income.
With this in mind, I think it's fair to say that the article puts a fair amount of work into talking about wealth and income as different, but also willingly conflates the two in order to produce shocking numbers when it's convenient.