So, it always bothers me when people say the rich don’t pay their fair share. I’ve done my own taxes since I was 13 and know far too much tax law for some random tech guy. The first thing that shocks me is people never seem to understand what unrealized gains are. Media loves to say, “Such and such earned X billions this year but paid $0 in taxes.” Well, yeah. Because they didn’t actually earn that money. The value of their stock just went up. When they sell it (which considering we all die will have to happen eventually), they will pay the same capital gains taxes on it like we all do on stocks or our houses.
Saying a rich person didn’t pay taxes on their billions of on paper stock gains is the same as saying a homeowner didn’t pay taxes on their house’s value going up. It’s even the exact same law governing the two.
Everyone eventually does pay taxes on gains.
Now, as to a lower rate on long term capital gains, that’s just necessary to incentivize capital re-investment. I prefer not to look at it as benefitting the wealthy but that standard income tax brackets are far too high for standard workers, especially on W-2 wage where nothing is deductible.
I actually heard and agree with a good argument that student loan payments (well, tuition and associated costs in general) should be tax deductible as a business expense since these days they are basically required to get a good job.
Enter Mark Cuban. Today, Mark Cuban announced on X that he is proud to pay $288 million in taxes and took a swipe at another billionaire “who doesn’t pay his taxes.” Cuban’s political supporters are eating it up and bragging about how good a guy he is.
Well, let’s examine that. Cuban sold his portion of the Dallas Mavericks last year for $3.5 billion. He bought that portion for $280 million. That’s a taxable gain of approximately $3.2 billion. Long term capital gains is 20% but somehow Mark is only paying 9%.
That’s AN INSANE AMOUNT OF DEDUCTIONS.
And if I were a billionaire, I would not go around freaking bragging I’m paying 9% income taxes.
Not to mention, all the haters of Elon Musk frequently attack him for “not paying his fair share.” Except in 2022, Musk paid $11,000,000,000 in taxes (that’s $11 BILLION).
Think about that. What the federal government does with $11 billion.
Musk in a single year could have:
Funded the entirety of NASA
Bought the US an entire Gerald Ford aircraft carrier
Funded the entire budget of almost every US city
Musk is attacked constantly despite the fact that through taxes alone he has created more jobs than all but a very few people in history. Even when paying taxes, Musk is putting money in other people’s pockets.
Yet here is Cuban bragging about paying 9%. Cuban is celebrated while Musk is vilified.
I hate how little the world makes sense sometimes.