Earners vs Owners

🌈 Abstract

The article discusses the covert war waged against the young in America, with a focus on the income tax system that favors Owners (those who derive most of their income from investments and assets) over Earners (those who earn a paycheck). It highlights the complexities and loopholes in the tax code that allow Owners to pay significantly less in taxes compared to Earners, and proposes various reforms to make the tax system more equitable.

🙋 Q&A

[01] The Income Tax System

1. What are the key differences between how Earners and Owners are taxed?

• Earners (those who get paychecks) pay a higher effective tax rate compared to Owners (those who derive most of their income from investments and assets)
• Earners' taxes are straightforward, while Owners' taxes are complex with many loopholes and deductions
• Owners can defer or avoid taxes on their income and wealth growth in various ways, such as through capital gains, depreciation, and inheritance

2. What are some of the tax advantages that Owners enjoy?

• Ability to deduct work-related expenses, including clothing, food, and home office costs
• Ability to deduct past investments in education as losses
• Deferring taxes on investment gains until assets are sold
• Avoiding taxes on wealth transfer to heirs through "stepped-up basis" at death
• Paying lower capital gains tax rates instead of ordinary income tax rates

3. How do Owners further reduce their tax burden through legal avoidance and illegal evasion?

• Leveraging the complexity of the tax code to find deductions and loopholes
• Timing the realization of capital gains to minimize taxes
• Using offshore entities and other strategies to conceal income and assets
• Outright tax evasion, such as failing to report substantial income and making up fake expenses

[02] Proposed Tax Reforms

1. What are the key tax reforms suggested in the article to make the system more equitable?

• Fully funding the IRS to improve tax enforcement and collection, especially on the wealthy
• Eliminating preferential treatment for capital gains and the "stepped-up basis" at inheritance
• Removing the income cap on Social Security taxes
• Restoring higher marginal tax rates for Owners
• Implementing a financial transaction tax and a tax on cloud/AI services
• Simplifying the tax code by eliminating loopholes and deductions for the wealthy

2. How would these reforms impact Earners and Owners differently?

• The reforms would increase the tax burden on Owners while reducing the tax burden on Earners, making the system more equitable
• Increased tax enforcement and elimination of loopholes would make it harder for Owners to avoid paying their fair share
• Reforms like higher marginal rates and elimination of preferential treatment for capital gains would directly increase the taxes paid by Owners

3. What are the potential challenges in implementing these tax reforms?

• Resistance from Owners and their lobbyists, who have significant influence over Congress
• Difficulty in mustering the political will to take on powerful special interests and make substantial changes to the tax code
• Potential backlash from Owners who may threaten to move their wealth and businesses to low-tax jurisdictions