Thread by @polotek

I mean... I guess I get it. But it's wild to me that people are legit fighting over whether $400K should be labeled "rich" or not. Like why is that the hill we wanna die on? In either direction?

If everybody who made $400K woke up tomorrow and said "okay, I admit it. I'm rich." What would happen? What are the next steps after we get aligned on this important issue?

Besides people who are making $399K breathing a sigh of relief that is.

I've got good news for you then. People who make $400K in w-2 income already pay a fuck ton of taxes. That is already solved problem. Are people telling themselves that's not happening? Like you can stop paying taxes at $400K? Is that the problem?

https://twitter.com/zippy1981/status/1445461360314183682?s=20

So yes. What we're dealing with is a lot of misinformation about who is skipping out on taxes. That's helpful to know I guess.

Let me provide an anecdotal datapoint. My family makes $400K, and the statement below is false for me. We pay a 35-38% tax rate.

https://twitter.com/mattberan/status/1445462921266413579?s=20

I know a lot of people who make north of $400K. It's not true for them either. There are lots of ways to avoid taxes. I do not believe that is happening on a massive scale for people below a million dollars in w-2 taxable income.

No I do not. I think the people who complain about taxes as theft are more correlated with people who don't like salaried jobs. They have their own businesses.

Again I am a person who makes $400K. There are a lot of liberal and left-leaning people who do.

https://twitter.com/stealingzen/status/1445468557328805890?s=20

I have been trying to talk to more people about wealth and money. We don't talk about either one of those things in real terms often enough. In some ways, having a lot of money will change your priorities. But not overly so. You don't become a different person.

If you care about lowering taxes at $400K, you probably cared about it at $40K too. If you think taxes are fair, you will still think it's fair when you hit $400K. It just becomes more painful to look at how much they take.

So let me put it in real terms again. Using myself as anecdotal data. I pay a tax professional to do my taxes every year. We might pay him $2000. But he might save us anywhere from $5000 to $20000 by moving some things around. Worth it in general.

But here's the kicker. Guess how much tax you pay on $400K? 35% is $140K. Gone. I never see it. Comes directly out of my paycheck. Saving $20K is nice. Could've been $160K. But the argument that I'm skipping out on taxes is just not accurate.

Now. This person seems to think there's some process where I pay my tax person $40K, he does some secret machinations, and the rest just goes away. I get to keep an extra $100K! I have never had a conversation like that, and I wouldn't know where to begin.

https://twitter.com/mattberan/status/1445462921266413579

It's fair to ask me if I someone did approach me with that deal, would I take it? The answer is no. Why? Because that sounds hella illegal. I don't do illegal things just because it's in my interest. Maybe that's what y'all are telling yourselves about "rich" people?

Correct. That is what's implied when we say it's w-2 income. When you have a salaried job, you get a w-2 that outlines your income. You cannot hide that money from the IRS. It's documented.

https://twitter.com/davidamato/status/1445478453638152198?s=20

More fun facts! Small business owners typically end up paying even more taxes overall. The employees get taxed and the business revenue gets taxed. That is the real reason business owners are the primary base of people who hate taxes. They pay a lot.

https://twitter.com/Matteotom/status/1445479389269950471?s=20

It's only when your business gets much larger and employs way more people that you start to see the "big corporate tax breaks" that we all love taking about without actually understanding.

Here come all of the people who want to tell ME how much I paid in my own damn taxes. Based on their rudimentary understanding of progressive tax rates. Gotta love the internet.

https://twitter.com/peterhuene/status/1445480871146835973?s=20

I promise I'm not fibbing folks. I know y'all don't understand how much money $400K is. I actually factually paid $140K+ in taxes last year. It's not a typo. It's not "technically". That is how much the government received from me. Even after machinations and refunds.

Anyway, you can still call me "rich". I'm comfortable with the label. And you can still be mad at me if you like. I just wanna know if you understand why you're mad and if you're sure I'm the right person for you to be mad at. So far, it's not looking good.

I never said the taxes were only federal. And I don't know why you would make that assumption. I'm not here to do homework for you. If you're gonna talk shit to people, try to make sure it's for good reasons and doesn't just make you look like an asshole.

https://twitter.com/Rock1991Punk/status/1445483433896022025?s=20

I'm here to give real information about how shit works. If you don't wanna believe me, just say that. I won't be offended, because I don't care if you stay ignorant. Coming behind me to check my "math" based on your own poor understanding of taxation doesn't actually help you.

This is the right question. It allows us to reframe the actual conversation. It's not a question of "what's the magic number to tax people". That doesn't matter. The problem is that truly wealthy people reclassify their money so it is not taxed as income.

https://twitter.com/ralph_squillace/status/1445485583548092416?s=20

That change in frame opens up a very deep field of understanding taxation beyond simply what shows up on a w-2. Truly wealthy people don't have w-2s. (If they do, the amount that shows up there is negligible). They are playing a different game with different rules.

How do I mean "reclassify"? That's where you really start to understand wealth. I can't go into it deeply right now. But it's important to understand that getting a w-2 is a strong indicator that you cannot hide or reclassify your money. It's already tracked.

Here's one good example. If you sell your house and make a profit over what you bought it for, that is not taxed as "income". It is classified as capital gains. And there are also tax laws that will exempt you from even that tax. There are ways to keep more of that money.

Taxable income that comes on w-2s from salaried jobs is just not where big money comes from. It's not where tax loopholes live. Everybody who is "wealthy" knows this already. That's why they laugh while we fight about it. I was ignorant too. I only learned this in recent years.