Skip To Content

Earners vs Owners

Scott Galloway@profgalloway

Published on May 17, 2024

Over the past several decades, America has waged a covert war against the young. One front in this war is our income tax system, which favors Owners over Earners. Young people are almost all Earners, while Owners are typically older, and the tax code is a wealth-transfer vehicle for Owners to garner a greater share of our common wealth. The good news? It can be changed … back.


If you get a paycheck, whether it’s salary or freelance, and that’s how you pay your bills, you’re an Earner. Owners, on the other hand, might collect wage income, but their real money comes through profits from investments: stock sales and dividends, rent from property, and other income streams derived from the ownership of assets. To be an Earner is noble; you work for a living, and labor is a sacred thing. Labor is the source of food, shelter, entertainment, and every material pleasure of society. We even celebrate it with a holiday, the first Monday in September. Pro tip: If you want to celebrate Labor Day somewhere awesome, try as hard as you can to become an Owner.

Owners also get a celebratory day. It’s April 15. Another pro tip: If you’re ever featured in a commercial calling you a “hero,” it means you’re getting fucked. The most fortunate in our society have no holiday, as they don’t need one. They recognize that holidays wallpaper over the inequity faced by anybody who gets a day in their honor.

Income taxes for Earners are deceptively straightforward. Take your annual income, subtract the standard deduction ($24,000 for a married couple), make a few other calculations, and then pay a percentage of what’s left to Uncle Sam. And the income tax rates for most people are low: A two-adult household making less than $100,000 per year pays 10% or less in federal income tax. Many pay much less, or none at all. Sounds reasonable, right? But there’s a catch. Several … catches.

First, for those paying “only” 10% or less of their wages in income taxes, other forms of tax are a heavier burden. At the federal level, Social Security and Medicare add almost 8%. Then all states collect taxes, and most state tax systems are “regressive.” All told, lower-income people pay a greater portion of their income in taxes than many rich people.

Sales tax, property tax, and other government revenue sources (licensing fees, permits and filing fees, and car registrations) take a larger bite out of lower-income households. In “low-tax” Florida, the most regressive state, low-income families (Earners) pay 13.2% of their income in state and local taxes, the middle class pays 9.1%, and the top 1% (Owners) pays just 2.7%. In fact, lower- and middle-income Florida households pay about the same in total taxes as they would in “high-tax” California. The next time you hear someone complain about low-income people who “don’t pay any taxes,” remind them that income tax doesn’t exist in a vacuum — low-income people often pay over 25% of their income in taxes.

There’s a myth that the rich don’t pay their fair share of taxes. The reality is most “rich” people — the super-earners — pay more than their fair share. A married household making more than $500,000 per year is in the top 5% of households by income and pays an effective federal income tax rate around 25%. Half a million dollars may seem like a lot, but careers that pay that well require expensive college and graduate degrees, entail long hours, offer little job security, and they’re typically in high-cost-of-living locations with high state income tax — in New York or California, add another 10% on to that 25%. With other taxes, including sales tax, the total tax burden borne by mid-career professionals can reach 40% of their income. The baller who makes seven figures plus is often working for the government: Their (total) effective tax burden can approach 50%. Until, that is, they can make the jump to lightspeed (i.e., become an Owner).

Think of building wealth as launching a rocket ship into orbit. Rockets burn 95% of their fuel to escape Earth’s soupy atmosphere and incessant gravity. Once you get to orbit, you’re a master of the universe — covering thousands of miles with just a touch of propulsion. Wealth is similar. The atmosphere is your expenses; the distance traveled, your income. Most of us never generate enough current income to make the jump to space and become an Owner — save enough to invest so our primary source(s) of income are passive. Investing is difficult, if not impossible at low income levels. Saving your first $100,000 is incredibly hard. The next $100,000 is tough, but you now have momentum and start to see the curvature of the Earth. Once your current income is substantially greater than your expenses, and you’ve deployed an army of capital that fights for you and your family in your sleep, you’ve made the jump. What we’ve done with the tax code has rendered the atmosphere thicker and gravity stronger. Go to law or medical school, or live at the office, and you’ll see your (current) income increase, but you’ll also lose a bigger share to taxes, and the harder it gets to save and escape the gravity of being an Earner.


Imagine if taxes worked like this: Everything you spend that’s remotely related to work is deducted from your taxable income. Clothes you wear and food you eat during the work week, your car, your internet and cellphone bills, furniture and square footage where you work at home (e.g., kitchen table), etc., all taken off your income before taxes. Pretty much anything you do on days you’re working, deductible. All past investments in education, deductible. If you spent more than you earned, as you did in college and graduate schools, you can roll over those losses as deductions in future years. In the meantime, deduct any credit card interest you’re paying. Any money you don’t spend? That’s not taxed until you retire and start spending it. If you give it to your kids, it’s never taxed at all.

If this sounds familiar but awkward, it is. It’s our tax code, through the lens of the Owner. The federal income tax code looks progressive: The highest marginal tax rate is 37%, more than 3x what the average American pays. But published tax rates are a weapon of mass distraction. They are the “rack rate” published on the door of your hotel room. Owners never pay the rack rate. They barely pay at all.

Unlike Earners’ taxes, Owners’ taxes are complex. As a result, determining the total tax burden of the very wealthy is difficult, but here’s what we know: In 2020 the 26,000 households with an income over $10 million paid 25.5% of their reported income in federal taxes, plus 5% to 10% in state and local taxes. But as I explain below, much of the cash they receive isn’t taxable income, and most of the increase in Owners’ wealth is never taxed at all. The White House has estimated that the 400 wealthiest households pay an effective income tax rate of just 8.2%, and Pro Publica found that the wealthiest 25 households pay just 3.4%. We can’t say for sure what percent Owners pay on average, but it’s less than most of their employees pay. This complexity results in a transfer of wealth from Earners to Owners. The tax code has exploded from 400 to 4,000 pages in the past few decades. If you have GPS (advisers, loopholes for the wealthy), you want races run at night.

If the government is meant to decrease suffering and add happiness, then our current system makes no sense. Paying taxes of $5 million on $10 million in income is the difference between flying first class and flying private. Paying $15,000 on $60,000 in income might mean foregoing a second child.

Capitalism means accepting a society of winners and losers. And that’s OK. Wealth is a great reward for hard work, and talent is what drives us to create value.  Capitalism has brought prosperity to billions over the past 150 years. The problem is the system, if left unchecked, becomes increasingly inequitable and unsustainable. We’ve morphed from capitalism to cronyism, rigged in favor of Owners. How? Three ways: calculation, timing, and collection.


Amateurs focus on tax rates. Professionals zero in on the calculation of the income to which those rates apply. In the 1950s the highest federal income tax bracket was 91%. Except nobody paid it. The tax code was a mosaic of loopholes, ensuring high-income taxpayers were able to shield most of their income. Now the top rate is 37%, but while the colors and fabric have changed, the Owner’s tapestry of tax avoidance still exists.

Owners receive cash from a range of sources: rent from tenants, dividends from stock, interest from loans, distributions from trusts, profits from investment partnerships, loans and lines of credit from banks, proceeds from asset sales, and more. Much of this income is shielded by pages of tax code defining what is, and is not, taxable. Owners who invest in the oil business leverage tax code provision section 263 (intangible drilling costs), section 613 (percentage depletion), section 611 (cost depletion), section 167 (geological expenses), section 199 (domestic production deduction), section 193 (tertiary injectant expenses), and section 469 (active losses). That’s just one industry.

Entrepreneurs are barely visible to the Treasury standing behind the tax code. Section 1202 excludes the first $10 million received in the sale of a business, a provision that saved me millions of dollars when I sold my firm L2 several years ago. When working at the firm — earning — I was paying 40+% taxes. But when I sold the business, my tax rate on the proceeds — owning — was 17%. Even before selling, every small business owner gets an enormous shield, the power to push all manner of personal expenses through the company income statement, thus making them tax deductions for the business rather than taxable income for the Owner.

Income that’s acquired by selling an asset for more than you paid for it is a capital gain, and isn’t subject to ordinary income tax rates. Capital gains rates (federal) max out at 23.8% instead of 37%. That’s still not the biggest loophole. Capital gains are only taxed when “realized” (typically when sold), so Owners’ assets grow tax deferred (some you can depreciate as they go up in value) and their sales are timed to minimize taxes. Earners lose 20% to 50% of their gains (from sweat) every year, a massive gravitational pull. Owners enjoy cleaner propulsion: As their wealth grows, the taxes are deferred until they sell … if they ever do.

But wait, there’s more. The biggest tax break Owners can register is dying, which resets the “basis” of their assets, so their heirs never pay taxes on the increase in value. Still, there’s more. The most indefensible loophole award goes to the “carried interest loophole” which permits investment fund managers to pay capital gains rates on their compensation. Tax policy groups have been lobbying to close this loophole for years, and Congress nearly did it in 2022, but Senator Kyrsten Sinema took $2 million from the private equity industry (aka Owners) and saved their $14 billion loophole. It’s well known that our leaders are whores. What’s more surprising, and disappointing, is what cheap whores they are ($2 million for $14 billion). But I digress.

Owners are so tax-advantaged that if they do have earned income, they often shield that from taxation as well. Donald Trump paid virtually no income taxes on the $427 million he made from The Apprentice — where he had an actual job — by offsetting that cash income with paper losses on his real estate properties (real estate is another of the most tax-advantaged industries). In 2007, Jeff Bezos made $46 million in actual income, yet he paid zero dollars in federal income tax, because he was able to shield that income with paper losses as an Owner (in reality, his wealth increased $3.8 billion that year). In 2011, not only did Bezos pay no income tax again, he claimed and received a $4,000 child tax credit — a program intended to lower child poverty. If you paid federal income tax in 2011, you helped feed Jeff Bezos’s kids. Don’t worry, he’s fine.


A key advantage of control over timing is state income tax arbitrage, practiced often by company founders. Several years ago, the media discovered the phenomenon of California entrepreneurs moving to Texas and Florida, and there was a lot of jazz hands about those states’ friendly business climates and youthful energy. The truth was simpler: Texas and Florida have no state income tax, and many of those founders were about to recognize enormous gains via sales of stock that had become worth billions. Elon Musk, who moved to Texas in 2020, sold millions of shares of Tesla, saving an estimated $2.5 billion in California income tax. When Washington State enacted a tax on income from asset sales, Jeff Bezos decided to spend more time with his father in Florida, which has no income tax, and sold 50 million shares of Amazon after he relocated. If taking advantage of Washington’s schools, roads, and tech ecosystem to build wealth, and then declining to pay taxes back to the state sounds wrong — and a massive additional burden on middle-class taxpayers who can’t peace out to Coral Gables — trust your instincts.

The best time to pay taxes is never, using the infamous “Buy, Borrow, Die” tax strategy. Wealthy Owners take out loans secured by assets such as company stock or real estate, and live off the loans (which are not considered taxable income) instead of selling the assets (which would incur a taxable gain). When the Owner dies, the stock goes to their heirs, who, with their “stepped up basis,” can sell enough stock tax-free to pay off the loans and start the cycle anew. This creates dynastic wealth, the lack of which used to be a key point of differentiation between Europe and the U.S. Used to be.


All of these strategies are legal and enabled by the complexity of the tax code. But that complexity also affords Owners another means of avoidance: cheating.

Skirting taxes stems from the complexity of the tax code itself. Wealthy filers can take deductions that don’t apply or classify income in inappropriate ways. And without an exhaustive analysis of the facts, there’s no way for the IRS to determine what they’ve done. Some of the losses Trump used to offset his income from The Apprentice may have been illegal — the IRS believes he claimed hundreds of millions of losses on a Chicago real estate project twice, burying the double-dip under a mountain of tax paperwork so tall it’s taken the IRS a decade to dig through it.

Owners can also choose to cheat bluntly, failing to report substantial income and making up fake expenses and losses. This was New York hotelier Leona Helmsley’s strategy. Before going to prison for tax evasion, she told her housekeeper, “We don’t pay taxes; only the little people pay taxes.” Offshore entities are a time-honored strategy for tax evasion. Trump’s campaign manager, Paul Manafort, concealed $16.5 million in income from the IRS in foreign bank accounts.

The Treasury’s analysis suggests $600 billion in owed taxes are not paid every year, equivalent to the total income taxes paid by the lowest-earning 90% of taxpayers. The avoidance is solely the domain of ownership income — 99% of the taxes owed on wages get paid. Owners can do this because Congress has starved the IRS of funding, and the agency audits fewer and fewer returns each year.

Tax Relief

Remedying these inequities is nowhere near as difficult as it would be to address many of the other challenges facing America. The most obvious and glaring remedy is to fund the IRS, enabling it to collect hundreds of billions in taxes owed but not paid. The Inflation Reduction Act was supposed to allocate $80 billion to the IRS over the next 10 years, but Republicans have attacked the measure, cutting $20 billion from the plan and keeping the IRS budget flat in 2024. Every $1 invested in tax enforcement targeting the wealthy returns $12 in revenue. To be clear, this isn’t harassment but enforcement. Most externalities are a function of incentives, and the government has incentivized owners to be incredibly aggressive on their tax returns, as there is little chance they’ll get caught. If you were on a highway with no police, would you speed?

Eliminating the special treatment given to capital gains is a simple fix that would increase tax revenue without increasing the tax burden of most Americans, reduce the incentive to cheat through misclassification, and make the tax system more fair. So would eliminating the step-up basis upon inheritance, which wipes away billions in taxes owed by the wealthiest people with little justification or social benefit. We should remove the income cap on social security tax (currently a paltry $160,000), which would help shore up the social security trust fund and make the tax code (not rates) more progressive. We should restore the highest marginal tax rate (for owners) to 40%. Biden and congressional Democrats have proposed all of these changes in recent years, but to no avail.

Since ownership carries with it some inherent tax advantages, a transaction tax would raise revenue from ownership in a fair manner. Numerous proposals, including one from Mike Bloomberg, for a 0.1% tax on securities trades and other financial transactions could raise nearly $80 billion per year, with the potential side benefit of damping high-frequency trading, which adds volatility without benefit to the markets. We should also levy a compute tax on cloud and AI services, as the wealth created by these innovations is accruing mainly to the wealthiest Owners. Compute is the new energy, and this is a chance to avoid the mistakes of fossil fuels, where we give tax breaks to Owners and stick Earners with gas taxes, among the most regressive surcharges in our system.

Finally, and most transformationally, Congress should take a chainsaw to the tax code, cutting the thousands of handouts to the ownership class that have been stuffed into it by lobbyists. Theoretically, finding the political will shouldn’t be difficult, as the majority of Americans are getting screwed by lawmakers representing a small number of their fellow citizens. Ironically, the Trump tax cuts paved the way for this change — by doubling the standard deduction, Trump ensured that just 10% of taxpayers take any itemized deductions — meaning 90% of voters should support eliminating the rest of them. Still, it may be a challenge, as the most valuable asset Owners own … is Congress.

We should reinvest some of the hundreds of billions of dollars per year gained by these changes to make the system fairer for Earners (i.e., the young):

  • Expand the child tax credit and the earned income tax credit and raise the floor required to pay any tax at all. (Currently it’s set by the standard deduction at $14,600/$29,200 for single/married households.) That would shield more lower-income households from federal income tax and reduce the impact of regressive state and local taxes.
  • Lower the rates paid by higher-but-not-highest-income taxpayers, the professionals and entrepreneurs whose 60-hour-a-week climb up the professional ladder shouldn’t be rewarded with a 45% tax burden. This will make earning the way to ownership (aka the American dream) more feasible.

Below is a rough revised set of brackets that, with greater enforcement and the elimination of the Trump tax cuts on corporations, should get us to the same or greater revenue:


I am troubled by the trend away from patriotism, fomented by a tech-billionaire class that conflates luck with talent, shitposts America, and prosecutes an economic war on the young. But America’s promise does not resonate unless it’s backed by performance. We diminish what’s great about America when we fail to talk about what’s broken in America. Especially when the fixes are within our grasp.

In defense of shielding Owners, lobbyists and our representatives in D.C. argue the wealthy are our most productive citizens, can better deploy capital, and need incentives to keep innovating. There is some truth to this notion, but we aren’t lowering taxes on the bulk of today’s innovators, the super-earners, or on future innovators, young people. Instead, we are ensuring a failure to launch by transferring more wealth to Owners/seniors. The three legs of the tax stool are corporations, super-earners, and super-owners. Corporate taxes are at their lowest levels since 1939 and the wealthiest Americans are paying single-digit tax rates, meaning the entire funding burden of our country rests on the super-earners and the young, who’ll have to survive the tsunami of debt we are aggregating to finance this inequity. This is capitalism collapsing under its own weight.

America, like any country, is a product — a mix of benefits that come at a price. America has been the best value (globally) for the better part of three centuries. Other than drugs, there is no other product so many people are willing to risk their lives to obtain. However, the value of America has diminished for super-earners and the young. We’re charging the former too much, and keep asking the latter if we can borrow their credit card. The bad news? This was deliberate, our decision. The good news? We can decide to fix it.

Life is so rich,

P.S. Our #1 business podcast, Prof G Markets, is now twice a week and getting its own feed. Subscribe here for new episodes every Monday and Thursday.

P.P.S. I’m sitting down with Mo Gawdat (formerly CBO of Google X) to talk AI and Happiness on May 30. Join us — it’s free.



  1. Alone says:

    I hope at least that a few really stupid people who claim to be pro-labor but have been helping an unethical hypnotherapist sent by my FORMER employer are starting to realize that, if you wouldn’t lift a finger to stop an unethical hypnotherapist sent by a former employer, your labor credentials are crap.

    If you’d want to send a hate-filled sack of something like Steven Ing after “your incels,” that’s a bigotry you share with the Rev. Sun Myung Moon, who is permanently being stabbed by a pitchfork in Hell.

    • Alone says:

      Worse yet, the people — if you could call them that — who bullied me in public showed their true selves to any incels who happened to be in the rooms I was in, and in any large room, there would have to be a few incels. There are a lot of us.

      I suspect that might have been a frightening thing for some men who are alone, perhaps including a few people around you who you never notice.

      I’ve tried to discourage the sick people who would hurt me for an unethical hypnotherapist, but it’s hard to get through to people who don’t believe in empathy. If they had any, they’d realize that they wouldn’t want to be treated as they’ve treated me, whether it’s psychological “treatment” or just normal human decency.

      I’ve tried to persuade others in the psychology and hypnotherapy professions to stop their rogue colleague, but they’ve treated it as a joke. That tells me that patient rights, ethics, and basic human decency are always a joke to psychologists and hypnotherapists. Any mental health professional who thinks a hypnotherapy begun without the patient’s consent and continued over his objections is okay isn’t okay themselves.

      Actually, any human being who thinks that’s okay isn’t okay themselves.

  2. Alone says:

    I hope that any incel who is reading this abhors violence as much as I do.

    The violence threatened or engaged in that you read about plays into the hands of people who target you with verbal, psychological abuse.

    The same people who cautioned against making a generalization when a transgender person murdered schoolchildren in Tennessee generalize about incels. They’d have to be idiots not to know that their generalizations spread stigma and cause harm.

    I read about a police unit that asked people if they knew any incels when they were stumped by unsolved murders. They apparently outed at least one incel. That’s as bad as if they’d done it to LGBT people, but it was a one-day story.

    Judging from the a*hole responses I got from my antagonist and her friends when I tried to inquire about what was going on, I’d guess the “incel movement” was something they made up to mock anyone who stood up to their abusive comments.

    The people who commit violence appear to be suicidal themselves. I understand that they got that way because of the hate directed at them, but violence is always wrong.

    I chastized Steven Ing because in asking people to turn in “your incels,” he shows that incels who really need help get mentally brutalized.

    I do hope anyone who stigmatizes men who are alone realizes they could be contributing to the violence as much as any “incel movement” that might not even exist.

    • Alone says:

      About the best advice I could give an incel is something I can’t do very often, to just be somewhere you’re not known once in a while. Take a walk on someone else’s Main Street, or go to a restaurant or browse a store you think is interesting. That was always calming, and still is when I can. I’m not sure it’s peaceful for clerks who really want to make a sale, but at least they give you practice at polite conversation, if they can’t avoid it.

      Once, I went to an art gallery, thinking I’d be safe, but ran into someone trying to set off hypnotherapy cues. I went outside, in what was supposedly a rough neighborhood, but without someone literally trying to hassle me as a loner, I took a long walk around a neighborhood I’m told I shouldn’t have walked in, feeling safer because the a*holes weren’t there. A neighborhood with closed stores was more beautiful than the art! That was before I knew they were hypnotherapy clues. It was a little easier to do something out of the norm then.

      If it’s difficult to have quiet around even people who don’t know you, go hiking somewhere where there aren’t likely to be people at all.

      I’d also turn away from the movies, TV shows, sites, etc. made by people who hate incels. You can get a lot more reading of books done that way.

      Things seem to go better when I don’t try to be social, but don’t try to cop an attitude, either. Just enjoy the peaceful moment and relax.

      • Alone says:

        I’ve read that countercomplaints are a good way to discourage the person who tries to create a hostile situation for you and get you stuck in “therapy.” They don’t want to be stuck in a hostile, abusive therapy, either. I’ve never tried that one myself, but I recall a couple of situations when I would have liked to have done it.

        I hope you realize there are peaceful ways to escape and discourage bullies.

        (I also hope all this venting might cause a few hostile people in my life and in others’ to give up and behave themselves like humans.)

        • Alone says:

          I can recall the weirdest result of trying something new I ever had. I took a course through the State Department, partially because I was interested in visiting a country, partially because I was bored. Not long after, I saw in the news that two State Department low-rankers were reprimanded for tweets that insulted someone in a class and also insulted the country I was thinking of visiting. I think the unethical hypnotherapist was involved in that one. I wish people wouldn’t listen to a hypnotherapist who has at least once created a low-level international incident while trying to hurt me for an employer I’ve long since left, but people are awfully stupid.

          • Alone says:

            When that happened, I took a break from trying online courses, but I got back up on the horse. I stopped eventually because some of those courses got to be empty. Even if I didn’t socialize much, the lack of feedback wasn’t very encouraging.

            Still, if you haven’t acquired an unethical hypnotherapist, you might be okay with just learning something, like medieval history or a few words in a foreign language.

        • Alone says:

          I am going a bit further than I’d wanted to, but I hope men who are alone will realize from my words that there are a lot of us who’ve had some rough times. I never went to an incel forum, but there have been times in my life when I’ve realized I wasn’t alone in bad experiences because of posts on anxiety or job forums. Even those got trolled into nonexistence, and I can’t imagine an incel board that helped men who were alone cope surviving the current wave of hatred. Some things that have happened to me are extreme, but they may have happened elsewhere, to someone else. That person may be helped by knowing that. I may even be teaching empathy to some bully. I’m not sure where you can speak or even where I can speak freely, but I hope there’s a place where you can someday. Never get too angry or speak of violence — don’t even think of it — but express your feelings as best you can. Someone has to, because the bullies have been misinterpreting their victims’ words for too long. I’ve asked the world to have empathy for incels, and I’ve asked incels to realize they’re not alone, and I’ve done it in as peacefully and responsibly as anyone can.

          • Alone says:

            For years, I’ve been mentally brutalized by a hypnotherapist that’s violating its own ethics policy in being in my head at all once I said no.

            Not one person I’ve encountered has tried to stop that unethical hypnotherapist, as far as I know.

            That couldn’t happen in an empathetic, caring society.

            If you’re from the party that calls itself empathetic and caring and you don’t really want to stop the unethical hypnotherapist, I guess you’ve proven my point that incels need to know they’re not alone and that they don’t deserve the crap they get.

  3. Alone says:

    I’m still trying to stop the perp hypnotherapist, but it’s kind of tricky because I was never introduced to it. I’ve known many other people around me over the years were from the things they did.

    It seems that doing off-the-books mindf*ing of bullied employees is an okay thing with the mental health profession, based on my inquiries trying to stop the mindf*er.

    Scott, I don’t know if the mindf*er contacted you when I started commenting, but I hope you will help me bring it to a full stop if it has.

    I hope anyone reading this who might have a clue that I’m telling the truth will also make an effort to stop the unethical hypnotherapist.

  4. Andy says:

    When a wealthy individual gets called to serve in a presidential administration, they pay zero tax on selling assets (aka Hank Paulson and GS stock). That should change. And letting congress “insider trade” needs to end as well.

  5. Alone says:

    Have you noticed how much the left’s hatred of incels sounds like Rev. Moon’s dribble? He did, after all, claim that Jesus came up from Hell to admit he was a loser because he never had sex and turn the crown of chief God to the Rev. (at least the Rev. said so). I must admit I always thought Dems who claimed their party’s out to get guys who haven’t had sex sounded more like the guy advocating date rape in a college dorm, though. It’s funny, but a tirade against incels in Psychology Today by wild-eyed cultist bigot Stephen Ing reminded me of Moon. Ing has toned his words down a bit since I complained to them, but they’re still bigoted enough if you’d care to compare them to Moon’s rants. Since they’re what PT seems to believe about any man who hasn’t dated in at least six months, it should be a concern, especially if young Democrats are picking up such cultlike nonsense.

    • Alone says:

      The most surprising and scary thing is seeing that a lot of teen boys already feel like they’re out of the breeding pool because of the hatred Democrats who act like 2-year-old rapist Rev. Moons show toward anyone who isn’t having sex ’round the clock. I’m assuming those young men will face ill treatment from oversexed colleagues in the job market, and that’s wrong.

      I hope those young men will hang on, and keep in mind the childishness and cultishness of the abuse they face. if you’ve gotten through another weekend as an incel, you’re better than they are. That’s why they have to turn the culture toward hating guys who haven’t been laid lately.

      • Alone says:

        Dr. Ruth Westheimer — that Dr. Ruth — has been named New York’s Ambassador of Loneliness. It’s a shame that no incel will believe her as long as there’s a hate-filled, stereotyping 2-year-old rapist Moonie like Steven Ing wanting to force them into a dodgy therapy.

        If Dr. Ruth’s serious on this Ambassador of Loneliness stuff, she should get Ing to apologize, and follow up with professional sanctions against Ing.

        You haven’t lived until you’ve been bullied and then threatened with “counseling” by the bullies, and that’s something incels face in work and social situations.

        That makes an Ing a disgusting thing.

        Since the Democrats allowed rank-and-file bullies to make hatred of men who haven’t had enough sex to please them a semi-official plank, they need to rethink a lot.

        I won’t suggest something like government brothels for incels. At least not seriously, although the French revolutionaries — the true socialists — did just that. The thought of it is as funny as where Moon is.

        Anyone who wants to rant about a supposed suggestion like that ought to realize that incels have a sense of humor, and they do not.

        • Alone says:

          Sorry to keep going like this, but when I stumbled on Ing’s stereotyping, it was a chilling moment. I’m sure his apology will be more therapeutic for incels than anything else he has to offer.

          • Alone says:

            There was a psychologist working wShe and her friends have been posting abusive things about men, especiith a hypnotherapist who did a number on my brain after I tried to report some bullies in an office, and I was under its spell for several years without knowing it.

            It had to tell me, although not while I was awake enough to get its license plate number, because a rather unpleasant woman laid on enough abuse and pressure that I knew something was up.

            I’d tried a lot of things to get away from the bullying I noticed and the unethical hypnotherapy cues I didn’t quite, and she was the person who was persistently rotten enough for me to kind of make a link between her abuse and the bad employer. I didn’t suspect that the hypnotherapist was in my mind until it said so, but who would?

          • Alone says:

            I have said at some point that I would like a friend date with an attractive woman to do an activity that I’ve wanted to do for a while. I heard it translated back at me in some rather a*holey intentional misinterpretations. Still, I would like it.

            That comes from the time that a woman offered a friendly meetup, then left me in a rather bad situation where people were taking potshots with hypnotherapy cues in a large hall. It’s only natural that I’d want the friendly date that was offered in the first place after that horrible experience, and when it was dangled in front of me a couple of times after that, I had to say so.

            I really did mean friendly date, not sex. I’ve been taunted with the friendly experience I didn’t get to have while coping with the vicious experience I did have, and I believe that a lot of people would want the friendly experience after getting the vicious experience and the taunts. I don’t feel repentant about feeling how most people would in my situation, and I don’t think I should because some a*holes want to hurt me forever.

            I would never ask for sex, and I’d reject an offer of pity sex.

            I don’t expect love when someone’s doing the things they are doing to me, but even Dr. Ruth suggests asking a friend to do something you really want to do.

          • Alone says:

            I’d guess your readers are finally getting the understanding that a horrible thing like Steven Ing wants to lock in the stigma and hurt for a group of people who have been badly hurt. I hope they’re also getting the understanding that what a horrible thing like Steven Ing wants to do is very wrong, and a horrible thing like Steven Ing would not have any power in a good society.

            There’s something sick about a society that uses psychologists to permanently stigmatize men who are alone to keep them on the bottom level, and reinforces that at every turn.

            I hope Steven Ing will be only the first to understand that he’s not just a stereotyping bigot, but the sign of a sick society.

  6. Not a Grasshopper says:

    I don’t know what sort of retirement you have, Scott, but I am getting a little worried about what little I have when Biden wants to penalize investment. He seems committed to the grasshopper vote and a little too ready to step on us ants. Anyone who tried to save for retirement has IRAs or 401Ks with stocks, so his attacks on the stock market are an attack on anyone who hopes to retire with a breaker against poverty.

  7. Not a Grasshopper says:

    I don’t know what sort of retirement you have, Scott, but I am getting a little worried about what little I have when Biden wants to penalize investment. He seems committed to the grasshopper vote and a little too ready to step on us ants. Anyone who tried to save for retirement has IRAs or 401Ks with stocks, so his attacks on the stock market are an attack on anyone who hopes to retire with a breaker against poverty.

  8. Mack says:

    Hi Scott,

    Thanks for the post! There is one component to this entire article that’s missing. What does the collection of federal taxes go towards, and do we believe that the US federal government is an efficient allocator of the collected resources it gathers from citizens? The two states shown above (NY and CA) as examples of a more balanced tax rate and the source of infrastructure necessary to build great companies are also two states in this country that struggle mightily with significant societal disfunction. The number of former Californians I know who left precisely because their high-tax state wasn’t dealing with significant societal problems like homelessness and crime can’t be understated. The myriad ways in which the US federal and state governments are unable to allocate capital don’t prompt me to think they should be the recipient of more funds, regardless of the source. At the end of the day, I don’t think the government’s job is to “decrease suffering and add happiness”. If that is you’re mental model, you’ll continue down the path of throwing money at a organization and ecosystem that’s incentivized to be inefficient and ineffective.

  9. John Sullivan says:

    Scott, that was the most informative thing I’ve read in years. I’m in the business of managing investments for high net-worth individuals and never took the time to see income, wealth creation and tax planning as clearly as you laid out. I spend all my energy seeking capital gains without regard to tax implications. As a trend follower, I often sell even short-term winners if they begin to fail. Thank you for sharing you “wisdom”. I love it when you’re a guest on Real Time with Bill Maher. He should let you speak more.

  10. LR says:

    Some good observations in here, but your depiction of real tax rates as regressive on lower earners ignores an important part of the equation: the means tested safety net benefits they get. Medicaid, rent control/assistance, food stamps, etc. which have disqualifying income limits create an “uncanny valley” where earning beyond poverty at a certain point, jurisdiction depending, actually puts people at over 100% tax rate once they try to move out of poverty level classifications for these programs.

    Sure, we can and should close loopholes, but the math doesn’t work, and I suspect you know it doesn’t work: the upper 1% or 0.01% simply isn’t big enough to decapitate and bring utopia to earth. Almost all income levels are going to have to pay higher taxes in America to get an effective social safety net and low to no cost college education, and left wing populists have been dishonestly misleading about that. Don’t feed into that.

    • LR says:

      ALSO …
      Taxing unrealized capital gains? Seriously? You want to destroy the sustainability of every pension fund in America? You’re a business professor, and you know better.

  11. Jeff says:

    Wow Scott, this post really shocked me. I’m dumbfounded that you apparently don’t understand the unintended consequences of taxing unrealized capital gains. And by the way, in the interest of fairness, what would you guess are the % of unrealized capital gains that just result from inflation.

    • reader says:

      Where does he call for taxing unrealized capital gains? Eliminating the capital gains tax rate is not the same thing as taxing unrealized gains.

  12. JI says:

    So what’s the right way to do taxes?

    “If we had a low-rate, broad-based flat tax, the way taxes should be, [taxpayers would] get taxed fair and square, like everyone else, and we’d collect a lot more money. I did Jerry Brown’s flat tax when he ran for president [in 1992]— there’s a right-winger for you, isn’t it? He got rid of all federal taxes, all of them, except for sin taxes. But then he put a 13% tax on everything. And he came second in the Democratic primary, only barely losing to Bill Clinton. If anyone proposed that today, they’d win.

    This will shock you a little bit, but let me just say: We all want to help the poor. Everyone does—that’s part of being a human. You don’t want to go so far that you make people poor and then use that as excuse to do progressive taxes and make them even poorer. All redistribution reduces income. Whenever you redistribute income, you reduce total income…” A Laffer

  13. Janning says:

    We vastly under-tax the ownership of things which cannot be hidden, cannot be moved, and cannot be produced. It would seem like the optimal solution to tax avoidance is to tax more of these things and less of the things which can be hidden, moved, and produced.

  14. Rafael says:

    the calculations forget the taxes paid by owners over their businesses, e.g. stocks’ dividends, and so on.

  15. Dimitrios says:

    I’m not sure people come to America to pay taxes. Any taxes to be accurate. When we come here we are surprised to pay so much money in taxes, fees, tips or however you name whatever goes between an hour of work and the value that this work provides you. I see a surgically crafted choice of what is mentioned in this article, to make some points but I know that I pay more taxes than the Swedish, I don’t have free education, nor healthcare and when the IRS comes and asks for more taxes, they don’t go to free education or healthcare, but they just go to “the cloud” funding more ways to tax me and fee me and to hire more people to find ways I’m wrong and I should ask for forgiveness. That might be rich peoples’ propaganda… but all those nice charts in this article… nothing really strong enough to convince me to give more money to the IRS to audit me more, and make $12 extra… that will go to the cloud. I don’t know… people don’t come to America to pay record taxes, and that’s what happens to them here. It’s very weird to propose more taxes and less loopholes. Sounds totally anti-American. All pro- advancing the young and transfer the wealth to younger people. Last time this happened was Gamestop as far as I can see. It seriously upset boomers and fund managers. Maybe it’s time to start cutting rates again?

  16. Larry Alder says:

    You forgot perhaps the biggest “owners” tax loophole of all. The charitable deduction especially when you donate appreciated assets (stocks) to create large deductions which offset the sale of other appreciated assets to completely avoid taxes as you realize gains. You donate to foundations you create and control, keep the most of the money in the foundation vs actually putting to charitable use and when you do deploy the funds ( to meet mandated minimum disbursement requirements) they promote your brand (eg naming buildings after you) and exert influence and power for you and your families benefit all cloaked in an positive halo of generosity and philanthropy. So as you point out , it is not the tax rate but the amount of money that is taxed. While one can think up some reasonable modifications to charitable deductions that might correct some of the excess here (donations are treated as donor realizing the apperciated gain in the asset for tax purposes, no deductions for gifts to foundations you control and until funds are deployed ) politically this is impossible todo.

  17. Ken Kohler says:

    Another very interesting piece, Scott. Thank you for your elegant writing and thorough coverage of a fundamental issue that is undermining society.

    Do you know, since I am Canadian, a person who writes about our Canadian environment as you do about the American experience?

    Thank you.

  18. allan kass says:

    all these words and never once a mention of why our governments (city, state, federal) overspend on priorities unrelated to we the people?

  19. Shelby says:

    Thank you, Prof G., for your clear-eyed analysis of a massive problem, rife with data. And then, offering solutions. You are a national treasure. Please keep it up.

  20. Kent says:

    Swing and a miss on this one. Yes, the tax code is a mess and should be revised.
    But, the top 1% pay the majority of Federal and State income, property and other taxes.
    Please tell us you don’t truly believe unrealized capital gains should be taxed!
    Finally, our government at all levels are out of control. Let’s require them to live on a balanced budget like the rest of us before we try to figure out how to send them any more of what we capitalist earn.

  21. Michael K says:

    Congress also should “take a chainsaw” to their $34,552,930,923,742+ debt produced by decades of excessive tax & spending. Otherwise, your ideas to confiscate more taxes from “the rich” are pointless.

  22. Mike says:

    Another interesting post but tainted by your passive-aggressive “Trump bad. Biden good”, now expanded to Dems > Repubs. Too bad you can’t write a pure argument without invoking your political views.

    • Patrick says:

      Is it a “political view” or presenting facts relevant to the article involving somebody everyone knows about.

  23. Freddy T says:

    Why increase the tax base if the government keeps printing and wasting money on overseas wars?

    As with any child asking for more food before finishing his meal, why don’t you ask DC to put the fiscal budget on a diet with the right priorities in place before asking for more money, or worse, continue printing money like a drug addict?

  24. William Lambdin says:

    Scott for president!!! Thanks, as always, for insightful, fact-filled analysis of our tax code dilemma.
    When fixes, to our tax code and most of the big issues in America, are, as you say, “within our grasp”, it is depressing to realize (aside from voting, or course, which has proven ineffective) that the problem, Congress, itself must enact most of the fixes we can think of. Still, I appreciate your efforts here. Thanks, Lanny

  25. The jew says:

    This is funny, just lower ALL taxes because 90% of them is used for the system that lives from bureaucracy and more bureaucracy.
    How many earners are government pencil pushers “employees” ?

  26. Marion Morton says:

    Great column Scott. Surprised? to see in the comments that support the Owners and the myopic view that all we get from the government is highways and passports… as a high earner where the government can track my income easily to the Owner where they can ‘self-report’. It’s time the Owners were subject to transparency and accountability for their transactions. Billionaires are an exponential category for the tax code. Buffett has admitted he could pay more and they should. They have benefitted from the US economy – and conflated that with “luck”.

    • G says:

      Are you really surprised though? Since the media split into “conservative” and everyone else back in the 90s with the rise of Fox News, you have half of the country being sold the bullshit that everyone but the super rich are unproductive and that taxes on them are unfair because of this supposed productivity difference.

      Kudos to Prof G as well for pointing out the 46% burden that “super earners” pay and that no one in either party really likes to talk about.

  27. Felix Markman says:

    Great work Mr. Galloway!
    I disagree with the focus on increasing taxes. Our government is so profligate and malicious that our focus should first be reducing government spending. Even if you don’t agree with the adage that taxation is theft (I firmly believe this in regards to Federal taxes especially), what spending by Washington is defensible besides entitlements that are known by everyone to be insolvent? Besides the Federal Highway system and the passport service by the Secretary of State, I can’t think of anything that I’ve gotten from the Federal Government in my 17+ years of paying taxes to Washington.

  28. Jay Smith says:

    I never blame the rich. They are doing exactly what I would do if I were in their position. I DO blame them for corrupting government, because our politicians should be doing what’s best for the PEOPLE, not the wealthy.
    Scott your analysis is excellent. This is late-stage capitalism only if we want it to be. A few more changes to the tax code, we can re-create the conditions again that created the middle class, one of the greatest innovations the world has ever seen. My advice to the rich: Invest in the people, not only do they deserve it, but they will make you even richer, too.

  29. Jeff says:

    Scott, the most misleading thing here is that you appear to equate growth in asset values as income. It’s only income when sold and much of that income was destroyed by government caused inflation/ dollar devaluation.

    How disruptive would it be to tax people annually on the increase in value of their home or static stock portfolio?

    Government caused inflation through waste, inefficiency and misallocated resources hurts the poor and middle class the hardest while benefiting the wealthy which own most of the physical assets that increase in value offsetting inflations theft.

    A smaller government and a flat tax would do far more for the poor and the economy than further punishing those that create value.

  30. Eric Hughes says:

    Another lucid, powerful, honest, and big-hearted analysis from the Prof. He is a national treasure.

    And yet, he seems completely unable to persuade the right-wing economic policy zombies still roaming the earth (and, it seems, this comment thread.)

  31. Jeff says:

    Arthur Laffer interview…
    “…1,000 years ago, if you taxed people at 110% of their income, if every time they went to the office, instead of a check they got a bill, they’d probably stop working. Ten thousand years in the future, too. What the wages are, what the taxes are—all of that changes, so you get different responses. But the principles don’t change, and the principles are what’s really critical. If you tax people who work, and pay people who don’t work—do I need to say the next sentence to you? Don’t be surprised if a lot of people don’t work! If you tax rich people and give the money to poor people, you’re going to get lots and lots of poor people, and not many rich people…”

    • Jeff says:


      …Taxes are all bad. Some are worse than others. It’s much better [writing a check] than trying to put in an incentive structure inside taxes to make it better. That tells you what not to do; do not report taxable income. People will evade, avoid, or otherwise not report taxable income. We tax people who speed on the freeway. Why do we do that? To get them to stop doing that. We tax smokers to get them to stop smoking. In the same breath, why do we tax people who earn income? Why do we tax people who employ other people? Why do we tax people who make good products at low costs? We don’t tax them to get them to earn less income. We don’t tax them to get them to not employ other people. We tax them to run the government, but don’t think the same consequences don’t occur as with smoking taxes and spending taxes—they do. Just be smart about it.”

  32. C Lane says:

    Very misleading one sided analysis straight from Marx. Capital gains are a massive tax on imaginary inflation related gains for many ither than the tech billionaires. If you sell your home after 30 years and garner a huge taxable gain, reality is most if not all is imaginary nominal gains. Not “real” inflation a gains. This is true of all long term gains. Further a look at the actual taxes paid by strata and as a percentage of income all of the leftist arguments fall apart. But you already know that so you conveniently ignore the facts you don’t like.

    Further, find me a bureaucracy with no incentive to be efficient only to placate their political masters that will allocate capital better than those who previously used their capital to create economic value (presuimg they outran the debasement of currency).

  33. Jeffrey says:

    Personal Income Taxes: Stop vilifying the wealthy as not paying their fair share?

    The top 5% of earners paid 66% of all personal income taxes. The bottom half of earners only paid 2%. When is everyone else going to pay their fair share (sarcasm- trying to make a point)?

    “The top 1% of income earners in America made 26% of the country’s total income in 2021 and paid 46% of total income taxes (their avg tax rate: 26%). The bottom 50% of income earners made 10% of total income and paid 2% of total income taxes (their avg tax rate: 3%).”

    Yes- there are also consumption taxes- in which rich people consume more- and it’s not as progressive as personal income taxes because it’s a flat tax.

  34. Jeffrey says:

    Ignorance leads to vilifying wealthy tax payers.

    “One third of democrats think the top 1% only pay 1% of the federal personal income taxes. Most feel they should be taxed at a rate below their actual tax rate.

    “To the best of your knowledge,” asked a new poll, “how much do you think the top 1% of taxpayers by income account for in terms of share of total federal income taxes paid: 1%, 12%, 42%, or 64%?”

    The correct answer, as of 2020, is 42%. But less than a quarter of those surveyed guessed right. Twenty-two percent (including more than a third of Democrats) thought the top 1% of taxpayers paid only 1% of income taxes, which is wildly off the mark. Twenty-five percent suggested it was 12% of revenue. Nineteen percent shrugged and said they weren’t sure.

    …Fifty-four percent of those surveyed said they’d shift the tax burden “by having high earners pay more,” which suggests that the left’s “fair share” mantra has sunk in. But then see this question: “What do you think would be a fair top tax rate on income: 0%, 10%, 20%, 30%, 40%, or higher?”

    Seventy-one percent chose a figure of 30% or less. Only 5% of respondents said they want a top tax of 40%, and 8% opted for “higher.” Huh. As a reminder, the current federal income tax that Americans pay today has a top marginal rate of 37%. Add state and local income taxes, and the top marginal rate hits 50.3% in California and 51.8% in New York City.”

  35. Burgess says:

    Sounds more like the state is the one sticking it to the earner not the Feds as often implied by the left ….. fair share get obliterated at the state level not the Federal.

  36. steven says:

    just tax the churchs and move to a flat tax, everybody pays.

  37. Dan says:

    One piece of context about accumulation and rates – if someone were to have worked, full-time, since July 4, 1776 until today, at today’s local minimum wage, they’d only have made a single-digit number of millions. In California, at $16/hour, this super-patriot would have made $8.3 million. Jeff Bezos’ 2007 was the equivalent of 460 of these super-patriots.

    • Mitchell Goldstein says:

      Everything you said is obvious. We just need the political will to do it

  38. Tim says:

    Interesting article, Scott. I agree with a lot of this, like eliminating the step-up basis on inheritance. I don’t like the idea of taxing capital gains more, as that would dis-incentivize people from investing in companies and innovation. I also think you don’t give enough credit to how the average earner can transition to being an owner. I’ve never earned more than $50,000 per year in my life, but I live very frugally and have been able to amass enough dividend stocks over several decades, that I could pay my bills with dividends if I had to. This would make me both an “earner” and an “owner”. One of the things I don’t like about left wing economic talking points is they like to make it seem impossible for an average person on an average salary to become an owner, but that just isn’t true. There is a learned helplessness perpetuated by a lot of these types of articles that I don’t like. You don’t need a six figure salary to become an investor and generate passive income, it just takes careful planning, discipline, and time.

  39. Yoav Michaely says:

    All true.. but: capital gains on assets are indeed taxed at favorable, low rates. Dividends , rent, interest ( all product of assets) are taxed the same as wage income.
    Also , the article did not fully explore the issue of deductions and tax exemptions.
    How about canceling ALL of those including donations, including university and church tax free status.
    Keep SS tax without a cap , like Medicare , tax all income the same with no deductions at all
    And then have simple brackets.
    0-150k (couples) no tax
    150-300 10%
    300-600 15%
    600-1,000 20%
    Over one million -25 %
    This will give government way more taxes and then the government will support higher education directly ( like most European countries do) etc. etc.

  40. Nelson says:

    It’s enough to make you sick. How the super rich get away with this just shows how dumb the American public has become. The fact that half of them vote for a guy who perpetuates this inequality illustrates how hopeless the struggle will be to make any change to the system.

  41. Abiewend says:

    I live in Florida…. Would you mind explaining our state and local income tax? I would love to know as I haven’t (and can’t) file a state/local tax return.

  42. Venkat. Warren says:

    I get Social Security check monthly !
    Am I an Owner or Earner ?!
    Gotch u !! Cheers.

  43. Linda Glick says:

    Thanks for highlighting these inequities. As part of the higher income professionals who keep our economy working(doctors, PhD’s, non profit execs, etc)we’ve been subjected to this
    rigged tax system for decades.

Join the 500,000 who subscribe

To resist is futile … new content every Friday.