Editor,

Ed Kahl wrote that the recent Tesla stock sale proves the wealth tax would have a devastating effect on pension funds (“Wealth tax debacle” letter to the editor in the Nov. 13 edition of the Daily Journal).

Elon Musk sold $6.9 billion in shares and options at an average price of $1,030 per share. He will probably sell more in the fourth quarter in large part to pay taxes on the stock and options that he earned. Pension investments in Tesla were rewarded with a 46% stock price increase in the last year. That is a pretty nice ride even without a spaceship.

Please don’t give me that malarkey that the pension investors will be hurt by Musk’s sale or a wealth tax.  

All the more reason our progressive tax system should be adjusted so the wealthy would pay higher taxes. One example is a higher tax on income $500,000 and up or a tax on the wealth itself as has been discussed in Washington, D.C.

We talk about Social Security and Medicare not having enough money in their trust funds in 10 years.

Why don’t we eliminate the cap on the FICA tax?

A value-added tax as Europe imposes, is a consumption tax that falls mainly on the lower and middle class, is not reasonable either.

At least Elon Musk pays his taxes unlike his fellow rocketeer Jeff Bezos.

Luke O’Brien

San Mateo

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(7) comments

Terence Y

Mr. O’Brien, please don’t give me that malarkey that pension investors will be hurt by Musk’s sale or a wealth tax just because you say so. In case you haven’t noticed, the wealthy do pay higher taxes. By some estimates, the top 1% pays 40% of all income taxes in the nation. As for eliminating the cap on the FICA tax, as long as you also eliminate the cap on Social Security payments. And then we’re back where we started – more income but also higher payments. BTW, I didn’t realize Mr. Bezos was convicted of tax evasion due to not paying taxes. Oh wait, he wasn’t. Seems like Mr. Bezos took advantage of current tax law, just like everyone else can.

edkahl

Some how you missed the point of my letter. If a wealth tax reduces the value of stocks say 20% that would devastate the value of pensions funds holding those stocks. Since pensions funds like CALPERS have difficulty earning the funds necessary to pay for pensions, why make it worse? Since a wealth taxes failed in Europe and they are unconstitutional in the US all the talk about them is nonsense.

Jorg

Keep in mind that Ed has a very ingenious way of figuring out the average income tax in European countries: take the highest bracket you can find and add the VAT tax for certain goods!

edkahl

Google "EU tax rates" and the op of the page shows 55% income tax rates for EU countries. Then add 20% value added tax and total taxes are even higher.

Jorg

Oh, Ed! You keep confusing top tax rates and average net tax after deductions, - which also varies quite a bit from country to country. And to add another tax rate with an entirely different, non-related reference base, like VAT, is ridiculous! Even basic math has some logical rules! It should be pretty obvious, and not so hard to understand, or what?

edkahl

You’re fighting a loosing battle. Everyone and his dog knows that net income taxes on the average person in EU countries is far higher than in the US. The VAT tax is no less a tax on personal income than an income tax is. So far no EU welfare state has discovered a way to support their welfare states on less than about 65% taxes on personal income. US tax payers will never agree to give up this amount economic freedom. It is one of the big reasons younger Europeans want to immigrate to the US.

Jorg

Ed: How can I possibly explain it more simply than I have already done? You demonstrate such a complete lack of understanding of even the simplest ground rules in math, that I have to wonder if you flunked out of 3rd grade. Adding income tax and VAT is worse than mixing apples and oranges! Don’t you have anyone, a neighbor or a kid, who can explain it to you?

Besides, Europe consists of a number of very different countries, with vastly different tax rates and deductible rules.

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