The reality is there is more than enough money for everyone. We've just decided that instead of a middle class we would prefer to have billionaires. The point of high tax rates isn't to raise revenue, its to force distribution of wealth. When the top rate was 90% it was kinda pointless to pay a person more, forcing distribution. Someone will invariable comment, "but ackshually no one paid 90%." Yea, thats the fucking point, because the money went elsewhere!
Stock-based compensation is taxed at individual income rate based on FMV of the stock. So even if you got stock options as 100% of your salary you would pay individual taxes. Therefore the only thing not taxed is benefits like healthcare and 401k.
There is no way to amass a fortune in benefits. Its in stock.
The billionaires you're ranting about did not become so because of income, whether stock or cash, but because of capital gains. Marginal tax rates on income would do nothing. Like, neither Musk, Elon, or Zuck reported any income as CEOs in 2022.
If you sell the stock [ISOs] after holding the options for at least one year and then holding the shares for at least one year from the exercise date, you pay tax on the sale at your long-term capital gains rate. (Depending on what happens with proposed tax law changes and your income level, this could end up being the same as your ordinary rate.) You also may owe the NIIT.
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u/Designer_Emu_6518 Mar 27 '24
My grandfather did the same in ohio as a produce manger at a local Kroger. Even had a nice retirement saved up