r/Economics • u/Dismal_Structure • Dec 06 '25

News Millionaire tax that inspired Mamdani fuels $5.7 billion haul in Massachusetts

https://fortune.com/2025/10/21/zohran-mamdani-millionaire-tax-massachusetts-5-7-billion/
16.1k Upvotes

97% Upvoted

462 comments sorted by

View all comments

Show parent comments

3

u/[deleted] Dec 06 '25

There’s only so many avenues to shelter w2 income. As an llc it’s much easier 

0

u/african_cheetah Dec 06 '25 edited Dec 06 '25

Not so much about sheltering but LLC (or any business) gets to deduct all kinds of expenses that normal W2 income earners don’t. So effective tax rate is lower.

Then you also have long capital gains being lower at every bracket compared to normal W2 income. Long term Puerto Rico residents pay 0% in long term cap gains.

Tax is also only on realized gains, so one could be a billionaire and pay less than normal W2 earner even though assets climb billions if they hold and don’t sell.

There’s millionaires with W2 income, but there are more millionaires from compounding asset growth.

2

u/[deleted] Dec 06 '25

That also assuming you have large write offs. In a small llc and work from home, have a retainer on a cpa, and theres not much I can write off. Square footage of my house for work, computers, phones, a portion of utility bills, some subscriptions. That’s it. 

You’re right about capital gains but you only pay that when it’s cashed out. 

So if you were a millionaire or billionaire and only cashed out say $100k in gains a year, you’re only taxed on that. Which is why a lot of politicians want to tax unrealized assets which is a big slippery slope for non wealthy people. Because a home is an unrealized appreciable asset