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We are publishing the tax secrets of the .001%

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Re: We are publishing the tax secrets of the .001%

#121

Post by fryry »

fairity wrote: post #109

One of the primary mechanisms for tax avoidance is taking out loans against appreciated capital assets to avoid realizing capital gains. What's stopping the average citizen from exploiting this tax avoidance strategy? For example, every time I try to submit an order to sell stock that results in short-term capital gains, my broker should be asking me whether I want to take out a collateralized loan instead. If there…

Also available in the UK, Interactive Brokers margin loan. The interest rate is 1-2% p.a.

Re: We are publishing the tax secrets of the .001%

#122

Post by jessaustin »

failwhaleshark wrote: post #74
gota wrote: post #54

Earlier quoted context omitted.

I disagree almost completely. I understand your concerns - but they are based on weighing personal freedom above all else, and I just don't. I think there's a tradeoff there and it is favorable in favor of disclosing tax information. To your points: > gold-diggers I'm not sure if this is an idiomatic term and out of my grasp, but if you mean that people will get romantically involved with others because of their mone…

> this is a non-issue. Who are you to have the gall to claim conclusive knowledge of an unknowable without a shred of evidence? How do you think gold-diggers and con-artists work, hang-around at airports, golf-courses, and investment brokerages waiting for rappers with the most gold chains? > I think its fine in context. That's your opinion that you're deciding for other people. It's the only number that matters and…

Who are you to have the gall...

Whoa, relax. ISTM GP is probably a typical human. "Gold-diggers" are not and have never been a major threat to reasonably well-adjusted people. For weirdos who temporarily possess more money than they deserve, perhaps "gold-diggers" are a spice of life. Fools and wealth are soon parted, but that's true no matter what gets published.

Re: We are publishing the tax secrets of the .001%

#123

Post by jedberg »

fairity wrote: post #109

One of the primary mechanisms for tax avoidance is taking out loans against appreciated capital assets to avoid realizing capital gains. What's stopping the average citizen from exploiting this tax avoidance strategy? For example, every time I try to submit an order to sell stock that results in short-term capital gains, my broker should be asking me whether I want to take out a collateralized loan instead. If there…

My Etrade account has that option. But I don't use it because it's risky. If you take out a loan collateralized by a stock, the stock could drop and you'd owe a lot of money.

Selling the stock locks in the gain. Now, if you only need say 1/2 the value as cash and can absorb the risk of the stock going down, then it makes sense. Or if you want to "buy insurance" by taking out an opposite short position, that would also make sense. But that short position will cost you money too.

So it's not as straightforward as "just take out a loan". You need a very good (and expensive) tax accountant to run the numbers and figure out the best strategy for your situation. Most people can't afford that.

Re: We are publishing the tax secrets of the .001%

#124

Post by adolph »

fairity wrote: post #109

One of the primary mechanisms for tax avoidance is taking out loans against appreciated capital assets to avoid realizing capital gains. What's stopping the average citizen from exploiting this tax avoidance strategy? For example, every time I try to submit an order to sell stock that results in short-term capital gains, my broker should be asking me whether I want to take out a collateralized loan instead. If there…

If one’s broker had collateralized loans in their menu of options, what volume of gains are needed to overcome the initial setup costs of the loan?

Re: We are publishing the tax secrets of the .001%

#125

Post by jedberg »

tomp wrote: post #117
fairity wrote: post #109

One of the primary mechanisms for tax avoidance is taking out loans against appreciated capital assets to avoid realizing capital gains. What's stopping the average citizen from exploiting this tax avoidance strategy? For example, every time I try to submit an order to sell stock that results in short-term capital gains, my broker should be asking me whether I want to take out a collateralized loan instead. If there…

Can you explain how this works, how it avoids tax? Taking a $100 loan still means you’ll need an income of $100 (plus interest) future income and tax paid on this income... If you’re gonna say “they benefit in the extra capital gains between now and when the loan is repaid” - no, that can’t be it, that’s exactly equivalent to taking a $100 loan and investing in stocks instead (i.e. leverage).

The assumption is that you are using the money for an income generating activity like buying a rental property.

Re: We are publishing the tax secrets of the .001%

#126

Post by [deleted] »

bidirectional wrote: post #99
whiddershins wrote: post #92

Every time someone tries to make a tax targeting the ultra rich, it ends up hurting the moderately wealthy instead. Every. Single. Time. The worse tax situation is always the person who makes 500k in a good year, or sells a house they held for 25 years which went up a bunch in value. I suspect this is a significant factor in social mobility. Our tax system is punitive to people who try to leave the working class.

How does this effect social mobility? I agree the tax system is unfair towards those in the 1% but not 0.001%, but I don't see how it is so punitive that those earning 500k or owning appreciating assets are taxed back down to a lower social class. And no one reaches those upper echelons by saving their 500k/year or holding their house for a really long time.

[deleted]

Re: We are publishing the tax secrets of the .001%

#127

Post by jdlshore »

eplanit wrote: post #55
itsoktocry wrote: post #49

Earlier quoted context omitted.

> Large grain of salt required. What exactly do I need to "take" with a large grain of salt? Have you been in seclusion for the past 20 years? I'm pretty sure we're at the point where the burden of proof is on the billionaires to demonstrate they aren't funnelling away their money, not vice versa.

Evidence isn't necessary for one who is already convinced. However, there is a lot that says that the 1% actually pay the vast majority of taxes collected: https://www.publishedreporter.com/2021/04/05/op-ed-top-1-inc... https://howmuch.net/articles/high-income-americans-pay-major... https://taxfoundation.org/top-1-percent-pays-more-taxes-bott...

The next article in the series states that the mass of citizens with equivalent wealth pay about 100x the tax.

The billionaires may pay more tax individually, but they don’t pay a fair share, if that’s true. Given what we know about Trump’s taxes and what Buffett has been saying, I found it entirely believable.

Re: We are publishing the tax secrets of the .001%

#128

Post by dvh »

mlac wrote: post #24

I would really just like a flat tax. No loopholes or deductions. Very simple. It should not take a masters degree to understand the tax code. I recognize this is one of the main ways Policy is implemented (incentives can drive certain behavior), but we’ve got hundreds of years of complexity going on and I wouldn’t mind simplifying this. I don’t know where to start though.

How about removing income tax (hard to measure, easy to avoid by rich) and increasing vat by the same amount. Vat could be even added to stocks (buying $5000 of Tesla stocks? Pay 20% vat. This could probably end all short term speculations as well). Definitely to yacht and houses, vacations, butlers and gardeners, gold doorknobs, Ferraris, swimming pools, 200" LCDs, hotel stays, massages, anything that is consumption really)

Re: We are publishing the tax secrets of the .001%

#129

Post by pydry »

whiddershins wrote: post #92

Every time someone tries to make a tax targeting the ultra rich, it ends up hurting the moderately wealthy instead. Every. Single. Time. The worse tax situation is always the person who makes 500k in a good year, or sells a house they held for 25 years which went up a bunch in value. I suspect this is a significant factor in social mobility. Our tax system is punitive to people who try to leave the working class.

One of the lobby tactics the ultra rich use is to try and push a tax hike/new tax to hit as many people as possible to stall its implementation.

Then they also go on an all out propaganda offensive to act like it'll hit even more than that.

Re: We are publishing the tax secrets of the .001%

#130

Post by cj »

tomp wrote: post #117
fairity wrote: post #109

One of the primary mechanisms for tax avoidance is taking out loans against appreciated capital assets to avoid realizing capital gains. What's stopping the average citizen from exploiting this tax avoidance strategy? For example, every time I try to submit an order to sell stock that results in short-term capital gains, my broker should be asking me whether I want to take out a collateralized loan instead. If there…

Can you explain how this works, how it avoids tax? Taking a $100 loan still means you’ll need an income of $100 (plus interest) future income and tax paid on this income... If you’re gonna say “they benefit in the extra capital gains between now and when the loan is repaid” - no, that can’t be it, that’s exactly equivalent to taking a $100 loan and investing in stocks instead (i.e. leverage).

1) You purchased $100 of SPY on June 15th, 2020

2) You're buying a house, and you need $100 today.

3) You sell $100 of SPY, and pay short-term capital gains (up to 37%)

OR...

1) You purchased $100 of SPY on June 15th, 2020

2) You're buying a house, and you need $100 today.

3) You take a loan for $100

4) You wait until June 15th, 2021 and then sell $100 of your SPY holdings, paying long-term capital gains (15-20%)

5) You repay the $100 loan

...it doesn't really avoid tax. It's just an alternative way of accessing capital by taking out a loan instead of liquidating assets.

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