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We are publishing the tax secrets of the .001%

propublica.org

131–140 of 580 posts

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

#131
post #2

> Many will ask about the ethics of publishing such private data. We are doing so — quite selectively and carefully — because we believe it serves the public interest in fundamental ways, allowing readers to see patterns that were until now hidden.... We believe that disclosing the identities of billionaires who paid little to no taxes in years their fortunes grew by billions of dollars will help readers understand t…

> quite selectively and carefully > allowing readers to see patterns that were until now hidden am I being too cynical, or is this a "pick one" situation? what "pattern" are the readers supposed to see in this carefully chosen subset of the data? what patterns do the unchosen subsets show?

This is where trust comes in. Most people need a narrative and a story to follow the threads; they are not experts in determining what the data does or does not tell us, and someone has to attempt to do so.

I'd give ProPublica the benefit the doubt here. They have the resources to hire the right talent, and that talent is likely empowered to keep conjecture at bay or properly disclosed.

And, of course, you're unlikely to get all the data. Stories like this will nearly always, in some form or fashion, be based on a somewhat incomplete snapshot of data or documents. But taking that data and corroborating it with what we do know is often enough to add validity to the assumptions that are being reached by a publication such as ProPublica.

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

#132
post #106

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.

You’re not actually talking about the “moderately wealthy.” Just because billionaires are insanely wealthy doesn’t change the fact that a household making $500,000 is still incredibly wealthy. There’s already an exemption for capital gains tax on the sale of primary homes. $500,000 for married couples, and you can remove the cost basis and cost of improvements from the equation. In other words, almost nobody is taxed…

>>A household that makes $500k on a good year is actually in the 1% statistically. They have left the working class long ago. They could work for about 7-10 years in their career and retire with an above-median salary (withdrawing following the 4% rule) in perpetuity. That is by definition not the working class: that family barely has to work in order to secure a lifetime of comfortable living.The "in a good year" qualifier in both your comment and the parent comment means that your conclusion that this person has left the "working class" is untrue. It's not uncommon to get a windfall (stock option vesting cliff, inheritance, capital gains, etc.) that boosts income in a single year to many multiples of one's typical income. Such an occurrence does not boost the recipient out of the working class. Managed carefully, it can change their life (buy a house, turbo-charge retirement savings, etc.) but no one's buying a private island with a single year of $500k income.

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

#133
The people who will be most upset about this probably aren't the wealthy people themselves, but their lawyers and accountants.

I have a lawyer friend who does estates for ultra-wealthy people. Each week, her whole firm gets together to review all new laws that have been passed that might change estates, and one of them does a "book report" on how to take advantage of old laws. They consider this their competitive advantage and how they win clients over other firms -- by being better at taking advantages of loopholes.

I'm sure they'll be looking at this article to both gain ideas and check if any of their own clients are there and if any of their secrets are revealed.

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

#134

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.

> Every time someone tries to make a tax targeting the ultra rich, it ends up hurting the moderately wealthy instead. Every. Single. Time.

Could you please share some of the situations you're thinking about here? I'm not familiar.

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

#135
post #117

Earlier quoted context omitted.

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.

Hm, but income from rental is also taxed, isn't it? If so, how does it help?

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

#136

It seems like this is missing the obvious focal point: loans taken out by individuals against assets like stock options and equities should be taxed as income. It's trivial to evade income tax when you have accumulated wealth in equities by taking out a loan against the equities and then progressively liquidating them at capital gains tax rates to fulfil the loan payments. If every loan taken out by Elon Musk or Jeff…

Why does this matter? The real problem is that the capital gains tax rate is below the income tax you would have to pay for the same income. Either you adjust the capital gains tax upwards to match income taxes or you replace it completely with income taxes. You don't need a complicated loan tax.

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

#137

Earlier quoted context omitted.

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

Hm, but income from rental is also taxed, isn't it? If so, how does it help?

The income from the rental is taxed, but slowly over decades. You don't have to take that entire tax hit in one year.

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

#138
post #112

Earlier quoted context omitted.

You can: https://www.schwab.com/pledged-asset-line https://www.wealthfront.com/portfolio-line-of-credit And HELOCs are essentially the same for people who own a house but not stocks.

Got it, but why don't brokers more aggressively push this program onto clients? It seems like a win-win. The debtor avoids the elevated short-term capital gains tax. The bank gets interest payments on a loan that has an almost 0 default rate due to the loan being fully collateralized.

> It seems like a win-win.

It's not a win-win, there's significant risk.

> fully collateralized

This is not true! The underlying asset fluctuates in value and is open to lowering significantly in value, leaving the bank holding the bag.

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

#139
post #98

Earlier quoted context omitted.

They also state: "We have gone to considerable lengths to confirm that the information sent to us is accurate. We compared the tax data in our possession to other sources of the same information wherever we could find them, some of which were public (a tax return for a candidate for national office), others of which were private. In every instance we were able to check — involving tax filings by more than 50 separate…

Sure, but it’s likely that a state actor had this information too. Any credible attempt at deception would use as much corroboratable data as possible.

I find it unlikely that even a state actor would have access to literally all the same private data that ProPublica has acquired over the years, and that they'd know what data ProPublica has and what can be safely manipulated.

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

#140

Earlier quoted context omitted.

Hm, but income from rental is also taxed, isn't it? If so, how does it help?

The income from the rental is taxed, but slowly over decades. You don't have to take that entire tax hit in one year.

You can also sell it and take the gains tax free in many cases.
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