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Tax details of US super-rich allegedly leaked

bbc.com

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Re: Tax details of US super-rich allegedly leaked

#141

Post by pwillia7 »

bradjohnson wrote: post #80
imgabe wrote: post #14

Earlier quoted context omitted.

We do tax capital gains. You pay taxes when you sell. Do you mean tax unrealized capital gains? There is a reason you don’t owe taxes on a stock you haven’t sold yet. For one thing, what if you have to pay tax at one valuation, and then it goes down later.

This isn't really true. If you receive RSUs as part of compensation, you have to pay taxes according to the value of the stock at the time of vesting. You also have to pay tax when you sell the stock equal to the difference in price from vesting. You might get a refund or you might pay more taxes when you sell, but there is precedent to paying taxes on stock that you currently hold.

Hey wait but those are for normal people!

Re: Tax details of US super-rich allegedly leaked

#142

Post by alkonaut »

imgabe wrote: post #136
alkonaut wrote: post #132

Earlier quoted context omitted.

Taxes on real estate work that way and are a favorite among economists. I borrow say $500k to buy a house. Then I’m taxed some % of the property value each year e.g 1%.

Real Estate is not the same thing as stock. There is a finite amount of land. You didn't make it. Ultimately it is a shared resource and we pay a fee to society while we are permitted the exclusive use (with some restrictions) of a small part of the planet we all share. Anyone can start a company tomorrow and declare that they have a billion shares of stock in that company. They only become worth something because th…

Yes property taxes have another dimension of “fairness” to them, but that’s not why economists favor them: it’s because they can’t easily be dodged and are easy to extract (knowledge of property ownership is pretty reliable).

Taxation isn’t necessarily based on what’s fair or rational, it’s a way of financing public expenses. It might be more logical from the perspective of the people as a whole to tax wealth more and income less (for example) even though wealth is less logical and “fair” to tax than income or consumption.

Re: Tax details of US super-rich allegedly leaked

#143

Post by benlivengood »

rayiner wrote: post #99
dougmwne wrote: post #24

Earlier quoted context omitted.

Once you have a certain amount of assets, there's no need to realize any personal income. It becomes completely voluntary. If you have a billion in stock, you could leverage that to pay personal expenses. You could use an unrealized loss over there to balance out the cash you're taking in from a gain over there. You can use companies and foundations to execute any vision you have outside of your household. If you pla…

> If you have a billion in stock, you could leverage that to pay personal expenses. And how do you pay back that loan? > You could use an unrealized loss over there to balance out the cash you're taking in from a gain over there. So can everyone. > If you play that game long enough, your descendants will get a cost basis step up. That's a strong argument for reforming estate taxation.

> And how do you pay back that loan?

Get another loan. If you're rich your assets are growing and so refinancing an existing loan with a larger one gives you more cash to spend and to perform perfunctory maintenance on the loan until it's time for an even bigger loan.

Dying in debt to your trust fund just means the trust fund can write off a large loss before estate taxes.

Re: Tax details of US super-rich allegedly leaked

#144

Post by imgabe »

GavinMcG wrote: post #29
imgabe wrote: post #14

Earlier quoted context omitted.

We do tax capital gains. You pay taxes when you sell. Do you mean tax unrealized capital gains? There is a reason you don’t owe taxes on a stock you haven’t sold yet. For one thing, what if you have to pay tax at one valuation, and then it goes down later.

What if? Most jurisdictions assess property taxes annually, and many of them regularly reassess the property value on which the tax is calculated, rather than waiting until a sale to reassess. One question is whether we want to encourage pure ownership/holding of assets (the current stock ownership situation) or whether we want to encourage productive use of an asset (the current land ownership situation).

Land can have buildings on it. It might have resources like water, oil, minerals, timber, that can be used. It's a shared resource and we pay society for exclusive use of it.

What "productive use" are you going to get out of a share of Amazon stock?

The company itself will do productive things, but taxing people to hold the stock is going to make them do what productive thing, exactly?

Re: Tax details of US super-rich allegedly leaked

#145

Post by paulpauper »

alkonaut wrote: post #132
imgabe wrote: post #41

Earlier quoted context omitted.

But borrowing is not equivalent to selling, tax wise or any otherwise. When you get a mortgage to buy a $750k house, do you want to be taxed as though you had $750k income that year? You’re just borrowing against the value of an asset after all.

Taxes on real estate work that way and are a favorite among economists. I borrow say $500k to buy a house. Then I’m taxed some % of the property value each year e.g 1%.

but that is only 1% and real estate is generally considered less volatile than stocks

Re: Tax details of US super-rich allegedly leaked

#147

Post by H8crilA »

sneak wrote: post #60
H8crilA wrote: post #45

Earlier quoted context omitted.

This is not on topic, but to me it's ridiculous that something like HELOC exists and is somehow widely accepted. Like dude, you'll never pay down that debt. Your house is not an ATM machine.

What's ridiculous about borrowing against equity? They repay when they sell the home.

The underlying assumption that prices only go up. It's so deep in the culture you don't even see the absurdity of not building any equity except for what's generated by upwards price momentum.

Re: Tax details of US super-rich allegedly leaked

#149

Post by sneak »

H8crilA wrote: post #147
sneak wrote: post #60

Earlier quoted context omitted.

What's ridiculous about borrowing against equity? They repay when they sell the home.

The underlying assumption that prices only go up. It's so deep in the culture you don't even see the absurdity of not building any equity except for what's generated by upwards price momentum.

Well, population growth has been a constant throughout that culture and that nation's entire history, so all of the consequences of that are to be expected, no?

Re: Tax details of US super-rich allegedly leaked

#150

Post by bradjohnson »

imgabe wrote: post #139
bradjohnson wrote: post #128

Earlier quoted context omitted.

>Isn’t that generally a problem where people get slammed with huge tax bills on stock they aren’t able to sell and may not have the cash available to pay? No, I can't say I've ever heard of that happening. You should be able to sell to cover. This will typically happen during an open trading window and brokerages will offer an option for "sell to cover". >Why would we want to do more of that? I didn't make a value st…

Ok correct me if I'm wrong, but RSUs are given to you as a part of your income, right? You don't buy them? That would make sense then to tax them as compensation. If the company gave you other non-cash items as a form of compensation, you would have to pay tax on that too. If the company rents an apartment for you, the value of the rent would be considered income. That is a lot different than buying a stock at $10, h…

First paragraph is correct.

The caveat would be that the capital gain during sale is calculated based on the difference from the price at vesting. So the original taxation is carried with you while you hold the stock which is the mechanism that you thought didn't exist for a reason.

For the second paragraph, it's not so different from real estate market fluctuations. You pay taxes based on the value of your property at a specific date even if that value tanks the very next day.

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