Tax details of US super-rich allegedly leaked • Hacker News Board

Re: Tax details of US super-rich allegedly leaked

#181

Post by chrismcb » Wed, Jun 09, 2021, 7:21 PM UTC

cheriot wrote: post #171

Dracophoenix wrote: post #164

Earlier quoted context omitted.

How is that any different than paying with a credit card or using reward points? Those aren't taxable or treated like income so why should loans and mortgages be?

The difference is what secures the loan: - credit card: nothing - mortgage: the house - car loan: the car One could make rules about loans secured by assets with unrealized gains (with an exemption for a primary residence). PS Credit card reward points are taxed as interest income in the US so look for a 1099 INT.

Why? The loan didn't get paid back magically. It isn't going to get paid back by other loans. It will eventually be paid with taxable income.

Re: Tax details of US super-rich allegedly leaked

#182

Post by sneak » Wed, Jun 09, 2021, 7:42 PM UTC

H8crilA wrote: post #177

sneak wrote: post #149

Earlier quoted context omitted.

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?

Housing prices always reverts back to CPI over multiple decades, i.e they offer no real capital gain. Robert Shiller wrote a lot about this. Also I don't understand how a growing population leads to increasing prices, while there's so damn much unused land? Either there is enough new land, then people eventually spread out (and prices revert to the CPI, to the cost of construction), or there isn't enough land and hom…

> Either there is enough new land, then people eventually spread out (and prices revert to the CPI, to the cost of construction), or there isn't enough land and homelessness increases as more and more people are completely priced out.

It's not binary. People like to live near other people in cities. Demand to live close to one's job, friends, activities, and loved ones drives up prices in dense areas even with unlimited room to expand elsewhere.

Desirable locations are desirable even on an infinitely-sized map.

Re: Tax details of US super-rich allegedly leaked

#183

Post by hundt » Thu, Jun 10, 2021, 2:20 AM UTC

rayiner wrote: post #93

01100011 wrote: post #5

I've seen people complaining that the article is disingenuous because it conflates income taxes with capital gains taxes. My response is 'so what'. When you make above a certain income level, you don't need anymore income and can play around with reinvesting capital gains to push taxes into the future while amassing wealth. Sure, you're not realizing the income, but what you're doing, I think, is gaining power and in…

The article is disingenuous for two reasons. 1) The "so what" is that capital gains is a different thing than wage income from an economics standpoint. Capital gains taxes have different economic effects than income taxes. Most economists agree that capital gains should be taxed lower than income. Most countries tax capital gains far lower than wage income. For example, in Canada only half of someone's capital gains…

> to actually do anything with that paper wealth, he needs to sell the stock or engage in a similar realization event, in which case that gain will be taxed

The ProPublica analysis that the BBC refers to [1] explains it: you borrow with the capital as collateral and then when you die the debt is repaid by selling some of the capital. But because of the stepped-up basis on death there is never a "realization" of positive gains.

[1] https://www.propublica.org/article/the-secret-irs-files-trov...

Re: Tax details of US super-rich allegedly leaked

#184

Post by cheriot » Thu, Jun 10, 2021, 3:15 AM UTC

chrismcb wrote: post #181

cheriot wrote: post #171

Earlier quoted context omitted.

The difference is what secures the loan: - credit card: nothing - mortgage: the house - car loan: the car One could make rules about loans secured by assets with unrealized gains (with an exemption for a primary residence). PS Credit card reward points are taxed as interest income in the US so look for a 1099 INT.

Why? The loan didn't get paid back magically. It isn't going to get paid back by other loans. It will eventually be paid with taxable income.

Someone sufficiently wealthy can push off taxes until they die and their heirs can use the step up basis[1] to avoid them entirely.

There's also a huge advantage in the ability to choose when one wants to pay taxes even if they eventually do get paid. Buffet loves to talk about unrealized gains as a loan from Uncle Sam at zero percent interest.

[1] https://www.investopedia.com/terms/s/stepupinbasis.asp

Re: Tax details of US super-rich allegedly leaked

#185

Post by CTmystery » Mon, Jun 14, 2021, 3:30 AM UTC

refurb wrote: post #170

benlivengood wrote: post #143

Earlier quoted context omitted.

> 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.

This is not how it works. You don’t write off secured debt loses when you die all the while passing on billions of assets. I swear people just make things up to try and prove their point.

I wouldn't mock the parent so quickly. See page 24 here for the game that's being played: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3242314

Particularly the section "Stepped-up Basis on Death (Die)"