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How to have a billion dollar exit with zero capital gains tax

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Re: How to have a billion dollar exit with zero capital gains tax

#231

Post by LeifCarrotson »

dmje wrote: post #68

Unfashionable thought: pay your damn taxes. Loopholes are one thing and IMO should be closed but morality is another. The whole idea that you can make a billion dollar business without being hugely dependent on the infrastructure, education, history, societal background etc that has largely been paid for by...taxes...is utter fallacy. Maybe if massively profitable businesses spent a bit more time doing the right thin…

If all you have to encourage people not to use those loopholes is an appeal to their morality, then you should not be surprised to find a bunch of amoral people and amoral corporations ignoring you.

The rich must be forced to do the right thing, otherwise they will not do it. Expecting otherwise is lunacy. Maybe one or two foolish and good ones will try to do the right thing, but they'll be swiftly out-competed in our hyper-efficient economy by those willing to break rules and cut corners.

Re: How to have a billion dollar exit with zero capital gains tax

#232

Post by gwright »

olalonde wrote: post #171
modeless wrote: post #32

There's an opportunity zone adjacent to Palo Alto that extends into Menlo Park. It has a Four Seasons hotel in it. There are other areas nearby that could use the investment incentive a lot more IMO. Who decided on these zones? Seems totally arbitrary.

It is arbitrary. Probably created by special interest groups and the politicians that cater to them. As if taxes were good in some geographic areas but not in others.

That doesn't sound like "arbitrary". In fact it sounds very "reasoned".

Re: How to have a billion dollar exit with zero capital gains tax

#233

Post by chii »

coldtea wrote: post #135
popcorncowboy wrote: post #124

Earlier quoted context omitted.

> what's the difference between sitting on say $500MM in cash, and $800MM? At least $15M a year over most 3 year horizons, or the insane compounding effect of $300M invested over the long haul. Your question makes sense from a "normal" perspective, but doesn't once you're UHNW [0]. > It's either way going to be more money than you'll ever be able to spend. Not even close. At UHNW levels there are whole classes of thi…

> At least $15M a year over most 3 year horizons, or the insane compounding effect of $300M invested over the long haul. How about the insane compounding effect of a better funded society, through less multi-mill/billionaire tax avoidance? > Your question makes sense from a "normal" perspective, but doesn't once you're UHNW Or rather, it makes sense from a normal (non quotes) perspective, but not from the point of a…

> insane compounding effect of a better funded society

this "compounding" is not captured by the private individual, where as the compounding from the saved taxes is.

Re: How to have a billion dollar exit with zero capital gains tax

#234

Post by chii »

ericmay wrote: post #195
lukas099 wrote: post #178

Earlier quoted context omitted.

Reducing your taxable income is stealing? So if I contribute to a Roth IRA, I am stealing too?

Depends on the spirit of the reduction and income levels. A Roth IRA was designed specifically for wage earners to have a tax-friendly investment vehicle to save for retirement. This benefits them and society. I don’t think you can say the same thing about the OP here.

> This benefits them and society. I don’t think you can say the same thing about the OP here.

The OP is given a tax incentive to build businesses in depressed economic zones and low-income areas.

Both roth ira and this special tax "loop hole" are incentives the gov't implemented to encourage a beneficial behaviour.

Re: How to have a billion dollar exit with zero capital gains tax

#235

Post by refurb »

throwawaygh wrote: post #176
lukas099 wrote: post #172

Earlier quoted context omitted.

If we keep putting special-interest clauses in our tax codes like these 'business opportunity zones' without expecting everyone who is capable to come in and exploit them to the maximum extent possible, that is really on us.

It adds insult to injury that a billionaire real estate mogul made EXACTLY this argument when selling his tax policy and business conduct (I’m just being a good businessman, and I’ll fix the rigged system by getting rid of loopholes!), then turned around and got rid of special deductions for normal folks and created a massive special interest handout for real estate moguls.

got rid of special deductions for normal folks

I assume you're talking about the SALT deduction? The one that mostly benefits the highest income earners?

Interesting how when people personally benefit from a tax break it's "entirely justified", but when someone else does it's a "massive special interest handout".

Re: How to have a billion dollar exit with zero capital gains tax

#236

Post by chii »

Thorrez wrote: post #127
panta wrote: post #113

Earlier quoted context omitted.

Yes, but these stats obviously take into account only paid taxes and wealth that remains visible. If you have 50 bn$, of which 1 is kept and taxed locally, and 49 moved through shell companies to offshore tax heavens, you'll still end up as one of the top tax payers, even if you are evading about ~5000%. Obviously this is much harder to do if you earn 200k/year.

Yes, if the top 1% paid their fair share, they would pay more than 33% of the country's taxes. But nevertheless they do in fact pay 33% of the country's taxes.

so is not paying more than their per-capita ratio not a fair share? I think 33% for a 1% cohort is quite large.

Why does the relative amount of tax paid against the total networth matter in this instance?

Re: How to have a billion dollar exit with zero capital gains tax

#237

Post by refurb »

ericmay wrote: post #195
lukas099 wrote: post #178

Earlier quoted context omitted.

Reducing your taxable income is stealing? So if I contribute to a Roth IRA, I am stealing too?

Depends on the spirit of the reduction and income levels. A Roth IRA was designed specifically for wage earners to have a tax-friendly investment vehicle to save for retirement. This benefits them and society. I don’t think you can say the same thing about the OP here.

The 401k was a literal tax loophole - it was never intended to be a tax-deferred retirement vehicle. Some accountant just noticed it in the tax code and figured that most Americans could actually take advantage of it.

https://www.northwesternmutual.com/life-and-money/your-401k-...

I assume you're sticking to your morals and don't use the 401k loophole?

Re: How to have a billion dollar exit with zero capital gains tax

#238

Post by ChrisLomont »

unglaublich wrote: post #164

... and let others pay for the upkeep of the country that enabled your success :).

... by investing in places deemed in need of investment, thereby providing jobs and skills and tax base (property, services, income taxes, unemployment taxes, growth in surrounding infrastructure)......

When an investor gets a billion dollar return, remember that is the value from a company that likely provides billions more to local economies.

Re: How to have a billion dollar exit with zero capital gains tax

#239

Post by chii »

IanCal wrote: post #149
epistasis wrote: post #71

Earlier quoted context omitted.

This isn't a loophole as much as a completely designed tax break. That's a different deal than some body squeaking around tax law; this was all about trying to change parts of the nature of capitalism's tendency to rerun money to capital more than to labor. If you think it's misguided, I do too. Though I think it's good to invest in under invested areas, I also think we need to counteract the effects of the Henry Geo…

> This isn't a loophole as much as a completely designed tax break. I strongly doubt that the outcome here is the intent of the tax break, which seems to be "pump money into poor areas and we'll let you off the CGT on the amount you invested in the area". She "re-invests" a thousand dollars by starting a company that is just a few people in some co-working spaces, and walks away a few years later with hundreds of mil…

The business is hypothetical in the article, but the hypothetical is a software business, and is making money. So they didn't "just place people in some co-working spaces", they did work as employees and got paid, which brings in economic activity to a depressed region. Seems to be exactly what the tax break is intending.

This is much better a tax break than a city bidding for an amazon HQ with a custom tax break deal that they have to compete with other cities!

Re: How to have a billion dollar exit with zero capital gains tax

#240

Post by refurb »

kmonsen wrote: post #86
ggm wrote: post #72

Earlier quoted context omitted.

This is HN. we welcome diversity of views. this view you espouse, is not actually a minority view, but still, its a divisive topic. I'm a high tax kinda guy. If we all had Norway taxes, we'd have Norway sovereign fund and EV and lifestyle (but maybe without SAD, because we're not all that far north)

Norwegian taxes are not too far off from CA or NY taxes to be honest. The marginal rate tops out at under 50%. It’s worse for capital gains and they have a wealth taxes so a lot worse for some.

I'm not sure the top marginal rate is relevant unless you compare at what income it kicks in at?

The top CA or NY bracket is dependent on the top US federal bracket which kicks in at $537,000.

Not to mention the 25% VAT in Norway.

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