The Greatest Wealth Transfer in History Is Here, with Familiar (Rich) Winners

Post by yieldcrv » Sun, May 14, 2023, 4:44 PM UTC

steveBK123 wrote: post #48

CPLX wrote: post #32

Earlier quoted context omitted.

You’ve zeroed in on the most egregious problem. Step up basis is insane as a policy choice. It basically means that we just don’t tax the primary means of income used by wealthy people AT ALL. If a company pays you you have to pay taxes on it. Unless the company pays you by inflating the value of stock in that company, in which case you just… don’t.

Yeah. I think a lot of the non-founder, high-pay FAANG crowd is in the funny spot where we are all paid super well, pay a lot of taxes, but if we were richer.. we'd actually pay a lot less taxes. Being paid salary by employers, we can't structure our compensation to the most tax efficient forms. The guys (almost always guys) at the top structure their pay to forms like stock or pass-thru or carried-interest, or whate…

Post by Eddy_Viscosity2 » Sun, May 14, 2023, 5:33 PM UTC

bluedevil2k wrote: post #35

pavlov wrote: post #6

Meanwhile the estate tax in the US only applies to inheritances larger than $12.9 million. People with that kind of wealth also know how to start planning early to avoid the tax, so the tax is practically ineffectual. A fairer inheritance tax could go a long way to fixing the worsening wealth gap in America.

What’s the argument FOR an inheritance tax, when it comes to fairness? The person who’s passsing the money down already paid tax on the money, whether income tax or capital gains tax. The government already got a hefty chunk of that earned money. Why should it be taxed again? Especially when we see how inefficient the government is at spending money for the public good.

Post by Retric » Sun, May 14, 2023, 5:48 PM UTC

prepend wrote: post #84

Retric wrote: post #15

Earlier quoted context omitted.

No, because you’re gaining interest on your unpaid taxes. Suppose you have exactly 1 million and must pay 1 million in taxes on year 0. That means you’re left with 0$. Now suppose you can defer exactly 1 year, so you owe 1 million + taxes on your interest in year 1. Taxes on that interest are 0$. That’s equivalent to lowering your tax bill even if nominally you eventually pay more. But what happens if you can avoid p…

But this is just a function of leverage and isn’t unique to tax deferment. This seems more of a complaint about rich people than rich not paying taxes. With 7% interest you end up paying the same tax as initial liquidation in 10 years so it’s not perpetual. And you eventually pay tax on the gains so even though you made money, the government eventually gets their money and ends up with a larger total.

Post by HDThoreaun » Sun, May 14, 2023, 6:06 PM UTC

voisin wrote: post #64

googlerx wrote: post #62

Earlier quoted context omitted.

> The person who’s passsing the money down already paid tax on the money. If they're passing down cash yes, but if they pass on assets like stocks or real estate, the cost basis gets stepped up to the fair market value at the time of death (in the US at least). So any capital gains accrued on those assets prior to the death of the person passing them on are just never taxed.

There isn’t a deemed disposition at the fair market value at the time of death? I thought the estate paid that capital gain which is why the inheritor receives it at the new FMV?

Post by readthenotes1 » Sun, May 14, 2023, 6:08 PM UTC

Incipient wrote: post #82

mcntsh wrote: post #69

Earlier quoted context omitted.

For me, this comment just highlights how egregious taxation already is.

Yet how woefully it has failed to curtail growing inequality. The well off have proven for millennia they won't support the hardest hit on society. Governments have to do that.