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The Big Escape: How the Ultra-Wealthy Avoid Paying Taxes and How to Fix It [pdf]

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Re: The Big Escape: How the Ultra-Wealthy Avoid Paying Taxes and How to Fix It [pdf]

#101

Post by evilos »

ninja3925 wrote: post #39

I have noticed that politicians always use extremes (many standard deviations away from the average) to illustrate a population.For example, Warren Buffet wealth is in the top 10. Yet, Warren's policies target the top 1% (top 10 is the top 0.00033% of the top 1%). He is not representative of the top 1% in any way!! Show me the median and let's talk. I am surprised people bite at this manipulative narrative. It seems…

To be top 1% in 2020, a household needed a net worth of $11,099,166. $10,374,030 was the 1% threshold in 2017.

To be top .5% in 2020, a household needed a net worth of $17,557,208. The top .1% bracket started around $43,207,732.

This wealth tax doesn't kick in until 50M USD.

https://dqydj.com/average-median-top-net-worth-percentiles/

Re: The Big Escape: How the Ultra-Wealthy Avoid Paying Taxes and How to Fix It [pdf]

#102

Post by evilos »

avalys wrote: post #30

Most of the “ultra-wealthy” have their wealth in the form of stock in public companies. This is certainly true for the examples she lists. If they’re all going to have to sell 2% of their holdings each year to pay for this wealth tax, who are they going to sell to and where is the money going to come from? It seems like this is a recipe to generate some temporary funding for the US government by selling off our natio…

Couldn't the shares just be transferred instead of sold?

Re: The Big Escape: How the Ultra-Wealthy Avoid Paying Taxes and How to Fix It [pdf]

#103

Post by mrkurt »

commandlinefan wrote: post #99
mrkurt wrote: post #73

Earlier quoted context omitted.

You're not really missing anything, but there's a giant loophole. If you have $84 billion (or even $20 million) in stocks and assets, you can borrow against them without converting them to income. Then you can die. Then your estate pays off the debt without paying income taxes. Thus, 0 income taxes over a lifetime of converting wealth to income.

> you can borrow against them without converting them to income. Then you can die. But surely you have to make payments on those loans before then... interest payments at least. You're either making those payments with the money you were loaned or from your regular income (that was taxed in the first place). At that point you might as well just pay the capital gains taxes because you're losing the same money to inter…

Rich people get access to astonishingly favorable loans. And they never have to make interest payments.

> Merrill Lynch recently quoted an interest rate of 3.2% to clients with at least $1 million in assets. Those with $100 million or more can get a rate as low as 0.87%.

These are loss leaders for banks. They want to entice incredibly wealthy people to do business with them and have their companies do business with them.

Wealthfront has a product for the merely rich: https://www.wealthfront.com/portfolio-line-of-credit

> Because your line of credit is secured by your diversified investment portfolio, we can keep the rates low for you. Depending on account size, current rates are 2.40% - 3.65%. Using a line of credit is generally cheaper than carrying a balance on a credit card or taking out a personal loan.

> Borrow up to 30% of your account whenever you need it, for whatever you need. Pay back what you borrow and the interest payment on your own schedule.

Re: The Big Escape: How the Ultra-Wealthy Avoid Paying Taxes and How to Fix It [pdf]

#104

Post by evilos »

anonymoushermit wrote: post #7

You can tell how close we are to complete collapse by how hard they agitate for outright wealth confiscation, and how sloppy they are with their attempts at intellectual sleight-of-hand. Like clockwork, from a historical perspective.

A moment of silence for those poor millionaires/billionaires who will have to pay taxes like filthy plebs.

Re: The Big Escape: How the Ultra-Wealthy Avoid Paying Taxes and How to Fix It [pdf]

#105

Post by CyanLite2 »

dahfizz wrote: post #69
belltaco wrote: post #41

Earlier quoted context omitted.

>Plus, a lot of that wealth is likely 'in' his company, which is really just fake money. Then maybe we should give the poor some of this "fake money" since it's fake and doesn't matter anyway. >EDIT: Repeat after me: net worth increases are not income. Net worth increases are not income. I mean, I "made" $250k last year in home appreciation, but that's just fake money. If they taxed me on it, it would come out of my…

> you can borrow against assets like this with secured loans Okay, and how do you pay back these loans? That's right: with your income. You're just moving the problem around.

Ultra-Wealthy secured loans don't work like mortgages you and I deal with. On a $1 billion dollar asset, they can borrow like 40% of that, with no monthly payments, just one big balloon payment at the end of the 10+ year term with a little bit of accrued interest. They simply refinance in 10 years, and now the asset is worth $3 billion and then they take out an even bigger loan. Because it's a loan, it's not considered taxable income. And the interest payments on this loan are tax deductible. And usually these assets (like real estate, or stocks) often pay out dividends or rental income. So they can borrow on these assets ad infinitum and use the proceeds to continue to reinvest in more hard assets and to fund their lavish lifestyle. They won't directly own a super-yacht, their company will own it and rent it back to them, with the maintenance expenses considered business expenses since it's a rental business. Same with their vacation houses. Along the way they may pay a modicum of capital gains taxes on the stock dividends, but it's usually offset by the tax-deductible interest on the loan itself. Rinse and repeat for a few decades.

At the end of it all, they have enough dividends/rental income, that's paying for lavish lifestyles, and they still own all of the hard assets that they can then pass down to their heirs with minimal taxable events.

Re: The Big Escape: How the Ultra-Wealthy Avoid Paying Taxes and How to Fix It [pdf]

#106

Post by commandlinefan »

ninja3925 wrote: post #39

I have noticed that politicians always use extremes (many standard deviations away from the average) to illustrate a population.For example, Warren Buffet wealth is in the top 10. Yet, Warren's policies target the top 1% (top 10 is the top 0.00033% of the top 1%). He is not representative of the top 1% in any way!! Show me the median and let's talk. I am surprised people bite at this manipulative narrative. It seems…

> I am surprised people bite at this manipulative narrative.

I suspect it's people believing what they want to believe. When Elizabeth Warren comes along and says, "you can have everything you need: healthcare, food, clothing, housing, all without having to work at a job you hate, and all we have to do is agree to take a little bit from a few people who won't even miss it", a lot of people who do work at a job they hate and stress about how much healthcare, food, clothing and housing they have or might have in the future don't really see much downside in saying, "yeah, sure, let's try it".

Re: The Big Escape: How the Ultra-Wealthy Avoid Paying Taxes and How to Fix It [pdf]

#107

Post by mbg721 »

Closi wrote: post #36
iammisc wrote: post #8

Earlier quoted context omitted.

Yeah, this is written in extremely manipulative language. What was warren buffett's income in 2018? We have income tax, not wealth tax. Plus, a lot of that wealth is likely 'in' his company, which is really just fake money. I mean, I know accountants look at it and there is some overlap for taxes when doing things like options and share grants and FMV, but really, a company is worth zero until you sell it, like most…

> a company is worth zero until you sell it, like most assets. I don’t think that’s quite true - I would say a better definition would be that a company is worth what someone will pay for it, regardless of if you actually sell it or not. Stocks, piles of gold and cash are just different types of asset all of which have value. And you have to really tax all of that, otherwise the wealthy will just avoid taxes by being…

That definition works for things like gold bricks or stocks that are purely treated as assets, but it can create some odd outcomes.

In the 90s there were stories of a fan who caught a milestone home-run baseball and because of its sentimental value didn't want to sell it, but had to do so in order to pay the tax bill.

In the extreme case, if I have a child, does that constitute income equal to the price a human-trafficker would be willing to pay for him or her?

Re: The Big Escape: How the Ultra-Wealthy Avoid Paying Taxes and How to Fix It [pdf]

#108

Post by ramblinrose »

csallen wrote: post #3

> In 2018, Warren Buffett had a net worth of $84 billion. The effective tax rate on his mountain of wealth? 0.006%—orders of magnitude lower than the tax rates paid by most middle-class families. What tax rate do middle-class families pay on their net worth? 0% I believe, since we don't have wealth taxes?

How is this the top comment? It does nothing to move the discourse forward. You are trying to slam the brakes by homing in on some tricky terminology. I wish this kind of comment would get downvoted into oblivion anytime the topic of a wealth tax comes up, whether or not you agree with it.

The difficulty you are having in parsing out the comparison here is because the comparison is difficult to make (and possibly you are just trolling). How would you word this sentence to make it more clear? It is clear from the rest of the document that what is being compared is not the "wealth tax" on families, because as you said we don't have wealth taxes.

The comparison is what percentage of wealth do families already give to the government through taxes in general. Nowhere does it mention an existing "wealth tax". Most middle-class families build their wealth from a paycheck, while ultra-rich families can do so through other means that aren't taxed. Whether or not you agree that a wealth tax would be of benefit here, it's hard to argue against that point. And that is what your referenced quote is trying to elucidate.

Re: The Big Escape: How the Ultra-Wealthy Avoid Paying Taxes and How to Fix It [pdf]

#109

Post by satronaut »

monocasa wrote: post #86
satronaut wrote: post #75

Earlier quoted context omitted.

Everyone gets a free education for 12 years, and access to infinite knowledge (library with books and internet). Qualifying families also have access to dirt cheap internet (at&t offers internet for 10$ a month if you're poor). Most anybody has the means to research how to set up an amazon store, a blog, or a youtube channel and start making business income. But instead of spending their time learning how to better t…

> set up an amazon store, a blog, or a youtube channel and start making business income. Those are barely above MLM scams in likelyhood of making money. You're sort of proving the opposite of your point by giving those as examples to pull yourself out of poverty.

you can make money if you do your research. You won't make millions over night, but you have to start somewhere. Really though, if people learned how to properly budget their time and money, change their habits, and disassociate from groups that bring them down, they'll have positive changes in their life.

You can lead a horse to water but you can't make it drink though.

Re: The Big Escape: How the Ultra-Wealthy Avoid Paying Taxes and How to Fix It [pdf]

#110

Post by CyanLite2 »

commandlinefan wrote: post #99
mrkurt wrote: post #73

Earlier quoted context omitted.

You're not really missing anything, but there's a giant loophole. If you have $84 billion (or even $20 million) in stocks and assets, you can borrow against them without converting them to income. Then you can die. Then your estate pays off the debt without paying income taxes. Thus, 0 income taxes over a lifetime of converting wealth to income.

> you can borrow against them without converting them to income. Then you can die. But surely you have to make payments on those loans before then... interest payments at least. You're either making those payments with the money you were loaned or from your regular income (that was taxed in the first place). At that point you might as well just pay the capital gains taxes because you're losing the same money to inter…

The rich invest in hard assets that produce income. Whether that's dividend from stocks, or rental income from commercial buildings. That recurring income is usually enough to service the loan.

And remember the ultra-rich themselves own the bank. Warren Buffet has huge multi-billion dollar positions in Goldman Sachs and Wells Fargo, in addition to owning the real-estate arm of Berkshire Hathaway itself. And the ones that don't own the banks, still get favorable personal treatment from banks in order to get their M&A or underwriting business.

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