Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

Buy, Borrow, Die – Explained

old.reddit.com

Post reply on HN
Print view View original

111–120 of 504 posts

Re: Buy, Borrow, Die – Explained

#111

Post by xmprt »

SoftTalker wrote: post #95
TrackerFF wrote: post #85

It always puzzled me how tax-adverse some wealthy people are. I'm not talking about the wealthy people that have 100% of their wealth tied up to company (stock) that they operate - but the wealthy people that are just asset-rich, with zero operational duties. Their wealth is handled by wealth managers, they probably don't even know what they own. But minimizing taxes and hoarding wealth is priority number 1.

Why does this puzzle you? It seems like completely expected behavior to me. Most people try to minimize taxes. Who do you know that gladly pays more than they legally have to pay?

I feel like if I were a billionaire or even a multi millionaire, I'd have better things to spend my time doing than worrying about taxes.

Re: Buy, Borrow, Die – Explained

#112

Post by relaxing »

SoftTalker wrote: post #95
TrackerFF wrote: post #85

It always puzzled me how tax-adverse some wealthy people are. I'm not talking about the wealthy people that have 100% of their wealth tied up to company (stock) that they operate - but the wealthy people that are just asset-rich, with zero operational duties. Their wealth is handled by wealth managers, they probably don't even know what they own. But minimizing taxes and hoarding wealth is priority number 1.

Why does this puzzle you? It seems like completely expected behavior to me. Most people try to minimize taxes. Who do you know that gladly pays more than they legally have to pay?

> Most people try to minimize taxes.

I don’t think this is true. Most people pay more in taxes, and receive the pleasure of a refund check come April.

Re: Buy, Borrow, Die – Explained

#113

Post by zkelvin »

xmprt wrote: post #105
bhauer wrote: post #51

Earlier quoted context omitted.

The step-up in cost basis on death is the original sin that underpins the entire debate over unrealized gains. It's disheartening to see so much thought and deliberation going into an obviously toxic idea (taxing unrealized gains) when the obvious solution (removing the cost basis step-up when assets change hands) is being ignored. Inherited wealth is the least earned, so it should be politically palatable to change…

This might be unpopular but I think there are ways that taxing unrealized capital gains could work without being super radical. 1. Allow unrealized losses to be deducted. 2. Once a certain percentage of the gain is taxed, step up the cost basis by the amount of tax paid. That way you avoid double taxation (once under the unrealized value and again when the asset is sold). 3. (optional) Keep the tax rate on unrealized…

Taxing unrealized capital gains already isn't all that radical -- property tax is effectively a tax on unrealized gains of property value, and essentially every municipality has that tax.

Re: Buy, Borrow, Die – Explained

#114

Post by zkelvin »

bhauer wrote: post #51
wmf wrote: post #42

If this is accurate, it finally explains something I've been asking about for years: The loan is paid back after the step-up in basis. That's the loophole. If the loan was paid back before step-up, the estate would still have to pay capital gains tax.

The step-up in cost basis on death is the original sin that underpins the entire debate over unrealized gains. It's disheartening to see so much thought and deliberation going into an obviously toxic idea (taxing unrealized gains) when the obvious solution (removing the cost basis step-up when assets change hands) is being ignored. Inherited wealth is the least earned, so it should be politically palatable to change…

Do you consider municipal property taxes (which, when the property value has risen since purchase, effectively taxes unrealized capital gains) also to be "obviously toxic"?

Re: Buy, Borrow, Die – Explained

#115

Post by w4 »

CalChris wrote: post #110
w4 wrote: post #102

Earlier quoted context omitted.

This actually has more to do with the vast majority of CEO compensation being structured as stock option grants, and very little if anything to do with “Buy, Borrow, Die.” It’s largely meant to communicate skin in the game to shareholders (“I don’t make any money unless I drive shareholder value via stock price increases"). Whether or not that’s actually true is a totally different matter and depends largely on the a…

The point of Buy is to acquire the asset you will Borrow against. How doesn't really matter. So Larry did that by growing a company. Good for Larry. But the tax avoidance is the same from there. Borrow, Die.

Sure. But you can do that more effectively by also being paid a salary (which you can then use to buy more stuff!).

Re: Buy, Borrow, Die – Explained

#116

Post by w4 »

yuvadam wrote: post #104
w4 wrote: post #92

Earlier quoted context omitted.

How odd. This is a rather interesting catch, especially in light of the upcoming tax fight in 2025 with the TCJA and Expanded Child Tax Credit expirations, and the unrealized capitals gains tax proposals. Given the other comments pointing to the SEO benefits of creating a subreddit just for a single post, it has shades of an effort to seed the information space and shape the narrative in advance of the tax fight by g…

It's mainly just a really bizzare post, super interesting and informative, but why would anyone in that position go into the trouble of typing up that amount of detail and post it in a brand new subreddit?

On a 7 day old Reddit account, no less. It’s very odd.

Re: Buy, Borrow, Die – Explained

#117

Post by [deleted] »

zkelvin wrote: post #114
bhauer wrote: post #51

Earlier quoted context omitted.

The step-up in cost basis on death is the original sin that underpins the entire debate over unrealized gains. It's disheartening to see so much thought and deliberation going into an obviously toxic idea (taxing unrealized gains) when the obvious solution (removing the cost basis step-up when assets change hands) is being ignored. Inherited wealth is the least earned, so it should be politically palatable to change…

Do you consider municipal property taxes (which, when the property value has risen since purchase, effectively taxes unrealized capital gains) also to be "obviously toxic"?

[deleted]

Re: Buy, Borrow, Die – Explained

#118

Post by Retric »

jongjong wrote: post #99
bhauer wrote: post #51

Earlier quoted context omitted.

The step-up in cost basis on death is the original sin that underpins the entire debate over unrealized gains. It's disheartening to see so much thought and deliberation going into an obviously toxic idea (taxing unrealized gains) when the obvious solution (removing the cost basis step-up when assets change hands) is being ignored. Inherited wealth is the least earned, so it should be politically palatable to change…

>Inherited wealth is the least earned Let's be real. No wealth is 'earned'. It's almost entirely luck and social connections. No different from inheritance. Besides, inheritance can be hard work, psychologically. Your parents may be in a very different socioeconomic group than you for most of your adult life. Your baseline expectation for a 'normal' lifestyle is somewhat elevated (due to the lifestyle you experienced…

People can live a long time which can turn relatively modest investments with average returns into significant wealth. 21 to 101 is 80 years and cost dollar averaging kicks in.

Sure you could call a long life and decent job luck, but a lot of people live into their 90’s.

Re: Buy, Borrow, Die – Explained

#119

Post by alasdair_ »

ashkankiani wrote: post #86
pmichaud wrote: post #74

Earlier quoted context omitted.

Maybe there's just no good solution here, but I think the original inspiration for this sort of law was about family homes. It's one thing to inherit stocks and have to sell some of them off, but it's much more complex to try to pass down a property that can't be arbitrarily subdivided. There are various options obviously, but I think enough people had to sell their beloved childhood home because of the tax obligatio…

Make an exemption for a primary residence. Everything else can go. Stop letting people hoard wealth like dragons.

There is already a 13.something million dollar exception. If the house is worth more than that it should be taxed anyway.

Re: Buy, Borrow, Die – Explained

#120

Post by ramraj07 »

zkelvin wrote: post #113
xmprt wrote: post #105

Earlier quoted context omitted.

This might be unpopular but I think there are ways that taxing unrealized capital gains could work without being super radical. 1. Allow unrealized losses to be deducted. 2. Once a certain percentage of the gain is taxed, step up the cost basis by the amount of tax paid. That way you avoid double taxation (once under the unrealized value and again when the asset is sold). 3. (optional) Keep the tax rate on unrealized…

Taxing unrealized capital gains already isn't all that radical -- property tax is effectively a tax on unrealized gains of property value, and essentially every municipality has that tax.

Why isn’t every person defending this idea mentioning this fact. It’s so obvious once you mention it.
Post reply on HN