121–130 of 150 posts
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Taxing unrealized gains in a blanket way is bad but a more targeted threshold, such as taxing them when used in loan arrangements in which someone borrows against their holdings to avoid paying taxes on realizing the gains, seems like it would achieve the spirit of such a tax
Taxing people for going into debt certainly an... interesting idea.
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It was not that it didn't apply to me. I've had shareholdings in Norwegian companies worth well over the deductible several times. The point is that it isn't a problem in practice as long as you're aware of it and plan accordingly. Yes, if you start a company in Norway without a liquid market for your shares, and without understanding the tax implications, you might end up having a bad time of it. If you spend an hou…
> You don't have to like it, and people are free to whine about it, but in reality it's a problem only if you don't know what you're doing. Maybe? Or maybe it's just a PITA that most people don't want to deal with? It's not nice when you company is doing well, and your reward is having to pay a bunch of extra taxes and deal with financing all that somehow. At least, I find paying income/value-added tax a lot more pal…
At the same time there is a significant social good in encouraging efficient investment of capital. If someone can't get returns sufficient that the wealth tax is nothing but a minor nuisance, it's better that capital gets distributed elsewhere.
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In the US property taxes largely go to fund public schools, local police/fire/emergency medical service, parks, roads, sewer, water, and trash collection. Generally the amount you need for such services is more a function of how much non-vacant land you have in the area than how much vacant land, so unless switching to just taxing vacant land was accompanied by some tax on something else to cover the aforementioned t…
The fairest system would be a flat tax per person, surely. Each person will use a pretty average amount of state resources. It's expensive to live in California, after all.
Not surprising that an Atlas Shrugged reading entrepreneur dislikes taxation. But government services cost money, and by other accounts [0] Norway are doing pretty well: Norway performs well in many dimensions of well-being relative to other countries in the Better Life Index. Norway outperforms the average in jobs, work-life balance, education, health, environmental quality, social connections, civic engagement, saf…
Holy shit, this blog tries to sell me the the right to highlight text! This gotta be the most extreme instance of NFT brain I've ever encountered...
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> They’re ‘unrealized gains’ for a reason The bridge that governments are attempting to make is between "you can't tax me on these, they're unrealized gains!" and "I'm going to fund my billionaire lifestyle by borrowing against these unrealized gains." Maybe tax people on those unrealized gains if they use them as collateral?
Maybe don't allow unrealized gains to be used as collateral for borrowing?
Mr Entrepreneur starts a business with $1,000 of his own capital and manages to grow his stake to $1,000,000. If the only way for him to use the $1,000,000 as collateral for a loan is to sell it and realize the gain, then he doesn’t need the loan anymore and a successful entrepreneur is deprived of ongoing ownership. But by allowing him to borrow on the $1,000,000 and taxing him, he is still able to maintain his share and use a portion of the loan proceeds to pay the new collateral tax. Netting less of the loan proceeds seems preferable for everyone than to force him to sell his stake.
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> They’re not paying 7.25% on those loan The rate I gave was for Bancorp's best SBLOC, for loans of over $10 million. HELOC rates (home equity loan) are anywhere from 7.65-8.6% right now. It doesn't take many years before you end up paying more in interest than you would have had to pay in capital gains - and of course, you need to pay back SBLOCs every year with interest, so you're having to sell assets - and paying…
If you want to know what they’re paying interest rate wise you aren’t going online to find it. We are talking about private bankers and exclusive preferred lender terms. These do go below (sometimes far below) market rates. We are talking about folks who typically have 50 million USD+ in assets. They may even do all this via their own private corporation investment vehicles which further skews things. This is why I w…
For goodness sake, the interbank rate right now is 4.8%. No one is getting close to that no matter how much they are worth.
Someone like Mark Zuckerberg does not need this for anything but short-term cash - where you don't want to, or can't do to trading rules, liquidate assets immediately or all at once. Instead you get a loan, sell assets slowly to cover it and repay it as quickly as you can.
The idea that someone in their 40s is living off debt as a capital gains tax avoidance strategy frankly sounds like someone has mistaken a financial services advertisement for a sound strategy.
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> A few percent of interest is a lot cheaper than 38% Not sure why that is comparable.
Let's say you have a tax debt of 1m, and your choice is to take out a 1m net dividend. Now you have to pay dividend tax. The other alternative is to borrow 1m, and pay interest on a 1m loan. Unless you hold the loan long enough for the aggregate interest accrued until you're able to sell some shares exceeds the dividend tax, it's a net saving.
The real alternative is to not tax illiquid wealth.
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If you want to know what they’re paying interest rate wise you aren’t going online to find it. We are talking about private bankers and exclusive preferred lender terms. These do go below (sometimes far below) market rates. We are talking about folks who typically have 50 million USD+ in assets. They may even do all this via their own private corporation investment vehicles which further skews things. This is why I w…
I gave example for a $10 million line of credit. The assets required for that it is $50 million. For goodness sake, the interbank rate right now is 4.8%. No one is getting close to that no matter how much they are worth. Someone like Mark Zuckerberg does not need this for anything but short-term cash - where you don't want to, or can't do to trading rules, liquidate assets immediately or all at once. Instead you get…
These types of loans are absolutely used as part of tax avoidance strategies employed by net worth individuals of a certain asset class. It is unlikely anyone on HN is doing this successfully if at all. As I repeatedly indicated it’s used successfully by people in a certain asset class, and it’s part of a broader strategy regarding how wealth is managed for the individuals that are able to take advantage of this.
I also linked several articles on how these things work, here’s another that talks about the tax loophole specifically: https://equitablegrowth.org/closing-the-billionaire-borrowin...
I did not say it’s the only way people live off their wealth though. That is something I never stated or indicated
Now as far as the rates go I wish I could find the article that that talks about it from earlier this year, but yeah if you really are super high net worth you aren’t paying 7%, but even if we take that off the table for the sake of argument, if you expect to net more than interest paid by a significant enough margin the loans still make sense, and for the class of folks I’m talking about they will almost always be able to outpace the rate by a significant margin