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We are publishing the tax secrets of the .001%

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Re: We are publishing the tax secrets of the .001%

#141

Post by gota »

failwhaleshark wrote: post #74
gota wrote: post #54

Earlier quoted context omitted.

I disagree almost completely. I understand your concerns - but they are based on weighing personal freedom above all else, and I just don't. I think there's a tradeoff there and it is favorable in favor of disclosing tax information. To your points: > gold-diggers I'm not sure if this is an idiomatic term and out of my grasp, but if you mean that people will get romantically involved with others because of their mone…

> this is a non-issue. Who are you to have the gall to claim conclusive knowledge of an unknowable without a shred of evidence? How do you think gold-diggers and con-artists work, hang-around at airports, golf-courses, and investment brokerages waiting for rappers with the most gold chains? > I think its fine in context. That's your opinion that you're deciding for other people. It's the only number that matters and…

I think you're being downvoted our of tone, rather than content. So let me respond in reverse order, as the first point seems to be the most emotional for you

>Nope, you automatically lept entirely in the wrong direction: it's not the justice who can be bought that is the problem, but the rich knowing how to calculate exactly how to exploit and buy-off the poor. Think Indecent Proposal or Bhopal rather than some Western movie about a crooked town sheriff.

I absolutely think that the core issue is that the legal system can 'be bought', i.e., it can bankrupt people even if they are right. Reforming that shouldn't be completely impossible and would by definition solve the niche problem you are describing. Btw, as a rule _any_ corporation can sue _any_ non-famously rich person and be sure that they threat of litigation costs will weight in their favor. Disclosed tax info worsens nothing from the current status quo.

> That's your opinion that you're deciding for other people.

It is opinion, yes. But all laws are someone's opinion 'deciding for other people'. And I mean absolutely all laws, even the most basic ones like the right to live or to have private property. It's all social constructs, and we decide which ones stand

> Who are you to have the gall to claim conclusive knowledge of an unknowable without a shred of evidence? How do you think gold-diggers and con-artists work, hang-around at airports, golf-courses, and investment brokerages waiting for rappers with the most gold chains?

I must say I'm surprised this issue seems important to you (and again - completely irrelevant to me). I absolutely don't care about something that I've only ever heard about in soap operas and have never, ever, heard of an example that bothered me in real life. I'm curious what makes this a relevant issue in your view, but I understand if its personal and you don't want to explain. But if you don't have any personal biases, let me argue that the problem of gold diggers is primarily a problem for the gold-dug (?). If a rich person doesn't want to marry/have a relationship with a person that only likes them for their money... then don't. I don't care, and I think nobody should

Re: We are publishing the tax secrets of the .001%

#142

Post by fairity »

jedberg wrote: post #123
fairity wrote: post #109

One of the primary mechanisms for tax avoidance is taking out loans against appreciated capital assets to avoid realizing capital gains. What's stopping the average citizen from exploiting this tax avoidance strategy? For example, every time I try to submit an order to sell stock that results in short-term capital gains, my broker should be asking me whether I want to take out a collateralized loan instead. If there…

My Etrade account has that option. But I don't use it because it's risky. If you take out a loan collateralized by a stock, the stock could drop and you'd owe a lot of money. Selling the stock locks in the gain. Now, if you only need say 1/2 the value as cash and can absorb the risk of the stock going down, then it makes sense. Or if you want to "buy insurance" by taking out an opposite short position, that would als…

Why isn't there an option to take out a loan where a repayment option is to transfer the capital asset (at whatever the value happens to be at the time of repayment)?

I.e. I don't get why the risky part of this loan can't be mitigated by the bank taking on the risk and managing it separately. Surely, there would be investors willing to back these types of collateralized loans?

Re: We are publishing the tax secrets of the .001%

#143

Post by tomp »

jedberg wrote: post #125
tomp wrote: post #117

Earlier quoted context omitted.

Can you explain how this works, how it avoids tax? Taking a $100 loan still means you’ll need an income of $100 (plus interest) future income and tax paid on this income... If you’re gonna say “they benefit in the extra capital gains between now and when the loan is repaid” - no, that can’t be it, that’s exactly equivalent to taking a $100 loan and investing in stocks instead (i.e. leverage).

The assumption is that you are using the money for an income generating activity like buying a rental property.

The correct expression to use to refer to such money is “loan”, not “tax evasion”.

Re: We are publishing the tax secrets of the .001%

#144

Post by lumost »

fairity wrote: post #109

One of the primary mechanisms for tax avoidance is taking out loans against appreciated capital assets to avoid realizing capital gains. What's stopping the average citizen from exploiting this tax avoidance strategy? For example, every time I try to submit an order to sell stock that results in short-term capital gains, my broker should be asking me whether I want to take out a collateralized loan instead. If there…

The average citizen can't borrow to pay off debts indefinitely.

At ~2% interest the billionaire can borrow against their assets and keep borrowing to pay off interest. The assets gain in value at 4-6% per year so they are actually coming out ahead and paying 0% tax.

Even a middle class retiree typically needs to draw down their savings to pay expenses. Giving up 2% to avoid taxes wouldn't be viable. The bank would also observe that there is a higher risk that the retiree goes bust than a billionaire and not lend enough money for the scheme to be worthwhile.

Re: We are publishing the tax secrets of the .001%

#145

Post by twinge »

ajb wrote: post #113
fairity wrote: post #109

One of the primary mechanisms for tax avoidance is taking out loans against appreciated capital assets to avoid realizing capital gains. What's stopping the average citizen from exploiting this tax avoidance strategy? For example, every time I try to submit an order to sell stock that results in short-term capital gains, my broker should be asking me whether I want to take out a collateralized loan instead. If there…

"What's stopping the average citizen from exploiting this tax avoidance strategy?" Probably that the average citizen doesn't have capital gains.

Only 55% of Americans own stock: https://news.gallup.com/poll/266807/percentage-americans-own...

Re: We are publishing the tax secrets of the .001%

#146

Post by mtberatwork »

eplanit wrote: post #55
itsoktocry wrote: post #49

Earlier quoted context omitted.

> Large grain of salt required. What exactly do I need to "take" with a large grain of salt? Have you been in seclusion for the past 20 years? I'm pretty sure we're at the point where the burden of proof is on the billionaires to demonstrate they aren't funnelling away their money, not vice versa.

Evidence isn't necessary for one who is already convinced. However, there is a lot that says that the 1% actually pay the vast majority of taxes collected: https://www.publishedreporter.com/2021/04/05/op-ed-top-1-inc... https://howmuch.net/articles/high-income-americans-pay-major... https://taxfoundation.org/top-1-percent-pays-more-taxes-bott...

> Evidence isn't necessary for one who is already convinced.

I suppose that cuts both ways then: https://theintercept.com/2019/04/13/tax-day-taxes-statistics...

Re: We are publishing the tax secrets of the .001%

#147

Post by cj »

fairity wrote: post #115
ajaimk wrote: post #112

Earlier quoted context omitted.

You can: https://www.schwab.com/pledged-asset-line https://www.wealthfront.com/portfolio-line-of-credit And HELOCs are essentially the same for people who own a house but not stocks.

Got it, but why don't brokers more aggressively push this program onto clients? It seems like a win-win. The debtor avoids the elevated short-term capital gains tax. The bank gets interest payments on a loan that has an almost 0 default rate due to the loan being fully collateralized.

> why don't brokers more aggressively push this program onto clients

They do.

Wealthfront (as just one example) features and advertises this prominently in their app.

It's also very easy to do with Robinhood, simply withdraw cash using your margin. Interest rates are quite low. 2.5% with Robinhood, 3.65% with Wealthfront.

There's a big "Borrow cash" button right when you open the Wealthfront app.

Re: We are publishing the tax secrets of the .001%

#149

Post by breakfastduck »

dvh wrote: post #128
mlac wrote: post #24

I would really just like a flat tax. No loopholes or deductions. Very simple. It should not take a masters degree to understand the tax code. I recognize this is one of the main ways Policy is implemented (incentives can drive certain behavior), but we’ve got hundreds of years of complexity going on and I wouldn’t mind simplifying this. I don’t know where to start though.

How about removing income tax (hard to measure, easy to avoid by rich) and increasing vat by the same amount. Vat could be even added to stocks (buying $5000 of Tesla stocks? Pay 20% vat. This could probably end all short term speculations as well). Definitely to yacht and houses, vacations, butlers and gardeners, gold doorknobs, Ferraris, swimming pools, 200" LCDs, hotel stays, massages, anything that is consumption…

Because this would absolutely shaft everyone other than the well off?

Because there would be no way at all of scaling the tax based on income / wealth? So someone earning almost nothing with no wealth would be expected to pay the same tax as a billionaire?

Re: We are publishing the tax secrets of the .001%

#150

Post by lacksconfidence »

bidirectional wrote: post #99
whiddershins wrote: post #92

Every time someone tries to make a tax targeting the ultra rich, it ends up hurting the moderately wealthy instead. Every. Single. Time. The worse tax situation is always the person who makes 500k in a good year, or sells a house they held for 25 years which went up a bunch in value. I suspect this is a significant factor in social mobility. Our tax system is punitive to people who try to leave the working class.

How does this effect social mobility? I agree the tax system is unfair towards those in the 1% but not 0.001%, but I don't see how it is so punitive that those earning 500k or owning appreciating assets are taxed back down to a lower social class. And no one reaches those upper echelons by saving their 500k/year or holding their house for a really long time.

The general idea is average people don't make 500k/yr. What they might do though is have a one time event that earns them 500k in a single year, like selling a small business or a house. In that one year where they finally did well the tax system comes in and hits them even harder with laws intended for someone who makes 500k every year.
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