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We are publishing the tax secrets of the .001%

propublica.org

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

#151

Post by notahacker »

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.

Certainly not capital gains of the order of "all the spending money I need, without any worry about repaying it on time even if the asset goes back down in price."

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

#152

Post by michaelt »

anovikov wrote: post #39
lmilcin wrote: post #28

Earlier quoted context omitted.

You obviously haven't been to Finland. In Scandinavia, the approach to other person earning couple of times more than you could be summarized by "good for you".

But earning couple of times less lol? ) I don't think anyone at all wants live in a place where most people earn a lot less than themselves.

Eh, I imagine this matters a lot more at the lower income levels, due to marginal utility.

If you're living in a trailer park because that's all you can afford, if you treble your income there's a good chance you'd move out right away.

On the other hand, if you own two $150,000 Lamborghinis and a guy moves in next door with only a single $100,000 Ferrari, are you going to be moving out because the neighbourhood is going down hill? Probably not.

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

#153

Post by relix »

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.

You're basically describing a margin account. If you have a portfolio on a margin account at the broker, you can just withdraw money from it up to the amount that your margin allows. That automatically starts a loan for that amount, collateralised by your portfolio.

The problem is that this is not nearly the same as selling stock and withdrawing the sales money, because you keep the risk that the stock will go down thus force liquidating your portfolio. You're conflating selling and borrowing, they're not identical except in these very vague tales about the ultra-rich.

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

#154

Post by syshum »

tengbretson wrote: post #94
pmoriarty wrote: post #60

Earlier quoted context omitted.

The solution to this is to eliminate wealth disparity.

Why stop at eliminating wealth disparity when you can eliminate wealth?

Same thing, the only way to eliminating wealth disparity is to eliminate wealth.

The Authoritarian Left that goes on and on about eliminating wealth disparity has no interest in lifting everyone up to be wealthy, not they want to seize the wealth and drag anyone down they deem is "too wealthy"

Which is ironically always someone more wealthy than the person advocating for wealth redistribution, for example Bernie Sanders used to talk about "millionaires and billionaires" until he became a millionaire, now like magic only billionaires are a problem for him

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

#155

Post by jedberg »

fairity wrote: post #142
jedberg wrote: post #123

Earlier quoted context omitted.

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?

You'd need a crazy high interest rate to account for market volatility. If the bank could make accurate predictions as to the future value of the stock, they would just invest in the stocks.

Loans against other assets are much less risky, because they are backed by actual things. If the bank screws up in predicting the future value of a house, they can still own the actual house and land if you default. With stocks it would be far more risky because stocks are far more volatile than houses.

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

#156

Post by dangus »

dhd415 wrote: post #132
dangus wrote: post #106

Earlier quoted context omitted.

You’re not actually talking about the “moderately wealthy.” Just because billionaires are insanely wealthy doesn’t change the fact that a household making $500,000 is still incredibly wealthy. There’s already an exemption for capital gains tax on the sale of primary homes. $500,000 for married couples, and you can remove the cost basis and cost of improvements from the equation. In other words, almost nobody is taxed…

>>A household that makes $500k on a good year is actually in the 1% statistically. They have left the working class long ago. They could work for about 7-10 years in their career and retire with an above-median salary (withdrawing following the 4% rule) in perpetuity. That is by definition not the working class: that family barely has to work in order to secure a lifetime of comfortable living. The "in a good year" q…

Of course it does. The working class doesn’t get stock options, vesting cliffs, inheritance, or capital gains!

Or much of a savings account or 401k, for that matter.

The option to stop working for more than a few weeks or months takes you squarely out of the working class.

Basically, what I’m trying to say is that the parent comment to ours is attempting to advocate for taxing just the billionaires and not to tax the moderately wealthy so much. I think that’s a flawed argument, because the moderately wealthy don’t need help, and are perhaps even more wealthy than they realize.

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

#157

Post by carapace »

pmoriarty wrote: post #60
Cthulhu_ wrote: post #48

Earlier quoted context omitted.

You become a kidnapping target by being rich, whether that's a matter of public record or just someone cruising the wealthier neighbourhoods is arbitrary. I mean over here you can't look up who makes how much, but the rough value of houses and neighbourhoods, which is used to determine property taxes, is public record. I'm sure there's some rich people / families living in otherwise underwhelming houses, but they're…

The solution to this is to eliminate wealth disparity.

Maybe. But how?

I think that, if you could somehow collect all the wealth and redistribute it equally, within a few years we would see disparity reappear. Some folks are better at accumulating wealth than others.

It seems to me that you would have to keep reallocating wealth. And many would then ask, what's the motive for generating wealth if it's just going to be taken away from you?

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

#158

Post by wegs2 »

bko wrote: post #2

> Many will ask about the ethics of publishing such private data. We are doing so — quite selectively and carefully — because we believe it serves the public interest in fundamental ways, allowing readers to see patterns that were until now hidden.... We believe that disclosing the identities of billionaires who paid little to no taxes in years their fortunes grew by billions of dollars will help readers understand t…

I think, in this case, the rich encroach on my privacy enough that it seems proportionate.

It's not okay to shoot your neighbor. It is okay to shoot your neighbor if they're shooting at you.

When the rich stop trading my data, I'll fight for their privacy too.

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

#159

Post by realce »

Wowfunhappy wrote: post #134
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.

> Every time someone tries to make a tax targeting the ultra rich, it ends up hurting the moderately wealthy instead. Every. Single. Time. Could you please share some of the situations you're thinking about here? I'm not familiar.

If you have just enough assets to be "rich" but don't have enough to purchase tax assistance, you've become unprotected prey. Everyone that can afford this tax assistance has a lower cost of business than you, everyone poorer has a lower tax burden.

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

#160

Post by mciancia »

mjmahone17 wrote: post #95
jvanderbot wrote: post #86

What I don't understand is: If I (a wage slave) find a football sized diamond in my back yard, I'm suddenly very "wealthy". Should I be forced to pay taxes on that find because my wealth has increased? What if I want to keep that diamond but cannot afford to because of the taxes? Isn't that how business owners gain wealth: By the valuation defined by others to the thing they "found". Should we force Bezos et al to se…

> What if I want to keep that diamond but cannot afford to because of the taxes? Then you have to sell it. This is no different from game show awards, where the “car” you ein is taxed at the car’s value, so unless you have enough savings, you have to sell the car to pay the taxes. I don’t really see any problem with this though? Absolutely we should force Bezos to sell some of his stock to pay taxes: employees alread…

I mean, it's possible he paid tax on stock he got when he started Amazon. It just wasn't that much back then.

Also, forcing people to selling stock seems like something that can be abused - imagine stock spike like we had with GME this year, during change of address year followed by significant drop. You would probably have to pay more tax than stock is actually valued at.

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