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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%

#181

Post by dakial1 »

tomp wrote: post #117
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…

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).

https://youtu.be/8pBPZMUcsh0 They never sell, they borrow over that invested money and pay 3% (interest) instead of 37% (income tax)

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

#182

Post by fairity »

jedberg wrote: post #155
fairity wrote: post #142

Earlier quoted context omitted.

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 i…

Hm, is it possible to define a range for "crazy high interest"? As the debtor, I'd be willing to pay up to the difference in long-term and short-term capital gains (~15%). I guess where I'm going with this is: I don't understand why the average person ever pays short-term capital gains tax.

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

#183

Post by tootie »

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…

That's not a tax loophole though. You still have to pay back the loan with interest. And it has to be paid with cash from somewhere. People like Bezos do this primarily to retain their equity because it's worth more than money to them. It's their ownership stake. For others, they are just betting the assets will appreciate more than the cost of the interest. It's income optimization not tax avoidance.

You can do the same thing with a HELOC. Otherwise you'd have to sell your house and pay cap gains then spend the net profit. I don't think a HELOC is tax dodge.

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

#184

Post by rongenre »

mlac wrote: post #23
bwestergard wrote: post #7

In Finland, everyone's taxable income is a matter of public record. One theoretical benefit of such a policy is that it eliminates information asymmetries between workers and employers in wage bargaining.

I would also think that this makes neighborhoods less financially diverse. I can’t see someone with a higher than average income moving into a neighborhood knowing that their neighbors might make 1/4th as much. It puts a target on them.

Anybody who buys in an "affordable" neighborhood - at least in CA - is making a lot more than their neighbors who've lived there for decades. If you're polite, you don't flaunt it.

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

#185

Post by mola »

syshum wrote: post #154
tengbretson wrote: post #94

Earlier quoted context omitted.

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 Sand…

You know being a millionaire today has a massively different meaning than 20 years ago.

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

#186

Post by [deleted] »

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.

[deleted]

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

#187

Post by nostrademons »

ipython wrote: post #164
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.

I agree with your general point, but your specific example of selling highly appreciated real estate is a poor one, since you incur no tax when selling your primary residence (up to something like $500k gain - over your cost basis which includes any capital improvement you made to the property) as long as you lived there for two of the last five years. It’s a huge tax advantage for homeowners. One could argue that it…

> (up to something like $500k gain - over your cost basis which includes any capital improvement you made to the property)

In a lot of markets this absolutely hits the "moderately wealthy trying to leave the working class". Bay Area houses that went for $1.2M in 2009 now go for about $3M, for a gain of $1.8M. That's well over the $500K exclusion, even including capital improvements.

Few folks will shed a tear for people who own a $3M house simply by virtue of living in a hot area, but that's exactly who the OP is talking about.

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

#188

Post by camgunz »

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…

I think you're extending "working class" to mean "people who live on wages instead of capital". But most people make an additional distinction inside wage earners between workers and professionals, i.e. mechanics, factory workers, nurses, assistants vs. doctors, lawyers, software engineers, managers, etc.

It's helpful in this little side discussion because policies that might affect people with (as GP says) any ability to make six figures in a year are pretty different than those that affect people without. The "works for a living" distinction isn't super relevant.

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

#189

Post by jtdev »

cm2187 wrote: post #148

Would be curious to see twitter blocking this story on the basis that this is the distribution of stolen data as they did last year...

Twitter only does that when it facilitates manipulation of important elections. They’ve moved on to protecting Fauci, Harris, Biden from the harsh reality of their own incompetence and rapidly vanishing facade of legitimacy.
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