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

181–190 of 504 posts

Re: Buy, Borrow, Die – Explained

#181

Post by ThunderSizzle »

relaxing wrote: post #112
SoftTalker wrote: post #95

Earlier quoted context omitted.

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.

A tax that is refunded isn't really a tax liability, it's an asset making 0% gain or interest, and will be converted to a cash asset within a 18 months or less.

Regardless, most people don't like tax, and there's not much they can do about it if they are W-2 wage earners short of opening a side business or maxing out retirement investments (which isn't helpful to someone trying to buy a house before they are 65).

Re: Buy, Borrow, Die – Explained

#182

Post by dirtdobber »

mrkeen wrote: post #179
dirtdobber wrote: post #70

Is this partly why so many billionaires own things like mega-yachts? Presumably they aren't all avid yacht enthusiasts, no? For example, Mark Zuckerberg has a lot of money. So much that he can buy a mega-yacht and it not really affect him financially. But, he could buy lots of things that don't affect him financially, and he chooses not to do so. I always assumed that acquiring a massively valued asset like a yacht t…

> For example, Mark Zuckerberg has a lot of money. So much that he can buy a mega-yacht and it not really affect him financially. That phrasing deserves a pause. If someone has money, it came from somewhere - income - which is taxed. If you play that in reverse: someone who paid no tax had no income, and therefore no money. Zuckerberg paid 13.7% tax [1]. Ballpark figure income [2,3] for that effective tax rate is $95…

Hmm, I'm not sure what you're getting at or how it relates to my question.

Also, someone could have received lots of income, say 5 years ago, at which point their income tax would be very high. The following years their income tax might be low if they, e.g., don't sell any stocks or take distributions from various trusts they have set up.

Re: Buy, Borrow, Die – Explained

#183

Post by hunter2_ »

relaxing wrote: post #167
hunter2_ wrote: post #142

Earlier quoted context omitted.

I think "minimize taxes" is short for "minimize tax liability" and refunds due to overpayment have absolutely nothing to do with that once you've paid enough to avoid penalties and interest (which is only ~90% of your liability).

My point is they’re not doing any sort of planning to minimize their liability. They’re not doing sound tax planning of any sort.

Ah, ok. It sounded like one or the other (i.e., people who inflate their refund aren't planning well) but personally I find that adding withholding at an amount that often leads to an inflated refund is a good low-effort way of minimizing risk of underpayment penalties (and it eliminates the need to think about estimated payments) for those good years where substantial gains unexpectedly occur. Of course it's like giving a free loan, which isn't great, but it's miniscule relative to the time I get back by thinking less. And I definitely minimize my liability -- loss harvesting, avoid short term gains, etc. -- so I am squarely in both camps.

Re: Buy, Borrow, Die – Explained

#184

Post by pixl97 »

danpad wrote: post #109
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.

I don't think it's that unfathomable when you look at how governments spend the money. E.g. a public Czech university spent 80k euros to change their logo from this: https://cdn.xsd.cz/resize/21404adf37a83977870fe87fe0eb4ea6_r... to this: https://www.em.muni.cz/cache-thumbs/logo_muni_web-1580x790-2... Why does a public university, one of the most popular in the country, need a new logo? And if it needs a new logo, wh…

I'm not sure if you've ever seen how much it costs a corporation of the same size to change logos, but you'll see similar expenses

Re: Buy, Borrow, Die – Explained

#185

Post by Retric »

jongjong wrote: post #162
Retric wrote: post #148

Earlier quoted context omitted.

You can do a lot to improve your odds of hitting 90 vs what actuarial tables show. Baseline may only be 15% but a very healthy lifestyle can get close to 50/50 which isn’t some major stroke of luck.

I work too hard and not rich enough to live to 90. I'm quite sure of that. Unfortunately, in my reality, I need to work extremely hard just to make ends meet which isn't enough surplus to offset the health problems I'm creating for myself.

I’m sorry you feel that way. Personally I radically reduced living expenses to get out of that kind of situation, but I understand every situation is different.

Re: Buy, Borrow, Die – Explained

#186

Post by machomaster »

throwaway22032 wrote: post #177
ohashi wrote: post #174

Earlier quoted context omitted.

If that home is over 10, 13 or 20m dollars... you can pay tax on it. If you have siblings, I assume it would be divided between you, so multiply value by siblings. If you got a home worth that much, you can pay some taxes on it. https://www.mansionglobal.com/articles/more-than-1-500-homes... 1,500 homes sold for over 10m in a year. We're talking about the richest of the rich. That's exactly who should be paying some…

I can pay taxes on one dollar. It's the principle. In my country our threshold is significantly lower by the way - it's around a million, so bog standard houses get hit by it. I think that inheritance taxes are wholly equivalent to wealth taxes, e.g. "you have a thing, I like that thing, give me that thing", and therefore morally wrong. I could agree with them on the basis that the money were minimal and solely used…

No house costing a million is just a bog standard house. It's a mansion; if not in size then at least in value.

Re: Buy, Borrow, Die – Explained

#187

Post by throwaway22032 »

machomaster wrote: post #186
throwaway22032 wrote: post #177

Earlier quoted context omitted.

I can pay taxes on one dollar. It's the principle. In my country our threshold is significantly lower by the way - it's around a million, so bog standard houses get hit by it. I think that inheritance taxes are wholly equivalent to wealth taxes, e.g. "you have a thing, I like that thing, give me that thing", and therefore morally wrong. I could agree with them on the basis that the money were minimal and solely used…

No house costing a million is just a bog standard house. It's a mansion; if not in size then at least in value.

The greatest privilege I suppose I have is that I am able to consider a bog standard three bedroomed terraced family house as being normal regardless of how much bad Governmental policy has managed to inflate the market value.

Re: Buy, Borrow, Die – Explained

#188

Post by alasdair_ »

twoodfin wrote: post #59
SeanAnderson wrote: post #39

Earlier quoted context omitted.

Mmm, I think we're mixing up some numbers here. Let me try to break this down for clarity. Using the numbers in the report, the $17M in taxes would be paid after just 10 years, not 40 years, because the asset appreciated from $50M to $108M in 10 years and the buyer wanted liquidity at that point. After 35 years, the FMV of the asset is $740M, and tax liability would be (740 - 50) * 1/(20 + 3.8 + 5) = $198.72M So, the…

The idea that anyone is getting a 0.5% interest rate for anything —let alone with collateral of a risky asset—when treasuries are at 4%+ is fanciful, and makes me lean strongly in the direction of the LARPer theory.

It’s 0.5% plus a portion of the asset appreciation, not just 0.5%

Re: Buy, Borrow, Die – Explained

#189

Post by TeMPOraL »

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?

More then possible legal minimum for them? Approximately everyone - finding ways to minimize your taxes carries opportunity cost that may as well be bigger than the savings, though again, most people will evaluate this in terms of frustration and risk of getting it wrong. The exception are people who can outsource this to professionals - doing that is very low in terms of opportunity cost, frustration and risk, but it's an option available to the few.

So perhaps that's why wealthy people seem so tax-averse - they may be as averse as everyone, but for them the aversion is much cheaper and easier to do.

(This reflects a more general principle I summarize as: the only thing necessary for evil to triumph in the world is that good men are separated from it by enough layers of abstraction.)

Re: Buy, Borrow, Die – Explained

#190

Post by littlestymaar »

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

No, most people don't care about their tax the way wealthy people do. I ended up in a wealthy family through marriage and I can tell you nobody I my original social circle spent even a fraction of the effort the wealthy do when it comes to taxes.

Post reply on HN