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Samsung's Lee family to pay over $10.8B inheritence tax

reuters.com

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Re: Samsung's Lee family to pay over $10.8B inheritence tax

#21

Post by winkeltripel »

emrah wrote: post #17
Denvercoder9 wrote: post #14

Earlier quoted context omitted.

That seems very far-fetched. For one, you can refuse gifts. Furthermore, I'd assume that the tax is based on fair market value, and if they can't sell the building because no one wants to buy it, doesn't that mean that the market value is $0?

I don't know how it works in South Korea but in the US, appraisals don't require having to sell the building. Similarly, for insurance purposes, they need to determine a value without having to sell the building.

The idea is that you'd have to pay inheritance tax on the value of the building. The only way for someone without wealth to pay that would be to sell the building. The sale of an industrial site could take years, during which you'd owe a bunch of taxes.

Re: Samsung's Lee family to pay over $10.8B inheritence tax

#22

Post by hogFeast »

speeder wrote: post #10
matthewmorgan wrote: post #2

Nice problem to have

Last time I heard about this, there was some south koreans explaining this is very not nice, that the laws are silly, and can be weaponized. For example you can gift someone a expensive building right before your death, because when you do die, they will be forced to pay so much inheritance tax, that they would have to sell the building, since selling the building is quite hard, it is likely the person will just go b…

The Samsung family have been engineering this for about two decades. Lee Kun-hee was convicted twice for stuff relating to this.

The issue they have is retaining control over Samsung whilst having to pay inheritance tax. This is why the stock price rose significantly when Lee actually "died", he obviously legally died before that point the coverup was to maintain control over Samsung, because it looks like they have finally lost control.

So yes, these laws are taken pretty seriously.

Btw, the thing about the gift is true in most countries. The reason why should be obvious: if you could just gift before someone dies then no-one would pay inheritance tax. It is usually a few years: so if you receive a gift and the granter dies within a few years then it is subject to inheritance tax.

Re: Samsung's Lee family to pay over $10.8B inheritence tax

#23

Post by nonameiguess »

They're paying over 5 years, so assuming equal payments, roughly $2.16 billion per year. The 2021 national budget is estimated at $469.8 billion[1], so about 0.5% of the budget.

I see another comment here questioning whether the South Korean government can really be trusted to be good stewards of that much money. I don't know. Samsung has certainly done a lot for the country. Maybe the kids would do just as much good as the father. Let's not pretend government has done nothing for them, though. The Samsung family today hasn't starved in a famine or been executed by a despot because of the actions of governments. My old battalion, the 3/8 CAV, was nearly completely wiped out in a single day back in 1950 in Unsan trying to ensure South Korea was able to exist at all.[2] This was the single bloodiest day in 1st CAV history.

[1]: https://www.koreatimes.co.kr/www/nation/2020/09/367_295260.h...

[2]: https://1cda.org/history/history-8cav/

Re: Samsung's Lee family to pay over $10.8B inheritence tax

#24

Post by hogFeast »

vmception wrote: post #9

Seems excessive, how well is the Korean government in stewarding public resources and identifying areas of the economy to direct capital? Do they have a history of being the proper stewards of this money than a private person?

I would look at what the Lee family has done at Samsung. How well did they steward capital? So well, that the share price rose significantly when Lee Kun-hee actually died, and it looked like they would finally lose control.

Kun-hee seemed like a very odd guy (there are videos online, people who posted this in SK got picked up by the NIS, of him having orgies with prostitutes). Jae-yong is less offensive but has a reputation as an incompetent. Success came in spite of their leadership, not because of it (the mobile business, in particular, seemed totally accidental...central office actually tried to stop the US mobile business growing).

Inheriting wealth doesn't mean you inherit talent.

Re: Samsung's Lee family to pay over $10.8B inheritence tax

#25

Post by [deleted] »

tekkk wrote: post #15
speeder wrote: post #10

Earlier quoted context omitted.

Last time I heard about this, there was some south koreans explaining this is very not nice, that the laws are silly, and can be weaponized. For example you can gift someone a expensive building right before your death, because when you do die, they will be forced to pay so much inheritance tax, that they would have to sell the building, since selling the building is quite hard, it is likely the person will just go b…

But that doesn't make any sense. The building should have to be sold first before appraising its value. Non-withstanding the difficulty of timing your own demise, I think you could at least reject the very dubious gift at least?

[deleted]

Re: Samsung's Lee family to pay over $10.8B inheritence tax

#26

Post by vmception »

hogFeast wrote: post #24
vmception wrote: post #9

Seems excessive, how well is the Korean government in stewarding public resources and identifying areas of the economy to direct capital? Do they have a history of being the proper stewards of this money than a private person?

I would look at what the Lee family has done at Samsung. How well did they steward capital? So well, that the share price rose significantly when Lee Kun-hee actually died, and it looked like they would finally lose control. Kun-hee seemed like a very odd guy (there are videos online, people who posted this in SK got picked up by the NIS, of him having orgies with prostitutes). Jae-yong is less offensive but has a re…

Thanks! Is there any percentage of tax to the Korean government where your answer would change? It seems everything you wrote is true whether the tax is 1%, 10%, 30%, or the 50% that occurred here, let alone greater amounts.

Is there a different outcome of the distribution of this money that you would support as well?

It seems the primary constant is that this family of directors should not steward it.

As an outside observer, not from Korea, I'm the opposite of bothered that a wealthy person had orgies with prostitutes. That wouldn't be an example of odd to me, it wouldn't be a euphemism for another stronger word, and it would have no bearing on my opinion of whether they get a haircut on their estate.

This is useful context as nobody else has replied yet.

Re: Samsung's Lee family to pay over $10.8B inheritence tax

#27

Post by psKama »

thrower123 wrote: post #7

They had to figure out how they could finesse this so that they didn't destroy the South Korean economy. So the Seoul National Art Museums will be getting some lovely new additions to their collections.

Or let's say extremely over-valued paintings so they can count them in that $10Billion.

Re: Samsung's Lee family to pay over $10.8B inheritence tax

#28

Post by msg3 »

vmception wrote: post #9

Seems excessive, how well is the Korean government in stewarding public resources and identifying areas of the economy to direct capital? Do they have a history of being the proper stewards of this money than a private person?

According to the Korean economist Ha-Joon Chang, the Korean government (or rather the dictator Park Chung Hee) is directly responsible for a lot of the success of the large Korean companies like Hyundai and Samsung.

It's been a while since I read the book (Bad Samaritans I think it's called), but I believe he offered them large government backed loans to move out of palm oil production and into more profitable areas like semiconductors.

Re: Samsung's Lee family to pay over $10.8B inheritence tax

#29

Post by vmception »

msg3 wrote: post #28
vmception wrote: post #9

Seems excessive, how well is the Korean government in stewarding public resources and identifying areas of the economy to direct capital? Do they have a history of being the proper stewards of this money than a private person?

According to the Korean economist Ha-Joon Chang, the Korean government (or rather the dictator Park Chung Hee) is directly responsible for a lot of the success of the large Korean companies like Hyundai and Samsung. It's been a while since I read the book (Bad Samaritans I think it's called), but I believe he offered them large government backed loans to move out of palm oil production and into more profitable areas…

Sounds like a good capital allocation by the government at the time! I'm guessing Samsung paid them back?

Any sectors that the Korean government is funding well or should be funding better these days?

Re: Samsung's Lee family to pay over $10.8B inheritence tax

#30

Post by msg3 »

vmception wrote: post #29
msg3 wrote: post #28

Earlier quoted context omitted.

According to the Korean economist Ha-Joon Chang, the Korean government (or rather the dictator Park Chung Hee) is directly responsible for a lot of the success of the large Korean companies like Hyundai and Samsung. It's been a while since I read the book (Bad Samaritans I think it's called), but I believe he offered them large government backed loans to move out of palm oil production and into more profitable areas…

Sounds like a good capital allocation by the government at the time! I'm guessing Samsung paid them back? Any sectors that the Korean government is funding well or should be funding better these days?

I'm not sure about the current situation, but I believe the loans were maintained for a long time to ensure a certain level of government control over the large Chaebols.
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