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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%

#201

Post by [deleted] »

cj wrote: post #130
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).

1) You purchased $100 of SPY on June 15th, 2020 2) You're buying a house, and you need $100 today. 3) You sell $100 of SPY, and pay short-term capital gains (up to 37%) OR... 1) You purchased $100 of SPY on June 15th, 2020 2) You're buying a house, and you need $100 today. 3) You take a loan for $100 4) You wait until June 15th, 2021 and then sell $100 of your SPY holdings, paying long-term capital gains (15-20%) 5)…

[deleted]

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

#202

Post by iso1631 »

Mc_Big_G wrote: post #178
Wowfunhappy wrote: post #134

Earlier quoted context omitted.

> 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.

GFY

> Most of your gains are going to go to taxes, so you wait to sell or only sell a little

So basically you're hoping for someone to get elected who will give you a ton of money (via a tax cut for the wealthy)

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

#203

Post by motohagiography »

nostrademons wrote: post #187
ipython wrote: post #164

Earlier quoted context omitted.

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 peo…

The people who live in hot real estate areas for years made them the hot real estate areas. Real estate appreciation isn't free money. It's people who risked moving into an area and brought their culture with them. This is what creates the value.

Just because middle class people benefit from the subsidy of low interest rates that create asset bubbles does not mean that the people who raised families in a neighbourhood or a city are somehow undeserving of the rewards on their equity.

The idea that money not taken in taxes is an "expenditure," or an advantage, and this idea of accounting for the hypothetical opportunity cost of not taking some peoples money as a tax privilege is bizzare.

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

#205

Post by MR4D »

Wowfunhappy wrote: post #175
tomerico wrote: post #165

Earlier quoted context omitted.

Another point is that $500k is not in the 1% everywhere. In the Bay Area, it wouldn’t even put you at the top 5%. https://www.nytimes.com/interactive/2019/08/01/upshot/are-yo...

But the Bay Area's high prices are driven by scarcity + demand, not intrinsic cost. So if everyone had a higher tax burden, I'd expect costs to come down.

Unless a huge earthquake hits it, the Bay area will always be worth more than central Kansas.

At a minimum, there is one simple reason for this - the amount of infrastructure investment over the years (power, sewer, roads, etc), of which there is basically none in central Kansas, but loads of in the bay area.

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

#206

Post by axiosgunnar »

pmoriarty wrote: post #100
silicon2401 wrote: post #82

Earlier quoted context omitted.

I disagree, at least not with so simple an implementation. I don't want to live in a world where we're unable to escape working by constant taxes. There should be at least a minimum threshold where wealth is completely untaxed so that people can live freely and not have to work until they die. Enough for a house, some property and land, and a retirement fund. I'd consider it more justifiable to tax someone like Bill…

"I don't want to live in a world where we're unable to escape working by constant taxes." I am against a system in which some escape work while others do not.

What incentive would I have in your system to be a frugal hard worker that practices delayed gratification instead of a dopamine-addicted wasteful lazy consumer?

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

#207

Post by rexreed »

geoduck14 wrote: post #61

Ok HN! We are intelligent, rational, and well intentioned- but we are also diverse! And it is great. Can someone please help me with the following! Why do we still compare WEALTH with INCOME tax? Of COURSE wealth is skewed: you go negative pretty fast (college and mortgage), and then you accumulate over time. It is a pretty rational progress. Income can vary over time - and the tax should vary, too. Why do we smash t…

I also don't understand how wealth and income can be conflated like this. We have an income tax, so, no duh, we tax income, not wealth. Criticizing the income tax because it doesn't tax wealth is like criticizing sales tax because it doesn't tax property values. They aren't the same.

I don't get how ProPublica can take such a stance. Either it's intentional, which is bad, or it's unintentional, which is even worse?

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

#208

Post by short_sells_poo »

madaxe_again wrote: post #57
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.

I don’t know that flat tax is necessary - progressive taxation is a sane policy, as the marginal utility of money goes down the more of it you have, and therefore a larger tax burden is more easily borne - however addressing the gap between how asset and employment income are taxed is critical to combatting gross wealth asymmetry. I write this as a member of the asset-owning class. I wasn’t always - I worked in the U…

One could always tax land ownership. It cannot be hidden or escaped from. It's also the ultimate scarce resource and yet there are landlords who do nothing just draw rent from those who actually utilize the land.

An addendum re the UK: it's funny how the UK tax scheme is so punitive on the middle class. Earn 100k pounds gross and take home 50k. But the moment you become an asset owner, you can basically optimize all of it away. The two income brackets "supported" by the UK tax regime are the poorest and the richest.

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

#210

Post by ldbooth »

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.

The tax system is part and parcel with inequality.
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