Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

The richest people borrow against their stock (2021)

forbes.com

Post reply on HN
Print view View original

211–220 of 348 posts

Re: The richest people borrow against their stock (2021)

#211

Post by WA »

mherrmann wrote: post #205
WA wrote: post #179

Earlier quoted context omitted.

Please stop counting taxes of super-rich in absolute terms. It simply doesn't matter. We need percentage-based taxes to get the real picture. Because those numbers seems a rounding error given their wealth.

I think it does matter. Let's assume Musk paid $12B. How much have you paid? Isn't it then actually reasonable to say that he contributed more than you to the country, even if his tax percentage is lower than yours?

What do you gain by talking about absolute numbers? They are meaningless. By this logic, Musk could pay only $1 million in tax and still would've "contributed more to the country" than most individuals.

If you talk about taxes percentage-wise, you make clear that the super-rich do not pay their fair share, that they will get richer faster than everybody else and, the most important fact, that long-term stability might suffer, because the bigger the divide between rich and poor, the more civil unrest follows.

Re: The richest people borrow against their stock (2021)

#212

Post by cool_dude85 »

mackman wrote: post #189
Shaanie wrote: post #149

Earlier quoted context omitted.

If I buy something for $10 and it's worth $10,000 when you inherit it, you should (obviously?) be taxed on the increase in value from $10 -> $10,000 if/when you sell. The purchase price shouldn't be "reset" to $10k. It'sutterly insane to me that the step-up basis exists in the US, it's such an obvious loophole that can fairly easily be closed without many adverse effects. In my country (Sweden) if you don't know the…

If you exceed the inheritance tax exemption then you are taxed on the $10k so LTCG would be double taxing. You could argue that the inheritance tax should have a much lower exemption but double taxation is harder to justify.

What is "double taxing" and why is it bad?

Re: The richest people borrow against their stock (2021)

#213

Post by vel0city »

mackman wrote: post #189
Shaanie wrote: post #149

Earlier quoted context omitted.

If I buy something for $10 and it's worth $10,000 when you inherit it, you should (obviously?) be taxed on the increase in value from $10 -> $10,000 if/when you sell. The purchase price shouldn't be "reset" to $10k. It'sutterly insane to me that the step-up basis exists in the US, it's such an obvious loophole that can fairly easily be closed without many adverse effects. In my country (Sweden) if you don't know the…

If you exceed the inheritance tax exemption then you are taxed on the $10k so LTCG would be double taxing. You could argue that the inheritance tax should have a much lower exemption but double taxation is harder to justify.

> double taxation is harder to justify

Bullshit. "Double taxation" is such a weak argument to me.

When I buy gas at the pump it's taxed multiple times. State sales tax. City sales tax. Federal gas taxes. State gas taxes. Quadruple tax on me there.

My wage income has several taxes. FICA taxes. Payroll taxes. Federal income taxes. Potentially state income taxes. Potentially city income taxes.

When I pay for a hotel there's often a bevy of different taxes on that. When I pay my phone bill there's a bunch of different taxes on that. Even getting a drink at a bar there's a sales tax and a liquor tax.

And all of that is on money I've already paid all those several income taxes on, so it's really all just stacking there.

Oh but boo hoo ultra wealthy get their massive inheritance "double taxed". Get bent crying over your "double taxed", I'm quadruple taxed and more all the damn time. Weak argument.

Re: The richest people borrow against their stock (2021)

#215

Post by yzydserd »

chgs wrote: post #166
throwaway2037 wrote: post #118

Earlier quoted context omitted.

I agree with most of your comments. However, most tax authorities in highly advanced countries view income earned from rental property as passive income, regardless of how much work you need to do. This might be some minor deductions if you act as a real estate agent, but that is a lot of work in most jurisdictions, as real estate agency is normally a highly regulated area of work.

Indeed. Passive income is taxed at a much lower rate than working income in the U.K, and that includes property rents (after paying expenses like a managing agent) and dividends Capital gains is taxed even lower than that.

> Passive income is taxed at a much lower rate than working income in the U.K, and that includes property rents (after paying expenses like a managing agent)

Is that right? I thought that income from property rents (after paying expenses like a managing income) had income tax levied like any other income.

Re: The richest people borrow against their stock (2021)

#216

Post by potato3732842 »

technothrasher wrote: post #201
hn_throwaway_99 wrote: post #35

Earlier quoted context omitted.

I disagree the framing is deceptive. A big reason this is done is to avoid paying taxes altogether - borrow against your equity, and then when you die your heirs receive a step-up in basis, so the gains are never taxed. To make it worth while you need to have a crap ton of money, such that the interest on your loans is less than the estate taxes you'd pay. Only very, very rich people pay any estate taxes in the first…

> Only very, very rich people pay any estate taxes in the first place because a couple's estate tax exemption is currently over $27 million. That's federal estate tax. State tax can be different. Massachusetts, for example, has estate taxes on over $2M ($4M for a couple who manages their estate plan wisely).

State estate tax is just a tax on people who are ignorant of it, unwilling to plan for it or who's relationship with their heir(s) is too dysfunctional to dodge it. The rich almost always avoid it. The poor are never subject to it.

It's like greasing a couple rungs in the middle of the economic ladder IMO. I'm not a fan.

Re: The richest people borrow against their stock (2021)

#217

Post by vel0city »

cool_dude85 wrote: post #212
mackman wrote: post #189

Earlier quoted context omitted.

If you exceed the inheritance tax exemption then you are taxed on the $10k so LTCG would be double taxing. You could argue that the inheritance tax should have a much lower exemption but double taxation is harder to justify.

What is "double taxing" and why is it bad?

So much stuff has several layers of taxes on it but "double taxation" is really only used when discussing inheritance taxes.

It's a term wealthy people made up to trick poor people into feeling sorry for ultra wealthy actually paying taxes on things.

Re: The richest people borrow against their stock (2021)

#218

Post by vel0city »

scotty79 wrote: post #180
nobodywillobsrv wrote: post #168

Earlier quoted context omitted.

Why should you be taxed on it at all?tax is policy. You tax things you want people to consume less of. Inflation makes nominal values to up. More inflation more capital gains. Gov is now incengltivized to inflate to pull tax out of realized assets that have not even gained real value

What you tax is not really relevant as long as it doesn't disrupt some activity you want to continue happening. If it was up to me I'd tax spending not income. Regardless of what you are spending on. Bread? Sure! Employee? Yes! 10% of Tesla? Same!

> If it was up to me I'd tax spending not income. Regardless of what you are spending on

Under this system the poor who spend the majority of their income just to survive pay the highest effective tax rate while the wealthier who save most of their income have the smallest effective tax rate. That sounds like a fair and equitable system to you?

Re: The richest people borrow against their stock (2021)

#219

Post by dataflow »

bruce511 wrote: post #175
chgs wrote: post #170

Earlier quoted context omitted.

> in many cases this can't be paid without selling the asset. Ok. And? Why should someone get $5m for doing bugger all. If they were paid $5m for cleaning a car they would lose a fortune in tax.

They're not getting 5m, that's the point. They're inheriting an asset which may be valued at 5m. Like a farm, or a house, or a painting or whatever. Forcing the sale of family property or assets does not serve any good in the long term.

> Forcing the sale of family property or assets does not serve any good in the long term.

How is carrying the cost basis forward without stepping it up "forcing a sale"?

Re: The richest people borrow against their stock (2021)

#220

Post by silotis »

SuchAnonMuchWow wrote: post #186
refurb wrote: post #158

Earlier quoted context omitted.

This sounds like a great idea but really fails the sniff test: - you’d need to borrow for decades, where, even at low interest rates were burn through significant capital (more than taxes would) - you’d need low interest rates to exists for decades which we know doesn’t happen - finally, all these Uber rich (Bezos, Musk) have all sold significant portions of their equity and paid taxes on it This seems like nothing m…

The article goes into great detail and gives several example of several CEOs borrowing for actual decades, so it passes the sniff test because it does actually happen.

The article gives examples of CEOs borrowing against their shares. The article provides no examples of CEOs rolling those loans over until their death.
Post reply on HN