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Buy, Borrow, Die – Explained

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Re: Buy, Borrow, Die – Explained

#271

Post by Rury »

w4 wrote: post #220
xmprt wrote: post #105

Earlier quoted context omitted.

This might be unpopular but I think there are ways that taxing unrealized capital gains could work without being super radical. 1. Allow unrealized losses to be deducted. 2. Once a certain percentage of the gain is taxed, step up the cost basis by the amount of tax paid. That way you avoid double taxation (once under the unrealized value and again when the asset is sold). 3. (optional) Keep the tax rate on unrealized…

> 1. Allow unrealized losses to be deducted. This seemed really reasonable to me until I started thinking about how it might work in practice. The sequence of returns can make this proposal ineffective in practice, even if it makes sense on first blush. By way of explanation: Let's say you're the founder of Pets.com in an alternate universe where unrealized gains have always been taxed (and correspondingly unrealized…

I think what you do is simply tax stock ownership. Say you own 100 shares of stock. A 2% tax would mean the government would confiscate 2 of your shares, so you then own 98 shares. The government then proceeds to sell their confiscated shares on the open market (not at once, but spread out over the next year) and use the proceeds as tax revenue. You as an investor can maintain your 100 shares of stock by simply buying back the shares on the open market (or not and so pay a smaller capital gains tax than you otherwise would when you sell. This is your cost basis being adjusted). This also doesn't necessarily disincentive investing, as the tax proceeds can be used for funding jobs (ie investment), and owning stocks can still be worthwhile.

That said, I don't see why there's a need for a deduction here. There isn't one for property taxes. Sure there is one when you sell your property at a loss, and that's also already the case when selling stock. Additionally such a tax like this won't ever cause you to lose your entire stock ownership as it's always based on a fraction of your ownership. And, last but not least, you could also impose caps or progressions.

Re: Buy, Borrow, Die – Explained

#272

Post by paulryanrogers »

Bloating wrote: post #250
justsomehnguy wrote: post #193

Earlier quoted context omitted.

> Who do you know that gladly pays more than they legally have to pay? What paying more in taxes gets more done in the things paid by taxes. It's like there is a direct dependency between a money received from the taxes and the things made/built on the tax money.

The rule of Bureaucracy: grow to absorb all available resources

The rule of Capitalism?

The rule of monopoly?

The rule of feudalism?

Greed isn't exclusive to to systems of government.

Re: Buy, Borrow, Die – Explained

#273

Post by paulryanrogers »

fallingknife wrote: post #224
xmprt wrote: post #111

Earlier quoted context omitted.

I feel like if I were a billionaire or even a multi millionaire, I'd have better things to spend my time doing than worrying about taxes.

You wouldn't spend any time. You would pay a CPA $300K per year to save you millions in tax liability and never even think about it.

Or decades ago you'd face a 70-90% tax rate, stop fighting it, and be happy with an upper middle-class life. Unless you're a certain washed up actor turned governor.

Re: Buy, Borrow, Die – Explained

#274

Post by paulryanrogers »

w4 wrote: post #205
cam_l wrote: post #202

Earlier quoted context omitted.

>why don't they assign it as a project to the students Damn straight, and they should do the same thing with their website. And while we are at it, they could use the students to design and engineer their buildings and do their accounting and lawyering and administration. Hell, while we are at it, why not get them to do the teaching as well?

> Hell, while we are at it, why not get them to do the teaching as well? They already do. They’re called TAs and grad students.

Two wrongs don't make a right

Re: Buy, Borrow, Die – Explained

#275

Post by paulryanrogers »

rmbyrro wrote: post #153
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.

Considering how governments spend the money nowadays, especially the US and a few others on military stuff and promoting death, I think avoiding tax is a favor to society.

Only if you use the savings to change the government to be more humane.

Re: Buy, Borrow, Die – Explained

#276

Post by paulryanrogers »

paulpauper wrote: post #256
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.

How is it puzzling to avoid taxes? This is the rational thing to in terms of maximizing one's utility.

Only if the government provides you (and society) no services.

Re: Buy, Borrow, Die – Explained

#277

Post by jazzyjackson »

barbazoo wrote: post #211
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.

Greed is hard to imagine for me, I don’t know what motivates those people. It’s so strange that this behaviour seems to be worshipped by so many people. Why would we do that as a society? Do we need people that hord anything for profit, do they add value to your group?

Could be they don't feel especially compelled to be a member of your group/society.

Re: Buy, Borrow, Die – Explained

#278

Post by bigstrat2003 »

ashkankiani wrote: post #86
pmichaud wrote: post #74

Earlier quoted context omitted.

Maybe there's just no good solution here, but I think the original inspiration for this sort of law was about family homes. It's one thing to inherit stocks and have to sell some of them off, but it's much more complex to try to pass down a property that can't be arbitrarily subdivided. There are various options obviously, but I think enough people had to sell their beloved childhood home because of the tax obligatio…

Make an exemption for a primary residence. Everything else can go. Stop letting people hoard wealth like dragons.

No. People have a right to their property, including wealth.

Re: Buy, Borrow, Die – Explained

#279

Post by paulryanrogers »

throwaway22032 wrote: post #143
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 think that categorising it as hoarding is a bit of a loaded stance. I own a home and I have assets that I use to pay my daily expenses. I am, by your definition, asset rich. I don't need to "do" anything other than maintain the investments. (I also do work, but that's besides the point). On an intellectual level I realise that if we are to have a public sector it needs to be paid for, and that I'm never going to be…

When the government is us there can be disagreement about what thresholds of taxes and services are best for society. Thinking only individually misses the forest for the trees. Private industry's record is just as messy as that of government. Thankfully voting gives us a voice. Private corporations listen only to share holders. (Unless they have competitors which is increasingly rare.) Yet corporations also get to lobby with their deep pockets, and sometimes control communication mediums themselves.

Re: Buy, Borrow, Die – Explained

#280

Post by doe_eyes »

HDThoreaun wrote: post #200
doe_eyes wrote: post #196

This kind of an explanation overlooks the obvious issue: you're exposing yourself to asset valuation risk. We don't tax unrealized gains for that exact reason. Let's say you have $10M in in index funds. You don't want to cash out and pay capital gains, so you get a $5M credit line with your stock as a collateral. Then, there's a market crash, your collateral is all of sudden worth just $4M, and you have a bank knocki…

The people utilizing this strategy are consuming on the order of .1% of their wealth a year. They face effectively zero risk of default or liquidation because theyre not taking a loan against half their portfolio.

Nah. Or rather, I don't doubt that some billionaires do, but they're not the target audience. First, not many billionaires spend time on Reddit. Second, if you're Warren Buffett and have obscene net worth but minimal living expenses, there's really no point. It doesn't matter if you're spending .1% or .125%. If you do borrow against your assets, it's usually to invest, not pay the bills.

People preoccupied with strategies like that are the ones who are burning through their net worth at a much higher rate, so the difference in tax burden actually makes a difference. They're usually just wealthy enough to have a "wealth advisor". Doctors, successful techies, business owners, etc.

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