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Who died and left the US $7B?

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Re: Who died and left the US $7B?

#291

Post by [deleted] »

bluGill wrote: post #290
kelseyfrog wrote: post #274

Earlier quoted context omitted.

Couldn't family farms plan around such an event occurring, either by having the cash on hand to pay taxes or through some sort of insurance?

Where does that cash come from? Family farms often are worth millions on paper, but it is all land. There typically isn't that cash. And the way tax laws and inflation works you are discouraged to not keep that kind of cash on hand - there is no place to save it that keeps pace with inflation after taxes that is low risk (If everyone tried this you will hear horror stories about someone who puts the money aside and t…

[deleted]

Re: Who died and left the US $7B?

#292

Post by Arch485 »

FanaHOVA wrote: post #111
cipheredStones wrote: post #88

Earlier quoted context omitted.

The article says that he made it by stock trading. It is, at best, difficult to articulate how that could be creating value rather than capturing it. Many of the world's billionaires made their money that way. Doing something positive-sum is a way to become a billionaire, but many people are very handsomely paid to ensure that their clients are on the good side of zero-sum transactions.

Do you really think a single individual could make $7B of profits from stock trading? They'd need to be trading $30-100B. Point72 manages $35B and has almost 3,000 people on staff.

Sure, but you could also toss that $30bn into SPY and make a killing.

Re: Who died and left the US $7B?

#293

Post by bluGill »

jjav wrote: post #258
fallingknife wrote: post #190

Earlier quoted context omitted.

Renters do not pay property tax in the US. That liability is entirely on the owner.

> Renters do not pay property tax in the US. There's a simple way to visualize why is not true: You're renting a property for $1000/mo. Whatever the owner is paying for property taxes, you don't know. Then, property taxes go up by $200/mo. Do you think your rent won't go up by at least $200/mo as a direct consequence of the tax increase? Because it will. Because the renter is of course paying for all costs, including…

Rent does not go up because your landlord has to compete with a landlord one town over where the tax didn't go up and so if your rent goes up you will just move.

Re: Who died and left the US $7B?

#294

Post by HeyTomesei »

Jedd wrote: post #94

A fascinating reddit post was mentioned here about a month ago - about the mildly famous (if a little macabre) 'Buy, Borrow, Die' cycle used by the obscenely-wealthy to - multi-generationally - avoid tax obligations. https://old.reddit.com/r/BuyBorrowDieExplained/comments/1f26... HN comments: https://news.ycombinator.com/item?id=41408772

I began my career doing this (Deloitte Tax's Private Client Group).

Yes, it is truly fascinating.

Re: Who died and left the US $7B?

#295

Post by bluGill »

sushid wrote: post #19
Kapura wrote: post #10

Pretty obscene that somebody could have so much wealth that $7,000,000,000 is just the tax bill. Also weird that it's framed as a "gift."

The article highlights that it’s not actually that hard for the ultra-wealthy to avoid a massive estate tax bill through proper tax planning and investment strategies. What’s striking here is that this individual wasn’t even the richest person to ever die, yet he paid the largest estate tax in history, likely by choice.

> likely by choice.

There is an element of competitiveness there. Some rich want to be known as rich and so they can brag about paying the most taxes that in turns implies they have the most money. Others want to be quieter about their wealth and so don't want you to know they have it and wouldn't tell you how much taxes they pay.

Re: Who died and left the US $7B?

#296

Post by chairmansteve »

pdonis wrote: post #272
jjav wrote: post #256

Earlier quoted context omitted.

> therefore we should set constraints on what the majority can do Which inevitably leads to the question: who should get the power to do that and why they, specifically?

You have it backwards. The actual question is, how did the majority magically get the power to enforce its will on the minority in the first place?

Maybe the question is, how are the wealthy magically protected from the mob?

The answer is, some form of government protects them. And that form of government is going to want it's tribute.

Re: Who died and left the US $7B?

#297

Post by Salgat »

_bin_ wrote: post #162
Jedd wrote: post #94

A fascinating reddit post was mentioned here about a month ago - about the mildly famous (if a little macabre) 'Buy, Borrow, Die' cycle used by the obscenely-wealthy to - multi-generationally - avoid tax obligations. https://old.reddit.com/r/BuyBorrowDieExplained/comments/1f26... HN comments: https://news.ycombinator.com/item?id=41408772

This is something people love to rage about, yet it's not one with an obvious fix. The counterpoint is that this leaves money invested, which means others invest in other things, and still entails interest payments. It exists in part because you don't want someone who inherited his parents' house and wants to move in to go broke trying to pay taxes, or have to re-mortgage it, with an even stronger case with family fa…

I don't get why people say a tax on unrealized gains is not feasible. All it means is that a percent of your investment becomes "realized" every year and you sell a portion of your investment to cover it. So if you have a billion dollars in stocks and you have to realize 10% of it in a year, you sell enough stock to cover the $20 million and the other $80 million becomes realized and never taxed again (only future gains on it). In the end you're only taxed $20M in capital gains every year on a billion dollar investment and after 10 years of this your remaining $800M is not taxed any further.

EDIT: Since it's not obvious, this would apply to the very rich, not to someone running a family farm. There would be a threshold and exemptions, which is how most taxes work.

Re: Who died and left the US $7B?

#298

Post by NoMoreNicksLeft »

kelseyfrog wrote: post #274
cperciva wrote: post #226

Earlier quoted context omitted.

Leaving aside the fact that Sam Walton was an American and so his assets had no "deemed disposition" upon his death: Walmart is a publicly traded company, so if his heirs inherited a few % less of the company it wouldn't make a big difference. In the "family farm" (and "family business") scenario, we're talking about private companies -- whether incorporated or not, all the owners are related. If part of such a compa…

Couldn't family farms plan around such an event occurring, either by having the cash on hand to pay taxes or through some sort of insurance?

In the particular example of a "family farm" (mostly extinct since the 1970s in any meaningful way), profit margins were always slim. Furthermore, life insurance for grandpa isn't likely to cover the difference... the real estate value of smallholdings is positively astronomical in many cases (acreage alone does this, but it's often high quality land in many ways).

There's not many plausible routes to "paying the millions-dollar death tax so that developers don't turn the cornfield into a suburb" in such scenarios. Mostly moot though, this all played out and was over before most of us were born. I suppose there are gigantic 20,000 operations that "won't stay in the family"... but those farmers:

1. Aren't really living on the same piece of land that they farm

2. Having to sell off 1500 acres to pay the tax bill doesn't much affect their operation except that it's slightly smaller

3. Have someone custom combine it anyway... they're basically a management company that hires a bunch of contractors

4. Generally are incorporated in such a way that sole ownership hasn't been an issue since great-great-granpa died back in 1961

Family farms are, at this point, largely mythological.

Re: Who died and left the US $7B?

#299

Post by AdrianB1 »

fragmede wrote: post #50
AdrianB1 wrote: post #31

Earlier quoted context omitted.

No. But it is a slippery slope of having limits on people, from wealth to anything you can think of (random example: limit ownership to a single car). In the end if it is all legal, it is nobody else's business. If it is illegal, setting an upper limit is not the moral solution.

Where $1 billion is about 40,000 Honda Civics, I think most people would support limiting ownership of cars to 39,999. It doesn't even have to be a hard limit, just a luxury tax on cars that cost more than, say, $1 million, and on owning more than 40,000 cars. If you want a 40,001st car, your can do it but it means you're going to have to pay an extra fee that goes towards helping people with less.

"most people would support" is mob rule or tyranny of the majority. Not morally right. People have no right to tell you how many cars (or something else) you are allowed to own.

Re: Who died and left the US $7B?

#300

Post by bluGill »

jimcsharp wrote: post #85
somethoughts wrote: post #51

Earlier quoted context omitted.

Interestingly a lot of the larger philanthropic organizations are just as administration heavy as the US government and suffer from the same mission creep and the same obfuscated, bureaucratic decision making process, etc. Not to mention the leadership is often richly compensated (i.e. $1M in salary) and non-elected. In fact we should probably celebrate gifts to the US government more than we do.

My hunch is that taxes are the most efficient 'charity', even with the bloat, and everyone's too busy sniffing farts in their corner to see it.

Taxes are not and never will be because no two people have the same priorities. Even if my favorite charity is only 10% as efficient as the government in doing what I want, a donation to that charity does what the charity does. A donation to the government goes to military, welfare (social security, medicare...), roads, scientific research, and a long long list. If I want to put extra money into say Lymphoma research $10,000 to a really bad lymphoma charity will get $3000 to research (finding a lymphoma research charity that bad is left as an exercise for the reader - the ones I'm aware of are considerably better). The same $10000 to the government will add nothing to lymphoma research since the share of the budget going to that is a rounding error.
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