Who died and left the US $7B? • Hacker News Board

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

#301

Post by bluGill » Wed, Oct 09, 2024, 4:14 PM UTC

bialpio wrote: post #173

schneems wrote: post #126

Earlier quoted context omitted.

The ultra rich don’t get paychecks. If you’re thinking in terms of “paychecks” you’re not who they are talking about when they say “tax the rich.”

100% this. This reminds me of what my SO says: if you have to work, you are not in the upper class. I don't think I agree with this statement fully (I personally think that top decile by income is already upper class), but I feel like I'm becoming more open to re-evaluating my opinion...

Most upper class work. They work different jobs, but they are generally not sitting around retired. They might or might not get a paycheck, but they are working. (if you own a restaurant you will probably pay yourself minimum wage when you do work - dishwashers start at double that - talk to your accountant but this is often the best legal way to handle your hours that are trackable) Steve Job's was famous for taking a salary of $1/year - he clearly was working and upper class.

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

#302

Post by sailingparrot » Wed, Oct 09, 2024, 4:15 PM UTC

_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…

> Of course, as your company continues to appreciate, you will be forced to continue reducing your ownership stake

Why? In an hypothetical world where getting a loan on an asset is impossible (or taxed the same as realizing the gains), you still don't get taxed on unrealized gains. You can leave your stock alone and you aren't forced to sell anything.

Of course if you decide that now that you are worth a billion you must live like a billionaire, then yes, you will have to sell stock, reduce your influence in the company and pay tax on the gains.

I don't see any problem with this? It offers a way for the stock owner to choose if they want to use the stock as power (don't touch it) or as cash (sell it), only taxing you when you opt for the later.

edit: I realised I might have misread your post as defending the system allowing one to use unrealized gains to back a loan, hence enabling the buy/borrow/die loophole, when you are in fact defending against taxing unrealized gains. To me the obvious fix is to prevent those loans as discussed above: force people to choose how they want to use their assets, if they choose to use them to live like kings then they must pay tax.

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

#303

Post by doe_eyes » Wed, Oct 09, 2024, 4:16 PM UTC

Salgat wrote: post #297

_bin_ wrote: post #162

Earlier quoted context omitted.

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 ga…

> 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.

Because there is a ton of investments that aren't liquid, aren't trivial to value on an ongoing basis, and aren't infinitely divisible.

Again, a farm is a perfect example. Land prices are going up. Your family farm was worth n million, and is now theoretically worth twice that. Do you sell a portion of it to developers to pay the tax on the unrealized gains? Oh by the way, the land is probably zoned agricultural, so you actually can't.

Or, you buy a famous painting as an investment. Do you cut off a piece each year and auction it off?

Yeah, it's relatively easy for stock market holdings. But if stocks get unfavorable tax treatment, all this will accomplish is moving money away from the stock market toward assets that get a better treatment... like investment real estate, with all the problems that entails.

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

#304

Post by ForHackernews » Wed, Oct 09, 2024, 4:16 PM UTC

NoMoreNicksLeft wrote: post #289

TheCoelacanth wrote: post #268

Earlier quoted context omitted.

> The state of nature is no tax The state of nature is no property. Billionaires can't exist without a government enforcing their property rights. Why shouldn't they pay the entity that made it possible for them to accumulate their vast wealth?

Given that most billionaires have their billions as imaginary ownership of gigantic corporations, how exactly would someone steal their shares from them such that government needs to enforce their property rights? Can I just walk up to the bank and say "hey, I have $100 billion worth of Facebook stock, gibs me da money"? You know, but for the feds swooping in (or possibly the Delaware state troopers) and shutting tha…

> ...most billionaires have their billions as imaginary ownership of gigantic corporations

Exactly. The entire notion of their wealth is predicated on an elaborate system of law and governance! Otherwise, it's all just freaking numbers on a computer.

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

#305

Post by AdrianB1 » Wed, Oct 09, 2024, 4:16 PM UTC

mxkopy wrote: post #45

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.

You can make just about anything a slippery slope if you wanted to - “they’re putting limits on guns, what’s next, kitchen knives?” Morally you should probably be spending more time figuring out how to get everyone their first car instead of worrying about your legal rights in owning your second.

That is not even an argument. "shall not be infringed" means you cannot put the first limit, no concerns about more limits.

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

#306

Post by AdrianB1 » Wed, Oct 09, 2024, 4:17 PM UTC

mxkopy wrote: post #245

FredPret wrote: post #75

Earlier quoted context omitted.

Why yes, there are countries with limits on kitchen knives. And if your focus is on providing that first car, then the system currently doing that en masse for billions of previously-poor people is called “capitalism” and your moral imperative is to speed it up, not slow it down.

Capitalism only works when you have a middle class. Protecting billionaires’ abilities to hoard wealth is not in the interests of the middle class. To be charitable I’ll point out that in general that’s not what you’re arguing for. There is a real sense in which personal freedom is essential to people making it out of poverty. Protecting one person’s and not another’s would defeat the point. Here is the compromise. I…

"Capitalism only works when you have a middle class" - I never saw a scientific demonstration of this. It is always in the "everyone knows" fallacy class of statements pulled out of the landing gear.

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

#307

Post by toast0 » Wed, Oct 09, 2024, 4:19 PM UTC

opo wrote: post #285

Rebelgecko wrote: post #254

Earlier quoted context omitted.

Is it still that common? I'm not super duper high net worth so maybe I'm missing out on the good deals, but my bank offers these loans interest of SOFR+2-4% depending on your net worth. When the SOFR rate is <1% like during COVID, it's a pretty good deal. When the SOFR rate is more like 5% (which I think is more typical?), it's not such a good deal.

>When the SOFR rate is It is very common to make loans based on using stocks, etc. as collateral. But that isn't what people claim happens with the "buy, borrow, die" loophole. The claim is that these loans have incredibly low interest rates (much lower somehow than the IRS Applicable Federal Rate) and the interest is only payable upon death - which might be decades away. That is how the borrower can supposedly avoid…

I don't know that I've seen a lot of details, but I didn't realize the rates were supposed to be less than benchmark rates. Either way, the expectation is that the appreciation of the capital exceeds the interest. (Not that anyone should rely on that expectation, but clearly, people do)

And that the lender is offering the loan to capture an ultra high net worth investor; so even if you lose money on the interest, you gain on advisory services and fees; plus first bite at holding the accounts of the heirs. Requiring good collateral and high account minimums make the risk for the lender low --- if broad market value drops significantly, the account should still have more collateral to pledge to get back to 1:1. Also, if market value drops significantly, selling shares becomes easier for the investor, as there may be some shares with capital losses, and paying down the loan becomes more attractive.

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

#308

Post by bluGill » Wed, Oct 09, 2024, 4:23 PM UTC

kaibee wrote: post #281

wisty wrote: post #90

Earlier quoted context omitted.

It's not real money. They aren't holding all the gold like a dragon. Or maybe they are, but that isn't hurting anyone, it's wealth not consumption. They consume the same number of calories as a poor person. They breathe the same amount of air. Maybe they have a few extra bedrooms, but their consumption could easily be less than a millionaire.

Idk man, I'm pretty sure I consume a lot fewer labor hours than a billionaire with a super-yacht. The thing to focus on is how many labor-hours someone is consuming. When a billionaire allocates ~20 people of labor-hours every day to maintaining that super-yacht, that means there's ~20 people fewer labor hours for services for everyone else. And building that super-yacht also consumed a lot of high-skill labor hours.

That means there are 20 MORE labor hours, not less. The typical person reading this is only working a couple hours to do anything related to the basics (you don't need nearly as large a house as you live in - even if you live in a tiny house)

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

#309

Post by vikingerik » Wed, Oct 09, 2024, 4:24 PM UTC

schmidtleonard wrote: post #174

_bin_ wrote: post #162

Earlier quoted context omitted.

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…

[flagged]

The problem with directing tax heat towards assets is that you chase away the assets to more favorable jurisdictions (ie, overseas.) Real estate / property tax works because land can't be moved. But if you tax capital in the US, the capital holders will simply leave the US.

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

#310

Post by adamisom » Wed, Oct 09, 2024, 4:25 PM UTC

cycomanic wrote: post #145

TacticalCoder wrote: post #106

Earlier quoted context omitted.

> But I am wondering if anyone has an counter argument. Confiscating all the US billionaires' wealth wouldn't even lower the US's debt by 20%. France's public spending is 60% of the GDP, the situation in France is totally catastrophic (6% deficit atm) and... We should listen to Piketty because he's only ever worked public jobs and... He's french? And came up with an ultra-simplistic formula using bogus data? I mean..…

what a weird argument. > Confiscating all the US billionaires' wealth wouldn't even lower the US's debt by 20%. so in other word confiscating the wealth of < 1000 people would reduce the US (a nation of ~300 M people) debt by nearly 20%. In other words we could significantly reduce the budget (much less interest payments) by taking away the wealth of ~0.0003% of the population. That seems like a no-brainer in terms o…

a "no-brainer"? for a one-time reduction? that severely damages America's ability to generate wealth? am I taking crazy pills today? I advise you to compare America's GDP per capita and especially disposable income per capita to any other country. wealth generation matters so much more than distribution.