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Who died and left the US $7B?

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

#311

Post by bluGill »

ricardobeat wrote: post #263
EricE wrote: post #120

Earlier quoted context omitted.

Yes, what a colossal waste - would have been much better going to charities.

Choose your charities wisely. The average is something like 66% of funds going to the actual cause, and it varies wildly between 10% and 95%+.

There is value in those other things. Administration is an important job - while it is justifiably looked down on because it is easy to bloat, there are important things that need to be done. And those administrators really should have comfortable chairs, motorized standing desks (yes both!), coffee, and other those other little things that make life in an office better.

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

#312

Post by martijnarts »

doe_eyes wrote: post #303
Salgat wrote: post #297

Earlier quoted context omitted.

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 y…

If you buy a famous painting as an investment, I'd assume you have enough money to cover the taxes without having to auction it.

Accurately valuing the painting every year is definitely very difficult.

The same argument doesn't necessarily go for a farmer's farmland. The zoning could of course be calculated into the land value. But I'm unsure if farming economics allow for paying the taxes on those unrealized gains

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

#313

Post by Salgat »

doe_eyes wrote: post #303
Salgat wrote: post #297

Earlier quoted context omitted.

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 y…

Just to be clear, we're talking about a wealth tax above a certain threshold, think hundreds of millions of dollars to billions and billions. This has no application to anything remotely related to the "family farm". And yes, it is okay to force someone with a half a billion dollars in assets to sell off a small percentage for tax reasons, unless you think they should never ever be taxed for it.

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

#314

Post by NoMoreNicksLeft »

fallingknife wrote: post #190
arcticbull wrote: post #169

Earlier quoted context omitted.

Are you familiar with the concept of noblesse oblige? Further does this include all taxes or just income taxes which are only a portion of revenues used to make less well off people look like moochers. For instance, in the US, there’s social security and Medicare taxes -- and payroll tax, the social security and Medicare tax contributed on behalf of employees by employers. Renters also pay their landlords property ta…

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

Some say that the owners should be permitted to pass that tax bill along to the renter in the form of increased rent. Can't someone think of the poor starving landlords?

Seriously though. Renters pay the property tax, even if they don't get to see the bill.

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

#315

Post by bluGill »

BobAliceInATree wrote: post #140
yieldcrv wrote: post #14

I hope this is educational for people, indeed the forbes rich list is inaccurate and there is no way to know how much anyone is worth, with just 5 minutes of planning it all goes opaque if you so desire Although there is the aspect of the immigrant being grateful for American opportunities, its far more likely that Fayez Sarofim didn’t expect to die and had these naked assets outside of the trusts and nonprofits. Sin…

He was 93 when he died. I think he knew his time was coming soon.

I have no idea what his situation was. Some people do live to over 100 so it is entirely possible that he expected another 10 years and then died in is sleep (as happened to someone else I know who died at 63). If you get a terminal cancer diagnosis you might know you have 6 months or a year, but many people don't get that much of a clue (I know one person who was down to 2 weeks when unexpectedly his body fought off the cancer and he lived many years after)

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

#316

Post by sailingparrot »

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…

How would you implement that in startup world for example? It's very common for startups to be valued at ~20M$ right out of the gate in seed stage, not because the company is worth $20M, but because at $20M valuation it allows the VCs to invest say $4M and only take 20%, no one want the VCs to take more (not even the VCs themselves) because otherwise it would mean the founders are left with too little equity too soon and probably won't care about their business anymore.

Now, as one of the founder, maybe you own ~40% of that business, so now your paper net worth is $8M, and just made $8M of unrealized gains in that year, how are you going to pay that? There is no way you will ever find someone to buy $1M of your share at the price of that round, you probably wouldn't find anyone willing to buy your entire paper $8M for $1M, because again, the company isn't worth $20M yet.

This is true until pretty late in a VC backed company, most round aren't priced based on how a realistic buyer would value the company, they are priced based on complex dynamics. Even a large number of unicorn startups founders in the Series C/D stages would have paper wealth of potentially 500M range, but absolutely no way to find 50M.

So, you effectively have no way to pay that tax.

This system actually already pseudo-exist in Canada in specific conditions: If you stop being a tax resident of the country, all your assets are considered realized the year you leave and you must pay taxes on them. Which is effectively impossible for most startup founders, because again, your stock isn't actually liquid. This means you can't stop being a tax resident of Canada until your companies either dies or you exit somehow. To be clear you can't easily just choose to remain tax resident of Canada while living abroad, Canada gets to decide, to maximize your chance you must prove that you still have ties, so e.g. you have to keep a home, you have to keep your bank accounts opened there, you must visit often enough etc.

Canada revenue agency offers one alternative: You leave the country but leave your stock in their keep, on the day you actually realize the gains, they will take what they were owed, which sounds great, except if the company fails, or you realize gains at a lower valuation, they still consider you owe them what was computed the year you left, not the day you exit, so there is a real risk of being in debt for the rest of your life.

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

#317

Post by MisterBastahrd »

geysersam wrote: post #183
metacritic12 wrote: post #179

Earlier quoted context omitted.

The obvious fix is to not step up basis on death. The estate tax already means that the estate of a person who dies may need to sell / divide / split stuff to pay the government. There already is no fundamental protection for an asset passing unscathed from a parent to a child. I don't see how not stepping up basis qualitatively changes this. And your argument of "you want a child to be able to inherit a family busin…

It's a funny argument the one about the family farm. In this case it's not even about inheritance tax. It's a sob story about a guy who couldn't inherit the farm because his dad owed the state money because they had let him not pay tax on his capital gains for a long time. Sorry for not tearing up.

Not even sure why I should be upset in the first place. If I get fired from my job, nobody is going to run to my aid crying that I deserved that job because my daddy worked really hard to put me through school (he didn't, but that's besides the point) and he wanted me to have it. No, I just get fired. How is a family farm any different? It's just an asset. Birthrights shouldn't exist past citizenship.

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

#318

Post by NoMoreNicksLeft »

bluGill wrote: post #293
jjav wrote: post #258

Earlier quoted context omitted.

> 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.

Your landlord knows moving is a hassle that you'll avoid if it means paying a little more. So he raises it just enough that you won't just pack up the Uhaul and go live there. Then over the next few years, he does the same again, when he can, until he recoups the property tax, or near enough of it.

Some landlords are bad at guessing the correct numbers. Others are savants. In aggregate, renters end up paying almost all of it over time if not immediately, and those that don't end up suffering in other ways (when the landlord just stops paying the tax entirely, but taking your rent, the building gets sold, and you don't get to renew the lease because they're going to knock it down and build luxury condos).

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

#319

Post by kwanbix »

_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…

Pay a percentage over the difference between the original value (50m) and the death value 740M, to inherit, you have to pay taxes on the difference, with brackets, as first millon 0%, second million 10%, etc.

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

#320

Post by MisterBastahrd »

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?

Violent revolution, mostly.
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