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

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

#331

Post by jncfhnb » Wed, Oct 09, 2024, 4:46 PM UTC

bluGill wrote: post #282

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?

The state of nature is it is your property so long as you can protect it. There are lots of different ways to do that. Many animals have concepts of owned territory which they protect in various ways.

And you principally protect your property by… wait for it… paying taxes to the state to uphold law and order

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

#332

Post by efsavage » Wed, Oct 09, 2024, 4:47 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…

There is definitely an obvious fix, just have collateralization be considered realization. You're welcome to have as much money on paper as you want, but if you want to post $Xm in stock against a loan, you need to pay taxes on it first.

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

#333

Post by morpheuskafka » Wed, Oct 09, 2024, 4:48 PM UTC

danm wrote: post #325

Maybe a consumption tax with broad exemptions for necessary goods like food, clothing, shelter, etc would be a nice way of dealing with the issues people seem to have with others having wealth. Billionaire heirs use the inheritance to buy a yacht, big tax bill, mostly use the inheritance to continue funding things that are generally good for society, smaller tax bill.

I don't care if a rich person buys a yacht or not, it's their money and after they've paid the tax they can do whatever they want. The wealthier you are you should pay more tax regardless of how you use the money. Consumption taxes just make it harder for regular people to afford things they want; the wealthy won't care that a luxury bag with 1000% profit margin has an extra 10% tax on top.

There's already exemptions for both income and estate tax for donations to charities or governments to benefit society. It's possible to set up a private foundation, with some additional guardrails to prevent abuse, if you want to give the money directly to people that need it.

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

#334

Post by lotsofpulp » Wed, Oct 09, 2024, 4:49 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…

Really easy, power law formula marginal sales tax rate. The more and more you spend, the higher and higher your sales tax rate is. Considering most spending happens via electronic payments, this should be easily trackable since we have internet/electronic databases/identifying numbers for each purchaser.

You get a 1099 or W-2 for income, why can there not be an equivalent for spending?

This plus power law formula land value tax rates would fix multitude of societal problems. Land values are also already in electronic databases.

And get rid of income taxes altogether. This would disincentivize hoarding and wasting, and incentivize working and being efficient.

The only other aspect of rent seeking I can think of that would need to be nerfed is copyright terms being reduced to 10 years.

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

#335

Post by monocasa » Wed, Oct 09, 2024, 4:49 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…

It's not under AFR, it's just generally less than inflation.

And the loan terms aren't payable at death on any of the loans, they just let you refi every year when you want another $100M for that year's incidentals.

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

#336

Post by mbrumlow » Wed, Oct 09, 2024, 4:50 PM UTC

pintxo wrote: post #251

_bin_ wrote: post #219

Earlier quoted context omitted.

There's also no fundamental reason for the state to institute any form of estate tax; on the contrary, I specified it goes against our usual federal regime of taxing value as it's moved rather than value at rest. If anything, I'd question why you believe there's some inherent reason or right to have any form of estate tax, let alone to the point one forces liquidation of assets. One form of taxation can be more or le…

I don’t get you intro argument. An estate tax is like the poster child of value moved: from the parents to the children. In contrast to a wealth tax.

I can see the reasoning. But the value did not really move. As the estate is family owned. The family did not die, a member of it did.

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

#337

Post by Salgat » Wed, Oct 09, 2024, 4:54 PM UTC

sailingparrot wrote: post #316

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…

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…

You set a minimum threshold to trigger it, and you set certain realistic exemptions for things that would benefit society, including giving a VC time to mature.

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

#338

Post by doctorpangloss » Wed, Oct 09, 2024, 4:55 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…

> The counterpoint is that this leaves money invested, which means others invest in other thing.s.. This means less money for R&D, for expansion, for your employees...

When grandma's Fidelity manager takes 2% every year to buy overpriced mutual funds that themselves eventually just buy SPY, how many dollars do you think goes to capital raises of any kind? The top of the S&P, which essentially determine its returns, are doing stock buybacks with their cash.

You would have been more persuasive if you had said, "Taking cash out of the stock market and into real assets results in inflation, which is bad for everyone, because nobody needs Apple stock to live, but they would like houses."

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

#339

Post by wizzwizz4 » Wed, Oct 09, 2024, 4:59 PM UTC

bluGill wrote: post #300

jimcsharp wrote: post #85

Earlier quoted context omitted.

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…

But if you and a million other people, all with differing priorities, all agree to pay taxes…

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

#340

Post by hluska » Wed, Oct 09, 2024, 5:01 PM UTC

efsavage wrote: post #332

_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…

There is definitely an obvious fix, just have collateralization be considered realization. You're welcome to have as much money on paper as you want, but if you want to post $Xm in stock against a loan, you need to pay taxes on it first.

What happens if the value of the underlying asset depreciates?

Here’s a hypothetical:

- I own $100 of stock in Company A.

- The First International Bank of efsavage decides to accept that $100 in stock as collateral on a loan. So I pay taxes assuming a value of $100.

- When I dispose of the stock, it is only worth $80.

Will that be a retroactive credit, meaning that I will have to amend my tax return in the year that I collateralized those assets? Would it be a forward tax credit, meaning that I could apply that credit to future years?

I worry about this both from a bookkeeping point of view (since this is potentially a lot of credits) but also worry the ways it could be manipulated.