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Buy, Borrow, Die – Explained

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Re: Buy, Borrow, Die – Explained

#341

Post by ipv6ipv4 »

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’d imagine that for some wealthy people it’s an unavoidable outcome of hiring wealth managers simply because they need someone to manage their wealth. The managers, in turn, have a professional obligation to minimize costs, including taxes - so they cook up these tax schemes.

Re: Buy, Borrow, Die – Explained

#342

Post by Rury »

jandrewrogers wrote: post #300
Rury wrote: post #271

Earlier quoted context omitted.

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 buyin…

This tacitly assumes a pretty naive model of how these markets work. The dynamics of poor liquidity, dead equity, stock restrictions, intangible asset loss, etc materially change the outcomes you can expect. In many cases it may cost the government more than the revenue generated, and the counter-party as well. This doesn’t work like your retirement account. Similar types of scenarios historically created by civil li…

>This tacitly assumes a pretty naive model of how these markets work. The dynamics of poor liquidity, dead equity, stock restrictions, intangible asset loss, etc materially change the outcomes you can expect. In many cases it may cost the government more than the revenue generated, and the counter-party as well

In all seriousness, that is extremely unlikely to be the case, especially in broad terms. I mean, to purchase public stock at all you already must do so from a licensed broker, who mind you, is already required by law to report the cost basis of shares purchased by investors. To require them to regularly move 2% of shares owned by investors, to the government's ownership, would be rather trivial in cost to do. Hell, it could be completely automated.

And the cost of it doing that would likely be much less than property taxes, which, is a far less liquid asset, and much more costly to assess than equities, but is nonetheless profitable to tax. I mean the SP500 alone has a market cap of ~$47 trillion, which is, surprising almost the same exact value as the entire US real estate market, but much more liquid.

Additionally, whether it is even profitable at all could be besides the intent of the tax here. It doesn't necessarily have to be profitable, from which perspective, poor liquidity and changes in outcomes isn't a problematic at all. It could be even the intent.

> And property taxes are deductible in the US. I’m not sure where you got the impression they aren’t.

Okay fair. I suppose you could do something similar, but also don't see why it's necessary, just because we do so for other taxes.

Re: Buy, Borrow, Die – Explained

#343

Post by atq2119 »

paulryanrogers wrote: post #274
w4 wrote: post #205

Earlier quoted context omitted.

> 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

There may be problems in the implementation details depending on the university, but the general idea of TAs is a good one, for two primary reasons.

One, in many fields, the more advanced you are, the harder it becomes to remember or even understand why or how one may struggle with understanding the basic material of the field. TAs are still closer to the experience of having learned the basics themselves.

Two, teaching material is a great way to deepen one's understanding of the material.

It also happens to provide a nice balance of giving students a way to earn some money while working in the subject, while still being quite cheap for the university. (That last part does have a smell especially in US universities with their insanely high tuition fees. But that feels like a larger and largely separate issue.)

Re: Buy, Borrow, Die – Explained

#344

Post by shigawire »

LVB wrote: post #339
zb1plus wrote: post #292

Earlier quoted context omitted.

I've always said people should be able to directly allocate where their taxes go within the government expenditures, or be able to file an objection based on religious or philosophical beliefs to having their tax dollars fund morally objectionable things. I would be much happier to pay taxes if they went to funding schools, infrastructure, NASA, emergency management, poverty relief and other useful things instead of…

I’ve gotten to see some of that at a local level and… I just don’t know. We barely managed to pass a local school levy to recoup from a major accounting error that would have meant massive layoffs for the district. It’s a pretty good district academically, and I was shocked at how many empty nesters (new ones, too) were vocal about voting no just because “no new taxes“, despite all of their kids consuming that very s…

The way I (not the previous poster) envision this working is not that you can opt out of taxes, but you can skip certain items.

So I don't pay Israel's defense budget, but that money is reallocated evenly to everything else.

I find it hard to believe a meaningful number of people would opt out of libraries and schools assuming their overall tax burden is unchanged.

Re: Buy, Borrow, Die – Explained

#345

Post by SergeAx »

manquer wrote: post #216
SergeAx wrote: post #213

> Let's assume the asset appreciates at an annual rate of 8 percent. Easy peasy. You going to the asset shop and buying there a brand new shiny asset, which will appreciate 8 percent for the next 30-40 years. This is a great plan. Swiss watch.

The return % is hardly important to what author is saying here. You can assume 4% and still get to 200M in 35 years. Does 200M or 750M make any difference to the point ?

What do you mean "hardly important"? What about suddenly turning appreciation into deprecation? Will my friend banker pay me negative interest? :)

Re: Buy, Borrow, Die – Explained

#346

Post by devbent »

danpad wrote: post #109
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 don't think it's that unfathomable when you look at how governments spend the money. E.g. a public Czech university spent 80k euros to change their logo from this: https://cdn.xsd.cz/resize/21404adf37a83977870fe87fe0eb4ea6_r... to this: https://www.em.muni.cz/cache-thumbs/logo_muni_web-1580x790-2... Why does a public university, one of the most popular in the country, need a new logo? And if it needs a new logo, wh…

That top logo is horrible and childish looking. The new logo will look dated soon, but at least it looks professional.

And 80k for a logo is incredibly cheap.

Re: Buy, Borrow, Die – Explained

#347

Post by shigawire »

sandspar wrote: post #311
johnnyanmac wrote: post #297

Earlier quoted context omitted.

Guess it's easy to talk this way as someone who isn't that rich, but if I'm at the point where I have 8 figures accessible, or 7 figures liquid and own all the important assets (house, car, kids' college funds in 523, etc), I don't particularly care what part of my income is being taxed past that point. My goal isn't to make money for money's sake. Nor even leaving oodles of money to my kids. I'd metaphorically just…

People always talk like this from the outside and yet when placed in the actual situation essentially everyone acts differently. "If I were in battle I wouldn't be scared" vs in actual battle essentially every soldier is scared. "If I were rich then I wouldn't worry about taxes" vs after becoming rich, essentially everyone worries about taxes. Is there a word for this phenomenon? What makes everyone believe they're a…

>"If I were rich then I wouldn't worry about taxes" vs after becoming rich, essentially everyone worries about taxes.

Consider that the type of people who are more inclined to accumulate wealth are the ones faced with this choice.

The people who'd rather strum guitars don't often find themselves in that position. So your observation is painfully anecdotal and not really useful.

Re: Buy, Borrow, Die – Explained

#348

Post by kortilla »

shigawire wrote: post #344
LVB wrote: post #339

Earlier quoted context omitted.

I’ve gotten to see some of that at a local level and… I just don’t know. We barely managed to pass a local school levy to recoup from a major accounting error that would have meant massive layoffs for the district. It’s a pretty good district academically, and I was shocked at how many empty nesters (new ones, too) were vocal about voting no just because “no new taxes“, despite all of their kids consuming that very s…

The way I (not the previous poster) envision this working is not that you can opt out of taxes, but you can skip certain items. So I don't pay Israel's defense budget, but that money is reallocated evenly to everything else. I find it hard to believe a meaningful number of people would opt out of libraries and schools assuming their overall tax burden is unchanged.

if they vote against a tax levy for a school they will most definitely vote to send the money elsewhere.

Empty nesters or childless people will funnel their tax money to things like parks, fire trucks, and other things.

Re: Buy, Borrow, Die – Explained

#349

Post by duped »

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…

[flagged]

Re: Buy, Borrow, Die – Explained

#350

Post by [deleted] »

mtremsal wrote: post #72
intended wrote: post #54

Earlier quoted context omitted.

AFAIK, its quite rare.

It has become more popular as a result of Google Search algorithm changes in December 2023. Search results now tend to showcase relevant Reddit posts regardless of subreddit size or post popularity, so it’s an efficient way to beat the SEO game. There’s value in owning the subreddit itself, such as to be able to display sidemenu links of your choosing.

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