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Who died and left the US $7B?

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

#351

Post by eli »

tim333 wrote: post #283
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…

I'm not sure that's a very good fix because the data of how much was paid for the assets may not be available after their owner is dead. The system in the UK seems to work ok for the most part. No CGT on death (the equivalent of step up basis in the US) but 40% inheritance tax on most of the assets over £325K. We do have the odd exemptions like Clarkson's Farm which was bought partly for inheritance tax avoidance, bu…

What would the owner have done if they decided to sell the assets shortly before death? Either they can establish a cost basis, or the basis is assumed to be $0. I don't see why this is a big problem.

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

#353

Post by HeyLaughingBoy »

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.

Maybe those people should just get over themselves?

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

#354

Post by HeyLaughingBoy »

jmpman wrote: post #264

This is the most frustrating news I’ve read about taxes. As an American, I’d like to think that our tax system was designed to be fair. Yes, Warren Buffet’s secretary famously paid a higher tax percentage than he did, because all of his wealth was in unrealized gains. I’d accepted that - with the understanding that upon Warren’s death, estate taxes would be paid, and “fairness” would be restored to the system. But, l…

> I’d like to think that our tax system was designed to be fair

It is. But everyone has a different definition of "fair."

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

#355

Post by eli »

_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…

These are just generic anti-tax arguments. Yes, if you pay your taxes you will have less money. And maybe you would have used some of that money to do good things. Oh well.

I don't think anyone is seriously suggesting you shouldn't be allowed to borrow against assets. That isn't even the problem. The problem is that you can go your whole life without paying taxes on gains of those assets, then pass them on to your heirs who can sell them and also never have to pay those taxes. It's like a big gift from the IRS: your assets that were previously encumbered by unpaid capital gains taxes instantly become more valuable upon your death.

Your heirs should have the same cost basis as you did. And so if they sell they have pay the taxes that you never did.

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

#356

Post by jldugger »

taylorius wrote: post #288

So it was a death-duty style tax - that makes more sense. For a minute I was imagining a lawyer reading a will. "And lastly, I leave my entire 7 billion dollar fortune to... the U.S. Government."

Well, the article leaves open the possibility that it was Musk paying the gift tax now to avoid paying an even larger estate tax later.

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

#357

Post by triceratops »

adamisom wrote: post #310
cycomanic wrote: post #145

Earlier quoted context omitted.

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.

> that severely damages America's ability to generate wealth?

Why would it damage that ability? The assets those billionaires own aren't going away. The skills of the people working at those businesses aren't going away.

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

#358

Post by SR2Z »

lazide wrote: post #326
MisterBastahrd wrote: post #317

Earlier quoted context omitted.

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.

Because the idea of leaving something to your kids (and a legacy beyond oneself) is a fundamental motivator for most people?

Boo. That's not what's at stake here; people don't wanna pay taxes that are fairly owed to the government.

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

#360

Post by a_c_s »

hluska wrote: post #340
efsavage wrote: post #332

Earlier quoted context omitted.

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…

Why would you earn a credit?

You created a tax event and paid taxes on it and you got a loan for x% of $100.

If you sell the stock at $80 you'd pay no taxes on the appreciation (-$20). No credits, investing is risky.

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