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

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

#441

Post by Detrytus » Wed, Oct 09, 2024, 8:57 PM UTC

a_c_s wrote: post #368

_bin_ wrote: post #227

Earlier quoted context omitted.

I mentally bucketed that in "try to find money": if you're not selling equity, debt is one way to do that. But the caveat - less money for R&D, expansion, and employees - still applies.

Not really, nobody goes "ooh, the stock price is up 5% this year, we can hire 5% more employees!" Most stock wealth isn't doing anything for the company. If the stock price of Apple went down by 90% tomorrow for no reason, the main effect on Apple would be... almost nothing. The employees who get equity compensation would be mad but they don't use their stock value to fund R&D or expansion or salaries.

But if you have "unrealized gains" tax you should also have "unrealized losses" tax deduction.

Also, instead of Apple try imagining NVIDIA: their stock went up like 1000% in two years, they are now a trillion dollar company. If they had to pay tax on that it would bankrupt them. Or, they could use all their cash + borrow some money against the stocks to pay tax. But then the stock can suddenly crash 90% and the lenders, seeing how their collateral is now 90% down might start demanding repayment of the loans, again, bankrupting the company.

"Unrealized gains" tax simply does not make sense. It's just greedy government attempt to squeeze more money from businesses.

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

#442

Post by tsimionescu » Wed, Oct 09, 2024, 9:04 PM UTC

logifail wrote: post #425

CPLX wrote: post #287

Earlier quoted context omitted.

We (almost) invariably tax money when it changes hands. Like if you own something and then I own it, there's a tax. If I give something of value to someone else, the government takes a cut. There's a ton of nuance there, sometimes intended to avoid certain negative consequences that feel like double taxation or that provide peverse incentives. But that's the general premise. If you pay taxes on your income and then u…

> We (almost) invariably tax money when it changes hands. Like if you own something and then I own it, there's a tax [..] But that's the general premise. I appreciate HN is USA-centric, but over on this side of the pond it's nowhere near as simple as that. > If you pay taxes on your income and then use it to buy something from me, I have to pay taxes on it too. That's my income now. Except that companies - even one p…

All companies almost everywhere absolutely pay taxes on revenue, in the form of sales tax / value-added tax.

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

#443

Post by pdonis » Wed, Oct 09, 2024, 9:06 PM UTC

jjav wrote: post #423

pdonis wrote: post #272

Earlier quoted context omitted.

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?

> 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? This doesn't answer my question at all. Who should decide those limits, and why they? Who pics them? Think of a thought experiment: A new city/town/state/country is getting started (let's assume peacefully somehow, this is a thought experiment). Who gets to set those li…

> This doesn't answer my question at all.

I wasn't trying to answer your question. I was pointing out that your question presupposes that the majority has the power to enforce its will on the minority. It doesn't even consider the possibility that the majority having that power is not a law of physics, it's a social construct, and a society does not have to adopt it.

> A new city/town/state/country is getting started (let's assume peacefully somehow, this is a thought experiment).

Who gets to set those limits on democratic action?

Again, you're assuming that what gets started is a city/town/state/country as a political entity, with the ability to enforce its will on its residents, and then asking how that power gets regulated.

You're not even considering the possibility of a community getting started without anyone having the power to enforce their will on others, with everyone having to deal with everyone else as an equal, and nobody having any "governmental" powers.

Historically, such things have happened. For example, saga period Iceland went for several centuries without anyone having governmental powers. Some of the American colonies in the late 1600s and early 1700s--Pennsylvania is a good example--had effectively no one having governmental powers, since while there was nominally a "goverment", it had no ability to enforce its will on residents. These are "other choices" that your question doesn't even comprehend.

What happened in those cases? Historically, those societies did fine as long as they were left alone. What eventually ended them was outside interference. Saga period Iceland ended up conquered by Norway. Pennsylvania ended up having its regime tightened up by the British after the French and Indian War (as part of a general tightening up on all the American colonies).

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

#444

Post by tsimionescu » Wed, Oct 09, 2024, 9:09 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…

Imagine the government went away tomorrow. Would Mark Zuckerberg's employees keep giving him any kind of money for the work they are doing? Would they even give Facebook money, or would they just emit invoices with their own bank accounts as the destination?

Billionaires absolutely depend on a very robust system of laws to maintain control of the giant corporations that they own. Zuckerberg couldn't even enter a Facebook building if his employees rebelled against him and the law wasn't protecting him.

Note, I'm not trying to single out Zuck in any way, just wanted to pick some billionaire tied to a well known corporation to make the examples simpler.

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

#445

Post by consteval » Wed, Oct 09, 2024, 9:13 PM UTC

chasd00 wrote: post #69

dweinus wrote: post #62

Earlier quoted context omitted.

TIL that in 2024 people are still trying to claim that trickle-down economics works. Given all the wealth at the top these days, I'll expect my trickle-down check in the mail any day now.

Giving $7B to the gov changes zero. Not a single function of the government will change not a single thing. They should have just thrown it in the trash. At least go pay off student loans with a lottery until the money is gone or something, that could help. Maybe pay all the mortgages in a small town or something. What they did by giving it to the gov is the same as setting it on fire in the front yard. It’s kind of…

If you take this to its logical conclusion then nobody pays taxes and then society falls apart. Clearly, that money does something.

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

#446

Post by tsimionescu » Wed, Oct 09, 2024, 9:14 PM UTC

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?

There is no mystery here. The majority has the physical power to force the minority to do what they want (at least if the difference is big enough). This is an objective, measurable power, not some theoretical concept or moral right. It's not magical, it very much comes from physical laws, like fists and clubs.

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

#447

Post by wisty » Wed, Oct 09, 2024, 9:16 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.

As I said, it's consumption not wealth. A billionaire with a super-yacht is more obscene than a trillionaire who doesn't have one.

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

#448

Post by tsimionescu » Wed, Oct 09, 2024, 9:17 PM UTC

mbrumlow wrote: post #336

pintxo wrote: post #251

Earlier quoted context omitted.

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.

By this logic, if I sell you a car, no money moved, because both the car and the money are still owned by the both of us. Or at least, if you're brother takes your car, you can't ask the state to give it back to you, as the car didn't really move, it's still in the family.

A family is not a single entity under any law in any country I know of. Certainly not in the USA or anywhere in Europe.

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

#449

Post by mindslight » Wed, Oct 09, 2024, 9:20 PM UTC

skizm wrote: post #420

mindslight wrote: post #389

Earlier quoted context omitted.

The asset value minus the debt (both on the date of death [0]) is what contributes to estate tax liability on the 706 form [1]. Then going forward, the asset basis is stepped up to what it was on the date of death (for both the estate entity and downstream beneficiaries), based on the idea the asset has already been taxed by the estate tax. This assumption falls apart when there isn't much value left in the asset-min…

So if I take a company public, and now own $10B in shares in a liquid stock (that I paid $0 for), take out a $1B loan, spend it all, and then die. What taxes need to be paid by the estate in that scenario?

First, a disclaimer that shouldn't even need to be said, but the legal regime being what it is - I'm not an accountant nor an attorney, but rather an just engineer that digs into the specific details of things rather than paying professionals to screw it up for me. So there is no warranty or representation for anything I'm saying, and it's merely meant as starting pointers for your own independent analysis. Being a Random Internet Commenter, perhaps I'm even purposely giving out bad advice because I want people to end up paying more taxes to the government.

In your scenario, the Estate Tax would be calculated on $9B. The executor/per.rep of your estate would then have $10B shares with a $1B loan against them. The basis of the shares would be their current value, so if they (or your heir(s)) sold $1B shares to pay off the loan there would be no capital gains tax. There would also be no capital gains tax if they sold the other $9B shares (but Estate Tax was paid on them instead). Of course, they might have to sell some of the $9B shares to pay the estate tax bill.

Where things get really interesting is the charitable contribution deduction. If you sell $1B in shares and donate $9B to a nonprofit (likely set up and controlled by you, and subsequently your heirs), then you get a $9B deduction on your taxes (wiping out the capital gains on the $1B). Then no estate tax, since they're not yours when you die. From what I understand it's also a great asset protection strategy against random creditors.

When we're talking billions and minimizing estate tax, the latter dodge is more applicable since it's going to awfully hard to actually spend down billions. The loan plus stepped up basis dynamic is more about dodging capital gains taxes while actually realizing and spending the gains while you're alive, which isn't really captured by your scenario.

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

#450

Post by fluoridation » Wed, Oct 09, 2024, 9:22 PM UTC

Wytwwww wrote: post #373

bluGill wrote: post #369

Earlier quoted context omitted.

That is not the state of nature though. There are "primitive" societies that don't organize their village that way. Social pressures and you working alone are enough to protect your property when the total population to worry about is around 100 people. We use taxes because nature doesn't scale to towns of 1000, much less nations of millions. But that is not the state of nature.

The concept of property (the way we understand it i.e. all the stuff besides of a handful of personal items) is not something that generally exists or existed in "primitive" societies. i.e. you can't really "own" more land than you and your family can personally farm and extract rent on it without a state to protect your claim.

You can if you can convince others to protect it for you.