451–460 of 504 posts
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The longer people will call it communist plot and insist on not paying taxes, the higher is the probability of having the actual communist plot and being exiled to the Moon by a popular vote.
Revealed preference at play again, and everyone knows that whats the whole communist thing really is about anyway - crippling jealousy and wishing to kill off the people who've put more effort in their life than you.
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It puzzles you in spite of knowing that wealthy people are taxed more by default due to progressive tax rates etc?
Usually, wealthy people pay capital gains tax not income tax. People who pay higher rate income tax are just normal people with a larger salary. Not every country works like this however.
If this is accurate, it finally explains something I've been asking about for years: The loan is paid back after the step-up in basis. That's the loophole. If the loan was paid back before step-up, the estate would still have to pay capital gains tax.
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It's not about personally using the money or marginal utility. By investing the money in the stock market, you are increasing the pool of money that is going into funding businesses (directly and indirectly). Think of it this way: Angel investors and venture capitalists are directly funding the creation of new productive businesses with the expectation of a future return / reward. This future reward is only possible…
I’d argue it’s still about marginal utility, but you’re talking about second order marginal utility. That is, by increasing the amount of wealth that’s locked up in equities, you’re “funding progress”. I would still posit that the second order marginal utility of those 20 cents is higher in hands of somebody who needs it. In the same way you talk about how that 20 cents impacts the derivative of “progress”, think abo…
The innovation that happens because people build companies and technologies that they go on to sell in public markets impacts every single human going forward as long as there is not a disaster. Meanwhile, the 20 cents of marginal utility is used once and according to the recent study on how people used a universal basic income, not to great effect.
You only need one transistor, vaccine, airplane, refrigeration level invention every few decades to justify how much more impactful it is.
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Maybe there's just no good solution here, but I think the original inspiration for this sort of law was about family homes. It's one thing to inherit stocks and have to sell some of them off, but it's much more complex to try to pass down a property that can't be arbitrarily subdivided. There are various options obviously, but I think enough people had to sell their beloved childhood home because of the tax obligatio…
First of all, the estate/gift tax does not kick in until 13 M$, so that already covers that case. Second, it is irrelevant. The capital gains tax that would be due on a normal step-up in basis during life is independent of the estate tax. Assume there was no exemption and you bought stocks 20 years ago for 100 K$ that are now worth 1 M$. If you die, then your estate would need to pay estate taxes on 1 M$. However, if…
If farms and ranches are the best place to hide family wealth, then family wealth will pour into agricultural land. That inflates values and pushes out the actual ranchers and farmers. If farming is just a byproduct of your tax-avoidance strategy then you are unlikely to try too hard at it. We actually need farms, and nobody wants them to become tax-avoidance shells.
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.
Dont know about the US but in India, you pay sales tax on EVERYTHING you buy. Doesn't matter you are rich or poor. You pay this tax. Want to buy an expensive car? Prepare to pay upwards of 100% car value in taxes. Same for cigarettes. Around 200% tax just to give 2 examples. Now, you "can" save your income tax by sleights of hand, by showing more expenses than actual or by misreporting things but still, you dont alwa…
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I can confirm that I’ve seen the same. I don’t think people have fully put together that the same personality type that was a slave owner prior to the 1900s is the same personality type of a venture founder, investor, venture, capitalist, banker, etc… That is to say their goal in getting rich is to have a dictatorship, not necessarily simply to have a nice boat and a house and raise a family The goal of the mega rich…
> If people haven’t, they should read about the “business plot” This? https://en.wikipedia.org/wiki/Business_Plot
If this is accurate, it finally explains something I've been asking about for years: The loan is paid back after the step-up in basis. That's the loophole. If the loan was paid back before step-up, the estate would still have to pay capital gains tax.
When I first read about the reset (step-up) in basis after death, I couldn't believe this was the law. Why should inheriting a property reset the basis? What a ridiculous notion. Someone's already getting an asset for free (inheriting it), and we're further subsidizing the tax liability on it. Taxes that were due to the government are wiped out.
If an asset was worth $50k in 1950, and is now worth $100k, it would feel really weird when capital gains tax is collected on an asset that actually lost more than 80% of it's value over the years.
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> If you had the time and resources, wouldn't you try to affect change in government? This is going to be hard for the politically inclined to understand, but no, it's simply not the case that everyone everywhere is preoccupied with finding/creating legal ways to push their will/preferences onto other people.
That choice does come with the consequence of having to abide by the agendas of people who are trying to push their will onto other people though. It's only a viable option if you trust your political system to function when your back is turned.
You can either opt out, or you can wade into a corrupt system and start finally enjoying your ability to join in on all the corruption. In the 2nd case, what's the plan moving forward for an ethical actor really? Using money to bribe politicians into stop accepting bribes? Should we bribe citizens to stop electing politicians that accept bribes? If you don't want money involved in politics then I don't know how you start to fix that with money.
Nobody is going to take a loan provided in the reddit example, since even a minor market fluctuation will trigger a margin call and cause you to lose all your assets used as collateral (and pay taxes on it).
The higher the loan amount, the higher the risks. The longer you have left to live, the higher the risks.
Since you have to commit to this strategy till the end of your life in order for it to work, you're essentially betting that your asset will always appreciate faster than losses accumulate on your compound rate on the loan. Making a bet like that for the rest of your life is quite the gamble (unless you're planning to die in the near future).
This strategy is only viable if you use it for a tiny fraction of your wealth, so it can potentially be used to fund your day-to-day expenses. But it's still a lifelong gamble. What if you happen to die during a market crash?