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Who died and left the US $7B?

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

#451

Post by TheCoelacanth »

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.

And even much later under feudalism, property as we know it didn't really exist. Land (essentially the only productive asset that existed) was owned by the government, but the government was a loose network of aristocrats instead of a faceless state.

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

#452

Post by AnthonyMouse »

Negitivefrags wrote: post #366
eli wrote: post #355

Earlier quoted context omitted.

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 he…

The main concern with this is how do you actually get the records of what the cost basis was from someone who is dead?

That isn't really the main concern. It's really a question of alienability.

If your great grandfather invested in something a hundred years ago and now 99% of its value is appreciation (or inflation), you may or may not want to continue investing in it. If you do, the step up in basis doesn't really matter because you're not going to sell it anyway.

But if you now think it's a mediocre investment, you may be inclined to sell it and invest in something else. Except that you won't if you'd lose a significant proportion of its value to taxes. This is a problem with capital gains taxes in general, but it's especially a problem for anything held intergenerationally (i.e. for a very long time) because not only will the appreciation be large, the inflation by itself would represent most of the value of the "gain". So the step-up in basis is a stupid hack to avoid this and let children make different choices than their parents and grandparents without being punished by the tax code.

There are probably better ways to handle this, but "delete it and replace it with nothing" is not one of them.

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

#453

Post by nemothekid »

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…

>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?

You have it backwards. "imaginary ownership of gigantic corporations" doesn't exist without government. The government doesn't "protect" Zuckerbergs shares, the government is the vehicle that gives Zuckerbergs shares value. Without the government Zuckerberg's billions is worthless.

In this fairytale world where Zuckerberg is somehow made a persona non grata, then all his shares would become worthless as he wouldn't be able to sell them, nor would he be able to enforce Facebook (the entity) to do anything on his behalf.

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

#454

Post by nemothekid »

a_c_s wrote: post #349
_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…

Getting a loan against assets is another way of "using" it, so why not make that a taxable event? Just like now your stock value would not be taxed while it is invested. But now it would be taxed if you use it as collateral for anything. If you don't want to pay capital gains by selling the underlying stock then you can just get a bigger loan and pay the taxes out of that. There, now you don't have to liquidate but t…

Only issue I can forsee is that every loan, except a credit card, personal loan, and student loan, is typically loaned against an asset. I guess you could make carve outs for mortgages and auto loans.

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

#455

Post by tsimionescu »

jandrewrogers wrote: post #363
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…

The vast majority of assets held by the ultra-wealthy are non-liquid. Thinking that these assets are "stock" that you can just "sell" is fundamentally misunderstanding the nature of the problem. You can't force realization for tax purposes because in most cases there is no feasible way to realize notional gains. Reality doesn't care if it is inconvenient for the government that assets with unrealized gains have no re…

So what you're saying is that many asset values are purely fictional and don't correspond to a real value that anyone would pay. But, you think this is a good thing and that the government would ruin things if it foced asset values to be closer to what someone would actually pay for them.

I don't think your argument is as strong as you think it is. The value of an asset in a market economy is supposed to be what someone would pay for it. If you can't sell your Tesla stock for it's value, then it doesn't actually have that value.

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

#456

Post by AnthonyMouse »

arrosenberg wrote: post #433
mmcdermott wrote: post #390

Earlier quoted context omitted.

While I'm sure that someone somewhere objects to paying for law and order, I think most tax grumbling comes from taxes rising (and, arguably, still not rising enough) to pay for bigger and bigger programs with an increasingly tenuous relationship to law or order. Not everyone objects to every line item, of course, but the bigger the budget gets the more certain it becomes that those rising taxes are not just to keep…

> I think most tax grumbling comes from taxes rising (and, arguably, still not rising enough) to pay for bigger and bigger programs with an increasingly tenuous relationship to law or order. The Constitution addresses this confusion in its' preamble. The role of the government includes law and maintaining order, but it extends further - "We the People of the United States, in Order to form a more perfect Union, estab…

A perfectly valid way of reading "promote the general welfare" is as a constraint on the government, i.e. it shouldn't do anything not consistent with that premise, not that it's empowered to do anything that is. The latter would be inconsistent with the overall architecture of the constitution as setting out a government of enumerated powers.

But the preamble to the constitution isn't legally binding anyway.

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

#457

Post by wiseowise »

leprechaun1066 wrote: post #137
Amorymeltzer wrote: post #21

Matt Levine touched on this briefly today, and I liked his two cents: >It’s kind of cool? Like you could imagine a hierarchy, in roughly ascending order of wealth: >Too poor to pay taxes. >Rich enough to pay taxes. >Rich enough to not pay taxes. >Rich enough to not even bother with not paying taxes.

In 2021/2022 there were 60 people in the UK who probably fall into that last group. Together their taxes accounted for about 1.4% of the UK tax bill despite being something like 0.002% of the population.

> In 2021/2022 there were 60 people in the UK who probably fall into that last group. Together their taxes accounted for about 1.4% of the UK tax bill despite being something like 0.002% of the population.

How much wealth do they have compared to other population?

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

#458

Post by eli »

saghm wrote: post #375
Negitivefrags wrote: post #366

Earlier quoted context omitted.

The main concern with this is how do you actually get the records of what the cost basis was from someone who is dead?

If the issue is that people are dying leaving behind significant wealth but not documenting this, just make the estate tax 100% on any assets missing documentation like this. I'm sure the lawyers would figure out the rest.

That's effectively already the rule if you sell something and can't figure out the cost basis - it counts as zero.

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

#459

Post by eli »

lesam wrote: post #411
a_c_s wrote: post #349

Earlier quoted context omitted.

Getting a loan against assets is another way of "using" it, so why not make that a taxable event? Just like now your stock value would not be taxed while it is invested. But now it would be taxed if you use it as collateral for anything. If you don't want to pay capital gains by selling the underlying stock then you can just get a bigger loan and pay the taxes out of that. There, now you don't have to liquidate but t…

This still leaves open ‘buy, don’t borrow, die’ as a way for the dynastically wealthy to opt out of paying capital gains tax. I think the sensible option is making death a taxable event, rather than borrowing (with perhaps exceptions for the family farm, but not for the family billion dollar business). And the second best solution is eliminating the step-up basis, which without deemed disposition at death is just a f…

Or another way to think of it: your estate has to settle all outstanding tax bills after your death, including the gains in assets that have remained untaxes your whole life.

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

#460

Post by kemitche »

nemothekid wrote: post #454
a_c_s wrote: post #349

Earlier quoted context omitted.

Getting a loan against assets is another way of "using" it, so why not make that a taxable event? Just like now your stock value would not be taxed while it is invested. But now it would be taxed if you use it as collateral for anything. If you don't want to pay capital gains by selling the underlying stock then you can just get a bigger loan and pay the taxes out of that. There, now you don't have to liquidate but t…

Only issue I can forsee is that every loan, except a credit card, personal loan, and student loan, is typically loaned against an asset. I guess you could make carve outs for mortgages and auto loans.

Why would there need to be a carve out for home/auto loans?

1. No one really borrows against the value of their (paid off) car. 2. Property taxes already, generally, are against the assessed value of the home, so it's already happening for that case. There are some minimal exceptions, like CA Prop 13, of course, but generally speaking, if I want to take out a second mortgage or something, my home's value is already appropriately "stepped up."

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