We are publishing the tax secrets of the .001% • Hacker News Board

Re: We are publishing the tax secrets of the .001%

#461

Post by HWR_14 » Tue, Jun 08, 2021, 9:23 PM UTC

jdsully wrote: post #435

HWR_14 wrote: post #419

Earlier quoted context omitted.

I never followed this chain of logic. The whole point behind the stock market is to treat any commonly traded stock as a liquid asset. Why do you think that this fails with respect to Bezos and Gates?

Bill Gates started selling off his microsoft stake in the late 90s. It took him more than two decades to get from 49% ownership down to the 1.9% he has today. It's hard for figure heads to divest without crashing the stock because it carries substantial signal risk. The stock market is only liquid at smaller scales, bigger transactions will have dramatic effects on the price.

You're assuming Gates was trying to divest from MSFT. There's no evidence he was in a hurry.

You are right that insiders selling can be a signal. That's why we have laws that govern their actions. But that's because it is assumed Gates knows more than the average MSFT investor.

Yes, if Bezos woke up tomorrow and wanted to crash AMZN by selling his shares, he could. But he routinely liquidates over a billion dollars worth a quarter.

Re: We are publishing the tax secrets of the .001%

#462

Post by WalterBright » Tue, Jun 08, 2021, 9:29 PM UTC

EricRiese wrote: post #286

WalterBright wrote: post #283

Let's say you borrow and invest $1 million into a business startup, like buying farmland. The land goes up in value 10%. Now you owe $40,000 in taxes. But you only made a $50,000 profit farming it. How are you going to pay taxes on that "gain"? You already borrowed money to pay for the farmland, you can't borrow any more. The only way is by selling off parts of the farm, which may not be feasible. In other words, man…

That logic doesn't really apply when you scale up to the ultra-billionaires. Shares of stock are plenty liquid.

The rest of it still applies. It makes the numbers not work for starting a business. Besides, selling off pieces of it means making less and less money off of it. You wind up working for the people you sold it to in order to pay the taxes.

You might as well kiss entrepreneurship goodbye with wealth taxes.

Re: We are publishing the tax secrets of the .001%

#463

Post by WalterBright » Tue, Jun 08, 2021, 9:30 PM UTC

ausbah wrote: post #347

WalterBright wrote: post #257

The top 1% contribute 38.5% of Federal income tax revenue.

the top 1% own 31% of all the net wealth in the US, which isn't the same as income - but gives a good idea of how disproportionate their share is 38.5% seems too low https://www.federalreserve.gov/releases/z1/dataviz/dfa/distr...

People creating wealth are not taking it from others. Wealth is not zero sum.

Re: We are publishing the tax secrets of the .001%

#464

Post by Alupis » Tue, Jun 08, 2021, 9:31 PM UTC

lotsofpulp wrote: post #385

Alupis wrote: post #383

Earlier quoted context omitted.

Just imagine Income Tax + Sales Tax... get taxed on what you earn, then taxed again when you go to spend it! This is a clever way to reduce purchasing power without making it seem as bad, ie. nobody really considers the tax on a new car purchase until they're signing the final paperwork... or even on a new T-Shirt. Depending where yo live, this sales tax is non-trivial too, sometimes up to 10%+.

Sales tax is the most visible tax. Maybe the richest of rich people do not consider it, but I have a hard time believing "nobody" considers it.

Do you add up in your head how much that fast food meal will actually cost before you order it? How about when you try on new shoes? Probably not...

Re: We are publishing the tax secrets of the .001%

#465

Post by WalterBright » Tue, Jun 08, 2021, 9:33 PM UTC

jl2718 wrote: post #293

WalterBright wrote: post #237

Earlier quoted context omitted.

ProPublica confuses wealth with income. If you have $2b in wealth, and lost $1b in bad investments one year, you're still a billionaire, and your tax rate is 0%.

Nope. $3000 yearly passive loss exemption. Let's say you operate a business netting you $1B and then buy a $1B pokemon card, which you sell for $0. You owe tax on $1B - $3000.

If you have $2b in wealth, and lose $1b of it, you do not owe taxes on $1b.

Re: We are publishing the tax secrets of the .001%

#466

Post by WalterBright » Tue, Jun 08, 2021, 9:34 PM UTC

HWR_14 wrote: post #420

WalterBright wrote: post #233

Earlier quoted context omitted.

> The working class doesn’t get stock options, vesting cliffs, inheritance, or capital gains! robinhood.com would beg to differ. Anyone can invest in the stock market and get capital gains.

Not at the 500k level most of them aren't getting capital gains. Or is this "anyone can be a multimillionaire - just play the lottery and get lucky" level of technically true?

They're getting capital gains any time they sell a stock for more than they paid.

There's no magic threshhold of $500k.

Re: We are publishing the tax secrets of the .001%

#467

Post by jdsully » Tue, Jun 08, 2021, 9:37 PM UTC

HWR_14 wrote: post #461

jdsully wrote: post #435

Earlier quoted context omitted.

Bill Gates started selling off his microsoft stake in the late 90s. It took him more than two decades to get from 49% ownership down to the 1.9% he has today. It's hard for figure heads to divest without crashing the stock because it carries substantial signal risk. The stock market is only liquid at smaller scales, bigger transactions will have dramatic effects on the price.

You're assuming Gates was trying to divest from MSFT. There's no evidence he was in a hurry. You are right that insiders selling can be a signal. That's why we have laws that govern their actions. But that's because it is assumed Gates knows more than the average MSFT investor. Yes, if Bezos woke up tomorrow and wanted to crash AMZN by selling his shares, he could. But he routinely liquidates over a billion dollars w…

No assumptions are needed. He created a public divestment plan and sold 20 million shares per quarter since. While it’s normal for insiders to declare trades well in advance doing so decades prior is a bit notable. He was pretty upfront about wanting to diversify after Ballmer took over.

Re: We are publishing the tax secrets of the .001%

#468

Post by lotsofpulp » Tue, Jun 08, 2021, 9:38 PM UTC

Alupis wrote: post #464

lotsofpulp wrote: post #385

Earlier quoted context omitted.

Sales tax is the most visible tax. Maybe the richest of rich people do not consider it, but I have a hard time believing "nobody" considers it.

Do you add up in your head how much that fast food meal will actually cost before you order it? How about when you try on new shoes? Probably not...

Yes, it is trivial to add 10% (or 30% for waited restaurants) to a number. Even if people did not for small purchases, with so many people living paycheck to paycheck, surely they notice an extra $50 to $150 for a TV or $3,000 for a car.

One of Amazon and other online only retailers’ biggest advantages until 2018 was that it did not have to charge sales tax to people in states without a physical Amazon presence. That meant you saved 7% or more buying from Amazon instead of locally. Basically everyone I know used to buy online to skirt sales tax.

https://en.wikipedia.org/wiki/South_Dakota_v._Wayfair,_Inc.

It was a very big deal and politicians had been complaining about waning sales tax revenues.

Re: We are publishing the tax secrets of the .001%

#469

Post by GordonS » Tue, Jun 08, 2021, 9:38 PM UTC

bwestergard wrote: post #7

In Finland, everyone's taxable income is a matter of public record. One theoretical benefit of such a policy is that it eliminates information asymmetries between workers and employers in wage bargaining.

I wholeheartedly agree, and I'd be in favour of such a system here in the UK.

That said, I'm not sure it would work in the US, where individualism has been taken to such extreme lengths - I could imagine it being used as bragging rights, rather than a source of moral embarrassment as it would be in Europe and Scandinavia.

Re: We are publishing the tax secrets of the .001%

#470

Post by kapp_in_life » Tue, Jun 08, 2021, 9:54 PM UTC

WalterBright wrote: post #245

carapace wrote: post #157

Earlier quoted context omitted.

Maybe. But how? I think that, if you could somehow collect all the wealth and redistribute it equally, within a few years we would see disparity reappear. Some folks are better at accumulating wealth than others. It seems to me that you would have to keep reallocating wealth. And many would then ask, what's the motive for generating wealth if it's just going to be taken away from you?

This has happened before. After the end of WW2, the Allies decided to repudiate the ReichsMark (the German dollar) and issue a new Mark. Everyone who held ReichsMarks saw it go to zero. To get the economy going again, everyone was issued 50 of the new Deutsch Marks. Within a couple weeks, the people who had been wealthy before were rapidly moving ahead, and the ones who had not been were again at the bottom. I.e. the…

I'm not familiar with this case study but was wouldn't that be due to retaining asset ownership? Even if the dollar became worthless, presumably I'd still control all my assets(the stocks in my brokerage/401k, my car, etc.). The companies I have ownership for would still be able to generate goods/services for Dollar2.0

People storing money under their mattress presumably were in trouble, but doing that already puts you at risk of devaluation through inflation. And I'd imagine that most wealthy people are wealthy because they do exactly the opposite and hold assets instead of currency.