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

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

#531

Post by lumost » Thu, Oct 10, 2024, 4:42 PM UTC

eli wrote: post #355

_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…

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…

It's also relatively easy to enforce with a generic assertion that all inherited assets must provide proof of adequate payment of capital gains taxes or carry a cost basis equal to the earliest point from which proof can be established.

I'm sure there would be hijinks to avoid this, but for the amounts in question a great deal of legal and accounting hours could be expended to audit the correctness of the returns.

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

#532

Post by mindslight » Thu, Oct 10, 2024, 5:21 PM UTC

mindslight wrote: post #498

skizm wrote: post #487

Earlier quoted context omitted.

Cool, thanks for the info! Definitely feels like they should just tax any asset sales needed to pay debts before the step-up happens, but I’m sure there’s a lot of push back against that idea.

That feels like the wrong approach to me, because this topic seems like a loophole in capital gains tax rather than estate tax. Taking a loan using untaxed assets as collateral is essentially realizing (most) of the income from the assets as cash. Capital gains tax should apply then. Also, flip your example around and say someone took a $9B loan [0] against their $10B in stock. Now when they die, their estate has onl…

Furthermore, another example of using the loophole that doesn't even involve estate tax:

$10B worth of stock ($0 basis), take a $9B loan on it, then donate the encumbered stock to a charity that you don't even control. Now you've realized 90% of your gain, (more than if you were to have paid capital gains tax), plus you get a $1B deduction from the charitable contribution. When the charity sells the stock to pay off the loan, they also don't pay capital gains due to being tax exempt.

The charity thing is another loophole that needs reform (and doesn't even seem to be talked about), but you don't even really need a charity - get the net value much closer to zero, and gift it to arbitrary non-rich person(s), probably near the end of their life. They can liquidate stock, live off the money, and give away non-legible gifts before the tax bills start to catch up a year and a half later.

This topic is really about a hole in the capital gains tax, and it's unfortunate to see so many commenters focusing on the estate tax and ending stepped up basis (seemingly because that's the way the political winds are blowing), when most estate planning just sidesteps the estate tax. For example this original article is exceptional because most people with $7B in possible estate tax liability would head off that situation by the use of giving, trusts, and whatnot. If those people are still allowed to use this loan loophole to avoid capital gains while living, then you haven't really fixed the problem.

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

#533

Post by hgomersall » Thu, Oct 10, 2024, 6:08 PM UTC

VirusNewbie wrote: post #528

hgomersall wrote: post #424

Earlier quoted context omitted.

Please everyone read this comment. Any disagreements should come with relevant references showing how it's wrong. An additional point to add is the mechanism by which taxation controls inflation. Tax serves to suppress demand in the private sector, freeing up resources that can then be bought at non-inflated prices. This is why super wealthy people are irrelevant to a sovereign government's ability to spend; their ma…

Disagreement? Literally nowhere in either of your comments did anyone actually explain how government spending is deflationary. There is nothing to disagree with, no claims were made!

The comment was a response to burning money. What does that have to do with deflation?

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

#534

Post by hgomersall » Thu, Oct 10, 2024, 6:10 PM UTC

willcipriano wrote: post #527

hgomersall wrote: post #436

Earlier quoted context omitted.

I'm yet to meet anyone that actually understands MMT and doesn't endorse it. You might be the first, but I doubt it. Which bit of MMT do you have trouble with?

The political will only exists to do money printing part in practice. The rest is a pipe dream.

So no, you don't understand it?

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

#535

Post by VirusNewbie » Thu, Oct 10, 2024, 6:57 PM UTC

hgomersall wrote: post #533

VirusNewbie wrote: post #528

Earlier quoted context omitted.

Disagreement? Literally nowhere in either of your comments did anyone actually explain how government spending is deflationary. There is nothing to disagree with, no claims were made!

The comment was a response to burning money. What does that have to do with deflation?

Are you seriously asking what reducing the money supply has to do with deflation?

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

#536

Post by Nasrudith » Thu, Oct 10, 2024, 6:59 PM UTC

supplied_demand wrote: post #467

gperkins978 wrote: post #266

Earlier quoted context omitted.

The state of nature has no schools, no water, no sewer and no police. If one is going to live in a civilized nation, he should pay his share of taxes. Capital gains is 15%. That is not an outrageous amount. Everyone should pay because everyone benefits. One is free to leave and live in tax shelter principality or Sultanate. There is a problem with high taxes on earned income, but anyone complaining about the 15% capi…

==most of the US has easily avoided the self-created problems of California and New York city.== Two places which produce an outsized share of the country's businesses and wealth? Seems like they are doing something right.

Fair enough that they are outsized productivity but they are also two places which have managed to basically population-cap themselves, primarily through real-estate mismanagement and refusal to build sufficiently to make it worth living there even as infamously high paying areas.

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

#537

Post by kelseyfrog » Thu, Oct 10, 2024, 7:03 PM UTC

VirusNewbie wrote: post #528

hgomersall wrote: post #424

Earlier quoted context omitted.

Please everyone read this comment. Any disagreements should come with relevant references showing how it's wrong. An additional point to add is the mechanism by which taxation controls inflation. Tax serves to suppress demand in the private sector, freeing up resources that can then be bought at non-inflated prices. This is why super wealthy people are irrelevant to a sovereign government's ability to spend; their ma…

Disagreement? Literally nowhere in either of your comments did anyone actually explain how government spending is deflationary. There is nothing to disagree with, no claims were made!

Government spending being deflationary is not a claim MMT makes.

> and putting it towards (wasteful) government programs to "burn it" in a sense.

This claim isn't congruent with the idea of MMT.

One way to look at MMT is asking, does our government have to operate like it has a checking account, or can our economy act like an MMORPG economy?

For example, Blizzard has no obligation to collect coin before distributing coin. Blizzard thinks in terms of coin sources and coin sinks and adjusts source and sink policy in response to aggregate demand and player engagement goals.

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

#538

Post by hgomersall » Thu, Oct 10, 2024, 7:31 PM UTC

VirusNewbie wrote: post #535

hgomersall wrote: post #533

Earlier quoted context omitted.

The comment was a response to burning money. What does that have to do with deflation?

Are you seriously asking what reducing the money supply has to do with deflation?

Friedman was a charlatan and monetarism was trivially debunked when he came up with it. The 60 years since have not been any more kind to it. Don't confuse stocks with flows. The whole idea of money supply as a useful metric needs to be put to bed; one would have thought the 13 years post GFC would have made that apparent.

(Of course, the Austrians have a peculiar notion that inflation can by definition only be considered as such if it's associated with increased money supply. Another reason to ignore them completely)

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

#539

Post by Nasrudith » Thu, Oct 10, 2024, 7:38 PM UTC

triceratops wrote: post #357

adamisom wrote: post #310

Earlier quoted context omitted.

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.

Because dealing with someone who has proven willing to steal is bad for business. We've seen this happen again and again with communists who think they are oh so clever for 'nationalizing' their business to collect all the profits. They inevitably then find their actions effectively self-embargoed as other businesses avoid them like plague-ridden cannibals because that is what they are. Why show up to trade if there is a good chance they'll just seize all of your goods?

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

#540

Post by chgs » Thu, Oct 10, 2024, 7:48 PM UTC

WrongAssumption wrote: post #477

chgs wrote: post #114

Earlier quoted context omitted.

401k is a massive Ponzi scheme where people working today hope that people in the future will value their work. Imagine a world where you had 15 billionaires and 5 people working. How much are are. Those billions worth when they are fighting each other to have one of the 5 useful people wipe their ass in their care home?

I’m not confident you know what a 401k is.

Like all investments it’s a hope that trading work done today will be worth work done in the future.

This only holds when supply of work is high and demand is low. If the amount of work requested in the future is higher than the supply then it doesn’t matter how many pieces of paper you have to prove that you worked in the past, you are not going to get that work done.

With a shrinking population you’re relying of productivity gains, and in areas that old people need, like personal care, there’s only limited gains to be had. If there’s only 100 hours of ass wiping being done but 200 hours demanded, then half of the people requiring that service will be disapointed.

But that’s just the general problem of timeshifting your work. You rely on the next generation to honour “the deal”.

Now the 401k specifically has other issues. It tends to be “pile money in the S&P”, which simply increases the values of those stocks regardless of their fundamental worth. Passive investments lead to bubbles and collapse.

https://www.ft.com/content/994bdda8-b704-4e4c-9b19-4e0021f0b...

Throw both of those together and you end up with a disaster waiting to happen.