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Who died and left the US $7B?

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

#581

Post by AnthonyMouse »

RHSeeger wrote: post #563
AnthonyMouse wrote: post #546

Earlier quoted context omitted.

> Eventually, someone will sell it. "In the long run, we are all dead." -John Maynard Keynes "Eventually" could be a thousand years from now, or after the fall of the nation. More to the point, compounding interest is a powerful force. Suppose you have an asset valued at $1000 which is generating annual returns of 10%. You know of another investment that would return 11%, and also employ more people etc. If you had t…

But by that logic, we should force people to pay taxes on everything they own that goes up in value, on a regular basis. My point wasn't that "not forcing the sale won't impact taxes at all". It was more to point out that not forcing the sale doesn't magically make the taxes disappear. It just leave them unrealized in the same way they would if the original owner was still alive and owning them. They'll just get paid…

> But by that logic, we should force people to pay taxes on everything they own that goes up in value, on a regular basis.

We don't really know the value of most things when a transaction isn't happening. Also, this would force people to sell things they otherwise wouldn't have merely in order to pay the tax on their value changing, which is six kinds of disaster.

And, that would imply that you would have a tax loss any time the value of something you own goes down, even if you don't sell it. Which would cause government revenue in recession years to be inverted, even though government spending in recession years is usually increased.

> It was more to point out that not forcing the sale doesn't magically make the taxes disappear. It just leave them unrealized in the same way they would if the original owner was still alive and owning them. They'll just get paid later.

They're unrealized gains. They may not ever be realized.

One of the more common ways for this to happen is for the business to eventually go under. Most of them do in the long run. What percentage of companies are over a hundred years old?

More to the point, that's exactly the problem. If you force a large tax event on sale, things get held longer than they ought to, and then (poorly) managed by someone not really interested in that line of business. Malinvestment leads to lower returns, which reduces tax revenue, often by more than the amount of the step up in basis.

In general, anything which is economically inefficient is also going to be bad for government revenue.

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

#582

Post by _bin_ »

MisterBastahrd wrote: post #465
Slava_Propanei wrote: post #387

Earlier quoted context omitted.

The asset has not moved outside the family, has not been sold, no profit on sale has been realized. You think a profit transfer has been made, because you think in terms of atomized individuals with no family.

Citizens are taxed as individuals, not families. A person did not have assets, and now they do. I don't care that the land was "in their family." If they are even decent at managing their assets, then they will have more assets when they die than when their parents did. And if they don't, then it's not my concern. I don't believe in government policies to perpetuate generational capital wealth, and I will vote agains…

Wrong, we literally double everything in our tax code so that spouses can file jointly.

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

#583

Post by _bin_ »

MisterBastahrd wrote: post #397
lazide wrote: post #326

Earlier quoted context omitted.

Because the idea of leaving something to your kids (and a legacy beyond oneself) is a fundamental motivator for most people?

You can make that claim, but the fact of the matter is that the US is a representative democracy, and our elected representatives make the laws. We are free to choose other people for the job if we want different laws. The vast majority of people were not lucky enough to be in a situation where their bumpkin ancestors just happened to possess a large swath of land, and so we don't vote to protect large swaths of inhe…

I've watched chunks of beautiful Texas ranchland get sold off and built up by insufferable austinites for the marginal mcmansion. I will probably oppose a policy that encourages that and would rather the descendant of your so-called "bumpkin" keeps it.

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

#584

Post by _bin_ »

SR2Z wrote: post #358
lazide wrote: post #326

Earlier quoted context omitted.

Because the idea of leaving something to your kids (and a legacy beyond oneself) is a fundamental motivator for most people?

Boo. That's not what's at stake here; people don't wanna pay taxes that are fairly owed to the government.

> fairly owed

You're doing it again. You're assuming that it must be a just tax. You're assuming that a tax is somehow intrinsically "owed", that any tax requires no justification.

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

#585

Post by jmpman »

ExoticPearTree wrote: post #526
jmpman wrote: post #525

Earlier quoted context omitted.

Ah yes, the libertarian’s dream. I have a different view of fair - no taxes, except for estate tax of 100%. That’s “more” fair. Equalizes society.

Right, the old eat the rich mantra, eh?

What makes trust fund children more deserving of resources than anyone else? When these estate taxes are avoided, yes, illegitimately through lobbying, then the rest of society shoulders their burden. The difference between a trust fund baby and a welfare mother is just which bank account is sending money to them.

I’m not suggesting to eat the rich. Far from it. I’m suggesting to leave the hard working rich alone, and tax them at the end of life. Their children are no more deserving of their riches than anyone else.

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

#586

Post by jewayne »

dixie_land wrote: post #571
jewayne wrote: post #470

Earlier quoted context omitted.

I always ask myself, "What was a government service necessary in order to obtain this money?" Since there are no capital gains without all manners of law enforcement, the answer is yes here. A capital gain is not a tax on the original income. It's a tax on the capital gain, which would be impossible without the rest of us.

Capital gains do depend on participants of the market and economy in general. But each and every one of them has already been taxed. I simply stating the obvious that money should be taxed exactly once, not so many times.

> I simply stating the obvious that money should be taxed exactly once, not so many times.

Why is that obvious? Doesn't a rule like that necessarily create distortions in who gets all the benefits of civilization? For example, in only income is taxed, but not gains on investments, doesn't that mean that working people do ALL the work AND pay ALL the taxes, while people who are rich enough not to work literally do NO work and pay NO taxes?

People like you don't realize that economics involves living, breathing humans.

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

#587

Post by bigfatkitten »

consp wrote: post #237
asne11 wrote: post #233

Earlier quoted context omitted.

Suppose you're a young 20 something with maybe $300 to your name. Daddy gets struck by farming equipment and dies. Now you have two choices: 1. Continue operations of the family farm, assuming you can come up with the money to cover taxes. 2. Sell the farm to Big Farm, Inc., get a $5M check and forget about it, regardless of the consequences that means to your customers.

The taxes are less than buying the farm outright so it would just be a very cheap buyout. I do not see the problem, you can get finance for that in civilized nations. It's not easy but neither is buying a farm normally. Inheritance, even with normal tax, is a cheap way of keeping money in the family and keeping rich people rich. It is not based on merit, capabilities or need and serves no purpose in a society based o…

> The taxes are less than buying the farm outright so it would just be a very cheap buyout.

If you have $300 to your name, you're not getting finance. The bank will just laugh you out the door.

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

#588

Post by a_c_s »

Detrytus wrote: post #441
a_c_s wrote: post #368

Earlier quoted context omitted.

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 lende…

You aren't arguing against what I wrote: an investor currently pays no tax on their own stock going up.

I'm suggesting if an investor in NVIDIA uses their $100 Million in stock that they bought for $10 Million to get a loan they would have to pay capital gains on that $90 Million capital gain. Just like they would have to pay capital gains when they sell the stock. No stock sale has to occur - the investor could pay $18 million in taxes out of their loan.

When we decide to tax things is inherently arbitrary: I'm suggesting that we count "borrowing" against an asset as a taxable event which is a simple and straightforward change that makes buy-borrow-die more equitable: government gets taxes at the same time as the investor gets the benefits.

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

#589

Post by Detrytus »

a_c_s wrote: post #588
Detrytus wrote: post #441

Earlier quoted context omitted.

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 lende…

You aren't arguing against what I wrote: an investor currently pays no tax on their own stock going up. I'm suggesting if an investor in NVIDIA uses their $100 Million in stock that they bought for $10 Million to get a loan they would have to pay capital gains on that $90 Million capital gain. Just like they would have to pay capital gains when they sell the stock. No stock sale has to occur - the investor could pay…

But that’s the thing: until you sell all the “capital gains” are illusionary: you borrow against your stock and tomorrow it falls down 50% and now you’re double screwed because you owe tax on those illusionary gains and your bank is also after you, demanding extra collateral on your loan. So your proposal would essentially ban borrowing against stocks completely
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