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The Big Escape: How the Ultra-Wealthy Avoid Paying Taxes and How to Fix It [pdf]

warren.senate.gov

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Re: The Big Escape: How the Ultra-Wealthy Avoid Paying Taxes and How to Fix It [pdf]

#81

Post by jeffbee »

onlyrealcuzzo wrote: post #68
jeffbee wrote: post #42

Earlier quoted context omitted.

Median American net worth is $121k. Median home price is $380k. Typical real property taxes are .5% - 2%. Call it 1% and that makes the typical wealth tax on middle-class people roughly 3% per year.

>60% of homeowners are in debt on their house, though. So they are getting appreciation on leverage. I would argue the median homeowner is being subsidized, having a negative wealth tax. The local government takes away 1%, but the Federal government pumps up your asset price by >2% - that's a -1% wealth tax (paid entirely through inflation by non-homeowners).

Yes, there are many exemptions in tax policy for real estate. We exempt the first $500k of gains from income taxes, for example. And our whole society is structured around "building equity" i.e. making housing cost more.

Re: The Big Escape: How the Ultra-Wealthy Avoid Paying Taxes and How to Fix It [pdf]

#82

Post by basseq »

Closi wrote: post #36
iammisc wrote: post #8

Earlier quoted context omitted.

Yeah, this is written in extremely manipulative language. What was warren buffett's income in 2018? We have income tax, not wealth tax. Plus, a lot of that wealth is likely 'in' his company, which is really just fake money. I mean, I know accountants look at it and there is some overlap for taxes when doing things like options and share grants and FMV, but really, a company is worth zero until you sell it, like most…

> a company is worth zero until you sell it, like most assets. I don’t think that’s quite true - I would say a better definition would be that a company is worth what someone will pay for it, regardless of if you actually sell it or not. Stocks, piles of gold and cash are just different types of asset all of which have value. And you have to really tax all of that, otherwise the wealthy will just avoid taxes by being…

To clarify, if you were paid in gold, that's still income and you would still be taxed on the fair market value of that gold. It's income that's taxed, not USD.

Same as stock grants: if you're paid in stock, you pay income taxes when that stock is granted, at the market value of that stock.

You aren't taxed on the FMV increase of that stock until you sell it (at which point you're taxed on capital gains).

Re: The Big Escape: How the Ultra-Wealthy Avoid Paying Taxes and How to Fix It [pdf]

#83

Post by nerdjon »

mrkurt wrote: post #73
nerdjon wrote: post #64

Earlier quoted context omitted.

This is something I have always been curious about but really not talked about in any of these studies. (I am purposefully ignoring the companies not paying taxes since that I think is a valid issue if we are talking about income). So Warren Buffet may have $84 billion in stocks and assets, but how much did he actually sell? How much money went from selling stocks to his bank account? I think that number if far more…

You're not really missing anything, but there's a giant loophole. If you have $84 billion (or even $20 million) in stocks and assets, you can borrow against them without converting them to income. Then you can die. Then your estate pays off the debt without paying income taxes. Thus, 0 income taxes over a lifetime of converting wealth to income.

I never realized that...

Wouldn't that loophole be the better thing to try to address then?

Instead of just focusing on their wealth, instead focus on the loopholes.

Re: The Big Escape: How the Ultra-Wealthy Avoid Paying Taxes and How to Fix It [pdf]

#84

Post by mrkurt »

dahfizz wrote: post #69
belltaco wrote: post #41

Earlier quoted context omitted.

>Plus, a lot of that wealth is likely 'in' his company, which is really just fake money. Then maybe we should give the poor some of this "fake money" since it's fake and doesn't matter anyway. >EDIT: Repeat after me: net worth increases are not income. Net worth increases are not income. I mean, I "made" $250k last year in home appreciation, but that's just fake money. If they taxed me on it, it would come out of my…

> you can borrow against assets like this with secured loans Okay, and how do you pay back these loans? That's right: with your income. You're just moving the problem around.

No, you die. Your assets get liquidated. The estate pays the loans. No income involved, at least in tax terms.

Re: The Big Escape: How the Ultra-Wealthy Avoid Paying Taxes and How to Fix It [pdf]

#85

Post by vnchr »

outlace wrote: post #63

What if we mandate that all workers must get part of their compensation in the form of company shares so that if the company explodes in value, it's not just the executives that become billionaires and the workers are just still going paycheck to paycheck? This seems common in the tech world but not so much in other companies.

So government-forced wealth redistribution?

I wonder if that’s been tried before. Maybe there’s some point of reference for the outcomes of that approach. Maybe it could be tried on a local basis and then evaluated before a complete overhaul of the largest single nation economy?

If I had to guess, I don’t think it would work out very well. Unless you imprison the wealthy. Then their wealth wouldn’t be mobile.

This would be a great idea to apply lean startup methodology. If it works, we’ll, that’d just be…unprecedented!

Re: The Big Escape: How the Ultra-Wealthy Avoid Paying Taxes and How to Fix It [pdf]

#86

Post by monocasa »

satronaut wrote: post #75
belltaco wrote: post #41

Earlier quoted context omitted.

>Plus, a lot of that wealth is likely 'in' his company, which is really just fake money. Then maybe we should give the poor some of this "fake money" since it's fake and doesn't matter anyway. >EDIT: Repeat after me: net worth increases are not income. Net worth increases are not income. I mean, I "made" $250k last year in home appreciation, but that's just fake money. If they taxed me on it, it would come out of my…

Everyone gets a free education for 12 years, and access to infinite knowledge (library with books and internet). Qualifying families also have access to dirt cheap internet (at&t offers internet for 10$ a month if you're poor). Most anybody has the means to research how to set up an amazon store, a blog, or a youtube channel and start making business income. But instead of spending their time learning how to better t…

> set up an amazon store, a blog, or a youtube channel and start making business income.

Those are barely above MLM scams in likelyhood of making money.

You're sort of proving the opposite of your point by giving those as examples to pull yourself out of poverty.

Re: The Big Escape: How the Ultra-Wealthy Avoid Paying Taxes and How to Fix It [pdf]

#87

Post by monocasa »

dahfizz wrote: post #69
belltaco wrote: post #41

Earlier quoted context omitted.

>Plus, a lot of that wealth is likely 'in' his company, which is really just fake money. Then maybe we should give the poor some of this "fake money" since it's fake and doesn't matter anyway. >EDIT: Repeat after me: net worth increases are not income. Net worth increases are not income. I mean, I "made" $250k last year in home appreciation, but that's just fake money. If they taxed me on it, it would come out of my…

> you can borrow against assets like this with secured loans Okay, and how do you pay back these loans? That's right: with your income. You're just moving the problem around.

Or you take out more loans to cover the interest until you die.

Re: The Big Escape: How the Ultra-Wealthy Avoid Paying Taxes and How to Fix It [pdf]

#88

Post by mrkurt »

nerdjon wrote: post #83
mrkurt wrote: post #73

Earlier quoted context omitted.

You're not really missing anything, but there's a giant loophole. If you have $84 billion (or even $20 million) in stocks and assets, you can borrow against them without converting them to income. Then you can die. Then your estate pays off the debt without paying income taxes. Thus, 0 income taxes over a lifetime of converting wealth to income.

I never realized that... Wouldn't that loophole be the better thing to try to address then? Instead of just focusing on their wealth, instead focus on the loopholes.

There is tremendous resistance to addressing that loophole. A wealth tax is one way to address it. An estate tax is another. So far a "wealth tax" seems more popular, because most people like the idea of a tax free inheritance but don't have untaxed wealth. Most people actually pay wealth taxes already when they buy cars or houses or a boat or an RV.

Re: The Big Escape: How the Ultra-Wealthy Avoid Paying Taxes and How to Fix It [pdf]

#89

Post by useful »

In theory, a 3% wealth tax makes the life of a billionaire difficult. You have like a 60% tax rate for fed/state/local. You make maybe 8% by being safe in your investments. If you pay taxes on your income, get that 8% reduced to 6% by 2% inflation and then your left with a 3.6% YoY gain (6% * 60%) before a 3% wealth tax wipes you out down to 0.6%.

But you still don't have to pay taxes on your gains with this bill. You can take out a loan on your new assets at a 2-3% rate and its reduced to around 1% with inflation. Now you don't have to pay taxes because a loan on the principal value doesn't cause a taxable event with the step up in value. You just sell enough to cover your interest liabilities and pay taxes on that.

I wish they'd address WHY these rates are so low by attacking people and companies that aren't being productive with their capital by building things people want. Why attack a people or a company with a wealth tax if they are paying low rates because they spend most of their revenue on building the business. Capitalism is about rewarding good allocators of capital.

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