13 ms·

"Poor people are just as free to avoid taxes on their long-term investments in illiquid capital-intensive projects as millionaires and billionaires" is not a ta

"Poor people are just as free to avoid taxes on their long-term investments in illiquid capital-intensive projects as millionaires and billionaires" is not a take I expected to see, but thank you HN for proving me wrong.

dwiel 8y ago
Not only that, but this poor person has to use capital gains for this ...
- tanderson92 8y ago
  Filling out and finding ways to minimize taxes due to 1040 Schedule Ds, that regular feature of tax season that people making $50k/yr or less know and love.
manigandham 8y ago
Does nobody gain at all from the investments in an opportunity zone? Are those benefits just ignored?
- tanderson92 8y ago
  You won't find me arguing against the need for more investment in opportunity zones, or the social benefits of doing so. We don't need a redistributional giveaway to rich people to do so, of course.
  - manigandham 8y ago
    Who else is going to do the investing then? The point of any investment is a return, and who would expect or choose a return from these areas compared to many other opportunities?
    - tanderson92 8y ago
      The government investing the money would be nice. Apparently they have a lot of money to invest, they just redistributed $2T to primarily rich people through the TCJA. (I'm a socialist in part because of the market's inability to effect change, such as investment in OZs, which doesn't have a sufficient monetary reward but has significant societal reward. Some people call this a "market failure")
      - manigandham 8y ago
        Yes, that's the only other option isn't it? But why is that better? Why have a massive inefficient government spend a vast sum of money when instead it can just defer some tax collection, letting these investors take the risk and optimize for success?
        tanderson92 8y ago
        I disagree that governments necessarily must be inefficient, but yes this is an area with some nuance. I could see myself being in favor of an incentivized tax structure for OZs, along with a highly redistributional tax system for income, wealth and equity, but I don’t think too many of the people who argue for the power of markets to incentivize investment of OZs are also in favor of the redistibutional part ;)
        ericd 8y ago
        Do you have much exposure to how government operates? Where money is being thrown around by government, in general, there are laws in place to make sure that money doesn't flow into the bureaucrats pockets somehow. But to do that, they add layers and layers of checks and processes. The side effect is that they're not very fast. And then there's the issue of not having attracted the hungriest talent on average, due to not offering very good salaries, because of the whole avoiding looking corrupt thing. And then there's the whole personal motivation of private investors to profit, whereas government investors have no such motivation (if they're not corrupt). So there's just no very good motivation to do a great job. There's a whole slew of reasons they don't make very good investors relative to private investors.
- pbarnes_1 8y ago
  This is what taxes and governments are for in civilized countries. Not whatever the US is right now. A proto-fascist quasi-theocratic corporatist-oligarchist kleptocracy.
  - dang 8y ago
    Please don't post political or national flamewar comments to HN. We're trying for better than that here, regardless of how low the odds are. https://news.ycombinator.com/newsguidelines.html https://news.ycombinator.com/newsguidelines.html
charlesdm 8y ago
People cry tax avoidance, but I'm assuming these will MOSTLY be areas where no one and their mother would want to reasonably invest. Areas with little hope for the people there to establish themselves in a good life. If this moves some money into these underdeveloped areas, after a 10 year stock market bull run, then great. Most of the investments will go to zero, but the ones that don't might have a good impact for the people living there.
- heavenlyblue 8y ago
  >> assuming Are there actual numbers somewhere?
  - thrmsforbfast 8y ago
    There's a map in the article. some of the zones are legitimate opportunities. A lot of them -- and the ones most likely to attract investment -- make it patently clear that this is a low-risk give-away.
- wefarrell 8y ago
  I live 2 blocks from one of these areas and used to live in one. I was immediately able to find a 400 sq foot studio for $3,250 per month inside one: https://streeteasy.com/building/235-adams-street-brooklyn/14a https://streeteasy.com/building/235-adams-street-brooklyn/14...
  - njarboe 8y ago
    Not saying that things aren't really expensive but this place has a "days on market" of 1529 and is 20% bigger at 473 sq ft.
- thrmsforbfast 8y ago
  If you look at the map, you'll notice areas with white hot housing and rental markets (2k+ rents, 600k+ floors of houses). See my other comment for a concrete example. Even worse, the zones are chosen by governors and the rules for selecting them are extremely lax. I know enough about the local politics of where I grew up to know that at least one of the OZs makes literally no sense and is 100% a kickback to a major gubernatorial donor.
WalterBright 8y ago
The long term capital gains tax rate for married people with less than $19,000 in income is zero.
- lexs 8y ago
  How much long term investment can you realistically do when your income is less than $19,000?
  - WalterBright 8y ago
    The point is that low income people do not need a capital gains tax optimization strategy, because the tax is already 0.
- ryanwaggoner 8y ago
  I believe it’s 0% up to $77k for married filing jointly.
refurb 8y ago
What if some blue collar worker has his 401k or pension plan invested in a company that is taking advantage of the tax break?
- tanderson92 8y ago
  The article is about a tax break for people, not companies, so this should not affect any investment decision that companies make. And, of course, the 401k/pension plan, or company that the 401k/plan owns, could easily invest in the OZ if they so desired, if it made financial sense separately from the individual tax break.
  - refurb 8y ago
    It's not just limited to individuals, company can invest and get the tax break as well.[1] [1]https://www.barrons.com/articles/opportunity-zone-funds-to-deliver-a-tax-break-1538680532 https://www.barrons.com/articles/opportunity-zone-funds-to-d...
- gcb0 8y ago
  his gains will still be much less than if the company paid more taxes. also it is irrelevant, as every single listed company will benefit from it, making no stock differentiation in price.
mendelk 8y ago
"In its majestic equality, the law forbids rich and poor alike to sleep under bridges, beg in the streets and steal loaves of bread." - Anatole France (Note, this is not to express an opinion on the GP!)
- tanderson92 8y ago
  This was, indeed, the inspiration for my comment. It’s cogent and persuasive encapsulation of current free market thought.

dwiel 8y ago

Not only that, but this poor person has to use capital gains for this ...

tanderson92 8y ago
Filling out and finding ways to minimize taxes due to 1040 Schedule Ds, that regular feature of tax season that people making $50k/yr or less know and love.

manigandham 8y ago

Does nobody gain at all from the investments in an opportunity zone? Are those benefits just ignored?

tanderson92 8y ago
You won't find me arguing against the need for more investment in opportunity zones, or the social benefits of doing so. We don't need a redistributional giveaway to rich people to do so, of course.
- manigandham 8y ago
  Who else is going to do the investing then? The point of any investment is a return, and who would expect or choose a return from these areas compared to many other opportunities?
  - tanderson92 8y ago
    The government investing the money would be nice. Apparently they have a lot of money to invest, they just redistributed $2T to primarily rich people through the TCJA. (I'm a socialist in part because of the market's inability to effect change, such as investment in OZs, which doesn't have a sufficient monetary reward but has significant societal reward. Some people call this a "market failure")
    - manigandham 8y ago
      Yes, that's the only other option isn't it? But why is that better? Why have a massive inefficient government spend a vast sum of money when instead it can just defer some tax collection, letting these investors take the risk and optimize for success?
      - tanderson92 8y ago
        I disagree that governments necessarily must be inefficient, but yes this is an area with some nuance. I could see myself being in favor of an incentivized tax structure for OZs, along with a highly redistributional tax system for income, wealth and equity, but I don’t think too many of the people who argue for the power of markets to incentivize investment of OZs are also in favor of the redistibutional part ;)
        ericd 8y ago
        Do you have much exposure to how government operates? Where money is being thrown around by government, in general, there are laws in place to make sure that money doesn't flow into the bureaucrats pockets somehow. But to do that, they add layers and layers of checks and processes. The side effect is that they're not very fast. And then there's the issue of not having attracted the hungriest talent on average, due to not offering very good salaries, because of the whole avoiding looking corrupt thing. And then there's the whole personal motivation of private investors to profit, whereas government investors have no such motivation (if they're not corrupt). So there's just no very good motivation to do a great job. There's a whole slew of reasons they don't make very good investors relative to private investors.
pbarnes_1 8y ago
This is what taxes and governments are for in civilized countries. Not whatever the US is right now. A proto-fascist quasi-theocratic corporatist-oligarchist kleptocracy.
- dang 8y ago
  Please don't post political or national flamewar comments to HN. We're trying for better than that here, regardless of how low the odds are. https://news.ycombinator.com/newsguidelines.html https://news.ycombinator.com/newsguidelines.html

charlesdm 8y ago

People cry tax avoidance, but I'm assuming these will MOSTLY be areas where no one and their mother would want to reasonably invest. Areas with little hope for the people there to establish themselves in a good life. If this moves some money into these underdeveloped areas, after a 10 year stock market bull run, then great. Most of the investments will go to zero, but the ones that don't might have a good impact for the people living there.

heavenlyblue 8y ago
>> assuming Are there actual numbers somewhere?
- thrmsforbfast 8y ago
  There's a map in the article. some of the zones are legitimate opportunities. A lot of them -- and the ones most likely to attract investment -- make it patently clear that this is a low-risk give-away.
wefarrell 8y ago
I live 2 blocks from one of these areas and used to live in one. I was immediately able to find a 400 sq foot studio for $3,250 per month inside one: https://streeteasy.com/building/235-adams-street-brooklyn/14a https://streeteasy.com/building/235-adams-street-brooklyn/14...
- njarboe 8y ago
  Not saying that things aren't really expensive but this place has a "days on market" of 1529 and is 20% bigger at 473 sq ft.
thrmsforbfast 8y ago
If you look at the map, you'll notice areas with white hot housing and rental markets (2k+ rents, 600k+ floors of houses). See my other comment for a concrete example. Even worse, the zones are chosen by governors and the rules for selecting them are extremely lax. I know enough about the local politics of where I grew up to know that at least one of the OZs makes literally no sense and is 100% a kickback to a major gubernatorial donor.

WalterBright 8y ago

The long term capital gains tax rate for married people with less than $19,000 in income is zero.

lexs 8y ago
How much long term investment can you realistically do when your income is less than $19,000?
- WalterBright 8y ago
  The point is that low income people do not need a capital gains tax optimization strategy, because the tax is already 0.
ryanwaggoner 8y ago
I believe it’s 0% up to $77k for married filing jointly.

refurb 8y ago

What if some blue collar worker has his 401k or pension plan invested in a company that is taking advantage of the tax break?

tanderson92 8y ago
The article is about a tax break for people, not companies, so this should not affect any investment decision that companies make. And, of course, the 401k/pension plan, or company that the 401k/plan owns, could easily invest in the OZ if they so desired, if it made financial sense separately from the individual tax break.
- refurb 8y ago
  It's not just limited to individuals, company can invest and get the tax break as well.[1] [1]https://www.barrons.com/articles/opportunity-zone-funds-to-deliver-a-tax-break-1538680532 https://www.barrons.com/articles/opportunity-zone-funds-to-d...
gcb0 8y ago
his gains will still be much less than if the company paid more taxes. also it is irrelevant, as every single listed company will benefit from it, making no stock differentiation in price.

mendelk 8y ago

"In its majestic equality, the law forbids rich and poor alike to sleep under bridges, beg in the streets and steal loaves of bread." - Anatole France (Note, this is not to express an opinion on the GP!)

tanderson92 8y ago
This was, indeed, the inspiration for my comment. It’s cogent and persuasive encapsulation of current free market thought.