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Every year Forbes publishes a list of the wealthiest people in the world with a number next to their name. If Forbes can do it I'm sure a properly staffed and f

Every year Forbes publishes a list of the wealthiest people in the world with a number next to their name. If Forbes can do it I'm sure a properly staffed and funded IRS could too.

missedthecue 6y ago
Finding their name isn't their hard part. Calculating their assets is. Imagine the following I own a $100M building outright that I rent to tenants (say an office building) - it's illiquid with a thin market and I can't just move a building. So let's say I do this: I enter into a terminally settled, non-transferable, future-callable, sale-leaseback with a partial-repo feature, with an overseas bank. The mechanics are this: I 'sell' the building to, say, Nomura in Japan. This is the 'sale', but I don't take any cash. Instead, Nomura agrees to a 999-year lease where I can operate the building and the rent payments are settled via the sale proceeds I never received - this is the terminally settled part. I rent to tenants and keep the net operating profit. 'Future-callable' means I can undo this in the future; 'repoed' means that if I need some of the money that Nomura is holding from the proceeds, I can get it back in part. You say, "but the operating lease has value!" - but does it? Its non-transferable, so it has no market value whatsoever, and I can zero the economics of it so it has no model value; you can't value that using any generally accepted measure. There are some detailed complicating factors in this example, but they can be sorted out; importantly, transactions like this are fairly common for (completely legal) reasons. The main thing I have done is taken the building out of my calculation of 'wealth' - I would have owed 6% times $100M, but now I don't 'have' a $100M building to tax - Nomura has the building, and they're in Japan. I will owe either income tax or corporation tax, but I would have owed that anyway. Wealth tax zeroed. Now multiply this by literally tens of thousands of millionaires and their respective assets. At some point, the cost of extracting the tax is more than the receipts collected! And this doesn't even touch on the fact that there are many asset rich, cash poor people. For instance if you own $25 million in shares in a pre-ipo unicorn, and you're making $175k in salary per year, where are you going to cough up the millions annually to afford the tax? These are real problems and it appears that the sole motivation why some want a wealth tax is not because it makes sense by any economic or policy standard, or that it might improve the lot of the man lesser-off, but because they want to make other people poorer. Full stop. And that seems to me to be a morally toxic and ideologically disgusting criteria for developing law.
- medium_burrito 6y ago
  Well then it sounds like us poors should just grab our pitchforks if the rich can't decide how to tax themselves
  - deleted 6y ago
    [deleted]
  - maxharris 6y ago
    > us poors No, use your brain. When the company I worked for closed up and laid everyone off (the day after Labor Day!) in 2019, I didn't know what to do. I knew I didn't want to work for another person's startup. I hated being ordered around, and I wanted the freedom to act on the ideas I have. I managed to save about $110k, and my goal was just a downpayment for a house. It took me years to do this. (I never bought a house - the real estate market kept shooting up, and I kept refusing to swing at it. I knew that property taxes and HOAs meant that I'd remain in chains forever, working for someone, had I bought in.) So I spent a lot of time working on my own open-source software. I ended up building a layout system, prototyped in JavaScript, meant to replace HTML and CSS. It's kinda like SwiftUI and Flutter, but I never picked up any contributors, so I stopped working on it when the pandemic really started. But that's not all I did. I also spent a lot of time reading about the financial markets, about investing, and I had always had an interest in how great companies are run. So I put my savings into $TSLA, $SQ, $ARKK, $ARKG and now I have $500k. (I had some money in "value investing" stocks early on, but sold out of those very quickly when I realized how poor the gains would be, pumped it all into in 10X innovation stocks.) I live cheaply - I eat hamburger and hot dogs, and I live in a total dump of an apartment. Why? Because I know that I'll be a millionaire in a year. What are the things making me rich? Excellent companies managed by the best allocators of capital out there. What are they doing to drive humanity forward? One is transitioning humanity to carbon-free energy, which is part of many changes required to help us avoid climate disaster. The other is using analytics to bring loans to people that banks refuse to serve and drastically undercutting payday lenders. I wrote up some of my story in these posts way back in May: https://news.ycombinator.com/item?id=22958528 https://news.ycombinator.com/item?id=22958528 https://news.ycombinator.com/item?id=22964850 https://news.ycombinator.com/item?id=22964850 Seven years ago, I had just moved to California. I had no savings, and a job that only paid $35k/year. Anyway, my point is that you don't have to be poor forever. It takes a great deal effort, planning and diligence, but you can rise up.
dagw 6y ago
Every year Forbes publishes a list of the wealthiest people in the world with a number next to their name. And each year a lot is written about how wildly inaccurate (in both directions) many people believe those numbers to be.

Every year Forbes publishes a list of the wealthiest people in the world with a number next to their name. If Forbes can do it I'm sure a properly staffed and funded IRS could too.

missedthecue 6y ago

Finding their name isn't their hard part. Calculating their assets is. Imagine the following I own a $100M building outright that I rent to tenants (say an office building) - it's illiquid with a thin market and I can't just move a building. So let's say I do this: I enter into a terminally settled, non-transferable, future-callable, sale-leaseback with a partial-repo feature, with an overseas bank. The mechanics are this: I 'sell' the building to, say, Nomura in Japan. This is the 'sale', but I don't take any cash. Instead, Nomura agrees to a 999-year lease where I can operate the building and the rent payments are settled via the sale proceeds I never received - this is the terminally settled part. I rent to tenants and keep the net operating profit. 'Future-callable' means I can undo this in the future; 'repoed' means that if I need some of the money that Nomura is holding from the proceeds, I can get it back in part. You say, "but the operating lease has value!" - but does it? Its non-transferable, so it has no market value whatsoever, and I can zero the economics of it so it has no model value; you can't value that using any generally accepted measure. There are some detailed complicating factors in this example, but they can be sorted out; importantly, transactions like this are fairly common for (completely legal) reasons. The main thing I have done is taken the building out of my calculation of 'wealth' - I would have owed 6% times $100M, but now I don't 'have' a $100M building to tax - Nomura has the building, and they're in Japan. I will owe either income tax or corporation tax, but I would have owed that anyway. Wealth tax zeroed. Now multiply this by literally tens of thousands of millionaires and their respective assets. At some point, the cost of extracting the tax is more than the receipts collected! And this doesn't even touch on the fact that there are many asset rich, cash poor people. For instance if you own $25 million in shares in a pre-ipo unicorn, and you're making $175k in salary per year, where are you going to cough up the millions annually to afford the tax? These are real problems and it appears that the sole motivation why some want a wealth tax is not because it makes sense by any economic or policy standard, or that it might improve the lot of the man lesser-off, but because they want to make other people poorer. Full stop. And that seems to me to be a morally toxic and ideologically disgusting criteria for developing law.

medium_burrito 6y ago
Well then it sounds like us poors should just grab our pitchforks if the rich can't decide how to tax themselves
- deleted 6y ago
  [deleted]
- maxharris 6y ago
  > us poors No, use your brain. When the company I worked for closed up and laid everyone off (the day after Labor Day!) in 2019, I didn't know what to do. I knew I didn't want to work for another person's startup. I hated being ordered around, and I wanted the freedom to act on the ideas I have. I managed to save about $110k, and my goal was just a downpayment for a house. It took me years to do this. (I never bought a house - the real estate market kept shooting up, and I kept refusing to swing at it. I knew that property taxes and HOAs meant that I'd remain in chains forever, working for someone, had I bought in.) So I spent a lot of time working on my own open-source software. I ended up building a layout system, prototyped in JavaScript, meant to replace HTML and CSS. It's kinda like SwiftUI and Flutter, but I never picked up any contributors, so I stopped working on it when the pandemic really started. But that's not all I did. I also spent a lot of time reading about the financial markets, about investing, and I had always had an interest in how great companies are run. So I put my savings into $TSLA, $SQ, $ARKK, $ARKG and now I have $500k. (I had some money in "value investing" stocks early on, but sold out of those very quickly when I realized how poor the gains would be, pumped it all into in 10X innovation stocks.) I live cheaply - I eat hamburger and hot dogs, and I live in a total dump of an apartment. Why? Because I know that I'll be a millionaire in a year. What are the things making me rich? Excellent companies managed by the best allocators of capital out there. What are they doing to drive humanity forward? One is transitioning humanity to carbon-free energy, which is part of many changes required to help us avoid climate disaster. The other is using analytics to bring loans to people that banks refuse to serve and drastically undercutting payday lenders. I wrote up some of my story in these posts way back in May: https://news.ycombinator.com/item?id=22958528 https://news.ycombinator.com/item?id=22958528 https://news.ycombinator.com/item?id=22964850 https://news.ycombinator.com/item?id=22964850 Seven years ago, I had just moved to California. I had no savings, and a job that only paid $35k/year. Anyway, my point is that you don't have to be poor forever. It takes a great deal effort, planning and diligence, but you can rise up.

dagw 6y ago

Every year Forbes publishes a list of the wealthiest people in the world with a number next to their name. And each year a lot is written about how wildly inaccurate (in both directions) many people believe those numbers to be.