7 ms·

Samsung's Lee family to pay over $10.8B inheritence tax

54 points by yellowyacht 5y ago

deleted 5y ago
[deleted]
matthewmorgan 5y ago
Nice problem to have
- staticelf 5y ago
  Nice way to put it
- ludamad 5y ago
  "50% rate... a premium can be added to shares if the deceased has a controlling interest in a company, potentially taking the top rate even higher" I have to wonder, there's a huge incentive to instead have the person somehow give huge gifts to everyone before death, right?
  - Denvercoder9 5y ago
    Generally the gift tax rate is comparable to the estate tax rate to avoid this loophole. From a quick Google search it seems the gift tax in South Korea can be up to 50%.
  - deleted 5y ago
    [deleted]
- dfilppi 5y ago
  Being double taxed is never a nice problem.
  - ABeeSea 5y ago
    No one person is being double taxed. The deceased was taxed once and then the inheritor is taxed once.
- speeder 5y ago
  Last time I heard about this, there was some south koreans explaining this is very not nice, that the laws are silly, and can be weaponized. For example you can gift someone a expensive building right before your death, because when you do die, they will be forced to pay so much inheritance tax, that they would have to sell the building, since selling the building is quite hard, it is likely the person will just go bankrupt, or go to jail. EDIT: I misremembered something. The gift wasn't before death, it was on the will. ie: person die, and "target" inherits some expensive crap he can't sell.
  - amelius 5y ago
    You could refuse the gift?
  - Denvercoder9 5y ago
    That seems very far-fetched. For one, you can refuse gifts. Furthermore, I'd assume that the tax is based on fair market value, and if they can't sell the building because no one wants to buy it, doesn't that mean that the market value is $0?
    - emrah 5y ago
      I don't know how it works in South Korea but in the US, appraisals don't require having to sell the building. Similarly, for insurance purposes, they need to determine a value without having to sell the building.
      - winkeltripel 5y ago
        The idea is that you'd have to pay inheritance tax on the value of the building. The only way for someone without wealth to pay that would be to sell the building. The sale of an industrial site could take years, during which you'd owe a bunch of taxes.
        jellicle 5y ago
        The tax man will put a lien on the building and get their money when the building sells. This idea that being given billions of dollars (as the Lee family was) is somehow a bad thing or has downsides is just ludicrous propaganda. For any billionaires out there, if you have unwanted buildings or want to punish me with a large tax bill, I will accept the punishment. Call me maybe!
- MikusR 5y ago
  Except the inheritance is in shares but the tax is cash.
ggambetta 5y ago
*inheritance
1cvmask 5y ago
While this link is getting traffic there are no written details in it (you have to watch the video). For those curious here are some more informative articles: https://www.cnbc.com/2021/04/28/samsung-inheritance-lee-family-to-pay-over-10-billion-inheritance-tax.html https://www.cnbc.com/2021/04/28/samsung-inheritance-lee-fami... https://www.reuters.com/business/samsungs-lee-family-pay-more-than-12-trln-won-inheritance-taxes-2021-04-28/ https://www.reuters.com/business/samsungs-lee-family-pay-mor...
thrower123 5y ago
They had to figure out how they could finesse this so that they didn't destroy the South Korean economy. So the Seoul National Art Museums will be getting some lovely new additions to their collections.
- psKama 5y ago
  Or let's say extremely over-valued paintings so they can count them in that $10Billion.
vmception 5y ago
Seems excessive, how well is the Korean government in stewarding public resources and identifying areas of the economy to direct capital? Do they have a history of being the proper stewards of this money than a private person?
- hogFeast 5y ago
  I would look at what the Lee family has done at Samsung. How well did they steward capital? So well, that the share price rose significantly when Lee Kun-hee actually died, and it looked like they would finally lose control. Kun-hee seemed like a very odd guy (there are videos online, people who posted this in SK got picked up by the NIS, of him having orgies with prostitutes). Jae-yong is less offensive but has a reputation as an incompetent. Success came in spite of their leadership, not because of it (the mobile business, in particular, seemed totally accidental...central office actually tried to stop the US mobile business growing). Inheriting wealth doesn't mean you inherit talent.
  - vmception 5y ago
    Thanks! Is there any percentage of tax to the Korean government where your answer would change? It seems everything you wrote is true whether the tax is 1%, 10%, 30%, or the 50% that occurred here, let alone greater amounts. Is there a different outcome of the distribution of this money that you would support as well? It seems the primary constant is that this family of directors should not steward it. As an outside observer, not from Korea, I'm the opposite of bothered that a wealthy person had orgies with prostitutes. That wouldn't be an example of odd to me, it wouldn't be a euphemism for another stronger word, and it would have no bearing on my opinion of whether they get a haircut on their estate. This is useful context as nobody else has replied yet.
    - hogFeast 5y ago
      No, my point is that having a high inheritance tax leads to improved efficiency of capital markets. The Lee family have relied on literally illegal manoeuvres (they rigged a shareholder vote on an subsidiary acquisition) to maintain control, it is best that a company is guided by economic motives and not dictatorship by minority groups (again, the cost to Samsung has been substantial, that is why the company has pretty much always traded at a heavy discount). I would read more about Kun-hee...the issue with the orgies is not moral judgement, the issue is that it paints a picture of someone who has a lot of other stuff going on: he spent almost no time at work (reportedly, he was obsessed with films and spent 95% of his waking time comatose watching films), he made others treat him as essentially a God...which, tbf, he basically was in SK...he was convicted of serious crimes twice, he oversaw massive political corruption (he gave literally tens of millions to individual politicians, his total bribes are probably in the billions), he gave impromptu incoherent rants that lasted multiple days that senior execs had to attend, no-one was allowed to make eye contact or look at him whilst their eye level was higher than his, factory workers weren't allowed to park within eyesight of his office, anyone who met him had to eat a mint before they spoke to him...this is just a small subset of the crazy shit...it is always funny to me that people will abandon all logic in order to reflect in their own self-regard (the reason why people say having prostitutes with orgies doesn't matter is because they want other people to know they are very liberal and forward-thinking...if you actually care about making money, it is difficult to think of a worse sign).
nonameiguess 5y ago
They're paying over 5 years, so assuming equal payments, roughly $2.16 billion per year. The 2021 national budget is estimated at $469.8 billion[1], so about 0.5% of the budget. I see another comment here questioning whether the South Korean government can really be trusted to be good stewards of that much money. I don't know. Samsung has certainly done a lot for the country. Maybe the kids would do just as much good as the father. Let's not pretend government has done nothing for them, though. The Samsung family today hasn't starved in a famine or been executed by a despot because of the actions of governments. My old battalion, the 3/8 CAV, was nearly completely wiped out in a single day back in 1950 in Unsan trying to ensure South Korea was able to exist at all.[2] This was the single bloodiest day in 1st CAV history. [1]: https://www.koreatimes.co.kr/www/nation/2020/09/367_295260.html https://www.koreatimes.co.kr/www/nation/2020/09/367_295260.h... [2]: https://1cda.org/history/history-8cav/ https://1cda.org/history/history-8cav/

54 points by yellowyacht 5y ago

deleted 5y ago

[deleted]

matthewmorgan 5y ago

Nice problem to have

staticelf 5y ago
Nice way to put it
ludamad 5y ago
"50% rate... a premium can be added to shares if the deceased has a controlling interest in a company, potentially taking the top rate even higher" I have to wonder, there's a huge incentive to instead have the person somehow give huge gifts to everyone before death, right?
- Denvercoder9 5y ago
  Generally the gift tax rate is comparable to the estate tax rate to avoid this loophole. From a quick Google search it seems the gift tax in South Korea can be up to 50%.
- deleted 5y ago
  [deleted]
dfilppi 5y ago
Being double taxed is never a nice problem.
- ABeeSea 5y ago
  No one person is being double taxed. The deceased was taxed once and then the inheritor is taxed once.
speeder 5y ago
Last time I heard about this, there was some south koreans explaining this is very not nice, that the laws are silly, and can be weaponized. For example you can gift someone a expensive building right before your death, because when you do die, they will be forced to pay so much inheritance tax, that they would have to sell the building, since selling the building is quite hard, it is likely the person will just go bankrupt, or go to jail. EDIT: I misremembered something. The gift wasn't before death, it was on the will. ie: person die, and "target" inherits some expensive crap he can't sell.
- amelius 5y ago
  You could refuse the gift?
- Denvercoder9 5y ago
  That seems very far-fetched. For one, you can refuse gifts. Furthermore, I'd assume that the tax is based on fair market value, and if they can't sell the building because no one wants to buy it, doesn't that mean that the market value is $0?
  - emrah 5y ago
    I don't know how it works in South Korea but in the US, appraisals don't require having to sell the building. Similarly, for insurance purposes, they need to determine a value without having to sell the building.
    - winkeltripel 5y ago
      The idea is that you'd have to pay inheritance tax on the value of the building. The only way for someone without wealth to pay that would be to sell the building. The sale of an industrial site could take years, during which you'd owe a bunch of taxes.
      - jellicle 5y ago
        The tax man will put a lien on the building and get their money when the building sells. This idea that being given billions of dollars (as the Lee family was) is somehow a bad thing or has downsides is just ludicrous propaganda. For any billionaires out there, if you have unwanted buildings or want to punish me with a large tax bill, I will accept the punishment. Call me maybe!
MikusR 5y ago
Except the inheritance is in shares but the tax is cash.

ggambetta 5y ago

*inheritance

1cvmask 5y ago

While this link is getting traffic there are no written details in it (you have to watch the video). For those curious here are some more informative articles: https://www.cnbc.com/2021/04/28/samsung-inheritance-lee-family-to-pay-over-10-billion-inheritance-tax.html https://www.cnbc.com/2021/04/28/samsung-inheritance-lee-fami... https://www.reuters.com/business/samsungs-lee-family-pay-more-than-12-trln-won-inheritance-taxes-2021-04-28/ https://www.reuters.com/business/samsungs-lee-family-pay-mor...

thrower123 5y ago

They had to figure out how they could finesse this so that they didn't destroy the South Korean economy. So the Seoul National Art Museums will be getting some lovely new additions to their collections.

psKama 5y ago
Or let's say extremely over-valued paintings so they can count them in that $10Billion.

vmception 5y ago

Seems excessive, how well is the Korean government in stewarding public resources and identifying areas of the economy to direct capital? Do they have a history of being the proper stewards of this money than a private person?

hogFeast 5y ago
I would look at what the Lee family has done at Samsung. How well did they steward capital? So well, that the share price rose significantly when Lee Kun-hee actually died, and it looked like they would finally lose control. Kun-hee seemed like a very odd guy (there are videos online, people who posted this in SK got picked up by the NIS, of him having orgies with prostitutes). Jae-yong is less offensive but has a reputation as an incompetent. Success came in spite of their leadership, not because of it (the mobile business, in particular, seemed totally accidental...central office actually tried to stop the US mobile business growing). Inheriting wealth doesn't mean you inherit talent.
- vmception 5y ago
  Thanks! Is there any percentage of tax to the Korean government where your answer would change? It seems everything you wrote is true whether the tax is 1%, 10%, 30%, or the 50% that occurred here, let alone greater amounts. Is there a different outcome of the distribution of this money that you would support as well? It seems the primary constant is that this family of directors should not steward it. As an outside observer, not from Korea, I'm the opposite of bothered that a wealthy person had orgies with prostitutes. That wouldn't be an example of odd to me, it wouldn't be a euphemism for another stronger word, and it would have no bearing on my opinion of whether they get a haircut on their estate. This is useful context as nobody else has replied yet.
  - hogFeast 5y ago
    No, my point is that having a high inheritance tax leads to improved efficiency of capital markets. The Lee family have relied on literally illegal manoeuvres (they rigged a shareholder vote on an subsidiary acquisition) to maintain control, it is best that a company is guided by economic motives and not dictatorship by minority groups (again, the cost to Samsung has been substantial, that is why the company has pretty much always traded at a heavy discount). I would read more about Kun-hee...the issue with the orgies is not moral judgement, the issue is that it paints a picture of someone who has a lot of other stuff going on: he spent almost no time at work (reportedly, he was obsessed with films and spent 95% of his waking time comatose watching films), he made others treat him as essentially a God...which, tbf, he basically was in SK...he was convicted of serious crimes twice, he oversaw massive political corruption (he gave literally tens of millions to individual politicians, his total bribes are probably in the billions), he gave impromptu incoherent rants that lasted multiple days that senior execs had to attend, no-one was allowed to make eye contact or look at him whilst their eye level was higher than his, factory workers weren't allowed to park within eyesight of his office, anyone who met him had to eat a mint before they spoke to him...this is just a small subset of the crazy shit...it is always funny to me that people will abandon all logic in order to reflect in their own self-regard (the reason why people say having prostitutes with orgies doesn't matter is because they want other people to know they are very liberal and forward-thinking...if you actually care about making money, it is difficult to think of a worse sign).

nonameiguess 5y ago

They're paying over 5 years, so assuming equal payments, roughly $2.16 billion per year. The 2021 national budget is estimated at $469.8 billion[1], so about 0.5% of the budget. I see another comment here questioning whether the South Korean government can really be trusted to be good stewards of that much money. I don't know. Samsung has certainly done a lot for the country. Maybe the kids would do just as much good as the father. Let's not pretend government has done nothing for them, though. The Samsung family today hasn't starved in a famine or been executed by a despot because of the actions of governments. My old battalion, the 3/8 CAV, was nearly completely wiped out in a single day back in 1950 in Unsan trying to ensure South Korea was able to exist at all.[2] This was the single bloodiest day in 1st CAV history. [1]: https://www.koreatimes.co.kr/www/nation/2020/09/367_295260.html https://www.koreatimes.co.kr/www/nation/2020/09/367_295260.h... [2]: https://1cda.org/history/history-8cav/ https://1cda.org/history/history-8cav/