4 ms·

You omit the fact that billionaires supposedly never realize their gains, yet they somehow are able to afford mansions and planes (not company owned). The gains

by rvba 5y ago

You omit the fact that billionaires supposedly never realize their gains, yet they somehow are able to afford mansions and planes (not company owned). The gains are realized, but due to various loopholes untaxed diaposable cash is created. How does this happen and why is it legal? Obviously there are ways (e.g. borrowing money against stock) - but maybe this should be closed? If you are a regular person your wages are taxed and then you build a house using taxed materials. If you are rich you borrow money against shares to a trust in a tax haven and then that trust builds a home for you as a company (so not even tax on materials) and you get an untaxed home where you can live.

paul_f 5y ago
Not sure we can make borrowing money illegal. For example, is it OK to have a second mortgage backed by the equity in your home?
Frost1x 5y ago
Definitely the significant difference. It's not just that the ultra wealthy can stash money in these sort of asset havens and avoid taxes, it's that they can somehow use them as liquid as cash. Your average person may have access to some of the asset storage options, like wealth stored in their 401k or even purchasing stocks directly. What we can't do is use those assets as if they're money in a bank account and avoid tax. I can lower my income by stashing money in my 401k and defer taxes until I retire but when I retire, I will pay taxes and between now and then, those assets can't be touched for much beyond an emergency without incurring fees, taxes, etc. Wealth is very different than income but if wealth can be utilized just like income (liquidated) yet not taxed, something is off in the tax system and this is what people get cranky about. If the assets weren't as liquid and usable in place of cash and had to be tucked away or otherwise taxed, less people would be cranky. For all intents and purposes for the ultra wealthy, that wealth is readily accessible, well above the amount of money they could need or most could even want which people equate to their income. They might not quickly liquidate their entire estate but they can liquidate or borrow against large enough portions that they can do about anything they want.
- Xcelerate 5y ago
  I’m confused how using their assets to borrow against lets them avoid taxes. If they borrow $10M for a yacht, they still have to presumably back that money back at some point to whomever they borrowed from. And to get that money from their assets, they will have to pay capital gains taxes on it. What am I missing?
  - Sargos 5y ago
    The loan is paid for by the appreciation of the backing asset. And over the long term the depreciation of the dollar.
danans 5y ago
> The gains are realized, but due to various loopholes untaxed diaposable cash is created. How does this happen and why is it legal? I'm sure there are loopholes, but at some level it also demonstrates how stupendously wealthy the super rich are that financing their lifestyles (i.e. houses) often requires a tiny fraction of their overall wealth.

by rvba 5y ago

paul_f 5y ago

Not sure we can make borrowing money illegal. For example, is it OK to have a second mortgage backed by the equity in your home?

Frost1x 5y ago

Definitely the significant difference. It's not just that the ultra wealthy can stash money in these sort of asset havens and avoid taxes, it's that they can somehow use them as liquid as cash. Your average person may have access to some of the asset storage options, like wealth stored in their 401k or even purchasing stocks directly. What we can't do is use those assets as if they're money in a bank account and avoid tax. I can lower my income by stashing money in my 401k and defer taxes until I retire but when I retire, I will pay taxes and between now and then, those assets can't be touched for much beyond an emergency without incurring fees, taxes, etc. Wealth is very different than income but if wealth can be utilized just like income (liquidated) yet not taxed, something is off in the tax system and this is what people get cranky about. If the assets weren't as liquid and usable in place of cash and had to be tucked away or otherwise taxed, less people would be cranky. For all intents and purposes for the ultra wealthy, that wealth is readily accessible, well above the amount of money they could need or most could even want which people equate to their income. They might not quickly liquidate their entire estate but they can liquidate or borrow against large enough portions that they can do about anything they want.

Xcelerate 5y ago
I’m confused how using their assets to borrow against lets them avoid taxes. If they borrow $10M for a yacht, they still have to presumably back that money back at some point to whomever they borrowed from. And to get that money from their assets, they will have to pay capital gains taxes on it. What am I missing?
- Sargos 5y ago
  The loan is paid for by the appreciation of the backing asset. And over the long term the depreciation of the dollar.

danans 5y ago

> The gains are realized, but due to various loopholes untaxed diaposable cash is created. How does this happen and why is it legal? I'm sure there are loopholes, but at some level it also demonstrates how stupendously wealthy the super rich are that financing their lifestyles (i.e. houses) often requires a tiny fraction of their overall wealth.