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> Ballmer pays such a low rate, in part, because of a provision of the U.S. tax code. When someone buys a business, they’re often able to deduct almost the enti
by ed25519FUUU 5y ago
> Ballmer pays such a low rate, in part, because of a provision of the U.S. tax code. When someone buys a business, they’re often able to deduct almost the entire sale price against their income during the ensuing years. That allows them to pay less in taxes. The underlying logic is that the purchase price was composed of assets — buildings, equipment, patents and more — that degrade over time and should be counted as expenses.
There’s the entire story for you. The owners took advantage of depreciation in the tax code.
- voisin 5y agoDepreciation only defers taxes. Their cost base declines and on a future sale they have greater capital gains. Jokes on them if the future tax rate is significantly higher than the rate they were writing off all along.
- tantalor 5y agoNo problem, just bequeath the asset to your heirs and the gains disappear.
- gruez 5y ago...but then you have to pay estate tax.
- tantalor 5y agoonly morons pay the estate tax
- fallingfrog 5y agoNo, you don’t. https://americansfortaxfairness.org/tax-fairness-briefing-booklet/fact-sheet-the-estate-inheritance-tax/ https://americansfortaxfairness.org/tax-fairness-briefing-bo...
- gruez 5y agoNot really. If you want the step-up basis, it has to go through your estate. If you do it through some sort of trust you lose that. There's a 11M exemption for estate tax, but for someone like jeff bezos he's probably not saving much using that.
- AmericanChopper 5y agoHow cheating billionaires defer millions in taxes with this one simple trick: spend billions on entirely legitimate business expenses. Even the angle they worked in there about claimed depreciation not always aligning with eventually realized depreciation is nonsense. If he ever sells those assets for a profit, he’s just going to have to pay all those taxes back anyway. I really can’t believe that the intention of articles like this is actually to inform the reader. It just seems like a way of getting low-information readers riled up about something they don’t understand.