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How to have a billion dollar exit with zero capital gains tax

287 points by the88doctor 4y ago

usmannk 4y ago
Of the reqs, having to hold the investment for 10 years seems like the biggest barrier in applying this to a startup.
- urthor 4y ago
  Locking in a 10 year horizon with 50% of all man hours within a single suburb is also a large hurdle.
webmaven 4y ago
The closest opportunity zone is 5 miles away, includes a large mall, mixed use development, upscale retail spaces, a Trader Joe's, etc. Meanwhile, I am surrounded by vacant lots, a large mall that is entirely dead and vacant, low income housing, one tiny strip mall with a convenience store, and another with a church, dollar store, and liquor store (a mile away). I can see though that the OZ tract is tiny, whereas the tract I'm in is about 7 x larger and includes some more supermarkets and malls further away that are very active though not upscale. Looks like a fairly straightforward case of economic gerrymandering.
Layke1123 4y ago
Is this really what people strive for in the USA. To avoid contributing anything back to the country that helped them achieve everything they've ever wanted?
- nerdponx 4y ago
  Yes. The "privatize gains, socialize losses" thing isn't just an empty meme, it's a legitimate (read: "not strictly illegal") and highly profitable strategy.
- deleted 4y ago
  [deleted]
- chii 4y ago
  it's not completely free money - you have to invest in qualified funds/businesses, which is located in areas of low economic opportunity that the gov't wants to incentivize businesses to start operating in. This is effectively a tax incentive to open new businesses in these somewhat remote and low-income areas. I dont think it's a bad thing if it does indeed encourage job creation and economic activity in those areas that otherwise would've stagnated.
- imgabe 4y ago
  The government is not a charity. If they have deemed something to be non-taxable, it's because the government (and by extension, the people it represents) want to incentivize that particular activity, in this case investing in economically depressed areas. If at some point we no longer want to incentivize that behavior, the government can simply remove the tax break. Moralizing about how people shouldn't engage in the behavior that the government is encouraging them to by offering tax incentives is beyond useless.
  - klyrs 4y ago
    > The government is not a charity. Not unless you're extremely rich or extremely poor, that is.
  - Layke1123 4y ago
    Or...the government is corrupt and used by the wealthy to write loop holes that allow them to escape paying taxes.
    - imgabe 4y ago
      If you think it's corrupt for the government to offer incentives for people to invest in underserved areas where they otherwise wouldn't, by all means, write your representatives, or run for office yourself to end this corrupt practice.
      - deleted 4y ago
        [deleted]
      - deleted 4y ago
        [deleted]
      - hamburglar 4y ago
        Speaking out about it is also a valid action, you know. In fact if you want to be a single issue candidate and actually get elected, it’s probably a requirement.
    - 4y ago
- alliao 4y ago
  I'd like to hear your thoughts on countries that don't even have capital gains tax
  - Layke1123 4y ago
    I'll let you take an educated guess on my position...
- 0xy 4y ago
  Capital gains tax is a parasitical tax that punishes people for being responsible with their after-tax money. It also creates massive, massive loopholes that can be abused. The fairest solution is to scrap CGT and associated capital loss write-offs. This allows the middle class to thrive by investing in productive enterprises and not getting taxed yet again to do so. It's the worst kind of tax that punishes success by stealing your after-tax money. As for your appeal to nation, the US will waste your money on slaughtering Afghanistani children with bombs and handing out cash to serial fraudsters (look up how many people on Social Security are actually real). Most tax money is wasted by government.
  - jusssi 4y ago
    There are two groups slicing the worker's cheese. One is the state, they claim tax. The other is the investors, they claim profit. Calling out other parasites, don't forget you also are one.
    - 0xy 4y ago
      This can only be true if you hold humans in such low regard that you think they cannot make an informed choice about where to work and under which conditions. Any example of a cooperative usually descends into chaos, an example being worker's unions which descend into criminality, corruption and pure evil (teacher's unions regularly defend sexual predator teachers, for example) more often than not. It's also a pure fallacy and just plain wrong to suggest I claim profit from Cloudflare. Cloudflare has not and does not issue dividends, meaning all of the profit is reinvested in business operations or goes to the workers. As an investor, I don't see a single cent of profit in this case.
      - jusssi 4y ago
        > sexual predator teachers You need to chill, dude. I am not defending child molesters. I am not even claiming that capital investment is evil. I am simply pointing out the fact that the relation is parasitic. > As an investor, I don't see a single cent of profit in this case. Then you aren't paying capital gains tax either, so I don't see the problem. I'm curious though, do you also not expect to get any profit for this particular investment in the future? When you have got back your inflation adjusted initial capital + a modest interest + a reward for the risk, do you mail your share certificates back to Cloudflare with a note, thank you, good doing business with you?
- thrwawy283 4y ago
  I don't know why you're being downvoted. While I would commonly understand people want to avoid taxes, I think there's a real question in there: Why don't people want to contribute back to an environment that enabled their success? I have too many family members that will avoid acknowledging anything the government does for them. "The social contract."
  - Layke1123 4y ago
    Because it's not what the VC's who run this site want the narrative to be and do everything they can to keep tech bros on their side.
  - deleted 4y ago
    [deleted]
- Fezzik 4y ago
  I think, like most things, it’s a bell curve - the bulk of the people want to contribute a reasonable amount while some want contribute none and some extra. The glaring issue in the United States is how much capital is gained — though I prefer ‘allocated to’, as the people do the work — by a minuscule portion of the population and the paltry taxes they then pay.
  - ars 4y ago
    "platry"?? The top 10% of the US pays 71% of tax.
    - HWR_14 4y ago
      Well duh, the top 10% own 89% of the country. Obviously they have to pay a reasonable tax rate.
  - tomcam 4y ago
    > the bulk of the people want to contribute a reasonable amount Not sure that’s correct. https://thehill.com/policy/finance/599753-study-57-percent-of-us-households-paid-no-federal-income-tax-last-year-amid/ https://thehill.com/policy/finance/599753-study-57-percent-o...
- dheera 4y ago
  The government of USA is incredibly inefficient at getting anything done. If I had billions of dollars I would always strive to legally pay as least taxes as possible and use the funds to contribute back the country in much more efficient ways, including investing in people who are provably getting shit done. Here's the latest of a constant firehose of misuse of funds I've seen. The gist is that a Stanford professor is basically leeching $40K of tax money at a $5000/hr rate for "consulting" about social justice and equity in schools. I'd rather give that $40K directly toward educational supplies for underprivileged students, or to a hundred tutors and therapists at $50/hr, or something else. https://nypost.com/2022/04/08/stanford-prof-calls-cops-on-berkeley-prof-who-exposed-her-5k-hour-consulting-fee/ https://nypost.com/2022/04/08/stanford-prof-calls-cops-on-be...
  - nobodyandproud 4y ago
    A state school professor (Berkeley) called out a private school professor (Stanford) for a $5k/hour BS consulting fee. How does that make your case?
    - dheera 4y ago
      That BS consulting fee comes from my taxes.
      - moistly 4y ago
        Strange that you pick a minuscule—nay, pissant—cost, when you could point to other waste that is literally millions of orders of magnitude greater. The BS consulting fee cost you perhaps a hundred-thousandth of a penny. The unnecessary war in Iraq cost you tens of thousands of dollars. Billions in subsidies to oil companies that are earning record-breaking profits is costing you hundreds of dollars. Don’t let clickbait distract you from the real pain.
        dheera 4y ago
        Strange that you didn't see this part "the latest of a constant firehose"
- golemotron 4y ago
  > Is this really what people strive for in the USA. To avoid contributing anything back to the country that helped them achieve everything they've ever wanted? You are working from a flawed model. Government spending is not tied at all to revenue. Over the past three years the federal government has dropped over 5 trillion dollars on the economy from a helicopter. Why not take advantage of a loophole when money can and is being created out of thin air?
- senectus1 4y ago
  This is America...
- dmje 4y ago
  Thank god for you. Wish I could upvote this 10x :-)
- tomcam 4y ago
  Apparently it’s the American dream. Over half of US workers pay zero federal tax. https://thehill.com/policy/finance/599753-study-57-percent-of-us-households-paid-no-federal-income-tax-last-year-amid/ https://thehill.com/policy/finance/599753-study-57-percent-o...
- deleted 4y ago
  [deleted]
- csomar 4y ago
  It's a free market approach. The alternative is that the government collects money everywhere equally and then go and invest/pump money into these area. If the area is tax negative (requires more government money than it brings in), then might as well give it tax breaks; if that economic activity can break it off the cycle. The very fact that some of these places exist for a long time; means that it's not worth it to invest in them even with the tax breaks.
chrisbrandow 4y ago
This is gross.
- LewisVerstappen 4y ago
  Nope, this is on the net sale of the asset not gross income. In terms of gross, you need at least 50% gross income in the qualified opportunity zone.
  - TAForObvReasons 4y ago
    > The regulations provide three safe harbors that a business may use to meet this test. These safe harbors take into account any of the following: > - Whether at least half of the aggregate hours of services received by the business were performed in a QOZ; > - Whether at least half of the aggregate amounts that the business paid for services were for services performed in a QOZ; or > - Whether necessary tangible property and necessary business functions to earn the income were located in a QOZ. So "in" is flexible.
- chaostheory 4y ago
  This is an argument for either flat tax or a tax system without deductions, otherwise we will always have loopholes like this. You can’t have your cake and eat it too.
  - lotsofpulp 4y ago
    I will always advocate for a simple cash wealth transfer via UBI and increasing tax rates to whatever amounts needed to accomplish it, and remove all deductions/credits/exemptions, etc. But in the meantime, it still makes sense for me to play the game with the rules as they are.
cercatrova 4y ago
Wow, this is awesome. So for even a small amount of money, such as in the Kara $1120 example, you simply need to have offices or even cowork in a particular area and you get to write off all capital gains taxes. I'll need to look more into this for my corporation...
- PeterisP 4y ago
  Well, it's not "simply that", the corporation also needs to be registered in a particular way and the investment in that corporation needs to be done in a particular way, as the article describes - complying accurately seems tricky, but seems doable if you want to.
modeless 4y ago
There's an opportunity zone adjacent to Palo Alto that extends into Menlo Park. It has a Four Seasons hotel in it. There are other areas nearby that could use the investment incentive a lot more IMO. Who decided on these zones? Seems totally arbitrary.
- umeshunni 4y ago
  I think that's East Palo Alto, a historically low income area: https://opportunitydb.com/zones/06081612100/ https://opportunitydb.com/zones/06081612100/
  - modeless 4y ago
    Yeah but most of East Palo Alto isn't in the zone, and part of Menlo Park is.
    - sjburt 4y ago
      The borders are based on census tracts with low average income. The complete list of zones is here: https://www.irs.gov/pub/irs-drop/n-18-48.pdf https://www.irs.gov/pub/irs-drop/n-18-48.pdf I'm not sure who draws census tract lines.
    - retcon 4y ago
      Arbitrarily and Irish myself seeing three streets of Irish name makes me assume long term economic doldrums. Saying this isn't a good feeling but one generation removed from poverty that's what I am programmed to think. (I'm not young my mother was born in '31)
- hanniabu 4y ago
  > Who decided on these zones? The wealthy
- olalonde 4y ago
  It is arbitrary. Probably created by special interest groups and the politicians that cater to them. As if taxes were good in some geographic areas but not in others.
econner 4y ago
You still owe capital gains on the original proceeds, deferred a few years and with a possible 10-15% basis step up. This isn't zero capital gains tax. If you happen to have a billion dollar exit on your reinvested capital gains that can be tax free, but you're still paying tax on the original gain.
- deleted 4y ago
  [deleted]
- modeless 4y ago
  It might as well be zero when the original "investment" is a token amount you put in at the founding of a startup.
pbreit 4y ago
Sounds interesting. Is there a TLDR for this?
- wmf 4y ago
  I think this article is the TLDR.
  - tlb 4y ago
    That's the core problem with OZs: you'd have to spend days jumping through hoops to qualify. For me, even though I could save quite a few bucks, life's too short.
- deleted 4y ago
  [deleted]
rdl 4y ago
Assuming this is about being a US citizen and doing this: Option B: Move to Puerto Rico, run your company from here, do Act 60, zero capital gains tax. It's challenging to build a successful billion-dollar-exit company in PR, though.
- hyuuu 4y ago
  why is it challenging? especially in a more remote friendly world we live in
  - rdl 4y ago
    Infrastructure sucks relatively to almost everywhere else in the US (better than other territories, probably better than parts of Alaska). Legal system is really bad (bad hybrid of old Spanish law, 1950s American law, and nearly a century of corruption). High costs (inherent to being on an island) combined with regulatory/etc. burden raising costs. It makes sense for completely vertically integrated businesses which are highly profitable (some software, crypto, pharma production), but it's not a place you'd put most businesses. compared to Florida/Texas (low tax low cost), a lot of other parts of the US (low cost moderate tax), or CA/NY/etc. (high talent pool, high tax). It can be done, it's just harder, and it's probably not worth saving 20% long-term capital gains (if successful) this way vs. a higher change of a successful outcome at all otherwise. But for some specific kinds of businesses it works great.
    - HWR_14 4y ago
      Pharma is no longer a great choice for PR. Several of the various federal advantages to locating there have expired
      - rdl 4y ago
        It still is relatively better to do pharma in PR than many other industries in PR, since it has an established workforce and a bunch of facilities, and there are PR-specific tax breaks under IRC 933 (just no longer 936). There's established pharma, and sometimes line extensions; not sure if anyone would put a new pharma startup here. Microsoft lost their tax case so they're GTFO after >10 years, though; that probably also discourages similar IP-embodied manufacturing in pharma.
sweis 4y ago
You can't just base a business in a QOZ and call it a QOZB. It needs to generate 50% of its gross income from within the zone and 40% of its intangible property (e.g. software) must be used for business within a zone. Further, there are restrictions on what kind of business it can be. It can't be, for example, a golf course or a liquor store.
- modeless 4y ago
  Seems like you can, as long as you work in the office 50% of the time ("at least 50% of the hours worked by partners, contractors, and employees could take place in an OZ"), and the IP seems to be addressed by this quote from the article: "The IRS’ Final Regulations on QOZB’s gave a rather interesting but nuanced example of an intellectual property holding company with a headquarters in an QZ which DID qualify as a QOZB despite concerns about the 40% intangible property rule. This is a very relevant example for many tech companies [...]" I'm not going to go read the IRS regulations because I'm not actually planning to implement this scheme but it seems plausible that it might work. As long as there isn't another COVID forcing everyone to work from home...
- ryan_j_naughton 4y ago
  The "50-percent of gross income test" is actually that you have to meet 1 of 3 standards[1]: Qualified Opportunity Zone Business QOF 50-percent of gross income test Q56. What is the 50-percent-of-gross-income test? A56. Each taxable year, a QOZ business must earn at least 50 percent of its gross income from business activities within a QOZ. The regulations provide three safe harbors that a business may use to meet this test. These safe harbors take into account any of the following— - Whether at least half of the aggregate hours of services received by the business were performed in a QOZ; - Whether at least half of the aggregate amounts that the business paid for services were for services performed in a QOZ; or - Whether necessary tangible property and necessary business functions were located in a QOZ. Q57. Must a QOZ business meet all three safe harbors to satisfy the 50-percent-of-gross income test? A57. No. A QOZ business satisfies the 50-percent-of-gross income test if it satisfies any one of these safe harbors. For example, if 50 percent or more of all the hours of services that a business receives and uses were performed in one or more QOZs, then the business satisfies the hours of services received test and, therefore, satisfies the 50-percent-of-gross-income test. [1] https://www.irs.gov/credits-deductions/opportunity-zones-frequently-asked-questions https://www.irs.gov/credits-deductions/opportunity-zones-fre...
bagels 4y ago
If you want to start a software company in a QOZ with, say, $1M of recent capital gains, more cash than you expect to use in the short term, what does the QOZB do with the cash to avoid breaking the 90% rule?
- urthor 4y ago
  From the article: > No more than 5% of a QOZB’s assets can be “nonqualified financial property”. Nonqualified financial property includes most types of financial assets such as stocks and bonds but excludes cash, loans with a term of 18 months or less, and accounts receivable acquired in the ordinary course of business. Cash on hand is ignored. However, I speculate that if you put said cash in an interest gathering bank account, the IRS might have a firmer view. So you're likely capitalizing the business with cash on hand that cannot attract meaningful interest.
dmje 4y ago
Unfashionable thought: pay your damn taxes. Loopholes are one thing and IMO should be closed but morality is another. The whole idea that you can make a billion dollar business without being hugely dependent on the infrastructure, education, history, societal background etc that has largely been paid for by...taxes...is utter fallacy. Maybe if massively profitable businesses spent a bit more time doing the right thing then everyone would be happier. Just a thought. ~ braces for inevitable downvotes ~
- maxehmookau 4y ago
- jen729w 4y ago
  I was going to say that this article should be titled “how to steal from society”, so I’ll join you in downvote-city, comrade.
  - tlb 4y ago
    "How to take money from society whose elected representative set up a specific program to hand out" Which I also refuse to take, myself, but for different reasons than refusing to steal.
    - mschuster91 4y ago
      Intent matters. Opportunity Zones are set up to incentivize actual businesses providing services to the local community, not to serve as vehicles for far-away rich arseholes to cheat money out of the taxman.
      - mcv 4y ago
        But if the rules don't enforce that, and allow far-away rich arseholes to use these zones to cheat money out of the taxman, then that's sloppy legislating. The loopholes need to be closed. Relying on the goodwill of people whose primary unifying characteristic is the hoarding of extreme amounts of money is a bad idea.
nickpeterson 4y ago
Flat tax on all the money you gained regardless of how. You make a dollar you pay 10 cents. Done.
- CryptoPunk 4y ago
unglaublich 4y ago
... and let others pay for the upkeep of the country that enabled your success :).
- lukas099 4y ago
  If we keep putting special-interest clauses in our tax codes like these 'business opportunity zones' without expecting everyone who is capable to come in and exploit them to the maximum extent possible, that is really on us.
  - throwawaygh 4y ago
    It adds insult to injury that a billionaire real estate mogul made EXACTLY this argument when selling his tax policy and business conduct (I’m just being a good businessman, and I’ll fix the rigged system by getting rid of loopholes!), then turned around and got rid of special deductions for normal folks and created a massive special interest handout for real estate moguls.
    - moffkalast 4y ago
      To the surprise of absolutely nobody.
      - andrepd 4y ago
        Apparently to the surprise of many! Some people really are terminally gullible.
        moffkalast 4y ago
        How can you tell if a rich/powerful person is lying? Rule of thumb: Their mouth is moving.
        AnIdiotOnTheNet 4y ago
        Rule of thumb: people don't get to be rich and powerful by being decent and honest.
pontifier 4y ago
Oh dang... Why didn't I find this information 6 months ago. I freaking hate my life right now.
- j2bax 4y ago
  You had a billion dollar exit 6 months ago and you hate your life right now?!
  - mcv 4y ago
    Probably started a startup, but not from capital gains and not in an opportunity zone.
  - pontifier 4y ago
    ~$1M capital gain 9 months ago and it's too late to roll it into an opportunity zone. I'm on the point of panic about taxes right now and still trying to sort out my expenses over the last 2 years which do include about $500k in investment in one of the poorest areas in the country. My location just happens to be gerrymandered out of the local opportunity zone though.
deleted 4y ago
[deleted]
bombcar 4y ago
Anyone interested in the actual map, it can be found here: https://cimsprodprep.cdfifund.gov/CIMS4/apps/pn-nmtc/index.aspx#?center=-122.244608,37.698671&level=11&tool=layers&visible=OPPORTUNITYZONE https://cimsprodprep.cdfifund.gov/CIMS4/apps/pn-nmtc/index.a... The purpose of the QOZ is to encourage investment in those areas, and it does this by favorable tax conditions. Some of these areas are surprising, at least around me I see areas designated that aren't much different from the surrounding areas. And there are rural ones, too. Looking at some of the ones above in street view, I can see why they're classified as they are, and I could certainly see a start-up choosing to place an office in one of those locations. Some are transit-close, even.
- throwawaygh 4y ago
  It’s about who owned the land in 2017 and who was governor. Some states were less corrupt than others, but as a general rule OZs were and are mostly political grift with a few legit trades thrown in for cover. The reason that HUGE tracts of OZs make no sense is that the “for development of blighted areas” thing is very thinly veiled bullshit.
- 11thEarlOfMar 4y ago
  The eligibility criteria: The Opportunity Zone Selection Process As prescribed by law, governors nominated which census tracts should be designated as Opportunity Zones by the U.S. Department of the Treasury. To be eligible for designation, a census tract must: - Have a poverty rate of at least 20 percent; or - Have a median income below 80 percent of that in the State or metropolitan area, or for rural census tracts, 80 percent of that in the entire State; or - Be contiguous with a census tract meeting one of the above conditions and have a median income less than 125 percent of the qualifying contiguous census tract. [0] [0] https://www.rd.usda.gov/sites/default/files/ImpactofOpportunityZones_082020.pdf https://www.rd.usda.gov/sites/default/files/ImpactofOpportun...
  - bombcar 4y ago
    I see the idea behind it, but I feel the end result will just be gentrification - which may not be a bad thing in the long run.
daniel-cussen 4y ago
Well I would not do that. Just gross, I mean for me, you can do as you wish, dodge this tax and that impost, and then of course end up greasing the wheels because the government is, morally speaking, forced to take bribes at that point if everyone's trying to become a billionaire without paying a dollar in capital gains. Forget the orphanage right? Or like do you want to make a 510c3 gift, or do a raffle, I mean from your perspective, I'm trying to see it from your perspective. So like then instead of paying the orphanage tax you pay the Ferrari tax and the...the handbag tax of the brand, but like always dodging actual luxury taxes, just paying for the brand. Like paying for the advertising, the...the events, like the Rolex sailing thing? Dude I rather hang out with one of my evicted buddies than go to that shit. As long as I'm squandering money, rather buy Jonnie the beer he's asking for so he can sleep, without judging him. And at obviously placing the burden on myself to help him, like making sure I have coins in my pockets for the beggars before I leave my house. Or a couple times when he asked, I'd tell him to let me get some change I knew I had at home to bring him. It's this whole Christianity thing. Though normally not talk about that, supposedly charity you're not meant to talk about. Well I guess it's not glamorous charity. And the whole thing about charity being private sort of works sort of doesn't, the Gates Foundation has a huge amount of publicity centered around, I think, the size of William Gate's fortune, reputed to be the world's greatest. But on the other hand, you have Laurene Powell Jobs, I knew someone she was indirectly paying wages to that had literally no idea where the money was coming from, like she used a corporation instead of a 510c3 for privacy and liberty in giving. So then Laurene Jobs came out in public, saying (paraphrase) this sucks, why rag on the Jobs's so much like they're niggardly, and then she opened up about the giving and then that someone I knew found out wages were coming from her. Basic reason it doesn't work is you can't know for sure, as a society, if the rich individual is giving anything at all or just hoarding. That's what's up in Chile, the rich just hoard. Acaparan in Spanish, but that's like a Communist-word. Well myself included, compared to Jonnie I'm rich, no two ways about it. And that's why I love paying taxes, so taxes are the escape hatch for this moral dilemma, you can by all means tell everyone what you're paying in taxes. Taxes are not charity. If you pay...I think I paid $80 extra split half-and-half State of California and Federal taxes, which I could do by asking about a form at the temp job agency at which I worked this...this menial but mostly dignified labor role...so I payed an absolute tax rate of 45%. I have the W-2 still, looks like I earned $300, obviously outside income but that's not what's in question. So that's why I'm quoting numbers, as well as I can remember, because it's not charity, it's not like being a sugar daddy, it's like being a husband. The money is demanded and if I choose, due to what is considered a masochistic loophole which nobody ever uses or talks about, but which appeared on-screen as a pre-filled 0 so I could ask about it...so because the state demands money and it's obligatory in general, that has more dignity. Because if you can pay a bit, you ought to. Not like they have to throw a party for you to sign a little check, no, DEMAND it. Just like education for children, it's GOOD that's it be OBLIGATORY. OBLIGATORY. And if you want to teach your child more after school, by all means. And like no capital gains on a billion dollars? OBVIOUSLY TAXES ARE A STUPID POINT SYSTEM BECAUSE EVERYTHING IS A STUPID POINTS SYSTEM, THERE'S NO ALTERNATIVE, YOU'RE NOT AS CLEVER AS YOU THINK YOU ARE. Just submit. Plus being a billionaire makes you a high-value target, in addition to a qualified investor, and there's more price discrimination. The only people that price-discriminate transparently are the Government. I would say they are the least predatory. If you really do pay up without avarice, they won't chisel you. And keep in mind the perk of having the FBI available for eg abductions or blackmail, extortion, what you might term "first world problems." But not if you're dirty from cheating the system. Totally different vibe. Speaking as to USA, there's different situations. The worst thing, the absolute worst thing, is dropping your US citizenship, because everyone knows the only real reason for that is avoiding taxes, or for avoiding going to war. Or both. Then it's open season. When the US Government says, and tax lawyers repeat this, fat pigs get slaughtered, it means you have to show respect for the point system and only hack a little here and there in additive, not multiplicative ways. And in a manner that conforms to American values and norms. Like middle-class gets to carve out the primary residence from capital gains I think, that's a super American value.[1] Or like making your career about intellectual property, especially inventions. What would a house be without them? Or what would we be without them? Still apes, no clothes, no fire, no tools. Hands are for inventions, and hands make us special to the exclusion of everything else. Otherwise we'd be knuckle-dragging. Plus America had so many great inventors, endless, still does they're just...it's different like everyone's delegating now. Trying to find the innovation in another field, rather than banging them out on their own. Or AI.[2] Like you can get very very rich in America, just accept the friction it comes with. [1] And it's American in tandem with being favored by the tax system, the two are inseparable. [2] Despite this being my line of business, soon to be hosted in www.fgemm.com, I have a negative view of matrix multiplication for this purpose. I think as a tool in a toolbox, to be used sparingly and not relied upon completely. Never a substitute for creativity, and thinking. And using your hands instead of just the brain, real inventors did that.

287 points by the88doctor 4y ago

usmannk 4y ago

Of the reqs, having to hold the investment for 10 years seems like the biggest barrier in applying this to a startup.

urthor 4y ago
Locking in a 10 year horizon with 50% of all man hours within a single suburb is also a large hurdle.

webmaven 4y ago

The closest opportunity zone is 5 miles away, includes a large mall, mixed use development, upscale retail spaces, a Trader Joe's, etc. Meanwhile, I am surrounded by vacant lots, a large mall that is entirely dead and vacant, low income housing, one tiny strip mall with a convenience store, and another with a church, dollar store, and liquor store (a mile away). I can see though that the OZ tract is tiny, whereas the tract I'm in is about 7 x larger and includes some more supermarkets and malls further away that are very active though not upscale. Looks like a fairly straightforward case of economic gerrymandering.

Layke1123 4y ago

Is this really what people strive for in the USA. To avoid contributing anything back to the country that helped them achieve everything they've ever wanted?

nerdponx 4y ago
Yes. The "privatize gains, socialize losses" thing isn't just an empty meme, it's a legitimate (read: "not strictly illegal") and highly profitable strategy.
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chii 4y ago
it's not completely free money - you have to invest in qualified funds/businesses, which is located in areas of low economic opportunity that the gov't wants to incentivize businesses to start operating in. This is effectively a tax incentive to open new businesses in these somewhat remote and low-income areas. I dont think it's a bad thing if it does indeed encourage job creation and economic activity in those areas that otherwise would've stagnated.
imgabe 4y ago
The government is not a charity. If they have deemed something to be non-taxable, it's because the government (and by extension, the people it represents) want to incentivize that particular activity, in this case investing in economically depressed areas. If at some point we no longer want to incentivize that behavior, the government can simply remove the tax break. Moralizing about how people shouldn't engage in the behavior that the government is encouraging them to by offering tax incentives is beyond useless.
- klyrs 4y ago
  > The government is not a charity. Not unless you're extremely rich or extremely poor, that is.
- Layke1123 4y ago
  Or...the government is corrupt and used by the wealthy to write loop holes that allow them to escape paying taxes.
  - imgabe 4y ago
    If you think it's corrupt for the government to offer incentives for people to invest in underserved areas where they otherwise wouldn't, by all means, write your representatives, or run for office yourself to end this corrupt practice.
    - deleted 4y ago
      [deleted]
    - deleted 4y ago
      [deleted]
    - hamburglar 4y ago
      Speaking out about it is also a valid action, you know. In fact if you want to be a single issue candidate and actually get elected, it’s probably a requirement.
  - 4y ago
alliao 4y ago
I'd like to hear your thoughts on countries that don't even have capital gains tax
- Layke1123 4y ago
  I'll let you take an educated guess on my position...
0xy 4y ago
Capital gains tax is a parasitical tax that punishes people for being responsible with their after-tax money. It also creates massive, massive loopholes that can be abused. The fairest solution is to scrap CGT and associated capital loss write-offs. This allows the middle class to thrive by investing in productive enterprises and not getting taxed yet again to do so. It's the worst kind of tax that punishes success by stealing your after-tax money. As for your appeal to nation, the US will waste your money on slaughtering Afghanistani children with bombs and handing out cash to serial fraudsters (look up how many people on Social Security are actually real). Most tax money is wasted by government.
- jusssi 4y ago
  There are two groups slicing the worker's cheese. One is the state, they claim tax. The other is the investors, they claim profit. Calling out other parasites, don't forget you also are one.
  - 0xy 4y ago
    This can only be true if you hold humans in such low regard that you think they cannot make an informed choice about where to work and under which conditions. Any example of a cooperative usually descends into chaos, an example being worker's unions which descend into criminality, corruption and pure evil (teacher's unions regularly defend sexual predator teachers, for example) more often than not. It's also a pure fallacy and just plain wrong to suggest I claim profit from Cloudflare. Cloudflare has not and does not issue dividends, meaning all of the profit is reinvested in business operations or goes to the workers. As an investor, I don't see a single cent of profit in this case.
    - jusssi 4y ago
      > sexual predator teachers You need to chill, dude. I am not defending child molesters. I am not even claiming that capital investment is evil. I am simply pointing out the fact that the relation is parasitic. > As an investor, I don't see a single cent of profit in this case. Then you aren't paying capital gains tax either, so I don't see the problem. I'm curious though, do you also not expect to get any profit for this particular investment in the future? When you have got back your inflation adjusted initial capital + a modest interest + a reward for the risk, do you mail your share certificates back to Cloudflare with a note, thank you, good doing business with you?
thrwawy283 4y ago
I don't know why you're being downvoted. While I would commonly understand people want to avoid taxes, I think there's a real question in there: Why don't people want to contribute back to an environment that enabled their success? I have too many family members that will avoid acknowledging anything the government does for them. "The social contract."
- Layke1123 4y ago
  Because it's not what the VC's who run this site want the narrative to be and do everything they can to keep tech bros on their side.
- deleted 4y ago
  [deleted]
Fezzik 4y ago
I think, like most things, it’s a bell curve - the bulk of the people want to contribute a reasonable amount while some want contribute none and some extra. The glaring issue in the United States is how much capital is gained — though I prefer ‘allocated to’, as the people do the work — by a minuscule portion of the population and the paltry taxes they then pay.
- ars 4y ago
  "platry"?? The top 10% of the US pays 71% of tax.
  - HWR_14 4y ago
    Well duh, the top 10% own 89% of the country. Obviously they have to pay a reasonable tax rate.
- tomcam 4y ago
  > the bulk of the people want to contribute a reasonable amount Not sure that’s correct. https://thehill.com/policy/finance/599753-study-57-percent-of-us-households-paid-no-federal-income-tax-last-year-amid/ https://thehill.com/policy/finance/599753-study-57-percent-o...
dheera 4y ago
The government of USA is incredibly inefficient at getting anything done. If I had billions of dollars I would always strive to legally pay as least taxes as possible and use the funds to contribute back the country in much more efficient ways, including investing in people who are provably getting shit done. Here's the latest of a constant firehose of misuse of funds I've seen. The gist is that a Stanford professor is basically leeching $40K of tax money at a $5000/hr rate for "consulting" about social justice and equity in schools. I'd rather give that $40K directly toward educational supplies for underprivileged students, or to a hundred tutors and therapists at $50/hr, or something else. https://nypost.com/2022/04/08/stanford-prof-calls-cops-on-berkeley-prof-who-exposed-her-5k-hour-consulting-fee/ https://nypost.com/2022/04/08/stanford-prof-calls-cops-on-be...
- nobodyandproud 4y ago
  A state school professor (Berkeley) called out a private school professor (Stanford) for a $5k/hour BS consulting fee. How does that make your case?
  - dheera 4y ago
    That BS consulting fee comes from my taxes.
    - moistly 4y ago
      Strange that you pick a minuscule—nay, pissant—cost, when you could point to other waste that is literally millions of orders of magnitude greater. The BS consulting fee cost you perhaps a hundred-thousandth of a penny. The unnecessary war in Iraq cost you tens of thousands of dollars. Billions in subsidies to oil companies that are earning record-breaking profits is costing you hundreds of dollars. Don’t let clickbait distract you from the real pain.
      - dheera 4y ago
        Strange that you didn't see this part "the latest of a constant firehose"
golemotron 4y ago
> Is this really what people strive for in the USA. To avoid contributing anything back to the country that helped them achieve everything they've ever wanted? You are working from a flawed model. Government spending is not tied at all to revenue. Over the past three years the federal government has dropped over 5 trillion dollars on the economy from a helicopter. Why not take advantage of a loophole when money can and is being created out of thin air?
senectus1 4y ago
This is America...
dmje 4y ago
Thank god for you. Wish I could upvote this 10x :-)
tomcam 4y ago
Apparently it’s the American dream. Over half of US workers pay zero federal tax. https://thehill.com/policy/finance/599753-study-57-percent-of-us-households-paid-no-federal-income-tax-last-year-amid/ https://thehill.com/policy/finance/599753-study-57-percent-o...
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csomar 4y ago
It's a free market approach. The alternative is that the government collects money everywhere equally and then go and invest/pump money into these area. If the area is tax negative (requires more government money than it brings in), then might as well give it tax breaks; if that economic activity can break it off the cycle. The very fact that some of these places exist for a long time; means that it's not worth it to invest in them even with the tax breaks.

chrisbrandow 4y ago

This is gross.

LewisVerstappen 4y ago
Nope, this is on the net sale of the asset not gross income. In terms of gross, you need at least 50% gross income in the qualified opportunity zone.
- TAForObvReasons 4y ago
  > The regulations provide three safe harbors that a business may use to meet this test. These safe harbors take into account any of the following: > - Whether at least half of the aggregate hours of services received by the business were performed in a QOZ; > - Whether at least half of the aggregate amounts that the business paid for services were for services performed in a QOZ; or > - Whether necessary tangible property and necessary business functions to earn the income were located in a QOZ. So "in" is flexible.
chaostheory 4y ago
This is an argument for either flat tax or a tax system without deductions, otherwise we will always have loopholes like this. You can’t have your cake and eat it too.
- lotsofpulp 4y ago
  I will always advocate for a simple cash wealth transfer via UBI and increasing tax rates to whatever amounts needed to accomplish it, and remove all deductions/credits/exemptions, etc. But in the meantime, it still makes sense for me to play the game with the rules as they are.

cercatrova 4y ago

Wow, this is awesome. So for even a small amount of money, such as in the Kara $1120 example, you simply need to have offices or even cowork in a particular area and you get to write off all capital gains taxes. I'll need to look more into this for my corporation...

PeterisP 4y ago
Well, it's not "simply that", the corporation also needs to be registered in a particular way and the investment in that corporation needs to be done in a particular way, as the article describes - complying accurately seems tricky, but seems doable if you want to.

modeless 4y ago

There's an opportunity zone adjacent to Palo Alto that extends into Menlo Park. It has a Four Seasons hotel in it. There are other areas nearby that could use the investment incentive a lot more IMO. Who decided on these zones? Seems totally arbitrary.

umeshunni 4y ago
I think that's East Palo Alto, a historically low income area: https://opportunitydb.com/zones/06081612100/ https://opportunitydb.com/zones/06081612100/
- modeless 4y ago
  Yeah but most of East Palo Alto isn't in the zone, and part of Menlo Park is.
  - sjburt 4y ago
    The borders are based on census tracts with low average income. The complete list of zones is here: https://www.irs.gov/pub/irs-drop/n-18-48.pdf https://www.irs.gov/pub/irs-drop/n-18-48.pdf I'm not sure who draws census tract lines.
  - retcon 4y ago
    Arbitrarily and Irish myself seeing three streets of Irish name makes me assume long term economic doldrums. Saying this isn't a good feeling but one generation removed from poverty that's what I am programmed to think. (I'm not young my mother was born in '31)
hanniabu 4y ago
> Who decided on these zones? The wealthy
olalonde 4y ago
It is arbitrary. Probably created by special interest groups and the politicians that cater to them. As if taxes were good in some geographic areas but not in others.

econner 4y ago

You still owe capital gains on the original proceeds, deferred a few years and with a possible 10-15% basis step up. This isn't zero capital gains tax. If you happen to have a billion dollar exit on your reinvested capital gains that can be tax free, but you're still paying tax on the original gain.

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modeless 4y ago
It might as well be zero when the original "investment" is a token amount you put in at the founding of a startup.

pbreit 4y ago

Sounds interesting. Is there a TLDR for this?

wmf 4y ago
I think this article is the TLDR.
- tlb 4y ago
  That's the core problem with OZs: you'd have to spend days jumping through hoops to qualify. For me, even though I could save quite a few bucks, life's too short.
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rdl 4y ago

Assuming this is about being a US citizen and doing this: Option B: Move to Puerto Rico, run your company from here, do Act 60, zero capital gains tax. It's challenging to build a successful billion-dollar-exit company in PR, though.

hyuuu 4y ago
why is it challenging? especially in a more remote friendly world we live in
- rdl 4y ago
  Infrastructure sucks relatively to almost everywhere else in the US (better than other territories, probably better than parts of Alaska). Legal system is really bad (bad hybrid of old Spanish law, 1950s American law, and nearly a century of corruption). High costs (inherent to being on an island) combined with regulatory/etc. burden raising costs. It makes sense for completely vertically integrated businesses which are highly profitable (some software, crypto, pharma production), but it's not a place you'd put most businesses. compared to Florida/Texas (low tax low cost), a lot of other parts of the US (low cost moderate tax), or CA/NY/etc. (high talent pool, high tax). It can be done, it's just harder, and it's probably not worth saving 20% long-term capital gains (if successful) this way vs. a higher change of a successful outcome at all otherwise. But for some specific kinds of businesses it works great.
  - HWR_14 4y ago
    Pharma is no longer a great choice for PR. Several of the various federal advantages to locating there have expired
    - rdl 4y ago
      It still is relatively better to do pharma in PR than many other industries in PR, since it has an established workforce and a bunch of facilities, and there are PR-specific tax breaks under IRC 933 (just no longer 936). There's established pharma, and sometimes line extensions; not sure if anyone would put a new pharma startup here. Microsoft lost their tax case so they're GTFO after >10 years, though; that probably also discourages similar IP-embodied manufacturing in pharma.

sweis 4y ago

You can't just base a business in a QOZ and call it a QOZB. It needs to generate 50% of its gross income from within the zone and 40% of its intangible property (e.g. software) must be used for business within a zone. Further, there are restrictions on what kind of business it can be. It can't be, for example, a golf course or a liquor store.

modeless 4y ago
Seems like you can, as long as you work in the office 50% of the time ("at least 50% of the hours worked by partners, contractors, and employees could take place in an OZ"), and the IP seems to be addressed by this quote from the article: "The IRS’ Final Regulations on QOZB’s gave a rather interesting but nuanced example of an intellectual property holding company with a headquarters in an QZ which DID qualify as a QOZB despite concerns about the 40% intangible property rule. This is a very relevant example for many tech companies [...]" I'm not going to go read the IRS regulations because I'm not actually planning to implement this scheme but it seems plausible that it might work. As long as there isn't another COVID forcing everyone to work from home...
ryan_j_naughton 4y ago
The "50-percent of gross income test" is actually that you have to meet 1 of 3 standards[1]: Qualified Opportunity Zone Business QOF 50-percent of gross income test Q56. What is the 50-percent-of-gross-income test? A56. Each taxable year, a QOZ business must earn at least 50 percent of its gross income from business activities within a QOZ. The regulations provide three safe harbors that a business may use to meet this test. These safe harbors take into account any of the following— - Whether at least half of the aggregate hours of services received by the business were performed in a QOZ; - Whether at least half of the aggregate amounts that the business paid for services were for services performed in a QOZ; or - Whether necessary tangible property and necessary business functions were located in a QOZ. Q57. Must a QOZ business meet all three safe harbors to satisfy the 50-percent-of-gross income test? A57. No. A QOZ business satisfies the 50-percent-of-gross income test if it satisfies any one of these safe harbors. For example, if 50 percent or more of all the hours of services that a business receives and uses were performed in one or more QOZs, then the business satisfies the hours of services received test and, therefore, satisfies the 50-percent-of-gross-income test. [1] https://www.irs.gov/credits-deductions/opportunity-zones-frequently-asked-questions https://www.irs.gov/credits-deductions/opportunity-zones-fre...

bagels 4y ago

If you want to start a software company in a QOZ with, say, $1M of recent capital gains, more cash than you expect to use in the short term, what does the QOZB do with the cash to avoid breaking the 90% rule?

urthor 4y ago
From the article: > No more than 5% of a QOZB’s assets can be “nonqualified financial property”. Nonqualified financial property includes most types of financial assets such as stocks and bonds but excludes cash, loans with a term of 18 months or less, and accounts receivable acquired in the ordinary course of business. Cash on hand is ignored. However, I speculate that if you put said cash in an interest gathering bank account, the IRS might have a firmer view. So you're likely capitalizing the business with cash on hand that cannot attract meaningful interest.

dmje 4y ago

Unfashionable thought: pay your damn taxes. Loopholes are one thing and IMO should be closed but morality is another. The whole idea that you can make a billion dollar business without being hugely dependent on the infrastructure, education, history, societal background etc that has largely been paid for by...taxes...is utter fallacy. Maybe if massively profitable businesses spent a bit more time doing the right thing then everyone would be happier. Just a thought. ~ braces for inevitable downvotes ~

maxehmookau 4y ago
jen729w 4y ago
I was going to say that this article should be titled “how to steal from society”, so I’ll join you in downvote-city, comrade.
- tlb 4y ago
  "How to take money from society whose elected representative set up a specific program to hand out" Which I also refuse to take, myself, but for different reasons than refusing to steal.
  - mschuster91 4y ago
    Intent matters. Opportunity Zones are set up to incentivize actual businesses providing services to the local community, not to serve as vehicles for far-away rich arseholes to cheat money out of the taxman.
    - mcv 4y ago
      But if the rules don't enforce that, and allow far-away rich arseholes to use these zones to cheat money out of the taxman, then that's sloppy legislating. The loopholes need to be closed. Relying on the goodwill of people whose primary unifying characteristic is the hoarding of extreme amounts of money is a bad idea.

nickpeterson 4y ago

Flat tax on all the money you gained regardless of how. You make a dollar you pay 10 cents. Done.

CryptoPunk 4y ago

unglaublich 4y ago

... and let others pay for the upkeep of the country that enabled your success :).

lukas099 4y ago
If we keep putting special-interest clauses in our tax codes like these 'business opportunity zones' without expecting everyone who is capable to come in and exploit them to the maximum extent possible, that is really on us.
- throwawaygh 4y ago
  It adds insult to injury that a billionaire real estate mogul made EXACTLY this argument when selling his tax policy and business conduct (I’m just being a good businessman, and I’ll fix the rigged system by getting rid of loopholes!), then turned around and got rid of special deductions for normal folks and created a massive special interest handout for real estate moguls.
  - moffkalast 4y ago
    To the surprise of absolutely nobody.
    - andrepd 4y ago
      Apparently to the surprise of many! Some people really are terminally gullible.
      - moffkalast 4y ago
        How can you tell if a rich/powerful person is lying? Rule of thumb: Their mouth is moving.
        AnIdiotOnTheNet 4y ago
        Rule of thumb: people don't get to be rich and powerful by being decent and honest.

pontifier 4y ago

Oh dang... Why didn't I find this information 6 months ago. I freaking hate my life right now.

j2bax 4y ago
You had a billion dollar exit 6 months ago and you hate your life right now?!
- mcv 4y ago
  Probably started a startup, but not from capital gains and not in an opportunity zone.
- pontifier 4y ago
  ~$1M capital gain 9 months ago and it's too late to roll it into an opportunity zone. I'm on the point of panic about taxes right now and still trying to sort out my expenses over the last 2 years which do include about $500k in investment in one of the poorest areas in the country. My location just happens to be gerrymandered out of the local opportunity zone though.

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[deleted]

bombcar 4y ago

Anyone interested in the actual map, it can be found here: https://cimsprodprep.cdfifund.gov/CIMS4/apps/pn-nmtc/index.aspx#?center=-122.244608,37.698671&level=11&tool=layers&visible=OPPORTUNITYZONE https://cimsprodprep.cdfifund.gov/CIMS4/apps/pn-nmtc/index.a... The purpose of the QOZ is to encourage investment in those areas, and it does this by favorable tax conditions. Some of these areas are surprising, at least around me I see areas designated that aren't much different from the surrounding areas. And there are rural ones, too. Looking at some of the ones above in street view, I can see why they're classified as they are, and I could certainly see a start-up choosing to place an office in one of those locations. Some are transit-close, even.

throwawaygh 4y ago
It’s about who owned the land in 2017 and who was governor. Some states were less corrupt than others, but as a general rule OZs were and are mostly political grift with a few legit trades thrown in for cover. The reason that HUGE tracts of OZs make no sense is that the “for development of blighted areas” thing is very thinly veiled bullshit.
11thEarlOfMar 4y ago
The eligibility criteria: The Opportunity Zone Selection Process As prescribed by law, governors nominated which census tracts should be designated as Opportunity Zones by the U.S. Department of the Treasury. To be eligible for designation, a census tract must: - Have a poverty rate of at least 20 percent; or - Have a median income below 80 percent of that in the State or metropolitan area, or for rural census tracts, 80 percent of that in the entire State; or - Be contiguous with a census tract meeting one of the above conditions and have a median income less than 125 percent of the qualifying contiguous census tract. [0] [0] https://www.rd.usda.gov/sites/default/files/ImpactofOpportunityZones_082020.pdf https://www.rd.usda.gov/sites/default/files/ImpactofOpportun...
- bombcar 4y ago
  I see the idea behind it, but I feel the end result will just be gentrification - which may not be a bad thing in the long run.

daniel-cussen 4y ago

Well I would not do that. Just gross, I mean for me, you can do as you wish, dodge this tax and that impost, and then of course end up greasing the wheels because the government is, morally speaking, forced to take bribes at that point if everyone's trying to become a billionaire without paying a dollar in capital gains. Forget the orphanage right? Or like do you want to make a 510c3 gift, or do a raffle, I mean from your perspective, I'm trying to see it from your perspective. So like then instead of paying the orphanage tax you pay the Ferrari tax and the...the handbag tax of the brand, but like always dodging actual luxury taxes, just paying for the brand. Like paying for the advertising, the...the events, like the Rolex sailing thing? Dude I rather hang out with one of my evicted buddies than go to that shit. As long as I'm squandering money, rather buy Jonnie the beer he's asking for so he can sleep, without judging him. And at obviously placing the burden on myself to help him, like making sure I have coins in my pockets for the beggars before I leave my house. Or a couple times when he asked, I'd tell him to let me get some change I knew I had at home to bring him. It's this whole Christianity thing. Though normally not talk about that, supposedly charity you're not meant to talk about. Well I guess it's not glamorous charity. And the whole thing about charity being private sort of works sort of doesn't, the Gates Foundation has a huge amount of publicity centered around, I think, the size of William Gate's fortune, reputed to be the world's greatest. But on the other hand, you have Laurene Powell Jobs, I knew someone she was indirectly paying wages to that had literally no idea where the money was coming from, like she used a corporation instead of a 510c3 for privacy and liberty in giving. So then Laurene Jobs came out in public, saying (paraphrase) this sucks, why rag on the Jobs's so much like they're niggardly, and then she opened up about the giving and then that someone I knew found out wages were coming from her. Basic reason it doesn't work is you can't know for sure, as a society, if the rich individual is giving anything at all or just hoarding. That's what's up in Chile, the rich just hoard. Acaparan in Spanish, but that's like a Communist-word. Well myself included, compared to Jonnie I'm rich, no two ways about it. And that's why I love paying taxes, so taxes are the escape hatch for this moral dilemma, you can by all means tell everyone what you're paying in taxes. Taxes are not charity. If you pay...I think I paid $80 extra split half-and-half State of California and Federal taxes, which I could do by asking about a form at the temp job agency at which I worked this...this menial but mostly dignified labor role...so I payed an absolute tax rate of 45%. I have the W-2 still, looks like I earned $300, obviously outside income but that's not what's in question. So that's why I'm quoting numbers, as well as I can remember, because it's not charity, it's not like being a sugar daddy, it's like being a husband. The money is demanded and if I choose, due to what is considered a masochistic loophole which nobody ever uses or talks about, but which appeared on-screen as a pre-filled 0 so I could ask about it...so because the state demands money and it's obligatory in general, that has more dignity. Because if you can pay a bit, you ought to. Not like they have to throw a party for you to sign a little check, no, DEMAND it. Just like education for children, it's GOOD that's it be OBLIGATORY. OBLIGATORY. And if you want to teach your child more after school, by all means. And like no capital gains on a billion dollars? OBVIOUSLY TAXES ARE A STUPID POINT SYSTEM BECAUSE EVERYTHING IS A STUPID POINTS SYSTEM, THERE'S NO ALTERNATIVE, YOU'RE NOT AS CLEVER AS YOU THINK YOU ARE. Just submit. Plus being a billionaire makes you a high-value target, in addition to a qualified investor, and there's more price discrimination. The only people that price-discriminate transparently are the Government. I would say they are the least predatory. If you really do pay up without avarice, they won't chisel you. And keep in mind the perk of having the FBI available for eg abductions or blackmail, extortion, what you might term "first world problems." But not if you're dirty from cheating the system. Totally different vibe. Speaking as to USA, there's different situations. The worst thing, the absolute worst thing, is dropping your US citizenship, because everyone knows the only real reason for that is avoiding taxes, or for avoiding going to war. Or both. Then it's open season. When the US Government says, and tax lawyers repeat this, fat pigs get slaughtered, it means you have to show respect for the point system and only hack a little here and there in additive, not multiplicative ways. And in a manner that conforms to American values and norms. Like middle-class gets to carve out the primary residence from capital gains I think, that's a super American value.[1] Or like making your career about intellectual property, especially inventions. What would a house be without them? Or what would we be without them? Still apes, no clothes, no fire, no tools. Hands are for inventions, and hands make us special to the exclusion of everything else. Otherwise we'd be knuckle-dragging. Plus America had so many great inventors, endless, still does they're just...it's different like everyone's delegating now. Trying to find the innovation in another field, rather than banging them out on their own. Or AI.[2] Like you can get very very rich in America, just accept the friction it comes with. [1] And it's American in tandem with being favored by the tax system, the two are inseparable. [2] Despite this being my line of business, soon to be hosted in www.fgemm.com, I have a negative view of matrix multiplication for this purpose. I think as a tool in a toolbox, to be used sparingly and not relied upon completely. Never a substitute for creativity, and thinking. And using your hands instead of just the brain, real inventors did that.