5 ms·

The rebuttal by mminer237 is much closer to right [0]. Also it isn't even as good as mminer237 mentions, as many states also have a much lower exemption, and t

by toss1 4y ago

The rebuttal by mminer237 is much closer to right [0]. Also it isn't even as good as mminer237 mentions, as many states also have a much lower exemption, and there is work in congress to get rid of the step-up in basis (a bad thing, imo) and to reduce the $12MM lifetime gift & estate exemption (a very good thing). So yes, there are some advantages, but OP is vastly exaggerating as if it is some freebie to landlords when it is not. There were some freebies introduced in the bills in the Trump term for the type of LLCs that Trump runs, but IDK if they were fixed in legislation in this term. If you want a general complaint, perhaps the angle is that capital is taxed much less than labor, under some notion that lower taxation is necessary to get people with capitol to actually deploy it in investments. I think that is provably false, and certainly does not require the level of tax code favoritism it currently enjoys. [0] source: tax & estate attny at biglaw firm in the household, although this is just from info absorbed by osmosis over years and is NOT a detailed legal analysis.

sbf501 4y ago
Thank you. > If you want a general complaint, perhaps the angle is that capital is taxed much less than labor, under some notion that lower taxation is necessary to get people with capitol to actually deploy it in investments. Yes, I recall when cap gains taxes dropped significantly during GWB and was, sadly, happy. Of course, I was just a dumb 20-something and didn't realize how much of boon to the wealthy it was.
- robertlagrant 4y ago
  It's a boon to anyone whose job was created by it as well, and whose life was made cheaper by capital investments in automation and/or scale.
  - toss1 4y ago
    Yes, the question is how much of a boon it needs to be. The fact of the matter is that people with capital want to invest and grow that capital. It is absolutely false that if that activity is taxed, it will disappear. Just as obviously, if all capital gains are taxed at 100%, it will disappear. The question is the balance - how much to tax it so that the wealthy don't merely get wealthier at everyone elses' expense. It may also be a good idea to tax underutilized capital, as land is taxed.
    - robertlagrant 4y ago
      If you get all of that just right you may even extract enough money to pay for all the many governmental systems required to administrate it. Sadly none of that will have done anything as useful as an investment in a company that makes people's lives cheaper or better.
  - kelnos 4y ago
    Do we actually have strong evidence that these sorts of tax breaks actually stimulate this kind of economic activity to the degree where it's actually worth it? It... doesn't seem like we do? I mean, it's not like pre-1990 we had skyrocketing unemployment and underinvestment in business, and lowering capital gains taxes fixed it.
  - sbf501 4y ago
    Please point to the "boon". If you mean people got to keep their jobs = boon, then I guess you are right. The problem is, wealth was transferred upstream, en masse, and not taxed anywhere near labor. Here is some data that solidly debunks your disguised claim of "trickle down": https://www.epi.org/publication/ceo-pay-has-grown-90-times-faster-than-typical-worker-pay-since-1978/ https://www.epi.org/publication/ceo-pay-has-grown-90-times-f... http://www.ibew.org/media-center/Articles/19Daily/1908/190827_NewReports http://www.ibew.org/media-center/Articles/19Daily/1908/19082...
    - robertlagrant 4y ago
      > Please point to the "boon". Sure. I said: > It's a boon to anyone whose job was created by it as well You then say: > If you mean people got to keep their jobs = boon No, I said the job in the first place is funded by investment. I couldn't have made it clearer. If investors don't invest in your startup/scaleup then there is no job in the first place. Nothing about being grateful for keeping your job. > The problem is, wealth was transferred upstream, en masse, and not taxed anywhere near labor. You're thinking in terms of groups instead of individuals, and that the groups are static. You shouldn't (as it will lead to so many broken ways of thinking) and they aren't. > Here is some data that solidly debunks your disguised claim of "trickle down" It's not trickle down - I only go for nonpolitical theories, and the US left wing's labels to oversimplify and demonise some fairly standard economics doesn't hold up by that measure. I'd rather you replied to what I said than straw man it. You will mislead casual readers by doing so.
      - toss1 4y ago
        >> You will mislead casual readers by doing so. Your entire post is misleading. It contains the ASSUMPTION that the favorable capital tax rate (vs labor tax rate) is NECESSARY for the investment to happen. This is obviously not the case. People with capital will want to deploy it so that it grows, as long as the tax rate on the profits is <100%. What we do not have is the curve - how high can the tax rate be set relative to the tax on labor income before investment is ACTUALLY discouraged? Only an assumption, based on the obviously self-serving assertions of people who own capital, that higher tax rates will make them just sit on their money and not deploy it profitably. As you can see above, I'm happy to debunk oversimplification & demonization from the LW or RW, but "trickly down" is pretty much what the RW called it when it was flogged as a concept in the '80s, that "freeing up capital" for the rich would trickle down to everyone in the economy. The ACTUAL result was the opposite. Ratios of executive vs worker pay only increased from ~70x to over 300x, and the share of the total GDP going to labor declined to the lowest point ever. The actual fact of the matter is that with lowering tax rates on capital, the "boon" you speak of is actually available to fewer people than ever.
naasking 4y ago
Perhaps you'd like to address rory's reply here which explains how the original post would actually work: https://news.ycombinator.com/item?id=32500536 https://news.ycombinator.com/item?id=32500536
- toss1 4y ago
  ummm, the mortgage interest deduction does NOT apply to rental properties, only your primary residence or a 2nd home that you spend at least 14 days or >10% of the time you rent it out. So, if you are talking about a fully rental property, it is incorrect. I'm not saying that there are no advantages or deductions, only that this character is trying to portray it as the govt basically giving landlords all the funding to become landlords. If that were the case, he should simply do it — there's plenty of no/low money down ways to get into it —, but I notice that he is not doing it. It just smacks of a lot more attitude than fact.
kelnos 4y ago
It may not be a freebie for landlords, but it is much more "cost neutral" or "tax neutral" to own an investment property than to own a primary residence. Consider: Investment property: * Deduct maintenance costs * Deduct insurance costs * Deduct property taxes * Deduct mortgage closing costs * Deduct mortgage interest * Deduct HOA dues * Deduct property management fees * Take advantage of depreciation deductions * Avoid paying cap gains taxes on sale using 1031 exchanges Primary residence: * Deduct property taxes (only on federal taxes, and only up to $10k, assuming you don't have other SALT to deduct) * Deduct mortgage interest (only up to a loan value of $750k) * Avoid paying up to $250k in cap gains taxes on sale Doesn't that seem incredibly lopsided to you? The current tax regime makes it very attractive to own an investment property, but a basic need -- housing! -- doesn't give you much in the way of tax breaks. And the breaks that are there, are capped.
- toss1 4y ago
  Of course there are more deductions when an object is a BUSINESS instead of a piece of PERSONAL PROPERTY. No, it does not seem the slightest bit lopsided. There is zero difference between the deductability of expenses you mentioned and expenses for any other business. Businesses are generally taxed on their PROFITS, which are [INCOME] MINUS [COSTS]. The regular homeowner is not running a business. The same thing is true of a truck or racecar. If you own it as personal property, you don't get to deduct much of anything. If you own it and run it as a business, you can deduct your expenses before counting profits and paying taxes. The same object can be either a personal property or a business, and it is the ACTIVITY that matters, not the object. Your argument is either attitude & ignorance gone wild, or demagoguery attempting to confuse the issue with sleight of hand. If you think that home ownership should be more subsidized than just the mortgage interest deduction, just say so and advocate for those subsidies. It'd be much more cogent, but you evidently don't want that discussion, or expect it to be a loser, which it likely is.
  - brnaftr361 4y ago
    Rent extraction from the underpriveleged for basic needs in a deliberately skewed market is hardly "business", it's raw exploitation at the systemic and the social level. Justify your habit of cannibalism however you may.

by toss1 4y ago

sbf501 4y ago

Thank you. > If you want a general complaint, perhaps the angle is that capital is taxed much less than labor, under some notion that lower taxation is necessary to get people with capitol to actually deploy it in investments. Yes, I recall when cap gains taxes dropped significantly during GWB and was, sadly, happy. Of course, I was just a dumb 20-something and didn't realize how much of boon to the wealthy it was.

robertlagrant 4y ago
It's a boon to anyone whose job was created by it as well, and whose life was made cheaper by capital investments in automation and/or scale.
- toss1 4y ago
  Yes, the question is how much of a boon it needs to be. The fact of the matter is that people with capital want to invest and grow that capital. It is absolutely false that if that activity is taxed, it will disappear. Just as obviously, if all capital gains are taxed at 100%, it will disappear. The question is the balance - how much to tax it so that the wealthy don't merely get wealthier at everyone elses' expense. It may also be a good idea to tax underutilized capital, as land is taxed.
  - robertlagrant 4y ago
    If you get all of that just right you may even extract enough money to pay for all the many governmental systems required to administrate it. Sadly none of that will have done anything as useful as an investment in a company that makes people's lives cheaper or better.
- kelnos 4y ago
  Do we actually have strong evidence that these sorts of tax breaks actually stimulate this kind of economic activity to the degree where it's actually worth it? It... doesn't seem like we do? I mean, it's not like pre-1990 we had skyrocketing unemployment and underinvestment in business, and lowering capital gains taxes fixed it.
- sbf501 4y ago
  Please point to the "boon". If you mean people got to keep their jobs = boon, then I guess you are right. The problem is, wealth was transferred upstream, en masse, and not taxed anywhere near labor. Here is some data that solidly debunks your disguised claim of "trickle down": https://www.epi.org/publication/ceo-pay-has-grown-90-times-faster-than-typical-worker-pay-since-1978/ https://www.epi.org/publication/ceo-pay-has-grown-90-times-f... http://www.ibew.org/media-center/Articles/19Daily/1908/190827_NewReports http://www.ibew.org/media-center/Articles/19Daily/1908/19082...
  - robertlagrant 4y ago
    > Please point to the "boon". Sure. I said: > It's a boon to anyone whose job was created by it as well You then say: > If you mean people got to keep their jobs = boon No, I said the job in the first place is funded by investment. I couldn't have made it clearer. If investors don't invest in your startup/scaleup then there is no job in the first place. Nothing about being grateful for keeping your job. > The problem is, wealth was transferred upstream, en masse, and not taxed anywhere near labor. You're thinking in terms of groups instead of individuals, and that the groups are static. You shouldn't (as it will lead to so many broken ways of thinking) and they aren't. > Here is some data that solidly debunks your disguised claim of "trickle down" It's not trickle down - I only go for nonpolitical theories, and the US left wing's labels to oversimplify and demonise some fairly standard economics doesn't hold up by that measure. I'd rather you replied to what I said than straw man it. You will mislead casual readers by doing so.
    - toss1 4y ago
      >> You will mislead casual readers by doing so. Your entire post is misleading. It contains the ASSUMPTION that the favorable capital tax rate (vs labor tax rate) is NECESSARY for the investment to happen. This is obviously not the case. People with capital will want to deploy it so that it grows, as long as the tax rate on the profits is <100%. What we do not have is the curve - how high can the tax rate be set relative to the tax on labor income before investment is ACTUALLY discouraged? Only an assumption, based on the obviously self-serving assertions of people who own capital, that higher tax rates will make them just sit on their money and not deploy it profitably. As you can see above, I'm happy to debunk oversimplification & demonization from the LW or RW, but "trickly down" is pretty much what the RW called it when it was flogged as a concept in the '80s, that "freeing up capital" for the rich would trickle down to everyone in the economy. The ACTUAL result was the opposite. Ratios of executive vs worker pay only increased from ~70x to over 300x, and the share of the total GDP going to labor declined to the lowest point ever. The actual fact of the matter is that with lowering tax rates on capital, the "boon" you speak of is actually available to fewer people than ever.

naasking 4y ago

Perhaps you'd like to address rory's reply here which explains how the original post would actually work: https://news.ycombinator.com/item?id=32500536 https://news.ycombinator.com/item?id=32500536

toss1 4y ago
ummm, the mortgage interest deduction does NOT apply to rental properties, only your primary residence or a 2nd home that you spend at least 14 days or >10% of the time you rent it out. So, if you are talking about a fully rental property, it is incorrect. I'm not saying that there are no advantages or deductions, only that this character is trying to portray it as the govt basically giving landlords all the funding to become landlords. If that were the case, he should simply do it — there's plenty of no/low money down ways to get into it —, but I notice that he is not doing it. It just smacks of a lot more attitude than fact.

kelnos 4y ago

It may not be a freebie for landlords, but it is much more "cost neutral" or "tax neutral" to own an investment property than to own a primary residence. Consider: Investment property: * Deduct maintenance costs * Deduct insurance costs * Deduct property taxes * Deduct mortgage closing costs * Deduct mortgage interest * Deduct HOA dues * Deduct property management fees * Take advantage of depreciation deductions * Avoid paying cap gains taxes on sale using 1031 exchanges Primary residence: * Deduct property taxes (only on federal taxes, and only up to $10k, assuming you don't have other SALT to deduct) * Deduct mortgage interest (only up to a loan value of $750k) * Avoid paying up to $250k in cap gains taxes on sale Doesn't that seem incredibly lopsided to you? The current tax regime makes it very attractive to own an investment property, but a basic need -- housing! -- doesn't give you much in the way of tax breaks. And the breaks that are there, are capped.

toss1 4y ago
Of course there are more deductions when an object is a BUSINESS instead of a piece of PERSONAL PROPERTY. No, it does not seem the slightest bit lopsided. There is zero difference between the deductability of expenses you mentioned and expenses for any other business. Businesses are generally taxed on their PROFITS, which are [INCOME] MINUS [COSTS]. The regular homeowner is not running a business. The same thing is true of a truck or racecar. If you own it as personal property, you don't get to deduct much of anything. If you own it and run it as a business, you can deduct your expenses before counting profits and paying taxes. The same object can be either a personal property or a business, and it is the ACTIVITY that matters, not the object. Your argument is either attitude & ignorance gone wild, or demagoguery attempting to confuse the issue with sleight of hand. If you think that home ownership should be more subsidized than just the mortgage interest deduction, just say so and advocate for those subsidies. It'd be much more cogent, but you evidently don't want that discussion, or expect it to be a loser, which it likely is.
- brnaftr361 4y ago
  Rent extraction from the underpriveleged for basic needs in a deliberately skewed market is hardly "business", it's raw exploitation at the systemic and the social level. Justify your habit of cannibalism however you may.