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I looked for some reliable numbers on Apple's tax payment and didn't find any, so I won't comment on that, but I do want to say some things about... > capital

by roenxi 2y ago

I looked for some reliable numbers on Apple's tax payment and didn't find any, so I won't comment on that, but I do want to say some things about... > capital gains tax exists but is deferred until you sell the shares and then rich people don't do that This gets pretty quickly into the philosophical what-are-we-doing-here-exactly of taxes, but: 1) Shares don't do very much on their own, so there isn't really a problem with that. I mean, dude owns a billion in shares - if they earn income dude will pay tax, if they don't the only true to get to the value is to sell them. I imagine there are some gaping loopholes involving charities and debt, but that isn't anything to do with the deferment of the tax. 2) Because of inflation - and asset inflation is markedly higher than CPI - CGT is effectively a wealth tax because fairly quickly most of the value of an asset is the inflationary component. I've got gold bars where I allegedly am making a 100-and-something% return and that just flies in the face of the inert reality of the metal itself. The tax is markedly unfair, anyone trying to be a responsible saver ends up paying much more of their income in tax than someone who just spends it on the day and it effectively becomes a wealth tax that stops anyone in the middle class moving up over time. Moving wealth between assets is catastrophic to your financial health once CGT is a factor. There are a bunch of quirky distortions in the tax system. CGT might even be one of the contributing factors to why people don't tend to have savings (although the biggest factor is probably psychology). Rationally speaking saving is quite an inefficient use of money if you end up paying CGT.

cipheredStones 2y ago
> 1) Shares don't do very much on their own, so there isn't really a problem with that. I mean, dude owns a billion in shares - if they earn income dude will pay tax, if they don't the only true to get to the value is to sell them. Are you aware of the "buy, borrow, die" strategy? In short, you can borrow against the value of appreciated assets to get income during your lifetime, then pass the assets (and the debt) on in inheritance, and your heirs don't have to pay any capital gains tax because of cost-basis step up when they sell the assets to pay the debt. You effectively avoid any taxation on the appreciation.
- robertlagrant 2y ago
  You don't need shares for this - you can be mortgaged up to the hilt and pass on the house to your heirs when you die, and they sell the house to pay off the mortgage. But all the money you borrowed needs to have been spent, or it's subject to inheritance tax (or paying back the debt it came from), and all that spending needs to be on things that are taxed with VAT, with employees providing services you buy who are paying income tax, and the businesses you're buying from paying corporation tax, etc etc. Tax is never avoided; it's just paid through other means.
AnthonyMouse 2y ago
But this is kind of my point. Capital gains tax is a dumb tax, it mostly screws middle class people and creates several perverse incentives, and we'd be better off to use a simple consumption tax instead. The argument against this is supposedly that "rich people" are the ones who pay capital gains tax, but in practice "rich people" are the ones in the best position to avoid paying it using fancy accountants and cross-border shenanigans. The middle class people actually paying it wouldn't be any worse off with a consumption tax that lacks all of those perverse incentives, and might even end up paying less because then the super rich would pay the same rate as they do instead of a lower one.
- pydry 2y ago
  Consumption tax screws the working and middle classes the absolute most because they consume the most as a % of their income. There's a reason it was pushed mostly by billionaires. LVT is the most egalitarian tax. It's completely unavoidable for land owners, renters pay nothing at all, it skews highest on the biggest landowers and it doesnt disincentivize productive investment or productive work.
  - IX-103 2y ago
    LVT ignores that there are other resources that may be hoarded. In particular, companies can hire all the employees with the skills necessary to build a competitor and have them do busy work to avoid having to innovate or compete on the merits of their products. This is essentially the same thing as buying up land and leaving it fallow, but with human resources instead of land. In some ways this is worse, as society has already invested in training those workers.
    - pydry 2y ago
      Employees are not a finite resource. Pay enough to hire half of the chartered accountants and that will drive the creation of more. Demand follows supply. Land is finite. Buy half of all the land and that won't exactly drive the creation of more land will it? It'll just drive up the price of existing land. This is in a nutshell why some things in America are dirt cheap (e.g. electronics, clothes) while houses keep getting more and more absurdly priced.

by roenxi 2y ago

cipheredStones 2y ago

> 1) Shares don't do very much on their own, so there isn't really a problem with that. I mean, dude owns a billion in shares - if they earn income dude will pay tax, if they don't the only true to get to the value is to sell them. Are you aware of the "buy, borrow, die" strategy? In short, you can borrow against the value of appreciated assets to get income during your lifetime, then pass the assets (and the debt) on in inheritance, and your heirs don't have to pay any capital gains tax because of cost-basis step up when they sell the assets to pay the debt. You effectively avoid any taxation on the appreciation.

robertlagrant 2y ago
You don't need shares for this - you can be mortgaged up to the hilt and pass on the house to your heirs when you die, and they sell the house to pay off the mortgage. But all the money you borrowed needs to have been spent, or it's subject to inheritance tax (or paying back the debt it came from), and all that spending needs to be on things that are taxed with VAT, with employees providing services you buy who are paying income tax, and the businesses you're buying from paying corporation tax, etc etc. Tax is never avoided; it's just paid through other means.

AnthonyMouse 2y ago

But this is kind of my point. Capital gains tax is a dumb tax, it mostly screws middle class people and creates several perverse incentives, and we'd be better off to use a simple consumption tax instead. The argument against this is supposedly that "rich people" are the ones who pay capital gains tax, but in practice "rich people" are the ones in the best position to avoid paying it using fancy accountants and cross-border shenanigans. The middle class people actually paying it wouldn't be any worse off with a consumption tax that lacks all of those perverse incentives, and might even end up paying less because then the super rich would pay the same rate as they do instead of a lower one.

pydry 2y ago
Consumption tax screws the working and middle classes the absolute most because they consume the most as a % of their income. There's a reason it was pushed mostly by billionaires. LVT is the most egalitarian tax. It's completely unavoidable for land owners, renters pay nothing at all, it skews highest on the biggest landowers and it doesnt disincentivize productive investment or productive work.
- IX-103 2y ago
  LVT ignores that there are other resources that may be hoarded. In particular, companies can hire all the employees with the skills necessary to build a competitor and have them do busy work to avoid having to innovate or compete on the merits of their products. This is essentially the same thing as buying up land and leaving it fallow, but with human resources instead of land. In some ways this is worse, as society has already invested in training those workers.
  - pydry 2y ago
    Employees are not a finite resource. Pay enough to hire half of the chartered accountants and that will drive the creation of more. Demand follows supply. Land is finite. Buy half of all the land and that won't exactly drive the creation of more land will it? It'll just drive up the price of existing land. This is in a nutshell why some things in America are dirt cheap (e.g. electronics, clothes) while houses keep getting more and more absurdly priced.