7 ms·

The issue is the step-up in basis, not borrowing against assets. The step-up in basis really is a giveaway. I think that it would make a ton of sense to trans

The issue is the step-up in basis, not borrowing against assets. The step-up in basis really is a giveaway. I think that it would make a ton of sense to transfer the basis rather than step it up.

hackernewds 2y ago
transfer the basis to whom? better not inherit anything
- Shaanie 2y ago
  If I buy something for $10 and it's worth $10,000 when you inherit it, you should (obviously?) be taxed on the increase in value from $10 -> $10,000 if/when you sell. The purchase price shouldn't be "reset" to $10k. It'sutterly insane to me that the step-up basis exists in the US, it's such an obvious loophole that can fairly easily be closed without many adverse effects. In my country (Sweden) if you don't know the purchase price, you can use an approximate purchasing price (e.g. for equities you are allowed to assume that it was acquired for 20% of the current value, so you'd be taxed on 80%).
  - nobodywillobsrv 2y ago
    Why should you be taxed on it at all?tax is policy. You tax things you want people to consume less of. Inflation makes nominal values to up. More inflation more capital gains. Gov is now incengltivized to inflate to pull tax out of realized assets that have not even gained real value
    - scotty79 2y ago
      What you tax is not really relevant as long as it doesn't disrupt some activity you want to continue happening. If it was up to me I'd tax spending not income. Regardless of what you are spending on. Bread? Sure! Employee? Yes! 10% of Tesla? Same!
      - vel0city 2y ago
        > If it was up to me I'd tax spending not income. Regardless of what you are spending on Under this system the poor who spend the majority of their income just to survive pay the highest effective tax rate while the wealthier who save most of their income have the smallest effective tax rate. That sounds like a fair and equitable system to you?
        orionsbelt 2y ago
        Sure, you can have transfers back to the poor.
        vel0city 2y ago
        You're just moving the point a little along the scale though. So now instead of the super poor paying a higher rate, now it's the slightly less poor. And the slightly less poor as you keep moving that transfer cutoff point. You're still going to have some point where the wealthier are paying a significantly lower rate than those who make a good bit less than them.
        scotty79 2y ago
        At appropriate level of transfers the cutoff point is at millionaires you no longer can call poor in good conscience. And people below cutoff point thanks to transfer effectively pay negative tax.
        vel0city 2y ago
        I absolutely agree on this point, and that curve adjustment would just continue into people we'd definitely agree are wealthy. But in the end those millionaires are paying a higher tax rate than those wealthier than them. Is that fair?
        scotty79 2y ago
        It's fairer than what we have today. Nothing is absolutely fair.
  - koolba 2y ago
    > If I buy something for $10 and it's worth $10,000 when you inherit it, you should (obviously?) be taxed on the increase in value from $10 -> $10,000 if/when you sell. The purchase price shouldn't be "reset" to $10k. There’s nothing “obvious” about tax policy. It’s an arbitrary determination of what’s in and what’s out. Taxing capital gains at all is not “obvious”. Taxing transfers of assets to your children, whether it’s while you’re alive or after you die is not “obvious”. > It'sutterly insane to me that the step-up basis exists in the US, it's such an obvious loophole that can fairly easily be closed without many adverse effects. The same law is the one that lets the surviving spouse or children to continue to live in a home rather than be forced to sell due to a sudden realized capital gain. You can argue that you don’t care about keeping multi millionaires in their childhood homes after their parents die, but it’s hardly “obvious” that it should be taxed.
    - Hikikomori 2y ago
      Is it obvious that we should have roads, running water, someone that builds up the basics of society?
    - NotYourLawyer 2y ago
      Getting rid of the stepped up basis doesn’t require that we realize the gain at death. Just transfer the basis to the heirs, and if/when they sell, then realize the gain.
    - mschuster91 2y ago
      > The same law is the one that lets the surviving spouse or children to continue to live in a home rather than be forced to sell due to a sudden realized capital gain. You can argue that you don’t care about keeping multi millionaires in their childhood homes after their parents die, but it’s hardly “obvious” that it should be taxed. Well, "homestead" exemptions are usually already a thing in most countries' inheritance laws. There is no need to draw stocks into the mix. > Taxing transfers of assets to your children, whether it’s while you’re alive or after you die is not “obvious”. It actually is obvious, at least if you want to prevent a return of feudalist eras.
      - 2y ago
  - mackman 2y ago
    If you exceed the inheritance tax exemption then you are taxed on the $10k so LTCG would be double taxing. You could argue that the inheritance tax should have a much lower exemption but double taxation is harder to justify.
    - cool_dude85 2y ago
      What is "double taxing" and why is it bad?
      - vel0city 2y ago
        So much stuff has several layers of taxes on it but "double taxation" is really only used when discussing inheritance taxes. It's a term wealthy people made up to trick poor people into feeling sorry for ultra wealthy actually paying taxes on things.
        JumpCrisscross 2y ago
        > "double taxation" is really only used when discussing inheritance taxes It’s a common concept, e.g. in the double taxation of corporate earnings and dividends.
        vel0city 2y ago
        You're right, its pretty common for the wealthy to try and trick poor people into feeling sorry for the wealthy actually paying taxes on things. As my other post pointed out, tons of things have multiple layers of taxes. But the things people suddenly have some big moral issue with "double taxation" are things like estate taxes and corporate earnings and dividends and capital gains. Few people bat an eye at us double taxing the low income nicotine addict. Everyone seems to want me to shed tears for the billionaire having to pay "double taxation" on their third vacation mansion they're inheriting. Argue the rates are too low or too high for a given transaction. I can get behind that. But just crying because there's two different taxes being applied to a given transaction? Really?
  - carlosjobim 2y ago
    > It's utterly insane to me that the step-up basis exists in the US, it's such an obvious loophole that can fairly easily be closed without many adverse effects. Who do you think writes the laws and the tax code?
  - presentation 2y ago
    Yup, here in Japan inheritors have to pay 10-55% (progressive based on the amount) of the value of all inherited property globally within 10 months. As an American, knowing that I could have gotten away without this tax had I decided not to live in Japan long-term, and knowing that I will have considerable inheritance when my parents pass is a bit of a downer; but logically speaking, the step-up basis loophole is BS and it probably ought to be this way, or some variant of it, everywhere.
roenxi 2y ago
Or the issue is the money printing that tends to be going on. This strategy should be too risky to work. They'd be losing interest on the money each month and they'd go bankrupt in the long term due to eventually borrowing money into a market downturn. If interest rates are too low though then they wouldn't pay interest each month and the market will keep inflating - so the strategy will work. Basically, this looks like a tax-effective strategy to stand in front of the money hose. If the money hose wasn't there it would be a tax-effective path to near certain ruin and much less attractive.
- KingOfCoders 2y ago
  One of the best things when you are rich, you can buy when everyone wants to sell, and sell when everyone wants to buy. At one level of money you are not impacted by a market downturn or crisis. Many very rich people in Germany became very rich during or after WW2 - but they already were rich. Normal people just get poor in a crisis or market downturn.
  - vintermann 2y ago
    Piketty's point in a nutshell, wasn't it? Only he talked about it in terms of insurance.
  - bushbaba 2y ago
    And many very rich people in Germany got very very rich in ww2 by stealing Jewish assets and businesses.
    - KingOfCoders 2y ago
      A. Yes. Plus selling to the Wehrmacht ("war is a racket"), often with forced labour - or both, first stealing from Jews then selling to the Wehrmacht (like the current owners of BMW, ancestors sold to the Wehrmacht, profited from forced laber and additionally stole from Jews [1]). In communist East Germany Jews even couldn't get back their assets after the war, because Jews where "capitalists". B. The vast majority of Germans profited from stealing from Jews (see book "Hitlers Volksstaat"), e.g. Germany was out of money before Kristallnacht and Jews had to pay 1 billion Reichsmark after the progroms, which helped the German state. Also jewish furniture etc. was auctioned off to all Germans - people too often only talk about arts and houses. [1] The Quandts already were rich selling to the Prussian army, then during hyper-inflation of the economic crisis bought struggling companies, then "bought" companies from Jews who were forced to sell, then used forced labour in their companies, sold to the Wehrmacht, after WW2 got everything back and the debt they accumulated to buy all of that had evaporated because of the war. Today they own large chunks of BMW for example.

The issue is the step-up in basis, not borrowing against assets. The step-up in basis really is a giveaway. I think that it would make a ton of sense to transfer the basis rather than step it up.

hackernewds 2y ago

transfer the basis to whom? better not inherit anything

Shaanie 2y ago
If I buy something for $10 and it's worth $10,000 when you inherit it, you should (obviously?) be taxed on the increase in value from $10 -> $10,000 if/when you sell. The purchase price shouldn't be "reset" to $10k. It'sutterly insane to me that the step-up basis exists in the US, it's such an obvious loophole that can fairly easily be closed without many adverse effects. In my country (Sweden) if you don't know the purchase price, you can use an approximate purchasing price (e.g. for equities you are allowed to assume that it was acquired for 20% of the current value, so you'd be taxed on 80%).
- nobodywillobsrv 2y ago
  Why should you be taxed on it at all?tax is policy. You tax things you want people to consume less of. Inflation makes nominal values to up. More inflation more capital gains. Gov is now incengltivized to inflate to pull tax out of realized assets that have not even gained real value
  - scotty79 2y ago
    What you tax is not really relevant as long as it doesn't disrupt some activity you want to continue happening. If it was up to me I'd tax spending not income. Regardless of what you are spending on. Bread? Sure! Employee? Yes! 10% of Tesla? Same!
    - vel0city 2y ago
      > If it was up to me I'd tax spending not income. Regardless of what you are spending on Under this system the poor who spend the majority of their income just to survive pay the highest effective tax rate while the wealthier who save most of their income have the smallest effective tax rate. That sounds like a fair and equitable system to you?
      - orionsbelt 2y ago
        Sure, you can have transfers back to the poor.
        vel0city 2y ago
        You're just moving the point a little along the scale though. So now instead of the super poor paying a higher rate, now it's the slightly less poor. And the slightly less poor as you keep moving that transfer cutoff point. You're still going to have some point where the wealthier are paying a significantly lower rate than those who make a good bit less than them.
        scotty79 2y ago
        At appropriate level of transfers the cutoff point is at millionaires you no longer can call poor in good conscience. And people below cutoff point thanks to transfer effectively pay negative tax.
        vel0city 2y ago
        I absolutely agree on this point, and that curve adjustment would just continue into people we'd definitely agree are wealthy. But in the end those millionaires are paying a higher tax rate than those wealthier than them. Is that fair?
        scotty79 2y ago
        It's fairer than what we have today. Nothing is absolutely fair.
- koolba 2y ago
  > If I buy something for $10 and it's worth $10,000 when you inherit it, you should (obviously?) be taxed on the increase in value from $10 -> $10,000 if/when you sell. The purchase price shouldn't be "reset" to $10k. There’s nothing “obvious” about tax policy. It’s an arbitrary determination of what’s in and what’s out. Taxing capital gains at all is not “obvious”. Taxing transfers of assets to your children, whether it’s while you’re alive or after you die is not “obvious”. > It'sutterly insane to me that the step-up basis exists in the US, it's such an obvious loophole that can fairly easily be closed without many adverse effects. The same law is the one that lets the surviving spouse or children to continue to live in a home rather than be forced to sell due to a sudden realized capital gain. You can argue that you don’t care about keeping multi millionaires in their childhood homes after their parents die, but it’s hardly “obvious” that it should be taxed.
  - Hikikomori 2y ago
    Is it obvious that we should have roads, running water, someone that builds up the basics of society?
  - NotYourLawyer 2y ago
    Getting rid of the stepped up basis doesn’t require that we realize the gain at death. Just transfer the basis to the heirs, and if/when they sell, then realize the gain.
  - mschuster91 2y ago
    > The same law is the one that lets the surviving spouse or children to continue to live in a home rather than be forced to sell due to a sudden realized capital gain. You can argue that you don’t care about keeping multi millionaires in their childhood homes after their parents die, but it’s hardly “obvious” that it should be taxed. Well, "homestead" exemptions are usually already a thing in most countries' inheritance laws. There is no need to draw stocks into the mix. > Taxing transfers of assets to your children, whether it’s while you’re alive or after you die is not “obvious”. It actually is obvious, at least if you want to prevent a return of feudalist eras.
    - 2y ago
- mackman 2y ago
  If you exceed the inheritance tax exemption then you are taxed on the $10k so LTCG would be double taxing. You could argue that the inheritance tax should have a much lower exemption but double taxation is harder to justify.
  - cool_dude85 2y ago
    What is "double taxing" and why is it bad?
    - vel0city 2y ago
      So much stuff has several layers of taxes on it but "double taxation" is really only used when discussing inheritance taxes. It's a term wealthy people made up to trick poor people into feeling sorry for ultra wealthy actually paying taxes on things.
      - JumpCrisscross 2y ago
        > "double taxation" is really only used when discussing inheritance taxes It’s a common concept, e.g. in the double taxation of corporate earnings and dividends.
        vel0city 2y ago
        You're right, its pretty common for the wealthy to try and trick poor people into feeling sorry for the wealthy actually paying taxes on things. As my other post pointed out, tons of things have multiple layers of taxes. But the things people suddenly have some big moral issue with "double taxation" are things like estate taxes and corporate earnings and dividends and capital gains. Few people bat an eye at us double taxing the low income nicotine addict. Everyone seems to want me to shed tears for the billionaire having to pay "double taxation" on their third vacation mansion they're inheriting. Argue the rates are too low or too high for a given transaction. I can get behind that. But just crying because there's two different taxes being applied to a given transaction? Really?
- carlosjobim 2y ago
  > It's utterly insane to me that the step-up basis exists in the US, it's such an obvious loophole that can fairly easily be closed without many adverse effects. Who do you think writes the laws and the tax code?
- presentation 2y ago
  Yup, here in Japan inheritors have to pay 10-55% (progressive based on the amount) of the value of all inherited property globally within 10 months. As an American, knowing that I could have gotten away without this tax had I decided not to live in Japan long-term, and knowing that I will have considerable inheritance when my parents pass is a bit of a downer; but logically speaking, the step-up basis loophole is BS and it probably ought to be this way, or some variant of it, everywhere.

roenxi 2y ago

Or the issue is the money printing that tends to be going on. This strategy should be too risky to work. They'd be losing interest on the money each month and they'd go bankrupt in the long term due to eventually borrowing money into a market downturn. If interest rates are too low though then they wouldn't pay interest each month and the market will keep inflating - so the strategy will work. Basically, this looks like a tax-effective strategy to stand in front of the money hose. If the money hose wasn't there it would be a tax-effective path to near certain ruin and much less attractive.

KingOfCoders 2y ago
One of the best things when you are rich, you can buy when everyone wants to sell, and sell when everyone wants to buy. At one level of money you are not impacted by a market downturn or crisis. Many very rich people in Germany became very rich during or after WW2 - but they already were rich. Normal people just get poor in a crisis or market downturn.
- vintermann 2y ago
  Piketty's point in a nutshell, wasn't it? Only he talked about it in terms of insurance.
- bushbaba 2y ago
  And many very rich people in Germany got very very rich in ww2 by stealing Jewish assets and businesses.
  - KingOfCoders 2y ago
    A. Yes. Plus selling to the Wehrmacht ("war is a racket"), often with forced labour - or both, first stealing from Jews then selling to the Wehrmacht (like the current owners of BMW, ancestors sold to the Wehrmacht, profited from forced laber and additionally stole from Jews [1]). In communist East Germany Jews even couldn't get back their assets after the war, because Jews where "capitalists". B. The vast majority of Germans profited from stealing from Jews (see book "Hitlers Volksstaat"), e.g. Germany was out of money before Kristallnacht and Jews had to pay 1 billion Reichsmark after the progroms, which helped the German state. Also jewish furniture etc. was auctioned off to all Germans - people too often only talk about arts and houses. [1] The Quandts already were rich selling to the Prussian army, then during hyper-inflation of the economic crisis bought struggling companies, then "bought" companies from Jews who were forced to sell, then used forced labour in their companies, sold to the Wehrmacht, after WW2 got everything back and the debt they accumulated to buy all of that had evaporated because of the war. Today they own large chunks of BMW for example.