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He can't eat with his shares. He can use them as collateral for debt. Presently, that's how he dodges taxes. You'd close that loophole.

anonfordays 2y ago
>He can't eat with his shares. You can't eat with your brokerage account either, what is the point? >He can use them as collateral for debt. Yes, you can use your brokerage account, house, etc. as collateral for loans, this is not new or unique. >Presently, that's how he dodges taxes. What does this even mean? Loans are not taxable as you have to pay them back. >You'd close that loophole. That's not a tax... This is what happens when you get your financial understanding from reddit comments.
- SecretDreams 2y ago
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  - anonfordays 2y ago
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    - SecretDreams 2y ago
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      - anonfordays 2y ago
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- vaidhy 2y ago
  The dodgy part is what happens after someone dies. The stocks get a one-time relief from capital gains as it moves to the heir. This gives opportunity for the heirs (or the estate) to sell the stocks to pay back the loan. That is the loophole. The key here is that you need enough wealth to keep borrowing for rest of your life without touching your principle.
  - SecretDreams 2y ago
    >The key here is that you need enough wealth to keep borrowing for rest of your life without touching your principle. Correct. The OP likely knows this. Or they're totally ignorant to it. The fact that they think joe blow can execute the aforementioned strategy is vexing.
    - anonfordays 2y ago
      >Correct. The OP likely knows this. Of course I know this. >The fact that they think joe blow can execute the aforementioned strategy is vexing. You don't understand the aforementioned strategy, nor do you understand wealth taxes vs estate taxes.
  - anonfordays 2y ago
    >The stocks get a one-time relief from capital gains as it moves to the heir. Yes, that estate/inheritance taxes need reworking. This is not a wealth tax as discussed, this is an estate/inheritance tax which is different. >This gives opportunity for the heirs (or the estate) to sell the stocks to pay back the loan. That is the loophole. The loans are made whole by the estate, no one is taxed on proceeds from a loan, nor should they be.
  - anonfordays 2y ago
    Too late to edit my comment, but one other thing: >The stocks get a one-time relief from capital gains as it moves to the heir. This gives opportunity for the heirs (or the estate) to sell the stocks to pay back the loan. That is the loophole. Yes, this step-up in basis happens because the estate is charged estate tax. Charging capital gains AND estate tax doesn't make sense, estate tax is typically higher than capital gains tax. This is a key piece a lot of people don't understand.
    - SecretDreams 2y ago
      > Charging capital gains AND estate tax doesn't make sense, estate tax is typically higher than capital gains tax. They should be multiplicative. Everyone is supposed to pay capital gains. And everyone is supposed to pay the estate tax. They're both percentage taxes. It's not supposed to be "pick one".
robertlagrant 2y ago
> He can't eat with his shares. He can use them as collateral for debt. Presently, that's how he dodges taxes. You'd close that loophole. You also don't get taxed on your debts, e.g. a mortgage. You pay interest on your debt instead.

anonfordays 2y ago

>He can't eat with his shares. You can't eat with your brokerage account either, what is the point? >He can use them as collateral for debt. Yes, you can use your brokerage account, house, etc. as collateral for loans, this is not new or unique. >Presently, that's how he dodges taxes. What does this even mean? Loans are not taxable as you have to pay them back. >You'd close that loophole. That's not a tax... This is what happens when you get your financial understanding from reddit comments.

SecretDreams 2y ago
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- anonfordays 2y ago
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  - SecretDreams 2y ago
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    - anonfordays 2y ago
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vaidhy 2y ago
The dodgy part is what happens after someone dies. The stocks get a one-time relief from capital gains as it moves to the heir. This gives opportunity for the heirs (or the estate) to sell the stocks to pay back the loan. That is the loophole. The key here is that you need enough wealth to keep borrowing for rest of your life without touching your principle.
- SecretDreams 2y ago
  >The key here is that you need enough wealth to keep borrowing for rest of your life without touching your principle. Correct. The OP likely knows this. Or they're totally ignorant to it. The fact that they think joe blow can execute the aforementioned strategy is vexing.
  - anonfordays 2y ago
    >Correct. The OP likely knows this. Of course I know this. >The fact that they think joe blow can execute the aforementioned strategy is vexing. You don't understand the aforementioned strategy, nor do you understand wealth taxes vs estate taxes.
- anonfordays 2y ago
  >The stocks get a one-time relief from capital gains as it moves to the heir. Yes, that estate/inheritance taxes need reworking. This is not a wealth tax as discussed, this is an estate/inheritance tax which is different. >This gives opportunity for the heirs (or the estate) to sell the stocks to pay back the loan. That is the loophole. The loans are made whole by the estate, no one is taxed on proceeds from a loan, nor should they be.
- anonfordays 2y ago
  Too late to edit my comment, but one other thing: >The stocks get a one-time relief from capital gains as it moves to the heir. This gives opportunity for the heirs (or the estate) to sell the stocks to pay back the loan. That is the loophole. Yes, this step-up in basis happens because the estate is charged estate tax. Charging capital gains AND estate tax doesn't make sense, estate tax is typically higher than capital gains tax. This is a key piece a lot of people don't understand.
  - SecretDreams 2y ago
    > Charging capital gains AND estate tax doesn't make sense, estate tax is typically higher than capital gains tax. They should be multiplicative. Everyone is supposed to pay capital gains. And everyone is supposed to pay the estate tax. They're both percentage taxes. It's not supposed to be "pick one".

robertlagrant 2y ago

> He can't eat with his shares. He can use them as collateral for debt. Presently, that's how he dodges taxes. You'd close that loophole. You also don't get taxed on your debts, e.g. a mortgage. You pay interest on your debt instead.