3 ms·

How about instead of taxing them any differently than now, we prevent them from borrowing against their assets? Force them to sell their assets and pay capital

How about instead of taxing them any differently than now, we prevent them from borrowing against their assets? Force them to sell their assets and pay capital gains.

romanovcode 9mo ago
The book about rules and regulations on this law would be larger than divorce law book.
jermaustin1 9mo ago
Or better than that, loans backed by assets above some "jumbo" threshold ($10M?) triggers a capital gain on those assets in the collateral. So if you get a $150M loan off of your amazon shares that on paper are worth $150M, but you paid $100M, you have a cap-gain of $40M, and at 20% tax, $8M fills the IRS's coffers.
- uqual 9mo ago
  This is something I've been in favor of for some time. Obviously the tax basis in the assets would also be stepped up by this action. The US should also get rid of the step up in basis at death. The recipient of an illiquid asset such as a family business should have a period of time (perhaps five or ten years from the triggering death depending on the type of asset) to "pay up" the tax basis "to market" at the time of death. Gains in liquid assets (such as publicly traded stock) should be taxed at the market value at the time of death by the estate or trust and passed on to beneficiaries with that adjusted tax basis.
  - jermaustin1 9mo ago
    > The US should also get rid of the step up in basis at death. This would actually fix the issue without my suggestion, but it is a harder pill to swallow for the "soon to be rich" Americans that tend to vote against their current economic interests.
    - DenisM 9mo ago
      That classic argument for step up is that a farmer’s son inheriting the farm suddenly owes a lot of taxes which he can’t pay without selling the farm. Is this a real problem? And how do we fix that?
      - jermaustin1 9mo ago
        You fix it by sidestepping it. Don't do it, even though it is the simplest/easiest to implement, and instead create 5 other laws that surround it and accomplish the same goal. Loop the hole back a them.
      - AuthAuth 9mo ago
        It is a real problem but its presented in a misleading way. If you inherit a farm worth 1m and you have to pay estate taxes on that of 100k. You do not have to sell the farm, you can instead take out a mortgage to cover that 100k. When we frame it that we its still very fair to the person inheriting the farm because who wouldnt want a $1m farm for 100k.
        smw 9mo ago
        Except you don't pay any estate tax unless your estate is larger than $15 mil
        AuthAuth 9mo ago
        In American maybe thats the case. Im talking about situations where we are trying to implement an estate tax and the discussion is framed as basically forcing the receiver to sell the estate to pay the tax instead of presenting it accurately as taking a small loan to pay the tax.
m463 9mo ago
I think this would break all kinds of things, for example home equity loans.
- orsorna 9mo ago
  Something like HELOCs would certainly be an exception. The point is to disallow people who make a man's yearly salary every 60 seconds from getting <2% loans against an asset pool that would take hundreds of years for the average American to amass, if ever.
knowitnone3 9mo ago
if not borrowing against assets, do people borrow based on their word?
dakial1 9mo ago
This makes more sense. I hate when people talk about taxing the “net worth” of some rich guy when a good part of that net worth is locked into invested companies who are (hopefully) being taxed already. The borrow scheme should be the thing being taxed really, because is a shadow realization of profit (they are borrowing against the current value of their assets)

How about instead of taxing them any differently than now, we prevent them from borrowing against their assets? Force them to sell their assets and pay capital gains.

romanovcode 9mo ago

The book about rules and regulations on this law would be larger than divorce law book.

jermaustin1 9mo ago

Or better than that, loans backed by assets above some "jumbo" threshold ($10M?) triggers a capital gain on those assets in the collateral. So if you get a $150M loan off of your amazon shares that on paper are worth $150M, but you paid $100M, you have a cap-gain of $40M, and at 20% tax, $8M fills the IRS's coffers.

uqual 9mo ago
This is something I've been in favor of for some time. Obviously the tax basis in the assets would also be stepped up by this action. The US should also get rid of the step up in basis at death. The recipient of an illiquid asset such as a family business should have a period of time (perhaps five or ten years from the triggering death depending on the type of asset) to "pay up" the tax basis "to market" at the time of death. Gains in liquid assets (such as publicly traded stock) should be taxed at the market value at the time of death by the estate or trust and passed on to beneficiaries with that adjusted tax basis.
- jermaustin1 9mo ago
  > The US should also get rid of the step up in basis at death. This would actually fix the issue without my suggestion, but it is a harder pill to swallow for the "soon to be rich" Americans that tend to vote against their current economic interests.
  - DenisM 9mo ago
    That classic argument for step up is that a farmer’s son inheriting the farm suddenly owes a lot of taxes which he can’t pay without selling the farm. Is this a real problem? And how do we fix that?
    - jermaustin1 9mo ago
      You fix it by sidestepping it. Don't do it, even though it is the simplest/easiest to implement, and instead create 5 other laws that surround it and accomplish the same goal. Loop the hole back a them.
    - AuthAuth 9mo ago
      It is a real problem but its presented in a misleading way. If you inherit a farm worth 1m and you have to pay estate taxes on that of 100k. You do not have to sell the farm, you can instead take out a mortgage to cover that 100k. When we frame it that we its still very fair to the person inheriting the farm because who wouldnt want a $1m farm for 100k.
      - smw 9mo ago
        Except you don't pay any estate tax unless your estate is larger than $15 mil
        AuthAuth 9mo ago
        In American maybe thats the case. Im talking about situations where we are trying to implement an estate tax and the discussion is framed as basically forcing the receiver to sell the estate to pay the tax instead of presenting it accurately as taking a small loan to pay the tax.

m463 9mo ago

I think this would break all kinds of things, for example home equity loans.

orsorna 9mo ago
Something like HELOCs would certainly be an exception. The point is to disallow people who make a man's yearly salary every 60 seconds from getting <2% loans against an asset pool that would take hundreds of years for the average American to amass, if ever.

knowitnone3 9mo ago

if not borrowing against assets, do people borrow based on their word?

dakial1 9mo ago

This makes more sense. I hate when people talk about taxing the “net worth” of some rich guy when a good part of that net worth is locked into invested companies who are (hopefully) being taxed already. The borrow scheme should be the thing being taxed really, because is a shadow realization of profit (they are borrowing against the current value of their assets)