Trove of Never-Before-Seen Records Reveal How the Wealthiest Avoid Income Tax

hungryhobbit•about 3 hours ago

If you live in California and see the endless stream of TV ads against the wealth tax, reading this will make you want to murder everyone involved in those commercials.

(To be clear, I'm not advocating murdering anyone ... not even the ultra rich ... but man, their aversion to paying taxes is shameless.)

paimapi•about 3 hours ago

you can thank Sergey 'Do No Evil' Brin for that: https://theconversation.com/why-a-vote-on-taxing-californias...

I remember doing the math when the last company I worked for was sold, and how much of a percentage of the wealth our founders received alone would be subtracted if they had made all the hundreds of us millionaires. I think the math equated to roughly 0.006% or so of their total wealth to basically instill a new millionaire class in my city which likely would have led to a little boom in spending + business creation

of the few people who did get an actual decent share and not piddly RSUs, I believe more than half stayed on in very senior roles and still do some of the best work at the company today. it's always astonishing how proportionally little of an impact wealth redistribution would have on the ultra-wealthy, and how disproportionately large of an impact that would have on the quality of life for the rest of us

gjsman-1000•33 minutes ago

Yes and no.

Consider if the US government liquidated every US billionaire at 100% of their stock market paper value (impossible, the liquidity influx would smash the stock price to the ground and ruin middle class retirements).

In this non-existent perfect world, it would raise about… $6-7 trillion. Enough to cover the US government deficit for under 3 years, or run the government for under one year. Then it’s gone.

Completely liquidating every billionaire would be satisfyingly cathartic, but still wouldn’t be enough to cause a real trajectory change. The idea is useful political fodder, to hide the fact even a hypothetically heavily taxed billionaire class can’t even cover today’s spending problem.

toomuchtodo•9 minutes ago

Ahh, but they wouldn’t have undemocratic power from their wealth if it was liquidated. China does this right, the US could learn how to handle these people better.

mring33621•about 1 hour ago

We need to figure this out. These people don't have "income", but do somehow have plenty of money to spend. So we should use their sources of spending money as a proxy for income, for taxation purposes.

Can we:

- create a progressive tax on dividends and capital gains, based on total wealth?

- create a tax on asset backed loans?

mindslight•42 minutes ago

I really wish articles like this wouldn't anchor around this refrain of "... while their wealth increased by $XXX". It's a staple of tax law that you're only taxed when income is actually realized, and there are a few glaring loopholes that allow people to avoid realizing capital gains. At the very least, things should be changed such that taking a loan against an asset beyond its basis is considered a realization of income - similar to how if you take a loan against your IRA it is considered a distribution.

But we already knew all that! We don't need numbers calculating out infinitesimally small fictitious "tax rates" (for a tax regime that doesn't actually exist) to illustrate it. Unless someone is actively selling the stock they own, they are not paying any income tax on its value, period end of story.

And so rather it feels like a wasted analysis to keep focusing on the value of zero divided by $big_number, when there are going to be far more interesting things like exactly what income did they realize, and what type of expenses did they use to offset it, what amounts did they actually pay tax on, and so on. Because capital gains deferral is not the only way the tax code skews towards the rich by far, yet it's currently using up all the air in the room.

java-man•about 2 hours ago

   A few countries, including Switzerland and Spain, have wealth taxes on a small scale. Several, most recently France, have abandoned them as unworkable.

There exists a simple self-correcting protocol for establishing the value of property: the owner declares the value, and the state reserves the right to buy at that price. Or auction it off. If the owner declines to sell that auction price becomes the new value for computing the wealth tax.

The reason they say "it's unworkable" is because the rich don't want to pay taxes.

Trove of Never-Before-Seen Records Reveal How the Wealthiest Avoid Income Tax

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