I'm not talking about the wealthy people that have 100% of their wealth tied up to company (stock) that they operate - but the wealthy people that are just asset-rich, with zero operational duties.

Their wealth is handled by wealth managers, they probably don't even know what they own. But minimizing taxes and hoarding wealth is priority number 1.

This is the real multiplicative effect of being really rich: It's not knowing that you'll never be short of money, but how many things you don't even have to think about, because they are handled in your stead.

This is where I'd expect AI will change the world for consumers first: The tasks that now require either a lot of energy, or hiring an assistant or eight, becoming so cheap a good chunk of middle class will be able to afford it.

I find that hard to believe.

I highly suspect that the "materially worse" deal you speak of is simply less liquid cash, but more retained wealth.

They would have rather foregone that income entirely, then be forced to pay full income taxes on it. Of course they didn’t argue it this way, or else the idiocy would have been obvious even to them. They were arguing that plan B “results in less tax paid overall.”

That is what their metric was: which plan results in less taxes paid. Not which plan results in more take-home pay.

Plus there is a concerted effort to maintain the narrative that the government should be starved, because the government is the most wasteful body that can be.

Being rich isn’t just some sort of statistical metric - it’s also a clear cut option to have your principles and desires accommodated.

It’s not hard to believe.

To determine whether its 60-40 (tax avoidance - convenience optimization) would seem to be the question to pursue.

In democracies, the massive bulk of people are voting to steal the money of the rich. That’s not cool.

Firstly - many developed countries have higher tax rates than America.

Secondly - the issue isn’t being rich. The issue is that tax avoidance for so many years has resulted in absurd levels of wealth capture.

Thirdly - no polity level discussion can happen effectively, because that wealth ensures productive discussion is mired in controversy by the time it reaches the voting public.

This is mostly not true. People are often confused into comparing US federal taxes to the totality of taxes in other countries, but US states levy taxes too. The total of state and federal taxes is often in excess of 50%, which is higher than the OECD average.

> The issue is that tax avoidance for so many years has resulted in absurd levels of wealth capture.

The primary cause of this is not tax avoidance, it's market concentration. If your company has 0.1% of the industry and is worth a billion dollars and you pay a 0% effective tax rate, you have a billion dollars. If your company has 50% of the industry and is worth $500 billion dollars and you pay a 70% effective tax rate, you still have $150 billion, i.e. 150 times as much. Also, effective tax rates have never actually been 70%.

> Thirdly - no polity level discussion can happen effectively, because that wealth ensures productive discussion is mired in controversy by the time it reaches the voting public.

The real problem is that the tax system is intentionally convoluted to conceal from the public who is paying what and where the money is going. This benefits the rich in many cases, but it mostly benefits Congress, who can lie to people about what's going on to get their votes even while screwing them in particular. This is not a partisan issue; both parties want more money and want it to go to their cronies, so neither of them wants to simplify the tax system into something sensible and harder to game, because it would interfere with the diversion of everyone's tax money to the politically connected.

I went to double check, and the best answer is that America collects less tax/GDP than its peers. Even accounting for state and federal taxation.

https://www.taxpolicycenter.org/briefing-book/how-do-us-taxe....

> Taxes on personal income and business profits made up 48 percent of total US tax revenue in 2021, a higher share than in most other OECD countries, where such taxes averaged 34 percent of the total (figure 2). Australia, Denmark, and New Zealand were the only OECD countries where over half of total revenue was generated from such taxes.

> In the United States, taxes on just the income and profits of individuals (not businesses) generated 42 percent of total tax revenue, compared with 27 percent for all other OECD countries combined.

So that clarification is warranted.

> Convoluted taxes

This … I mostly agree that simpler tax codes are beneficial, I am not sure its complexity is the core reason discussion is difficult.

Tax payment itself is made as painful as possible, so that it remains a focus of ire for citizens.

Hmm. I suppose in the spirit of simplicity, it would be ideal to have an automated tax generation form, and a simple tax code - making it easier for people to just pay their taxes and get on with their life.

And then have progressive taxes for people higher up the wealth ladder.

> Market concentration

Your point is that this is not the primary reasons for wealth disparity?

I dont know - we are well aware of the kind of steps firms take to avoid paying taxes, and instead move them to tax havens. The numbers indicate that firms tend to pay much lower taxes in America compared to their OECD peers.

Again - the point here is on “primary reasons” for wealth capture.

If you fully play out your argument, the least wealthy and least successful deserve it the most to have their remaining wealth taken because they are not assuming any risk in this society.

I think that is a very destructive world view.

No, if you fully play out his argument then the least wealthy deserve not to have their wealth stolen. His argument is that theft is bad, it isn't a complex argument with unexpected implications.

Although it does seem a bit faulty regardless, the amount of risk someone is taking has no bearing on whether taking their stuff is theft.

If this is what you believe raising taxes is like, I'm not surprised you're against it. But no wonder that you're struggling to get this point across, because it's outlandish in how far removed it is from what I perceive the instrument of taxation to be from concept to application to its morality... Forgive me for my own overblown comparison, but yours is a position I'd expect to hear in a comic from Scrooge McDuck.

It is not unreasonable to me that you have to pitch in for common goods if you live in a village, and should you refuse to take part in this you might find yourself in a situation where you have to either move out of the village or forfeit your share.

Ethically is it right to increase the risk to accumulate wealth? That depends on what you buy with that risk. It’s well-established that people will take risks for fun, and they’ll take significantly more risk when security for themselves and their family is on the line.

Folks with hundreds of millions or billions in assets or millions in income have vastly higher levels of security compared to folks with $100 in the bank and a $15/hr job with no benefits.

So, how much is it ethical to take from the rich to ensure that the poor have decent odds to improve their situation and have a basic level of security? In America, it’s been as much as 60% in income taxes for the highly-paid. A wealth tax of 40% upon death still exists, even if the rich have found a way around that. It sounds like America has already established that 40% taxed to the benefit of all is ethically okay.

So we should probably be killing the buy, borrow, die strategy of tax avoidance, especially on transfer taxes should be collected. But could we take more from the wealthiest and have that be ethically okay?

Let’s say we have someone with $300M in assets and those appreciate 8% annually on average. Those assets will be worth $600M in 10 years. Assuming a spend of $10M per year, they’d still be worth $400M by the end of 10 years. So we’ve had at least $100M generated compared to where we started just for existing and living a lavish life. But we could have taxed that $100M at 40% and put 40M into public services, infrastructure, or entrepreneurial grants to provide tens of thousands of people with more security without materially affecting our asset-owning individual. Even just distributing $40M to supplement incomes for low-security folks would translate to 2500+ people getting a chance to improve their situations.

So, is it ethical to tax the excess asset appreciation that the individual didn’t use for anything? It’s not that it didn’t grow, it’s that it grew a little less fast. And we were able to impact thousands based on that. I’d argue yes, and I struggle to understand how “make life no different for the individual vs make life better for thousands of people” comes down on the side of the individual. It’s not until taxes grow higher than appreciation that I start to think it might be unethical.

But as you approach taxes equaling appreciation, I can see how it could be counterproductive. I think that’s not the argument though. It wouldn’t be terribly difficult to tax assets based on appreciation above their highest appraisal, with appraisal triggering taxes being owed. Certainly no more complicated than our current taxes assets and the loopholes that lead to buy, borrow, die.

The bill gates example where someone has 100 billion in sp500 is rare. You don't get insanely rich through diversification

So perhaps that's why wealthy people seem so tax-averse - they may be as averse as everyone, but for them the aversion is much cheaper and easier to do.

(This reflects a more general principle I summarize as: the only thing necessary for evil to triumph in the world is that good men are separated from it by enough layers of abstraction.)

My conservative expectation is that we all have to start contributing a lot more over the next few decades if we want to maintain our standard of living, otherwise it will just gradually get worse. I hope I’m wrong.

There are so many valuable services provided by the US federal government. People just take it all for granted.

A few counties away, the library district said without a tax increase, they’ll have to shut down. “No new taxes” carried the day. Library shut down. Now folks are howling. And again it’s the non-voting kids that suffer.

If this is the behavior of folks about issues affecting their neighbors, in their own town, I’m not too optimistic what sort of support we could see for any kind of longer-term issue, especially if it isn’t atop the media cycle.

So I don't pay Israel's defense budget, but that money is reallocated evenly to everything else.

I find it hard to believe a meaningful number of people would opt out of libraries and schools assuming their overall tax burden is unchanged.

I might be too pessimistic though, I tend towards liking the idea but I'm concerned about the changes it could cause.

Empty nesters or childless people will funnel their tax money to things like parks, fire trucks, and other things.

Obviously, this was supposed to be the job of the person you elected.

But in 2024 we definitely have the technology to let people vote on smaller units of issues that they care about.

I would be completely in support of people self-allocating their taxes as long as (1) the distribution still had to add up to 100% so you can’t under contribute and (2) government offices capped their income and redistributed excess to the general funds instead of letting some feel-good departments waste money they didn’t need but were allocated.

Members of Congress often propose things like this because it sounds good but in practice it's meaningless.

Suppose that Democrats don't want to pay for bombs and Republicans don't want to pay for makework jobs, so they both say they don't want their tax money to be used for this. Then the government takes the money from Democrats they didn't spend on bombs and uses it to make up the shortfall in the makework jobs programs and takes the money Republicans didn't spend on makework jobs and uses it to make up the shortfall in the military, and nothing changes at all.

The only way it could actually do something is if you got the money back you didn't want spent on that thing, instead of letting the government spend it on something else. But then most people would do that with large chunks of government spending because they'd rather the money than the programs.

How?

Russia invades the Ukraine. Ukraine defends itself. Ukraine's allies, incl. the USA, send weapons. None of the allies, incl. the USA, fight in Ukraine or Russia.

I'm afraid your independent thinking has formed a prejudiced opinion. George Carlin would not be proud.

Ukraine isn’t our ally. That’s a silly sentiment. Ukraine is a developing country wholly comparable to say Zambia or Namibia. Our interests just happen to align this way this time around.

Ukraine is a highly developed country, in some ways more than the U.S. Its people are certainly way more educated, on average.

If you can't get that part right, then I doubt you have much to tell us about the context of the war or whether Ukraine is an ally or not.

That other stuff doesn't even cost a significant amount of money by comparison and could be well-funded from the savings.

The government doesn't lack for revenue, it lacks for efficiency.

If you go to early Reddit, you will see it a staunchly pro market, anti tax stronghold - as was HN.

For eons, “competition” was the mantra along with “greed is good”. Many people who own wealth reached there with that ethos.

No one has to “contribute more”. That’s the opportunity for whichever bright eye person decides to take advantage of the gap in the market.

If you want a counter to this dogma -

1) Yes. Market inefficiencies should be open as opportunities to the industrious

2) No. Not all market inefficiencies are the same. for example, Public goods (police, military) are not better off with multiple companies. Insurance is similar.

3) Lobbying for convenient rules, lobbying for weakened regulators has given far more advantage to firms, which then use that wealth to become rent seekers. They dont need to innovate, because they can litigate.

4) “more regulation means higher compliance costs” was a new one I saw. Guess what - if your firm uses contracts, that’s a compliance cost. Why not just do it by a hand shake? Save your lawyer fees.

Compliance costs ensure fair play between entities of unequal strength. You can trade on your competitive advantage, not on the tertiary strengths, such as a firms ability to pay for a better legal team.

Edit: Soap box - This is about Personal Responsibility.

The place where most people agree today, is the desire for a fair fight.

How can I reasonably defend the idea of personal responsibility, in something like the sale of NINJA loans.

If firms field trained, resourced, networked sales people to sell loans to people who have a negligible chance of even understanding what they are getting into, then how do I reasonably bring up personal responsibility ?

Can people reasonably be expected to read all the contracts they have signed? ( Netflix, Uber, gmail, phone, etc.)

Algorithmic ads are fine tuned to grab your attention and keep you online. There is more money spent on UI UX research than the GDP of some global south countries.

Forget America for a second - imagine how regulators in smaller economies handle these things. Heck, that’s if they even have time to worry about these things.

One of the big problems here, and the lobbyists do this on purpose, is that they promote the false notion that the issue is the quantity of regulations and not their substance. Quantity can be an issue when the number of regulations becomes excessive and their sheer number thwarts competition by creating high barriers to entry, but "incumbents want fewer regulations" is not only misleading but typically the opposite of what really happens.

Incumbents want to get rid of regulations that protect competition and add regulations that inhibit it. What we need, of course, is the opposite. Which isn't as simple as "make number of regulations go up/down", it matters very much which ones and what they do.

> Compliance costs ensure fair play between entities of unequal strength.

This is completely the opposite. Compliance costs are generally fixed costs, i.e. every entity has to hire a lawyer and pay them $250,000. For a megacorp this is negligible and they don't even notice, for a small business they're now out of the market because that amount of expense would bankrupt them. The more rules you have, the higher that number gets. This is the sense in which the absolute number of rules matters.

But it still depends what they are. Even if you only have a couple of rules, the incumbents will want rules that only they can comply with. Conversely, you can hypothetically have a lot of rules and still have them easy to comply with, though this is certainly easier said than done. What you really want is to have a small number of rules, but the right rules -- the ones the incumbents don't want and their smaller competitors do.

Just to be clear, you are quoting typical lobbyist talking points here? I definitely disagree with such a simplification.

I agree with the fact that incumbents want to make it easier to make money.

> This is completely the opposite …

Yes, I am in firm agreement that the content, quality and enforceability of the regulation matters.

That said, I used contracts as an example, specifically to combat this common reduction: “Compliance cost price smaller businesses out of the market, so they are bad for competition and the little guy.”

Writing up a contract is more expensive than trusting someone’s word, it is fair to say that having no contracts would enable more small businesses to flourish (lower costs).

Many things reduce costs, however firms / businesses having to bear compliance costs is not bad for the polity.

But now we're back to "what the regulation is matters more than how many there are". There can exist rules that benefit small companies, obviously. But if the rules every company has to comply with can fill three shelves at the library, this is not going to benefit small companies because they will be unable to operate.

> Many things reduce costs, however firms / businesses having to bear compliance costs is not bad for the polity.

It depends what they are.

One of most insidious is regulations that are ostensibly neutral, i.e. there is a societal benefit of approximately $100 per company on average and to get it the rule is going to impose costs of approximately $100 on the average company. The books are full of these because they provide some ostensible benefit and the cost isn't even being calculated. Nobody fights against them too hard because they're approximately breakeven.

Except that each of them adds $100 in compliance costs to every company, and there are ten thousand of them, so now every company in that industry has a million dollars in compliance costs, which small companies can't sustain. So the rules on their own provide neither benefit nor cost to society, but impair competition, and that has a societal cost.

you and me are back to this.

Most arguments dont get this far, unless these answers are first furnished. Which was the spirit and intent of my parent comment.

And I agree, good regulation is better than absurd regulation.

> ostensibly neutral… small companies can’t sustain

Sure.

The austerity policies of the neoliberal turn has already caused standards of living among the less fortunate to drop over the last few decades already. The 2008 crisis is when it started to impact the middle class and we're still feeling the impacts 16+ years later.

Federal outlays are not granular enough and increasing Federal outlays is pretty meaningless.

My goal isn't to make money for money's sake. Nor even leaving oodles of money to my kids. I'd metaphorically just spend my days strumming a guitar for the rest of my days. The economy is just a distraction from what I really care about.

The issue here is that it depends what you're trying to do. If you have eight figures then you have all the housing and vehicles you need and more money is not going to make a big difference in that regard.

But that's not what people use it for at that point. Mostly what money past that is used for is business. You own a company and you want to get into the auto industry? You're going to need to pay designers to design the cars well before you make any revenue, and then you're going to need factories and raw materials etc. Suddenly a million bucks is chump change and if you want to make it work you need a lot more.

ESPN recently did a movie on what happened to poor people who suddenly became multi-millionaires when they joined a pro sports team.

TLDR: they quickly spent it all and wound up with nothing. It turns out to be amazingly easy to burn through a million dollars.

On a similar note, I do understand the peer pressure that comes with being on a team like that. "tradition" where you buy your entire team dinner for a night on the order of high 5 figures as a start. I can start to sympathize with how that spirals when the environment itself pressures you. More reason to make a financial planning class mandatory in school. Won't save everyone, but it'll at least bring awareness.

After all, we live in a market society, shouldn't students be at least able to read a simple P&L statement and balance sheet?

I always wanted to start a business, so on summer break I took a course in basic accounting from the local community college, and it has served me very well ever since.

Will Smith is another cautionary tale. As a teen, he made it big with his Fresh Prince rap songs. He blew all the money on partying. Then the IRS came knocking. It had never occurred to him he had to pay income tax on his millions, which no longer existed. He made a deal with the IRS. On his show "Fresh Prince of Bel-Air", all his earnings other than an allowance went to the IRS.

Is there a word for this phenomenon? What makes everyone believe they're a special case?

Consider that the type of people who are more inclined to accumulate wealth are the ones faced with this choice.

The people who'd rather strum guitars don't often find themselves in that position. So your observation is painfully anecdotal and not really useful.

I have some "relative" taste of it in that I'm a lot better off than the past 3 generations of my family minimum. But I was still far from what I consider "wealthy" even within the tech community, let alone to the country at large. I didn't feel it fundamentally changed how I approached finances outside of being more willing to splurge on some tech (something I've always wanted to do) after I put away 20% for savings.

But that's only one magnitude. Who knows, money corrupts for a reason.

If you had the time and resources, wouldn't you try to affect change in government? It's not fundamentally any different than showing up to your city council meeting to get housing developments approved/blocked, for instance. Moreover, most people don't think of themselves as bad people, so they probably legitimately think they're doing the Right Thing™, rather than being some sort of cartoonishly evil villain trying to ruin society by starving government of funding.

This is going to be hard for the politically inclined to understand, but no, it's simply not the case that everyone everywhere is preoccupied with finding/creating legal ways to push their will/preferences onto other people.

It's only a viable option if you trust your political system to function when your back is turned.

I'm also not sure who you're suggesting is ideologically blind. All I'm saying is that given resources like a huge pile of money, many would not wish to use that money to coerce others or otherwise change their local political situation to better suit them. Instead they'd use those resources to increase their own resilience, i.e. simply choosing to leave the neighborhood or situation that was bothering them instead of trying to change it and assuming their own interests are the best and most appropriate ones for everyone.

As the parent is pointing out, everyone thinks they are doing TheRightThing(tm) when they collect/use power to force their views on others. Instead you could have power/wealth and just choose to not fuck with other people. That's not being ideologically blind, it's just an ideology that says, you know what, even my strongly held opinions could be wrongheaded, and maybe I shouldn't be using my arbitrarily acquired wealth/power to steer anything besides my own life.

Regardless, most people don't like tax, and there's not much they can do about it if they are W-2 wage earners short of opening a side business or maxing out retirement investments (which isn't helpful to someone trying to buy a house before they are 65).

Rather than add a bunch of subsidies in the form of tax breaks, the government could just spend money on programs that accomplish the aim they want. By making this complicated system whereby subsidies are accomplished by negating taxes you would otherwise owe, this means these benefits are more likely to help people who are otherwise going to be paying more taxes, and the fact that these require legwork to opt into without being at risk of the government thinking you're defrauding them, it seems kind of inevitable that it would devolve into a subsidy mostly for wealthier people who are good at navigating the bureaucracy of it, or rather, who can pay someone in what has become a cottage industry of tax (evasion) specialists who ply the trade of doing so in service of people who can afford them

Like, yeah, given that the game is set up this way, the obvious objective of it from the standpoint of any taxpayer engaging with it is to pay as little as possible. But if the aim of the tax breaks are something besides creating said incentive (and the industry around it), it seems like bad mechanism design to have it work this way in the first place

No, most people don't care about their tax the way wealthy people do. I ended up in a wealthy family through marriage and I can tell you nobody I my original social circle spent even a fraction of the effort the wealthy do when it comes to taxes.

When I got a bit more money, mortgage, stock options, investments, etc. then I started to have options - do I pay this way or that way? Do I invest in this account or that account? Does HDHP/HSA make sense for me or not? Should I sell the certain investment to harvest the tax loss or keep it? Etc. etc. then my asset structure is more varied, so are the opportunities to pay more or less tax. I imagine for really wealthy people (definitely not me, still) there are even more options how to pay less taxes, and they are doing right serious considering them (or paying people to seriously consider them) - if I ever get rich, that's what I'd do.

I don't think this is actually true. It's a nice rhetorical soundbite, but if you count properly (e.g. all taxes all assets owned by Buffett actually pay) there's no way he pays less unless his secretary is extremely exceptional for some reason. It is true that her tax structure is probably different from Buffett's, so if you creatively form your query so that taxes that Buffett predominantly pays are excluded and taxes that the secretary predominantly pays are included, you could probably find a way to justify it, but that would not be a valuable insight.

And of course the whole "pays less", as formulated, is a bit deceptive - his rate of one of the taxes is lower as a percentage, but he actually pays vastly more in actual money (Berkshire Hathaway alone, in which he holds a substantial share, pays billions in taxes every year).

In that regard, most people minimize their taxes by doing nothing. The wealthy have to put effort in to get the same effect.

What you see as "minimizing taxes" could be a necessary responsibility. If you're on the outside looking in, you may be uninformed about their circumstances and responsibilities. Its definitely a 1% of the 1st world problem, but its still a responsibility that has to be managed; Unless you're familiar their THEIR circumstances, its easy to incorrectly assume motivations.

Be glad you live in a country where you have this problem to complain about.

Is it not entirely logical that a cohort that actually pays attention to where 20%, 30%, 40% of their money is going ends up wealthier than one that doesn't?

Many if not most rich never got rich, they happened to be born rich. In the situation I'm talking about, the said family has been wealthy for two centuries. And my in-laws are significantly less well-off than the generation before. Their ancestors may have been gifted in some way that got them rich in the first place, but there have definitely be some regression to average since then and their management of their wealth has been much less efficient than the one of my parents for instance (who aren't wealthy today, but are still clearly better than their own parents).

In fact I suspect that these people are obsessed about taxes because they know their fortune is ever going downhill because they lack the thing that made their ancestors successful so they spend their efforts trying to salvage their wealth instead of making one of their own.

This, of course, doesn't work if the incumbents capture the government and pass regulations that constrain the competition which is supposed to be keeping them in check.

  (defun parkinsons-law (k m p n)
    (/ (+ (* 2 (expt k m))
          p)
       n))
 
  Where:
  The retval is the number of new employees to be hired annually
  k is the number of employees who want to be promoted by hiring new employees
  m is the number of working hours per person for the preparation of internal memoranda (micropolitics)
  p is the difference between the age at hiring and the age at retirement
  n is the number of administrative files actually completed

A lawyer told me, this is how you scam people. Mainly Medical Doctors. Pitch an investment to them. They don't bite. Then mention, that they will save taxes with this investment, and they will say: Where do I have to sign?

To ask a team of designers to do brand and marketing research and design a new logo for a big organisation that will use said logo everywhere is not a 1K euro freelancer job.

To be fair, the new logo is a bit crap, but in the grand scheme of things, 80K is not a lot at all.

There is overhead for the person itself (employer subsidized healthcare, office space, equipment) and there is overhead within the organization. Like a secretary and accounting departments who cannot be billed to a client. And management layers of course…

Most likely the 80k are enough to cover one person-year for a consulting agency in Eastern Europe.

That said, the new logo is atrocious.

Arguably the public image of a university is its most important asset. Because that attracts the best students, researchers and third party funding (public and private).

Damn straight, and they should do the same thing with their website. And while we are at it, they could use the students to design and engineer their buildings and do their accounting and lawyering and administration.

Hell, while we are at it, why not get them to do the teaching as well?

One, in many fields, the more advanced you are, the harder it becomes to remember or even understand why or how one may struggle with understanding the basic material of the field. TAs are still closer to the experience of having learned the basics themselves.

Two, teaching material is a great way to deepen one's understanding of the material.

It also happens to provide a nice balance of giving students a way to earn some money while working in the subject, while still being quite cheap for the university. (That last part does have a smell especially in US universities with their insanely high tuition fees. But that feels like a larger and largely separate issue.)

http://kenlevine.blogspot.com/2011/09/one-of-nbcs-great-blun...

I worked as a webdev for the Cornell University Library (more than 70 web sites) at the time when Cornell changed their logo from a nice little square that looked like the J.C. Penny logo except it said "Cornell" on it and then they made everybody doing any kind of visual communication change their logo including hiring a friend of mine as a consultant for almost two years to change all the letterheads and similar things for suborganizations that didn't have graphic design talent in house.

We got this thing instead

https://brand.cornell.edu/logos/

which I think is OK graphically on its own but unlike the square it is demanding on the environment that it is in and might force you to change things around it to look good whereas I liked the square because you could just put the square near an edge or a corner and it always looked OK.

Sad part is the US would have spent millions on a "consultant" who would barely do any work and instead be a yes man to accept accountability for some admin who just wanted to play political theater for a promotion in another campus. That's where Atlus shrugs.

Also this is pure after the fact justification with no meaning. Most people who are rich became and remained so by maximizing their monetary position and needs to excuse nor reason to actually continue doing so. They do so because it perceptibly makes them more rich and more successful even if ultimately is just points on a score board with no real meaning for their life.

Nobody minimizes their taxes in order to ensure their money is better spent. They spend the excess on themselves like everyone else. On bigger and better castles to demonstrate their wealth, on planes, on another bigger boat.

Want to buy an expensive car? Prepare to pay upwards of 100% car value in taxes.

Same for cigarettes. Around 200% tax just to give 2 examples.

Now, you "can" save your income tax by sleights of hand, by showing more expenses than actual or by misreporting things but still, you dont always get to pay 0 tax. That never happens.

It’s so strange that this behaviour seems to be worshipped by so many people.

Why would we do that as a society? Do we need people that hord anything for profit, do they add value to your group?

I own a home and I have assets that I use to pay my daily expenses. I am, by your definition, asset rich. I don't need to "do" anything other than maintain the investments. (I also do work, but that's besides the point).

On an intellectual level I realise that if we are to have a public sector it needs to be paid for, and that I'm never going to be the arbiter of exactly how the money is spent.

But at the end of the day, I sit here and think, how much do the police, military, and the other basic functions really cost, and is the right way to do that really to say -

Hey, you bought something, give me 20% of that!

Hey, you earned something, give me 20,40,45% of that!

Hey, you sold something, give me 20,28% of that!

Hey, you died? Give me some of that!

etc. etc. If you minimise nothing and just do the "golden path", then you end up paying well over 50% when you stack it, and it feels more like theft than a "trade for civilization" as some like to put it, because I know that it doesn't cost that much.

In my country taxation functions less like "we need this to run the Government", and more like "it's politically popular for us to redistribute". Which is logically how democracy is always going to function, but it doesn't mean that I have to agree.

I prefer to pay for things that I derive benefit from and I think my family, community, country etc benefit from, I prefer not to pay for things that don't, it's honestly no different to me than say, I'll buy a TV if I want one, I won't buy a 100 inch TV because I think that's unnecessary.

And ironically enough, it costs money to figure out how to optimize budgets and labor. So your tax minimization is just ensuring that the government always performs the greedy algorithm instead of focusing on a proper traversal of the problem. It's a death spiral.

Also, we can never really say how much something costs. Most funds for taxes go to welfare. Guess what the classic conservative economic administration always targets...

edit: Hoarding is buying assets that could be used productively and storing them somewhere instead of using them. People with a political axe to grind like taking words with negative connotations and applying them to things that don't make sense to manipulate you.

If you think about it for more than two seconds you will understand we already have a word that describes someone with a lot of assets, "wealthy" or "rich". So hoarding as a term only makes sense when used in the context of someone stockpiling something that could be used by people in need. "Hoarding" shares in a company does not make sense for example.

For me, the answer is certainly not 100 and not 0, let’s say it’s 80 cents. Speaking for myself, I think that marginal 20 cents is by definition hoarding because the marginal utility of money to me at that point is negligible.

Sure it could benefit my kids or get me a nicer retirement home. But there are kids that are homeless, and our public education system is crumbling. I personally would much rather those 20¢ be redistributed to people who need it. Just speaking for myself.

Think of it this way:

Angel investors and venture capitalists are directly funding the creation of new productive businesses with the expectation of a future return / reward. This future reward is only possible with secondary markets such as the public stock exchange. Additionally, employees at these companies are typically rewarded with shares to align incentives. These stock based grants motivate them to work harder and produce more and this is only possible because they can then go and sell their shares on the public market.

An example of hoarding would be like someone buying a bunch of property to park their wealth with low risk but not renting out any of the homes or apartments they purchased because it's too much effort.

I would still posit that the second order marginal utility of those 20 cents is higher in hands of somebody who needs it. In the same way you talk about how that 20 cents impacts the derivative of “progress”, think about how those 20 cents would impact the derivative of the people it’s redistributed to.

It’s my opinion that there’s no better ROI than investment in early childhood education, for example. Because it’s an investment that pays compounding dividends integrated over an entire human lifetime.

And again, we’re not talking about removing the whole dollar from the market, just 20 cents. An amount, by the way, that is around what would be taxed if you were investing in a non-tax-advantaged account. There’s some irony in there.

https://www.pbs.org/newshour/amp/economy/houses-are-getting-...

>If you think about it for more than two seconds you will understand we already have a word that describes someone with a lot of assets, "wealthy" or "rich".

Semantics? I think your first metaphor for productivity was better. Are you simply buying a yatch you use twice in your life ever, or are you living your dreams of sailing the deep blue in a flashy way? Or in the gray area; do you turn it into a business to have other rich people pay to ride?

How you use your assets or liquidity matters a lot more than what medium you store it as. =

It's disheartening to see so much thought and deliberation going into an obviously toxic idea (taxing unrealized gains) when the obvious solution (removing the cost basis step-up when assets change hands) is being ignored.

Inherited wealth is the least earned, so it should be politically palatable to change this. But presumably because such a change would acutely affect the people who make laws in the country specifically, it is never seriously considered.

Second, it is irrelevant. The capital gains tax that would be due on a normal step-up in basis during life is independent of the estate tax.

Assume there was no exemption and you bought stocks 20 years ago for 100 K$ that are now worth 1 M$. If you die, then your estate would need to pay estate taxes on 1 M$.

However, if instead you sold it the day before you died, you would need to pay capital gains on 900 K$. Then you pass away with N $ = (1 M$ - taxes) in cash. Your estate would then additionally need to pay estate tax on N $.

The step-up in basis is the difference between these cases. Your inheritors get your capital gains (step-up in basis) tax-free, but you still need to pay the estate tax.

A - In a universe with cost basis step-up on death, they die with gains taxed at 0% and then pay 40% estate tax on everything.

B - In a world without cost basis step-up on death, they die with gains taxed at the 20% long term rate and then pay 40% estate tax on what remains.

Thus:

The step-up causes less tax revenue by percentage from the >$300M crowd who use the BBD strategy, but it causes more tax revenue by percentage from the $13M

I wonder which crowd has more worth-at-death in aggregate (in the absence of BBD and the like -- if estate tax were to be paid by all, no loopholes), given that the less wealthy crowd is a much larger population.

N is your cost basis. M is the gain. E is the estate tax. G is the gains tax.

((N + M) * E) is tax on the automatic step-up, option A.

(M * G) + (N + M - (M * G)) * E is the tax on the non-automatic step-up, option B.

Reorganized to ((N + M) * E) + (M * G) * (1 - E), it is clear that option B is strictly more taxes for any estate tax less than 100%.

Even public businesses are not trivial to value for very large shareholders who don’t have the ability to easily sell all shares at once without moving the market quite a bit. But in any case, removing this loophole would just encourage the ultra wealthy to put their money into opaque businesses and then try to “value” them as low as possible. So it’s not so easy to fix.

You would pay an estate tax (on the total value of something, regardless of its cost). And then you'd still (when you eventually sold it) owe capital gains tax.

Regardless of whether you think that particular reasoning makes sense, it definitely doesn't make sense if there's no estate tax (which there effectively isn't for most due to the multi-million dollar exclusion) since there's no risk of double taxation.

Step up basis was actually repealed in 1976. But there was immense pushback at the time around record keeping and Congress eventually agreed and retroactively cancelled the new law.

Whether the answer would be different today in this age of computerised record keeping .... ?

More or less having to do that would be good for society and mildly annoying for the like five dozen existing corporate dynasties on the planet.

1. Allow unrealized losses to be deducted.

2. Once a certain percentage of the gain is taxed, step up the cost basis by the amount of tax paid. That way you avoid double taxation (once under the unrealized value and again when the asset is sold).

3. (optional) Keep the tax rate on unrealized gains low. Even 3% would be significantly higher than what we have today.

Under this logic, it almost seems like a no brainer. People who have a ton of wealth in unrealized gains would pay taxes progressively over time instead of being hit with a massive tax bill when they sell (or potentially no tax bill when they die due to the step up in cost basis). Feel free to poke loopholes in this idea.

This seemed really reasonable to me until I started thinking about how it might work in practice. The sequence of returns can make this proposal ineffective in practice, even if it makes sense on first blush.

By way of explanation: Let's say you're the founder of Pets.com in an alternate universe where unrealized gains have always been taxed (and correspondingly unrealized losses can be deducted). It's 2000, and you've just had an incredible run. You have also paid incredible taxes along the way.

Then your company blows up and goes to zero.

Now you've payed an incredible amount of taxes on your paper gains, and have realized no gains whatsoever. So the entire enterprise only resulted in an enormous real loss to you. Sure you can now carry forward those losses, but so what? You're never going to make up the difference, unless we're also letting your heirs carry forward those losses into the next century or two.

Given the exposure to massive tax bills without any actual profits, who in their right mind would start or invest in a business under that tax code? Who would dare invest a large portion of their personal worth in public equities given the risk that they plummet, as they did in 2022, 2020, 2008, 2001, 2000, 1987, 1962, 1929, 1907, etc.? Who would take a gamble on a big real estate development? And so on.

It seems to me that a tax on unrealized gains massively disincentivizes investment and the creation of anything new, and therefore the only way to tax capital gains that makes sense is if we calculate the tax due based on when chips are taken off the table. Issues like Buy, Borrow, Die are better addressed with other changes to the tax code that undo the weird incentivizes presently in place (e.g. eliminating the step-up basis, possibly at some threshold if the goal is to make the tax code more progressive). Unless, that is, your goal is to actively disincentivize entrepreneurship and investment. Which if it is, I guess fair enough, but then none of us should be surprised to find ourselves with a lower standard of living in a decade as a result.

That said, I don't see why there's a need for a deduction here. There isn't one for property taxes. Sure there is one when you sell your property at a loss, and that's also already the case when selling stock. Additionally such a tax like this won't ever cause you to lose your entire stock ownership as it's always based on a fraction of your ownership. And, last but not least, you could also impose caps or progressions.

And property taxes are deductible in the US. I’m not sure where you got the impression they aren’t.

In all seriousness, that is extremely unlikely to be the case, especially in broad terms. I mean, to purchase public stock at all you already must do so from a licensed broker, who mind you, is already required by law to report the cost basis of shares purchased by investors. To require them to regularly move 2% of shares owned by investors, to the government's ownership, would be rather trivial in cost to do. Hell, it could be completely automated.

And the cost of it doing that would likely be much less than property taxes, which, is a far less liquid asset, and much more costly to assess than equities, but is nonetheless profitable to tax. I mean the SP500 alone has a market cap of ~$47 trillion, which is, surprising almost the same exact value as the entire US real estate market, but much more liquid.

Additionally, whether it is even profitable at all could be besides the intent of the tax here. It doesn't necessarily have to be profitable, from which perspective, poor liquidity and changes in outcomes isn't a problematic at all. It could be even the intent.

> And property taxes are deductible in the US. I’m not sure where you got the impression they aren’t.

Okay fair. I suppose you could do something similar, but also don't see why it's necessary, just because we do so for other taxes.

Property taxes are a use tax (roads, police, fire, schools, etc), apportioned base on property value, it is not a capital gains tax.

Also, there is a real debate to be had about if housing should be primary considered an investment or a basic need by society. Many argue that the focus on housing as an investment in the US is a primary driver of our housing problems.

Taxing unrealized gains in general I think is impractical since many assets simply don't have well-defined valuations, but if you take out, say, a $10 million loan using, say, shares in a privately traded company, then those shares are apparently worth $10 million dollars because the owner and the bank agreed they were.

We have a limit on gifts and according to this is 13 million. Just make it that.

What would be the downside here other than extremely wealthy having to pay some taxes upon death?

It's your home. It's no more free or unfree, earned or unearned than anything else.

The home that I grew up in is.. hell, I'd consider it to be "mine" and my siblings more than almost anything else I have.

If you got a home worth that much, you can pay some taxes on it.

https://www.mansionglobal.com/articles/more-than-1-500-homes...

1,500 homes sold for over 10m in a year. We're talking about the richest of the rich. That's exactly who should be paying some taxes. The people bitching about losing 'their' home this way... are either a) delusional or b) looking for a way to protect their incredible wealth.

Is your family home worth more than 10 or 20m dollars?

That's exactly what the ultra wealthy seem to generally believe too. Sorry that many of us reject your premise that you should be freely protected to screw over everyone else and think that's a moral decision (it's not, but I won't waste my time).

Not as simple as it sounds...when you can set up original ownership of an asset into a trust and have control of that trust change hands.

Sure you could call a long life and decent job luck, but a lot of people live into their 90’s.

Did I say that anywhere?

> Tell that to the kids in Congo who have to dig out Cobalt for free. That's actual reality and it has arrived in the west.

What does this have to do with the concept of someone "earning" something?

Presuming you can continue to service your debt payments as interest rates and your income varies over time, and are never subject to a margin call due to a drop in the value of your collateral, something even the most powerful are at risk of: https://www.ft.com/content/cf78d815-7ade-40fc-a68d-ec73accb7...

It’s not really any different than what the average American family does with their home.

Let's say you have $10M in in index funds. You don't want to cash out and pay capital gains, so you get a $5M credit line with your stock as a collateral. Then, there's a market crash, your collateral is all of sudden worth just $4M, and you have a bank knocking on your door - but you already spent $5M on a McMansion. Now what?

You can opt for "risk-free" assets, but then, if they're truly risk-free, they're probably not appreciating in a way that would make this tax gamble worth your time.

It’s greatly ironic: in the interest of avoiding minor taxes, they lose major assets to their bankers. It wouldn’t surprise me if the same bankers who profit in the downturn from the margin calls are the ones who sold their clients on the strategy.

Any time you go into debt you need to make sure you have a margin of safety. It’s an instrument of some value but it’s a sharp blade to be wielded carefully.

People preoccupied with strategies like that are the ones who are burning through their net worth at a much higher rate, so the difference in tax burden actually makes a difference. They're usually just wealthy enough to have a "wealth advisor". Doctors, successful techies, business owners, etc.

You take out a few % a year to pay for your cost of living. For example, you rent a house, or take out a mortgage and pay for the house over time using the few % a year.

Even ignoring all tax considerations it's often better to buy with a mortgage rather than full cash.

For example a few years back you could get 1-2% mortgage rates in the UK. Right now it's more like 4-5%.

Ignoring tax fun, if you have 10 mil in a share index returning say 7-8% annually and you want to buy a 5 mil house then your best strategy is to sell say 500k for the deposit, then sell just enough to pay the interest + minimum repayment in all following years.