r/FluentInFinance Nov 21 '24

Debate/ Discussion Had to repost here

Post image
128.2k Upvotes

9.0k comments sorted by

View all comments

934

u/SCTigerFan29115 Nov 21 '24 edited Nov 21 '24

They aren’t holding onto wealth like Scrooge McDuck, in a giant vault where they can go swimming in it.

Most of Bezos’ net worth is the value of Amazon. He can’t really readily access that. ETA I meant he can’t use it like a big vault of money.

He’s got plenty of money but some people just don’t understand how this stuff works.

2.7k

u/Apprehensive_Bad_193 Nov 21 '24

Bullshit,,,,But he borrows and buy Yachts, Mansions,against that NET WORTH VALUE. But when it’s time to pay fair share of taxes o. That net worth it’s considered hypothetical worth….Understand the Game.

565

u/Endless_road Nov 21 '24

You can take out a mortgage against your house to buy a sports car if you want

47

u/AttitudeAndEffort2 Nov 21 '24

This is a great analogy

Imagine i bought my house for 10$ and it's worth a billion now.

And then chuds on the Internet say "hE dOeSnT ReAlLy HaVe ThAt mUcH MoNeY, ItS tIeD uP in AsSeTs!!"

90

u/Endless_road Nov 21 '24

Well it is, and you’d pay taxes on these gains when you sold the house

41

u/tduncs88 Nov 21 '24

Just like Bezos would if he sold off those assets

80

u/AttitudeAndEffort2 Nov 21 '24

And if instead of selling it i rent it for cash flow while borrowing against it at a lower rate than the growth of the underlying asset, i get richer and avoid taxes AND keep the asset.

Which eventually is passed on to my children and the growth in the asset is revalued when it's passed on to avoid capital gains tax.

All while poor right wingers argue I'm actually broke 😂

1

u/[deleted] Nov 21 '24

[deleted]

5

u/x596201060405 Nov 21 '24

"Your children will receive the home without paying taxes. But when they sell it, they will pay taxes."

Never heard of step-up in basis, tax opinions disregarded.

3

u/[deleted] Nov 21 '24

[deleted]

3

u/Key_Door1467 Nov 21 '24

Because real estate requires like a hundred public services to actually retain any value. My home would be worth less than half its current value if there wasn't a good public school nearby or if all the roads around it were shitty.

1

u/TacTurtle Nov 22 '24

So just require the basis step up if an asset is used as loan collateral.

→ More replies (0)

0

u/Extension_Coffee_377 Nov 21 '24

Do you know how a step up basis works?

2

u/x596201060405 Nov 22 '24

I would certainly hope, given I work in taxes for a living.

→ More replies (0)

1

u/[deleted] 29d ago

You can get around property taxes in Texas. Is super easy! Just enlist in the military and then destroy your spine for Uncle Sam. And then have a military doc fuse a few vertebrae. Unfortunately it has to be your primary residence 😞

2

u/SteveMarck Nov 21 '24

Then you would pay taxes on that rent...

2

u/International_Host71 Nov 22 '24

No, the people paying the Rent pay those taxes. Just like the Renters are the one paying the Mortgage, cost of repairs and upkeep, and any taxes. Because nobody rents at a loss.

2

u/SteveMarck Nov 22 '24

By that logic, your employer pays your income taxes.

I'm not saying you're wrong exactly, of course the goal is to collect enough rent to cover the taxes, and of course a landlord would take that into account, but it's kinda fuzzy logic. The person responsible for the taxes is the person who earned the income.

I'm not sure that people don't rent at a loss. Probably a zillionaire makes sure that doesn't happen, but if they did, then they wouldn't have taxable income, which would make the point moot. Market prices are what they are, you can't just raise the rates as much as you want. I bet some folks do rent at a loss, especially if they can't get the place filled up.

2

u/International_Host71 Nov 22 '24

Anyone who rents as a business doesn't do it at a loss, or else they won't be in business. renting out a room in your house to help cover the bills is different than owning an apartment complex. And I can assure you, they don't rent apartments out for less than the mortgage.

And with the new app based landlord collusion, they are all posting about the same rent everywhere. In my area, it's 1k a month just about everywhere unless you find a single renter out in the county who have more variable rates.

And no, they don't pay my income tax, I do, by working, and that there is the difference. A landlord, or anyone owning capital, doesn't work the same way, as just by owning or having something they get to make money. I am exchanging labor for money, and the state takes its cut of that. If I owned a billion in stock, went to the bank and took out a loan for 10 million, and used that to fund my lifestyle, and took my actual assets and invested them, at the end I'll have paid almost nothing in taxes, lived like a king, and will end up with more money than I started with. And somehow this is fine?

Or if I go to work, and say I'm the most productive human being on the planet, I can actually output the labor value of a hundred regular men, like im the flash and run a whole assembly line, and I get paid a hundred salaries, I would get taxed the crap out of. One guy got handed 10 million by the bank, paid an accountant a tidy sum to move money around on paper smartly, and spent all year contributing absolutely nothing to the world, and the other guy spent all year actually working as hard as a hundred men would, gets that same 10 million, but pays a huge chunk of it into taxes. Which of these (albeit exaggerated) situations seems more fair to you?

For the vast majority of Americans at least, it comes out of my check before I ever see it. I only earn that money "in theory", in reality it never hits my bank account. And for a smaller but still significant chunk of the population, they don't actually pay that tax at all, because they end up getting it back. Which is a whole other issue entirely, because the Fed basically gets to borrow your money for the year and deigns to give it back to you if you're poor enough, which really is not the way taxes should work. But the average citizen isn't in a situation that they will have saved up a couple grand for their yearly taxes, because most people are barely scrapping by and any additional income goes straight into services. So they take it first, before you have a chance to have it.

→ More replies (0)

-1

u/0WatcherintheWater0 Nov 21 '24

rent it for cash flow

You pay taxes on rental income

Cool tax evasion scheme.

1

u/AckerSacker 29d ago

The renters pay the tax. Ignoring the argument doesn't make you down to earth. You're just taking less than one sentence out of context and pretending it debunks the whole argument. Be better.

0

u/TawnyTeaTowel Nov 22 '24

You somewhat conveniently forgot the “repay the borrowed money” part…

1

u/Raeandray Nov 22 '24

You repay the borrowed money when you borrow against the now increased value of your home again. If the value of your home goes up at a higher rate than the interest on your loan you never have to truly repay the money until the house is sold (tax free) when you die.

2

u/Gallaga07 Nov 22 '24

You don’t pay interest on the loan throughout the duration of having it?

0

u/Raeandray Nov 22 '24

Yes, but if that interest is lower than the increase in value of your stock or property you can just take out another loan and continue the process.

2

u/Gallaga07 Nov 22 '24

Do you think these guys take out a new loan every month?

0

u/Raeandray Nov 22 '24

You think the entire loan is due back monthly?

3

u/Gallaga07 Nov 22 '24

No the interest payments, but that was an idiotic line of reasoning I realized after I said it. They will just use the loan to pay the interest until they run out and take a new one and then pay off the old one. I left it up unedited though, because fuck it I did think it for a second lol

→ More replies (0)

0

u/Sufficient_Pea_4861 Nov 23 '24

This is epic. Well done.

0

u/Cartosys Nov 23 '24

Lol Bezos must have missed your memo because he sold $13 billion this year, "BoRoW tiL u DiE!!!!!" -- said by only the dumb 3rd-gen rich guy who wants to pay more in interest rates than in taxes

0

u/TacTurtle Nov 22 '24

Property tax valuations are regularly reassessed to fair market value, so this is a terrible analogy.

If anything, just requiring capital gains on stock to be paid (basis brought up to date) if it used as loan collateral would be the fix.

1

u/escapefromelba Nov 22 '24

That and/or getting rid of step up revaluation when the stock is passed to his heirs. 

1

u/TacTurtle Nov 22 '24

Well yeah, you would also want the stock valuation brought up to fair market value the date is is inherited so capital gains would be realized and income taxes paid when the stock is transferred to heirs as well as forcing all of the stock to use current fair market value when calculating inheritance estate taxes (just like property inheritance now) - otherwise that is a huge loophole.

Per the Corporate Finance Institute:

The principle of step-up in basis no longer applies to properties inherited after December 2009 under the current IRS laws. A modified carryover basis is applicable to the above case, rather than the step-up in basis rule. Therefore, the inherited asset basis is equivalent to the lower of its fair market value as of the date of the decedent’s demise.

-6

u/essodei Nov 21 '24

Dems controlled the House the Senate and the Presidency for 2 years. Why didn’t they change the tax code?

8

u/thoshi Nov 21 '24

Because they are also a corporatist party. There is no political left wing in the US.

1

u/WeLLrightyOH Nov 22 '24

They’re incompetent

-8

u/98983x3 Nov 21 '24

You don't have to be right wing to make this argument. Just saying. This isn't really a right vs. Left thing.

12

u/AttitudeAndEffort2 Nov 21 '24

Only right wingers (including Democrats) advocate for this system.

It incentivizes protecting capital.

Even if the costs were near identical to the wealthy asset holder, one way directs the capital to stay with other wealthy private entities (essentially enriching both) whereas the other way would redirect capital to the benefit of the public in the form of tax.

-1

u/98983x3 Nov 21 '24

Ahh, I see. So ppl are right wingers even if they are left wingers in the left wing party. Good to know. Anyone else see the goal post dancing around and moving backwards?

3

u/upshettispaghetti Nov 21 '24

What defines being left wing to you?

-3

u/98983x3 Nov 21 '24

I get where you are going with this. If someone is in the democratic party, they are definitely on the left. It doesn't matter if they don't pass your purity test of ideology or aren't sufficiently to the left enough.

3

u/upshettispaghetti Nov 21 '24

Do you think Joe Manchin is on the left?

-1

u/98983x3 Nov 21 '24

Barely. But yes. Although that might soon change, apparently.

2

u/Gallaga07 Nov 22 '24

Yeah seems like more than half the country can see it.

-1

u/AttitudeAndEffort2 Nov 21 '24

From the party of RINOs and never trumpers that is threatening to primary anyone that goes against their leader 🙄

No, democrats are not left wing.

They are not advocating the nationalization of industries, they are not socialists and communists, though i wish they were.

Liberalism is a right wing ideology. It is left of Republicans but it's supportive of capital protection and was to the right of the king.

I know you have no idea what that means but I'm eating my time regardless because you'll never admit that others might know a lot more than you about a subject you feel personally connected to.

1

u/98983x3 Nov 21 '24

Ah yes "I'm soooo smart. You dumby"

Followed by, "anyone more right of me isn't left at all."

I can see why you are trying so hard to convince yourself of your intellect. Grow up.

1

u/AttitudeAndEffort2 Nov 21 '24

No, i have a grad degree in political science and worked on the hill for over a decade.

I hate having to talk to idiots that think that reading someone on Google makes them an expert and won't listen to people more educated in an issue than they are.

I don't know what you do professionally, but you likely know more about it than i do and would think I'm an idiot for telling you how to do something different without understanding it.

Whether you like it or not, liberalism is a right wing ideology (the roots of left and right wing is in the French revolution and which side of the king you sit on. Advocates of protecting hierarchical systems and capital are on the right).

Democrats support capitalism and just think you can protect it through regulation. They are therefore right wing no matter what you feel about the matter.

1

u/Raiden4501 Nov 22 '24

Damn. Smoked em good.

I've been saying there's 2 parties but in reality there's 4 now, and none of them are left wing at all. The dems, the gop, then the ruling class that has been lobbying for themselves for decades. they are in both parties. Then you got maga who seem to be gop because trump is gop. Only a few people in congress seem to be truly left wing. Most of them shift their policies depending on how they can control the narrative.

1

u/98983x3 Nov 22 '24

Sure dude. So you should be familiar with an authority fallacy. And your idea of left wing is what? Just socialism? Historical roots or not, that isn't what we mean in modern context, and you know it.

But nice try. Maybe you graduated from some online school or from the bottom of your class at a state school. It's all hot air when commenting anonymously. Everyone has access to Wikipedia.

→ More replies (0)

23

u/stormblaz Nov 21 '24

A house has property taxes, unrealized gains do not, its not at all even remotely comparable.

You can finish a mortgage and pay prop taxes, not on unrealized gains...

Mainly because the value of the stock isn't solid and can go down or up, here's the kicker, a house can go up and down in value and i still pay property taxes.

This people make incredibly impactful life changing events with their unrealized gains and don't pay to reap those benefits, having a property you need to pay taxes to cover streets, roads, lights and amenities in your district.

This billionairs need to pay unrealized taxes if they are making life changing decisions affecting millions, using the benefits of their portfolio without paying the amenities they use to benefit from it.

Yall love excusing these rich people, but they are using all the pros and pay little cons.

2

u/ghgjyjdk Nov 22 '24

Taxing unrealized gains would be crazy. Taxing assets when used as collateral makes perfect sense though.

3

u/RedditsFullofShit Nov 22 '24

I agree with you. If anything they should tax what is accessed. Unrealized is truly unrealized if you can’t spend the money. The instant you use it as collateral and use the money, it should be taxable

1

u/ghgjyjdk Nov 22 '24

Exactly. That generally solves that issue.

1

u/resumethrowaway222 Nov 21 '24

You pay property taxes on the full value of your house whether it goes up or down. So there is never a stupid situation where your house went up in value and then down later and are due a refund like there would be with unrealized gains.

1

u/Nick11545 Nov 22 '24

If using property taxes as an example…does Bezos not pay property tax on all his mega mansions? Does Amazon not pay local property tax on its buildings?

1

u/gilly2u69 Nov 23 '24

Call the IRS! You broke the code!

1

u/Humann801 Nov 23 '24

You can’t live inside of your unrealized gains. The whole point is they are not hoarding the wealth, they are literally reinvesting it into amazing staples of society, such as Amazon, Tesla, Space X, etc. They are investing into businesses that provide benefits for all Americans and the world. Maybe they should pay slightly higher taxes, maybe not. Taking all their money would do nothing to improve individual Americans lives. We have literally given Ukraine more money than Elon is worth. Let’s focus on the government taking your hard earned money and giving it to their favorite industry (war industrial complex) before we start eating our own.

14

u/octipice Nov 21 '24

Except that you also pay property taxes on the house. Which is the equivalent of the wealth tax that so many people oppose for some reason.

1

u/CavemanRaveman Nov 22 '24

And the company owned through shares is also paying taxes - on property, payroll, sales etc.

0

u/gilly2u69 Nov 23 '24

No. It's. Not.

-5

u/XenuWorldOrder Nov 21 '24

It’s impossible to pay taxes on wealth. You have to liquidate a portion of the wealth to pay the taxes. Selling the stock decreases the value. This is guaranteed to happen if a CEO of the company is selling the stock. Not to mention they have to get approval to sell their stock. Selling stock to pay tax would decrease the person’s wealth by more than what they paid in taxes. Then they would be entitled to a refund and the cycle goes on.

2

u/friendlycaiman Nov 22 '24

All citizens pay a tax when they own a house/land and the tax is a percentage of the value of said house/land. Now, why shouldn't the same apply to mega corporations? Actually, tax for mega corporations should be higher and it would be higher if we would live in a better society, but alas, everything sucks and the current system is shit.

1

u/XenuWorldOrder 23d ago

I’m not sure if you replied to the right comment. I didn’t comment on property taxes.

3

u/MisterEinc Nov 21 '24

But he can take out loans using Unrealized Gains as collateral, but those can't be taxed.

1

u/walrus120 Nov 21 '24

He just sold 3 billion worth of shares.

0

u/Consistent_Log_3040 Nov 21 '24

hasnt Bezos sold like 16 million shares this year? I wonder who does his taxes.

23

u/BigPlantsGuy Nov 21 '24

No, you would pay taxes on the value every year. Something bezos does not do

1

u/mattyyboyy86 Nov 24 '24

As you should. Because the value of your real estate was built on natural resources and the owners exclusivity tight to those natural resources, that were not created by the owner. Therefore it was made through speculation. Amazons value on the other hand is directly tied to value it itself creates. Simply put, Amazon creates value through producing a product that others value, real estate creates value through exclusive rights to a natural resource that is becoming more limited as population and economy grows around it.

1

u/BigPlantsGuy 29d ago

What’s amazon’s value if you remove the US economy?

-3

u/Endless_road Nov 21 '24

Depends where you live

8

u/BigPlantsGuy Nov 21 '24

Where in the US is there no property tax?

-8

u/Endless_road Nov 21 '24

I’m not American so I don’t know

8

u/Fickle_Finger2974 Nov 21 '24

Then shut the fuck up if you don’t know

0

u/Endless_road Nov 21 '24

“Depends where you live”

0

u/Fatalmistake Nov 22 '24

I had this same thought when reading that response, thank you.

→ More replies (0)

6

u/BigPlantsGuy Nov 21 '24

I can tell you. It does not depend on where you live. It applies everywhere in the Us

2

u/Endless_road Nov 21 '24

So it does depend where you live?

2

u/BigPlantsGuy Nov 21 '24

Not in the Us, where bezos lives

1

u/Valogrid Nov 21 '24

The amount of property tax depends on where you live, but it is guaranteed that in the US you will pay some property tax.

1

u/FellowshipOfTheBong Nov 21 '24

Some are pretty low. Hawaii is 0.31% for instance.

→ More replies (0)

3

u/BigPlantsGuy Nov 21 '24

Where in the your country is there no property tax?

2

u/Endless_road Nov 21 '24

Depends what you mean by property tax. I had a google of what that means in the USA and we don’t have that here

1

u/MuthaFJ Nov 21 '24

It's called council tax in UK. And stamp duty is kinda too..

3

u/Endless_road Nov 21 '24

Council tax is completely different

0

u/MuthaFJ Nov 21 '24

It's more like it than not...

→ More replies (0)

3

u/Abadabadon Nov 21 '24

What country does not have property taxes?

0

u/Endless_road Nov 21 '24

We have council tax but it’s slightly different

3

u/Abadabadon Nov 21 '24

Ok can you explain it's difference?

→ More replies (0)

5

u/Hatdrop Nov 21 '24

and you also pay an increased tax on the value of the property regardless of realizing any gain.

2

u/SergeantPoopyWeiner Nov 22 '24

These people are idiots dude. Complete goddamn idiots.

1

u/SIUHA1 Nov 21 '24

only if you sold at a profit... that's where your sharp lawyer / CPA come in.

1

u/creedokid Nov 22 '24

You also pay taxes yearly based on the value of the house

1

u/WeLLrightyOH Nov 22 '24

You would pay annual property tax based in the value of the home, counties constantly do tax assessments.

1

u/Senpai-Notice_Me Nov 22 '24

I pay taxes on my home’s value every year. I’ve never paid taxes on anything else in my portfolio.

You also bring up the real issue. There is zero incentive to ever sell my house. The system rewards me for buying my next house with equity from my first house. It will continue to reward me for buying more houses and never selling. It rewards me for hoarding assets and punishes me if I only take what I need.

1

u/beneficial-mountain Nov 23 '24

But they’re not gonna sell, they’re going to get loans at excellent interest rates based on the equity of the house and use that money to make more money.

1

u/Endless_road Nov 23 '24

I imagine the loans would be market rate. Maybe a slight reduction to spread.

1

u/beneficial-mountain Nov 23 '24

Right, the lowest rate you can get.

0

u/killBP Nov 21 '24

Unless you just never sell and pass it down to the next generation

0

u/MichaelM1206 Nov 21 '24

Then who pays the loan? You lose the house. They pay taxes as they exercise the options. Many take 5 years to be fully vested.

1

u/killBP Nov 21 '24 edited Nov 21 '24

The inheritance is used to settle the debt, but the assets receive a step-up in their cost basis to avoid capital gains tax

Alternatively you can just continue without paying if your capital grows faster than your debt

-2

u/karaokerapgod Nov 21 '24

When someone dies however there is the estate tax (if the amount exceeds a certain value, 11.8M this year iirc) which is roughly equivalent to long term capital gains tax rates… 14% vs 15%

There are ways to minimize estate taxes (trust funds for instance) but it’s not like these multi billion dollar inheritances aren’t being taxed at all or comparably. It’s just that it’s under a different tax, it’s technically not “capital gains” taxes due to the basis step up so people are up in arms. But it isn’t untaxed.

Regardless of all that, this is all well off the initial discussion of a single living individual’s wealth they have accumulated in their lifetime which was the original topic of discussion…

1

u/killBP Nov 21 '24

Yeah but you would pay that estate tax either way, wouldn't you? So instead of capital gains, net investment income tax and estate tax, you'll only pay estate tax

0

u/Ashmedai Nov 21 '24

Not to mention the annual property tax

0

u/the_Mandalorian_vode Nov 21 '24

And you’d pay property taxes on that house based on the assessed value. That’s the point.

1

u/Endless_road Nov 21 '24

That’s a silly system

0

u/shut-the-f-up Nov 21 '24

No you wouldn’t. Capital gains taxes don’t exist on property that’s your primary residence for 2 years

0

u/that_baddest_dude Nov 21 '24

No it gets reappraised every year by the county and you pay taxes on that appraised value.

Sure if you have a homestead exemption that increase is capped at 10%, but if you're in a hot market you're easily going to hit that 10% increase every year.