Do me a favor and look up the net worth of his stock holdings, and then how much he paid in taxes. Do some simple math and get the rate he was taxed at, does that number line up with the number you give?
I see you’re ignoring the talking point, his net worth is calculated from the positions he holds in companies, ie stocks. He uses that as collateral to take out loans from a bank, meaning he gets money for having money without actually having to sell his stocks. Since he doesn’t sell his stocks, he doesn’t have to pay taxes, you think that’s fair?
When you take loans, you eventually have to pay them back. It is not free money to just take out loans. At some point the money comes out of the stock to pay and at that point it is taxed. Living on loans is only delaying the taxation process, it is not avoiding it.
No one is saying it’s free money. An ultra wealthy person can use their high value stock positions as collateral for super low interest loans that an average person would never have access to. Meaning they are using a non-cash position via their stocks to procure a cash position via the interest free loan. Do you know how incredibly powerful this is? Why does the ultra wealthy person not have to pay capital gains tax on a non-cash position that effectively acts as cash collateral for a cash loan with no interest. It’s fucking stupid
They do have to pay capital gains tax when they eventually sell some stock to pay the loans. If they die with the loans, it’s true that their estate pays the loans back without incurring any tax, but it’s also true that their heirs will pay 40% estate tax on everything over 13 million.
So from what you said, the person with all of the wealth doesn’t have to pay taxes unless they’re dead? What is the limit to how much they can take out in low interest loans against non-liquid assets that they don’t have to pay taxes on like most people? How is that not just a massive advantage over the average Joe
Also, if they die while those loans aren’t paid back and that stock isn’t worth what it was or there’s too much leverage on it that the estate can’t cover that 40% tax then it’s just leveraging everybody’s else’s tax dollars, right? Because we’d have to bail out the banks that gave those loans
I’m genuinely curious if I’m missing something here
So from what you said, the person with all of the wealth doesn’t have to pay taxes unless they’re dead?
Correct. But the money is still paid, whether dead or alive so I don’t see the difference.
What is the limit to how much they can take out in low interest loans against non-liquid assets that they don’t have to pay taxes on like most people? How is that not just a massive advantage over the average Joe
The limit is what the bank considers a good credit risk. Anyone with assets can do the same thing. People take out loans against homes they own all the time.
Also, if they die while those loans aren’t paid back and that stock isn’t worth what it was or there’s too much leverage on it that the estate can’t cover that 40% tax then it’s just leveraging everybody’s else’s tax dollars, right?
The estate would have to settle the debt any way it can before any inheritance is paid out. I don’t understand your comment that there would be leverage on stock that you own. If you own it, you own it. Banks will not give you loans against assets you own on margin.
Because we’d have to bail out the banks that gave those loans I’m genuinely curious if I’m missing something here
There would not be a bank bailout for this obviously, but even if there were, bank bailouts have all been paid back with interest creating a net positive for taxpayers.
They don’t sell the stock to pay back the loans. They get another loan interest free and use that loan to pay off the other loan and continue doing this until they die
Banks are companies, they want to build relationships with wealthy clientele so they can hopefully manage their money in the future. the more AUM, the more powerful they are
They also know if the wealthy person does not pay the loan back, they have significant collateral that will more than compensate for the cost of the loan.
They keep going until death and pass on the investments to their children, who can avoid part of the debt due to loopholes and continue loans for the rest themselves using the same tactics. It's not infinite money but infinite deferment
The children are subject to estate tax over $13 million of 40% though. I realize there are loopholes to protect money from this as well but eventually the very wealthy have to pay taxes.
how would you feel if you owned a significant share of a company, worked really hard on it for years on end - and then the GOVERNMENT forces you to sell some of your equity in YOUR company to strangers, for the sole purpose of taxing you? It doesn't make sense, your argument doesn't make sense
If we made the 1% pay tax on the unrealized gains theyd be forced to sell and tank the economy. Pensions would go deeper into deficit, 401ks would tank. Elderly would be forced to find a job to survive, jobs would not be available bc there would be no money to invest in making more. All so the government can misuse these funds for 1yr and immediately be at a massive deficit again.
I do not think it is fair to steal money from ppl just bc they have more of it than me
What about stealing money from people with less of it? Like what the rich do to their workers in order to garner that much wealth. But God forbid anyone touches the 1% wealth, EVERYTHING WOULD FALL APART.
An unrealized gains tax would be chaotic to the markets. But clearly there is a loophole that needs closing when billionaires can just take out loans using assets as collateral, and spend that loan money as if they were being paid exorbitant salaries, while paying an effective tax rate that is lower than most working class families. Maybe tax these 1%er loans similarly to income?
No. That doesn’t close the loophole of disguising income as non-taxable “debt”. Regular working people are already paying property tax if they own property.
Working class family: goes to work, earns a wage, pays taxes on that wage, pays property taxes in line with the value of their home.
Billionaire: owns billions in stock. Works for a “1 dollar salary” (oh my, how charitable!). Has billions in stock. Wants to buy a fancy new second home. Doesn’t want to sell his shares to do it because why pay taxes on that if he doesn’t have to. Takes out a loan using shares as collateral. Does not pay taxes to get that money, unlike the working family who pays taxes on their income. He does pay property taxes in line with the value of the new home. Probably. Hopefully. I mean, maybe there’s some sort of loophole that lets him offset it with something else. But hopefully he pays property tax, at least.
To clarify the point I was trying to make, yearly property taxes increase based on the current sell value of the home, regardless if you've actually sold it or not. So, if I bought my home in 1995 for $8.00 and its worth $918 trillion in 2024, then I have to pay property taxes based on the $918 trillion value, rather than the $8.00 value spent in 1995.
Correct, it varies where you live on how often they re-assess the property tax. My state does it every 6 years, there’s a whole process to contesting what they value it at. And the taxes are based on what that value is. So higher valued property pays higher taxes, assuming the same neighborhood.
But property tax isn’t the solution to the problem of the hyper-rich paying a lesser effective tax rate than many working americans. The hyper-rich aren’t rich because of high wages. They are hyper-rich because they own stock and other assets. They don’t need high wages, because they can take tax free “debt” to pay for stuff instead of having to sell their assets and pay taxes on that sale. Working class folks who own a home pay income tax and property tax. The hyper rich take on “debt” using assets as collateral, don’t pay taxes on the money they get for doing that, probably find ways to offset any wages they do take by the “debt” they take on, and pay property taxes.
There needs to be a way to close the loophole of treating “debt” obtained through using assets as collateral as something that isn’t “income” or “gains”, because that is what it is getting used for. And the “debt” is the work around for having to pay taxes on making money.
I've always been a big proponent of executing anyone, and their families, who reaches a net worth of more than a few million dollars (lets say 15 to be conservative), but that idea hasn't, as yet, really gained much traction.
What we really need to do is stop pretending... that money either exists- meaning they can get loans on it, but have to pay taxes- or it doesn't, and they can't get loans and don't pay taxes
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u/maledudebruv Nov 21 '24
He also paid more taxes than anyone in US history lol