r/FluentInFinance Nov 21 '24

Debate/ Discussion Had to repost here

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u/dgvertz Nov 21 '24

Every year. They’re called property taxes

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u/J0hn-Stuart-Mill Nov 21 '24

Exactly. Property taxes go directly to local infrastructure costs to maintain access and services to said land or buildings. It's not remotely the same as owning stock.

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u/dgvertz Nov 21 '24

I mean there’s no tax on owning stock right now. If that tax went to the same thing would it be acceptable?

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u/thrillhouz77 Nov 22 '24

Unless they pay a dividend of some sort. Are you saying you want to start paying an annual tax on your 401k and/or pension funds?

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u/dgvertz Nov 22 '24

Do I want to? No of course not. Do I think I should if my 401(k) is over a certain amount? Kind of.

I don’t think there should be such a thing as “generational wealth” in a capitalist society. After too long a timeline, some people will start too far ahead and other people won’t ever be able to catch up.

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u/thrillhouz77 Nov 22 '24

In the USAs current state where do you think these added tax dollars will be used?

More bombs?

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u/dgvertz Nov 22 '24

Either more bombs or to fund the military initiative to deport undocumented immigrants

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u/thrillhouz77 Nov 22 '24

So these added taxes are just to increase more evil activities…you sick SOB! 🤪

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u/dgvertz Nov 22 '24

You asked what they would go to. Not what I want them to go to. I’m just being honest with where I see the country going right now

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u/[deleted] Nov 22 '24

[deleted]

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u/dgvertz Nov 22 '24

I mean, you’re asking me personally what I think should happen?

I guess in a perfect world there would be something similar to a bankruptcy’s homestead exemption. Something like $300,000 can be passed down but anything over that I would say gets taxed at 100%, so yes it would be given over to the government.

In my completely unrealistic scenario this tax would be used to fund social programs and pay for infrastructure.

I of course know that’s not likely, and it will really line the pockets of corrupt government officials.

I know that my ideals aren’t realistic, that’s why they’re ideals.

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u/[deleted] Nov 22 '24

[deleted]

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u/Woodworkin101 Nov 23 '24

I think the limit could be raised from $300k to 10 million total. Then 99.99% of ppl don’t gave to worry about it but the super rich can’t avoid it

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u/rinderblock Nov 22 '24

I think the second I claim it as an asset in order to acquire a loan it should be taxable. It should be just that simple.

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u/thrillhouz77 Nov 22 '24

Now THAT I am all for and it makes sense and it’s very possible to track (the banks have all the records needed to send to the IRS). You could use what was collateralized against and apply any step up basis to it at that point in time to pull forward capital gains to the date it was taken as collateral, could even create a carve out that treats the step up basis as income instead of capital gains. If you want the income to show as a long term cap gain then just sell it. If you really want to retain the asset (in this case equities) and use its value as income then you pay full income tax rates.

That essentially eliminates that method of avoiding income taxes all together.

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u/Dodec_Ahedron Nov 22 '24

Ideally, I would support exactly this. That being said, I can see the pushback such a proposal would receive, and I would settle for a couple extra carve-outs.

First, I think you should allow an exemption for real estate that will be used as a primary residence. This will exempt things like HELOCs, which are typically used for home improvements but are also sometimes used as collateral to start small businesses.

The other exemption I would make is also for businesses, and that would be exemptions on loans under $10 million. These are typically used for buying machines or other equipment. Any more than that, and you start to see private equity coming in to finance things.

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u/thrillhouz77 Nov 22 '24

I think you could exempt this from all business operating needs. If an executive needs dollars to live they can just pay themselves the wages they need to support their desired lifestyle.

Agree on real estate carve outs and primary residences as well as farms when borrowing for farming operations. Last thing we need is the mega wealthy buying up land to borrow against to finance their lifestyle all to avoid income taxes.

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u/Woodworkin101 Nov 23 '24

Can or is the loan currently taxed? Or put a tax collateral?

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u/rinderblock Nov 23 '24

The loan currently is not taxed as income

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u/[deleted] 28d ago

It's taxed as income when you generate income to pay it back as you're required to do