Join Early Retirement Today
Closed Thread
 
Thread Tools Search this Thread Display Modes
Old 06-10-2021, 01:48 PM   #21
Recycles dryer sheets
Popeye's Avatar
 
Join Date: Sep 2016
Posts: 316
Quote:
Originally Posted by Andre1969 View Post

What a lot of these people are advocating, is actually a wealth tax, rather than an income tax. Whether they're doing that to be sneaky, or simply don't understand how math and taxes work, remains to be seen. But I have a feeling that, as time goes by, you're going to see more self-appointed experts post these types of articles. I have a feeling these are the same types of people that would short-circuit mentally if you tried to make them start a carbureted car that comes with two keys.
Thatís exactly right. They are trying to pave the way for a wealth tax. I think itís a combination of willful deceit and a willful refusal to comprehend. Of course even well educated, experienced people can have trouble understanding financial items. Reminds me of how hard it was for so many professionals at Megacorp to grasp the difference between cash flow and revenue.
Popeye is offline  
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Old 06-10-2021, 01:53 PM   #22
Thinks s/he gets paid by the post
 
Join Date: Feb 2014
Location: South central PA
Posts: 2,614
Quote:
Originally Posted by Texas Proud View Post
A horrible article that actually is comparing apples to oranges...


They talk about the WEALTH increase and then compare the taxes paid showing how little they paid... it is an INCOME tax people... you have to have income to pay it...


Now, if you want to start taxing the increase in wealth then you are going to go down a big rabbit hole... my wealth has increased a bunch over the last few years but my income is low...


Then throw in the increase in house values in high cost areas of California and New York... how many want to pay taxes on their wealth increase?


I think if you look at the taxes paid compared to the income it would show a high percent of taxes... but then it would not lead to a wealth tax to make them pay 'their fair share'...


As to the question on dividends... it has a lower tax rate even for the rich but they do pay taxes on them...
It's a garbage article. Tax rate is based on income, not increase in NW. ProPublica is being disingenuous or really stupid. My guess is stupid. And the result is the AG just announced they are looked into leaked information. Another dumb distraction and waste of time and taxpayer dollars. It is private information but not classified.

I did the same garbage calculation based on my increase in portfolio value in the last year and I get 2% fake tax rate. Real tax rate was about 11% since most of the income was qualified dividends and cap gains, and would have been a lot less (close to 0%) if I didn't do a Roth conversion.
EastWest Gal is offline  
Billionaires donít pay taxes?
Old 06-10-2021, 02:00 PM   #23
Thinks s/he gets paid by the post
Markola's Avatar
 
Join Date: Nov 2013
Location: Twin Cities
Posts: 2,353
Billionaires donít pay taxes?

I enjoy the sport of seeing billionaires, the ones who act like jerks anyway, take their lumps as much as anyone. However, another analogy is how home prices have increased by trillions nationally recently for all of us who own homes, yet that wealth growth hasnít translated into higher federal income taxes, nor should it.
Markola is offline  
Old 06-10-2021, 02:04 PM   #24
gone traveling
 
Join Date: Oct 2019
Posts: 1,631
Quote:
Originally Posted by jollystomper View Post
This article related to the thread topic was published a few days ago:


The Secret IRS Files: Trove of Never-Before-Seen Records Reveal How the Wealthiest Avoid Income Tax


https://www.propublica.org/article/t...oid-income-tax

It then proceeds to walk through the methodology and results in great detail
The quote says, "those 25 people saw their worth rise a collective $401 billion from 2014 to 2018. They paid a total of $13.6 billion in federal income taxes in those five years, the IRS data shows. Thatís a staggering sum, but it amounts to a true tax rate of only 3.4%."


"Their worth rise" has nothing to do with income or income taxes.
So, what percent of their income is $13.6 Billion?
Time2 is offline  
Old 06-10-2021, 02:08 PM   #25
Thinks s/he gets paid by the post
 
Join Date: Dec 2014
Location: St. Charles
Posts: 2,881
Quote:
Originally Posted by EastWest Gal View Post
It's a garbage article. Tax rate is based on income, not increase in NW. ProPublica is being disingenuous or really stupid. My guess is stupid. And the result is the AG just announced they are looked into leaked information. Another dumb distraction and waste of time and taxpayer dollars. It is private information but not classified.

I did the same garbage calculation based on my increase in portfolio value in the last year and I get 2% fake tax rate. Real tax rate was about 11% since most of the income was qualified dividends and cap gains, and would have been a lot less (close to 0%) if I didn't do a Roth conversion.
And my guess is intentionally misleading, at a minimum, and probably intentionally dishonest. They clearly have an agenda to focus attention on the uber-wealthy not paying their fair share, as evidenced by this at the end of the article:

Quote:
Help Us Report on Taxes and the Ultrawealthy

Do you have expertise in tax law, accounting or wealth management? Do you have tips to share? Hereís how to get in touch. We are looking for both specific tips and broader expertise.
__________________
If your not living on the edge, you're taking up too much space.
Never slow down, never grow old!
CardsFan is offline  
Old 06-10-2021, 02:33 PM   #26
Dryer sheet aficionado
 
Join Date: Apr 2021
Posts: 42
Quote:
Originally Posted by Andre1969 View Post
One thing I noticed that's getting pushed these days is the narrative that it's "unfair" that someone "made" obscene amounts of money but paid little to nothing in taxes, but they forget that asset appreciation is NOT income. It's only income, if you sell something off at a profit and then pay taxes on it.

So, if you started 2020 with $1B in net worth and ended up with a net worth of $1.5B at the end of the year, but you only cashed out $100K (or let it rise, but made $100K in some other fashion), then your taxable income is only $100K (minus any deductions). But with the narratives I'm seeing pushed in some of these "financial" articles, in their mind, that person made $500M.

Let's say this hypothetical person paid $10K in federal taxes. Regardless of what their top marginal tax rate is, their effective tax burden is 10%. But these financial savants would have you believe their effective tax burden was only 0.002% ($10k/$500M).

I'm oversimplifying it a bit here. It's possible that on its rise from $1B to $1.5B, that portfolio might have had taxable events such as dividends, capital gains distributions from mutual funds, etc., but for the sake of simplicity, let's pretend it didn't.

What really happened here, is that this person had assets that rose in value, from $1B to $1.5B. But then the next year, who knows? It could fall to $500M.

What a lot of these people are advocating, is actually a wealth tax, rather than an income tax. Whether they're doing that to be sneaky, or simply don't understand how math and taxes work, remains to be seen. But I have a feeling that, as time goes by, you're going to see more self-appointed experts post these types of articles. I have a feeling these are the same types of people that would short-circuit mentally if you tried to make them start a carbureted car that comes with two keys.
Exactly!
Jenna is offline  
Old 06-10-2021, 02:40 PM   #27
Thinks s/he gets paid by the post
ownyourfuture's Avatar
 
Join Date: Jun 2013
Posts: 1,148
I figure the only way to truly see who pays what, would be to make all tax returns available for the public to see.
(Sans the SSN's of course)

Of course that's never going to happen, so the debate will probably go on forever.

As I understand it, approximately 45% of people who file a tax return pay zero federal taxes, & debt, which reached 1 trillion for the first time in history in 1980, is now over 30 trillion. Some say the real number is 3 times that if you count the unfunded liabilities from SS & Medicare.

I have no idea what the actual number is, only that it doesn't seem sustainable.
At least not if debt ever 'matters'

Modern Monetary Theory says it doesn't.
I hope that's right.
__________________
"No beast so fierce but knows some touch of pity, but I know none, therefore am no beast"
ownyourfuture is offline  
Old 06-10-2021, 02:51 PM   #28
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
RunningBum's Avatar
 
Join Date: Jun 2007
Posts: 11,175
Quote:
Originally Posted by Jenna View Post
The Go Curry Cracker Blog tells you how to pay very little taxes and explains exactly how to do it for smaller income early retirees. He's mostly living off of capital gains income from non retirement accounts. He has lots of great info but the forums wont let me link without it looking like spam.
The topic here is billionaires, not people like this, but I've seen this blog and there is a certain amount of smoke and mirrors. One blog entry was discussed in this thread, with the blogger participating:
https://www.early-retirement.org/for...tax-72880.html

A poor lifetime strategy IMO, and I feel confident running the numbers would prove it.
RunningBum is offline  
Old 06-10-2021, 02:54 PM   #29
Thinks s/he gets paid by the post
Dash man's Avatar
 
Join Date: Mar 2013
Location: Limerick
Posts: 3,377
One trick some reporters use is to report the amount owed when they file, ignoring the huge quarterly tax payments they made.
They decide what they want to write and cherry pick information to ďsupportĒ it.
Dash man is offline  
Old 06-10-2021, 03:13 PM   #30
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
youbet's Avatar
 
Join Date: Mar 2005
Location: Chicago
Posts: 11,525
Hopefully the IRS employees who leaked the data will serve some jail time.
__________________
"I wasn't born blue blood. I was born blue-collar." John Wort Hannam
youbet is online now  
Old 06-10-2021, 03:13 PM   #31
Dryer sheet aficionado
 
Join Date: Jun 2018
Posts: 25
OK I get that increases in net worth and income are two different things and have nothing to do with taxes. However, what about this article that says Musk borrows money against his stock or other collateral and doesn't take a paycheck from Tesla, hence no income and no income taxes. Seems way too easy and clever. What's the downside of this, besides needing to pay it back? https://www.zerohedge.com/news/2021-...ents-after-all
charais is offline  
Old 06-10-2021, 03:27 PM   #32
Moderator
Aerides's Avatar
 
Join Date: Nov 2015
Posts: 8,643
I would imagine - unless these B's are very carefully invested, their dividends alone would put them into high income brackets. Of course, even so, taxes on, say $500k in dividends might qualify as chump change compared to their wealth, but if they don't have income that is how it works. That is the system.

I don't particularly care for the process of borrowing against invested assets to pay for your lifestyle, because they can just keep getting new loans to pay the old, etc. That seems really unsavory to me. But I also don't think there would be any smart way to legislate around it that wouldn't hurt everyone else much more.

And besides, all these multi-B's will just find a new way around it. They won't just sit there and go welp you got me, guess I have to start paying taxes. There is always some bank in the Cayman's or something...or Mars...
Aerides is offline  
Old 06-10-2021, 03:28 PM   #33
Thinks s/he gets paid by the post
 
Join Date: Sep 2006
Posts: 2,665
Quote:
Originally Posted by Andre1969 View Post
One thing I noticed that's getting pushed these days is the narrative that it's "unfair" that someone "made" obscene amounts of money but paid little to nothing in taxes, but they forget that asset appreciation is NOT income. It's only income, if you sell something off at a profit and then pay taxes on it.

So, if you started 2020 with $1B in net worth and ended up with a net worth of $1.5B at the end of the year, but you only cashed out $100K (or let it rise, but made $100K in some other fashion), then your taxable income is only $100K (minus any deductions). But with the narratives I'm seeing pushed in some of these "financial" articles, in their mind, that person made $500M.

Let's say this hypothetical person paid $10K in federal taxes. Regardless of what their top marginal tax rate is, their effective tax burden is 10%. But these financial savants would have you believe their effective tax burden was only 0.002% ($10k/$500M).

I'm oversimplifying it a bit here. It's possible that on its rise from $1B to $1.5B, that portfolio might have had taxable events such as dividends, capital gains distributions from mutual funds, etc., but for the sake of simplicity, let's pretend it didn't.

What really happened here, is that this person had assets that rose in value, from $1B to $1.5B. But then the next year, who knows? It could fall to $500M.

What a lot of these people are advocating, is actually a wealth tax, rather than an income tax. Whether they're doing that to be sneaky, or simply don't understand how math and taxes work, remains to be seen. But I have a feeling that, as time goes by, you're going to see more self-appointed experts post these types of articles. I have a feeling these are the same types of people that would short-circuit mentally if you tried to make them start a carbureted car that comes with two keys.
This is not how the game is played. Elon Musk has spent hundreds of millions of dollars because he borrows against that equity and borrowing is free from taxation. He then has TESLA give him further equity each year, raising equity and allowing more personal borrowing-in 2021 he was granted 701 million dollars in stock options. As of today he has 558 million in personal debt that he has been able to spend without paying a dime in taxes for multiple years in a row.

The interest is deductible in the future when you do have income, which is why after years of living on borrowed money on stock investments, Carl Ichan was able to cash in 520 million in profits and deduct all the gains from past interest costs that were not deductible due to no income.

Peter Thiel put a PAYPAL & FACEBOOK STOCK valued at 5,000 in his estimation before public allowed in into a ROTH 401K, as soon as they allowed outside investors the valuation now is 90 million and it is tax free for any use in 6 years.
Mark Zuckerberg has a tax free Grant Annuity Trust that is valued at 185 million dollars and that money is exempt from taxes.

Warren Buffett complains about executives and private planes and bought a company with 20 so he can fly at a moment's notice on Berkshires expense because, well why not?


Billionaires support higher income tax rates because they do not ever use income to support themselves, excepting when they need to sell massive amounts of stock which they do when the capital gainst tax rates are dropped to 15%. Almost every expense they have can be called a company expense, no matter how luxiorious and avoids the need for income, they live on equity and company expense accounts.

Equity is superior to income in every way because you always have access to money but you get to choose if and when you declare income.
__________________
ERD 50

https://www.early-retirement.org/forums/f44/why-i-believe-we-are-about-to-embark-on-a-historic-bull-market-run-101268.html
Running_Man is offline  
Old 06-10-2021, 03:31 PM   #34
Thinks s/he gets paid by the post
 
Join Date: Dec 2014
Location: St. Charles
Posts: 2,881
Quote:
Originally Posted by charais View Post
OK I get that increases in net worth and income are two different things and have nothing to do with taxes. However, what about this article that says Musk borrows money against his stock or other collateral and doesn't take a paycheck from Tesla, hence no income and no income taxes. Seems way too easy and clever. What's the downside of this, besides needing to pay it back? https://www.zerohedge.com/news/2021-...ents-after-all
Didn't read the article, but how is this different than taking out a HELOC, using those funds for spending, slowly paying back the loan, and then being in a low enough tax bracket to get ACA subsidies, saving 10's of thousands of dollars per year?

I have not done this, but from reading posts, more than a couple here have, or at least have the HELOC as a back-up.

I'm sorry, I can't get upset when anyone, billionaire or "just" a millionaire, follows the tax code and legal saves a pile of money.
__________________
If your not living on the edge, you're taking up too much space.
Never slow down, never grow old!
CardsFan is offline  
Old 06-10-2021, 03:32 PM   #35
Recycles dryer sheets
troutnut1's Avatar
 
Join Date: May 2014
Location: Big Sky Country, Montana
Posts: 165
Quote:
Originally Posted by Dash man View Post
One trick some reporters use is to report the amount owed when they file, ignoring the huge quarterly tax payments they made.
They decide what they want to write and cherry pick information to ďsupportĒ it.
Exactly. To avoid being penalized last year i made large advance payments. Media folks would gladly report that I made lots of money and didnít have to ďpayĒ any taxes on my tax return. That would of course be incorrect. My taxes were paid will in advance of my return. We arenít supposed to be really short on our payment of taxes. Idiots in the media, or media folks with malicious intent capitalize on this to make it seem someone important only paid $750. Huge advance payments are totally ignored to make it seem as if the wealthy person is cheating.

Another way they mislead is to ignore the depreciation of things such as real estate holdings or expensive equipment. This depreciation is not only allowed, its normally mandated. You get to decide what methods you use, or speed it up or slow it down a little, but you normally donít get to not play. This can have the effect of postponing taxes somewhat but not necessarily escaping. The normal consequence is that both you and the government make more money, but at a later date.

In the 70ís I sold a rental property that I had been having fun depreciating. My father in law was an IRA agent who did my taxes. Thatís when I got the big tax bill and found out about ďrecaptureĒ. I said ďWell I donít want to depreciate anything ever again if that is how this works!Ē. He said ďyou donít really have a choice. You have to depreciate your real estate rentals. We can play with the method. We can speed it up. Or slow it down. But when you eventually sell for a profit, the government is your partner again with their hand out.Ē Of course I could have exchanged it into another like kind of property and kept the game going for longer. And some idiot reporter could write about me too. But postponing taxes is not the same as escaping taxes.
troutnut1 is offline  
Old 06-10-2021, 03:40 PM   #36
Thinks s/he gets paid by the post
 
Join Date: Dec 2014
Location: St. Charles
Posts: 2,881
Quote:
Originally Posted by Aerides View Post
I would imagine - unless these B's are very carefully invested, their dividends alone would put them into high income brackets. Of course, even so, taxes on, say $500k in dividends might qualify as chump change compared to their wealth, but if they don't have income that is how it works. That is the system.
Just a point, in the case of Tesla, Amazon, and Berkshire Hathaway, no dividends. I expect many of the others B's are invested similarly, or in Real Estate. I would guess many actually have very little divie income, why would they invest that way? They have a trove of CPA's to tell them how to save on taxes, not that there is anything wrong with that.
__________________
If your not living on the edge, you're taking up too much space.
Never slow down, never grow old!
CardsFan is offline  
Old 06-10-2021, 03:43 PM   #37
Thinks s/he gets paid by the post
 
Join Date: Jun 2014
Posts: 1,019
The only part that caught my eye in this whole report is that supposedly the ultra rich were using bank loans to skirt taxes as it didn't force a sale of anything.

But its impossible to get into "fair" without getting into every little thing.
ie is it fair that one person rents and another gets to take a huge tax break on a 3/4 million home? Is it fair one person works their way thru school and has no student debt and the other gets to write it off? Is it fair deductions are based on your income so the more you make the bigger your deduction for the exact same thing? Is it fair that if you buy your insurance thru a company it is tax deductible but its not if you buy it as an individual?

I hate the word "fair" when it comes to the tax code, pick you poison those that know the system get a much better deal than those that dont. However at any given time most people traverse their way thru the fair/unfair parts of each part of the tax code so in the end its a wash.
karen1972 is offline  
Old 06-10-2021, 03:49 PM   #38
Thinks s/he gets paid by the post
mpeirce's Avatar
 
Join Date: Feb 2012
Location: Northern Ohio
Posts: 2,569
Quote:
Originally Posted by Popeye View Post
Thatís exactly right. They are trying to pave the way for a wealth tax.
yup, thatís exactly what they are up to
mpeirce is online now  
Old 06-10-2021, 03:52 PM   #39
Thinks s/he gets paid by the post
 
Join Date: Sep 2013
Location: Ventura County
Posts: 1,243
Oh good, another Rohrschach Test for how ER.org members feel about tax policy.
stepford is offline  
Old 06-10-2021, 04:12 PM   #40
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Car-Guy's Avatar
 
Join Date: Aug 2013
Location: Citizen of Texas
Posts: 6,253
Quote:
Originally Posted by Markola View Post
I enjoy the sport of seeing billionaires, the ones who act like jerks anyway, take their lumps as much as anyone.
I only know Billionaires that I see on TV, the news or read about but I'd be interested to hear what billionaires you think don't act like jerks.... Buffett maybe.... Should be a pretty short list, IMO.....
__________________
Authority is given, respect is earned.
Car-Guy is offline  
Closed Thread


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
Billionaires' 2016 Profits FIREmenow Stock Picking and Market Strategy 1 01-05-2017 08:28 AM
Billionaires Dumping Stocks ripper1 FIRE and Money 5 06-11-2013 08:34 AM
Fewer U. S. Billionaires. Are you one? mickeyd FIRE and Money 2 06-02-2012 05:19 PM
Meet the Next Billionaires yelnad Other topics 2 05-16-2007 06:01 PM
What Billionaires Drive cute fuzzy bunny Other topics 16 03-17-2006 08:56 PM

» Quick Links

 
All times are GMT -6. The time now is 12:19 PM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2021, vBulletin Solutions, Inc.