ProPublica uses leaked IRS data to show how wealth inequality is messed up in this country

[Zorba]

I didn't read this entire article because it's long, and I wasn't that interested in it. It's a hit piece and this kind of financial leak should be investigated and people responsible found and charged.

But I do have some knowledge on how portfolio margin loans work. No, you do not need income to pay back the loan. You do eventually have to pay back the loan but unless your margin called, you can keep accumulating interest payment balance "forever" until you want to pay off your loan. The interest on the margin loan is just charged to your overall account and is deducted from your overall portfolio balance. So the value of your portfolio drops by the interest charge. But margin interest is really low right now. For margin loan balance of $1 million or more, brokers will charge you less than 0.75%. That's less than 1% interest. For people like Musk and Bezos who have billions, I bet the interest charged to them is near 0%. Or maybe even 0%. But when your portfolio asset balance is increasing faster than the margin debt, you will never be margin called and you can keep that margin debt as long as you want without having to pay in full. They are technically making interest payment every month on the margin debt. It just gets deducted from their portfolio balance.

People here don't know the difference between unrealized gain and income. They think people should pay taxes on unrealized gains. To those people, Fuck You. Bezos, Musk, and others will pay taxes on the unrealized gains when they sell their stock. Bezos has been cashing out of his Amazon shares in recent years in tunes of couple billion a year. These people risked everything to start and build their companies. They took the risk of keeping their stock. So they're getting rewarded. People like Elon take no salary so they have no income to report. So it makes sense they pay no income tax if they don't sell anything. It's called yearly income tax, not yearly wealth tax.

So basically they are paying their loans as an investment fee, as opposed to showing a sell of stock that would be taxable. One of the extremely numerous ways the extremely wealthy get out of paying taxes on realized gains.

 

[Zorba]

Twenty Billionaires Who Started With Nothing - Bloomberg

You can build a legacy. If youre lucky, and smart, and work hard.

So about 0.0000057% of the population.

 

[uclaLabrat]

That's the main issue: people who make it big always attribute it to their gifts. They earned their wealth/status/good fortune because they're smart. They're highly educated. They worked their ass off. They deserve it.

None of those criteria are sufficient to explain building an empire, as plenty of people are smarter than Musk, or gates, or bezos. Plenty of people work harder. Plenty of people take risks.

Hell drug dealers do all the above and we throw them in jail or shoot them.

Really it comes down to luck, and we shouldn't forget that.

 

[blackangst1]

So about 0.0000057% of the population.

So? If becoming a millionaire or billionaire were easy, everyone would be one. Its not supposed to be easy. It doesnt make it wrong though.

 

[Zorba]

So? If becoming a millionaire or billionaire were easy, everyone would be one. Its not supposed to be easy. It doesnt make it wrong though.

Never said it was wrong. You are the one making it sound like it is a viable/normal outcome, even though it is more rare than winning the lottery, and most, even "self-made," billionaires come from fairly privileged backgrounds.

Regardless, everyone that became a billionaire has taken massive advantage of the infrastructure and resources of our society and they could pay to maintain and grow it.

I'm not for a wealth tax, but the tax code should be changed to make it a lot harder to get out of capital gains taxes and pass massive wealth to heirs with little tax ramifications.

 

[MrSquished]

So? If becoming a millionaire or billionaire were easy, everyone would be one. Its not supposed to be easy. It doesnt make it wrong though.

I haven't seen anyone say this is wrong in this thread. In fact I have said I have no problem with these guys being billionaires many tens of times over, but the taxation system is still clearly fucked, as per the article.

 

[darkswordsman17]

That's the main issue: people who make it big always attribute it to their gifts. They earned their wealth/status/good fortune because they're smart. They're highly educated. They worked their ass off. They deserve it.

None of those criteria are sufficient to explain building an empire, as plenty of people are smarter than Musk, or gates, or bezos. Plenty of people work harder. Plenty of people take risks.

Hell drug dealers do all the above and we throw them in jail or shoot them.

Really it comes down to luck, and we shouldn't forget that.

Yep its survivor bias, although it comes down to wealthy parents, then luck.

I haven't seen anyone say this is wrong in this thread. In fact I have said I have no problem with these guys being billionaires many tens of times over, but the taxation system is still clearly fucked, as per the article.

Which that stupid bitch you're responding to has complained about how unfair taxes and shit is before, he's just doing his capatalism cuck clown routine. Hell its the entire crux of the whiny bitch brigade's argument about liberal elites. For fuck's sake basically every one of them has bitched about Bezos, Gates, and multiple others that they're now defending. They genuinely have no self awareness and it boils down to literally the propaganda they were taught.

I had a co-worker try to argue that trickle down economics works. While he was complaining about wealth gap and how mega rich tech bros are ruining everything. He really could not understand how hilariously stupid it was.

 

[blackangst1]

I haven't seen anyone say this is wrong in this thread. In fact I have said I have no problem with these guys being billionaires many tens of times over, but the taxation system is still clearly fucked, as per the article.

That has nothing to due with income taxes, as you probably know. For example, the wealthy make their money by investments, which they dont realize as income right now, but rather sits in an account. We arent going to be taxing wealth any time soon. Secondly, capital gains. It would take some serious engineering to create different levels of capital gains just for the wealthy, so as not to screw with middle or high income America. Dividends...again, this is rarely collected as cash, therefore sits in an accounts, thus not taxed. And lastly, the wealthy borrow money, alot. Its much better financially to borrow say 100Million at 3% using personal wealth as a guarantor, than to take take income taxed at 34%. So thats what they do. We always hear about how all these wealthy people have so much debt...this is why. Do you honestly think if income were taxed for the wealthy at 80% it would change anything for them?

There is no easy fix, and its up to Congress to draft and make these changes. But whats their motivation when they use these same strategies themselves?

 

[ponyo]

But the guy you like who went along with them later is the good guy because?

Never said if Musk was good guy or bad.

As for Musk, he already signed the Giving Pledge which is a pledge that he will give away at least half his fortune to charity. He was one of the first to do so back in 2012. But none of the pledges are binding and it’s just PR move. These guys are free to do whatever they want with their money.

So basically they are paying their loans as an investment fee, as opposed to showing a sell of stock that would be taxable. One of the extremely numerous ways the extremely wealthy get out of paying taxes on realized gains.

They're not really getting out of paying taxes. They're only deferring. They will eventually realize the actual gains when they sell. Either in their lifetime or after death. We need to eliminate the step up basis for the heirs on their stock inheritance and disallow that and close inheritance loophole.

There's nothing stopping you from using your stock portfolio and borrow against it. All you have to do is open a margin account and borrow like you would line of credit. Of course, your rate will be higher unless you borrow large amounts like them. I have portfolio margin account which allows me to borrow at really low rates and more than standard Regulation T margin requirements. Standard regulation T leverage is generally 2:1. I can borrow 4:1 and up to 6:1 depending on how my portfolio is structured. You only need like $100,000 in your brokerage account to qualify for portfolio margin. For regular margin account, I think you can open one with something low as $1,000.

 

[Zorba]

Never said if Musk was good guy or bad.


They're not really getting out of paying taxes. They're only deferring. They will eventually realize the actual gains when they sell. Either in their lifetime or after death. We need to eliminate the step up basis for the heirs on their stock inheritance and disallow that and close inheritance loophole.

There's nothing stopping you from using your stock portfolio and borrow against it. All you have to do is open a margin account and borrow like you would line of credit. Of course, your rate will be higher unless you borrow large amounts like them. I have portfolio margin account which allows me to borrow at really low rates and more than standard Regulation T margin requirements. Standard regulation T leverage is generally 2:1. I can borrow 4:1 and up to 6:1 depending on how my portfolio is structured. You only need like $100,000 in your brokerage account to qualify for portfolio margin. For regular margin account, I think you can open one with something low as $1,000.

Treating interest on a loan guaranteed on assets as an investment expense as opposed to a living expense is bullshit, unless that loan is used exclusively for investing. Which might be what you are talking about, but everyone else is talking about them taking out assest backed loans to live off of.

This seems like an obvious place to start, use stock as collateral? You pay capital gains on it, and the baises resets.

I agree with you that the bias shouldn't reset when assets are inherited.

 

[ponyo]

Treating interest on a loan guaranteed on assets as an investment expense as opposed to a living expense is bullshit, unless that loan is used exclusively for investing. Which might be what you are talking about, but everyone else is talking about them taking out assest backed loans to live off of.

This seems like an obvious place to start, use stock as collateral? You pay capital gains on it, and the baises resets.

I agree with you that the bias shouldn't reset when assets are inherited.

You can't write off interest paid as expense. There's no longer misc investment expense. That was eliminated in 2018.

You want to tax if stock is used as collateral? lol. Well, how about house used as collateral? Or car used as collateral. When you get a mortgage, you're using your home as collateral and borrowing like 5-19 times leverage on your initial 5-20% downpayment. And people here write off interest paid on home mortgage. And some people get home equity line of credit or loan. And they write off interest on that too. Most people pay 0% capital gains tax on home sale. Don't you think it's only fair all home sales are taxed? Why are home owners exempt from paying taxes on their home sale profit? And shouldn't they have to pay capital gains on any home mortgage since they're using their house as collateral to get the loan? So let's tax capital gain tax on any mortgage at time of home loan origination. And disallow any mortgage interest deduction on income tax. That's what you want, right? Or is house special because you all own it and you would pay more tax so we must exempt? lol.

 

[WelshBloke]

Never said if Musk was good guy or bad.

I mean this kinda does sound like you are saying that.

Pretty much everything you wrote here is wrong and incorrect. Musk has proven time and again he really doesn’t care about money other than trying to use it to go to Mars. He has risked every penny he has multiple times to keep SpaceX and Tesla from going bankrupt. You really don’t have a clue on the topic. You might try reading Elon Musk biography by Ashlee Vance. Elon Musk: Tesla, SpaceX, and the Quest for a Fantastic Future. It gives good insight into what kind of person Elon Musk is and what drives him. There’s also another good book, Liftoff: Elon Musk and the Desperate Early Days that Launched SpaceX by Eric Berger. Plus literally hundreds hours of interviews of Elon Musk on YouTube.

 

[ponyo]

I mean this kinda does sound like you are saying that.

Nothing I wrote there is incorrect. If correcting ignorance and false information is a crime, I'm guilty.

 

[Zorba]

You can't write off interest paid as expense. There's no longer misc investment expense. That was eliminated in 2018.

You want to tax if stock is used as collateral? lol. Well, how about house used as collateral? Or car used as collateral. When you get a mortgage, you're using your home as collateral and borrowing like 5-19 times leverage on your initial 5-20% downpayment. And people here write off interest paid on home mortgage. And some people get home equity line of credit or loan. And they write off interest on that too. Most people pay 0% capital gains tax on home sale. Don't you think it's only fair all home sales are taxed? Why are home owners exempt from paying taxes on their home sale profit? And shouldn't they have to pay capital gains on any home mortgage since they're using their house as collateral to get the loan? So let's tax capital gain tax on any mortgage at time of home loan origination. And disallow any mortgage interest deduction on income tax. That's what you want, right? Or is house special because you all own it and you would pay more tax so we must exempt? lol.

When you buy a house there is no capital gains, same with a car. But easy, exclude primary residences. Meanwhile, I do pay a wealth tax on my house and car every year.

Deduction of fees from an investment account does just subtracts from the holdings and doesn't show up as an asset sell.

For the record I have orders of magnitude more capital gains on non-house investments. You exempt primary residences because it's the only assest the majority of Americans have and it's good policy.

 

[WelshBloke]

Nothing I wrote there is incorrect. If correcting ignorance and false information is a crime, I'm guilty.

So you are saying that he's a good guy? I'm getting mixed messages here from you.

 

[ponyo]

So you are saying that he's a good guy? I'm getting mixed messages here from you.

You can project all you want. You see what you want to see.

 

[Captante]

plenty of people are smarter than Musk, or gates, or bezos

If stupid really IS as stupid does, do you REALLY believe this to be true?

IME the ONLY meaningful measure of real intelligence is success and FAR MORE importantly HAPPINESS. (this does not require big money although it sure doesn't hurt)

 

[ponyo]

When you buy a house there is no capital gains, same with a car. But easy, exclude primary residences. Meanwhile, I do pay a wealth tax on my house and car every year.

Deduction of fees from an investment account does just subtracts from the holdings and doesn't show up as an asset sell.

For the record I have orders of magnitude more capital gains on non-house investments. You exempt primary residences because it's the only assest the majority of Americans have and it's good policy.

The yearly property tax you pay is state, county, local tax. We're not talking about state and local taxes. Entire discussion is on Federal tax. Which is IRS tax. That's what people are outraged about.

 

[Zorba]

I mean this kinda does sound like you are saying that.

He is very much in the Elon cult.

 

[Zorba]

The yearly property tax you pay is state, county, local tax. We're not talking about state and local taxes. Entire discussion is on Federal tax. Which is IRS tax. That's what people are outraged about.

Lol, of course. I'm sure you'd have no issue with state level wealth tax on investments.

Meanwhile you still think you have gains when you purchase real property? Or are just going to skip over that load is f BS you dropped in here?

 

[ponyo]

He is very much in the Elon cult.

Of course. Doesn't mean anything I wrote that's being quoted is incorrect.

I know lot about Elon and Tesla because I researched everything I could get my hands on. I've literally spent thousands of hours of research. You don't blindly invest millions of dollar on someone or some stock without doing your homework. At least I don't. But I'm sure you guys are expert on Elon and Tesla from gossip pages you read and follow.

 

[ponyo]

Lol, of course. I'm sure you'd have no issue with state level wealth tax on investments.

Meanwhile you still think you have gains when you purchase real property? Or are just going to skip over that load is f BS you dropped in here?

No, I fucking hate annual property tax. Having to pay state tax and property tax sucks big donkey balls.

You have gains on property when the equity on your home increases. People realize the gains all the time through home refinance or home equity loans. Banks give you X amount of dollars more because property appraisal comes back higher. So when you refinance and cash out, you're realizing the gains. But do people pay federal taxes on that gain? Nope. They keep that tax free. How is that fair?

 

[Zorba]

Of course. Doesn't mean anything I wrote that's being quoted is incorrect.

I know lot about Elon and Tesla because I researched everything I could get my hands on. I've literally spent thousands of hours of research. You don't blindly invest millions of dollar on someone or some stock without doing your homework. At least I don't. But I'm sure you guys are expert on Elon and Tesla from gossip pages you read and follow.

I'm pretty indifferent on him. I have actually sat in his office and talked with for an hour in January of 2009 before most people had any idea who he was as part of my 11 fucking hour long interview at SpaceX, again before most people had ever heard of them.

 

[Zorba]

No, I fucking hate annual property tax. Having to pay state tax and property tax sucks big donkey balls.

You have gains on property when the equity on your home increases. People realize the gains all the time through home refinance or home equity loans. Banks give you X amount of dollars more because property appraisal comes back higher. So when you refinance and cash out, you're realizing the gains. But do people pay federal taxes on that gain? Nope. They keep that tax free. How is that fair?

You were talking about original purchase, of which there would be no gains.

But sure tax all gains used as collateral, maybe people would stop using their house as an ATM. The way it is today, billionaire on living off the gains without paying taxes on tide gains, and that isn't right.