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  • Tangler
    replied
    Originally posted by jacoavlu View Post
    it’s funny cuz we pretend as if taxes pay for gov spending. $360B over 10 years lol
    As a country we have a lot of debt (national debt) and we rarely worry about the annual federal deficit (rarely balance annual budget).

    National debt is equivalent to $242,500 of debt per tax payer or $91,226 per citizen (ask yourself why these are so different?!)

    National debt.

    Is it a problem? Can it ever become a problem?

    Many on this forum tell me it is irrelevant and completely different than personal (individual) debt.

    I hope these forum members are correct.

    I do worry that it is unsustainable. I don't think many in congress do anything to address it. Rarely seriously discussed.

    Personal finance always starts with the simple idea (Rick Van Ness' rule 0, WCI latest podcast): spend less than you make.

    I hope the people who tell me I am too simple and that our national debt is irrelevant and inconsequential are correct.

    Pascals wager. Consider consequences and probabilities not just probabilities. Rare disastrous consequences have relevance.

    To bring it back to the original post: Wealth taxes. Taxing capital gains. I would not be surprised in the least.

    In an attempt to become a tax alpha dog In retirement I am planing on eating from 3 different doggie bowls: Taxable, Roth, Tax deferred (IRAs).

    No one knows what will be the most advantageous, so I want to have all 3.

    Would I leave the USA to escape wealth taxes..............not now..........but I could see a global exodus of retired wealthy people.

    There is already an exodus from CA to Texas and from NY to FL etc.

    Geographic arbitrage is not limited to one nation. If some place becomes welcoming, and we continue to punish success, people might move.

    https://www.usdebtclock.org

    https://www.amazon.com/Overtaxed-Investor-Slash-Your-Alpha-dp-0997059621/dp/0997059621/ref=dp_ob_title_bk

    Leave a comment:


  • jacoavlu
    replied
    it’s funny cuz we pretend as if taxes pay for gov spending. $360B over 10 years lol

    Leave a comment:


  • Lithium
    replied
    Supposedly a wealth tax would “work” better in the USA since it taxes income regardless of where you reside unlike virtually every other country in the world. So you’d have to renounce your citizenship to wriggle out of it.

    I have no idea how an exit tax would work or how it could be enforced. What are the other financial consequences of this? If you have $100M surely you don’t give a hoot about keeping SS and Medicare.

    Leave a comment:


  • bovie
    replied
    Originally posted by Nysoz View Post
    Even if it does eventually trickle down to the 'rich' doctors here, how many would actually leave the country? Especially when you'd basically take a huge pay cut and have worse quality of life in most other countries.
    It would certainly cross my mind if the alternative was to stay and abide a significant haircut on my assets every year in the form of taxes on unrealized gains.

    But this would probably be in retirement, and the plan is to spend most of that abroad anyway.

    Practice abroad? Unlikely, yes.

    Leave a comment:


  • Nysoz
    replied
    Yeah there's no way this passes as it would be impossible to capture and enforce everything owed. Then why just stocks? Do they go after real estate? Artwork? Wine bottles? Crypto? The uber rich will always find a way to minimize it.

    Wealth inequality keeps getting worse, national debt keeps getting worse. Both 'need' to be 'fixed' and there's no easy way to do it. Sure we need to spend less as a country, but it would probably be easier to pass this legislature than spending less.

    It would be more palatable as a country to anger the few rich people by taxing them than essentially killing/hamstringing masses of poor people by cutting social spending. Afraid of the rich leaving the country? Just make the exit tax worse than paying any unrealized gain/wealth tax.

    Will Elon Musk, Jeff Bezos, or any other uber billionaires leave the country because they get taxed more? I'd bet no. Even if it does eventually trickle down to the 'rich' doctors here, how many would actually leave the country? Especially when you'd basically take a huge pay cut and have worse quality of life in most other countries.

    Leave a comment:


  • Tim
    replied
    Originally posted by Kamban View Post

    By a strange twist, one could argue that George Steinbrenner, owner of the NY Yankees timed his death perfectly. The Fed estate taxes were being slowly reduced and in 2010 it was zero and the next year it rose back to 55%. By making sure he died ( or was made to die like another recent Ep incident ) his heirs did not have to pay a $600M tax bill. Convenient or lucky?

    https://www.forbes.com/2010/07/20/ya...h=3f05463a180e
    Funny thing how we identify with chance occurrences . From first to fifth grade I live one house away from George's house in Bay Village Ohio. Didn't own the Yankee's yet but owned a hockey team and basketball team. His kids were "playmates". Got to shoot basketballs and throw footballs with "famous athletes".

    Actually sent condolences to the wife and Hank. Probably false identification. Probably the smartest money deal he ever made. Can't take credit for his planning.

    Leave a comment:


  • Kamban
    replied
    Originally posted by Tim View Post
    Remember, cause of death is not a factor in tax collections. One could always regulate when death is required. Just think of the possibilities for accelerating tax revenues.
    By a strange twist, one could argue that George Steinbrenner, owner of the NY Yankees timed his death perfectly. The Fed estate taxes were being slowly reduced and in 2010 it was zero and the next year it rose back to 55%. By making sure he died ( or was made to die like another recent Ep incident ) his heirs did not have to pay a $600M tax bill. Convenient or lucky?

    https://www.forbes.com/2010/07/20/ya...h=3f05463a180e

    Leave a comment:


  • Tim
    replied
    Originally posted by Kamban View Post
    The best way to collect revenue is to eliminate step up basis.

    On top of it if you force wealthy to pay a top tier income tax rate instead of LTCG of the assets when they die before it can be passed on to their heirs, the wealthy would rather sell while they were living and pay the smaller LTCG. This will help steady stream of tax revenue year after year.

    Make hedge fund owners pay for their income as income tax rather than LTCG. Might not get much but will be fair to all income tax payees.
    Remember, cause of death is not a factor in tax collections. One could always regulate when death is required. Just think of the possibilities for accelerating tax revenues.

    Leave a comment:


  • Hank
    replied
    Personally, I thought the Roth Horserace approach was overkill. I preferred to over-convert by $20K to $30K, then recharacterize to top out a given tax bracket or avoid an all or nothing phase out of a given credit. It let me be more aggressive with taxable Roth conversions of existing traditional accounts, while not getting walloped by $10 extra in taxable income causing $1800 in additional tax liability. (Yes, that actually would have happened to us if we hadn't been able to recharacterize one year.)

    Leave a comment:


  • spiritrider
    replied
    Originally posted by Hank View Post
    Heck, if your goal is to get more tax revenue upfront today, why get rid of Roth conversions and recharacterizations?
    Like much of what Congress does these days, budget gimmicks.

    ​​​​​The immediate elimination of Roth conversions in the BBB Act was only a prohibition on conversions of non-deductible basis in traditional IRAs and employee after-tax contributions in non-IRA employer plans. No revenue gain there, but continuing to allow taxable conversions for 10 years gets counted in the required 10-year budget projections.

    10-year "pay for" was a significant reason for the elimination of lifetime RMDs for non-spouse beneficiaries in the SECURE Act. It was also the driving force for the elimination of the Roth conversion income limit in 2010. Near-term revenue gain at the expense of future revenue. Congress will always take that short-sighted path.

    I have it on firm IRS and congressional sources that the elimination of Roth conversion recharacterizations were because of thousands of people (and increasing every year) using the Roth Horserace strategy.

    For those who are not familiar with the term. This was where you split your traditional IRA assets into several accounts and did several Roth conversions to different Roth IRAs. Then you invested each Roth IRAs assets into a different asset class or even made all or nothing investments in individual stocks.

    You kept your biggest gains and recharacterized your lower returns and losses back into IRA accounts. Rinse and Repeat. Recharacterizations were intend for an OOPs. A common use was for the uninitiated doing a Backdoor Roth early in the year and then rolling over a 401k to a traditional IRA.

    We used to be able to tell them how to use a Roth conversion "do over." Well, no more, because of the minor greedy abusers of a valuable tool.

    Leave a comment:


  • CordMcNally
    replied
    A consumption tax that isn't levied on basics (food, clothing, etc. but not 5 star Michelin restaurants, Gucci, etc.) would seem to make a lot of sense.

    Leave a comment:


  • Panscan
    replied
    is just totally impossible and a frank non-starter.

    this is equivalent to talking about pigs flying. the logistics and complexity of implementing would be leagues beyond anything the IRS does now.

    What we need to do is reduce the amount of deductions or perhaps phase them out for higher incomes more frequently. Prevent people from deferring income, particularly equity based compensation.

    Leave a comment:


  • Hatton
    replied
    I would be fine with a consumption tax if income tax was eliminated

    Leave a comment:


  • G
    replied
    A consumption tax would seem to fix all/most of the issues I've seen in this thread. Even if Elon Musk is a cheapskate, his wealth will eventually be spent, and therefore taxed.

    Leave a comment:


  • Kamban
    replied
    Originally posted by Dusn View Post

    I think everyone on this forum would agree with you on a personal level. Capital gains taxes are totally against my self-interest.

    But many billionaires make nearly all their money off of capital gains and the idea that they should have a tax rate of nearly zero percent just because they get paid through stocks that they then offset with depreciating assets or borrow against doesn’t make sense either. This is the point of a graduated capital gains tax based on “wealth” - of course it won’t work though.

    At the end of the day this is just an academic discussion though. The chance that the govt is going to outsmart the billionaires and make them actually
    pay taxes is zero.
    I am partly with you and partly with Hatton . Our earnings on investment income is minor in the grand scheme of things and should be taxed as LTCG.

    Of course the basis should not be taxed since one has already paid taxes on it. My basis might be $2M and it it makes $4M I pay LTCG on the $2M earned.

    Musk's basis is close to zero. If he sells any TSLA stock he should pay 20% or whatever is the highest LTCG, on the stock sold. But should he choose to be greedy and die his heirs don't get any step up and after that 10 or 20M estate tax-free amount they pay estate taxes of 40-45% before they get their money. So there is that money that goes to IRS. Better to sell when you are alive than when you die.

    And the rich cannot escape by giving it all away to charity and leave the others to pay those pesky taxes. You owe the government first before you give charity. Sorry, taxes have to be paid by all of us who live in USA. Gates and Buffett cannot give it to their favorite charities and make the rest of the us bear the tax burden.

    Leave a comment:

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