Log In
Register
Home
Topic RSS
Facebook
Twitter
Email this12:49 pm
November 8, 2018
Offline
There is a discussion in the US on topic of taxing billionaires on unrealized capital gains.
I have found justification for such tax in Opinion column written for CNN, by Edward McCaffery, a tax law professor, and I have question about it.
It goes like this:
The rich can borrow against their stock holdings, which is tax-free under an income tax.
If the rich hold both assets and debt at death, everything gets reset under current law, as their heirs inherit the assets without any income-tax obligations.
Asking people who are financially smarter than me: does that make sense? When someone dies, are their debts simply forgiven and assets transferred to heirs?
Also, if this is true, why would lenders accept such terms and give away money they know they may not see back? What is the benefit for them?
------------------
The Opinion column I refer to from CNN is "How to tax Elon Musk and Jeff Bezos," October 26, 2021.
2:30 pm
April 6, 2013
Offline
Debts are definitely not forgiven on death unless that is part of the terms of the debt.
Usually, what's left after debt is paid off is transferred to heirs.
Lenders are smarter than to lend against stock without putting a lien on the stock.
3:27 pm
October 27, 2013
Offline
Agreed. There is more to it than that (the complexities of US tax law which I know little about). The initial advantage for the ultra rich is no need to crystallize cap gains while alive to pay income tax on. If one can borrow against collateral to fund one's lifestyle, why not do that? Death will require a reckoning. It's a matter of timing.
4:35 pm
March 15, 2019
Offline
I have no clue how it works but the U.S. still has an estate tax.
4:54 am
November 8, 2018
Offline
In that case, what tax law professor describes appears to be not tax avoidance, but tax deferral. The IRS will get taxes collected on stock holdings, sooner or later.
Then, what am I missing here? I can understand why politician could come with that idea: it can score great political points if you think about it. But why does tax law professor support it unequivocally?
5:12 am
April 27, 2017
Offline
I can’t get my head around the concept of taxing unrealized gains. It’s against the basic logic behind our whole taxation system. Forces sales. Destroys any chance of future Teslas and Amazons and takes ownership away from company founders. Also, gives lots of interesting work to lawyers and accountants.
10:26 am
September 11, 2013
Offline
Alexandre said
Then, what am I missing here? I can understand why politician could come with that idea: it can score great political points if you think about it. But why does tax law professor support it unequivocally?
Alexandre, the answer is because not just politicians have political bias, tax law experts (and CNN) do too. If you do a bit of research on McCaffery you'll see why he supports it, e.g. "The fundamental flaw in the US tax system is that we tax wages, not wealth........" I'm sure tax law experts would not have unanimity on opinions like that.
2:23 pm
November 8, 2018
Offline
mordko said
I can’t get my head around the concept of taxing unrealized gains.
There was a piece at Babylon Bee where they suggested to give refund for unrealized charitable donations.
"So... I haven't exactly given away any money to charity this year, that's why it's unrealized," said Chuckston. "I fully intend to give maybe a million or so to charity at some point over my lifetime, or maybe my kids will. But I think I'm going to go ahead and claim the exemptions for all of it right now!"
Not all political satire in the US is dead, which is good news.
Please write your comments in the forum.