Post New

Dear Oprah, Mayor Bloomberg, etc.

Please go on Morning Joe with Steve Rattner a very sharp guy. Ask him how many years of selling your assets will it take to pay the new taxes before you are minority shareholders in your own companies? Thank you.


" Capital gains and dividends tax more than twice as high as communist China
Here is a direct quote from the Biden-Harris budget: “Together, the proposals would increase the top marginal rate on long-term capital gains and qualified dividends to 44.6 percent.“
Yes, you read that correctly: A Kamala Harris capital gains and dividends tax rate of 44.6%
China’s capital gains tax rate is 20%. Is it wise to have higher taxes than China?
Under the Harris plan, the combined federal-state capital gains tax exceeds 50% in many states. California will face a combined federal-state rate of 59%, New Jersey 55.3%, Oregon at 54.5%, Minnesota at 54.4%, and New York state at 53.4%.
Unconstitutional wealth tax on unrealized gains
The Harris-endorsed budget calls for an annual 25 percent minimum tax on the unrealized gains of individuals with income and assets that exceeding $100 million. Once in place, it won’t be long before the threshold is lowered to hit more and more Americans.
Americans overwhelmingly oppose taxes on unrealized gains, by a factor of three to one, including 76% of independents. Americans know that a “gain” isn’t “real” until it is actually realized, in hand.
This Harris tax is similar to the wealth taxes pushed by radical progressives such as Sens. Elizabeth Warren (D-Mass.) and Bernie Sanders (I-Vt.).
Capital gains taxes should only be paid when a gain is realized. Harris’s wealth tax would break with current tax policy and impose tax Americans based on the value of an asset on a particular arbitrary date.
This unprecedented tax would give even more power to the IRS, encourage taxpayers to move assets overseas, and will only expand to hit millions of Americans over time.
A second Death Tax by taking away stepped-up basis when parents die
Harris wants to impose a second Death Tax by taking away stepped-up basis when parents die. This would result in a mandatory capital gains tax at death — separate from, and in addition to — the current Death Tax.
This will impose a steep tax increase and paperwork nightmare for small businesses, farms, and families. "

hclasvegas The Harris-endorsed budget calls for an annual 25 percent minimum tax on the unrealized gains of individuals with income and assets that exceeding [sic] $100 million.

Gosh, I wonder how those poor folks with more than $100 million in assets (including the many who inherited their vast wealth) will survive?

Together, the proposals would increase the top marginal rate on long-term capital gains and qualified dividends to 44.6 percent.

This is incorrect, and you never linked to your source. The higher rate would only apply to people with over $1 million in income, and the top marginal rate would be 39.6%, not 44.6%. Here's the actual statement:

"It also proposes taxing capital gains at the same rate as wage income for those with more than $1 million in income..."

https://www.whitehouse.gov/omb/briefing-room/2024/...

In its entirety, the budget proposal would cut the budget deficit by $3 trillion over 10 years. Any changes to the tax law would require approval of Congress, though.

Good morning common, stick to your expertise , that Biden will definitely be the nominee. “ Gosh, I wonder how those poor folks with more than $100 million in assets (including the many who inherited their vast wealth) will survive?“ priceless.

“This is incorrect, and you never linked to your source. The higher rate would only apply to people with over $1 million in income, and the top marginal rate would be 39.6%, not 44.6%. Here's the actual statement:”. Thanks, is there a tax on unrealized cap gains or not? Wealth tax or not? Thanks.

hclasvegas The Harris-endorsed budget calls for an annual 25 percent minimum tax on the unrealized gains of individuals with income and assets that exceeding [sic] $100 million.

Gosh, I wonder how those poor folks with more than $100 million in assets (including the many who inherited their vast wealth) will survive?

Those with assets exceeding 100 million have benefits. I once listened to a conversation between Estate Tax attorneys. where one bragged that by using restriction clauses, they reduced the value of a $30 million dollar business to 3.5 million dollars. So there are ways and there are ways.

We've got people inheriting on a stepped up basis up to ? millions. Wealth can be moved overseas, entities changed, etc., and returned without tax or much less foreign taxes. Hedge funds get special breaks. We need to tap into all of that. This is a hugely desirable market.

Gosh, I wonder how those poor folks with more than $100 million in assets (including the many who inherited their vast wealth) will survive?

It amazes me how many republicans are adamant about not "discriminating" against the extremely wealthy minority group, but are all-in discriminating against ethnic, racial, and sexual minorities.

This is how cnbc explained it today.

https://www.cnbc.com/video/2024/08/22/kamala-harri...

HC, if it's video, tell us how long it is. I normally do not watch any videos.

" HC, if it's video, tell us how long it is. I normally do not watch any videos."

Good idea, it's two minutes. If you own assets, you should watch it.

This is how cnbc explained it today.

As I said, he forgot to mention that the higher cap gains tax rate would only apply to income above $1 million.

Read the actual White House 2025 budget proposal I linked above.

Also, under both the Trump admin and the current Biden admin, short term cap gains are taxed at the same rate as your ordinary income tax rate. That won't change under a Harris admin.

"short term cap gains are taxed at the same rate as your ordinary income tax rate. That won't change under a Harris admin."

Thanks, but we aren't talking short term gains.

If you have the time, let's take Buffett. Round numbers he has 140 BILLION in brka, cost basis near zero, what happens to him in year one? Thanks.

If you have the time, let's take Buffett. Round numbers he has 140 BILLION in brka, cost basis near zero, what happens to him in year one? Thanks.

Exactly what you think would happen. He'd have to either liquidate or borrow against his holdings.

Buffett is the ur-example of both the reasons for this kind of proposal. But also a little bit against.

On the "for" side, Buffett has increased his net worth by more than $200 billion over the course of his lifetime - he's earned more than almost any other human. But he's paid no taxes on virtually all of those earnings, because they've taken the form of appreciation in his BRK shares. That's why he pays so much less in taxes than his secretary - not because the marginal rates are off, but because Buffett can earn his money through an investment vehicle that accrues unrealized gains, and all his secretary's wages are immediately taxable. Generally speaking, you want your taxation system to be neutral - that however people are making their money, they all pay taxes the same way. But because some ways of earning money result in unrealized gains, that has extraordinary benefits compared to realized income.

But on the "con" side, it's really difficult to generate significant tax revenues from unrealized gains without forcing people to realize those gains by selling assets. And since ownership and control are bound together in many contexts, like closely held corporations (and even some public ones), that can have serious consequences. And Buffet's the easy one, since his assets are mostly in securities. Many folks have their wealth tied up in assets that are illiquid and long-term, and simply cannot be liquidated to pay taxes.

There's ways to manage that a bit, but it's all idle fancy - we're never going to see a tax on unrealized income in a Harris administration, so the details are unimportant.

" Exactly what you think would happen. He'd have to either liquidate or borrow against his holdings."

OR, expedite his gifting, and pay nothing, no? Gotta go, later bud.

OR, expedite his gifting, and pay nothing, no?

Perhaps. Presumably this type of proposal would also modify the provisions that say that appreciated assets can be gifted without triggering a requirement to pay taxes. The whole point is to address the massive fortunes that people have acquired entirely outside the tax system, so that someone who earns $X in salary (and thus has to pay taxes immediately) gets treated equally as someone who earns $X by having their shares appreciate in value (who right now doesn't have to pay taxes until they choose to realize their gains).

"The whole point is to address the massive fortunes that people have acquired entirely outside the tax system, so that someone who earns $X in salary (and thus has to pay taxes immediately) "

Thanks, but I've thought about this for a very long time. IF Buffett donates untaxed wealth why not make the Foundation pay the 20 % cap gain rate from the proceeds when they sell? Simple and easy, no?

IF Buffett donates untaxed wealth why not make the Foundation pay the 20 % cap gain rate from the proceeds when they sell? Simple and easy, no?

The Foundation is (I assume) a charitable entity that's exempt from paying taxes altogether. They don't have to pay anything when they sell.

You could change that, of course (theoretically almost any aspect of the tax code can be amended). But it's probably much more complicated to carve out that one specific instance of tax exemption for charitable entities, rather than to require a tax payment by the donor at the time of transfer as a way of blocking that 'escape hatch' from the appreciated asset income tax.

Presumably this type of proposal would also modify the provisions that say that appreciated assets can be gifted without triggering a requirement to pay taxes.

There's two kinds of gifts to consider: donations to qualified charitable organizations, and gifts to any other kind of organization or individual.

Gifts to charitable organizations are not only tax free to both the giver and the charity, they can actually generate a tax benefit to the giver.

Other kinds of gifts can generate a tax on the giver (the gift tax, which is a companion to the estate tax) and also transfer any income tax liability to the recipient.

Buffet (and Gates, and others, I'm sure) are engaging in the first kind of gifts. They make gifts to qualified charities. Those gifts are free from the gift tax AND they get to claim a tax deduction for the charitable contribution on their income tax return. Even more, the charitable contribution is based on the current FMV of the donated assets. So they can get a tax deduction not only for their original cost (which for these two gentlemen is something negligible) but they can optionally choose to deduct all of their unrealized appreciation. But there are still limits. Because they're going to go for the FMV option, the actual income tax deduction will be limited to 20% or 30% (sorry I don't recall exactly - this isn't an area I practice in) of their AGI, with any excess carrying over for 5 years. I haven't followed closely since Buffet started his gifting program, but his stock gifts in the early years were well in excess of his allowable deduction. And since he was giving stock every year, his excess deductions expire and go unused.

I can actually make a public policy argument for allowing this tax treatment. Because the money is going to charities, and because those charities are watched over by the state in which they are organized (and shut down if they are not doing adequate charitable work with their money), they are able to do quite a bit more work with this untaxed money than they would be if it were taxed first. Presumably, the work charities do is going to be things that a government might do if charities didn't step in, so they are actually saving the government some money. Plus charitable organizations attract a fair amount of volunteer work - work that a government would have to pay for. So charities can leverage their contributions to do even more than a government could do with the same money. All good stuff when they work right.

--Peter

"But it's probably much more complicated to carve out that one specific instance of tax exemption for charitable entities, rather than to require a tax payment by the donor at the time of transfer as a way of blocking that 'escape hatch' from the appreciated asset income tax."

good morning albaby, my way is more efficient and practical. The donor fills out a one-page form at the time of donation, to establish their cost basis at the time of donation. As the foundation, charity, etc, liquidates the asset, the 20% or so cap gain tax would be paid from the proceeds of sales. IF property appreciates over time higher tax receipts will be realized. IF the asset drops substantially prior to sale, no one pays tax of assets that deteriorate in value over time. Been there done that bud, that's why it's fair to wait to tax donations until they are sold. Trust me on this. Have a grand day.

"IF property appreciates over time higher tax receipts will be realized."

al, to clarify this point. when Buffett passes the value of his brk holdings might be 150 billion or more. IF the tax was due upon his passing, the estate would have to sell 30 billion brk or more to pay the tax. That would be very disruptive to markets. On the other hand, a charity might receive 1 million of a crypto coin or a painting. What happens if prior to liquidation the coin goes no bid, or the painting is discovered to be a fraud? It gets very complicated.

What happens if prior to liquidation the coin goes no bid, or the painting is discovered to be a fraud? It gets very complicated.

The IRS cracked down on this sort of thing long ago. If you donate a car to one of those charities (Kars 4 Kidz, for example) or land or a building or whatever, you used to be able to “declare” the value and take the deduction. Now you only get the realized cash value, so when Kars 4 Kidz finally disposes of the asset they tell you what it brought, and that’s the value, not some arbitrary number plucked from thin air.

" tell you what it brought, and that’s the value, not some arbitrary number plucked from thin air."

So, the donation must be liquidated in a certain time period, for the donor to get the tax write off? Buffett has stipulated that his 140 billion or so be sold off over a ten-year period by the foundations. How would that work tax wise?

It gets very complicated.

Of course. That's why it is exceptionally unlikely to ever happen.

But you set that against the fact that Warren Buffett has earned about $200 billion over his lifetime, but our tax system treats him as if he has only earned about $0.7 billion (or less).

There's no easy answer, but neither scenario (trying to tax unrealized income, or leaving unrealized income to remain unrealized at the discretion of the individual) is ideal.

IDK, I am taxed every year on the unrealized gains of my home. There seems to be a way to make that work.

IDK, I am taxed every year on the unrealized gains of my home. There seems to be a way to make that work.

Sure.

For real property, like homes, every single asset is registered with the local government. That local government has an entire department (usually a county property appraiser's department) whose sole job is to continually appraise and value those assets, including tracking every single sale and the corresponding price. That's aided by a regulatory scheme based on record notice (in most states), all-but-forcing voluntary compliance to disclose all asset transfers. That department also informs the property owners of their valuation, provides a mechanism by which values can be disputed, and defends those valuations in court. The effort involved in doing this is not trivial - here in Miami-Dade County (where I live), the Property Appraiser has a budget of about $60 million and a staff of about 400 employees. Just to fix the valuations of a single class of assets (real estate) for small slice of the population.

So, the donation must be liquidated in a certain time period, for the donor to get the tax write off? Buffett has stipulated that his 140 billion or so be sold off over a ten-year period by the foundations. How would that work tax wise?

I don’t know all the particulars. I’m just parroting a piece I read in Bloomberg quite a while back. Maybe the rule only applies to things without an immediately liquid / cash equivalent market? Cars and property would fall into that, whereas stocks, bonds, and (obviously) cash would not. Not a tax guy, so the best answer from me is “I don’t know”

So, the donation must be liquidated in a certain time period, for the donor to get the tax write off?

No. First, it applies only to certain tangible assets (mainly cars, trucks and boats). It doesn't apply to stocks and bonds. Second, if the charity DOES sell the tangible asset, the price they get is what the donor gets to deduct. If they instead choose to use the asset in their charity (an example might be keeping a car to use), they have to report that to the donor and then it's up to the donor to value the asset.

None of this applies to Buffett's donation of his stock. That is valued based on the price of the stock on the day it was transferred.

--Peter

Well, how would that work. We have an office that keeps track of the assets of people worth more than $100 million. Then, since every system gets gamed, we have to examine how people hide(or restrictions are placed) on the value of assets prior to reaching $ 100 million. Brian Epstien's ghost peddles how to lower your asset value along with pre-pubescent titillations. A great time to be had by all!

Well, how would that work.

It probably wouldn't. That's my point. We independently value real estate for property tax purposes, but that requires a fair amount of effort even for a fairly easy asset class to value (it's immobile, open and visible, all transfers have to be reported timely to the government, there are frequently comps and related sales, and as a single asset class it's easy to assemble expertise). It would be very difficult to replicate that to create independent valuations for things like privately held companies, artworks, gemstones, mineral extraction leaseholds, and a host of privately held intangible and intellectual properties (like when Michael Jackson bought most of the Beatles catalog for about $48 million - what's that worth today?). Much more difficult to update them over time.

In that respect, Buffett's the simplest case. Almost all his wealth is in publicly-traded securities, which are easy to assign a market value to. Much harder to put a value on, say, the unrealized gain of Jerry Jones for his ownership share of the Dallas Cowboys or George R.R. Martin's ownership of the copyright and licensing rights to his Game of Thrones characters.

I'm sure it won't happen. But, conceptually, it seems fairly simple. Step-up the basis every year, and tax the amount of the step. If it's a step-down, then they can write off the loss (as if they realized the loss).

Again, it will never happen. But it seems pretty straightforward. I agree that it would be more difficult for the Beatles' catalog than for Buffett's stock portfolio (or similar equities or investments). Maybe even intractable. But the stock and bond markets are quite doable, in principal.

But it seems pretty straightforward.

Hardly straightforward, which is why it’s a bad idea.

You’ll help kill startups, for one.

{{ IDK, I am taxed every year on the unrealized gains of my home. There seems to be a way to make that work. }}

That only works because of the difficulty in spiriting away your home to a Caribbean tax haven.

intercst

Post New

Global Payments FAQ

---

Contact Shrewd'm
Contact the developer of these message boards.