I have a friend who helps manage wealth for clients net worth $500m+
They all have loans against their holdings at 0.1%, fixed five year terms
That’s the money they live on
They never sell, when they die basis is adjusted via step-up and they never pay cap gains
Tax free life
They all have loans against their holdings at 0.1%, fixed five year terms
That’s the money they live on
They never sell, when they die basis is adjusted via step-up and they never pay cap gains
Tax free life
https://twitter.com/JimForsythe5/status/1454074040906362881
What about estate tax?!
No one pays estate tax, you set up a series of trusts and your heirs get all the money estate and cap gains tax free
$20 billion annually is collected via estate taxes, of $140 trillion in wealth
The only way you pay is if you have very poor planning
No one pays estate tax, you set up a series of trusts and your heirs get all the money estate and cap gains tax free
$20 billion annually is collected via estate taxes, of $140 trillion in wealth
The only way you pay is if you have very poor planning
Normal people pay 10-40% of their annual income taxes and have little wealth
We tax poor people trying to build a small nest egg and the ultra wealthy pay next to nothing
“What about the income tax stats showing the top 1% pay 35% of income taxes?!”
We tax poor people trying to build a small nest egg and the ultra wealthy pay next to nothing
“What about the income tax stats showing the top 1% pay 35% of income taxes?!”
The doctors and lawyers do pay high taxes on their income yes
But the ultra wealthy who live off assets (far wealthier than doctors) report no income, so it’s not included in the denominator of these statistics
Meaning all that tax free wealth gain is distorting the stats
But the ultra wealthy who live off assets (far wealthier than doctors) report no income, so it’s not included in the denominator of these statistics
Meaning all that tax free wealth gain is distorting the stats
If you’re reading this odds are the system wasn’t designed for you
You are a cash flowing asset of the people it was designed for
You are a cash flowing asset of the people it was designed for
This also contributes to "stocks only going up"
As equity holdings become more and more concentrated into fewer and fewer hands, they are increasingly held by people who have no motivation to ever realize gains
Low interest rates contribute in more ways than one to the bubble
As equity holdings become more and more concentrated into fewer and fewer hands, they are increasingly held by people who have no motivation to ever realize gains
Low interest rates contribute in more ways than one to the bubble
This would become unprofitable at some level of higher short term interest rates
Even though banks give these super preferred low rates to the ultra wealthy to keep them as clients, they would eventually pass on the cost
The wealthy have to then weigh cap gains tax vs interest
Even though banks give these super preferred low rates to the ultra wealthy to keep them as clients, they would eventually pass on the cost
The wealthy have to then weigh cap gains tax vs interest
But even then, how much do the ultra wealthy really need to sell of their holdings to live off of?
If you have $1 billion, and you grow that by 5-10% a year, it's growing $50-$100m annually. You can easily realize $20 million each year and live lavishly after taxes
If you have $1 billion, and you grow that by 5-10% a year, it's growing $50-$100m annually. You can easily realize $20 million each year and live lavishly after taxes
Thus even if we raise rates and they stop doing the borrow-to-live strategy, the vast majority of their wealth will still end up never becoming a realized capital gain and will escape tax free
what about the need to diversify assets and rebalance holdings? Aren't gains realized then?
Actually for clients of say $50m and up who are CEOs or founders of companies with concentrated positions, there are pooling arrangements available
Actually for clients of say $50m and up who are CEOs or founders of companies with concentrated positions, there are pooling arrangements available
Through a complicated legal arrangement, various people's concentrated assets are legally pooled with other people's concentrated holdings, with each participant getting both the benefit of no one selling (no taxes) as well as diversification
• • •
Missing some Tweet in this thread? You can try to
force a refresh
