World News
A community for discussing events around the World
Rules:
-
Rule 1: posts have the following requirements:
- Post news articles only
- Video links are NOT articles and will be removed.
- Title must match the article headline
- Not United States Internal News
- Recent (Past 30 Days)
- Screenshots/links to other social media sites (Twitter/X/Facebook/Youtube/reddit, etc.) are explicitly forbidden, as are link shorteners.
-
Rule 2: Do not copy the entire article into your post. The key points in 1-2 paragraphs is allowed (even encouraged!), but large segments of articles posted in the body will result in the post being removed. If you have to stop and think "Is this fair use?", it probably isn't. Archive links, especially the ones created on link submission, are absolutely allowed but those that avoid paywalls are not.
-
Rule 3: Opinions articles, or Articles based on misinformation/propaganda may be removed. Sources that have a Low or Very Low factual reporting rating or MBFC Credibility Rating may be removed.
-
Rule 4: Posts or comments that are homophobic, transphobic, racist, sexist, anti-religious, or ableist will be removed. “Ironic” prejudice is just prejudiced.
-
Posts and comments must abide by the lemmy.world terms of service UPDATED AS OF 10/19
-
Rule 5: Keep it civil. It's OK to say the subject of an article is behaving like a (pejorative, pejorative). It's NOT OK to say another USER is (pejorative). Strong language is fine, just not directed at other members. Engage in good-faith and with respect! This includes accusing another user of being a bot or paid actor. Trolling is uncivil and is grounds for removal and/or a community ban.
Similarly, if you see posts along these lines, do not engage. Report them, block them, and live a happier life than they do. We see too many slapfights that boil down to "Mom! He's bugging me!" and "I'm not touching you!" Going forward, slapfights will result in removed comments and temp bans to cool off.
-
Rule 6: Memes, spam, other low effort posting, reposts, misinformation, advocating violence, off-topic, trolling, offensive, regarding the moderators or meta in content may be removed at any time.
-
Rule 7: We didn't USED to need a rule about how many posts one could make in a day, then someone posted NINETEEN articles in a single day. Not comments, FULL ARTICLES. If you're posting more than say, 10 or so, consider going outside and touching grass. We reserve the right to limit over-posting so a single user does not dominate the front page.
We ask that the users report any comment or post that violate the rules, to use critical thinking when reading, posting or commenting. Users that post off-topic spam, advocate violence, have multiple comments or posts removed, weaponize reports or violate the code of conduct will be banned.
All posts and comments will be reviewed on a case-by-case basis. This means that some content that violates the rules may be allowed, while other content that does not violate the rules may be removed. The moderators retain the right to remove any content and ban users.
Lemmy World Partners
News [email protected]
Politics [email protected]
World Politics [email protected]
Recommendations
For Firefox users, there is media bias / propaganda / fact check plugin.
https://addons.mozilla.org/en-US/firefox/addon/media-bias-fact-check/
- Consider including the article’s mediabiasfactcheck.com/ link
view the rest of the comments
The answer would be of course they have income, and we have to adequately recognize it as such.
Borrowing money against stocks? Income. Capital gains on high value or nonessential assets (e.g. non-primary residences and stock)? Income.
Actual money has to come in at some point to manifest that lifesytyle and that is obviously income.
I've always thought that it would make sense to tax borrowing money against something, but you need to have a way to account for it being paid back with either yet to be taxed assets, or already taxed assets.
E.g
Has 100 million in bank.
Leveeages 10m to buy a house.
Sells stock to pay off loan monthly.
Now in this case we can tax the 10m (maybe at a different rate) but if they sell the stock to pay off the loan it should take into account the tax they paid on the loan.
Also if they pay the loan off with already taxed money (cash in an account) that loan then needs to have its tax refunded in some manner.
It can get pretty messy, but if the law only triggers when you do this over a certain threshold, those people would be able to afford the tax people to sort it out.
The easy way around the problem is to tax loans that aren't being used to purchase an asset. This is the "living expenses" loan hack that the ultra-wealthy use and it absolutely needs to be removed.
Your example is a bit different because the wealthy person is selling stock to make the mortgage payment. In this case they should already be paying capital gains taxes on those sales. If they aren't then figure out why and fix the tax code.
We can tie the two situations together by considering the annual sum of all stock sales and non-asset purchasing loans as regular income and thus subject to income tax, minus any capital gains taxes already paid.
That easily closes both of the common loopholes that the ultra-wealthy use while leaving us normal people untouched. The ultra-wealthy would suddenly be paying income taxes on the money they are spending to maintain their lifestyle, same as the rest of us are.
Sorry I meant in my example they took out a loan, not a mortgage.
Better rates that way probably.
But it's the same problem even if it's living expenses.
You borrow 1m to live off of and pay income tax on it.
You then sell stocks to close out the loan and pay capital gains tax
You've now paid tax twice.
Edit: that's what it needs to be able to account for which might get messy
Stock dividends? Oh, you bet that's income. Income should be delta wealth, simple as.
I actually take issue with this one, though. Debt doesn't just disappear, until you (or someone else) pays it back, rich or poor alike.
Edit: It doesn't but apparently in the US specifically the taxation isn't the same.
At least in the US dividends already count as normal income and taxed at the rate of wages, as far as I know.
On the debt, I'd say the remedy for that is some sort of tax credit on repayment, depending on how the repayment goes. So if you are using real income to pay a debt that has already incurred tax liability, then that real income is exempt to avoid the double taxation.
They're not in Canada, I'm pretty sure. Which is messed up.
Is there something I can read on leveraging stocks as a loophole? I've never heard of it. Every financial advisor will tell you to avoid long-term debt if at all possible.
Here's something talking about the loophole: https://equitablegrowth.org/closing-the-billionaire-borrowing-loophole-would-strengthen-the-progressivity-of-the-u-s-tax-code/
And some talking about some ways in which it can be leveraged: https://www.healio.com/news/hematology-oncology/20220928/avoid-capital-gains-taxes-like-a-billionaire-using-buy-borrow-die-strategy
In short, by borrowing, the tax code assumes that long term the proceeds of the loan will be disposed of in an appropriate tax way. However there are so many ways to be slippery about repayment that it's hardly a guarantee. So it may be wise to shift to pessimistically assuming long term shenanigans at borrowing time and taxing the proceeds as income, with tax breaks around "sane" repayment to handle the intended "avoid double taxation" behavior.
Fascinating. Old paintings as a way of hiding wealth make sense - that is subjective value - but you can look up stock prices in near-real time. Uncle Sam just has a really weird way of defining a transaction, probably do to something in deep US history.
If we're rearranging the whole tax code in this hypothetical, I'd just write it in such a way the IRS is allowed to tax gains even if there's no "realization", or at least taxes heirs just like the deceased. If not, I guess it's a matter of what you can get legislative support for, and what the article suggests would be a reasonable kludge.
Problem with taxing unrealized gains is that there's a fair argument that unrealized gains are, largely, fictitious. For example if Musk said, today, "I am selling all my stock, give me 250 billion now", he would not get 250 billion dollars, because there isn't 250 billion dollars of money actually primed to buy Musk's stock.
Analagous, if your house went up by $150k, then they said "oh, you 'earned' $150k, you owe $80k", your only way to cover that would be to sell the house, which isn't fair because you were living in it, not using it as a financial instrument. However, if you borrowed $150k and used it to buy a couple of corvettes based on that equity increase, well that's weird but maybe ok depending on how you ultimately pay back that $150k you borrowed, but at least in the short term, you made $150k appear out of thin air, which might be janked in the long term...
Yeah, there'd need to be a bit more flexibility about payment schedules, I think. If your stuff appreciates you're definitely richer, it's not just theoretical before selling in today's complex financialised market. It would have to be legal to owe more than you pay for a long period if there's a good reason like "my house isn't subdividable and I am house poor". Taxing something hard to value would be a stickier wicket, but you could just leave the amount owed for your now legendary sports card undefined until it is defined (realised, basically, but without needing to pin it down in the legislation).
And capital gains tax should have to be settled up before your estate closes.
Primary residences are often exempted from financial requirements for that reason.