After Billionaire Abuse of Retirement Accounts, US Considers New Regulations (propublica.org) 183
U.S. Senate Finance Committee Chairman Ron Wyden said last week "he is revisiting proposed legislation that would crack down on the giant tax-free retirement accounts amassed by the ultrawealthy," reports ProPublica, "after a ProPublica story exposed that billionaires were shielding fortunes inside them."
Earlier ProPublica had reported that PayPal founder Peter Thiel turned his retirement account "into a $5 billion tax-free piggy bank." Wyden said ProPublica's stories have shifted the debate about taxes at the grassroots level, underscoring a "double standard" that would have a nurse in Medford, Oregon, dutifully paying taxes "with every single paycheck" while the wealthiest Americans "just defer, defer, defer paying their taxes almost until perpetuity..."
Wyden's proposal also targeted the stuffing of undervalued assets into Roths, which congressional investigators had flagged as the foundation of many large accounts. Under the Wyden draft bill, purchasing an asset for less than fair market value would strip the tax benefits from the entire IRA. ProPublica's investigation showed that Thiel purchased founder's shares of the company that would become PayPal at $0.001 per share in 1999. At that price, he was able to buy 1.7 million shares and still fall below the $2,000 maximum contribution limit Congress had set at the time for Roth IRAs. PayPal later disclosed in an SEC filing that those shares, and others issued that year, were sold at "below fair value...." Daniel Hemel, a tax law professor at the University of Chicago who has been researching large Roths, said that Congress should simply prohibit IRAs from purchasing assets that are not bought and sold on the public market...
He added that lawmakers should go beyond reforms targeting the accounts directly and address a potential estate tax dodge related to Roths. If the holder of a large Roth dies, the retirement account is considered part of the taxable estate, and a significant tax is due. But, Hemel said, there's nothing to stop an American who has amassed a giant Roth from renouncing their citizenship and moving abroad to a country with no estate taxes. It's rare, but not unheard of, for the ultrawealthy to renounce their U.S. citizenship to avoid taxes. Under federal law, U.S. citizens who renounce their citizenship are taxed that day on assets that have risen in value but are not yet sold. But there's an exception for certain kinds of assets, Hemel said, including Roth retirement accounts.
Thiel acquired citizenship in New Zealand in 2011. Unlike the United States, New Zealand has no estate tax. It's not clear whether estate taxes figured into Thiel's decision... Patching the hole in the expatriation law, Hemel said, "should be a top policy priority because we're talking about, with Thiel alone, billions of dollars of taxes."
Wyden's proposed legislation to regulate Roth IRA accounts was excoriated in at least one 2016 editorial that complained everything in it was "opposed to capitalism and economic freedom."
Earlier ProPublica had reported that PayPal founder Peter Thiel turned his retirement account "into a $5 billion tax-free piggy bank." Wyden said ProPublica's stories have shifted the debate about taxes at the grassroots level, underscoring a "double standard" that would have a nurse in Medford, Oregon, dutifully paying taxes "with every single paycheck" while the wealthiest Americans "just defer, defer, defer paying their taxes almost until perpetuity..."
Wyden's proposal also targeted the stuffing of undervalued assets into Roths, which congressional investigators had flagged as the foundation of many large accounts. Under the Wyden draft bill, purchasing an asset for less than fair market value would strip the tax benefits from the entire IRA. ProPublica's investigation showed that Thiel purchased founder's shares of the company that would become PayPal at $0.001 per share in 1999. At that price, he was able to buy 1.7 million shares and still fall below the $2,000 maximum contribution limit Congress had set at the time for Roth IRAs. PayPal later disclosed in an SEC filing that those shares, and others issued that year, were sold at "below fair value...." Daniel Hemel, a tax law professor at the University of Chicago who has been researching large Roths, said that Congress should simply prohibit IRAs from purchasing assets that are not bought and sold on the public market...
He added that lawmakers should go beyond reforms targeting the accounts directly and address a potential estate tax dodge related to Roths. If the holder of a large Roth dies, the retirement account is considered part of the taxable estate, and a significant tax is due. But, Hemel said, there's nothing to stop an American who has amassed a giant Roth from renouncing their citizenship and moving abroad to a country with no estate taxes. It's rare, but not unheard of, for the ultrawealthy to renounce their U.S. citizenship to avoid taxes. Under federal law, U.S. citizens who renounce their citizenship are taxed that day on assets that have risen in value but are not yet sold. But there's an exception for certain kinds of assets, Hemel said, including Roth retirement accounts.
Thiel acquired citizenship in New Zealand in 2011. Unlike the United States, New Zealand has no estate tax. It's not clear whether estate taxes figured into Thiel's decision... Patching the hole in the expatriation law, Hemel said, "should be a top policy priority because we're talking about, with Thiel alone, billions of dollars of taxes."
Wyden's proposed legislation to regulate Roth IRA accounts was excoriated in at least one 2016 editorial that complained everything in it was "opposed to capitalism and economic freedom."
Good steward of the money (Score:2)
Sorry, Ronny boy, but you are not a good steward of anyone's money so STFU.
An obvious loophope (Score:5, Insightful)
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A bill closing this loophole would qualify for reconciliation (it's about taxes), so the filibuster could be moot.
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Roth IRAs were specifically designed to limit how much you put into the account. If you're slick enough to find an early company and get a few tens of thousands of shares of a penny stock into your Roth before it blows up to $10/share or more, then have you abused the system? No. High risk, high reward. Enjoy your take. Odds were good you were going to lose everything.
The real question is: how did Thiel get shares of PayPal at $.001?
Re: An obvious loophope (Score:2)
Yes, of COURSE it's only conservatives that use tax loopholes.
https://www.google.com/url?q=h... [google.com]
This is the sort of partisan bullshit that's so toxic. "Your guys do this, MY guys don't!"
You are exactly the reason the current environment is so partisan.
Wealth tax (Score:5, Informative)
The question you should be asking yourself is will you always agree with those people and how they run the country? Not do you agree with them now, a lot of people on this forum do. But will you always agree with them? Because the window to do something about their absolute power is closing fast. Another few years the option to take that power away will be gone.
It's about power (Score:3, Informative)
Fuck equality. It's about power. We have given way way too much power to way too few people.
Wealth inequality is a fundamental byproduct of the mathematics of capitalism, in the sense that a completely fair system will evolve to wealth inequality.
If you set up a computer simulation of a completely fair [umd.edu] system running capitalism, the end result is wealth inequality. The linked site has two very nice simulations (sim1 [umd.edu], sim2 [umd.edu]) that show the endpoint, and the whole thing is laid out mathematically in the paper "Statistical mechanics of money" by A. Dragulescu and V.M. Yakovenko.
The endpoint of capitali
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First, "fair" is a subjective term, and a system with grossly unequal outcomes is not what most would consider fair. For example, a system based on a lottery where whoever draws the winning ticket gets 99% of the wealth and power is not what most people would consider "fair," even though it is totally unbiased.
So instead of "fair" it would be more accurate to say that gross inequality is "natural," in that it tends to occur pervasively wherever it is not prevented. But this is an ar
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consider if everyone is playing by the same rules?
Even if everyone is playing by the same rules, doesn't mean the rules are fair.
Having more money means you have more to invest. While some investments will fail, others
will succeed. Some investors will succeed more often than fail, while others will fail more
than succeed. Over time, this will result in a very few controlling most of the money.
Whether this is fair depends on which end of the wealth spectrum you are on.
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My previous post already gave a specific example of a system in which everybody plays by the same rules and the outcome is unfair - a lottery.
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In a fair system, (1) all have equal opportunity, and (2) outcomes are proportional to "merit," defined in some reasonable manner.
Applying the same set of rules to everybody does not necessarily guarantee either of these.
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Also to be rich one has to be smart; ie know the game you are playing and play it well. We surely don't want dumb folks to hold millions of dollars ( or power). So there is no way wealth-inequality can be elimin
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Let's agree to disagree. Poor people can't buy the power of an ivy-league education, the power of the best surgeons and healthcare.
But wealth allows the rich to buy more than a future: Add a law claiming civil contracts have more power than state laws, and only the rich will be protected from professional (and often, criminal) misconduct. Add an exemption so that civil contract doesn't apply to hourly wages, and rich people will never suffer their investment in a business (AKA pension fund) being stole
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You don't pay property tax to the Feds.
Certain Romney vote (Score:2)
I'm sure Utah Senator Mitt Romney(R) will step right up to vote in favor of legislation restricting billionaires from abusing pretax retirement accounts - he's probably mad he only managed to stash $2 billion in his compared to Thiel's $5 billion. But hey, he arranged that each of his executive staff got $75,000 in their accounts as part of that deal so its all good right?
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Not sure of the details for the billionaires, but for me I have a very hard and strict ceiling about how much money I can put into the retirement accounts. The tax free accrual of the retirement account is not the issue here, but on how they manage to get so much money into it, and avoid full tax when they take the money back out again.
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Well, I wrote up a post explain how I remembered the scam worked but I guess we can no longer write posts with dollar signs or decimal figures so that makes it a bit hard to reply on a financial topic. Willard Mitt Romney has worked hard to erase any reference to how he did it but if you search around you can find it. I imagine it was all perfectly legal at the time but not something an ordinary Joe with a 1099 consulting gig could pull off.
Sounds similar to Eduardo Saverin (Score:5, Interesting)
For those not familiar, Eduardo Saverin was a co-founder of Facebook. Right before Facebook went public, and while he had a 4% stake in the company, Saverin renounced his U.S. citizenship and casually moved to Singapore. In so doing, he saved not paying at least $67 million in taxes [bloomberg.com].
Needless to say, the timing of his renunciation had nothing to do with saving taxes. He had only been in discussions about it for months, according to his spokesperson [goingconcern.com].
Mind you, having a Roth IRA is one way to save on taxes since the money used has already been taxed. Your withdrawals do not incur a taxable situation once you reach 59 1/2 years of age.
However, the difference between you or I having a Roth and Peter Thiel having a Roth is that he had investment opportunities you nor I will ever have. As was mentioned in the article, restrict Roth investments to what is publicly traded and that advantage goes away. At least it would level the playing field.
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What exact opportunity did Thiel have that you don't? What enabled him to get PayPal at $.001? You can buy penny stocks and put them in a Roth right now. What's stopping you?
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Try reading the summary? Peter Thiel had an opportunity to buy Founder's shares of Paypal. Since he was one of the founders of Paypal, he essentially sold shares to himself at way below market value to dodge taxes. Normally when someone does this they have to at least pay capital gain taxes, which is less than income taxes - hence the whole reason this kind of thing is done. But because Thiel had his Roth IRA buy the shares instead, he doesn't have to pay any taxes at all.
This is not a normal middle cla
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I will reiterate (as I have posted elsewhere):
Why was Thiel allowed to sell himself founders shares for below-market value? Has it ever occurred to you that the Roth IRA isn't to blame here?
Re:Sounds similar to Eduardo Saverin (Score:5, Informative)
You need to educate yourself a bit more. Peter Theil sold stock to himself very far below market value, thus getting assets into his Roth IRA below that limit.
So, yes, we are all aware of the existence of that limit, but you apparently aren't aware of TFSummary, much less TFS.
Re:Sounds similar to Eduardo Saverin (Score:5, Interesting)
Sounds like the problem isn't the Roth. It's a below-value stock sale.
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Sounds like the problem isn't the Roth. It's a below-value stock sale.
Yes, which is why the proposal to limit IRAs to assets that are publicly traded fixes the problem.
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The easy path isn't always the best one.
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And who decides that certain point?
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There is absolutely nothing barring you from starting a wildly successful company except your own limitations
Or not having access to existing contacts, capital, etc. Or is not being born to the right parents a limitation you should be ashamed of? Even companies with great ideas are rarely wildly successful companies. That's why they are called unicorns (which are rare/imaginary) not 'companies'.
Cost Benefit Analysis (Score:2)
Let's take the case of Peter Thiel.
A bunch of people are offended that he took money, stuck it into a Roth IRA, and now doesn't have to pay tax on it.
Let's leave aside whether he unfairly put below-market assets into it. That just allowed him to stuff more in early. Let's also leave aside the fact that not paying taxes on after tax money in a Roth IRA is kind of the point (the flip side of the deal is you aren't able to deduct your losses.)
Let's assume that the IRS retroactively converts his Roth IRA into
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That should have read HOV lane...
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Taking a slightly different (fictional) viewpoint, let's look at the price he paid for PayPal shares vs. the IPO price.
According to a Google search, PayPal IPOed at 13 a share.
According to this Fool article, 10k invested in PayPal at IPO would have resulted in 1200 shares of PayPal and 1200 shares of eBay today.
https://www.fool.com/investing... [fool.com]
I just looked up the price and paypal was trading at about $290/sh as of yesterday, and ebay $70 a share. (290+70) * 1200 == $432,000.00, or a 43x return over the la
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And finally, a link to an opinion article from 2013 about Mark Zuckerberg that details how internet millionaires/billionaires can stop paying taxes once they have accrued assets to borrow against:
https://www.cnn.com/2013/04/09... [cnn.com]
"
So, you think you have it bad this tax season. Have you heard that Facebook founder Mark Zuckerberg will pay between $1 billion and $2 billion in taxes? That sounds like a tough pill for anyone to swallow.
But it is premature to start a pity party for Zuckerberg. The twenty-somethin
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Let's leave aside whether he unfairly put below-market assets into it. That just allowed him to stuff more in early
No, it let him stuff the stock in at all. The quantity of stock required a far below market price, otherwise the quantity of stock and the appreciation on that stock would mean he could not get most of it into the IRA.
So, leaving aside the entire problem with the current situation is probably not the best approach.
as far as I know, most IRA plans will not allow you to borrow against assets in the plan, you have to sell assets and then repay the balance of the loan
The bank loaning you the money does not have to be involved in the IRA at all. You list it as an asset and they give you money. Banking for the extremely wealthy is not at all like it is for us
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What was the fair market value of PayPal in 1999?
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According to the IRS, it is a prohibited transaction to use an IRA as collateral on a loan:
https://finance.zacks.com/can-... [zacks.com]
"IRA Money
The IRS doesn't allow you to use an IRA as collateral for a loan. IRS Publication 590 classifies this as a "prohibited transaction," along with things like buying property for personal benefit. You can't get around the ban by borrowing directly from the IRA -- that is also a prohibited transaction.
IRA Penalties
If you use an IRA as collateral for a loan, the IRS considers the
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What you described is "stuffing":
https://www.irafinancialgroup.... [irafinancialgroup.com]
"This scheme involves shifting value through transactions that disguise Roth IRA contributions exceeding annual IRA limits, such as selling receivables at less than fair market value to a Roth IRA. In 2004, IRS determined that this abusive tax avoidance shelter is a listed transaction that taxpayers must report to IRS.
In Notice 2004-8, the IRS highlights the following type of transaction involving a Roth IRA that they have listed as abusive.
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Going back to getting stock cheap angle:
https://www.irafinancialgroup.... [irafinancialgroup.com]
"* Make sure the aggregate business ownership is less than 50%, when including the stock ownership of the IRA owner personally, his or her lineal descendants, and their IRAs.
* Be cautious if your IRA will be investing in a mature company. It is imperative that the IRA pay fair market value for the stock or membership interest. Beware of IRS Notice 2004-8.
* The Roth IRA must be making the investment for the exclusive benefit o
Eat Your Own Dog Food, Democrat! (Score:2)
Senator Wyden is a part of the problem. The Congress, led by Democrats like Wyden, led the USA into these complex and convoluted Tax Codes. The Democrats created the loopholes that Only the Rich and UltraRich could take advantage of.
For decades, Conservative and Libertarian commentators have said that taxes effect the Middle Class and not the Lower or Upper Classes.
Wyden has shown to the whole USA and world, the slyness and complicity of the Democrats in the Ruling Class in this unfair tax
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The Democrats created the loopholes that Only the Rich and UltraRich could take advantage of.
Roth IRA was proposed and sponsored by Sens Bob Packwood of Oregon and Senator William Roth of Delaware. Both were Republicans.
Perhaps (Score:2)
Perhaps the government should give those gaming the system a choice:
Since your Roth IRA was funded via illegal means ( yes, intentionally devaluing an asset so you can sell it to your buddies ( or yourself ) on the cheap to skirt tax laws is illegal. For example, I cannot sell a high dollar asset ( like a home ) to my buddy for $1 to keep it out of upcoming divorce proceedings.
You can either:
1) Cash out the entire Roth right now incurring all early withdrawal penalties and interest in addition to being t
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Again, I ask: why are you targeting the Roth? How did Thiel get away with selling himself stock in his own company at a devalued rate?
I am afraid (Score:2)
Roth is one of the *good* retirement options available to middle class Americans. And unlike most other alternatives, it is not double taxed (contributions are taxed, but withdrawals, or even returns are not). However a few rich guys are spoiling it for everyone.
Once in the radar of politicians, it is not far fetched to see these benefits will slowly erode, even for the middle class. Sure, closing the loopholes is important. Otherwise I would build my own company, make my Roth its partner, and then transfer
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while I agree Roths are good for middle class, Once you get around upper middle class or better, it's not very attractive.
there are plenty of other ways to reduce tax and still keep your money more accessible than it is in retirement accounts.
the end result of government actions like this, in the end just means more burden on the middle class, the middle and lower class are the only one's that don't use accountants and lawyers to find ways to reduce their taxes, and in the end things this will just be anoth
Some people just have unfettered greed (Score:2)
I say, strip them of their assets, declare them incompetent and have them live on what the average citizen has available. These people contribute nothing but take as much as they can.
shouldn't this be differently titled? (Score:2)
"After billionaires follow the specific rules for retirement accounts, liberal journalists use them to stoke class-envy, and politicians that literally wrote those rules for those rich people now see it as politically expedient to insist they should be changed"?
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And who do you suppose bought the laws with obvious loopholes for the ultra-wealthy? It's getting to be very rare that laws are actually written by legislators...
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You just made his point. What kind of legislator lets you "buy the laws"? Bad ones. And who votes for these morons?
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Generally speaking, either you vote for the lesser of two evils offered by wealthy, or you accept the greater.
Re: Just tax their account with regular capital ga (Score:2, Informative)
As things stand, they didn't break any rules. You can't just create laws or regulations and then say they apply retroactively, otherwise ignorance of the law becomes an excuse. Suppose you created a tax regulation stipulating that assets purchased from private sources don't get exemption, all they have to do is trade it for assets that do qualify before the law is in effect. It could prevent future occurrences though...
Also, you don't have to be rich to have some professional finance people manage your IRA
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IMHO the solution is even easier: all forms of income to be taxed at the same rate regardless of whether its wage labor or capital gains. In other word harmonize the labor rate with the cap gains rate. Permanently. Carve out an exception for the sale of one's primary residence.
The go back to the 1950's and outlaw compensating executives with stock. If they want stock in their companies, they can buy it at retail just like everyone else. Outlaw stock buybacks, just like they used to be.
IMHO if the US did tho
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New Zealand is reckoned a progressive place. It does not have capital gains taxes.
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Re: Just tax their account with regular capital ga (Score:3)
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The whole point of this article is that only the first is certain for billionaires.
Re: Just tax their account with regular capital g (Score:2)
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Re:Just tax their account with regular capital gai (Score:4, Informative)
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I also don't think a wealth tax (such as we have in the Netherlands) is a good idea: guys like Bezos and Musk own billions but it is mostly in stock of their own companies, and it would be silly to expect them to cash out some of them just to meet the tax bill.
Wait until you hear about property taxes. They already exist, and houses are way less liquid than stock.
But they mostly fuck over middle-class people, so they must be OK.
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guys like Bezos and Musk own billions but it is mostly in stock of their own companies, and it would be silly to expect them to cash out some of them just to meet the tax bill.
Why? Everyone else is held to a standard of, in the absolutely best deals available - some don't even make it that far, "work to pay off a mortgage designed to fleece you for as much interest you can afford to pay until the day you die, then estate taxes eat it up so your children do the same thing." Fuck the rich any way you can, at least until they stop fucking the poor and middle class. All that's really going to come from TFA though is more taxes on the middle class the billionaires dodge in differen
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I take issue with people whose bank account has five digits over mine pays less income taxes.
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Personally I find it highly amusing that people like you keep trying to leverage taxes against the rich, only to find you're going to be paying those taxes yourselves. Now that's some social justice I can live with!
Re:Just tax their account with regular capital gai (Score:5, Informative)
Mitt Romney literally stole money out of my neighbor's retirement accounts and stuffed it in his pockets - the infamous hundred dollar bills and cigars photo. He was also an early pioneer of stuffing billions, much of it stolen from hourly workers' pension plans ("cashectomies" in the criminal patter of Bain Capital), into pretax retirement accounts so his n times greatgrandchildren would start out life as decamillionaires. That's a good strong basis for a working society right there.
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Apologies for the typo: I wrote neighbor's when it should have been neighbors'. I lived among dozens out of the thousands of IH/Wisconsin Steel retirees who had their pensions stolen by Romney.
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What, did Mitt Romney secretly mastermind IH's stiffing of Wisconsin Steel's pension [justia.com] the same year he joined Bain & Co?
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But Romney is anti-Trump. Doesn't that make him a good guy in today's society?
... good guy or servant of Satan, it depends on which of the USA's two tribes you belong to. I'm just glad I don't have to live in the no man's land between their territories like the handful of still sane Americans have to do.
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Hardly. It just means he's got some kind of grip on reality.
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"You can't stand capitalism because other people are better at it than you."
LOL since when is tax fraud "capitalism"?
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Re:Just tax their account with regular capital gai (Score:5, Insightful)
If it's obvious they had professional money managers trading in their retirement account with exotic financial products, just say they broke the rules and don't qualify for the tax exempt status. Considering the amounts of money in these accounts, the IRS could easily invest the resources to take this to court.
What did wealthy people ever do to you? You can't stand capitalism because other people are better at it than you. Why can't you extreme lefties stand the sight of somebody being successful shout feeling the urge to steal all their money by violence and giving it away to the undeserving? Keep your grubby communist hands off of the fruits of their life's work, these people worked their way up from nothing. They earned their wealth honestly by the sweat of their brow, they are the salt of the earth that keeps America employed and at the peak of human development and evolution.
Geez, you need to lay off the Ayn Rand.
You think taxing Thiels' undervalued paypall shares is stealing "the fruits of their life's work" that he earned "honestly by the sweat of their brow", even though putting deliberately undervalued shares into an investment instrument meant for assets at fair market value is pretty damn dishonest.
But yeah, I guess if you enjoy working a few extra hours to subsidize tax-breaks for billionaires then Thiel is your guy.
Re: Just tax their account with regular capital ga (Score:2)
I'd rather work a few extra hours "subsidizing"* capitalists like Thiel (I don't agree it's hours), than to spend a few extra hours subsidizing worthless welfare layabouts and do-nothings so that democrats can farm their votes.
Did you know the majority of the federal budget goes to social spending?
*of course we both know that not taxing them isn't a subsidy, that's your first order bullshit here...
Re: Just tax their account with regular capital ga (Score:2, Interesting)
This has to be the dumbest take of the decade on Slashdot. By every measure we live in a less equitable society. This is a perversion of what has been the norm in most of modern human existence.
https://time.com/5888024/50-tr... [time.com]
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This has to be the dumbest take of the decade on Slashdot. By every measure we live in a less equitable society. This is a perversion of what has been the norm in most of modern human existence.
https://time.com/5888024/50-tr... [time.com]
Wealth was measured in humans (as in slaves) for a very long time.
And your article highlights that now we measure wealth in dollars which directly and corruptly affects the health and welfare of damn near everyone else (not unlike slavery), and I'm supposed to fucking feel better about that ignorant bullshit?
"Because we've always done it this way" is your lazy piss-poor excuse. We humans are too fucking dumb and ignorant to avoid the worst of our history, and you want to continue to beat that drum. Well,
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Hey, I think government should be shrunk by a ton and everyone should get lower taxes.
But as long as I'm paying 45% it's only fair that the assholes who own everything should pay at least as much.
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If it's obvious they had professional money managers trading in their retirement account with exotic financial products, just say they broke the rules and don't qualify for the tax exempt status. Considering the amounts of money in these accounts, the IRS could easily invest the resources to take this to court.
What did wealthy people ever do to you? You can't stand capitalism because other people are better at it than you. Why can't you extreme lefties stand the sight of somebody being successful shout feeling the urge to steal all their money by violence and giving it away to the undeserving? Keep your grubby communist hands off of the fruits of their life's work, these people worked their way up from nothing. They earned their wealth honestly by the sweat of their brow, they are the salt of the earth that keeps America employed and at the peak of human development and evolution.
Three Americans own as much wealth as the bottom 50% of the country.
And you think this is about that, don't you? You're wrong.
No, this is about the fact that the rest of the country has higher taxes to pay, BECAUSE billionaires are purposely manipulating (through lobbying and corrupt-yet-legal dealmaking), and certainly not paying into the tax coffers as they should.
What happens when everyone gets as "better at it" as the billionaires in avoiding taxes? Public services break down. Retirement funds disa
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What did wealthy people ever do to you?
How much is the rent your parents are paying for your place?
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Just because you excel at capitalism doesn't mean you have to be a shitty person. But wait, most millionaire/billionaire types are shitty people by default. Can you imagine being that selfish after having success? These people are disgusting. Can you imagine a human being with the capability of ending suffering for THOUSANDS of people with the money they will never be able to spend but still choose to horde it and even worse, chase more? When is enough for them? The only satisfaction I get out of it is
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Re:Keep it simple, stupid (Score:5, Insightful)
But with or without that change there are still loopholes about what is and is not income. The flat tax idea does literally nothing about the problem. The extremely wealthy actually want a flat tax, it benefits them, because they define what gets the flat tax in a way that benefits them (ie, would it apply to capital gains or increases in house values or whatnot). The problem is that "income" is not so simple a definition. These billionaires don't usually have a "salary" and if they do it's the smallest part of their income. And when you clamp down on some forms of income it also hurts the poor - do you really want a massive income tax increase just because some yuppies gentrified your neighborhood and raised the potential value of your house? Whoops, you haven't sold your stock options yet, but their value went up so now you have to pony up extra taxes (and extra paperwork when they go down to claim the potential loss, etc). Flat tax proposals never seem to address any of that.
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Net income. Raising or lowering tax rates on the 'rich' is pointless if shelters aren't taken into consideration. Also, there's nothing natural about a flat tax. Nature is just as often linear on a log scale.
Land Value Tax (Score:2)
Preferred by several economist, simplifies the tax code immensely, and reduces corruption.
Probably the only (partial) wealth tax that is manageable.
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But "tax rate" is the most simple part of the tax process. Other than signing it at the end.
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Let's say you own a bar of gold, and you have it under your bed and have not touched it in years. This year the price of gold goes up. Is that income? Do you pay tax on it? Now, if only rich people owned bars of gold a lot of people would say "hell yes, they should pay tax those freeloaders!", but those with the gold would say "no, the increase in price is not realized yet, it's just a potential income until I actually sell it." And both sides might argue over it. Sort of like the alternative minimum
My Version of the flat tax (Score:2)
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I vigorously opposes since I make over $200K! :-)
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The main reason is that many people could not survive if they had to pay the flat rate. Here in the UK a lot of people pay zero income tax and get benefits on top, and are working.
The pay is so low that even with food banks and contributions to rent they are struggling. Flat rate would either have to be offset some other way or minimum wage would have to massively increase.
And in any case billionaires don't pay much income tax. Most of their wealth is not from salary.
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No income tax. A national sales tax with low or no tax on certain classes of consumables like food, medicine, etc.
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Re: Keep it simple, stupid (Score:2)
As another poster put it, a sufficiently large UBI (as in: enough to live decently, 100k or so) would fix that problem.
Then you could flat-tax pretty highly, even way above 50%.
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Because people don't peacefully starve to death.
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No, they really don't. Police have never managed to quell a civil war anywhere on the planet.
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Syria says otherwise
You mean the country where it took the military and intervention from two superpowers to quell the civil war? As an example of the police stopping a civil war?
What a great example.
hey are always organized by the upper middle class
Yes, and that only works when the alternative is worse. Starving? Well, gonna die anyway, might as well join the rebellion.
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Just make sure there are protections against taxing people out of their own homes, side effects to owning property like cars or businesses, and the like.
I'd rather tax income based on total wealth, rather than tax income based on income or wealth based on wealth.
Maybe, at the very least, a wealth tax should exempt primary residences so you don't tax people out of their own homes.
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This could fix some of the issues here IMO.
Wealth tax isn't necessary for this case.
IRA's (401K, 403b,etc) already have a required minimum distribution that begins when you turn 72 and slowly drains your account during your expected remaining lifetime.
In the case of these retirement plans, we can make a upper limit on the amount that these plans are allowed to hold (something like $1 million or $10 million), and force yearly distributions of any excess.
Retirement plan distributions are taxed as ordinary income, which is the worse thing that could ha
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Except for Roth IRAs, which won't have taxes on the distributions, normally.
But the law could be changed for future distributions from these jumbo retirement plans.
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Except for Roth IRAs, which won't have taxes on the distributions, normally.
You pay taxes on the way in with a Roth IRA, its post tax contributions only. So it still works with forced distributions above a certain threshold. You are limiting the amount of untaxed growth given by retirement programs. That's the goal here. Please try to remember the rest of us have IRAs and 401Ks too. We just don't have billions in them.
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Wealth tax is unConstitutional. It's a non-starter.
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It will morph just like the income tax. It starts as only affecting the super rich, then the rich then the middle class, then everyone.
How about a consumption tax instead of the current, convoluted tax code.