Billionaires have avoided taxation by paying themselves very low salaries while amassing fortunes

[ttwtt78640]

Yes .. because he doesn't pay income taxes .. a novel concept Americans should understand before leverage the talking points of Democrats and the media.

He doesn't get a paycheck ...

He’s obviously getting some income or he would be unable to repay loans.

 

[Razoo]

Property taxes .... I think should be based on original purchase price.

Instead in some areas they are based on an assumed market value based on what?

So I say until a property sells the the assessed value remains as is.

Now some years back we noticed from time to time a vehicle taking photos of our home/lot. Upon
asking why the response was a house similar to ours at another location sold for X amount of dollars.
Or when improvements were made to the exterior the camera would be back....once again a tax increase
is about to take place.

My final response was to deplete the value as much as possible by letting the outdoor surroundings go
straight to hell as it is as we speak. Yes increases stopped for some time. Increases are much smaller.
I intend to maintain the property under this policy ..........until we decide to sell.

 

[jotathought]

He’s obviously getting some income or he would be unable to repay loans.

If he (or other billionaires using the same approach) are getting income through a paycheck, then they pay income taxes; however, they leverage tax advantages to minimize tax liabilities ...

How does a billionaire pay off a monthly recurring expense .. e.g. loan? Dividends, wealth growth on investments and/or the loan value itself. I would suggest you be more disgusted with the 50%+ of Americans that pay NO income taxes.

 

[Michael Cole]

Great, but did that 7% given away reduce her (obscene?) net worth (of $55B) or negatively impact her lifestyle?

I doubt it. She has a 4% stake in Amazon.

I think she plans on giving away half of her fortune, but regardless of the percentage, her attitude is a stark contrast to Bezos.

MacKenzie Scott is a full-blown philanthropist. She married a science teacher, "who expressed gratitude 'for the exceptional privilege it will be to partner in giving away assets with the potential to do so much good when shared.'"

MacKenzie Scott marries Seattle teacher after Bezos divorce

MacKenzie Scott, philanthropist, author and former wife of Amazon founder Jeff Bezos, has married a Seattle science teacher

abcnews.go.com

 

[ttwtt78640]

If he (or other billionaires using the same approach) are getting income through a paycheck, then they pay income taxes; however, they leverage tax advantages to minimize tax liabilities ...

How does a billionaire pay off a monthly recurring expense .. e.g. loan? Dividends, wealth growth on investments and/or the loan value itself. I would suggest you be more disgusted with the 50%+ of Americans that pay NO income taxes.

Those (bolded above) sources are taxable income. I’m disgusted with folks making false claims.

 

[ttwtt78640]

I doubt it. She has a 4% stake in Amazon.

I think she plans on giving away half of her fortune, but regardless of the percentage, her attitude is a stark contrast to Bezos.

MacKenzie Scott is a full-blown philanthropist. She married a science teacher, "who expressed gratitude 'for the exceptional privilege it will be to partner in giving away assets with the potential to do so much good when shared.'"

MacKenzie Scott marries Seattle teacher after Bezos divorce

MacKenzie Scott, philanthropist, author and former wife of Amazon founder Jeff Bezos, has married a Seattle science teacher

abcnews.go.com

That money she gives away will likely do far more good than if it was surrendered to the federal government instead.

 

[jotathought]

Those (bolded above) sources are taxable income. I’m disgusted with folks making false claims.

I'm disgusted that 50+% of Americans don't pay income taxes . Parasites ...

... and many Americans are okay with this approach, and bitch and complain about those who are successful.

 

[ttwtt78640]

I'm disgusted that 50+% of Americans don't pay income taxes . Parasites ...

... and many Americans are okay with this approach, and bitch and complain about those who are successful.

I am one of those “parasites” who no longer pays any federal income tax. My (reportable) income consists Social Security retirement and too little 1099 (self-employment) income to require filing a tax return.

Technically, I am required to pay self-employment taxes on any 1099 (self-employment) income above $400, but mine is far below the standard deduction amount for a senior (the 1040 filing requirement) so IRS simply doesn’t care because it would cost Uncle Sucker more to process the payment than what I would owe.

 

[Michael Cole]

That money she gives away will likely do far more good than if it was surrendered to the federal government instead.

Indeed.

I know nothing about her now husband, but I can only give a thumbs up to the guy. Lol. Science teacher. Scott is either the most in-touch billionaire ever or a tad batshit crazy. Maybe both. Can't remember the last inter-class marriage that spanned the teachers' union to multi-billionaires.

Anyway, yes, I agree. The word "assets" caught my eye in the quote I posted.

There are hard assets and there are securities. A hard asset would be a printing press. A security would be stock in a printing company.

Outside of risk; profit or loss, the financial sector is non-productive economically. The productive capacity of a printing press does not change with the price of stock. It's the system we have, and it works fairly well sometimes...I guess. I'm not the 1%, but I understand what makes the wheels turn. Point is, every dollar held in a security could be used to buy a loaf of bread. Indeed, that security represents loaves of bread, sitting on the shelf. People like Scott feel it's better to feed hungry people than keep shelves full of bread. (Somebody buys the "shelf space" from her and the cycle goes on, but I'm impressed by the woman's compassion.)

The government would be much more inefficient. If we had a thousand MacKenzie Scotts, we could forget the government welfare state altogether. It's not a trend, sadly, and I'll give Scott her due, as little as it really is in the general economy.

 

[Mulefoot]

I am one of those “parasites” who no longer pays any federal income tax. My (reportable) income consists Social Security retirement and too little 1099 (self-employment) income to require filing a tax return.

Technically, I am required to pay self-employment taxes on any 1099 (self-employment) income above $400, but mine is far below the standard deduction amount for a senior (the 1040 filing requirement) so IRS simply doesn’t care because it would cost Uncle Sucker more to process the payment than what I would owe.

The standard deduction doesn't reduce SE tax.

 

[jotathought]

I am one of those “parasites” who no longer pays any federal income tax. My (reportable) income consists Social Security retirement and too little 1099 (self-employment) income to require filing a tax return.

Technically, I am required to pay self-employment taxes on any 1099 (self-employment) income above $400, but mine is far below the standard deduction amount for a senior (the 1040 filing requirement) so IRS simply doesn’t care because it would cost Uncle Sucker more to process the payment than what I would owe.

You represent a minority of the majority of those who don't pay income taxes. I'm confident you'd agree with this.

 

[Jezcoe]

Not the whole picture. Between 2014-2018 Musk paid 455 million in income tax and is set to pay the most ever by any individual - ever - north of 8 billion dollars.

Because he exercised some stock options.

That is the only reason he paid those taxes.

To buy stock at a discounted rate.

 

[Jezcoe]

Between 2015 and 2022, those on Medicaid paid ZERO in income taxes. And that's a whole lot of people.

Well. Let us compare the very poorest among us needing health care to the richest people in the world.

It’s a good look.

 

[Jezcoe]

Yes .. because he doesn't pay income taxes .. a novel concept Americans should understand before leverage the talking points of Democrats and the media.

He doesn't get a paycheck ...

And is still one of the wealthiest people in the world.

It’s wild how that happens.

 

[Jezcoe]

That is nonsense. Neither loans nor unrealized capital gains (increases in het worth) are income. I see absolutely nobody arguing that either loans or increases in net worth should be considered as income for anyone else.

The loans are used in lieu of income.

Their tax liability is greatly reduced because they don’t realize gains off of their assets or get paid taxable income.

 

[Jezcoe]

He’s obviously getting some income or he would be unable to repay loans.

They get new loans to pay the old ones until they die.

 

[ttwtt78640]

Indeed.

I know nothing about her now husband, but I can only give a thumbs up to the guy. Lol. Science teacher. Scott is either the most in-touch billionaire ever or a tad batshit crazy. Maybe both. Can't remember the last inter-class marriage that spanned the teachers' union to multi-billionaires.

Anyway, yes, I agree. The word "assets" caught my eye in the quote I posted.

There are hard assets and there are securities. A hard asset would be a printing press. A security would be stock in a printing company.

Outside of risk; profit or loss, the financial sector is non-productive economically. The productive capacity of a printing press does not change with the price of stock. It's the system we have, and it works fairly well sometimes...I guess. I'm not the 1%, but I understand what makes the wheels turn. Point is, every dollar held in a security could be used to buy a loaf of bread. Indeed, that security represents loaves of bread, sitting on the shelf. People like Scott feel it's better to feed hungry people than keep shelves full of bread. (Somebody buys the "shelf space" from her and the cycle goes on, but I'm impressed by the woman's compassion.)

The government would be much more inefficient. If we had a thousand MacKenzie Scotts, we could forget the government welfare state altogether. It's not a trend, sadly, and I'll give Scott her due, as little as it really is in the general economy.

You middle paragraph is not accurate. Money spent on (consumed) bread is money not invested to buy, house, operate or maintain the (producing) printing press. The productive capacity of the printing press (an asset) may not change, but the cost to house, operate, maintain, or replace/upgrade it may.

For example: your house may have (initially) cost $50K to buy or build, but would cost $100K to replace or rebuild.

 

[jotathought]

Well. Let us compare the very poorest among us needing health care to the richest people in the world.

It’s a good look.

What does that have to do with paying taxes and being accountable as Americans?

 

[jotathought]

And is still one of the wealthiest people in the world.

It’s wild how that happens.

Why is being wealthy a bad thing? Isn't that the reason immigrants (legal) come to the United States? To start something to differentiate themselves and become financially wealthy?

Why should we care about those who FAILED or become LAZY to suck on the government tit?

 

[Mulefoot]

Because he exercised some stock options.

That is the only reason he paid those taxes.

To buy stock at a discounted rate.

....so he could buy 1.6 million Tesla shares at a strike price of $6.24 per share. Total of $10M? Hardly the reason for selling billions.

 

[ttwtt78640]

The standard deduction doesn't reduce SE tax.

On paper no, but in practice yes. You don’t pay the SE tax unless you file. You are not required to file unless you make over the standard deduction.

 

[Mulefoot]

On paper no, but in practice yes. You don’t pay the SE tax unless you file. You are not required to file unless you make over the standard deduction.

Not true. You're not required to file with SE earnings more than $400.

 

[Michael Cole]

You middle paragraph is not accurate. Money spent on (consumed) bread is money not invested to buy, house, operate or maintain the (producing) printing press. The productive capacity of the printing press (an asset) may not change, but the cost to house, operate, maintain, or replace/upgrade it may.

For example: your house may have (initially) cost $50K to buy or build, but would cost $100K to replace or rebuild.

Yes, the consumer markets and securities markets are choices we make. If we stopped consuming and started saving, the economy would change drastically. That's not my point. It's why I mentioned selling her "shelf space." Liquidating securities simply means ownership has changed hands. The difference here is she's using the cash to sponsor scholarships rather than buy more securities. The system remains intact.

My point is that while investment is necessary to launch a corporation, once the cash is converted into hard assets assembled for production, the securities represent only ownership. On their own, they produce nothing; it's the hard assets that actually produce.

 

[JasperL]

One reason why capital gains taxes should be eliminated completely is because you are taxed on gains you never received.

Suppose you bought an investment property for 50k twenty years ago and sell it for 200k today, for a 150k gain. Where I live the capital gains tax would be about 20% (state and federal) or 30k. The gain is not adjusted for inflation, so you will be taxed on "gains" that you never received. Even at just 2 or 3 percent inflation, over 20 years, about half of that 150k gain is due to inflation. Your real gain is closer to 75k, but you have to pay tax on the other 75k "gain" that you never got. In reality, you paid 30k in taxes for a 75k gain, which is 40%.

Your example doesn't support your conclusion. Why "eliminated?" Your example is an argument for indexing the cost basis for some measure of inflation.

Bottom line is capital gains are income to the recipient. There's no principled reason to treat income from X different than income from Y. Let's say my business is buying used cars then reselling them, for a profit. The cost of the used cars is cost of inventory and deductible and my income is the difference, after accounting for my business costs, transporting the vehicles, etc. How is that different in principle than buying stocks and reselling them for a profit? Or houses. Or land. Or paintings.

I've also seen estimates that over half the functional complexity in the tax code is directly related to the capital gains preference. I believe it. There is an entire tax planning industry around converting ordinary income into preferentially taxed capital gains, and in deferring those taxes indefinitely. The OP mentions one common strategy - just borrow against inflated shares. The receipt of a loan is not taxable, and the interest cost is minimal versus the tax savings and ability to leave the funds invested, and generate more income. That's a simple strategy, and IRS has identified dozens or hundreds of strategies too complex to summarize but that are abusive. But that's whack-a-mole. IRS figures out a strategy, specifically determines it's abusive, and the industry moves on to the next.

 

[ttwtt78640]

Not true. You're not required to file with SE earnings more than $400.

I haven’t heard a peep out of IRS for years. The last time I filed a 1040 was in 1998. The last (and only) time the IRS bugged me about any SE taxes was in 2006 when I made about $26K in reported (1099) income (alone). Apparently, if you have non-SE income (e.g. also got a W-2) the IRS does not consider you to be self-employed.