Sports Owners Use Their Teams to Avoid Millions in Taxes
propublica.org
propublica.org
[1] https://www.youtube.com/channel/UCHYeaAH3D-wzQyDiXndSfMA
> Schemes that get more widely used are removed from the tax code and something else is put in their place.
Schemes that benefit the income-class are removed from the tax code
> The fact their only used by a small percentage of the population is a feature not a bug.
The fact they're only used by the very wealthy is a feature, not a bug.
> Governments spend mind boggling amounts of money, most people need to hand over a large fraction of their earnings or the system fails.
Governments are paid by the ultra weathly to siphon more money their way, most non-ultra-wealthy people need to hand over a large fraction of their earnings or the system fails.
People pretend anything that is currently benefiting them is simply a forgone conclusion in part to avoid having to defend it. Nobody wants to admit that say “companies should pay taxes” because incorporation brings benefits and those benefits should have an associated cost.
I use the liability thing because it’s such an old social contract. Plenty of more recent exceptions evoke similar responses from those who benefit.
The only way such a system is a good idea is if there is some reason for people not to incorporate.
Conservative groups are mobilizing to oppose increasing the funding:
https://www.washingtonpost.com/business/2021/07/07/irs-taxes...
Hell, I used to own a single family house that I rented out and I had to listen to snarky comments from tenants who assumed I was rich. Newsflash: I'm not!
The IRS does catch cheating wealthy people, but their personnel for doing so has been reduced by ~30%. What do you suggest? Let them keep cheating?
I thought it was just that the vast majority of mere mortals simply did not possess the sufficient wealth to take advantage.
Can I buy a major league sports team?
Can I get millions of stock options to be valued at pennies on the dollar to put in my Roth IRA?
Where has school failed me?
That's..wild.
In the internet era, information spreads pretty quickly, so I imagine a tax benefit will be quickly disseminated so either it is brand new or you should take it with a boulder of salt.
https://www.investopedia.com/terms/c/charitableremaindertrus...
In this case, this seems like a pretty big drawback. And I assume sure you cannot just set yourself up as beneficiary.
> Charitable remainder trusts are irrevocable. This means that they cannot be modified or terminated without the beneficiary's permission. The grantor or trustor, having transferred assets into the trust, effectively removes all of her rights of ownership to the assets and the trust upon creation of its irrevocable status.
The catch, of course, is that the funds actually get donated to charity in the end.
It's not so much that people are unaware that this exists. It's that it's not actually an attractive option for most people who wish to leave their inheritance to their children.
Has there ever been a state in recent history that simply refused to start the deduction game?
Then as the owner of the Corp, your compensation gets distributed as a dividend. With a dividend, you don't pay taxes on FICA.
You'll save ~15% in taxes.
You could do this with a simple s-Corp created with LegalZoom. $400.
Lyft drivers can drive as an S-Corp if they wish.
It’s not that exclusive.
And if the money you're making isn't all that much saving 15% could easily be not worth the trouble of doing it. Or add up to even $400.
The 199A deduction lets most sole proprietorships deduct 20% of net income. S-corps can only deduct 20% of payroll.
There are certainly other benefits to operating as an S-Corp (using an HRA and HSA in the same tax year is a particular favorite) but the income/fica benefits are overstated these days.
Curious, what's the benefit there?
In 2016 we deducted something like $40k off of our income between premiums, deductibles and copays (HRA) and maxing our HSA.
https://proconnect.intuit.com/tax-reform/entity-selection-ca...
It does appear that a Schedule C ends up with more cash after taxes, when factoring in the 199a. I need to revisit my assumptions.
> As the owner of the Corp, pay the rest of the comp as a dividend. Thus avoiding fica taxes.
Sounds good in theory, but if you're operating as a consultant, charging clients one rate, and then only claiming 40% of that is your "reasonable salary" then the IRS is likely to see right through your scheme. They can, and will, send the S-Corp a bill for unpaid taxes when they recharacterize those "dividend payments" as salary for you.
> You could do this with a simple s-Corp created with LegalZoom. $400.
Starting an S-Corp is only the beginning. S-Corps are legally required to do a lot of record keeping, paperwork, filing, and even hold shareholder meetings with recorded minutes. Yes, even if you're the only shareholder and you're meeting with yourself.
Some number of people do abuse the S-Corp status to dodge taxes by paying themselves in dividends with a token salary, but it's not an easy or risk-free tax dodge. The IRS may be understaffed for audits (for now) but they're not dumb when they actually start looking into these things.
Why would that be off? 40% sounds exactly right; large consultancies pay their consultants 40% (or less!) of what they’re charging clients for said consultants’ time.
Maybe what you’re more concerned about here would be giving giving a 40%-of-revenue salary plus a 60%-of-revenue dividend. But the dividend wouldn’t be 60%. You, as the S-Corp, would be paying into all the regular withholding stuff companies have to pay into on behalf of their employees (social security, etc.). Ever heard the phrase “employing someone at a given salary, costs ≥200% of that salary”? It’s not far off.
This is a perfectly reasonable approach.
You're both an employee and an owner of the Corp. And are entitled to benefits on each side.
Dividend distributions are a common means of compensation to share holders. You are an investor in the company.
Your usage of "scheme" is interesting and probably one of the many reasons why people like Bezos bring up so much vitriol when discussing taxes.
I see this approach as a perfectly legitimate, thoughtful structure to the issue of division between employee and ownership compensation. You see it as a "scheme".
If your one-person S-Corp doesn't reach that level of income, all of its earnings should be paid as a salary subject to FICA.
Also...S-corps don't pay dividends. I don't know who told you that. S-Corps are pass-through entities, so the portion of income paid to an owner other than as a salary retains the character it had when the S-corp received it, meaning that ordinary income to the S-Corp...is also taxable ordinary income to the owner.
Importantly, this taxation applies whether the S-Corp actually send the earnings onward to its owners. S-Corps, like partnerships, may then distribute this already-taxed income to its owners then or at any point in the future, and it will be tax free, because the owners have already paid taxes on it.
Source?
>If your one-person S-Corp doesn't reach that level of income, all of its earnings should be paid as a salary subject to FICA.
Source?
This isn't supported by Sean McAlary LTD, Inc. v. Commissioner, T.C. Summary Opinion 2013-62.
"The IRS, as it’s wont to do, argued that McAlary was not reasonably compensated, and once again, the Service took a scientific approach. Utilizing the same engineer employed by the IRS in JD & Associates and Watson, the IRS determined that $100,000 of the $240,000 distribution represented McAlary’s “reasonable” compensation."
https://www.forbes.com/sites/anthonynitti/2013/08/12/s-corpo...
The $142k is the inflation adjusted FICA salary threshold, which was lower when this case was heard back in 2013.
People don't get this. I have a family friend was was an IRS agent specializing in a few niche frauds. His personal caseloads pulled in 9-figure recoveries and a few criminal prosecutions a year. When he started in the late 80s, there were about 100 agents working those cases. When he retired a few years ago, it had attrited down to 4, and was doing half of the cases he had been due to the travel requirements for audit and court appearances, which could take him as far away as Guam or as close as in his backyard.
Definitely a super-smart dude, I remember going to parties with some of his work buddies and they were a unique group of really passionate nerds about tax and accounting issues.
I pay myself a "salary" of $60k and the rest (~$240k) is dividends. I pay my taxes quarterly too.
If someone actually does follow your advice they will be audited, they will owe penalties and back taxes to the IRS. This is also known as a "false tax return", and so the statute of limitations never expires and the IRS has until the end of time to audit the understated returns.
Comparing a mortgage to slavery is wildly out of touch with the horrors of actual slavery. Let’s pick a different word to discuss the relative inconvenience of having to have a job in modern society.
Be careful. There are a lot of creative interpretations of the tax code out there that genuinely are illegal. People who employ them often assume they’re fine because they haven’t been audited or caught yet, but that doesn’t make them legal.
Always, always refer to a qualified accountant to review any tax strategies that seem too good to be true. YouTube is a fun place to learn about things, but the goal of YouTube producers is to get more clicks, not necessarily give the most accurate legal advice.
There's also the pack effect. Kind of like how few folks taking the EITC actively trade stock, it looks 'normal' for rich people to do these things, whereas the same device when used by someone of more modest means is more likely to attract attention.
Not to mention having fewer resources to fight if you are audited.
Can't find the link now, but I read somewhere that the IRS avoids audits if the risk of losing is higher (i.e. the person in question has more resources to fight it $). So their enforcement is heavily skewed towards average people.
Which corroborates this statement.
> more modest means is more likely to attract attention
- Why can Trump write off a $70k haircut but I can't write off a $35 haircut?
- Why can my employer buy my laptop, and I can use it in my off time for video games but if I buy a laptop, even to help with say an LLC I might own, I can only write off the 'portion' used for work?
- Why can my employer buy us lunch but if I work on my own I can't write off a meal except under specific circumstances?
At what point is a corporation able to do the above? Can other normal citizens also do it or is the system kinda rigged against us (even if unintentionally)?
Probably claims it as a necessary expense for being on TV.
>Why can my employer buy my laptop, and I can use it in my off time for video games but if I buy a laptop, even to help with say an LLC I might own, I can only write off the 'portion' used for work?
Stuff provided to employees for personal use is supposed to be taxed as a benefit. It's just likely that this hasn't been investigated by the IRS.
> - Why can my employer buy us lunch but if I work on my own I can't write off a meal except under specific circumstances?
That one's a can of worms and I know the rules have changed a number of times on this. You might consider inviting potential client to lunch. Then he or she might invite you next time as a potential vendor to lunch.
Similarly: company retreats, teambuilding exercises, and gifts to clients. Consult your tax professional.
Examples?
The real "cheat" for US taxes is real property. At the small scale, you buy one of more multi-family properties and use cash rents and improvements to get rid of taxable income. At the larger scale, there are many different schemes to defer or eliminate tax liability. Looking at the business model for franchised hotels (Hampton Inns, Holiday Inn, Courtyards, etc) provides alot of perspective.
It’s less that than that they’re not worth the trouble without a fair amount of capital at stake. It’s not worth hiring accountants and lawyers, setting up trusts, etc. if you don’t have enough tax savings to balance out those upfront costs – for many people, it’d be easier and a better return to put the same money in an index fund.
The depreciation of assets is a rich-unfriendly feature of the tax code. It explicitly prevents the rich (those buying big assets) from writing of the expense in a single tax year and therefore reducing their profit and so their tax.
Unlike, say salary expenses, it forces them to defer most of the expense to future years, earning the tax collector more money earlier.
So if you don't depreciation, are you arguing for no expensing of capital assets, ever? (Which makes no sense).
Perhaps could you be precise how some mythical non-elite person would write this aspect of the tax code?
It even highlights how they're using recent changes in the tax code to claim depreciation on assets that either don't actually depreciate or the value is highly subjective.
It's a lot more than just "Oh boo boo is us our asset lost value last year so now we don't have to pay taxes".
Also, capital gains are assessed relative to the depreciated price of the asset, so if there is a wild divergence between that and market value, the owner will pay a huge tax bill on sale.
This is the problem with the post-Wikileaks concept of "leaked documents". By default, the reader is lead to believe that by a document being leaked it demonstrates something nefarious or shadowy.
We saw this most notably with the Panama Papers and the Podesta emails. No one was directly prosecuted as a result of evidence derived from the wholesale publishing of the material. In the case of Podesta, it revealed absolutely nothing. So much so that a certain group of people became obsessed with innocuous messages about pizza.
The ProPublica IRS hack, in my opinion, is doing nothing for journalism ethics.
Billions of tax dollars have been recovered due to the Panama Papers alone [1]. The Podesta emails were BS, but everyone in the know always have agreed on that.
How you can claim that the ProPublica IRS leak isn't good journalism is unclear to me. In the few articles they've published, they've clearly exposed the nefarious practice of legal tax avoidance using specific leaked information that wasn't documented or widely known before.
[1] https://www.icij.org/investigations/panama-papers/panama-pap...
Totally innocuous. I mean, who doesn't write vague messages about pizza and pasta? Who doesn't collect art depicting stylized child abuse? Who isn't friends with convicted child molesters? It's all merely a coincidence.
Of course it's impossible to get direct prosecution from any leaks of vague messages. That doesn't mean they aren't nefarious or shadowy. Here's another totally innocuous message from a high-level "waste-management consultant" in New Jersey: "Hey Paulie, our friend with the hair needs to go".
Genuine, partly-rhetorical: Which of the PRISM stories that came out after the Snowden revelations asserted and proved illegality? IIRC, no one from the government nor any of the C-suite tech executives who secretly approved the surveillance were charged or convicted with anything.
Looking at the lengthy Wikipedia article [0], I see that foreign governments said "nightmarish if true". James Clapper and President Obama himself acknowledged the existence of the program and defended it as passionately and robustly as any of the rich people defending their tax situations.
Should Snowden/Greenwald/Guardian/WaPo held off on publishing the PRISM revelations until they had proof of criminality in hand?
[0] https://en.wikipedia.org/wiki/PRISM_(surveillance_program)#M...
The word has a nearly constant emotional appeal now. I can think of another topic that it is used a ton and means less than nothing. It should be considered bad writing by now.
But I guess if you squeeze your eyes hard enough, everything looks the same.
"Congress inaugurated the modern era of amortization by simplifying the rules in 1993: Under the new regime, the purchaser of a business would be allowed, over the span of 15 years, to write off more types of intangible assets. This might have been welcome news for the sports business. But Congress explicitly excluded the industry from the law.
Following lobbying by Major League Baseball, in 2004, sports teams were granted the right to use this deduction as part of a tax bill signed by President George W. Bush, himself a former part owner of the Texas Rangers. Now, team owners could write off the price they paid not just for player contracts, but also a range of other items such as TV and radio contracts and even goodwill, an amorphous accounting concept that represents the value of a business’ reputation. Altogether, those assets typically amount to 90% or more of the price paid for a team."
> the purchase price was composed of assets... that degrade over time ... in few industries is that tax treatment more detached from economic reality than in professional sports ... Ballmer still gets to deduct the value of those assets over time
I'm reading this and thinking, wait are they just talking about depreciation? That's not something special about sports teams, it's also very common in real estate.
Calling it a "financial magic trick" only makes the obfuscation worse.
Do a sport team have it value degrade, and if so, by how much each year?
You need to be more precise with "depreciate."
These assets (tangible/intangible) have a limited useful life and generate revenues beyond the current period. For sports franchises, there's no guarantee that they'll be around forever, and they also require continuous working capital maintenance and capex to continue operating.
There are limits to what can be depreciated.
Generally, IP needs to be purchased (not self-built) in order to be depreciable.[0]
[0] https://www.investopedia.com/ask/answers/061715/intellectual...
We tax income, because that's the actual money you make. So if I buy a business for $500 and only make $100 a year, I'm not really making money until after 5 years. If I have to depreciate that asset over 10 years then I can deduct $50 a year and have to pay taxes on $50.
Depreciation is a handout to the tax man honestly. The reality is that until you have made more money than the purchase price you are not really making money.
Depreciation is just an accounting trick, e.g. if you buy a laptop, you can’t put it in costs immediately (in the profit = sales - costs equation), it depreciates over say 4 years (i.e. only 25% of the purchase price can be accounted as cost each year).
Does this really happen with property? There’s no fundamental reason why a 100 year house wouldn’t be worth just as much as a new one, with proper maintenance (which can, and IMO should, be accounted separately).
Also, houses built today have better design and better safety. I wouldn't want to live in a 100 year old house in LA.
True for most tax "loopholes."
All that said, I'd love to see the rolled up sleeves version actually going over the account... or a fictitious one. Let's be real though. It's more likely to get eyeball on HN than elsewhere, but 96.2% would not read it and we would still be discussing it based on a surface level, bias-ridden understanding.
> But Veeck dreamed up an innovation, a way to get a second tax deduction for the same players: depreciation. The way he accomplished this was by separately buying the contracts before the old company was liquidated, instead of transferring them to the new company as had been done before. That meant that the contracts were treated as a separate asset.
They also discuss how the problem is not the concept of depreciation but the relatively recent changes allowing it to be used for things which don’t depreciate or where the valuations are highly subjective.
Either they don’t do that OR they do it and just dismiss the expert’s opinion (e.g. “oh depreciation, yeah that’s standard, every businesses uses that to properly account for the cost of capital investment”)
I suspect it’s the latter, but if he author’s goal is to incite the reader’s sense of injustice, eliminating the depreciation deduction won’t radically change the disparity between these people’s tax rates.
Am I misunderstanding, or is this not stating that 12% was his real tax rate?
IMO the real tax inequality isn't "loopholes" of deductions that can be narrated into extravagances, but rather that the tax code deliberately privileges those with more wealth. Capital gains is limited to 15% regardless of income, instead of the same graduated scale as everything else. And even more harshly, individual taxpayers don't get to deduct their "personal" expenses (eg transportation, food, utilities, housing is limited, healthcare is limited) even though they're necessary expenses for performing whatever job gives them income.
[0] I guess this is escapable by dying, which is perhaps the long term plan.
You can't combine both. If you use one you lose the benefits of the other, see my sibling comment.
>non-profits are a third
Sure, moving your wealth to a nonprofit is tax free. But then what? If you want to spend it (on personal stuff, not curing the word of malaria or whatever), you still get taxed.
>carried interest is a fourth
I skimmed the wikipedia article and it looks like it's just like ISOs, but for investment managers?
>The logic was that the non-financial partner's "sweat equity" was also an investment, since it entailed the risk of loss if the exploration was unsuccessful
If you are saying that investment manager inventives should be taxed as "performance-based compensation for management services", then you are arguing for it to be taxed as regular income. This is how bonuses are taxed for everyone else.
What would capture a lot of revenue from people like Bezos is to tax stock option gains, when realized, as regular income.
Then companies couldn't shelter their CEOs from tax by paying them mostly in options rather than salary. And the CEO would still care about growing the company so that their after-tax gains are maximized.
but the strike price of such options have to be the market price (when they're granted). They can't give bezos options with $0.01 strike price when AMZN is trading at $3600[1]. In that sense, it already works like how you want it to work.
[1] well they can, but they wouldn't be ISOs and would be taxed at regular tax rates.
"But even if owners ultimately repay the taxes they skipped, deferring payment of those taxes for years, sometimes decades, essentially amounts to an interest-free loan from taxpayers. An owner could reap huge gains by investing that money."
"If owners die while holding their stake, as many do, the tax savings may never be repaid. And their heirs can generally restart the amortization cycle anew."
These are each clear loopholes. The first sentence is about how time value of money matters when talking about billions of dollars. The second sentence gives you an idea of why it was so "important" to weaken the Estate Tax in 2017.
I cant speak to the tax burden on inheritance, I know debts and expenses are often paid out of an estate first however.
https://www.investopedia.com/terms/s/stepupinbasis.asp https://www.peoplestaxpage.org/buy-borrow-die
Basis step up should be eliminated though. I can't see any economic justification for it.
The actual headline: "Government providing depreciation that amounts to an interest free loan to billionaires in exchange for investing in capital assets" doesn't fit with the sensationalist nature of the piece
I think this says everything that needed to be said. The core of the issue with all rich tax evasion, are the laws themselves allowing for it to happen legally, albeit not morally.
Its not a problem that winners get more winnings, until the whole system tips into massive acceleration for say, less than one percent of the educated, voting population of a political economy. In the case of accelerating returns on investment and lowering tax liability, there might be no upper bound on how much money flows in one direction.
The 'fair' way to do capitalism is everyone pays a fixed dollar value of taxes - since everyone gets equal benefit from the army, the courts, schools, etc. So they should pay equally.
Yet for various reasons that doesn't lead to good outcomes... So having tax percentages, and even escalating tax percentages, is a 'hack' that doesn't really have a theoretical basis. And therefore it doesn't really seem like people should be criticising that this hack is unfairly implemented when the vast majority of people still are better off than the theoretical capitalistic approach.
This isn't true. Bezos benefits a lot more than I do from all of those things. As an example, the court system will enforce his property claims, and he has a lot more of them that need enforcing than I do.
Both are full of intangible value to you (a nice seat where people treat you like you’re important because you sign the cheque, the hard value accruing to you being minimal in either case).
Maybe you could buy 1/10000th of the restaurant instead of the meal, and maybe pay for the ingredient cost while the rest could be a loss that was paid out to the staff.
You have to ask yourself: how did these deductions get into the tax code in the first place, and why is there no political will to change it? I mean, they didn't just appear there. So who put them there and why?
The tax code was just changed in 2017. There was plenty of political will to pass a $2T tax bill that sent 80% of the benefits to the wealthiest Americans and corporations. That happened. It included all kinds of benefits for the wealthy, including lowering the estate tax and corporate tax rate. The corporate tax cuts were permanent, while the individual tax cuts we all got will expire soon.
If Congress can do that, isn't there any political will to allow me to deduct my children's day care? If I had a billion dollars, I'd send a pack of lobbyists to DC just like AT&T and maybe they could muster up some "political will" to change the tax code too.
In short, when the wealthiest Americans use their wealth to leverage Congress to perpetuate their wealth, it's not enough to say "Well, what they're doing is 100% legal, so I guess there's nothing shady and illegal going on here." If "legal" just means "whatever money can buy", then what's even the point of law?
“Please excuse any typos, wrote this on my phone in a hurry”
It’s less about sports owners vs person on the street than it is about any business owner and their employees. The business owner most likely does pay an overall lower tax rate. It is a broader philosophical conundrum.
On the one hand, you want to encourage entrepreneurship. Without a disproportionate reward, why would anyone be willing to take on the regulatory burden of a owning a business. On the other hand, we wish to promote equal treatment. Same laws for everyone.
So maybe, the real conversation should be about simplification of tax law to promote a less disproportionate divide between being an employer and an employee. The compliance frameworks and tax laws are as it is horrendously complicated in every country I’ve ever worked in. How about simplifying them? Have income > X? Pay Y tax. Not only will this promote egalitarianism, it will ease the complexity of running a business.
A good compromise then? In theory. In practice, that’s never going to happen. Governments are not autocratic. They need consensus to move forward. Making a change like this will involve appealing to all kinds of govt. leaders with differing vested interests. It’s the very reason behind our (US/Canada) countless tax rebates clauses and provisions. Local leaders creating new subsidy programs to attract more businesses (that translates into jobs) for their constituents.
Hmm..what can we do then? Treat sports franchises differently from other businesses. Somewhere in the countless points the author makes, they brought this up. I think there’s some real substance here.
Also interesting is this particular article is talking about carry forward losses. Regular people can carry forward losses too, it just doesn't happen very much because it only applies to investments. But if have a big investment loss, you can carry that forward as well. You can also depreciate your assets like Ballmer does. It's just that you probably don't have enough to deduct to get beyond the standard deduction.
The real problem with our tax code is that it favors capital over labor. Losses tied to capital can be written off, but losses tied to labor cannot (like the food, shelter, and clothing you need so you can live to work another day).
Imagine how our world would change if you could write off your rent, meals, and clothes. Anyone living paycheck to paycheck wouldn't pay any taxes at all. Of course it would also discourage savings, so we'd have to find a balance somewhere.
An even better word here is 'expenses'. Businesses pay tax revenue net of expenses, people pay tax on revenue, and Propublica is shocked - shocked! - by what businesses can count as expenses.
I suppose there's an argument that standard exemption/deduction are an estimate of baseline expenses to sustain labor, and additional costs over that are consumption that shouldn't be allowed to be netted against revenue (labor income). Does one's _entire_ rent go toward sustaining their productive capacity, or does is some part of that accrue to personal enjoyment? Of course, for most workers, even the 12k deduction probably doesn't feel anywhere close to basic living expenses,
It is nice to imagine a fairer system that would allow the high cost of living in most US cities to be reflected in the treatment of labor income, but that sounds like even more complexity to add to the tax code.
the bigger deal would be the fact that if held to death (much like with other assets) the cost basis resets to. so what was once depreciated to 0% of value, is now cost basis as value at time of inheritance.
I'm sort of leaning towards the belief that the reset of the cost basis should perhaps be limited to normal tax free estate limits, and anything above that, does not get reset.
Don't want to pay high American taxes and enjoy our roads and such? No problem. Guatemala has very low tax rates. UAE has no income tax. Don't like regulations in general? Somalia will be right up your alley.
No one is forcing you to stay in American and pay these taxes. That is your choice.
Guess we should have just remained a colony of Britain huh? If people didn't like the rules they should have just moved somewhere else. After all, the rules are the rules and if you don't like them the only thing you should do is go somewhere else right?
What a hypocritical, disingenuous argument this is.
You are trying to twist his argument into "if you have any complaint, you should leave". But that's not his argument.
His argument is that if you disagree with taxation specifically, you should leave. He's fine with taxation. He probably believes that any other issues he may or may not have with his government can be fixed within that system without compromising the things he likes about it too much. He doesn't believe you can't remove taxes without compromising everything he likes about his country.
Argue his point, not some make-believe exaggeration.
https://www.irs.gov/individuals/international-taxpayers/expa...
https://travel.state.gov/content/travel/en/legal/travel-lega...
you could also opt to make no money, that gets you out of taxes. It isn't 'fraud' or 'theft' or 'extortion' its a social contract.
The most desirable places often have high tax rates, though. Funny how it works out like that.
This isnt a story of some ruthless baron aggressively beating his competitors in the market. He's literally just having the money handed to him as a redistribution by the government.
It’s definitely NOT something that only the rich know how to use.
For the people who understand this, understand how to leverage it, and have the resources to leverage it, it's the biggest handout of all time.
That is exactly why it's a failure of modern capitalism.
It seems like you just don't like our society. And then label our society as capitalist so whatever you don't like about our society is therefor a failure of capitalism. I mean sure, given those definitions I'd agree with you. The problem is that "whatever the US does" is not the definition of capitalism.
Is it a failure though? I'm amazed I need to say this on HN, but that depends on the KPIs you choose to use to evaluate the capitalist aspect of this particular tax policy. If the goal is that the rich get richer, its a capitalism success. If the goal is that everyone in society gets more leisure time and increased quality of life, it looks like a failure to me.
Free and fair capitalist markets are good, but rare.
I guess it would be better to say that this specific practice is "socialistic". I'm not making some binary claim that we are a "socialist country" as opposed to a "capitalist country"
The way I defined socialism is how socialism is usually defined. Per Wikipedia "Socialism is a political, social, and economic philosophy encompassing a range of economic and social systems characterised by social ownership of the means of production".
The way you are defining socialism as "government giving money to some group" seems to stem from a misunderstanding about exactly what socialism is. But the government collecting money from citizens and giving it to one group or another is just what all governments do. This flow of money isn't happening because of socialism.
I can't stand the notion, "What can we do? We have to let the rich pay little to no taxes!"
There’s the entire story for you. The owners took advantage of depreciation in the tax code.
Jokes on them if the future tax rate is significantly higher than the rate they were writing off all along.
Even the angle they worked in there about claimed depreciation not always aligning with eventually realized depreciation is nonsense. If he ever sells those assets for a profit, he’s just going to have to pay all those taxes back anyway.
I really can’t believe that the intention of articles like this is actually to inform the reader. It just seems like a way of getting low-information readers riled up about something they don’t understand.
If we aren't supposed to write negatively about anything someone does as long as it is legal, how would we ever come around to deciding to making something illegal?
Claiming depreciation on your tax return is something I do with all my home office equipment every year.
This is only true if you assume that everything involved (his time, knowledge, planning, etc.) had no value. Even if it would be unreasonable to predict how valuable it’d become, $0 is hard to defend.
A simple fix for this would be to prevent private holdings from being placed into a Roth since independent valuations are hard to establish without market data but it’d be even better to simply cap the tax-free gains as suggested - if you accumulate millions in returns, paying taxes on the portion over n million is fine because you’ve still been phenomenally lucky and will retire wealthy.
This isn't a "I feel like these are worth a lot" scenario. This is a "we'll give you half a million dollars in a couple weeks" scenario and then Peter undercut that valuation.
Tim Cook might think that AAPL is worth $1000 a share, but it's not against the law for him to fill his IRA with Apple shares.
The same is true for Thiel: a private company doesn’t have such an easy way to document market value but he had insider knowledge suggesting that $0.0001/share was low, as their own SEC filings acknowledged. I would prefer that the fix be to set a tax-free cap (e.g. pay capital gains on returns over $10M) but I suspect that kind of example will get the most attention because it’s pretty clear that he low-balled it and even if that’s perfectly legal it won’t seem fair to the vast majority of the population who never have access to pre-IPO shares, much less the ability to claim their own valuation.
Thats the part of your comment I am confused by...
1) the discussion of political detox week from 2016:
https://news.ycombinator.com/item?id=13108404
2) The 2019 new yorker profile on HN/dang/mod team
https://www.newyorker.com/news/letter-from-silicon-valley/th...
Key quote: In an Emacs file, Gackle collects a list of contradictory statements that people have used to describe Hacker News. (“SJW cesspool”; “a haven for alt-right and libertarian people”; “If you don’t support neoliberal fantasies, your comments probably aren’t welcome here”; “The only thing is left is to change Hacker News icon to Che Guevara emblem.”)