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Comment by aiforecastthway | Hacker News Reader

> No, that's just investing.

Yes. Investing is passive income. If you have $20M and your lifestyle requires no more than $800K/yr of income taxed a waaaaay lower rates than the working stiffs pay on the same, then a 4% return more than suffices to live off of income that is waaaaay more passive than most passive income frauds even come close to promising.

The difference between "investing" and "passive income" is mostly just the difference between blue blood and the new rich. A tale as old as time.

Working men of the world uniting would be an utter disaster, so instead they're persuaded at any cost to choose sides in this absurd dichotomy between two sets of do-nothings.

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Why would working men of the world uniting be a disaster for my ETF? Don't the working men need machines and capital to work?

> If you have $20M and your lifestyle requires no more than $800K/yr of income taxed a waaaaay lower rates than the working stiffs pay on the same, then a 4% return more than suffices to live off of income that is waaaaay more passive than most passive income frauds even come close to promising.

Assuming you are in eg the US than a 4% nominal return is actually taxed quite severely in real terms, ie after you adjust for inflation.

That's because capital gains taxes and taxes on interest don't account for inflation.

My comment is very specific about the ultra rich who use tax sheltering to reduce taxable burden on passive income from bonds: In the US, there is (was?) a special class of municipal (state/local) bonds call "triple tax-free"/TTF, where the owner can receive interest, but pay no federal, state, or local taxes. Of course, there are limits, but it is a big business, and the buyers are almost always ultra rich. To be clear, under the Alternative Minimum Tax (AMT) rules in the US, I doubt you can pay zero taxes, but you can certainly greatly reduce your taxable burden using TTF muni bonds.

Ref: https://www.investopedia.com/terms/t/tripletaxfree.asp

Well, you can also use the buy-borrow-die strategy in the US to avoid capital gains taxes.

Here in my adopted home of Singapore we don't have such silly things as capital gains taxes. Makes things a lot simpler for the average person who doesn't want to pay for the lawyers and accountants.

The average person doesn't pay capital gains tax - at least in the UK; there is a 12 3000 GBP allowance per year of gains which means that you need to have significant assets (think top 10% of the country) before it becomes an issue.

Not £12300 any more, £6000 last year and currently £3000.

Investing is passive income, but most passive income isn't investing.

* A way to generate passive income, for example, are royalties on a book you wrote.

* Semi-passive income might be $50k speaking gigs after e.g. being the PotUS.

In a financed world, perhaps I can make a financial instrument out of future royalties, but for most people, it's not the same.

>If you have $20M and your lifestyle requires no more than $800K/yr of income taxed a waaaaay lower rates than the working stiffs pay on the same,

Won't somebody think of the "working stiffs" who have to slave away for their $800k/yr!?

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