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Comment by gortok | Hacker News Reader

One thing to point out that is lost in these arguments of “they create value for the shareholders”.

Folks that own a vast amount of stock do not pay taxes on that stock. They own the shares, and they take out loans against those shares. At some point they rollover or pay off those loans by selling some shares, but the shares have increased in value significantly in that time, or they’ve been granted new shares.

When we say “<business> has created value for shareholders”, it’s said in a way that implies that somehow that wealth creation makes its way into the tax system by virtue of the fact the wealth was ‘created’. It does not.

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First, taxes still get paid when the individual dies as estate tax. Second, increased shareholder value typically means more corporate profit which is also taxed. Third, dividends are taxed. So your claim that the shareholder value never makes its way into the tax system is plainly false.

This is all aside from the fact that increased shareholder value means a more abundance society regardless of the increase in taxes. We could quibble over the exact distribution of who gains from the enlarged pie but it's certainly not the case the 100% of it goes to capitalists so consumers and employees also benefit.

> taxes still get paid when the individual dies as estate tax

Almost no one in the US pays the estate tax. It only applies to estates over $14MM and most large estates get reorganized into trusts with estate tax avoidance as a primary motive.

> It only applies to estates over $14MM

Yes this entire conversation is about the ultra wealthy not paying their "fair share". A $14MM exemption is practically irrelevant here.

> most large estates get reorganized into trusts with estate tax avoidance

This isn't so simple. Transfers to a irrevocable trust count against your lifetime 14mm estate and gift tax exemption and a trust in excess of the 14M exemption is subject to gift tax.

Also, this discussion was about "Buy Borrow Die" strategy. Irrevocable trusts don't make much sense in this context because trusts aren't subject to stepped up basis.

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