Ultra-wealthy individuals legally minimise their tax liability by:
Receiving a relatively low official salary (Bezos's Amazon salary was $81,840 for many years).
Not receiving dividends, so the wealth remains in stock that is not taxed annually.
Borrowing money against their stock holdings to fund their lifestyle. Loans are not considered income and are therefore not taxable, and the interest on the loans can sometimes be used as a deduction.
> Borrowing money against their stock holdings to fund their lifestyle. Loans are not considered income and are therefore not taxable, and the interest on the loans can sometimes be used as a deduction.
A loan should definitely be a taxable event and capital gains taxes should apply to rebase the value of the stock to the market value at the time the loan is taken out. Currently, very wealthy people use the loan dodge to avoid selling stocks and since the loan isn't paid off until death (usually), estate taxes wave their hands and any gains in the stock price go away, so that the next nepo generation gets to repeat the same dodge.
Rather, you pay taxes on the income you use to repay the loan. Plus you pay the interest on the loan.
This basically defers the taxes to a later date and charges you interest for 'em. Which might be worthwhile, depending on how quickly and reliably your capital is growing.
I think the claimed issue is that these people do receive income from those assets indirectly. My understanding is that if your assets are worth much more than the amount you're borrowing then a bank is happy to keep giving you loans, which you use like income, that incur compound interest until you die, your estate must settle up the loans, and the estate gets to pay capital gains against the basis when you died, not the basis when the shares were first created and worth $1 each.
There is no tax loophole. The only thing they are getting is higher leverage against borrowing, and the only difference would occur if that individual would go bankrupt in that the entity that they borrowed from wouldn't need to pay income tax.
So the only way to pay less tax is to surrender all your assets.
I'm not sure if "options" is the relevant word in your post, but it does seem like capital gains tax is significantly reduced in inheritances? Here's an example source that says the cost basis gets reset to its value at approximately the deceased's death [1], and gains relative to that cost basis are likely much smaller (and thus a much smaller tax burden) than those relative to their initial acquisition price possibly decades earlier, no?
Even according to you article, fair market value at the time of transfer is subject to same tax. Can you phrase what exactly you are trying to say?
I included options because that's how ultra wealthy get their wealth from and it has market value of 0 so company could give lot of them.
Also anyone can get majority of your earning in stocks, not just ultra rich. Companies want to pay in stocks, and it's a win win for both, if there is a loophole.
My understanding is that it's not subject to the same tax it would have been as income, since the federal estate tax only applies to value above ~14 million per individual. So, my understanding is that a married couple can pass 25 million in stocks to their heirs and pay nearly no taxes on it because it's under the estate tax threshold and the capital gains cost basis got reset on their death. But not everyone can do this because you need enough assets or other business the bank wants to handle for them to be happy lending you money for years, and only people with a lot of assets have either of those things.
(I'm happy to be wrong about this, since it seems unfair, but AFAIK this is how it works?)
I heard from a medium reliable source that this loophole wasn't as popular as the zeitgeist implies. I'd love to know how true that is and if so, how the rich finance themselves.
In a real-world scenario, if you saw a result significantly far from 100 (like 150 heads), you might suspect the coin is unfair. However, seeing exactly 100 heads gives no reason to suspect the coin is unfair; it's the result most consistent with a fair coin.
Despite its overall failure, some parts of the infrastructure and national applications, such as the Summary Care Record and the Electronic Prescriptions Service, are considered to have survived and continue to be used
In that case they were not buried alive rather they were just in isolation. We do that to prisoners all the time all around the world often in much worse conditions including being chewed on by diseased rats and worse.
The privatisation of the water industry in the UK certainly wasn’t and is considered a failure due to rising bills, poor infrastructure, and severe pollution from sewage overflows.
French engineers were known for their willingness to embrace advanced, high-risk technologies to gain a decisive advantage in the aerospace market.
French influence drove Airbus's early focus on understanding customer needs and adapting to market requirements. Early on, the company adopted English as its working language and U.S. measurements to appeal to a wider range of airline customers.
German engineers brought a reputation for meticulous attention to detail, efficiency, and robust industrial processes, ensuring reliable and high-quality production.
Germany's strong engineering foundation provided the technical discipline needed to standardize components and organize the complex cross-border manufacturing process.
Yes. Also the way how internal collaboration works. A lot of focus on relationship building and pre-alignments vs a content-first approach („people will accept it if it’s just correct enough“). In any real-world situation that matters it will always take a bit of both
There was that problem with CAD software on the A380: German teams used CATIA version 4, while French had upgraded to version 5, resulting in incompatibilities.
"By late autumn, a team of around 200 German mechanics was in Toulouse along with several hundred kilometers of electrical cables to be installed in the first planes. But after weeks of painstakingly threading thousands of veins of copper and aluminum wire around the walls and floor panels of the airframes, the teams had run into a maddening snag: the cables were too short.
"The wiring wasn't following the expected routing through the fuselage, so when we got to the end they weren't long enough to meet up with the connectors on the next section," said one German mechanic, who said he arrived in Toulouse in early 2005. He asked not to be identified out of fear that he might lose his job. "The calculations were wrong," he said. "Everything had to be ripped out and replaced from scratch." --- nytimes https://archive.vn/uLIqa#selection-603.204-617.419
What’s your source for that? It reads like a cliché, especially when you know about the arguably stronger engineering background in France when it comes to aerospace.
Receiving a relatively low official salary (Bezos's Amazon salary was $81,840 for many years).
Not receiving dividends, so the wealth remains in stock that is not taxed annually.
Borrowing money against their stock holdings to fund their lifestyle. Loans are not considered income and are therefore not taxable, and the interest on the loans can sometimes be used as a deduction.
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