The 2022-23 Economic Crisis Megathread

[Admiral Yi]

Not even that. You buy a stock at 100. It appreciates to 300. There's 100 in wealth not taxed. Even if you sell 100 you still have the left over 200 not taxed. For the extremely wealthy that 200 appreciated will never be taxed.

I'll freely admit I'm no expert and can be missing subtleties

But this is the issue with untaxed unrealized gains, not an issue created by margin trading.

[HVC]

Not even that. You buy a stock at 100. It appreciates to 300. There's 100 in wealth not taxed. Even if you sell 100 you still have the left over 200 not taxed. For the extremely wealthy that 200 appreciated will never be taxed.

I'll freely admit I'm no expert and can be missing subtleties

But this is the issue with untaxed unrealized gains, not an issue created by margin trading.

the loan loophole is the one I mentioned in the post before that one. The unrealized asset as collateral tax avoidance scheme tax free use of the unrealized gain.

[Admiral Yi]

the loan loophole is the one I mentioned in the post before that one. The unrealized asset as collateral tax avoidance scheme tax free use of the unrealized gain.

So like using your stock as collateral is similar to cashing it in?  I guess.  Another way to look at it is you cash it in if and when you fail to pay the loan back.

[Josquius]

the loan loophole is the one I mentioned in the post before that one. The unrealized asset as collateral tax avoidance scheme tax free use of the unrealized gain.

So like using your stock as collateral is similar to cashing it in?  I guess.  Another way to look at it is you cash it in if and when you fail to pay the loan back.

Surely you then just get another loan at very good rates due to your obvious giant wealth in stocks.

[HVC]

the loan loophole is the one I mentioned in the post before that one. The unrealized asset as collateral tax avoidance scheme tax free use of the unrealized gain.

So like using your stock as collateral is similar to cashing it in?  I guess.  Another way to look at it is you cash it in if and when you fail to pay the loan back.

sure,  I guess. Depends on frequency of those that failed to pay the loan. Vast majority would just pay the loan in installments from taxed income. They're going to pay the tax on earned income either way, be it dividends, business, or wage income. But now they also have access to the loaned amount tax free.   

[HVC]

I may be just explaining it badly. Minsky step in and explain my point for me

[crazy canuck]

the loan loophole is the one I mentioned in the post before that one. The unrealized asset as collateral tax avoidance scheme tax free use of the unrealized gain.

So like using your stock as collateral is similar to cashing it in?  I guess.  Another way to look at it is you cash it in if and when you fail to pay the loan back.

the loan loophole is the one I mentioned in the post before that one. The unrealized asset as collateral tax avoidance scheme tax free use of the unrealized gain.

So like using your stock as collateral is similar to cashing it in?  I guess.  Another way to look at it is you cash it in if and when you fail to pay the loan back.

sure,  I guess. Depends on frequency of those that failed to pay the loan. Vast majority would just pay the loan in installments from taxed income. They're going to pay the tax on earned income either way, be it dividends, business, or wage income. But now they also have access to the loaned amount tax free.   

Nope, again Yi's analysis is based on the assumption that it is some poor working schmuck who is taking the loan with the shares as his collateral. No  Self-respecting millionaire/billionaire, and soon to be trillionaire pays off their loans personally.

It's all part of a massive tax avoidance scheme. It's all done through corporations, and the loans are themselves tax write offs.

[Admiral Yi]

Surely you then just get another loan at very good rates due to your obvious giant wealth in stocks.

That's not the way margin works, which is what I think Hillary is talking about.

[The Minsky Moment]

My view of the world is basically the same as cc.  The tax codes are set up to maximize the flexibility and avoidance options for extremely wealthy people.  Income taxes mean nothing because they set up their affairs so that they never earn anything taxable as income.

[Tamas]

My view of the world is basically the same as cc.  The tax codes are set up to maximize the flexibility and avoidance options for extremely wealthy people.  Income taxes mean nothing because they set up their affairs so that they never earn anything taxable as income.

Indeed.