You can't just base a business in a QOZ and call it a QOZB. It needs to generate 50% of its gross income from within the zone and 40% of its intangible property (e.g. software) must be used for business within a zone.
Further, there are restrictions on what kind of business it can be. It can't be, for example, a golf course or a liquor store.
The "50-percent of gross income test" is actually that you have to meet 1 of 3 standards[1]:
Qualified Opportunity Zone Business
QOF 50-percent of gross income test
Q56. What is the 50-percent-of-gross-income test?
A56. Each taxable year, a QOZ business must earn at least 50 percent of its gross income from business activities within a QOZ. The regulations provide three safe harbors that a business may use to meet this test. These safe harbors take into account any of the following—
- Whether at least half of the aggregate hours of services received by the business were performed in a QOZ;
- Whether at least half of the aggregate amounts that the business paid for services were for services performed in a QOZ; or
- Whether necessary tangible property and necessary business functions were located in a QOZ.
Q57. Must a QOZ business meet all three safe harbors to satisfy the 50-percent-of-gross income test?
A57. No. A QOZ business satisfies the 50-percent-of-gross income test if it satisfies any one of these safe harbors. For example, if 50 percent or more of all the hours of services that a business receives and uses were performed in one or more QOZs, then the business satisfies the hours of services received test and, therefore, satisfies the 50-percent-of-gross-income test.
Seems like you can, as long as you work in the office 50% of the time ("at least 50% of the hours worked by partners, contractors, and employees could take place in an OZ"), and the IP seems to be addressed by this quote from the article: "The IRS’ Final Regulations on QOZB’s gave a rather interesting but nuanced example of an intellectual property holding company with a headquarters in an QZ which DID qualify as a QOZB despite concerns about the 40% intangible property rule. This is a very relevant example for many tech companies [...]"
I'm not going to go read the IRS regulations because I'm not actually planning to implement this scheme but it seems plausible that it might work. As long as there isn't another COVID forcing everyone to work from home...
The purpose of the QOZ is to encourage investment in those areas, and it does this by favorable tax conditions.
Some of these areas are surprising, at least around me I see areas designated that aren't much different from the surrounding areas. And there are rural ones, too.
Looking at some of the ones above in street view, I can see why they're classified as they are, and I could certainly see a start-up choosing to place an office in one of those locations. Some are transit-close, even.
It’s about who owned the land in 2017 and who was governor. Some states were less corrupt than others, but as a general rule OZs were and are mostly political grift with a few legit trades thrown in for cover.
The reason that HUGE tracts of OZs make no sense is that the “for development of blighted areas” thing is very thinly veiled bullshit.
As prescribed by law, governors nominated which census tracts should be designated as
Opportunity Zones by the U.S. Department of the Treasury. To be eligible for designation, a
census tract must:
- Have a poverty rate of at least 20 percent; or
- Have a median income below 80 percent of that in the State or metropolitan area, or for
rural census tracts, 80 percent of that in the entire State; or
- Be contiguous with a census tract meeting one of the above conditions and have a
median income less than 125 percent of the qualifying contiguous census tract. [0]
There's an opportunity zone adjacent to Palo Alto that extends into Menlo Park. It has a Four Seasons hotel in it. There are other areas nearby that could use the investment incentive a lot more IMO. Who decided on these zones? Seems totally arbitrary.
Wow, this is awesome. So for even a small amount of money, such as in the Kara $1120 example, you simply need to have offices or even cowork in a particular area and you get to write off all capital gains taxes. I'll need to look more into this for my corporation...
Is this really what people strive for in the USA. To avoid contributing anything back to the country that helped them achieve everything they've ever wanted?
The government is not a charity. If they have deemed something to be non-taxable, it's because the government (and by extension, the people it represents) want to incentivize that particular activity, in this case investing in economically depressed areas.
If at some point we no longer want to incentivize that behavior, the government can simply remove the tax break. Moralizing about how people shouldn't engage in the behavior that the government is encouraging them to by offering tax incentives is beyond useless.
Yes. The "privatize gains, socialize losses" thing isn't just an empty meme, it's a legitimate (read: "not strictly illegal") and highly profitable strategy.
it's not completely free money - you have to invest in qualified funds/businesses, which is located in areas of low economic opportunity that the gov't wants to incentivize businesses to start operating in.
This is effectively a tax incentive to open new businesses in these somewhat remote and low-income areas. I dont think it's a bad thing if it does indeed encourage job creation and economic activity in those areas that otherwise would've stagnated.
> Is this really what people strive for in the USA. To avoid contributing anything back to the country that helped them achieve everything they've ever wanted?
You are working from a flawed model. Government spending is not tied at all to revenue. Over the past three years the federal government has dropped over 5 trillion dollars on the economy from a helicopter.
Why not take advantage of a loophole when money can and is being created out of thin air?
Capital gains tax is a parasitical tax that punishes people for being responsible with their after-tax money. It also creates massive, massive loopholes that can be abused.
The fairest solution is to scrap CGT and associated capital loss write-offs.
This allows the middle class to thrive by investing in productive enterprises and not getting taxed yet again to do so.
It's the worst kind of tax that punishes success by stealing your after-tax money.
As for your appeal to nation, the US will waste your money on slaughtering Afghanistani children with bombs and handing out cash to serial fraudsters (look up how many people on Social Security are actually real). Most tax money is wasted by government.
It's a free market approach. The alternative is that the government collects money everywhere equally and then go and invest/pump money into these area. If the area is tax negative (requires more government money than it brings in), then might as well give it tax breaks; if that economic activity can break it off the cycle.
The very fact that some of these places exist for a long time; means that it's not worth it to invest in them even with the tax breaks.
I think, like most things, it’s a bell curve - the bulk of the people want to contribute a reasonable amount while some want contribute none and some extra. The glaring issue in the United States is how much capital is gained — though I prefer ‘allocated to’, as the people do the work — by a minuscule portion of the population and the paltry taxes they then pay.
The government of USA is incredibly inefficient at getting anything done.
If I had billions of dollars I would always strive to legally pay as least taxes as possible and use the funds to contribute back the country in much more efficient ways, including investing in people who are provably getting shit done.
Here's the latest of a constant firehose of misuse of funds I've seen. The gist is that a Stanford professor is basically leeching $40K of tax money at a $5000/hr rate for "consulting" about social justice and equity in schools. I'd rather give that $40K directly toward educational supplies for underprivileged students, or to a hundred tutors and therapists at $50/hr, or something else.
The closest opportunity zone is 5 miles away, includes a large mall, mixed use development, upscale retail spaces, a Trader Joe's, etc.
Meanwhile, I am surrounded by vacant lots, a large mall that is entirely dead and vacant, low income housing, one tiny strip mall with a convenience store, and another with a church, dollar store, and liquor store (a mile away).
I can see though that the OZ tract is tiny, whereas the tract I'm in is about 7 x larger and includes some more supermarkets and malls further away that are very active though not upscale.
Looks like a fairly straightforward case of economic gerrymandering.
If you want to start a software company in a QOZ with, say, $1M of recent capital gains, more cash than you expect to use in the short term, what does the QOZB do with the cash to avoid breaking the 90% rule?
> No more than 5% of a QOZB’s assets can be “nonqualified financial property”. Nonqualified financial property includes most types of financial assets such as stocks and bonds but excludes cash, loans with a term of 18 months or less, and accounts receivable acquired in the ordinary course of business.
Cash on hand is ignored.
However, I speculate that if you put said cash in an interest gathering bank account, the IRS might have a firmer view.
So you're likely capitalizing the business with cash on hand that cannot attract meaningful interest.
You still owe capital gains on the original proceeds, deferred a few years and with a possible 10-15% basis step up. This isn't zero capital gains tax.
If you happen to have a billion dollar exit on your reinvested capital gains that can be tax free, but you're still paying tax on the original gain.
Well I would not do that. Just gross, I mean for me, you can do as you wish, dodge this tax and that impost, and then of course end up greasing the wheels because the government is, morally speaking, forced to take bribes at that point if everyone's trying to become a billionaire without paying a dollar in capital gains. Forget the orphanage right? Or like do you want to make a 510c3 gift, or do a raffle, I mean from your perspective, I'm trying to see it from your perspective.
So like then instead of paying the orphanage tax you pay the Ferrari tax and the...the handbag tax of the brand, but like always dodging actual luxury taxes, just paying for the brand. Like paying for the advertising, the...the events, like the Rolex sailing thing? Dude I rather hang out with one of my evicted buddies than go to that shit. As long as I'm squandering money, rather buy Jonnie the beer he's asking for so he can sleep, without judging him. And at obviously placing the burden on myself to help him, like making sure I have coins in my pockets for the beggars before I leave my house. Or a couple times when he asked, I'd tell him to let me get some change I knew I had at home to bring him. It's this whole Christianity thing.
Though normally not talk about that, supposedly charity you're not meant to talk about. Well I guess it's not glamorous charity. And the whole thing about charity being private sort of works sort of doesn't, the Gates Foundation has a huge amount of publicity centered around, I think, the size of William Gate's fortune, reputed to be the world's greatest. But on the other hand, you have Laurene Powell Jobs, I knew someone she was indirectly paying wages to that had literally no idea where the money was coming from, like she used a corporation instead of a 510c3 for privacy and liberty in giving. So then Laurene Jobs came out in public, saying (paraphrase) this sucks, why rag on the Jobs's so much like they're niggardly, and then she opened up about the giving and then that someone I knew found out wages were coming from her. Basic reason it doesn't work is you can't know for sure, as a society, if the rich individual is giving anything at all or just hoarding. That's what's up in Chile, the rich just hoard. Acaparan in Spanish, but that's like a Communist-word. Well myself included, compared to Jonnie I'm rich, no two ways about it.
And that's why I love paying taxes, so taxes are the escape hatch for this moral dilemma, you can by all means tell everyone what you're paying in taxes. Taxes are not charity. If you pay...I think I paid $80 extra split half-and-half State of California and Federal taxes, which I could do by asking about a form at the temp job agency at which I worked this...this menial but mostly dignified labor role...so I payed an absolute tax rate of 45%. I have the W-2 still, looks like I earned $300, obviously outside income but that's not what's in question. So that's why I'm quoting numbers, as well as I can remember, because it's not charity, it's not like being a sugar daddy, it's like being a husband. The money is demanded and if I choose, due to what is considered a masochistic loophole which nobody ever uses or talks about, but which appeared on-screen as a pre-filled 0 so I could ask about it...so because the state demands money and it's obligatory in general, that has more dignity. Because if you can pay a bit, you ought to. Not like they have to throw a party for you to sign a little check, no, DEMAND it. Just like education for children, it's GOOD that's it be OBLIGATORY. OBLIGATORY. And if you want to teach your child more after school, by all means. And like no capital gains on a billion dollars? OBVIOUSLY TAXES ARE A STUPID POINT SYSTEM BECAUSE EVERYTHING IS A STUPID POINTS SYSTEM, THERE'S NO ALTERNATIVE, YOU'RE NOT AS CLEVER AS YOU THINK YOU ARE. Just submit.
Plus being a billionaire makes you a high-value target, in addition to a qualified investor, and there's more price discrimination. The only people that price-discriminate transparently are the Government. I would say they are the least predatory. If you really do pay up without avarice, they won't chisel you. And keep in mind the perk of having the FBI available for eg abductions or blackmail, extortion, what you might term "first world problems." But not if you're dirty from cheating the system. Totally different vibe.
Speaking as to USA, there's different situations. The worst thing, the absolute worst thing, is dropping your US citizenship, because everyone knows the only real reason for that is avoiding taxes, or for avoiding going to war. Or both. Then it's open season. When the US Government says, and tax lawyers repeat this, fat pigs get slaughtered, it means you have to show respect for the point system and only hack a little here and there in additive, not multiplicative ways. And in a manner that conforms to American values and norms. Like middle-class gets to carve out the primary residence from capital gains I think, that's a super American value.[1] Or like making your career about intellectual property, especially inventions. What would a house be without them? Or what would we be without them? Still apes, no clothes, no fire, no tools. Hands are for inventions, and hands make us special to the exclusion of everything else. Otherwise we'd be knuckle-dragging. Plus America had so many great inventors, endless, still does they're just...it's different like everyone's delegating now. Trying to find the innovation in another field, rather than banging them out on their own. Or AI.[2]
Like you can get very very rich in America, just accept the friction it comes with.
[1] And it's American in tandem with being favored by the tax system, the two are inseparable.
[2] Despite this being my line of business, soon to be hosted in www.fgemm.com, I have a negative view of matrix multiplication for this purpose. I think as a tool in a toolbox, to be used sparingly and not relied upon completely. Never a substitute for creativity, and thinking. And using your hands instead of just the brain, real inventors did that.
Loopholes are one thing and IMO should be closed but morality is another. The whole idea that you can make a billion dollar business without being hugely dependent on the infrastructure, education, history, societal background etc that has largely been paid for by...taxes...is utter fallacy.
Maybe if massively profitable businesses spent a bit more time doing the right thing then everyone would be happier.
Honest to god, I'm kind of stunned by the people with tens to HUNDREDS of millions, liquid, that will go great lengths to avoid, even evade, taxes. You see people move to other countries for "tax purposes" alone. Or people that will create elaborate schemes.
Of course, I understand that if you're in that wealth bracket, the actual tax/accounting acrobatics is abstracted from you. You probably hire some consultant to do all the work, and in the day only pay a fee to get your tax cut by x.xx%. That's zero work for you, minus whatever time you spent on a meeting with the consultant.
But still, there are people that will be heavily involved in these things themselves.
Yes, it is a polarizing topic. Some people refuse to pay taxes because of how the money is spent - or they have some idea of how the money is spent. But from a pragmatic point of view...what's the difference between sitting on say $500MM in cash, and $800MM? It's either way going to be more money than you'll ever be able to spend. Hell, even the safest investments at that scale will yield more money than what most CEOs make in a year.
(With that said, I do have sympathy for the people living in countries where you have to pay wealth tax or tax on unrealized gains, which for founders means
1) taking out loans to pay taxes
2) increasing their yearly compensation, just to meet their tax burden or
My brother's life was paid for by taxes. Went to the ER with a headache, turned out to be a brain annurism leading to 2 8rh plus surgeries and a month in the hospital. Bill was paid out of Minnesota state taxpayers fund. Otherwise he would have been bankrupt for life -- and without the surgery that life would not have been long.
My wife's life was saved twice by tax-funded health care. Won't share details here.
I happen to enjoy quite a few government services. Like "roads".
I'm happy to pay taxes.
I don't always like the way they are spent. I also don't like everything about my job, and if I had a dog I could probably find things about it that I didn't like.
This is HN. we welcome diversity of views. this view you espouse, is not actually a minority view, but still, its a divisive topic.
I'm a high tax kinda guy. If we all had Norway taxes, we'd have Norway sovereign fund and EV and lifestyle (but maybe without SAD, because we're not all that far north)
I don't think anyone has done the legwork to link "your taxes" and a moral aspect. There are a lot of basic unresolved questions (if Jeff Bezos pays more in taxes than you earn in your lifetime, has he payed his fair share? Why/why not? Are the standards used to work that out some sort of objective moral or just a reflection of personal interest speaking? A suspicious number of moral justifications involve other people paying all the taxes & not the moraliser). And a company like Apple has had a bigger positive influence on my lifestyle than a large number of government agencies. Some of those agencies are trying to make my life worse as far as I reckon it.
If the law says some entity must pay X tax it is uncertain what it would mean, in practice, to claim "their taxes" were really Y, some other amount they aren't legally obliged to pay.
> The whole idea that you can make a billion dollar business without being hugely dependent on the infrastructure, education, history, societal background etc that has largely been paid for by...taxes...is utter fallacy.
A business is a hypothetical entity, a term for a system of organising people to do things. Things that are measurably in high demand. It is profoundly uncertain that diverting money out of those systems is a good idea. Observing that businesses rely on their context does not start or end the argument about how much tax they should pay.
Why? Is there some correlation between the amount of capital gains I’ve made and the amount of money society needs? If I were to make less in capital gains does that mean society is missing out in some way?
I pay federal income taxes, payroll taxes, medicare and medicaid taxes, social security taxes, corporate taxes, state income taxes, city income taxes, property taxes, and more.
Why should I then pay a huge capital gains bill? Why should I feel morally obligated to do such a thing?
I think you’re missing all the taxes paid along the way to achieving a billion dollar business. For me it’s 47% per year. Far more than I would consider my fair share considering most people pay an effective rate of 0%.
As an American, I'd be more excited about taxes if I had access to affordable education, affordable healthcare, a well maintained infrastructure, and general social safety net. Now that I'm living outside of the USA & still subject to USA taxation, I'm even less excited about it.
Still, if the tax loophole exists, it's hardly surprising that people use it. People should pay their taxes, but the government should also close these tax loopholes, or at least be a lot more strict about how they're used; I can imagine these opportunity zones exist to make it more attractive to set up shops and small businesses here in order to develop the area. It's not meant for app startups with billion dollar exits, so the rules should exclude those.
If you get downvoted it will be because you stated an opinion that is in no way controversial among these demographics and then pretended like you were making some noble stand based on principals when in reality you were just the first person to come along and say what half of everyone was thinking and you weren't really risking much blowback.
[+] [-] sweis|3 years ago|reply
Further, there are restrictions on what kind of business it can be. It can't be, for example, a golf course or a liquor store.
[+] [-] ryan_j_naughton|3 years ago|reply
Qualified Opportunity Zone Business QOF 50-percent of gross income test Q56. What is the 50-percent-of-gross-income test?
A56. Each taxable year, a QOZ business must earn at least 50 percent of its gross income from business activities within a QOZ. The regulations provide three safe harbors that a business may use to meet this test. These safe harbors take into account any of the following—
- Whether at least half of the aggregate hours of services received by the business were performed in a QOZ;
- Whether at least half of the aggregate amounts that the business paid for services were for services performed in a QOZ; or
- Whether necessary tangible property and necessary business functions were located in a QOZ.
Q57. Must a QOZ business meet all three safe harbors to satisfy the 50-percent-of-gross income test?
A57. No. A QOZ business satisfies the 50-percent-of-gross income test if it satisfies any one of these safe harbors. For example, if 50 percent or more of all the hours of services that a business receives and uses were performed in one or more QOZs, then the business satisfies the hours of services received test and, therefore, satisfies the 50-percent-of-gross-income test.
[1] https://www.irs.gov/credits-deductions/opportunity-zones-fre...
[+] [-] modeless|3 years ago|reply
I'm not going to go read the IRS regulations because I'm not actually planning to implement this scheme but it seems plausible that it might work. As long as there isn't another COVID forcing everyone to work from home...
[+] [-] bombcar|3 years ago|reply
https://cimsprodprep.cdfifund.gov/CIMS4/apps/pn-nmtc/index.a...
The purpose of the QOZ is to encourage investment in those areas, and it does this by favorable tax conditions.
Some of these areas are surprising, at least around me I see areas designated that aren't much different from the surrounding areas. And there are rural ones, too.
Looking at some of the ones above in street view, I can see why they're classified as they are, and I could certainly see a start-up choosing to place an office in one of those locations. Some are transit-close, even.
[+] [-] throwawaygh|3 years ago|reply
The reason that HUGE tracts of OZs make no sense is that the “for development of blighted areas” thing is very thinly veiled bullshit.
[+] [-] 11thEarlOfMar|3 years ago|reply
The Opportunity Zone Selection Process
As prescribed by law, governors nominated which census tracts should be designated as Opportunity Zones by the U.S. Department of the Treasury. To be eligible for designation, a census tract must:
- Have a poverty rate of at least 20 percent; or
- Have a median income below 80 percent of that in the State or metropolitan area, or for rural census tracts, 80 percent of that in the entire State; or
- Be contiguous with a census tract meeting one of the above conditions and have a median income less than 125 percent of the qualifying contiguous census tract. [0]
[0] https://www.rd.usda.gov/sites/default/files/ImpactofOpportun...
[+] [-] modeless|3 years ago|reply
[+] [-] cercatrova|3 years ago|reply
[+] [-] rdl|3 years ago|reply
Option B: Move to Puerto Rico, run your company from here, do Act 60, zero capital gains tax.
It's challenging to build a successful billion-dollar-exit company in PR, though.
[+] [-] hyuuu|3 years ago|reply
[+] [-] Layke1123|3 years ago|reply
[+] [-] imgabe|3 years ago|reply
If at some point we no longer want to incentivize that behavior, the government can simply remove the tax break. Moralizing about how people shouldn't engage in the behavior that the government is encouraging them to by offering tax incentives is beyond useless.
[+] [-] nerdponx|3 years ago|reply
[+] [-] chii|3 years ago|reply
This is effectively a tax incentive to open new businesses in these somewhat remote and low-income areas. I dont think it's a bad thing if it does indeed encourage job creation and economic activity in those areas that otherwise would've stagnated.
[+] [-] thrwawy283|3 years ago|reply
Why don't people want to contribute back to an environment that enabled their success?
I have too many family members that will avoid acknowledging anything the government does for them.
"The social contract."
[+] [-] alliao|3 years ago|reply
[+] [-] golemotron|3 years ago|reply
You are working from a flawed model. Government spending is not tied at all to revenue. Over the past three years the federal government has dropped over 5 trillion dollars on the economy from a helicopter.
Why not take advantage of a loophole when money can and is being created out of thin air?
[+] [-] unknown|3 years ago|reply
[deleted]
[+] [-] 0xy|3 years ago|reply
The fairest solution is to scrap CGT and associated capital loss write-offs.
This allows the middle class to thrive by investing in productive enterprises and not getting taxed yet again to do so.
It's the worst kind of tax that punishes success by stealing your after-tax money.
As for your appeal to nation, the US will waste your money on slaughtering Afghanistani children with bombs and handing out cash to serial fraudsters (look up how many people on Social Security are actually real). Most tax money is wasted by government.
[+] [-] csomar|3 years ago|reply
The very fact that some of these places exist for a long time; means that it's not worth it to invest in them even with the tax breaks.
[+] [-] Fezzik|3 years ago|reply
[+] [-] tomcam|3 years ago|reply
[+] [-] dmje|3 years ago|reply
[+] [-] senectus1|3 years ago|reply
[+] [-] unknown|3 years ago|reply
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[+] [-] dheera|3 years ago|reply
If I had billions of dollars I would always strive to legally pay as least taxes as possible and use the funds to contribute back the country in much more efficient ways, including investing in people who are provably getting shit done.
Here's the latest of a constant firehose of misuse of funds I've seen. The gist is that a Stanford professor is basically leeching $40K of tax money at a $5000/hr rate for "consulting" about social justice and equity in schools. I'd rather give that $40K directly toward educational supplies for underprivileged students, or to a hundred tutors and therapists at $50/hr, or something else.
https://nypost.com/2022/04/08/stanford-prof-calls-cops-on-be...
[+] [-] usmannk|3 years ago|reply
[+] [-] pontifier|3 years ago|reply
[+] [-] webmaven|3 years ago|reply
Meanwhile, I am surrounded by vacant lots, a large mall that is entirely dead and vacant, low income housing, one tiny strip mall with a convenience store, and another with a church, dollar store, and liquor store (a mile away).
I can see though that the OZ tract is tiny, whereas the tract I'm in is about 7 x larger and includes some more supermarkets and malls further away that are very active though not upscale.
Looks like a fairly straightforward case of economic gerrymandering.
[+] [-] bagels|3 years ago|reply
[+] [-] urthor|3 years ago|reply
> No more than 5% of a QOZB’s assets can be “nonqualified financial property”. Nonqualified financial property includes most types of financial assets such as stocks and bonds but excludes cash, loans with a term of 18 months or less, and accounts receivable acquired in the ordinary course of business.
Cash on hand is ignored.
However, I speculate that if you put said cash in an interest gathering bank account, the IRS might have a firmer view.
So you're likely capitalizing the business with cash on hand that cannot attract meaningful interest.
[+] [-] chrisbrandow|3 years ago|reply
[+] [-] econner|3 years ago|reply
If you happen to have a billion dollar exit on your reinvested capital gains that can be tax free, but you're still paying tax on the original gain.
[+] [-] nickpeterson|3 years ago|reply
[+] [-] unglaublich|3 years ago|reply
[+] [-] unknown|3 years ago|reply
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[+] [-] pbreit|3 years ago|reply
[+] [-] daniel-cussen|3 years ago|reply
So like then instead of paying the orphanage tax you pay the Ferrari tax and the...the handbag tax of the brand, but like always dodging actual luxury taxes, just paying for the brand. Like paying for the advertising, the...the events, like the Rolex sailing thing? Dude I rather hang out with one of my evicted buddies than go to that shit. As long as I'm squandering money, rather buy Jonnie the beer he's asking for so he can sleep, without judging him. And at obviously placing the burden on myself to help him, like making sure I have coins in my pockets for the beggars before I leave my house. Or a couple times when he asked, I'd tell him to let me get some change I knew I had at home to bring him. It's this whole Christianity thing.
Though normally not talk about that, supposedly charity you're not meant to talk about. Well I guess it's not glamorous charity. And the whole thing about charity being private sort of works sort of doesn't, the Gates Foundation has a huge amount of publicity centered around, I think, the size of William Gate's fortune, reputed to be the world's greatest. But on the other hand, you have Laurene Powell Jobs, I knew someone she was indirectly paying wages to that had literally no idea where the money was coming from, like she used a corporation instead of a 510c3 for privacy and liberty in giving. So then Laurene Jobs came out in public, saying (paraphrase) this sucks, why rag on the Jobs's so much like they're niggardly, and then she opened up about the giving and then that someone I knew found out wages were coming from her. Basic reason it doesn't work is you can't know for sure, as a society, if the rich individual is giving anything at all or just hoarding. That's what's up in Chile, the rich just hoard. Acaparan in Spanish, but that's like a Communist-word. Well myself included, compared to Jonnie I'm rich, no two ways about it.
And that's why I love paying taxes, so taxes are the escape hatch for this moral dilemma, you can by all means tell everyone what you're paying in taxes. Taxes are not charity. If you pay...I think I paid $80 extra split half-and-half State of California and Federal taxes, which I could do by asking about a form at the temp job agency at which I worked this...this menial but mostly dignified labor role...so I payed an absolute tax rate of 45%. I have the W-2 still, looks like I earned $300, obviously outside income but that's not what's in question. So that's why I'm quoting numbers, as well as I can remember, because it's not charity, it's not like being a sugar daddy, it's like being a husband. The money is demanded and if I choose, due to what is considered a masochistic loophole which nobody ever uses or talks about, but which appeared on-screen as a pre-filled 0 so I could ask about it...so because the state demands money and it's obligatory in general, that has more dignity. Because if you can pay a bit, you ought to. Not like they have to throw a party for you to sign a little check, no, DEMAND it. Just like education for children, it's GOOD that's it be OBLIGATORY. OBLIGATORY. And if you want to teach your child more after school, by all means. And like no capital gains on a billion dollars? OBVIOUSLY TAXES ARE A STUPID POINT SYSTEM BECAUSE EVERYTHING IS A STUPID POINTS SYSTEM, THERE'S NO ALTERNATIVE, YOU'RE NOT AS CLEVER AS YOU THINK YOU ARE. Just submit.
Plus being a billionaire makes you a high-value target, in addition to a qualified investor, and there's more price discrimination. The only people that price-discriminate transparently are the Government. I would say they are the least predatory. If you really do pay up without avarice, they won't chisel you. And keep in mind the perk of having the FBI available for eg abductions or blackmail, extortion, what you might term "first world problems." But not if you're dirty from cheating the system. Totally different vibe.
Speaking as to USA, there's different situations. The worst thing, the absolute worst thing, is dropping your US citizenship, because everyone knows the only real reason for that is avoiding taxes, or for avoiding going to war. Or both. Then it's open season. When the US Government says, and tax lawyers repeat this, fat pigs get slaughtered, it means you have to show respect for the point system and only hack a little here and there in additive, not multiplicative ways. And in a manner that conforms to American values and norms. Like middle-class gets to carve out the primary residence from capital gains I think, that's a super American value.[1] Or like making your career about intellectual property, especially inventions. What would a house be without them? Or what would we be without them? Still apes, no clothes, no fire, no tools. Hands are for inventions, and hands make us special to the exclusion of everything else. Otherwise we'd be knuckle-dragging. Plus America had so many great inventors, endless, still does they're just...it's different like everyone's delegating now. Trying to find the innovation in another field, rather than banging them out on their own. Or AI.[2]
Like you can get very very rich in America, just accept the friction it comes with.
[1] And it's American in tandem with being favored by the tax system, the two are inseparable.
[2] Despite this being my line of business, soon to be hosted in www.fgemm.com, I have a negative view of matrix multiplication for this purpose. I think as a tool in a toolbox, to be used sparingly and not relied upon completely. Never a substitute for creativity, and thinking. And using your hands instead of just the brain, real inventors did that.
[+] [-] dmje|3 years ago|reply
Loopholes are one thing and IMO should be closed but morality is another. The whole idea that you can make a billion dollar business without being hugely dependent on the infrastructure, education, history, societal background etc that has largely been paid for by...taxes...is utter fallacy.
Maybe if massively profitable businesses spent a bit more time doing the right thing then everyone would be happier.
Just a thought.
~ braces for inevitable downvotes ~
[+] [-] TrackerFF|3 years ago|reply
Of course, I understand that if you're in that wealth bracket, the actual tax/accounting acrobatics is abstracted from you. You probably hire some consultant to do all the work, and in the day only pay a fee to get your tax cut by x.xx%. That's zero work for you, minus whatever time you spent on a meeting with the consultant.
But still, there are people that will be heavily involved in these things themselves.
Yes, it is a polarizing topic. Some people refuse to pay taxes because of how the money is spent - or they have some idea of how the money is spent. But from a pragmatic point of view...what's the difference between sitting on say $500MM in cash, and $800MM? It's either way going to be more money than you'll ever be able to spend. Hell, even the safest investments at that scale will yield more money than what most CEOs make in a year.
(With that said, I do have sympathy for the people living in countries where you have to pay wealth tax or tax on unrealized gains, which for founders means
1) taking out loans to pay taxes
2) increasing their yearly compensation, just to meet their tax burden or
3) to sell their equity
But these aren't really in the "exit" bracket)
[+] [-] mellavora|3 years ago|reply
My wife's life was saved twice by tax-funded health care. Won't share details here.
I happen to enjoy quite a few government services. Like "roads".
I'm happy to pay taxes.
I don't always like the way they are spent. I also don't like everything about my job, and if I had a dog I could probably find things about it that I didn't like.
Life is compromise.
[+] [-] jen729w|3 years ago|reply
[+] [-] ggm|3 years ago|reply
I'm a high tax kinda guy. If we all had Norway taxes, we'd have Norway sovereign fund and EV and lifestyle (but maybe without SAD, because we're not all that far north)
[+] [-] roenxi|3 years ago|reply
If the law says some entity must pay X tax it is uncertain what it would mean, in practice, to claim "their taxes" were really Y, some other amount they aren't legally obliged to pay.
> The whole idea that you can make a billion dollar business without being hugely dependent on the infrastructure, education, history, societal background etc that has largely been paid for by...taxes...is utter fallacy.
A business is a hypothetical entity, a term for a system of organising people to do things. Things that are measurably in high demand. It is profoundly uncertain that diverting money out of those systems is a good idea. Observing that businesses rely on their context does not start or end the argument about how much tax they should pay.
[+] [-] parkingrift|3 years ago|reply
I pay federal income taxes, payroll taxes, medicare and medicaid taxes, social security taxes, corporate taxes, state income taxes, city income taxes, property taxes, and more.
Why should I then pay a huge capital gains bill? Why should I feel morally obligated to do such a thing?
I think you’re missing all the taxes paid along the way to achieving a billion dollar business. For me it’s 47% per year. Far more than I would consider my fair share considering most people pay an effective rate of 0%.
[+] [-] devoutsalsa|3 years ago|reply
[+] [-] mcv|3 years ago|reply
[+] [-] kmonsen|3 years ago|reply
I think it is sad they exist, but clearly they are there to be used.
[+] [-] gonzo41|3 years ago|reply
[+] [-] throwaway0a5e|3 years ago|reply
>~ braces for inevitable downvotes ~
If you get downvoted it will be because you stated an opinion that is in no way controversial among these demographics and then pretended like you were making some noble stand based on principals when in reality you were just the first person to come along and say what half of everyone was thinking and you weren't really risking much blowback.