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Comment by foobarian | Hacker News Reader

So the million dollar question... when to sell off to beat the boomer exit? :-D

the ultra wealthy put all their assets into trusts or charities that dodge taxes and don't require selling anything. They can then take out loans using those assets as collateral when they need cash

Are they allowed to take out loans without paying them back? If they have to pay them back, eventually they have to use that collateral which will be a taxable event. They might be able to delay, but they'll eventually have to pay.

Could they not make sure that enough of their assets are in cash-flowing assets (think, rent-yielding assets, or treasuries, or dividend-yielding stock, etc.) that need not be sold and whose cash-flow can be utilized?

All those cash flows are taxed.

"Buy, Borrow, Die" is the talking point. Cost basis of the assets gets stepped up at death so the inheritor can pay off the loans at that point in time without paying taxes on capital gains.

Then this seems to be the loophole that needs to be resolved. Before the estate pays out, the debts should be settled within the estate using the cost basis belong to the deceased. Assets paid out after loans are satisfied should then have their cost basis reset (if that happens at all, I don't want to take a stance either way if that should happen, except it should only apply once loans are repaid if it ever does apply).

Mechanically, I don't think that works. What prevents the debt from attaching to the inheritor before death (e.g., co-signed loan)? The only solution here is eliminating the cost basis step-up at death.

They invest the loans and make even more money. No need to sell anything ever.

When inheritance taxes become punitive. So, on the 2nd of never, two thousand and not gonna happen.

Who cares of they do or don't have to pay taxes. Taxes shouldn't be punishment. We should strive to all pay less. The government wastes our money frivolously. We should be advocating for better appropriation and spending, not advocating to give them more just because you think the rich are an enemy.

Some people want wealth redistribution. Taxes are the only real mechanism for doing that. I understand that you disagree with that objective. But the proposed mechanism isn't the problem.

Having people be this rich is a problem, though: periods of time where the wealth is superconcentrated have never been good for anyone, the economy slows down, because the superrich never consume in proportion with what they have, there is social unrest and eventually wars and revolutions. The times where wealth was less unequally distributed were the '50s and '60s, whereas we haven't seen this kind of inequality since 1914, and we all know what happened in the following 3 decades...

If the rich are not consuming in proportion to what they have, then what do they do with their money? Right, they invest it. And what does that investment create? Jobs, factories, lower costs, and new opportunities for all. The fact that someone was able to accumulate wealth shows that they know how to use it to generate a return. For the economy in general, it is much more beneficial to have people with skin in the game to invest their own money, instead of the government wasting it in bureaucracy.

>Right, they invest it. And what does that investment create? Jobs

No, overpriced housing. You want jobs? You need more income equality to fund spending.

Sure let’s cut spending, but in the mean time those who are wealthy and benefitting most should be paying the most.

If society ossifies into classes with landed gentry at the top, it’s not going to end pretty.

Wealth redistribution via progressive taxation has been a primary way of avoiding peasant revolts for awhile (working in favor of the rich who tend to be targeted during those things). Sort of like how property taxes discourage buying and holding property without using it productively.

But yes, government should use our tax money better, and even if they are used as a debtor of last resort, they should use the money they borrow more wisely as well (less relevant now that interest rates are high).

Boomers have been exiting for the past 10+ years.

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