How One of the Richest Men Is Avoiding $8B in Taxes
nytimes.com
nytimes.com
I haven't been paying attention to the bullshit that is nth-richest person but how the fuck is someone worth that much and is only in 10th place? Wasn't it not too long ago that $127B would have been 1st?
But mostly, because technology has ASTOUNDING margins and markets that are, essentially, winner takes all, the richest people are now tech instead of oil or resources like they used to be.
We will see the world's first trillionaire. It will happen in our lifetime.
Unless the trend of murdering the ultra wealthy actually kicks off. Then maybe not.
The founder of a company -who may or may not be be CEO- is where the the money is at. That's where the value-creation is, and where the ultra wealthy reside. They also usually have somewhat functional families.
But I wanted to answer this question objectively, so here's what I did:
I suppose you can start with a definition of ultrawealthy[1] which is $30m assets minus primary residence. That seemed low to me, but its on wiki, so OK.
Median CEO pay for publicly listed companies was 16.3M, gross. [2] . Take 50% off the top for taxes (US-avg so aggressive), then you are around ~$8M , before expenses. Factor expenses of $1M (probably low, considering consumption goes up relative to income), that means $7M for assets, meaning the avg CEO is working about 5 years to become hit ultra wealth. However, the average tenure for a CEO is 4.8 years [3]
So i suppose a few of the CEOs are eventually making it into the ultra rich, if they can outlast the average tenure on the job.
I stand corrected.
[1] [1] https://en.wikipedia.org/wiki/High-net-worth_individual
[2] https://www.resourcefulfinancepro.com/wp-content/uploads/202...
[3] https://corpgov.law.harvard.edu/2023/08/04/ceo-tenure-rates-...
If they were content to be salaried CEOs, then no.
This can entirely be explained by the performance of the broader stock market. In 2005 the the 10th person richest person had $18.3B. If you multiplied that by the total returns of S&P 500[2], you'd get $129.5B, which is actually more than how much Mr. Huang was worth.
[1] https://stats.areppim.com/listes/list_billionairesx05xwor.ht...
All wealth is paper wealth. The value of anything and everything changes with the wind and, as such, can only be measured at a moment in time. The ridiculous mantra that wealth isn't truly wealth until it is turned into cash is absurd since the value of cash itself fluctuates with rates of inflation and one currency against another.
No in that this is paper wealth that you can borrow liquid cash against. Which makes a decent fraction of that wealth actually accessible (if you don't use this borrowing to just buy more shares.)
Time flies fast.
Ethics is a very subjective thing. I disagree with your take.
Take this up with the IRS if you disagree with it. Don’t blame the individual for following the law.
No man owes the government more than the government demands.
Ethics has no place in the discussion aside from being a consideration in setting what the government demands.
If we want fewer loopholes then we should prioritize that when selecting our government.
The law does not define ethics. Ethics does not define the law. It is folly to pretend there is more than a tenuous bidirectional link.
For example, any father ethically owes his children more than child support. And any child ethically owes his father more than refraining from stealing from or killing him.
1) Follow the spirit of the law, which is that on your death, your assets are taxed as they are passed on, thus you contribute to funding the laws and society we are supposedly working together to create.
2) Do work to avoid having to give up anything, even though you can easily afford it, and you'll be dead anyway.
I don't see how #2 is ethically the same as #1. He doesn't have to do the most selfish thing just because he isn't technically being forced otherwise. Caveat that I haven't researched if this guy is giving tons of money away otherwise or something, I'm just trying to explain why I think it's fair for people to criticize this behavior even though it might be legal.
2. If the government squanders tax payer money all over the world, isn't it morally bad to give that money to the govt. when you can legally keep it?
1. I'm not sure what the implication is here.
2. It sounds like he is attempting to create dynastic wealth by avoiding taxes owed after he dies. So, to me it does not seem like some protest against the US government. But if he was actively trying to do good with his wealth in the amount of billions of dollars, then maybe that could be defensible.
If I take the money I have and invest it then I'll get paid something for that. It follows that the person taking the money thinks they can use my money and end up with more even after they've paid me back.
Here's the question. Is every act of commerce an act of theft? If so then none of this means anything. If not, if a company borrowing money is making good and services (and jobs) that everyone benefits from then in theory my putting my money to work is making everyone better off.
The alternative is that government will use the money more positively. On the upside they just spend it on the downside all they do is spend it - the feedback from "good" and "bad" spending is delayed.
People need to get real examples of how the tax avoidance is happening. How insane the amounts are. And realize that when the rich don't pay, it's left to the middle class to foot the bill. Abstract explanations won't work.
There can be no real change a witouth massive amount of political pressure. Pressure that can only be fueled, at least partly, by emotions. And the proper emotions are fear, anger, and the feeling of being tricked.
From the article:
>The Huangs were taking advantage of a precedent set nearly two decades earlier, in 1995, when the I.R.S. blessed a transaction [...]
Regardless of your position on the current tax code, I think most would agree it's a dick move for the government to prosecute someone for something that they previously said was legal.
Of course, we are now entering the time of open oligarchy, so it probably won't happen soon.
In any case most (all?) loopholes are well intended ideas that weren't fully thought out.
Plus then more deductions you have the higher you can have nominal rates.
From where I sit, having more than the equivalent to a few grams of gold in personal property is very generous.
“I Dig It” trusts
GRATs
Private Foundations in combination with Donor Advised Funds
interestingly this article has no evidence of an “I Dig It” being used by Huang, which is an overly complex and unnecessary strategy to limit taxes, when it does have evidence of the Private Foundations and Donor Advised Fund being used, at far greater values and is a far simpler way of having tax exempted gains and tax deductions.
There is also a GRAT being used, which is also more complex than necessary.
PF + DAF is all you need
It would have been interesting to see a very aggressive use of QSBS in action, as this would be even more tax free instead of tax exempt, but seems like a missed opportunity
Nobody seems to be permitted to explain the flagging either because of the "Please don't complain that a submission is inappropriate. If a story is spam or off-topic, flag it. Don't feed egregious comments by replying; flag them instead. If you flag, please don't also comment that you did." guideline. Anybody who does post to explain their reasons for flagging seems to often have their comment downvoted and flagged.
I'm not arguing for or against the guidelines, just pointing them out.