jeremy_arnold

There's a fundamental asymmetry here: many commenters vs. one of me. It's one big reason why most writers don't engage in comments at all. The time and energy burden is enormous.

As happens though, I think standing behind one's work is important, and that the investment is worthwhile on the net. So I engage more than most do, and I quite literally pay people when they help me see flaws in my work (or even just when they raise a really helpful point). This is good for all. But it's only sustainable when those on the other side engage in good faith. I told someone (who was already being super snarky) that I was centralizing their comments as they'd made the same one in two places. They responded with something deeply uncharitable. So I blocked them in one place but still addressed their concerns here (while linking readers from SS to here so they could follow). If that's not enough for you, lol ok.

As for butthurt, look, I've been on HN for a day. I don't know anything about the culture here. I don't even know what flags you're talking about or how to find them. No mods have gotten in touch with me about anything. If they did, I'd happily hear them out. But I'm never a dick to anyone who isn't a dick first, and even then I still try to engage in good faith if there's a real concern within their dump.

Flack is a pejorative, and really speaks to spokespeople, which I'm not.

I write all the time about what my day job is, and I regularly disclose it whenever there is even an vague intersection with a story I'm writing. It's not a secret!

Lots of people drift between comms and public writing. When there's a perception of conflict, they disclose. As do I. Pretty routine.

As I've said elsewhere, if the US wants to set some max window for realizing gains, that could be fine. ProPublica and others are welcome to write opeds arguing for it. People can debate that on its own merits.

The difference between this and deferring wage income is that wages don't need to be liquidated. And that's not a small difference.

It's the same as property taxes. Do they factor capital gains in some obvious sense? Sure! They're based on assessed value, which should be closer to market value than original sale price. But no one looks at them as the same as forcing gains realizations. Just two different things conceptually. Just so for wealth taxes, with are just property taxes for non-RE property.

lol at "paid flack". Brb gonna update my LinkedIn.

Anyway, I awarded a correction bounty here. I'd said in the same piece "if your only criteria for publishing are some measure of verification and some measure of newsworthiness", but used poor phrasing in saying "sole criteria" prior. I don't think it was likely to mislead the fair reader. But a mistake is a mistake, and I'm happy to own it.

OP here. Slept on it.

I said in that same segment "if your only criteria for publishing are some measure of verification and some measure of newsworthiness". In re-reading their piece, that's all they checked for. So what I said seems substantially accurate to me.

But as a matter of phrasing, it's true that I used "sole criteria" above, which was sloppy. So I'll award a bounty on that. See your email.

> How do you envision changing incentives and accountability?

I'm writing a piece about that on Thursday actually. TLDR is a mix of paying for corrections (really just "more correct information flow") and maintaining a super readable changelog. Also a different reader premise. We'll try to present stories almost in the form of Wikipedia, if each page were managed by a really engaging writer with a good grasp of the subject, who was being fed high-quality feedback.

> Realistically, they can't address all of it, and yes it's very annoying to be ignored.

I've written about this pretty extensively, and IMO while I'm sympathetic about all the Twitter hate that some of them get, journalism let go of its public editors for a reason. And it's next to impossible to get a staff editor to seriously review anything no matter how you approach. Their whole culture is "ship and move on" at a deep level. And that kinda-maybe made sense in the paper distro days. But it doesn't really serve the reader now compared to what a truly native digital solution could look like.

> I notice the OP article effectively, if not explicitly, sides with Musk (and others) against ProPublica.

I side with him sometimes, and sometimes I don't. And sometimes where I do I still have a lot to criticize. I ultimately just try to call balls and strikes (with the correction policy keeping me honest). But as a rule, I think tech journalism is pretty poisoned against rich entrepreneurs now, and that the major corrective work in the info market is explaining how they're getting misrepresented, and why.

Ok, useful context. Thanks. (I've never submitted my own link, but it seems my readers do from time to time. I'll try to be mindful of this if it's something I'd like to see posted here.)

The offense was you intimating that I had bad motives when I simply wanted to centralize discussion and then link from one to the other (as I did). You clearly have no idea what it's like to manage replies at scale. People with bad faith engagement gum up the works, and that's unfair to everyone else, including me.

You've made your points. I've replied to all of them. Readers can judge.

If you'd been respectful, there'd be no ban!

There are taxes A B. B includes A.

ProPublica says "we'd love to see more of A, which is separate from B, as B doesn't seem especially workable".

A and B are not the same, even if one encompasses the other in some meta sense.

A is actionable in a direct sense. And if you wanted to do it in a direct sense, the M2M date you'd pick would not be the first day of the tax year. And you wouldn't use a fixed formula that ignored actual results of the asset.

lol

I've directly engaged with 100+ comments today. I stand behind my work in ways that virtually no writers do. All I ask in return is a basic bit of respect in the form of default rules of engagement. Forcing me to address the same concern in two places is bad form. When I informed you of that, you implied (per your own screenshot) that I was trying to get away with something underhanded. I don't need to be treated like that, so I blocked you in the space I control.

You can be as butthurt as you'd like! You can complain about it wide and far! Or you can reflect. It's up to you!

It's certainly true that political winds are driving the reversions. But what's driving the politics?

Wealth taxes face three classic problems: (1) they're very hard to set in any fair sense given complexities of markets and assets, (2) they can induce liquidation in ways that are net bad for the economy, and (3) capital flight.

3 seems to have been a problem in Norway (https://archive.is/L6kyZ), as it was in France and elsewhere in Europe prior. If your tax system causes a net decrease in receipts because you're golden geese have fled, that's a workability problem!

ProPublica said that these billionaires were avoiding taxes because their unrealized gains weren't being taxed, and implied that they should be in a direct sense for fairness.

(Note that ProPublica mentions wealth taxes at the end, and then immediately dismisses them. Their object here really was/is gains taxation in a direct sense.)

My point was that this isn't tax avoidance, that there are reasons we don't tax unrealized gains directly, and that virtually no countries do it that way.

It's true that a few (and very much declining) number of countries have some form of wealth tax that includes some amount of unrealized gains. The Netherlands, for example, marks-to-market on Jan 1st of the tax year then doesn't actually track gains/losses over the next 364 days. So that obviously isn't a direct tax on gains. But it's certainly adjacent, and I said in the parent comment here.

OP here. Three things:

1. Most countries that have tried wealth taxes have either abandoned them or have had to constantly readjust them due to logistical difficulties and capital flight. They're elegant in theory, but very difficult practically.

2. The problem with ProPublica's coverage is that it was a tax policy argument masquerading as a news story. If they wanted to advocate for whatever policy position, that's fine! But to paint specific individuals as underpaying in taxes is deeply disingenuous. It poisons the civic well and gives casual readers the sense that something nefarious is happening.

3. Violating right-to-privacy laws to illustrate a policy proposal is bad! Really bad!

We'll start with the meta here. Some of these vehicles have arcane applications that I wouldn't know about. I'm not a CPA, and I pay people for corrections for a reason (which I'm pretty sure I'm about the only person on the internet who does this). If you can demonstrate to me that I've missed something meaningful here, I'm happy to pay off and revise/note my piece accordingly.

As for the concrete, the important thing here is whether those repurchased shares retain their original cost basis or not (to the grantor) from the IRS's POV. If they do, all that's happened is a complicated tax-free cash transfer. If they don't, then cap gains taxes have been avoided.

So far as I understand the rules, it's the former. If I'm wrong, I'm happy to be pointed to a credible source etc.

I just mean that so far as the invention/calibration of the taxes, the idea was that a high estate tax would offset the reset of capital gains. I don't have a strong position on whether the laws do this well or make full sense etc.

Though I'll note that the scenario you pose never really happens. A billionaire isn't going to cash out a billion dollars of stock just to have cash to sit on. They're either doing it to spend in on consumption (nothing to inherit anyway) or to buy a different asset that would itself have capital gains assigned.

The only way this is possible is if the assets are still accruing value in sufficient excess of loans made against the assets. So long as this happens, it's fine for the realization to be 1,000 years off. The IOU doesn't expire, and the gov's carrying costs are lower than the gained value of their share in this scenario.

Just to start with one thing here, you're arguing that Robinhood's retail customers are not in fact actual customers despite the fact they very obviously meet the definition you use? lol ok

Most of those instruments retain the initial cost basis. They're a way of getting around gift taxes, not capital gains.

OP here. I sort of agree with you, but it's a bit complicated and it wasn't obvious what the right way to word that was.

To get granular:

Wealth taxes are a bit distinct from taxing unrealized gains directly (even though they often have that effect, and there is some obvious overlap). If we look at, say, the Netherlands, they're assessing a ~1.7% wealth tax on assets over €1m independent of the performance of the assets over the year in question, which then exempts the payer from capital gains taxes upon sale. So we can call this taxing unrealized gains, but it's a bit imprecise in that they aren't taxing the gains themselves (which are unknown, and could be losses), but rather wealth at a prior point in time based on a fixed formula. If the asset in question went up 20%, the Dutch gov isn't going to tax the excess or force realization on any specific timeline. They'll just keep taking their 1.7% every year on whatever is there on Jan 1st.

There also aren't a lot of countries doing anything like this as touching upon non-real estate investments, and most European countries that have experimented with them are in the process of reversion (e.g., Norway, France) as it basically hasn't proved workable in most instances.

So maybe I should have left something like this as a footnote to clarify.

If you actually have substantive criticisms (that don't devolve to "I can clairvoyantly intuit your intent and thus know you to be an unreliable narrator even though I'm not going to be concrete/specific anywhere"), I'm happy to hear them! I've written extensively on this topic. My archive is full of specific examples you can adjudicate (many of which were brought to journalists by people who were not me). Earn yourself some correction bucks if you spot any overstatements! But your argument here was abstract, meanspirited, and not a meaningful attempt to take any specifics in my argument seriously. Hence why I screencapped it and intend to use it in my collection of journalists doing exactly that (i.e., reflexively dismissing concerns without any demonstrated curiosity or engagement with the meat of any of my proffered examples).

EDIT: Fixed two typos. (Also note what edit marks are what people use to avoid changing what they wrote after the fact!)

I mean saying that my headline was incendiary is fair. That's just not synonymous with trolling imo?

The offset, such as it is, is that estates below a certain threshold pay a lower rate of 18%. So the tax was designed to make the wealthy pay more, irrespective of whether it does a good enough job there.

But to be clear, if someone wants to argue for say a 45-50% estate tax (or even a higher CG rate), that's fine! My point in the article was just that this should be done as an oped, not a faux-bombshell news feature.

I know they happen for offshore wealth getting repatriated. Possible that they've existed for onshore too? Interesting thing to look into. But even if so, that just seems a vanilla case of "Congress should be held accountable to not give away the farm", as it would be a pretty perverse incentive if the rich felt that such a holiday were likely to arise.

I mean there are elaborate schemes to avoid this, but it's not obvious to me that many of them really work short of active (i.e., illegal) tax evasion.

You can, for example, shield stuff in trusts, which is tax-efficient. But when an heir wants to realize gains to buy stuff, it's going to be taxed. All you're doing is deferring, which is fine from the gov's POV as their share of the pool isn't changing, and the pool is in most cases growing a rate that exceeds their borrowing costs.

That said, if Congress wants to make estate/inheritance laws more strict, sure, fine! I think most would be ok with that. Or they could even put a max window on gains realization. But the thing to do there is write an op-ed directly calling for the desired policy, not some sort of alarmist piece about the rich and their "true tax rate".

OP here. Can give some partial answers.

1. Lots of possible deductions. Charitable giving is a big one here. I guess we'll see from future instalments in the ProPublica series which ones were specifically used.

2. You can roll-over loans by borrowing new money to pay back old debt, up to a practical cap of a max % of collateralized share value. And this is worth it if the expected growth on your shares is higher than interest on the loans. But at some point you or an heir will have to realize gains if you want to exceed that practical cap -- or if the loans get called. Bezos could probably raise $2bn for a sports franchise on loan no problem coz that's only ~1% of his shares. If you're a regular billionaire with say $4-5bn in shares, much harder.

The meta point here though is that the taxes are always going to be paid at some point, and deferring that point to the future is fine if the rate of growth on the gov's share exceeds their borrowing costs (currently between 0-2% depending how you look at it).

OP here. The point is that taxation can't really be avoided. If you take out loans against your shares to fund a lavish lifestyle, those loans need to be paid back (and you'll also get taxed on much of your consumption via sales taxes / VAT).

Now, sure, there's a way in which you can just keep rolling over loans with new ones until you approach some max % of your collateralized shares. But this has practical limits, and you're still not really avoiding anything. What's happening practically is that the gov has an IOU for 20% of those shares, where the value of that IOU is growing faster than the servicing costs of their own debt. So pushing out the date of realization is basically fine. The rich person may never pay those taxes within their own lifetime, but someone will. And the gov has no meaningful reason to care who pays or when, so long as the increase in share value outpaces their borrowing costs (pretty easy).

EDIT: Should have said 15-20% to be precise, as lowest rate is 15% for long-term holdings.

Thanks!

OP here. Pondering this.