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Wealth inequality (1 Viewer)

The thing that is galling to me is that many uber rich are accumulating wealth through increased stock valuations (which everyone can do) then taking that wealth and getting loans using the unsold stock as collateral.  Those loans are untaxed and might only carry a 10% rate or less.  If their wealth grows faster than 10%, they can keep taking loans to pay off previous loans.  Then when they die, those assets get transfer tax free via stepped up basis.  That means Uncle Sam never gets a cut.  Hardly a "fair share" IMO.  The loans on the wealth as collateral is something that most average Joes can't do, only the really wealthy. 

So, I agree, something is definitely broken with our system of taxation.

 
The Z Machine said:
The thing that is galling to me is that many uber rich are accumulating wealth through increased stock valuations (which everyone can do) then taking that wealth and getting loans using the unsold stock as collateral.  Those loans are untaxed and might only carry a 10% rate or less.  If their wealth grows faster than 10%, they can keep taking loans to pay off previous loans.  Then when they die, those assets get transfer tax free via stepped up basis.  That means Uncle Sam never gets a cut.  Hardly a "fair share" IMO.  The loans on the wealth as collateral is something that most average Joes can't do, only the really wealthy. 

So, I agree, something is definitely broken with our system of taxation.
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People get cash out refis on their mortgages all the time.

 
John123 said:
24 minutes ago, The Z Machine said:
The thing that is galling to me is that many uber rich are accumulating wealth through increased stock valuations (which everyone can do) then taking that wealth and getting loans using the unsold stock as collateral.  Those loans are untaxed and might only carry a 10% rate or less.  If their wealth grows faster than 10%, they can keep taking loans to pay off previous loans.  Then when they die, those assets get transfer tax free via stepped up basis.  That means Uncle Sam never gets a cut.  Hardly a "fair share" IMO.  The loans on the wealth as collateral is something that most average Joes can't do, only the really wealthy. 

So, I agree, something is definitely broken with our system of taxation.
Expand  
Click to expand...
People get cash out refis on their mortgages all the time.
Click to expand...
While true....has nothing to do with what Z is talking about.  Two completely different things.

 
The Z Machine said:
The thing that is galling to me is that many uber rich are accumulating wealth through increased stock valuations (which everyone can do) then taking that wealth and getting loans using the unsold stock as collateral.  Those loans are untaxed and might only carry a 10% rate or less.  If their wealth grows faster than 10%, they can keep taking loans to pay off previous loans.  Then when they die, those assets get transfer tax free via stepped up basis.  That means Uncle Sam never gets a cut.  Hardly a "fair share" IMO.  The loans on the wealth as collateral is something that most average Joes can't do, only the really wealthy. 

So, I agree, something is definitely broken with our system of taxation.
Click to expand...
When referring to the uber rich, why wouldn't the estate tax capture this?

I know one person who tried doing loans to invest in the market, he almost lost he and his wife's home with his wife being unaware.  The guy was going home to intercept margin calls daily for awhile.  The guy was losing hair in his early 20's.  

To be fair as someone who invests in the market and in real estate, it's not exactly easy to roll off 10% IRR's.  If you can guarantee me 10% on something today, I'm in.

 
The Z Machine said:
The thing that is galling to me is that many uber rich are accumulating wealth through increased stock valuations (which everyone can do) then taking that wealth and getting loans using the unsold stock as collateral.  Those loans are untaxed and might only carry a 10% rate or less.  If their wealth grows faster than 10%, they can keep taking loans to pay off previous loans.  Then when they die, those assets get transfer tax free via stepped up basis.  That means Uncle Sam never gets a cut.  Hardly a "fair share" IMO.  The loans on the wealth as collateral is something that most average Joes can't do, only the really wealthy. 

So, I agree, something is definitely broken with our system of taxation.
Click to expand...
Yep. This is an exploit.

 
The Z Machine said:
The thing that is galling to me is that many uber rich are accumulating wealth through increased stock valuations (which everyone can do) then taking that wealth and getting loans using the unsold stock as collateral.  Those loans are untaxed and might only carry a 10% rate or less.  If their wealth grows faster than 10%, they can keep taking loans to pay off previous loans.  Then when they die, those assets get transfer tax free via stepped up basis.  That means Uncle Sam never gets a cut.  Hardly a "fair share" IMO.  The loans on the wealth as collateral is something that most average Joes can't do, only the really wealthy. 

So, I agree, something is definitely broken with our system of taxation.
Click to expand...
The people who can swing a low enough LTV to pull this off generally are above the inheritance exclusion limit.  Though it does seem like gaming the system.

 
John123 said:
Seems like it has the same benefits.  You are welcome to explain the differences.
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One is a tangible realized asset.  The other is not.  Though the gap can be closed (taxes wise) by having the house in a trust.

 
John123 said:
This didn't address my query in context, but thanks I guess. 
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Im not an "end justifies the means" individual. Not sure if you are or not. Just my guess where your disconnect is. 

ETA....poorly worded above. Point is just because the result is similar doesnt mean the processes were. Hope that's clearer. 

 
Last edited by a moderator:
Sorry, my bad- 7. I was looking at the column with older dates, not 2020.

The 3 states at the top combine for about 320 billionaires.
 
We don't need studies to tell us that the less diversity in a state the less inequality. I think we've made that very point in this thread several times.
 
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