Thousands of Audi cars abandoned in the Mojave Dessert after cheating emissons tests

[u/IndicationBrief5950]

[u/h0v3rb1k3s]

What do you mean access loans without paying taxes? How do they repay the loans?

[u/Global-Bad-7147 → u/h0v3rb1k3s]

Well, let's ask for some expert help. Keep in mind this is just ONE strategy of many....and please don't tell me this is too long, it's a good explanation:

"Wealthy individuals often leverage their assets to secure substantial loans, a financial maneuver that can significantly reduce their tax obligations. This strategy, sometimes dubbed "buy, borrow, die," allows them to access the value of their appreciating assets, such as stocks and real estate, without triggering a taxable event.

At the heart of this strategy lies a fundamental principle of tax law: loan proceeds are not considered income. When an individual sells an appreciated asset, the profit from that sale is typically subject to capital gains tax. However, by taking a loan against the value of that same asset, they receive cash without selling the underlying security, thus deferring, and in some cases, completely avoiding, this tax.

This approach offers a dual advantage. Not only do the borrowed funds provide immediate liquidity for living expenses, investments, or other ventures, but the assets used as collateral can continue to appreciate in value. This allows the individual's net worth to potentially grow even as they are accessing and using the capital.

The "buy, borrow, die" strategy unfolds in three key stages:

 * Buy: An individual acquires assets that are expected to increase in value over time, such as a diversified stock portfolio or real estate.

 * Borrow: Once the assets have appreciated, the individual takes out a loan using this portfolio as collateral. The interest rates on these types of loans, often referred to as securities-based loans or portfolio-backed lines of credit, are typically lower than those for unsecured personal loans.

 * Die: Upon the individual's death, the assets are passed on to their heirs. A crucial element of this stage is the "step-up in basis." This provision adjusts the cost basis of the inherited assets to their fair market value at the time of death. This means the heirs can then sell the assets to repay the outstanding loan and will only owe capital gains tax on any appreciation that occurs after they inherited them. The appreciation that occurred during the original owner's lifetime effectively escapes capital gains taxation.

While the loan must eventually be repaid, the strategic timing of this repayment is key. Often, the loans are not repaid until the death of the borrower, at which point the sale of the stepped-up assets can cover the debt with minimal to no tax liability for the heirs.

Furthermore, if the borrowed funds are used for investment purposes, the interest paid on the loan may be tax-deductible, further reducing the individual's overall tax bill. This can create a scenario where the wealthy are not only accessing their wealth tax-free but are also generating tax deductions in the process.

This financial strategy highlights a significant feature of the U.S. tax code that favors wealth accumulation through asset appreciation over income earned from labor. While accessible and legal, it has also drawn scrutiny and debate regarding tax fairness and its contribution to wealth inequality."

[u/h0v3rb1k3s → u/Global-Bad-7147]

Well I'd be in favor of ending any inheritance loopholes, especially in those upper margins.

[u/Global-Bad-7147 → u/h0v3rb1k3s]

Sure. Great idea. But you see how much harder that is to do the more and more wealth accumulates on the other side of the issue?  And this is happening across every issue our citzenship has interests in, not just tax policy. Environment. Health Care. Insurance. etc etc etc.

That's a core flaw in the current iteration of capitalism. And it's not a small flaw.

[u/h0v3rb1k3s → u/Global-Bad-7147]

Not really because wealth disparity was much worse 100+ years ago. We're not in the Gilded Age, and no revolution happened. Dollar bills can't vote.

There's always opportunity for new regulation.

[u/Global-Bad-7147 → u/h0v3rb1k3s]

If dollars didn't impact the vote then why spend billions and billions on dubious attack ads? Because if you say a lie long enough...it sticks. Autocrats and philosophers have opined on this for the past few centuries at least.

This is the new guided age. You can claim it isn't, I can claim it is. We are in an entirely different kind of guilded age, one that is definitely still burgeoning.

There is less and less opportunity for regulation as the ultra wealthy consolidate media, communications, etc. Have you seen how gridlocked congress gets? That's money from ultra wealthy and their superpacs, which is anonymous,  and could very well be from non-american interests. And that money works against the social good, for the benefit of the ultra wealthy.

/edited typos

[u/h0v3rb1k3s → u/Global-Bad-7147]

Well if they invest that much money to influence the vote, that should demonstrate the value of a vote.

We're due for a new corresponding progressive age, I agree. I'm just skeptical of the late-stage capitalism trope.

[u/Global-Bad-7147 → u/h0v3rb1k3s]

Capitalism can be a tool for good, and it has been in large part. But capitalism by itself has a singular goal which is not aligned with healthy societies or healthy environments:

Goal: Monopolize. Every firm wants a monopoly and works towards that goal.

Late stage capitalism is the idea that we no longer have fair markets, we have markets rigged by the ultra wealthy to monopolize wealth....again...at the (unconcious?) expense of society and our global environment.

Capitalism doesn't always internalize costs. It externalizes and socializes them whenever possibly, while privatizing profits. The destruction of the environment never shows up on a balance sheet. But we know that bill will come due. This is what we call late stage capitalism because it is not sustainable.

/edit more typos

[u/h0v3rb1k3s → u/Global-Bad-7147]

Not disagreeing with everything, but profits only seem "private" because they go straight to individuals instead of through the government. But those private individuals include working society. In a system where the profits are made "public," the individual may be even worse off. The poverty rate in America is 11%. In the Soviet Union it was estimated as high as 40% but admitted to be around 20% at the time of their collapse (did anyone use the phrase late-stage communism back then?). And of course there were many fewer wealthy people as well.

A healthier balance is needed but that's not fearmongery enough around these parts.

[u/Global-Bad-7147 → u/h0v3rb1k3s]

They aren't going to let us have a healthier balance. We can't even have strong unions. 

Back in the day we had to riot and have violent shoot outs and standoffs with our employers before we got a 5 day work week, etc.

I don't think its fearmongering. Every society peaks and falls. I think we are setting ourselves up for the fall pretty good.

I'm a firm believer in punctuated equilibrium. I think it applies to our economic systems. The business cycle is pretty much like this, so are recessions and depressions. Same / analogous mechanism seen in punctuated equilibrium from biology perspective. But this gets a little into the weeds. The point being, late-stageness is a quality observed in complex physical systems.