Taxes and the Mega-Wealthy

[McDad]

If unrealized gains are taxed, will those with unrealized losses be issued credits by the government?

Who gets to determine the subjective value of non-publicly traded equities?

We already have wealth tax. It’s called property tax. It’s collected at the local and state levels.

Brilliant! Great point.

 

[n_huffhines]

It doesn't matter. Here's why, Amazon pays BezosCorp a consulting fee. It's an expense to Amazon and a receipt to BezosCorp. But the only way Bezos is personally getting money from BezosCorp is money moving from BezosCorp to Jeff through payroll, dividends, corporate loans, rent, etc). And everything, except the corporate loan will hit Bezos's personal taxes.

I'm saying BezosCorp owns his house in Martha's Vineyard (made up example), not him, so no, it doesn't have to go through all that. It's written off as a business expense. They use it for corporate retreats and it makes no profit.

 

[volinbham]

So Amazon has never made a payment to a company owned by Bezos? This seems impossible. I just found an article that says he owns 15 companies. He can take pay as a consulting fee from Amazon to one of his companies showing no profit, and there you go, realized but untaxable wealth.

This stuff is so easy for the rich.

The term "unrealized wealth" is the sticking point. Perks from the company are not wealth. They certainly support his lifestyle but the meaning of the term wealth doesn't fit those resources he utilizes.

 

[0nelilreb]

It doesn't matter. Here's why, Amazon pays BezosCorp a consulting fee. It's an expense to Amazon and a receipt to BezosCorp. But the only way Bezos is personally getting money from BezosCorp is money moving from BezosCorp to Jeff through payroll, dividends, corporate loans, rent, etc. And everything, except the corporate loan will hit Bezos's personal taxes.

I’m just guessing here because I’m poor but I’m betting he has a whole firm of accountants and attorneys telling him constantly that at this point he doesn’t need any more “ personal wealth “ .

 

[McDad]

I'm saying BezosCorp owns his house in Martha's Vineyard (made up example), not him, so no, it doesn't have to go through all that. It's written off as a business expense. They use it for corporate retreats and it makes no profit.

You're still wrong. His unrealized wealth isn't paying for the house on Martha's Vineyard. BezoCorp is. He hasn't used unrealized wealth. His CPA and Tax Attorneys have used deductions available to the Corporation. I don't have a home through my corporation. But if it is like anything else my corporation funds, then there are strict rules governing usage for BezoCorp's home in Marhas Vineyard. It isn't Jeff's house. And he is probably limited on using it so it can meet the definition of a corp retreat (it's also likely it has to be made available to other executives is BezoCorp).

@BigOrangeMojo has forgotten more than I will ever know about this stuff. He should help us all.

 

[DancingOutlaw]

Meh, it wouldn't be misinformation. It would be factual... at least with regards to his "effective" tax rate.

No, it's dumb. Using their metric I pay like 0.3% in taxes. Look at me, I pay less taxes than Jeff Bezos.

 

[Rasputin_Vol]

It is purposeful massaging. We people discuss their tax rate they are discussing the percentage they paid versus what they earned.

I realize it is deceptive messaging. But in my mind, the fact is that they are paying a far lower effective rate than most/a lot of people.

 

[McDad]

The term "unrealized wealth" is the sticking point. Perks from the company are not wealth. They certainly support his lifestyle but the meaning of the term wealth doesn't fit those resources he utilizes.

You've accurately identified my only issue with Huff's original post.

 

[volinbham]

I'm saying BezosCorp owns his house in Martha's Vineyard (made up example), not him, so no, it doesn't have to go through all that. It's written off as a business expense. They use it for corporate retreats and it makes no profit.

it still wouldn't be wealth for Bezos if it is owned by the company.

 

[McDad]

I’m just guessing here because I’m poor but I’m betting he has a whole firm of accountants and attorneys telling him constantly that at this point he doesn’t need any more “ personal wealth “ .

I'm sure.
Heck. to use Huff's example, Bezo could have a home in his name in Marthas Vineyard and run BezosCorp from that home (if local codes allowed). The money Amazon pays BezosCorp could be paid in rent to Jeff which he deposits before the mortgage is deducted.

I do this to a small degree with my corporation.

 

[volinbham]

I realize it is deceptive messaging. But in my mind, the fact is that they are paying a far lower effective rate than most/a lot of people.

at a minimum then they should be reporting on effective rate on income so a comparison can be made.

 

[McDad]

it still wouldn't be wealth for Bezos if it is owned by the company.

Correct. Lifestyle, yes. Wealth, no.

Of course we could get into an esoteric discussion about what is wealth compared to lifestyle, I guess.

 

[BigOrangeMojo]

I see both sides of this. The study is framed in a stupid way, but let's not pretend that $95B of Bezos' "unrealized" wealth is actually all unrealized. A lot of it is unrealized, but a lot of it is paying for his lifestyle and he's able to write it off, so it's realized, it's just not legally taxable.

A lot of it may have been realized in a prior year too. Just to pick out 1 year in time to draw a conclusion can lead to a crazy result.

 

[BreatheUT]

I would really like to not turn VN into a reddit sub forum.

I saw this on reddit, too.

Did you read the report?

The envy is marxism at it's finest when we start monitoring citizens finances and tax payments.

This was discussed on the radio.

 

[Tyler Durden]

How fortunate for them that they are able to easily rationalize why the “good” realized by their actions outweighs the privacy rights of the affected individuals

Poor mega billionaires. Someone wrote an unflattering article about them.

 

[McDad]

The envy is marxism at it's finest when we start monitoring citizens finances and tax payments.

This was discussed on the radio.

This report linked in this thread was discussed on the radio?

 

[n_huffhines]

You're still wrong. His unrealized wealth isn't paying for the house on Martha's Vineyard. BezoCorp is. He hasn't used unrealized wealth. His CPA and Tax Attorneys have used deductions available to the Corporation. I don't have a home through my corporation. But if it is like anything else my corporation funds, then there are strict rules governing usage for BezoCorp's home in Marhas Vineyard. It isn't Jeff's house. And he is probably limited on using it so it can meet the definition of a corp retreat (it's also likely it has to be made available to other executives is BezoCorp).

@BigOrangeMojo has forgotten more than I will ever know about this stuff. He should help us all.

I don't get how any of this means he doesn't have a house in Martha's Vineyard paid for by BezosCorp. If he'd pay $5m for a house in Martha's Vineyard that he's only going to visit for 3 weeks a year, he gets exactly that without paying for it with taxable wealth.

 

[Thunder Good-Oil]

Reminds me of how mutual funds unintentionally screwed investors when the dot com bubble burst. Distributions in 2000 were being taxed while portfolios were melting down in 2001.

 

[McDad]

Poor mega billionaires. Someone wrote an unflattering article about them.

View attachment 372696

My favorite are the Billionaires who lament their secretary pays a higher rate than they do (looking at you Mr. Warren B). If it is so troubling to your conscience, simply have your compensation structure changed to all payroll and no dividends. Then we can compare your rates.

 

[volinbham]

I don't get how any of this means he doesn't have a house in Martha's Vineyard paid for by BezosCorp. If he'd pay $5m for a house in Martha's Vineyard that he's only going to visit for 3 weeks a year, he gets exactly that without paying for it with taxable wealth.

at the risk of answering for McDad - wealth is assets-liabilities a person owns; in your example Bezos does not own the home hence it is not part of his wealth.

if you folks owned a vacation home and let you use it for free that isn't unrealized wealth for you - it is their wealth (the asset)

 

[McDad]

I don't get how any of this means he doesn't have a house in Martha's Vineyard paid for by BezosCorp. If he'd pay $5m for a house in Martha's Vineyard that he's only going to visit for 3 weeks a year, he gets exactly that without paying for it with taxable wealth.

Because he doesn't have a house. He has use of a house. BezoCorp has a house.

 

[n_huffhines]

it still wouldn't be wealth for Bezos if it is owned by the company.

But the point is this is just an accounting trick. I get that legally he doesn't own it...but he controls it and enjoys it....so essentially he does own it. To me, the whole discussion is about whether or not this is fair.

 

[n_huffhines]

Because he doesn't have a house. He has use of a house. BezoCorp has a house.

But he does have a house. He uses it. He controls it. It's his. Do you think his guests correct him when he calls it his house?

 

[n_huffhines]

A lot of it may have been realized in a prior year too. Just to pick out 1 year in time to draw a conclusion can lead to a crazy result.

Everything I'm saying is based on assumptions for the sake of illustrating how this works. You agree that he can control considerable wealth and enjoy it without it being taxable, right?

 

[volinbham]

But the point is this is just an accounting trick. I get that legally he doesn't own it, but he controls it and enjoys it....so essentially he does own it. To me, the whole discussion is about whether or not this is fair.

it matters because the terms have legal meaning - if said home sold (realized wealth) Bezos wouldn't be the one realizing it. Using someone else's asset is not unrealized wealth for the user whether said use is right or wrong.

I get the fair/not fair but part of McDad's point was whether the original article is an accurate representation of tax rate giving the shifting of terms between income and wealth.