The Elephant in the room - Taxation

[qldfrog]

and the Collins class before that , not to mention being tricked into scrapping the F-111s ( about the only lucky break we had since the Spitfires arrived too late for WW2 )

am certainly not investing/saving for the Government's sake

On your last point, i am afraid the ato and our governments strongly disagree

 

[divs4ever]

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imagine what they do to quisling allies !

 

[divs4ever]

and here we are .. in Ukraine

 

[MovingAverage]

Hmm I'm just wondering if it was brought up and actually was passed would the peasants have an uprising and boot out one mob of duds only to replace them with another lot of duds.

The current clowns running this country love their class division so no doubt when this is raised it will be positioned as only a tax on the super wealthly and only aimed at capturering inter generational wealth transfer. You know, the same narrative they used to increase super earnings tax rate. Positioning a new tax like this tends to go down well with the voting public so I think they will not get too much blow back if they do.

 

[Sean K]

I would suggest that when the assets hit the Nephews balance sheet, they get taxed at say 10% of their face value at that time, and that face value becomes his new cost base from which his future capital gains are calculated.

Eg

Assets worth $50 M are taxed $5M and $45 Million gets past along to the Nephew.

Then I’d say 20 years when he sells them for $90M, it’s treated as if he bought them for $50 Million, and he is taxed only on the $40 Million growth.

But if he hands them along to a third generation they get taxed at 10% again.

Or, assets are valued, handed to the nephew, and only get taxed once they are sold. Otherwise, it's just money to the government for someone's unfortunate death. There's no reason for the tax except for someone being killed. Tax Man becomes the Grim Reaper.

 

[Value Collector]

Or, assets are valued, handed to the nephew, and only get taxed once they are sold. Otherwise, it's just money to the government for someone's unfortunate death. There's no reason for the tax except for someone being killed. Tax Man becomes the Grim Reaper.

That’s the issue though, that means that that capital gains could go untaxed in perpetuity, it’s already a great deal that us investors can compound capital gains for decades before a tax event.

I think there is no reason that transfer via inheritance shouldn’t trigger the tax event just like a sale does.

If Joe blogs loses his job and has to sell some cba shares and pay some capital gains, is that government profiting off his job loss? No, it’s just the way it is, when assets get sold the CGT is triggered, no reason inheritance transfers shouldn’t also be a trigger.

Other wise 100 generations could go on earning gains tax free.

 

[Value Collector]

free-market capitalism , NOT crony-capitalism for me , thanks

treat the capital nicely and it will be invested ( re-invested ) there , start getting greedy and profits run away

In no way do I think taxation is anti-capitalism.

 

[divs4ever]

That’s the issue though, that means that that capital gains could go untaxed in perpetuity, it’s already a great deal that is investors can compound capital gains for decades before a tax event.

fair enough , but i see the proposal to tax unrealized gains , as something that could be taxed in perpetuity ( do your gains amount reduce by inflation , what about capital gains taxed previously on the same assets ... say a property in a property boom ) how many years do you pay on unrealized gains ??

AND how long before the new laws ( if adopted ) change again ?

 

[divs4ever]

In no way do I think taxation is anti-capitalism.

without taxation it is very hard to fund big government ( because governments usually suck running a business/enterprise )

 

[farmerge]

h the dead wood in any large company/corportation usually in plague porportions. Private company I worked for eons ago only promoted the duds because they couldn't do anything useful except to turn up to the workplace daily. They in turn brought their dud mates up to be the underling bosses. nothing changes in this regard and probably never will.

 

[Value Collector]

without taxation it is very hard to fund big government ( because governments usually suck running a business/enterprise )

Agreed, but our health care system is much better than the for profit system of the USA.

This isn’t a debate about capitalism vs any other system, I am a huge fan of capitalism, and believe it’s the best way to generate value for society.

But, there are things that are best left to governments and we need a good tax system other wise capitalism will eventually collapse as society thinks it doesn’t work for them.

 

[Value Collector]

fair enough , but i see the proposal to tax unrealized gains , as something that could be taxed in perpetuity ( do your gains amount reduce by inflation , what about capital gains taxed previously on the same assets ... say a property in a property boom ) how many years do you pay on unrealized gains ??

AND how long before the new laws ( if adopted ) change again ?

Yes, some of the capital gain is just a result of inflation and reinvested earnings, but that’s why we get the 50% capital gains tax discount when we hold assets for more than a year, So the inflation portion should escape taxation.

 

[mullokintyre]

Yep, you are justifying my point there, there is a lot of ways the super rich get out of paying the taxes the rest of us face.

That’s why I said I am not against capitalism, hell I make my living as a capitalist, but we can be capitalists while still trying to make the tax system fairer.

As I explained above I believe an inheritance/death tax is a good way to catch some of these huge amounts of wealth that built up and escaped taxation during their owners lives, and it’s not double taxation, because it’s a tax on the new owner, not the previous owner.

But as I said it will never get in, because people will resist it on irrational arguments, and mean while allow these huge dynasties to get away without paying their fair share.

One of the problems in this subthread is that everyone seems to be assuming that all those with mega wealth that has been handed down or will be handed down is purely capital gains.
Take the example of say a gold explorer who finds a large deposit somewhere.
They borrow money to develop it, build their mills, their transport systems etc and then start producing.
If its really good, it might actaully make money for the owner, for which he pays income tax, probably some royalties, maybe even some super profit tax. So he has ammassed a fortune from his mine, which over time becomes depleted and worthless.
He sells the mine equipment, trucks etc for a loss as some is now in less than in ideal condition.
So now our entrepreneur is sitting on a fortune that he has continuously paid tax, even if he held the fortune as shares in a holding company.
If he were to pass that to his kids, why should it be subject to capital gains tax or death tax when he has consistently paid taxes to get that wealth in the first place? Would that not be double taxation?
This is obviously an extreme example, but not an unlikely example.
But there will be many fortunes amassed in a way where various portions of it are created as after tax income, and some by capital appreciation.
There will be wide variations in those proportion when one looks at individuals rather than as a generalised perception.
Mick

 

[qldfrog]

One of the problems in this subthread is that everyone seems to be assuming that all those with mega wealth that has been handed down or will be handed down is purely capital gains.
Take the example of say a gold explorer who finds a large deposit somewhere.
They borrow money to develop it, build their mills, their transport systems etc and then start producing.
If its really good, it might actaully make money for the owner, for which he pays income tax, probably some royalties, maybe even some super profit tax. So he has ammassed a fortune from his mine, which over time becomes depleted and worthless.
He sells the mine equipment, trucks etc for a loss as some is now in less than in ideal condition.
So now our entrepreneur is sitting on a fortune that he has continuously paid tax, even if he held the fortune as shares in a holding company.
If he were to pass that to his kids, why should it be subject to capital gains tax or death tax when he has consistently paid taxes to get that wealth in the first place? Would that not be double taxation?
This is obviously an extreme example, but not an unlikely example.
But there will be many fortunes amassed in a way where various portions of it are created as after tax income, and some by capital appreciation.
There will be wide variations in those proportion when one looks at individuals rather than as a generalised perception.
Mick

Any tax death is obviously double taxation..if your company is worth double at death, death becomes a capital gain event..fair..even if death of family business, but any death tax otherwise is tax on taxed items, and the non indexation of cg taxation is an horrendous steal, and an incentive to incompetence in government..
But it will happen, a nation of sheeple as is most of the world

 

[divs4ever]

Agreed, but our health care system is much better than the for profit system of the USA.

This isn’t a debate about capitalism vs any other system, I am a huge fan of capitalism, and believe it’s the best way to generate value for society.

But, there are things that are best left to governments and we need a good tax system other wise capitalism will eventually collapse as society thinks it doesn’t work for them.

as a former paper boy , lawn mower , shop cleaner and junk mail deliverer ( all before 13 ) the parents only knew about the paper round because Newscorp were required parental consent to insure us you can get a LOT of capitalism done without government ( opportunism as well )

BTW the QLD health care system used to be wholly funded by the Golden Casket for decades and in many ways was superior to the Medicare system now that casket evolved eventually into TLC , and Medicare is federal and a hybrid system

the QLD system was the envy of Australia so here we are now ( under-funded , under-staffed , partly funded by tax-payers )

BTW governments only work when people trust/believe in them take for example Southern Italy ( and Sicily ) , people will find a workaround if needed

 

[Value Collector]

One of the problems in this subthread is that everyone seems to be assuming that all those with mega wealth that has been handed down or will be handed down is purely capital gains.
Take the example of say a gold explorer who finds a large deposit somewhere.
They borrow money to develop it, build their mills, their transport systems etc and then start producing.
If its really good, it might actaully make money for the owner, for which he pays income tax, probably some royalties, maybe even some super profit tax. So he has ammassed a fortune from his mine, which over time becomes depleted and worthless.
He sells the mine equipment, trucks etc for a loss as some is now in less than in ideal condition.
So now our entrepreneur is sitting on a fortune that he has continuously paid tax, even if he held the fortune as shares in a holding company.
If he were to pass that to his kids, why should it be subject to capital gains tax or death tax when he has consistently paid taxes to get that wealth in the first place? Would that not be double taxation?
This is obviously an extreme example, but not an unlikely example.
But there will be many fortunes amassed in a way where various portions of it are created as after tax income, and some by capital appreciation.
There will be wide variations in those proportion when one looks at individuals rather than as a generalised perception.
Mick

You are also assuming there that income tax has been paid along the way, it’s often not paid in the case of some of these super wealthy, because they can get away without paying them selves a taxable income.
For example, rather than pay him self $100 M as a dividend which would be taxable at 47%, a super wealthy person can go to their private banker, their company makes a deposit of $100M long term deposit at 0.1% interest, that bank then gives the individual a personal loan of $100M at say 0.2%.
The bank makes a risk free margin of 0.1% on the $100M per year and the billionaire avoids paying 47% tax on his dividend, even if he keeps the loan going for 30years he only pays 3%.
——————————
Secondly, if some one does build a large fortune, and decides to hand to to the next generation rather than give it away to charity like some people choose to do, why shouldn’t that next generation pay some tax on it, I don’t think it’s a bad thing for once a generation to clip some of these large family fortunes if they decide to keep it in the family for another generation.

 

[Value Collector]

as a former paper boy , lawn mower , shop cleaner and junk mail deliverer ( all before 13 ) the parents only knew about the paper round because Newscorp were required parental consent to insure us you can get a LOT of capitalism done without government ( opportunism as well )

BTW the QLD health care system used to be wholly funded by the Golden Casket for decades and in many ways was superior to the Medicare system now that casket evolved eventually into TLC , and Medicare is federal and a hybrid system

the QLD system was the envy of Australia so here we are now ( under-funded , under-staffed , partly funded by tax-payers )

BTW governments only work when people trust/believe in them take for example Southern Italy ( and Sicily ) , people will find a workaround if needed

My personal fortune was started by delivering papers and picking fruit too, so I know what it’s like to build a fortune from the ground up. I still don’t see how this fact would mean I shouldn’t be taxed, or why my fortune shouldn’t be taxed before it hits my nieces and nephews balance sheets.

 

[Value Collector]

Any tax death is obviously double taxation..if your company is worth double at death, death becomes a capital gain event..fair..even if death of family business, but any death tax otherwise is tax on taxed items, and the non indexation of cg taxation is an horrendous steal, and an incentive to incompetence in government..
But it will happen, a nation of sheeple as is most of the world

If my nephew is about to inherit millions of dollars from me, and he never had a hand in earning a single cent of it, how is the inheritance tax double taxation?

Any inheritance he gets is fresh money for him, I don’t see an issue with it being taxed, I am not saying at 47%, something around 5% to 10% would be fine.

—————————
In reality I don’t even think it’s ethical for my nieces or nephews to be inheriting wealth of a level that allows them to do nothing, so will be donating the bulk of my estate to charity at my death.

But if others choose to set the the next generation up with large wealth, I think a tax on the way through is ethical. But it won’t happen, it’s to unpopular even though it’s very rational.

 

[divs4ever]

If my nephew is about to inherit millions of dollars from me, and he never had a hand in earning a single cent of it, how is the inheritance tax double taxation?

Any inheritance he gets is fresh money for him, I don’t see an issue with it being taxed, I am not saying at 47%, something around 5% to 10% would be fine.

—————————
In reality I don’t even think it’s ethical for my nieces or nephews to be inheriting wealth of a level that allows them to do nothing, so will be donating the bulk of my estate to charity at my death.

But if others choose to set the the next generation up with large wealth, I think a tax on the way through is ethical. But it won’t happen, it’s to unpopular even though it’s very rational.

then top up the list should be the English Royal Family with their deep and complicated holdings throughout much of the world
i can think of some other prominent families with large internationally diverse holdings that might attract similar scrutiny

 

[farmerge]

Agreed, but our health care system is much better than the for profit system of the USA.

This isn’t a debate about capitalism vs any other system, I am a huge fan of capitalism, and believe it’s the best way to generate value for society.

But, there are things that are best left to governments and we need a good tax system other wise capitalism will eventually collapse as society thinks it doesn’t work for them.

Mr Value I totally agree we have the best of the best here. Just needs spending reined in when it just duplication and waste and course when the bum polishers have their snouts in the public trough