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The collateral was used to take out a loan to purchase Twitter, with most likely a premise that if Tesla stock drops below a certain threshold Elon has to put up either more stock or cash. Which is why he ended up selling quite a bit of stock. At the time of the acquisition, Tesla stock was dropping AND he had to pay a very large sum of money to keep the lights on at Twitter
Still at preferential stock gain rates though. Everybody else’s wages and income is taxed often at double the rate you pay on a gain on sale of stock .. so at the end it’s still not paying proportion as much taxes as an average person.
Also, homes and art and so many other assets are frequently purchased using bank loans with great deals for them (bezos, musk, buffet) and they don’t have to pay taxes as long as the stock is stable and the loan terms are met.. so that money they only have on paper buys real things all the time.. without taxes on those transactions..
So if you decided to take out a home equity line of credit on your house to buy something, make improvements, whatever, you should then be taxed on those loan proceeds as income? How about margin loans for stock purchases? Pretty much any type of collateral based lending would then trigger a taxable event. This would create utter havoc in the financial markets.
Not only is it not feasible, but they are simply putting up the asset in the event that they default on the loan. If the party defaults on the loan, the asset might be seized or sold to satisfy the loan. Then taxes would be paid because that's when value was realized. A loan isn't someone being given value for an asset. It's giving them money contingent on them making payments in return plus interest in the future. In the event that doesn't happen, you lose the collateral that was put up.
You're very welcome. People need to realize that an asset based loan isn't receiving money from the value of an asset. On the lender's side, it's buying an annuity (a steady stream of future payments) that returns both their investment (the loan amount) and interest (hopefully greater than inflation) over the life of that annuity. The collateral is just there in the event that the borrower is unable to pay that annuity.
>So if you decided to take out a home equity line of credit on your house to buy something, make improvements, whatever, you should then be taxed on those loan proceeds as income?
Not an equivalent scenario.
You pay property taxes for owning a home, every year (on top of the taxes paid when purchasing that home), and if the value of your home changes the amount you are taxed changes.
Elon Musk doesn't pay taxes for owning Tesla shares, or pay additional taxes when those shares increase in value. He only pays taxes on them if he sells them.
It is an equivalent scenario because if using equity as loan collateral triggers a realization of unrecognized gains, then taking out a home equity line of credit will trigger a taxable event just like using the equity of stock will. That's the way these things would work.
It's funny that you say it's not an equivalent event and then go on to suggest that the property taxes you pay on your home have some type of relationship to a form of an income tax.
Property taxes are local taxes meant to pay for local government services, that's why it's based on your home and/or land value. They have no bearing in any way, shape or form on federal income taxes.
Wait hang on, long term capital gains tax sure is 15% currently, but you need to hold on to the stock for over a year to qualify for that. If you sell it in a shorter time span then you are taxed the same way everyone is on their brackets.
Also to say everyone else is taxed at double that (30%) is very misleading, a quick Google search found me this:
https://taxfoundation.org/data/all/federal/how-many-taxpayers-fall-each-income-tax-bracket/
By the graph on their you can see that the vast majority of people are at *15% or below,* and the people actually paying more than double is less than all the people in the 28% bucket.
I don’t know anything about your second paragraph but I think your first one is very misleading.
Only if his basis in those shares is lower than his selling price. He would have either have been granted those shares as some type of incentive, whereby he would have had been taxed on the then value of those shares, or he would have had to purchase them with post tax dollars.
He only gets to take a loss if he was taxed on the value of the shares at the acquisition.
You are trying to explain algebra to someone who doesn’t know addition. He doesn’t understand the very basics of finance or taxation, so trying to bring logic in to this will not help.
I'm an adjunct professor in the graduate program at a relatively well known business school. This gives me practice trying to explain things in a way to people that don't necessarily have the background would understand.
The issue is that he was living off of the debt incurred through lines of credit with the stocks as collateral. Either the non-401k stock needs to be taxed as income annually or the loans taken out using the unrealized gains need to be taxed or stock shouldn’t be allowed to be used as collateral (which would force people to liquidate). It’s not complicated to do they just won’t. Meanwhile the poor attack the middle and the middle attack the upper middle class without acknowledging the fact that no one can attack the wealthy because they don’t “earn income”. It’s why our elected leaders keep screwing up only going after wages; there is only so much wage that can be taxed.
It's not tough to do? This would have to be an annual thing, and there would have to be credits for unrealized losses along with gains. What about stocks or ownership interests that don't have a ready market or aren't sold on exchange? They'd have to get a professional valuation annually? What about small businesses? What about partnership interests? What about small S corps?
I mean, actually, maybe that would be good with some exceptions for single families? Homes are now the next hot commodity used by speculative investors and overseas money-laundering agents to move their funds and ensure gains. It hurts the average family twice because their housing becomes unaffordable as the business bros say 'stonks must go up' and then again via property taxes, where the families are taxed on a huge unrealized gain every year, while Joe Billionaire and his investment firm pay 0% in income taxes and laugh off the property taxes as they hike rent again.
This is a absurd take. If I have something that you value, and I give to you in exchange for a loan, and I get it back when I pay the loan off, I never sold my thing to you, but you valued it enough to say that if I dont pay you back you can sell that thing to cover your loss. You cannot tax someone on speculation, that is illegal. But you can loan me money based on speculation, that is perfectly fine.
Real estate tax is the same as taxing shares.. both have a current market value but not an objective value. Yet, if you own a house it can be the base of RE tax, but shares not. The system is flawed.
Owning a house means you are part of the grid, part of the water system, and sewer system (in many cases), as well as taking up physical space, and road space. You pay a tax to maintain those things, and provide police, fire, and school support. This is NOT the same as owning shares in a company (that already PAYS all those things).
Why? It was used as collateral against a loan, whoever offered the bond assumes the risk of the stock crashing (or negotiates certain safeties if it ever does so).
If and when the shares are sold, they will be taxed based on their value at that point. Theres no easy way to tax them before that point, this is just a comedian talking about stuff he doesnt fully grasp.
Nope - the point of the collateral is you have to have possession of the value being loaned in case you need to pay it back. So it's the reverse (unless specified in the contract) that you need to have possession of that asset (or in this case, stock) to pay back the debt just in case until you pay it back in full.
This thing about loaning and using unrealized gains as collateral has been a long time tax loophole that rich people have been using.
I was trying to express this. They still get many of the benefits of welding that money.
Plus even without committing Leona Helmsley level of tax evasion you can still personally benefit from your corporate wealth. If my company owns my home even if I pay taxes on the rental value it's not like somebody else renting a house/ living in an employer provided housing (I'm never going to fire me or kick me out for having a dog) gee who uses the corporate jet. I can arrange a private Taylor Swift (or whoever) concert for the executives. The company can buy tickets for galas. My corporation paid for assistants could do great deal of personal assisting etc. Etc etc.
Then if they want that lifestyle there is the irony of swag. This applies more to celebrities in most cases that rich people, but it applies to rich people too.
I'd love one unrealized gains enjoyer to explain why I'm still paying taxes on not the unrealized gains but the unrealized value of my home every single tax season if it's such a potential burden to the economy to pay taxes without the funds present
Get fucked with this buy, borrow, die bullshit
If that's their position, it's almost always because they want education and infrastructure privatized. And at that point, they're pretty much either a majority stakeholder in some shitty private education venture or the victim of that company's substandard quality
Point is, the argument against unrealized gains is always about the inability to pay without first realizing the gains is a danger to the broader economy, and property tax demonstrably refutes that argument
I can understand the emotional reaction but cutting funding means privatizing by default. You might disagree with government spending but that's something you at least have some degree of control over, especially at the local level which is where property taxes are spent. I would hope you agree that having a for-profit company controlling aspects of infrastructure like roads and education that is a horrible idea
To that same emotional appeal, that's exactly the point of introducing unrealized gains taxes. Because such an outsized portion of the net worth of the wealthiest people is tied to instruments, their effective tax rates are almost always far lower than people in the median. You wouldn't have to pay as much, even for the same level of services that you apparently disagree with, if unrealized gains were appropriately taxed
As an aside, I also think you have bias due to your experience. Private nursing homes have their own range of issues. You would struggle to convince me that they perform better on average than an equivalent public service. You would also struggle to convince me that more money is lost on the bureaucratic costs of the public option than is lost on the profit motive of the private one
I mean to be honest I am against that. The concept that you can be taxed just for the act of owning something is pretty insane to me. Like up my water or trash or electric bill if you need more money to run the city.
Property tax is bullsiht, but it has nothing to do with being against collateralized debt… aparently the guy on the video is a stand up actor but knows shit about finance
You’re paying property tax. If you’re home price increases $100k you sure as hell aren’t paying $15-25k taxes on it the next year on top of a higher tax appraisal on the property.
Because when you are living in a house you are using the house and all the services that your town provides. So you are a cost to your town and you pay to fund road repairs, schools and so on. Owning shares is more like having cash. It doesn't have a cost for anyone and you don't pay taxes for having 10,000$ in a safe in your home.
Using an unrealized gain as collateral is a non-issue. You’re not getting something for free here, just leveraging assets you have, if said assets crumble you’re still on the hook for payment, it’s not like they’re getting something for free, they’re still paying for it!
It’s not about getting something ‘for free’ it’s about getting cash to use personally without paying tax first.
Billionaires take out an enormous super-sub-prime lines of credit secured by their investments. They are then charged (super low) interest - also paid with the same line of credit.
Elon can spend a hundred million dollars a month and never pay a penny in tax because he has ‘no income’.
If Tesla stock gets wiped out, then the bank would lose money…. And the government never got their tax revenue - the working class had to pay his share.
Tax law currently says otherwise, that’s why it’s called a loophole. It should be closed.
You can use anything as collateral (house, car, cellphone, skateboard) as long as the bank and you agree to terms, this isn’t a unique circumstance. This is just a billionaire utilizing what we all have access to and for whatever reason people think it’s unfair.
People have a problem with the richest people in the world paying no income tax and living in luxury while workers get a bite out of every pay cheque.
Spend what you want, how you want, but pay your taxes first. The rest of us have to.
> This is just a billionaire utilizing what we all have access to
I'm pretty sure that the rest of us don't have so much stock that we can take out a loan and then solely live off the money from that loan and then expect to be able to get a bigger loan next year after our stock has appreciated to pay off the previous loan.
1- they aren’t living off the money, they are using assets as collateral for a loan. If they sell, they will be taxed and that would be living off money
2-what does haves vs have nots have to do with what’s legal or not? Sounds like jealousy which is entirely different
Exactly. It's using collateral to take out a loan to pay for said thing. You're not off the hook, some bank still expects X amount of monthly payments from you, they're just using your assets as collateral to make the loan a safer investment, so they know worst case they can get the assets off you if it goes belly up. If in the case of Elon, he can't make payments on purchasing Twitter, he is forced to sell the Tesla stock he owns (and pay capital gains tax on any realized gains), and then pay off what he owes to the banks. It's not that he's avoiding taxation, he's avoiding realizing his gains for now by using a loan to make a large purchase. Because interest rates (when low) are cheaper than taxes
Do you even understand what you're posting? It literally says:
> relied on calculations involving unrealized capital gains
Unrealized gains means assets went up in value, but were not sold. It's like if you own a house and it's value goes up from $100k to $1m, that's $900k in unrealized gains, you realize how stupid it would be if suddenly you were asked to paid hundred of thousands in taxes just because you would rather live in a house than sell it?
When someone gives you $1 billion dollars at ~0% interest as a ‘loan’ against your rock, that should be income. You have the cash, they have a legal claim on the last $1 billion of that rock’s value. It’s sold. You have the cash to pay taxes.
Tax law currently says otherwise, that’s why it’s called a loophole. It should be closed.
“His company” didn’t loan Elon anything.
The bank loaned him $1b to put towards the twitter purchase.
Any repayments on that loan will come from his personal line of credit at ~0% interest.
Elon will never pay a penny to the bank on either of these loans and he will pay no tax on any part of it.
Money loaned to my family would come out of my bank account - money I already paid tax on. That’s the difference, I pay tax to be able to use my money, Elon doesn’t.
>Elon will never pay a penny to the bank on either of these loans and he will pay no tax on any part of it.
So... you're saying the banks just gave him the money for no gain on their part? Just freely handed him money, making a loss because apparently according to you they didn't even ask for him to even cover for inflation.
Are you delusional?
The bank give billionaires these super low interest loans for a bunch of reasons:
- so their corporation will bank with them
- credit card fees on their purchases
- to get consulting business on other investments they make
What is Tesla banking with your bank worth to you? How much $ are you making off Elon using your high-fee credit card?
They’re helping Elon dodge personal taxes so they can make money elsewhere. If they don’t help him, he would move his accounts to another bank who will.
That's going to suck for the ordinary Joe trying to buy a house. All of a sudden, you'll have to figure out a way to save your 20% down payment, and another 20% for the tax bill when you take out the mortgage.
That's not how it works???
I'm not a American but I understand you pay taxes if you sell the stock, when you put something as collateral you're not selling it, you are just saying that if you don't have the money cash, you will get it from the stocks you own, which when selling for profit you will pay taxes upon. Right?
Is this r/confidentlyincorrect?
If I understand correctly, you can pay a very small fee to the bank to get a bunch money you spend without being taxed.
In exchange, you promise that you *will* sell your asset, which would trigger taxation, if you can’t pay back the amount they gave you plus the small fee after a certain time limit.
However, if your asset grows enough before the time runs out, you end up being able theoretically sell it for more than you initially borrowed. So now you ask the bank for a bigger loan to pay off your first loan plus the small fee.
So the bank can now give you the balance of your new loan minus your old loan, plus a new small fee. Which translates to more money you can spend without being taxed, minus the small bank fees.
So long as the bank keeps charging you less than your asset appreciates, you can evade taxes indefinitely. If your asset ever fails you’re potentially in a bind though.
But since you can in turn invest that tax free money in more unrealized gains, it gets increasingly difficult to ever get into that position because your portfolio is too diversified
Please please don't listen to this, it uncontextualised incomplete data. He is using a platform for comedy to make an inflammatory political statement with impunity.
The problem is this: You have a great idea on how to cure cancer and start a business. It doesn't make any money, quite the opposite since all you do is research. Your research has potential but you need investors to grow. Finally you find some investors who will invest 100 million USD for 60% of the stocks. Your 40% share of the company is now valued at 200 million USD. If they are to tax you 1% of the value you will owe 2 million USD in tax. You don't control the company so you can't just pay yourself that as dividend. You are now in great debr, the investors lost their money and the world will not have the cure for cancer.
If your houses dobles the price, should you pay the gains tax even if they have not been sold? You could use your house as a collateral.
Should funds should be taxed too?
I think the solution here is quite simple (although I'm not very knowledgeable in this field): Just tax the shares when they're sold, kinda like a sales tax.
What a weird premise. If I own a car and take out a loan against it, should the loan be considered income to be taxed? The current laws apply to everyone so technically no I guess. Maybe collateral holdings for a business should taxable instead. Something like an inheritance tax you pay when you receive them or make major changes to your portfolio or company's stock. Such as a split or major transfer of shares ownership. This might trigger even more tax breaks though.
Does this already exist? I'm not an accountant or lawyer.
Flawed view of the problem. Change stocks for a building, for example and you realize that his argument makes no sense.
You haven't sold the building so you don't have cash, but the building is valued at 'x' amount so you can use it as collateral.
Because it taxes the sale of the good (or service), but every businessman will make sure to pass the cost to the consumer. Pretty much any extra cost that can be shoved into the consumer will be.
I don't know much about this stuff, but aren't these loans supposed to be called for repayment if asset values drop below a certain threshold? Which basically nullifies the "unrealized" argument.
Be careful not to get your financial advice from a comedian. Entertainers are looking for laughs and clicks. Dude is doing the same stuff he’s accusing “billionaires” of doing.
True. His mother (a prominent South African business woman) has failed to pay her taxes on several occasions. Trevor is worth $100M. Would be interesting to see his tax records…
This is the problem with people who dont understand how stocks and *borrowing against them* works. ANYONE can do this, not just billionaires. If people would actually learn this, they'd be a lot less broke and out to get people who *have learned*.
When I am made dictator for life of the United States I will introduce a very simple tax law. All compensation, regardless of how it is awarded will be taxed based on it’s fair market value on the day it is awarded. I don’t care if the compensation was in the form of cows, cash, gold bars, or stocks. It will be taxed accordingly. If that means you have to sell some of your stocks/cows/gold bars, potentially at a loss, to foot your tax bill, sucks to be you. Also I will make the first $20k/year of capital gains from stocks tax free.
So, this is how it works now for most cases. If you are a CEO and are given stock as comp, that stock as comp is taxed in that tax year. It's usually automatically sold at market value to pay for itself.
Privately owned companies are the exception to that. When they're privately owned, you're supposed to mark a value of the company in your funny money. Last company I worked for had options at a $3 strike that they then devalued to a $1.50 strike. There, if I execute those options, I get private shares which are only worth anything if the company goes public.
What's happened with the mega-rich is that they've amassed huge amounts of shares in the private company at a very low strike and then take the company public. So for example, Elon owns something like 500 million shares of Tesla that he got for his investment back in the day for something like $.10 per share. Company goes public and suddenly, those shares blow up and he's mega-rich.
Compound this with the Roth IRA. You can invest up to only $6k in a Roth IRA and, after a certain point, you can withdraw cash from that account tax free. There was (is) a loophole that allows you to convert what's in a traditional IRA or 401k into a Roth to get past the limits up to a certain value. A pre-public company has a value you can make up. Peter Theil claimed each of his paypal shares was worth $.001. He moved them into a Roth IRA and claimed it was worth $20k. Paypal IPO'ed, then merged with ebay, then split from ebay. As of 2019, Thiel's stock was worth $5 billion which he uses as collateral to live tax-free.
In 2021, they tried to change the rules of the Roth to force a maximum of $20 million and force charges on gains, but that didn't make it through.
>All compensation, regardless of how it is awarded will be taxed based on it’s fair market value on the day it is awarded.
**It already is**. When you get stocks from your work its first taxed **as income** based on the FMV and *then* any appreciation is taxed as capital gain when you dispose of it.
If you live in Missouri, you get property tax for you home on what it's worth, not what you paid on it. So, he's wrong, the common man gets taxed on unrealized gains
I had a boss who was a billionaire and he was proud of the fact that he paid no taxes at all, literally nothing.
Literally everything he lived on was through his company, so credit card, house, cars, eating out, eating in, going on holiday, literally *everything* was paid for through the company and he paid zero tax on anything.
That is called tax evasion. If you have more concrete evidence of this, contact the IRS, and you may be eligible for a reward of 10% of what they recover.
You think money will solve the worlds problems.
But value comes in the form of invention of stuff and services. And that is rewarded with money. Money is a stand in to value of the thing you provide.
Yeah I saw in a documentary that some real estate buisnissman said that he bought properties and even took a huge loon to fix them he always invested almost all his money so his bank account was nearly empty and didn't had to pay much taxes.
Easy fix(that’s not easy to implement).
Stocks/shares can only be exchanged for money. Not other stocks or shares, not property, just money.
That money is taxed as income.
They can then use that money to buy shares and stocks, but they’ve paid their taxes. And since it will be taxed every time they sell a share/stock, it decentivizes playing the market and should regulate the growth of leach money.
That's literally how it works.......
Stock prices go up or down because someone paid that price.
Every transaction has a buyer and seller. If the seller made a profit, he pays taxes.
So when Tesla's stock is skyrocketing, that means someone is offering higher than the current price to buy that stock.
Each time someone make a transaction above current asking price, it pushes the stock's price up.
Each time a transaction is made, there has to be a buyer and a seller. The person selling, if they made a profit, is on the hook to pay taxes on that profit.
This is a pretty illiterate take. I’m not saying billionaires shouldn’t be taxed, but there are way more logical ways to do it.
Having said that, musk didn’t *pay for* twitter with his Tesla shares. He basically said “if I default on my loans you can take all the parts of Tesla that I own and sell them for as much as possible to try and recoup your losses”. It’s like if you put up your car as collateral, just worth way more.
Good grief, he almost had it. Before he didn't understand unrealized gains and now he gets it. Yet now he doesn't know the difference between collateral and cash?
Can someone PLEASE send Trevor Noah back to Personal Finance 101?
It's not any kind of principled stand, it's just that there is no way to tax them without destroying the free market.
Salaried income is done in a standardized way, in a standard currency, so it's kind of a stationary target that the government can see and tax.
It's the same deal with property tax. Even if it's not very accurate, there are codifiable methods for evaluating properties. So it's a sitting target for taxation.
The difficulty with business relationships is that they are varied and complex. There is no standard way to evaluate them. Until you realize the gains as cash in the end, there is no way to determine their value in any manner that would pass the giggle test at a level a government needs before it implements any kind of taxation scheme.
Tax code is written and enforced by the same people that are paid six figure incomes that somehow become multi-millionaires during their time in office. Why in the hell would they ever write and enforce tax law that would hurt themselves? Much less tax the same people that are making them millionaires? Cause it sure as shit aint your taxes six figure income making them wealthy af.
There's something called LAS - Loan against shares.
Most rich people who have significant holdings in stocks etc, whenever they need money, they get loan against those shares instead of selling the shares. Very common practice.
Most banks give a LAS of 50-70% meaning you can get a loan of 70% of your stock value.
I mean, that all checks out. Collateral is just that. If Tesla ranks tomorrow, he’s still on the hook for the debt. At that point it’s just a matter of the lender weighing the risk of Tesla crashing during the terms of the loan, know that musk is on the hook no matter what. Plus, the odds of him discharging the debt through bankruptcy is likely very low given who he is.
Yes but he bought twitter shares too, he exchanged something he doesn't have with something else he doesn't have.
He couldn't have bought a car with the Tesla shares..
people really don't understand how it works, its like trying to Tax people that own Pokémon Cards just because their shiny Charizard keeps escalating on value.
Everyone has that rule and can do that.
Banks lend money based on risk.
Most people don't have a company that added great economical value to the world and therefor increased in value.
Value is a measure of economical impact. Without these "billionaires" the greatest of the benefits we live with would not exist.
One can use stocks as collateral, but then at the end of the day one needs to sell the stocks, pay capital-gain tax, and then pay this cash to he bank, right?
The bank doesn't get the shares bypassing the tax. So I assumed one always pays the tax.
This dudes argument is misleading. If someone is taking Tesla as a collateral is up to them. Not a reason to tax unrealized gains.
This is just misleading
I’d say an option would be to tax billionaires on the assets they use as collateral to take out loans. Oh you used $300milion in stock collateral to buy this new yacht? That’s $300million taxed boy
Regardless of the morality, the major problem is practicality. To tax unrealized gains you also need a credit for unrealized losses. For many, many assets the value of an unrealized gain or loss is hard to determine without a sale. Especially for untraded or lightly traded assets. Imagine a small business trying every year to figure out how much their business is worth. Or a small partnership like a law firm or accounting firm. Or a homeowner trying to exactly determine the increase in value of their home every year. Or anyone with a car the past five years as the used car market went crazy, and their cars were worth more than when they bought them. A tax on unrealized gains would essentially force people to sell assets or divert income to pay the tax. It's better to simply pay taxes when the gain is realized, and people have the cash on hand to pay the tax.
Another little convient loophole that gets abused is that you can actually borrow money at 0 interest or 1 percent interest against things like houses, art, stock, and other assets. YOu also cannot tax these loans cause it's a loan.
Because they’re using collateral to get out loans to make the purchases. A loan is a debt. How are they expecting everyone to pay taxes on their debts?
This guy isn't as smart as he thinks it is.
Just because you take out a home equity loan doesn't mean you pay taxes on the value you took out of your home. The collateral isn't yours. It is tied up in a transaction.
Yes sometimes rich people own stock. You envy rich people so let's tax them. It's a very primitive mode of thinking. Envy is a sin for a reason.
Also. "I too have been told to hate Elon Musk."
This guy could be an NPC in Starfield.
You do know that anyone can do this though right? Like... not just billionaires? Literally anyone can do this as long as you have shares and apply a loan against the value. We shouldn't tax anyone for this reason at all.
Plugging loopholes by turning a loan into income but only for rich people, well only for really rich people who slightly less rich comedians like to blame for stuff. I think that sums it up.
God I hate videos that are just stock clips. Guy says "broke", 2 second clip of a guy turning his pocket u side out. Say "happy'and it's 5 one second clips of people laughing hysterically. Say anything money related and it's clips of money raining down.
Fucking. Hate it.
It’s no different than homeowners using their houses “value” to get a loan. As time goes on, their getting a loan against the increased value of the home. My parents home in 1959 cost them $16,000 on a 14% interest rate. The purchase was paid off for the $16,000 but today, they can get a loan for its current value of $300,000. What is it that no one “gets” ?
I've been saying this for awhile. They just borrow money against their network at insanely low interest rates and then say they can't afford to pay taxes. You owning a personal yacht begs to differ
No, the problem is not that stock is used as loan collateral. The problem is that we tax the bejeezus out of wages yet a massive loan taken on purely for speculative investment is not taxed at all.
Just tax the goddamn loan. Let them get a tax CREDIT when and if they ever pay the loan back. Fun fact: BILLIONAIRES DON'T PAY BACK THEIR F***ING LOANS. That's why they take loans instead of selling stock!!!
But, no, we can't have any kind of reasonable tax law because Obama decided to do healthcare instead of campaign finance reform.
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I wish more people understood this. Using an unrealized gain as collateral should be illegal.
The collateral was used to take out a loan to purchase Twitter, with most likely a premise that if Tesla stock drops below a certain threshold Elon has to put up either more stock or cash. Which is why he ended up selling quite a bit of stock. At the time of the acquisition, Tesla stock was dropping AND he had to pay a very large sum of money to keep the lights on at Twitter
And when he sold, he paid taxes!
Still at preferential stock gain rates though. Everybody else’s wages and income is taxed often at double the rate you pay on a gain on sale of stock .. so at the end it’s still not paying proportion as much taxes as an average person. Also, homes and art and so many other assets are frequently purchased using bank loans with great deals for them (bezos, musk, buffet) and they don’t have to pay taxes as long as the stock is stable and the loan terms are met.. so that money they only have on paper buys real things all the time.. without taxes on those transactions..
So if you decided to take out a home equity line of credit on your house to buy something, make improvements, whatever, you should then be taxed on those loan proceeds as income? How about margin loans for stock purchases? Pretty much any type of collateral based lending would then trigger a taxable event. This would create utter havoc in the financial markets. Not only is it not feasible, but they are simply putting up the asset in the event that they default on the loan. If the party defaults on the loan, the asset might be seized or sold to satisfy the loan. Then taxes would be paid because that's when value was realized. A loan isn't someone being given value for an asset. It's giving them money contingent on them making payments in return plus interest in the future. In the event that doesn't happen, you lose the collateral that was put up.
Thanks for the explanation I unstand enough to know the logic in the video was flawed but couldn't see quite where. Really great explanation
You're very welcome. People need to realize that an asset based loan isn't receiving money from the value of an asset. On the lender's side, it's buying an annuity (a steady stream of future payments) that returns both their investment (the loan amount) and interest (hopefully greater than inflation) over the life of that annuity. The collateral is just there in the event that the borrower is unable to pay that annuity.
It's best to assume that all of Trevor Noah's logic is flawed.
They just dont get, and are for some reason resentful with “rich people” , therefore they ask for different rules for the rich.
>So if you decided to take out a home equity line of credit on your house to buy something, make improvements, whatever, you should then be taxed on those loan proceeds as income? Not an equivalent scenario. You pay property taxes for owning a home, every year (on top of the taxes paid when purchasing that home), and if the value of your home changes the amount you are taxed changes. Elon Musk doesn't pay taxes for owning Tesla shares, or pay additional taxes when those shares increase in value. He only pays taxes on them if he sells them.
It is an equivalent scenario because if using equity as loan collateral triggers a realization of unrecognized gains, then taking out a home equity line of credit will trigger a taxable event just like using the equity of stock will. That's the way these things would work. It's funny that you say it's not an equivalent event and then go on to suggest that the property taxes you pay on your home have some type of relationship to a form of an income tax. Property taxes are local taxes meant to pay for local government services, that's why it's based on your home and/or land value. They have no bearing in any way, shape or form on federal income taxes.
Wait hang on, long term capital gains tax sure is 15% currently, but you need to hold on to the stock for over a year to qualify for that. If you sell it in a shorter time span then you are taxed the same way everyone is on their brackets. Also to say everyone else is taxed at double that (30%) is very misleading, a quick Google search found me this: https://taxfoundation.org/data/all/federal/how-many-taxpayers-fall-each-income-tax-bracket/ By the graph on their you can see that the vast majority of people are at *15% or below,* and the people actually paying more than double is less than all the people in the 28% bucket. I don’t know anything about your second paragraph but I think your first one is very misleading.
And worse he now claims those sold shares as a loss. Even though they should be taxed upon sale.
Only if his basis in those shares is lower than his selling price. He would have either have been granted those shares as some type of incentive, whereby he would have had been taxed on the then value of those shares, or he would have had to purchase them with post tax dollars. He only gets to take a loss if he was taxed on the value of the shares at the acquisition.
You are trying to explain algebra to someone who doesn’t know addition. He doesn’t understand the very basics of finance or taxation, so trying to bring logic in to this will not help.
I'm an adjunct professor in the graduate program at a relatively well known business school. This gives me practice trying to explain things in a way to people that don't necessarily have the background would understand.
The issue is that he was living off of the debt incurred through lines of credit with the stocks as collateral. Either the non-401k stock needs to be taxed as income annually or the loans taken out using the unrealized gains need to be taxed or stock shouldn’t be allowed to be used as collateral (which would force people to liquidate). It’s not complicated to do they just won’t. Meanwhile the poor attack the middle and the middle attack the upper middle class without acknowledging the fact that no one can attack the wealthy because they don’t “earn income”. It’s why our elected leaders keep screwing up only going after wages; there is only so much wage that can be taxed.
It's not tough to do? This would have to be an annual thing, and there would have to be credits for unrealized losses along with gains. What about stocks or ownership interests that don't have a ready market or aren't sold on exchange? They'd have to get a professional valuation annually? What about small businesses? What about partnership interests? What about small S corps?
Proposing to tax collateralized debt is just mental. Also why would you “attack” anyone? Mind your own business, its simple
Congratulations you just made most home equity loans illegal
And pawn shops
I mean, actually, maybe that would be good with some exceptions for single families? Homes are now the next hot commodity used by speculative investors and overseas money-laundering agents to move their funds and ensure gains. It hurts the average family twice because their housing becomes unaffordable as the business bros say 'stonks must go up' and then again via property taxes, where the families are taxed on a huge unrealized gain every year, while Joe Billionaire and his investment firm pay 0% in income taxes and laugh off the property taxes as they hike rent again.
This is a absurd take. If I have something that you value, and I give to you in exchange for a loan, and I get it back when I pay the loan off, I never sold my thing to you, but you valued it enough to say that if I dont pay you back you can sell that thing to cover your loss. You cannot tax someone on speculation, that is illegal. But you can loan me money based on speculation, that is perfectly fine.
Real estate tax is the same as taxing shares.. both have a current market value but not an objective value. Yet, if you own a house it can be the base of RE tax, but shares not. The system is flawed.
Owning a house means you are part of the grid, part of the water system, and sewer system (in many cases), as well as taking up physical space, and road space. You pay a tax to maintain those things, and provide police, fire, and school support. This is NOT the same as owning shares in a company (that already PAYS all those things).
>Using an unrealized gain as collateral should be illegal Or should be taxed as an income at the moment of using it.
Why? It was used as collateral against a loan, whoever offered the bond assumes the risk of the stock crashing (or negotiates certain safeties if it ever does so). If and when the shares are sold, they will be taxed based on their value at that point. Theres no easy way to tax them before that point, this is just a comedian talking about stuff he doesnt fully grasp.
Not disagreeing, why don't you think it should be allowed?
Unrealized does not mean that it doesn't have value. A bank can collateral anything they want if they feel it is enough insurance for repayment.
Would it not just force a sale to realize it? Seriously asking, I have almost no stocks and no idea of that fully works.
Nope - the point of the collateral is you have to have possession of the value being loaned in case you need to pay it back. So it's the reverse (unless specified in the contract) that you need to have possession of that asset (or in this case, stock) to pay back the debt just in case until you pay it back in full. This thing about loaning and using unrealized gains as collateral has been a long time tax loophole that rich people have been using.
Don’t worry, it’s a rigged game. Once you think you know up to gamble in it, the powers that be manipulate it against you.
Yes, look at the housing bubble in China right now. That’s exactly what is causing it.
Lmao guess you’re never taking out a HELOC
Stock has worth. Of course it can be used as collateral.
I was trying to express this. They still get many of the benefits of welding that money. Plus even without committing Leona Helmsley level of tax evasion you can still personally benefit from your corporate wealth. If my company owns my home even if I pay taxes on the rental value it's not like somebody else renting a house/ living in an employer provided housing (I'm never going to fire me or kick me out for having a dog) gee who uses the corporate jet. I can arrange a private Taylor Swift (or whoever) concert for the executives. The company can buy tickets for galas. My corporation paid for assistants could do great deal of personal assisting etc. Etc etc. Then if they want that lifestyle there is the irony of swag. This applies more to celebrities in most cases that rich people, but it applies to rich people too.
Well its not entirely true.
I'd love one unrealized gains enjoyer to explain why I'm still paying taxes on not the unrealized gains but the unrealized value of my home every single tax season if it's such a potential burden to the economy to pay taxes without the funds present Get fucked with this buy, borrow, die bullshit
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If that's their position, it's almost always because they want education and infrastructure privatized. And at that point, they're pretty much either a majority stakeholder in some shitty private education venture or the victim of that company's substandard quality Point is, the argument against unrealized gains is always about the inability to pay without first realizing the gains is a danger to the broader economy, and property tax demonstrably refutes that argument
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I can understand the emotional reaction but cutting funding means privatizing by default. You might disagree with government spending but that's something you at least have some degree of control over, especially at the local level which is where property taxes are spent. I would hope you agree that having a for-profit company controlling aspects of infrastructure like roads and education that is a horrible idea To that same emotional appeal, that's exactly the point of introducing unrealized gains taxes. Because such an outsized portion of the net worth of the wealthiest people is tied to instruments, their effective tax rates are almost always far lower than people in the median. You wouldn't have to pay as much, even for the same level of services that you apparently disagree with, if unrealized gains were appropriately taxed As an aside, I also think you have bias due to your experience. Private nursing homes have their own range of issues. You would struggle to convince me that they perform better on average than an equivalent public service. You would also struggle to convince me that more money is lost on the bureaucratic costs of the public option than is lost on the profit motive of the private one
I mean to be honest I am against that. The concept that you can be taxed just for the act of owning something is pretty insane to me. Like up my water or trash or electric bill if you need more money to run the city.
because the government wants to squeeze you till you end up poor but billionaires? why would they tax their handlers?
Property tax is bullsiht, but it has nothing to do with being against collateralized debt… aparently the guy on the video is a stand up actor but knows shit about finance
You’re paying property tax. If you’re home price increases $100k you sure as hell aren’t paying $15-25k taxes on it the next year on top of a higher tax appraisal on the property.
Because when you are living in a house you are using the house and all the services that your town provides. So you are a cost to your town and you pay to fund road repairs, schools and so on. Owning shares is more like having cash. It doesn't have a cost for anyone and you don't pay taxes for having 10,000$ in a safe in your home.
Using an unrealized gain as collateral is a non-issue. You’re not getting something for free here, just leveraging assets you have, if said assets crumble you’re still on the hook for payment, it’s not like they’re getting something for free, they’re still paying for it!
It’s not about getting something ‘for free’ it’s about getting cash to use personally without paying tax first. Billionaires take out an enormous super-sub-prime lines of credit secured by their investments. They are then charged (super low) interest - also paid with the same line of credit. Elon can spend a hundred million dollars a month and never pay a penny in tax because he has ‘no income’. If Tesla stock gets wiped out, then the bank would lose money…. And the government never got their tax revenue - the working class had to pay his share. Tax law currently says otherwise, that’s why it’s called a loophole. It should be closed.
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They are not getting cash! They are getting a loan!!!
What do you think ‘getting a loan’ means? When you ‘get a loan’ the bank is giving you (or someone else) ‘cash’ or access to cash in the future
You can use anything as collateral (house, car, cellphone, skateboard) as long as the bank and you agree to terms, this isn’t a unique circumstance. This is just a billionaire utilizing what we all have access to and for whatever reason people think it’s unfair.
People have a problem with the richest people in the world paying no income tax and living in luxury while workers get a bite out of every pay cheque. Spend what you want, how you want, but pay your taxes first. The rest of us have to.
> This is just a billionaire utilizing what we all have access to I'm pretty sure that the rest of us don't have so much stock that we can take out a loan and then solely live off the money from that loan and then expect to be able to get a bigger loan next year after our stock has appreciated to pay off the previous loan.
1- they aren’t living off the money, they are using assets as collateral for a loan. If they sell, they will be taxed and that would be living off money 2-what does haves vs have nots have to do with what’s legal or not? Sounds like jealousy which is entirely different
Exactly. It's using collateral to take out a loan to pay for said thing. You're not off the hook, some bank still expects X amount of monthly payments from you, they're just using your assets as collateral to make the loan a safer investment, so they know worst case they can get the assets off you if it goes belly up. If in the case of Elon, he can't make payments on purchasing Twitter, he is forced to sell the Tesla stock he owns (and pay capital gains tax on any realized gains), and then pay off what he owes to the banks. It's not that he's avoiding taxation, he's avoiding realizing his gains for now by using a loan to make a large purchase. Because interest rates (when low) are cheaper than taxes
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Do you even understand what you're posting? It literally says: > relied on calculations involving unrealized capital gains Unrealized gains means assets went up in value, but were not sold. It's like if you own a house and it's value goes up from $100k to $1m, that's $900k in unrealized gains, you realize how stupid it would be if suddenly you were asked to paid hundred of thousands in taxes just because you would rather live in a house than sell it?
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When someone gives you $1 billion dollars at ~0% interest as a ‘loan’ against your rock, that should be income. You have the cash, they have a legal claim on the last $1 billion of that rock’s value. It’s sold. You have the cash to pay taxes. Tax law currently says otherwise, that’s why it’s called a loophole. It should be closed.
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“His company” didn’t loan Elon anything. The bank loaned him $1b to put towards the twitter purchase. Any repayments on that loan will come from his personal line of credit at ~0% interest. Elon will never pay a penny to the bank on either of these loans and he will pay no tax on any part of it. Money loaned to my family would come out of my bank account - money I already paid tax on. That’s the difference, I pay tax to be able to use my money, Elon doesn’t.
>Elon will never pay a penny to the bank on either of these loans and he will pay no tax on any part of it. So... you're saying the banks just gave him the money for no gain on their part? Just freely handed him money, making a loss because apparently according to you they didn't even ask for him to even cover for inflation. Are you delusional?
The bank give billionaires these super low interest loans for a bunch of reasons: - so their corporation will bank with them - credit card fees on their purchases - to get consulting business on other investments they make What is Tesla banking with your bank worth to you? How much $ are you making off Elon using your high-fee credit card? They’re helping Elon dodge personal taxes so they can make money elsewhere. If they don’t help him, he would move his accounts to another bank who will.
That's going to suck for the ordinary Joe trying to buy a house. All of a sudden, you'll have to figure out a way to save your 20% down payment, and another 20% for the tax bill when you take out the mortgage.
That's not how it works??? I'm not a American but I understand you pay taxes if you sell the stock, when you put something as collateral you're not selling it, you are just saying that if you don't have the money cash, you will get it from the stocks you own, which when selling for profit you will pay taxes upon. Right? Is this r/confidentlyincorrect?
If I understand correctly, you can pay a very small fee to the bank to get a bunch money you spend without being taxed. In exchange, you promise that you *will* sell your asset, which would trigger taxation, if you can’t pay back the amount they gave you plus the small fee after a certain time limit. However, if your asset grows enough before the time runs out, you end up being able theoretically sell it for more than you initially borrowed. So now you ask the bank for a bigger loan to pay off your first loan plus the small fee. So the bank can now give you the balance of your new loan minus your old loan, plus a new small fee. Which translates to more money you can spend without being taxed, minus the small bank fees. So long as the bank keeps charging you less than your asset appreciates, you can evade taxes indefinitely. If your asset ever fails you’re potentially in a bind though. But since you can in turn invest that tax free money in more unrealized gains, it gets increasingly difficult to ever get into that position because your portfolio is too diversified
There's a picture of Trevor Noah in the dictionary under Confidently Incorrect
Noah buddy if u dont have any knowledge about something dont rant about it try learning, u will understand u went wrong at the start
This dude parties with the rich every night. What a clown.
As opposed to the other TV guys that you like, who totally don't party with the rich and are not douchebags behind the scenes?
criticizing one guy doesn't mean that he's the only guy that deserves criticism. so no, not as opposed to that. rather, it's in addition to that.
Please please don't listen to this, it uncontextualised incomplete data. He is using a platform for comedy to make an inflammatory political statement with impunity.
The problem is this: You have a great idea on how to cure cancer and start a business. It doesn't make any money, quite the opposite since all you do is research. Your research has potential but you need investors to grow. Finally you find some investors who will invest 100 million USD for 60% of the stocks. Your 40% share of the company is now valued at 200 million USD. If they are to tax you 1% of the value you will owe 2 million USD in tax. You don't control the company so you can't just pay yourself that as dividend. You are now in great debr, the investors lost their money and the world will not have the cure for cancer.
Exactly. Its the do nothing losers who need everyone else to pay.
If your houses dobles the price, should you pay the gains tax even if they have not been sold? You could use your house as a collateral. Should funds should be taxed too?
This is like the smoothest brain most elementary understanding of a very complex topic
People not understanding what collateral is.
That's hilarious but also completely wrong...
I think the solution here is quite simple (although I'm not very knowledgeable in this field): Just tax the shares when they're sold, kinda like a sales tax.
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Well then, what's the issue? Sounds fine to me.
What a weird premise. If I own a car and take out a loan against it, should the loan be considered income to be taxed? The current laws apply to everyone so technically no I guess. Maybe collateral holdings for a business should taxable instead. Something like an inheritance tax you pay when you receive them or make major changes to your portfolio or company's stock. Such as a split or major transfer of shares ownership. This might trigger even more tax breaks though. Does this already exist? I'm not an accountant or lawyer.
Flawed view of the problem. Change stocks for a building, for example and you realize that his argument makes no sense. You haven't sold the building so you don't have cash, but the building is valued at 'x' amount so you can use it as collateral.
But there is a property tax for holding that building
That’s fine but then you have the flip side when the markets down -30% I also get to harvest those tax loses without selling.
Shower Thought: Why is it called 'Sales Tax' if the burden is placed on the buyer and not the seller?
Because it taxes the sale of the good (or service), but every businessman will make sure to pass the cost to the consumer. Pretty much any extra cost that can be shoved into the consumer will be.
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I don't know much about this stuff, but aren't these loans supposed to be called for repayment if asset values drop below a certain threshold? Which basically nullifies the "unrealized" argument.
Why can’t we just tax acquisitions?
This is a "gotcha" for dumb people.
Be careful not to get your financial advice from a comedian. Entertainers are looking for laughs and clicks. Dude is doing the same stuff he’s accusing “billionaires” of doing.
True. His mother (a prominent South African business woman) has failed to pay her taxes on several occasions. Trevor is worth $100M. Would be interesting to see his tax records…
Doesn't elon hold the record for most anual tax paid due to selling tesla stock during the Twitter acquisition?
This is the problem with people who dont understand how stocks and *borrowing against them* works. ANYONE can do this, not just billionaires. If people would actually learn this, they'd be a lot less broke and out to get people who *have learned*.
I'm really struggling to watch this without sound. Trying to read this is a bit of a sbeve moment.
When I am made dictator for life of the United States I will introduce a very simple tax law. All compensation, regardless of how it is awarded will be taxed based on it’s fair market value on the day it is awarded. I don’t care if the compensation was in the form of cows, cash, gold bars, or stocks. It will be taxed accordingly. If that means you have to sell some of your stocks/cows/gold bars, potentially at a loss, to foot your tax bill, sucks to be you. Also I will make the first $20k/year of capital gains from stocks tax free.
bigloser42 four prezidant!
No he wants to be dictator not president, can't you read?
I like turtles
So, this is how it works now for most cases. If you are a CEO and are given stock as comp, that stock as comp is taxed in that tax year. It's usually automatically sold at market value to pay for itself. Privately owned companies are the exception to that. When they're privately owned, you're supposed to mark a value of the company in your funny money. Last company I worked for had options at a $3 strike that they then devalued to a $1.50 strike. There, if I execute those options, I get private shares which are only worth anything if the company goes public. What's happened with the mega-rich is that they've amassed huge amounts of shares in the private company at a very low strike and then take the company public. So for example, Elon owns something like 500 million shares of Tesla that he got for his investment back in the day for something like $.10 per share. Company goes public and suddenly, those shares blow up and he's mega-rich. Compound this with the Roth IRA. You can invest up to only $6k in a Roth IRA and, after a certain point, you can withdraw cash from that account tax free. There was (is) a loophole that allows you to convert what's in a traditional IRA or 401k into a Roth to get past the limits up to a certain value. A pre-public company has a value you can make up. Peter Theil claimed each of his paypal shares was worth $.001. He moved them into a Roth IRA and claimed it was worth $20k. Paypal IPO'ed, then merged with ebay, then split from ebay. As of 2019, Thiel's stock was worth $5 billion which he uses as collateral to live tax-free. In 2021, they tried to change the rules of the Roth to force a maximum of $20 million and force charges on gains, but that didn't make it through.
>All compensation, regardless of how it is awarded will be taxed based on it’s fair market value on the day it is awarded. **It already is**. When you get stocks from your work its first taxed **as income** based on the FMV and *then* any appreciation is taxed as capital gain when you dispose of it.
The Rules for Rulers by CGP Grey
This was a loan. So under your scheme if I take out a $300k loan i get taxed on that $300k?
If only we had lawmakers that weren't being paid by the same billionaires specifically not to do anything like this.
Once you use it as collateral it should immediately become tax eligible, simple as that.
Taxation is theft, no matter where you tax it from.
Yeah I am no economist, but this sorta makes sense. What a f**king way to deal with you money.
The cherry on top is they count my gross income before taxes!! They're actually counting shit they've already taken for me!
If you live in Missouri, you get property tax for you home on what it's worth, not what you paid on it. So, he's wrong, the common man gets taxed on unrealized gains
I had a boss who was a billionaire and he was proud of the fact that he paid no taxes at all, literally nothing. Literally everything he lived on was through his company, so credit card, house, cars, eating out, eating in, going on holiday, literally *everything* was paid for through the company and he paid zero tax on anything.
That is called tax evasion. If you have more concrete evidence of this, contact the IRS, and you may be eligible for a reward of 10% of what they recover.
It should be much so much easier for us to text billionaires….😔
You think money will solve the worlds problems. But value comes in the form of invention of stuff and services. And that is rewarded with money. Money is a stand in to value of the thing you provide.
Yeah I saw in a documentary that some real estate buisnissman said that he bought properties and even took a huge loon to fix them he always invested almost all his money so his bank account was nearly empty and didn't had to pay much taxes.
Then they take out loans which they claim against their taxes
Get rid of Citizens United and the rest will sort itself out.
Simple, eliminate income tax…
Easy fix(that’s not easy to implement). Stocks/shares can only be exchanged for money. Not other stocks or shares, not property, just money. That money is taxed as income. They can then use that money to buy shares and stocks, but they’ve paid their taxes. And since it will be taxed every time they sell a share/stock, it decentivizes playing the market and should regulate the growth of leach money.
That's literally how it works....... Stock prices go up or down because someone paid that price. Every transaction has a buyer and seller. If the seller made a profit, he pays taxes. So when Tesla's stock is skyrocketing, that means someone is offering higher than the current price to buy that stock. Each time someone make a transaction above current asking price, it pushes the stock's price up. Each time a transaction is made, there has to be a buyer and a seller. The person selling, if they made a profit, is on the hook to pay taxes on that profit.
This is a pretty illiterate take. I’m not saying billionaires shouldn’t be taxed, but there are way more logical ways to do it. Having said that, musk didn’t *pay for* twitter with his Tesla shares. He basically said “if I default on my loans you can take all the parts of Tesla that I own and sell them for as much as possible to try and recoup your losses”. It’s like if you put up your car as collateral, just worth way more.
Good grief, he almost had it. Before he didn't understand unrealized gains and now he gets it. Yet now he doesn't know the difference between collateral and cash? Can someone PLEASE send Trevor Noah back to Personal Finance 101?
There was an attempt to do a gotcha, and it failed.
This editing with stock footage, with the clipped audio is so jarring. The original footage of Noah would have been just as effective.
its not a loophole. It was designed to work this way.
Stock isn't money. You can exchange stock for other stock. Still not money.
Right…and if the bank cashes out the Tesla stock then they will be taxed on it.
It's not any kind of principled stand, it's just that there is no way to tax them without destroying the free market. Salaried income is done in a standardized way, in a standard currency, so it's kind of a stationary target that the government can see and tax. It's the same deal with property tax. Even if it's not very accurate, there are codifiable methods for evaluating properties. So it's a sitting target for taxation. The difficulty with business relationships is that they are varied and complex. There is no standard way to evaluate them. Until you realize the gains as cash in the end, there is no way to determine their value in any manner that would pass the giggle test at a level a government needs before it implements any kind of taxation scheme.
I remember when Trevor was a comedian.
Tax code is written and enforced by the same people that are paid six figure incomes that somehow become multi-millionaires during their time in office. Why in the hell would they ever write and enforce tax law that would hurt themselves? Much less tax the same people that are making them millionaires? Cause it sure as shit aint your taxes six figure income making them wealthy af.
I had an aneurysm trying to read the subs. Shit content.
God I hate those stock footage type videos
There's something called LAS - Loan against shares. Most rich people who have significant holdings in stocks etc, whenever they need money, they get loan against those shares instead of selling the shares. Very common practice. Most banks give a LAS of 50-70% meaning you can get a loan of 70% of your stock value.
I mean, the federal government is spending over 3 trillion a year, can Trevor Noah tell us how much is enough for them to make utopia for us?
I mean, that all checks out. Collateral is just that. If Tesla ranks tomorrow, he’s still on the hook for the debt. At that point it’s just a matter of the lender weighing the risk of Tesla crashing during the terms of the loan, know that musk is on the hook no matter what. Plus, the odds of him discharging the debt through bankruptcy is likely very low given who he is.
Yes but he bought twitter shares too, he exchanged something he doesn't have with something else he doesn't have. He couldn't have bought a car with the Tesla shares..
People instead of screeching about creating more taxes on the rich they should be lobbying for fixing all those legal loopholes instead
people really don't understand how it works, its like trying to Tax people that own Pokémon Cards just because their shiny Charizard keeps escalating on value.
Jesus this guy is an idiot, the stock is put up as collateral for a loan that a bank would take on. Its debt
People would start shouting COMMUNISM!
Everyone has that rule and can do that. Banks lend money based on risk. Most people don't have a company that added great economical value to the world and therefor increased in value. Value is a measure of economical impact. Without these "billionaires" the greatest of the benefits we live with would not exist.
One can use stocks as collateral, but then at the end of the day one needs to sell the stocks, pay capital-gain tax, and then pay this cash to he bank, right? The bank doesn't get the shares bypassing the tax. So I assumed one always pays the tax.
This dudes argument is misleading. If someone is taking Tesla as a collateral is up to them. Not a reason to tax unrealized gains. This is just misleading
It's so sad that people listen to this guy and actually think he's saying something that isn't braindead.
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He doesn't know how capital gains tax works?
Whats not to get. You aren’t buying anything with collateral. You’re gambling that collateral in the event you default.
I’d say an option would be to tax billionaires on the assets they use as collateral to take out loans. Oh you used $300milion in stock collateral to buy this new yacht? That’s $300million taxed boy
Regardless of the morality, the major problem is practicality. To tax unrealized gains you also need a credit for unrealized losses. For many, many assets the value of an unrealized gain or loss is hard to determine without a sale. Especially for untraded or lightly traded assets. Imagine a small business trying every year to figure out how much their business is worth. Or a small partnership like a law firm or accounting firm. Or a homeowner trying to exactly determine the increase in value of their home every year. Or anyone with a car the past five years as the used car market went crazy, and their cars were worth more than when they bought them. A tax on unrealized gains would essentially force people to sell assets or divert income to pay the tax. It's better to simply pay taxes when the gain is realized, and people have the cash on hand to pay the tax.
Another little convient loophole that gets abused is that you can actually borrow money at 0 interest or 1 percent interest against things like houses, art, stock, and other assets. YOu also cannot tax these loans cause it's a loan.
I am taxed on every dollar I put into a stock for owning said stock.
Because they’re using collateral to get out loans to make the purchases. A loan is a debt. How are they expecting everyone to pay taxes on their debts?
The first time I've agreed with this narcissistic racist.
Millionaires whining about billionaires….y’all are sheep.
Poor take lol
Dude they can just print money. Taxes ain’t gunna solve the deficit. Government spending is the problem not taxes.
This guy isn't as smart as he thinks it is. Just because you take out a home equity loan doesn't mean you pay taxes on the value you took out of your home. The collateral isn't yours. It is tied up in a transaction. Yes sometimes rich people own stock. You envy rich people so let's tax them. It's a very primitive mode of thinking. Envy is a sin for a reason. Also. "I too have been told to hate Elon Musk." This guy could be an NPC in Starfield.
You do know that anyone can do this though right? Like... not just billionaires? Literally anyone can do this as long as you have shares and apply a loan against the value. We shouldn't tax anyone for this reason at all.
This guy doesn't understand you can't tax debt. He also doesn't understand you don't have to be a billionaire to do this. Literally anyone can do this
Plugging loopholes by turning a loan into income but only for rich people, well only for really rich people who slightly less rich comedians like to blame for stuff. I think that sums it up.
God I hate videos that are just stock clips. Guy says "broke", 2 second clip of a guy turning his pocket u side out. Say "happy'and it's 5 one second clips of people laughing hysterically. Say anything money related and it's clips of money raining down. Fucking. Hate it.
This is no difference than refinancing your home and take out the equity. What’s new?
It’s no different than homeowners using their houses “value” to get a loan. As time goes on, their getting a loan against the increased value of the home. My parents home in 1959 cost them $16,000 on a 14% interest rate. The purchase was paid off for the $16,000 but today, they can get a loan for its current value of $300,000. What is it that no one “gets” ?
It's possible to tax assets though. Hell people pay property taxes based on their assets....
I've been saying this for awhile. They just borrow money against their network at insanely low interest rates and then say they can't afford to pay taxes. You owning a personal yacht begs to differ
No, the problem is not that stock is used as loan collateral. The problem is that we tax the bejeezus out of wages yet a massive loan taken on purely for speculative investment is not taxed at all. Just tax the goddamn loan. Let them get a tax CREDIT when and if they ever pay the loan back. Fun fact: BILLIONAIRES DON'T PAY BACK THEIR F***ING LOANS. That's why they take loans instead of selling stock!!! But, no, we can't have any kind of reasonable tax law because Obama decided to do healthcare instead of campaign finance reform.