Individuals Dodging Taxes

They only work for the envious to dream about…

 

You don’t speak to people on this board the way that guy does…so I guess you’re only about half as bad since you still want wealthy folks taxed more.

 

So Buffett is known as possibly the best investor of all time (there are others now I think that have far more acumen) but it was his quote that I mentioned early in this thread. His quote actually was “diversification may preserve wealth but concentration builds wealth”.

That quote isn’t a recommendation that all make concentrated bets; it’s a truth that if you want to create wealth you must make a concentrated bet somewhere.

Sure someone who saves money over the years and pours those funds in indexes like SPY/QQQ and the like will build a nice nest egg if they are consistent. However, there’s a big difference between a nest egg and wealth.

 

Unless they spent any time at all in estate planning, in which case the estate tax doesn't apply to anything.

 

See Tesla from 5-7 years ago. Analysts couldn’t understand the model and had price targets on the stock well below its trading value. Then it ran 800+%.

Analysts are wrong a lot but I understand the point you were responding to as well. It’s gambling plain and simple when you make a large concentrated bet in the market. Some people can stomach it and some can’t. Same with crypto. That style of investing isn’t for everyone but for me I utilize about 25% of my liquidity to make concentrated bets that are very risky. The other 75% are invested in diversified portfolios.

Plus I still have social security if all else fails (sarcasm).

 

I see this reference a lot. It isn’t as easy as most here think it is to completely avoid the estate tax. If you have 50MM for instance you better start planning years and years ahead to try to reduce that exposure. Using IDGTs, CLATs, etc take time and a willing grantor who can grasp the reason for doing all the work.

 

Making “concentrated bets” in risky stocks as primary strategy does somewhat increase your chance of getting rich quickly, sure.

It also increases your chance of living in a dumpster.

But sounds like with your claim of 75% passively in “diversified portfolios” you aren’t much of a believer in so-called concentrated bets afterall.

The reality is the more trades are made with that other 25%, the more likely you return to the mean. It’s essentially just inescapable math. Nobody times the market all the time. Nobody. If you are investing in typical stocks, including Tesla, the more trades you do the more likely you would inadvertently create a set of stocks that mimick an index anyway. Maybe a higher risk/higher return index (like small caps), but that is the benchmark nonetheless.

Obviously penny stocks are where amateur and gullible stock traders looking to “get rich quick” would typically think they can outsmart the market and get huge returns. The vast majority are wrong, and this area of the market is where a bunch of criminal activity takes place (pump and dumps). So the ones who aren’t “wrong” are either extremely lucky and should cash out that lottery ticket immediately, or they are participating in a pump and dump scheme of a low volume stock. I don’t look at crypto, but in those lesser known coins I imagine it behaves a bit like penny stocks where it’s more akin to gambling or even adjacent to straight up criminality.

This is absolutely not what Buffet is taking about, Buffet is a value investor - his “concentrated bets” are in real cash generating companies he perceives as undervalued. A good strategy, maybe good to mimic it, but a regular investor won’t get the special terms or access to preferred shares that buffet does, and even Buffet is merely “market perform” in terms of his investment performance! In the end even Buffet’s wealth isn’t actually because he was a good stock picker, it’s that he ran a successful enterprise which he turned into a huge conglomerate. His “concentrated bet” means acquiring a successful but undervalued company which he absorbs into Berkshire, not going all-in on some crypto.

 

If the value of my house plummets do I get a refund in property tax from the year before?

 

I would think if your tax assessment decreases then yes, you pay less on your property taxes.

 

We are talking about a difference in a wealth tax, which would behave as you describe, and is explicitly unconstitutional at the federal level due to apportionment issues, vs a tax on the increase in wealth which could be argued as income and may or may not be unconstitutional.

 

Why is taxing wealthy more bad? Is the current level of taxation bad? Do they need to be taxed less? What is the moral principle that states the wealthy can only be taxed to some magical threshold?

Personally I give little weight to the fairness issue. So what is more unfair, somebody who gets taxed some portion of $100 million on death, or a kid who only has a single mom on drugs?

To me the more relevant issue is efficiency, practicality and incentives. If a tax is so high people change their behavior in unproductive ways, like working less, legally evading the tax at great expense, illegally evading it, moving money out of the country, etc. then it may not be worth it.

 

The argument that increased wealth falls on its face unless the gain is actually captured is selling the property in this example.

 

Generally speaking I am for less taxes and never will vote for increases.
When someone or some entity shows you bad behavior and irresponsible habits…ie govt spending, you gotta believe them.
I will never trust the govt to tax and save. They may increase taxes on the rich but they have already shown that it will make little difference.
Keep the wealthy happy and they should remain in the states. Please don’t run off the wealthy because it sounds good to the poor.

 

Seems the logical conclusion of what you are saying is we should stop taxing and shut down the government. I doubt that is actually your view. If you believe there should be a federal government, then you have to support some sort of taxation. So it isn’t clear to me what you think should happen.

 

A wealth tax is not explicitly unconstitutional.

 

It would be due to apportionment issues, as I said in the post you quoted.

 

Yeah I read your earlier post. But a federal wealth tax wouldn't necessarily be unconstitutional.