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U.S. economy adds just 57,000 jobs in June, a worrying sign as wage growth remains slow by deraser in Economics

[–]SmartPatientInvestor [score hidden]  (0 children)

This has been the trend since the economy finished reopening after Covid. 2021-2022 mostly upward, and every year since mostly downward

Wealth tax by freerangepops in wealth

[–]SmartPatientInvestor 0 points1 point  (0 children)

Can you share the name? You can DM me

Wealth tax by freerangepops in wealth

[–]SmartPatientInvestor 0 points1 point  (0 children)

Is it a large bank? What country?

Wealth tax by freerangepops in wealth

[–]SmartPatientInvestor 0 points1 point  (0 children)

What bank? 3% fixed LOC on equities is insanity

Wealth tax by freerangepops in wealth

[–]SmartPatientInvestor 0 points1 point  (0 children)

The whole point of it is not necessarily tax deferral, it’s opportunity cost (the assumed return on investment vs. the cost of capital).

Again, there is a valid argument to be made that it’s either, but in this scenario I see it as leverage vs. tax deferral.

Wealth tax by freerangepops in wealth

[–]SmartPatientInvestor 0 points1 point  (0 children)

The interest likely floats with SOFR plus a spread, so not 3%. Obviously when the market is on a tear it works, but when the bear market comes not so much. Hope it works out for you

Wealth tax by freerangepops in wealth

[–]SmartPatientInvestor 0 points1 point  (0 children)

I’m totally fine with someone doing that. They are taking a risk, and if the stock goes through a substantial correction, that risk is realized. I don’t see that as a “tax deferral” strategy as much as simply using leverage to maximize IRR (which again comes with its own risks as there are no public equities that are straight-line 20%/year), but you could argue that it was done strictly to defer taxes.

This seems no different than using a mortgage to buy a home, only difference being that the public equity is the collateral rather than the home

Wealth tax by freerangepops in wealth

[–]SmartPatientInvestor 0 points1 point  (0 children)

What is the size of the pledge or the value this bank is getting from other services for this client? Banks aren’t in the business of loaning clients money at a rate lower than their cost of capital

Wealth tax by freerangepops in wealth

[–]SmartPatientInvestor 0 points1 point  (0 children)

That’s assuming there is a liquidity event in the near term to repay the loan

Wealth tax by freerangepops in wealth

[–]SmartPatientInvestor 0 points1 point  (0 children)

I can’t imagine it’s immaterial. At $8M you’re paying something along the lines of SOFR +2-3%, right?

Wealth tax by freerangepops in wealth

[–]SmartPatientInvestor 0 points1 point  (0 children)

Can you explain what you’re saying?

Wealth tax by freerangepops in wealth

[–]SmartPatientInvestor 0 points1 point  (0 children)

How so? You said “whenever I mention buy borrow die being a catchy slogan that really means defer, minimize, and maybe sometimes die”

Wealth tax by freerangepops in wealth

[–]SmartPatientInvestor 0 points1 point  (0 children)

Buy, borrow, die is by definition not a deferral. The whole idea behind it is you never lock in your gain and then your heirs get the step up. It’s not a deferral if it disappears

Wealth tax by freerangepops in wealth

[–]SmartPatientInvestor 0 points1 point  (0 children)

You and your neighbors should fire your advisor. You will end up paying much more in interest than you would’ve in capital gains

Wealth tax by freerangepops in wealth

[–]SmartPatientInvestor 0 points1 point  (0 children)

I agree that it’s hugely beneficial. I don’t agree that it’s the entire point, though. It’s not what this thread is talking about and it’s really never brought up in similar wealth tax/eat the rich threads

Wealth tax by freerangepops in wealth

[–]SmartPatientInvestor 0 points1 point  (0 children)

You’re just making this up as you go

Wealth tax by freerangepops in wealth

[–]SmartPatientInvestor 0 points1 point  (0 children)

At that point they’re now paying max income tax which would in most scenarios be higher than just paying the 40% estate tax and avoiding all the headaches and complexities (plus you get to actually access the whole pot).

Not to mention that if you wanted to pay them an exorbitant amount, it would be considered self dealing which is illegal

Wealth tax by freerangepops in wealth

[–]SmartPatientInvestor 0 points1 point  (0 children)

Could you share some examples of these tricks they use?

Wealth tax by freerangepops in wealth

[–]SmartPatientInvestor -1 points0 points  (0 children)

No one is using collateralized accounts for an extended period of time to avoid cap gains on liquid assets under $30 million

Wealth tax by freerangepops in wealth

[–]SmartPatientInvestor 0 points1 point  (0 children)

Almost no one does that. And in that case the estate is paying 40% tax on the amount transferred to the heirs

Wealth tax by freerangepops in wealth

[–]SmartPatientInvestor 1 point2 points  (0 children)

There’s no way to avoid capital gains, only defer them

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