Honest to god, I'm kind of stunned by the people with tens to HUNDREDS of millions, liquid, that will go great lengths to avoid, even evade, taxes. You see people move to other countries for "tax purposes" alone. Or people that will create elaborate schemes.
Of course, I understand that if you're in that wealth bracket, the actual tax/accounting acrobatics is abstracted from you. You probably hire some consultant to do all the work, and in the day only pay a fee to get your tax cut by x.xx%. That's zero work for you, minus whatever time you spent on a meeting with the consultant.
But still, there are people that will be heavily involved in these things themselves.
Yes, it is a polarizing topic. Some people refuse to pay taxes because of how the money is spent - or they have some idea of how the money is spent. But from a pragmatic point of view...what's the difference between sitting on say $500MM in cash, and $800MM? It's either way going to be more money than you'll ever be able to spend. Hell, even the safest investments at that scale will yield more money than what most CEOs make in a year.
(With that said, I do have sympathy for the people living in countries where you have to pay wealth tax or tax on unrealized gains, which for founders means
1) taking out loans to pay taxes
2) increasing their yearly compensation, just to meet their tax burden or
> what's the difference between sitting on say $500MM in cash, and $800MM?
At least $15M a year over most 3 year horizons, or the insane compounding effect of $300M invested over the long haul. Your question makes sense from a "normal" perspective, but doesn't once you're UHNW [0].
> It's either way going to be more money than you'll ever be able to spend.
Not even close. At UHNW levels there are whole classes of things to "spend" on that ramp pretty quickly into 8, 9, 10+ figure values. Influence, power, status, prestige, legacy, ideology, politics, rinse, repeat. And the UHNW "brackets" are a real thing (you're either in the tres commas club or you're not, etc).
Sure, pay your taxes. But once you crack these numbers there are entire industries dedicated to helping you work the system, and it's unfortunately pretty workable (because there are substantial interests lobbying to make/keep it so).
"UHNW" people are crazy, evil and dangerous. There is no amount of stuff that will ever satisfy them. They will consume, and cheat on taxes, obsessively - until our natural world is destroyed.
It has come down to us vs. them. We didn't start this fight, but we are going to have to finish it.
You've got this class of people telling the rest of us we can't have decent affordable healthcare of places to live while they consume our entire life's salaries worth of resources on luxury items. Society simply can't afford people like this.
well, what's the ROI (or fiscal multiplier in econ speak) of spending 300M on housing vouchers but not building more houses?
or founding more border patrols instead of local police? or funding local police, which then spends it on legal fees to fight against releasing body cam footage?
also note, that I'm not saying the people who optimize away their taxes spend it better (yachts! country clubs in the middle of the desert!)
There's a reason that every stupidly wealthy person who wants to throw their resources toward some goal either funds or starts a charity for the specific mission.
If you don't take tax at face value and see it as an optimization game, and only focus on what is to be gained (or what is to be lost), I can easily see why one might want to minimize their tax liability. To what lengths would you go to save 100'000$ a year? I don't earn that much, so I'd probably do a lot, as long as it's legal. I hate to advocate for the devil here, and I do believe everyone should be paying their fair share, but I don't think this issue is clear cut at all. Some ways to decrease one's tax liability exist due to government policies to encourage a particular behavior, sometimes it's to subsidize a behavior or a status quo. Tax isn't just a way to transfer wealth (but it often seems to be, and often is for the poorer part of countries), but it's also a way to shape behaviors. The unfortunate fact is that trying to incentivize or disincentivize certain behaviors for a large body of people will often introduce loopholes that can be exploited. However, some incentives end up being vital some livelihoods or behaviors that the country depends on. Not to say there aren't any cases where the loopholes are unambiguously bad.
People don't become billionaires by paying their fair share and not screwing people over. I remember hearing jokes about how you need to be a sociopath to be a great business person, but the reality is that in order to maintain and grow massive wealth, you need to be willing to take advantage of others for personal gain and pay back literally the least you can get away with. Playing fair is for suckers.
Note that I'm not even talking about taxes. But tax avoidance also becomes a lot easier the more money you have.
Of course, I understand that if you're in that wealth bracket, the actual tax/accounting acrobatics is abstracted from you. You probably hire some consultant to do all the work, and in the day only pay a fee to get your tax cut by x.xx%. That's zero work for you, minus whatever time you spent on a meeting with the consultant.
But still, there are people that will be heavily involved in these things themselves.
Yes, it is a polarizing topic. Some people refuse to pay taxes because of how the money is spent - or they have some idea of how the money is spent. But from a pragmatic point of view...what's the difference between sitting on say $500MM in cash, and $800MM? It's either way going to be more money than you'll ever be able to spend. Hell, even the safest investments at that scale will yield more money than what most CEOs make in a year.
(With that said, I do have sympathy for the people living in countries where you have to pay wealth tax or tax on unrealized gains, which for founders means
1) taking out loans to pay taxes
2) increasing their yearly compensation, just to meet their tax burden or
3) to sell their equity
But these aren't really in the "exit" bracket)