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Life, Death, Wealth, and Taxes

Discussion in 'TSLA Investor Discussions' started by RABaby, Oct 2, 2017.

  1. RABaby

    RABaby Member

    Mar 10, 2013
    Since there was an ongoing debate that is worth having but was cluttering a more specific thread, it seemed reasonable to create a thread to collect any thoughts about taxes, as well as the related subject that is a component of them. And since taxes also involve death and they are inescapably connected - think estate taxes, why not discuss it all here?

    Around 2014 I posed the question, "how much is enough?" but nobody seemed to get it. I think those who had made all they needed had abandoned active participation here. Others just wanted more, but they didn't seem to have that much. I made a lot thanks to TSLA and my approach - think TT007, and then since I held it, I lost a good bit, but I continued to hold and now have considerably more, even after recently losing more than the total of all I made in my wage earning life. But how is it that some get to a point and say it's enough while most others never stop, even after hitting their target? The lucky few who start from wealth probably don't have targets; that is probably relegated to those who start with nothing.

    Having money is different than fantasizing about winning the lottery. When you have the money, you lose some motivation, but if you acquire the wealth too easily, it makes one think the target is too close and so getting more becomes the goal. And then, once you have more than you can spend, and expect to grow that significantly, the game is one of avoiding taxes.

    So this is how I am starting out this thread. How much is enough? And when you have enough, do you look to take advantage of all the legal ways to avoid taxes, even if paying them would not hinder your lifestyle?

    I can offer my current thinking. I always pay what I owe to anyone for anything. I try to be fair and reasonable and never cheat anyone. It's pretty sad how so many find it necessary to screw anyone just to line their pockets, but I don't know the story of each of those who cheat and that isn't the focus of this thread.

    I don't have any problem looking for creative ways to save on taxes, as long as it is legal and doesn't require an inordinate amount of effort. But I pay and I see the need for taxes in society. Like most Americans, I think our government wastes far too much, but if you look at the cost of Cheney shenanigans to offload the (illegal) war in Iraq, I think an objective person (one could argue I am not) can see that government has a role in certain activities and can perform them better/cheaper than private companies. Purchase of the various means to kill while failing to provide adequate training is an indication of corruption in government. I think private prisons are failures that successfully hide their atrocities, but I will leave it at that.

    if our elected officials were honest and didn't care about getting re-elected, the waste, fraud, and abuse could be reigned in. We all know it won't because people are human. Look at me. I have more than I need and it isn't enough.

    So let's see if this thread gets some traffic or people offer thoughts, or if it dies lonely and alone like the efforts for socialized medicine. Yes, I am a conflicted progressive, but only conflicted because I am in the elite category of those who have money.
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  2. neroden

    neroden Happy Model S Owner

    Apr 25, 2011
    Ithaca, NY, USA
    I think too many people use money as a way of "keeping score" in some sort of game. They have enough to be set for life but they want more because of the "score". In economics it's called a "positional good": they value themselves by comparing their pile of money to the other guys on Wall Street. It's not about how much they have, it's about whether they have more than the other guy. *This* is a problem; these people distort the economy and distort politics. (And honestly, if you take away most of their money for all of them, they still have the same relative position in the game, so it doesn't really hurt them.)

    You and I are not like that. A while ago I worked out how much money I needed to be "set for life" in a comfortable lifestyle. I've got that, almost.

    The single exception that there is *no way* to insure against major medical costs. (No, private health insurance doesn't do it, with both premiums and "list prices" rising so fast that they could eat my entire fortune and the insurance companies doing their best to eliminate everything from their authorized networks and not actually pay out on claims. This is one of many reasons why we need single payer healthcare.)

    But anyway, "enough to be set for life" is, depending on your lifestyle choice, between $2 and $10 million (if the medical costs problem is resolved).

    After that.... well... I'd like to have enough money to build my own electric passenger railroad (minimum $1 billion) but honestly, I'm not sure any individual *should* have enough money to be able to do a large project on that scale by himself. For a project like that one should probably be *required* to get support from a lot of people. 1000 millionaires supporting such a project seems legitimate to me; 1 billionaire pushing his own hobby-horse by himself seems in some sense illegitimate to me.

    Anyway, since I'll never be that rich, everything else I make goes, in the end, to the charities I care about (though I'm actually holding a bunch of it back until I die in case of medical costs). I happen to favor relatively *unpopular* charities (online, sex-positive sex education for teenagers, for example -- telling underage kids it's OK to have sex if they play safe is fairly unpopular) because my politics are kind of radical, so I know they need the money. So I'd rather give money to my targeted charities than to the government. That's OK, there's a charitable tax deduction. :)

    Like Andrew Carnegie, I feel quite negatively towards people who amass huge fortunes for the purpose of leaving them to their kids; I mean, sure, the $2-$10 million to leave the kid set for life seems tolerable to me, but hundreds of millions or billions... that's another thing. That's basically inviting the kid to use the money to push their political agenda on the public against the public's will, and that's what the Wal-Mart heirs and the Koch heirs *did* with their inheritances.

    To answer your original quesiton, I minimize taxes by methods which are likely to hold up in court, but I don't do stuff which looks squirrely and contentious from the getgo. Life is too short to invite audits, and it's not as if I "deserve" the large amounts of money -- I'm lucky to have it.
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  3. adiggs

    adiggs Active Member

    Sep 25, 2012
    Portland, OR
    I'd figured on the roughly $2M number for myself as being enough. At the lower end of @neroden's range, the additional assumption is that house and cars are paid off (no monthly debt service). That lowers living expenses by a lot, generates $60k/year assuming a 3% withdrawal rate, and counts 0 for social security (an unreasonably conservative assumption, but a true assumption if you're "set" before social security starts).

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