- In Ted Turner's autobiography [0] (highly recommended) he describes how wealth individuals got around the very high income taxes in the 1960s-1970s:
- Person A is selling their company to Person B
- The total price is very high (let's say millions)
- I B pays A the millions, A will have to pay a large tax burden
- Instead, A "loans" the money to B so that B can "buy" the business
- This creates a stream of small payments (less tax), spread out over time
I mention this only b/c smart people will eventually figure out ways around these taxes.
For example, there are already "barter networks" in Scandinavia where Person 1 does plumbing for Person 2, Person 2 does legal work for Person 3 who in turn does accounting for Person 1. All so there is less income reported.
- Also, uniquely in the USA, interest payments on debt can be deducted from your income. There are some caveats to deducting this from personal taxes rather than business taxes, but in general if you can show your personally used the loan for business purposes, you can use the Schedule C form to deduct the interest on it from your personal income to lower taxes paid.
- Deduction of interest against revenue isn't allowed in other countries for business purposes?
I know the home mortgage deduction might be somewhat unique, but interest costs seem a business expense pretty clearly.
- In the NL the one who provides the loan is supposed to do that against a normal interest rate, which is a capital gain subject to tax. So this trick would not work here afaik, because now there is still a party paying taxes.
- Doesn't look like there is additional tax on the property itself which would be way worse, but still it's completely medieval to tax rises in asset value before there is any cash flow intended to be realized from the rise.
The rate might even be in excess of medieval times, I don't know, but it's bound to drive people away who are not flush with cash. I would maybe consider limiting to crypto alone, and still only after being sold for a profit.
I assume property tax is already exorbitant. I don't know how deep the similarities go, but in Florida many a subdivision or even whole new towns have been carved out of wetlands which were not welcoming otherwise.
Sometimes where dry land didn't even exist before :)
Eventually the subdivision fills, property values rise, and taxes do too automatically.
This is by design, once it's full, they want to tax you out of there to make room for people with more money to spare.
Is that where the pressure's coming from?
They could end up with no room for anybody except the very elite.
If that doesn't work they could always raise the tax rates even more, escalating the same logic ought to move faster in the same direction ;)
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- Dutch person here: im going to need a source for all those claims. They seem obviously false.
22 points by janandonly 3 hours ago | 6 comments