Topic: why super rich pay no tax but suggest giving all their wealth away (eventually) (Read 413 times)

I again agree with franky1 on this. Many people are not clear about the difference, I see it constantly on this and other forums, they think that tax avoidance and tax evasion are the same thing, when they are not and they would do very well to learn the difference and practice tax avoidance to the best of their ability.

when you use an CEX you relinquish your btc to get fiat
when you give yourself a 'personal loan' via some (buyer) person writing up the (swap) deal as a loan. (theres more finer details than this, im oversimplifying)
you again relinquish the BTC as collateral by purposefully defaulting to the (buyer) loaner on the day you receive the fiat.

loan vs exchange.. same end result. just treated differently for tax purposes..
your not suppose to have borrowers repay over time..

alot of people think btc=btc and dollar=dollar where all currency is fungible and treated the same.. its not
when you receive a gift/loan. no tax. but if you receive the same amount via other means its taxed differently

EG a retailer receiving fiat from customers is not paying cap gains. but corporation tax, sales tax.
an employee vs a sub-contractor receives funds under different tax codes
a treasurer of a trust/foundation receives different treatment compared to others

did you know that if you loan yourself (from your online persona) to your offline life.. your online persona can write-off the deal because you are both loaner and loanee. there wont be any conflict of anyone chasing you for repayments

many rich/elite transfer property/assets as collateral for loans. with no intent to make ongoing repayments. as long as there is no conflict between the parties to need to take it to court. there is no problem. so if you are on both sides of the deal on the paper. there is no conflict

you just have to learn the fine details to do the deal correctly

avoidance not evasion
its not so much the wealth getting away with it. its more so that average joe minimum wage income dont pay much tax to see the worth in learning these techniques.. especially if they are on some national employer pay scheme that auto deducts tax before putting it into employees account. most people think they have no choice..or think its too much of an effort

however bitcoin open up the choice

Franky1, I see exactly where you're coming from and if I thought the US government wouldn't figure out what was really happening, would let it slide, or otherwise wouldn't put the ol' kaybosh on it, it'd be a friggin' excellent idea.  But when you're running a loan service and none of the borrowers are repaying you--and, most importantly, when it's a fiat<-->BTC conversion--you'd better believe it isn't going to last for long.  Not with the scrutiny crypto is under right now, and probably not even if it weren't.

But yep, the wealthy can and do get away with tax evasion all the time.  They've had that shit mastered since the beginning of taxation, I'd imagine.

Billionaires declaring all of their wealth is for charity, is the biggest scam of modern times. The best example is Bill Gates (founder of Microsoft). This guy never pays any tax, because he has transferred all of his wealth to the Bill & Melinda Gates Foundation (BMGF). The trust claims that their target is to make the world a better place to live, by fighting against infectious diseases and natural calamities. But a large part of the expenses came from "speaking fee" and other forms of legalized bribes provided to various political figures.

In my case I do, but I also believe that some of the budget is spent unnecessarily and some of it is spent to buy votes. That's not even counting corruption. But whatever your opinion on the matter, tax avoidance is legal and should not cause any moral dilemma.

The "paying taxes" part is basically a bit of a moral dilemma. The point is that, do you really trust the government enough that when you pay your taxes you end up with actually giving the world something?

Or are you just making some politicians richer? In my nation, the taxes are taken from people and goes into the pockets of the politicians and their families, so paying taxes is not helping the nation at all. Sure, they do use some of it, maybe even most of it, on people, but they take a huge billions of dollars worth chunk out of it every year to make each other richer. So if you reject paying taxes, and instead use that money to donate to charity, that is not really all that bad and should be something that can benefit people.

what im saying is.. dont limit the options or limit your education

some people who currently use CEX and want to avoid the KYC/tax man intrusion can use other services where end result is fiat in pocket after handing over assets(as cex end game is) but done so in a legally way to avoid taxes by not being an exchanger, but instead a 'loan offer"

other ways are using defi where you use decentralised services to offer your offline personal life a loan from your online persona

use all the other ways too like trusts, foundations, etc
EG the most simplest formation of a trust for bitcoin is simply multisig.. thats it

learn from the super fiat rich about all their methods of tax avoidance and 'temporary cashflow' methods

I think franky1 is right on this. There is a Spanish guy who has been popularising (legal) tax avoidance as a method of paying as little tax as possible, which we have discussed in the local forum.

https://www.cryptospainoficial.com

He also has a YouTube channel and has simply made available to everyone, largely using cryptocurrencies, methods that previously only the wealthy could use to avoid paying taxes.

I just imagine how this will be done in a decentralize manner but can't figure it out and I hope you aren't suggesting we should use a centralized service because it goes against the whole point of adopting Bitcoin in regards to avoiding restrictions from centralized services. If doing this is going to make us give up our privacy to those centralized services because obviously they'll demand KYC verification from us and who knows, they might probably rat us out to the authorities when they get called for questions. There's nothing bad with doing your civil rights of paying taxes to the government. Just because the rich are doing it doesn't mean we have to because that isn't what made them rich. Are the government eating the taxes, no they're using it to run the affairs of the state and for those of you in a well governed states you guys are lucky because I'll pay more to get a lifestyle that's a quarter to what you're enjoying from your government.


When I do get rich, I'll do everything in my power to provide for the society and paying my taxes is one of those things, you know what's funny, avoid taxes won't make you wealth or poor, those would will be rich will still be rich even after paying all the taxes so why should we go through all this to avoid paying the tax when we'll still leave all the wealth behind some day when we're no more. Paying of taxes is our way of contributing to the society as those taxe are some of the funds that the government use in paying public servant like the fire fighters and cleaners that keep our street clean. Also the law enforcement officers that protect us against crime in the society and so on.

They are just a bunch of assholes who are evading tax because because they think they are exempted from the law, but they are not. They are just too confident because they have a lot of money which they can control someone powerful to protect them from the law, which is possible.

A YouTuber here in my country deleted their YouTube channel with over a million subscribers so that they can avoid paying their taxes, and after a while, they just build a new YouTube channel, imagine that, lol. People who avoid paying taxes are the greedy one, who don't want to pay for their responsibility as a certain individual who makes a lot of money or the taxes in their country is taking too much.

Education is probably the main thing, but it surely isn't the only thing that matters. In the first place, an ordinary person cannot easily learn the twists and turns of how specific sections or provisions of particular laws or processes can be used to come up with minimal or even zero taxes. That's something that's carefully learned over time.

Also, when you do things yourself, there's a tendency that people from the tax department or other government offices will be strict on you regarding the rules and fees and all. But when you pay fixers, for example, everything seems easy and smooth and cheap.

I'm certainly lucky that my country doesn't have efficient tax policies and implementation as regards Bitcoin or crypto or taxation in general. I'm not declaring any crypto assets and I feel like I'm not worried at all that one day they would come knocking on my door about it.

it is "available" you just have to KNOW how

education is the issue. and when we are cashing out when bitcoin spikes. we too will suddenly see the benefit of learning and accessing this knowledge when the tax expense becomes more than the tax free allowance. where its suddenly worth learning this stuff.

this is where tax accountants and lawyers can offer services.. not just for tax. but for trusts/foundations.. and loans
some people may even want to use their own energy to learn for themselves to avoid needing to pay accountants/lawyers

for those thinking its not worth it. are usually those playing with small amount of sats, where any gains are still within a tax free allowance.. but those that are concerned about tax will be concerned to minimise their tax expense

Tax avoidance is completely legal. The problem, however, is that this is something that is not easily available to ordinary folks. The rich have all the high-caliber accountants and lawyers to make sure their evasion only appears as a simple case of avoidance. Not to mention that the law has always been lenient to the rich and powerful. It has always been generous and tolerant to the elites. As a matter of fact, tax laws, policies, and regulations are always tailored for them.

ok people.. look deeper into how the rich do it

did you know the rich give themselves a personal loan
yep thats right they loan money to themselves(no central authority)

many politicians have revealed it
one example in the UK
https://www.theguardian.com/politics/2021/dec/22/jacob-rees-mogg-cleared-of-wrongdoing-over-6m-in-cheap-loans

he bought a house, furnished it. but did not pay tax, nor did he have to declare it as earnings

so its not about putting funds into a centralised thing. its about learning tax law and using its loopholes

.. look at the clintons. they put funds into their clinton foundation(a donation to. rather than earnings from) then spend it as business expense. thus avoid taxes

the question you should all be asking is. instead of using a CEX, how can people get hold of fiat without declaring it as earnings/profits

Basically its because rich people know they way around laws and taxes, or they hire professionals on how to do it. If you are a registered tax payer, you actually have the benefits of optimizing tax avoidance and thats legal. But there are really professionals who risk their integrity for money. Like regardless of how illegal things can be, as long as there is huge money involve, they will find a way of tax evasion

Yeah well, if you had read six comments back you would have seen that it is:



I think along similar lines.



I think it's 50% maximum that's why I think you have to do it only with a small part of your holdings so if you get a margin call you can give more as collateral.

Isn't this kind of service already available to Bitcoin owners? If I'm not mistaken, there are already crypto banks or crypto lending platforms which offer loans to Bitcoin owners if they are willing to send them as collateral. That's even happening in this forum. But the problem with marrying this kind of traditional financial service to Bitcoin being a new technology is that it somehow betrays the spirit of Bitcoin. Your Bitcoin isn't anymore under your control and the platform from which you borrow money could run away with it. Yeah, you got cash, but only around 25% to 50% of your Bitcoin's worth? Isn't this what happened to BlockFi?

Anyway, should Bitcoin adjust to this unfair taxing system or should this unfair taxing system be restructured instead?

life is a race for people that want to achieve greater heights and have ambition, its not a race for those who want to feel grateful for the little thing in life which arguably makes one's life colourful without the need to be excessive about money in some ways.
but I would argue that its everyone dream to be independent financially or in other words rich. its not the money that people sought after, its the freedom that we get after achieveing the financial independence.
but when it comes with rich people I guess, they just wanna be at the top achieving great things, there's reason why these billionaires keep buying new company and creates more.

So, the saying is not really true? That life is not a race but maybe for the rich people only because for the poor's, they are the ones who are mostly chill. Yes it is difficult to be rich and climb the rankings of the most wealthiest person in the world. Maybe this makes them love it because they can get a sense of achievement once they get successful. Maybe they can die with loads of money but I believe someone can still carry their wealth. So don't worry.

There are still wealthy people who are kind to other people, especially to the poor. Maybe some government has to do with the issue if they are also corrupt because they can accept bribes from these rich people.

I would say in order to do that you need a centralized authority to make it happen, and that is what we dislike in the crypto world. You need that credit union or loan company, and they would have all the power and there is no need for that.

How do you think that Elon Musk bought twitter? He didn't spend a dime of his money, he has stocks at tesla right? Is he getting taxed on that stock? Of course not, it is an unrealized gain and could drop in value, so how did he pay? He went to people asking for loan, and he put up his stocks as collateral to get that loan, then he used that loan to get twitter, so he didn't spend a dime out of his own pocket to get it, he just used his already existing non-taxed stocks to buy it.

In the end, we would need banks  to make this work, and we need people who would be legit using collateral, we can't really have that in crypto, what if the person declines to pay it back? Then you need centralized figure to collect the money.

That’s interesting practical approach. Buying new real estates by loaning the previous estates creates perfect investment circle. Here banks are making you rich by using their own money. All the riches are just making OCR (Own Contribution) during loan process where according to type of real estates and type of loan they are accruing. It could be 10% or max 20% according to the country where you reside or the structure they have. It makes sense all they have to invest is that much OCR and nothing more. They run the business as usual they earn many fold in the revenue and only end up paying small portion on their loan EMI. They also avail tax benefits under expenses section during tax filing. It’s like they are have discounted property and investments from all the sides. The more they invest the more they benefit in tax. I am think it’s not only about rich peeps but also common peeps however they should learn how this works through their Chartered accountant who exactly knows what can be saved where.

i totally agree the term super rich has nothing at all to do with real cash-in-hand statistic

anyways
we bitcoiners do not need to change the laws.. we just have to LEARN the laws to realise the same fiat backdoors apply

education is the problem. most people do not know how to function at the same level as the wallstreet guys.. we as bitcoiners actually have more of an advantage because bitcoin doesnt has as many laws attached

i was recently debating people who were crying that their (affiliated business) mixers were soon to need to be licenced money service businesses..
i was trying to tell them instead of crying that their favourite money service business requires licencing now(being recognised for what it is).. they should be smarter and read the laws to find the backdoors. and learn how fiat businesses operate, to learn how to create a service that sidesteps the regulations

EG imagine if a passenger transport startup just cried about taxi cab licences and regulations.. uber would not operate.. but uber learned the law and offered a service that was not described as a taxi service thus doesnt need to comply to taxi-cab law

its education. learn how others do things. and apply them to how to operate bitcoin services.


i was the one telling people about the reasons he done things ages ago while it was happening.. but still later on people are not learning/using these tricks.. and yea it is ad nauseam

i see people in 2023 saying about how they "need" to use a centralised exchange with KYC to convert to fiat and then be taxed.
we need a better education program and better services that dont "need" to operate in this manner

So franky1 has now realised a strategy that Saylor has made popular ad nauseam, and people are wondering how to get those bitcon loans when all you have to do is search the internet:

https://tokentax.co/blog/best-crypto-loans

I remember that one of the big ones that went bankrupt not long ago also offered this type of service, such as Celsius.

I only see sense in it if you are going to use a small part of your holdings, as you lose the power of control with your private keys. That is, if you have 20 bitcoins and you are only going to use 1 to borrow against it, fine. But if you have only 1 or 2 you can end up broke.

There was a crypto website offering similar service. The name of the website was xCoins.io(if I remember it correctly).
The BTC seller sells his BTC and receives Paypal payment, which in the payment info is described as a loan repayment.
The website had a negative reputation due to multiple scam attempts and it's currently shut down.
There are countries with a 0% capital gains tax, so the Bitcoiners can sell their BTC without being taxed. My country is one of those.
There will always be loopholes in the various national tax systems and there will always be rich people trying to take advantage of those loopholes.

I also know about super rich farmers in our area that are buying farms around them with loans to reduce the taxes that they are paying at the end of the tax term. They buy huge tractors and vehicles for the farms and hire more employees, to show expenses that can be deducted from their income and expense sheet for tax purposes.

They openly brag about this... because they know it is a legal loophole in the tax system, so they misuse that loophole to avoid paying a lot of money for taxes. Also.... Capital gains only come into affect, when the asset or property are sold.... and this seldom happens. (they just acquire more land and that land generate wealth)  

At the highest levels, the super rich are in a constant game throughout their lives to try to get to the very top - there's no way you end up acquiring so much money in your life time that you don't feel you're in a competition and want to make it to the #1 spot of richest in the world, however difficult that may be. That's why we see most billionaires holding on to their vast mountains of wealth until they die aged 80+. They could really be putting it to much better use throughout their lifetimes, but choose to accumulate until the end. It's a fault of all the governments around the world letting them get away with it really, as they should be taxed a lot more but they effectively become financial nomads because they can.

It could be a good idea for country like US which has strict and unfair taxation. In other countries where the taxation is fair, there's no need trying to strategically avoid taxes like the wealthy men do. If this method is adopted by bitcoiners, the government who is already not in love with bitcoin will increase their tempo of fight against bitcoin.

They already see bitcoin and some other altcoins as means of evading tax. This therefore mean that there will be overnight introduction of laws to stop bitcoin tax evaders using loan.

I know liabilities like these are good for a business to give the impression of a healthy financial standing, but doesn't servicing a loan mean it's cutting through the companies profits ??
Btw not only can the super rich avoid paying taxes, Businesses have always found legal ways of avoiding paying taxes and this is done by most companies as far as am concerned , but  what's interesting about this is that does this mean these guys don't plan on paying back the loan after such a transaction? And isn't it easy for Capital gains to be applied here with or without the losses as they can  be deducted in case losses are recorded..

I always find it to be an eye opener, seriously it is, isn't it some kind of shocking LIFE HACK or some voodoo magic, defying the gravitation! And start to wonder how can this be even allowed, btw, you can't beat born rich, and born provider hunter no matter how you gonna do, you would likely bend over to begin to see what they do next and do exactly what they do just like the cult, when they move into the next hype you too have to quickly adopt, find a fat and big paypig and cling on it firmly and lock up the target only to you the whole damn life, such is a life of being passive and totally living a life of no self-worth, no hobby no passion no goal not even contribute no consistency like the empty shell, crave other people opinions and reviews on you madly, but mindlessly chasing the next shinny trend because you eagerly find passive gain from it such as view count and emotionally supporting your cause. Easily get trigger by a little rejection and quickly accuse and sue them for defamation. What is it, does it sound exactly like a person would behave to a certain expectation/pattern but they can't help themselve but wandering in the same circle over and over again, like a rat race.

What they did is nothing less than looking for provider in life to be their paypig, just like what a certain gender did, you said to make it illegal? That is gonna be very challenging to impose such restrictions, first you would have to tell those provider hunters to stop leeching money and get to work... haha!

I don't think they should be condemned for doing so, I do believe they are using the system against the one who made the system. We know for a fact that being rich is paying a huge amount of taxes, therefore they are trying to avoid it by using some legal ways just like what the OP indicated from his post. Taking a loan to invest is not taxable, that's true, this is why most of rich or wealthy people spend like crazy using credits giving collaterals from their assets, and it is because the interest rate is much smaller than the tax they need to pay when they spend money from their gains.

Totally different with bitcoin, because of decentralization government failed to tax people who makes profit for it.

The level of risk offered by either banks or other lending services is usually commensurate with the entire loan amount and is still below the level of tax liability, so for the average Joe the interest rate is not much different.

If they want to take this step to avoid taxes like the rich, they can do that too although having to set up their "collateral" is a bit time consuming at first.

Thanks for bringing this information in front of us. The main reason behind not giving any shit to tax for the poor might be that they are dealing in a lesser amount, and the tax is also lesser. And why give the rich so much thought to tax? Because they will be charged more in tax if they are dealing more. This only happens if the tax is progressive in that country or region.

Otherwise, the poor would also give more importance to taxes, but they pay less, so they care less. In countries where there is no progressive tax system, the poor are becoming poorer and the rich are becoming richer. Because the poor make choices that are risk-free, they do not take risks to do something out of their league, and they always end up in poverty.

Many poor people tried their luck or their skills to take themselves out of poverty, and many have been successful, but the main reason is not some tax, it's the efforts that one person is making. If a poor person is making efforts, he will be successful, and the second thing that makes the poor poorer and the rich richer is the opportunity on the basis of background.

If, in the first example, a poor person is making efforts in the compete with some rich people, then the chances of losing are higher for the poor.

I already knew a few of these legal loopholes that rich people uses but got a clear picture of the overall scenario and how they do it. It is not rocket science but why only rich people can use this method? Because they have assets to use as a collateral and lenders trust that they can repay the loan with high interest whereas average Joe cannot. The law is for average people when wealthy people always find a way to evade them.

That is actually an awesome idea, but I would have been more amazed if I had read this post yesterday because my professor of HRM taught us about this tip of tax yesterday, he used the example of factories (production units) where the tax experts have to come up with ways, where they have to reduce the tax and this method of taking a huge loan to reduce or eliminate the tax partially or fully. I thought at that moment that, why pay interest (because in our religion it's haram) so I thought if I had to choose between them I would choose to pay tax rather then take a loan on which I have to pay interest.

Overall, maybe the government increase taxes and do not ban this policy of no tax on loan money at the same time, because they know in both ways money is coming to them but there must be some trick in it (some point) that we are missing because governments and banks do not make deal where they are making loss (lesser profit is also a loss to them).

Thanks for the video I will share it with my class group.

Oh yeah, I've watched videos about this scheme with investing money and then taking loans to avoid paying taxes. To be honest, I think it's a practice that should be condemned if not somehow made illegal because being rich and doing things like avoiding giving your fair share back to your country is disgusting behaviour.
So, because of that, I have mixed feelings about an idea of doing the same thing to avoid paying taxes with Bitcoin, although I'm sure some people will appreciate the idea, and, in general, it's a pretty good idea for the US (because taxes work differently in different countries).

Trump is openly saying this system is rigged. https://www.youtube.com/shorts/OjLSTv2hVtE
Debts are not taxable. And all of these rich men are using this same system to get away with it. But those in the low class who don't have any collateral to throw still have to pay a huge percentage for the tax.

Those rich men didn't feel like it was their responsibility to pay taxes. Could it be justified to also not pay tax because we are using BTC?

There are a couple of things you are missing, first is that they are not "super fiat rich" they have a high networth. As you said it, they don't bag hold fiat, they invest it.

But the more important thing you are missing is the fact that these super rich minority are playing the system and have already changed the laws to have these types of backdoors to help them evade being taxed. It wasn't always like this, they basically infiltrated the governments specially in places like US (mostly from Reagan time) and made all the changes to benefit themselves.
It can not happen in bitcoin world because bitcoiners don't have nearly the same "infiltration powers" and governments who want to tax them will find a way to shut any way you think you could use to evade their taxation...

a. you dont declare tax each day you receive income from customers. you file your taxes at the end of year of what is left after to separate out your deductibles.. its the same as the common man, before tax they can invest part/all of their salary into a pension or a tax free investment and such. so the amount of money going into an investment is not post-tax, nor taxed at source.

b.you forgot all about the loan service i mentioned.. the point of a service is not for the loan receiver to make repayments that include interest. the point is for the loan receiver to give collateral to get the cash and then ..hint hint. default the loan so the service takes the collateral. that way instead of selling coin to then be taxed on normal CEX. you have instead been given cash equivalent in loan form, thus no tax. and surrendered your coin... (hint hint its a tactic to sell coin get fiat without selling and being taxed)

and thats how the rich never pay tax, but get to handle alot of money

OP, I read a book ===>  "Why We Want You To Be Rich - Two Men One Message" written by Donald Trump and Robert Kiyosaki... where they explain something interesting.

They say, they want more people to be rich, because if more people are rich.. then they pay less taxes. They do not want a small group of super rich people paying 90%+ of the taxes..... they want a good middle class and a large group of rich people that can help them to pay the taxes. 

This is what exactly Robert Kiyosaki's was saying.

I don't understand with a part why you're not get taxed when you gets revenue? you gets taxed because you're make profit (revenue > expense), loan/debt is a liability, not an expense.

I think you forget to mention interest since taking out a loan has always an interest rate you'd need to pay. But interest rate is still lower than tax, much much lower for someone who make big amount of money.

after another discussion with someone when a topic came up about the super fiat rich
how do they get away with paying no taxes, but then suggest they will eventually give all their wealth away

the simple answer is this
when their business gets revenue, they invest it. and because they are not spending the money personally outside of business purposes, and because they are not selling the investment there is no tax. (investing is a pre-tax event)

then if they need some spending money, they do not sell the investment. instead they ask for a loan using the investment as collateral. and because funds from a loan are not taxable they get to use the money without paying tax

so here is a tip for us bitcoiners who ask how can governments try to tax bitcoin but yet, fiat billlionaires dont get taxed
there needs to be a bitcoin service where people who want to buy bitcoin join(lets call it a credit union or loan company). but instead of "buying" they become investors/funders of loans.
so the service offers loans to bitcoiners that want to cash out. but the bitcoiner doesnt sell the coin. but instead hands the coin over to the service as collateral.
the bitcoiner is then a non-coiner and receives cash. but has not sold the coin but instead received a 'loan' of cash for his collateral. thus no tax. yep loans are not taxable.
obviously never making any repayments the coins become the service investors property. and the deal is done.

buyers have the coin. the ex-bitcoiner gets the cash.

.. sidenote
the only time the rich sell assets is if the asset is performing below its purchase price. so they sell it. and instantly buy it back. (no loss due to sell-buy being equal price/time) but it triggers a "realised value loss" they can put on their financial statement, which they can then use the loss against any tax their main fiat business could not avoid within the business.. to not have to pay tax because the asset loss writes off any fiat business tax