Tax Chats

Send us a textScott describes why it is so difficult to tax giant multinational companies.

Send us a textJeff and Scott discuss how to legally reduce or avoid paying capital gains taxes. We use Satya Nadella's recent sale of half his stake in Microsoft as an example. To reduce the capital gains tax burden, one can:Change the timing of capital gain incomesell before a new tax is imposed, or after an old tax is retiredwait to sell until capital gain becomes "long term," currently after 1 yearwait to sell to take advantage of the power of deferralExampleshttps://www.journals.uchicago.edu/doi/abs/10.17310/ntj.2015.3.02 https://tax.unc.edu/index.php/news-media/should-you-sell-stock-before-president-biden-raises-the-capital-gains-tax-rate/ Change jurisdictionsMove to Texas, Florida, Wyoming, etc.Hold until death to take advantage of the "step-up" in basis. Inheritance, Estates and the Step-Up in Basis Rule - WSJDonate appreciated assets to charityCharity gets assets at their fair market valueDonor does not pay capital gains taxDonor gets charitable contribution deduction for full market value if itemizes on personal tax returnTax loss harvesting Sell assets that have losses to offset assets that have gains.Invest in Opportunity zones

Send us a textScott discusses whether domestic companies pay more tax than multinational companies. The episode addresses a commonly held belief that domestic firms are at a tax-based cost disadvantage. An example would be this Op-Ed, published by Bloomberg.  

Send us a textJeff explains how it should never be the goal to pay nothing in taxes, but, rather, as far as your financial life goes, to maximize your after-tax income.

Send us a textWe discuss "scoring" with Brigham Young University Professor John Barrick. Scoring is the process used to determine how much revenue a tax bill will generate, or how much revenue a spending bill will consume. Scoring is a major part of every tax bill, including the Biden's Build Back Better plan. For example, the most current scoring of the BBB can be found here.  More information can be found here:jct.govhttps://www.jct.gov/operations/frequently-asked-questions/https://www.cbo.gov/about/products/ce-faqClarification: One listener emailed and let us know that in the episode, there is a reference that some may interpret as scoring including behavioral effects only since 2003. To be clear, behavioral effects have always been taken into account in JCT scores.

Send us a textScott discusses the common narrative that most large publicly traded companies pay very low or no income tax. 

Send us a textJeff talks about fair taxes. People always say they want a fair tax system, or that they want people to pay their fair share. What would a fair tax system look like?

Send us a textJeff and Scott discuss a recent report released by Senator Elizabeth Warren's office entitled "Tax Dodgers: How Billionaire Corporations Avoid Paying Taxes and How to Fix It" available here. We discuss the weaknesses in the report, including the language to describe tax avoidance, and the facts underlying the data in the report. We describe how the report does not appear to provide many insights, but instead appears designed to incite anger against large profitable corporations.

Send us a textScott discusses how much tax millionaires pay. Millionaires and Billionaires are often used in the same way to describe someone who is rich. But the taxes levied on the typical millionaire are vastly different than the taxes levied on many Billionaires. 

Send us a textJeff discusses wealth and income tax rates. We are used to thinking of tax rates on income. How do we think about tax rates on wealth? Luckily, there is an easy way to convert a wealth tax rate into an income tax rate, and, the result may surprise you.