Re:Companies and Billionaires
by melling on Monday September 19, 2016 @09:21PM
(#12536248)
I have $100 and i need $2 so i go through the trouble borrowing it? That's if you have a measly billion dollars. Now if you've got $10B, that's like financing 20 cents.
[ Parent
| on HN ]
You're forgetting about taxes. If you sell something worth $100, you probably aren't going to pay $30 in tax on it (or probably anything at all).
If you sell something worth 100 million you're going to pay 30 or 40 million in taxes.
With the loan you won't pay any tax now, you might pay it later, or you might not ever pay it because you'll have that loan until you die and the bank will be the beneficiary of 100 million of your estate.
Then you just die with more assets which will incur higher estate taxes. The estate tax rate is higher than the long term capital gains rate.
Estate taxes are paid before creditors.
Yeah but you're dead so you don't care. :)
Well if your goal was to optimize your taxes to pass on as much as you could to your heirs you failed at your goal.
you only need $2. There's no need to cash in $100.
You're right I missread but the point is the same. Taxes. The whole thing changes when you're trying to be tax efficient.
capital gains tax is lower, no?
Sure, but you still have to pay taxes, whereas if you get a loan you just pay interest (probably a very low rate) and defer the taxes.
Re:Companies and Billionaires
by prostoalex on Tuesday September 20, 2016 @01:36AM
(#12537324)
I think major shareholders of Kodak, MCI WorldCom, Enron or Polaroid would point out the concentration risk one is incurring.