IRS records reveal how the wealthiest avoid income tax

Re:IRS records reveal how the wealthiest avoid income tax by anonymoushn on Tuesday June 08, 2021 @06:41AM (#27433110)

If I am a market maker or arbitrageur and I do tens of thousands of trades a day, I owe income tax (uh, short term capital gains tax) on all of that. If I own equity in a market maker or arbitrageur that does tens of thousands of trades a day, I owe nothing until I sell some equity.

Over reasonably long time scales with reasonable assumptions about the profitability of such businesses, the vast majority of the value of the company comes from its preferential tax treatment.

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Re:IRS records reveal how the wealthiest avoid income tax by quickthrower2 on Tuesday June 08, 2021 @06:00PM (#27441527)

Not sure why you are downvoted but the point is correct.

Maybe the trading example isn’t great. I think a better example is simply Amazon - famously not making a profit for years.

What they are doing is reinvesting and avoiding tax on the “profit” but it’s hard to distinguish reinvestment from cost and so hard to tax.

Interestingly in my country there is an R&D tax credit for businesses and they are happy now to say that software devs are doing R&D (so like… an investment) to claim that ha ha.

The other angle is using profits to do buy backs instead of paying dividends. In both cases you give back to share holders. With buy backs you both defer and minimise tax for the investors.

Edit: hello downvoter!

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