No. Gift taxes are paid by the gifter. Gifts are not income for the recipient. Additionally, there are annual and lifetime exclusions for gift tax.
They manifestly are income for the recipient.
They aren't taxed as such, though, because undertaxing income through generational wealth transfer is how you preserve a privileged elite.
> Additionally, there are annual and lifetime exclusions for gift tax.
The annual per-recipient limits are large, only amounts over them count against the lifetime limit, and the lifetime limit is enormous.
The argument that the step up basis avoids double taxation appears to be slight of hand. By the same rationale, you should earn a tax credit for sales taxes paid during the tax year.
But to be clear, if someone wants to argue for say a 45-50% estate tax (or even a higher CG rate), that's fine! My point in the article was just that this should be done as an oped, not a faux-bombshell news feature.
Bezos didn't avoid CG, he deferred it. By not paying CG, he also didn't cash out, meaning to cash out the inheritor will have to pay all the CG Bezos would have paid? i.e Bezos full tax amount on stock was deferred to the inheritor. Unless they get to dispose / realise gains on those stocks for only 40% - but I read it as they receive the unrealised stocks, and need to pay 40% tax to do so.
Isn't this pretty easy to pull off? Just buy a home (most americans own their home), and get a reverse mortgage when you're retired.
Tax policy isn't something I know a lot about, so I'll discuss your article "Breaking Down the New Yorker's Slanted Robinhood Story".
> "Brokers by definition are middlemen who have customers on both sides. And if we have to pick the side that matters more to Robinhood, it’s obviously retail customers. To suggest otherwise is either disingenuous or negligently ignorant."
Channeling my inner Antonin Scalia here. The Cambridge English dictionary defines a customer as "a person who buys goods or a service." There is a perfectly reasonable argument that Robinhood users are not customers at all, let alone Robinhood's primary customers. It's not a good look to dismiss the plausible as "disingenuous or negligently ignorant". That's a symptom of ideological conflict, which is dull and tiresome.
> "Payment for order flow is something that it seems only one financial journalist understands well enough to explain"
I see a trend here. People who disagree with you are ignorant or lying. It's not difficult to understand that PFOF entails selling user orders to brokers under common control with enormous asset managers that hoard advertising data and make market-moving trades. Questioning the intelligence of those who disagree is another symptom of ideological conflict.
> "Did stock markets haemorrhage value in 2007-2008? Famously so. But the causes there were complex. Was excessive Wall Street greed a part of it? Sure! But so were a lot of other elements — including weak consumer financial education."
With all due respect, that sounds like some sleezy shit Anthony Mozilo might say. I want to give you the benefit of the doubt, but it's hard to see this as anything but pandering to one side of an ideological conflict.
I'm not following this. Are robinhood customers not buying stocks from them? Are stocks not "goods or a service"?
>It's not difficult to understand that PFOF entails selling user orders to brokers under common control with enormous asset managers that hoard advertising data and make market-moving trades.
You seem to be beating around the bush here. What nefarious activity are you suggesting they're doing? Front running? Because that's explicitly illegal.
>I see a trend here. People who disagree with you are ignorant or lying.
>[...] but it's hard to see this as anything but pandering to one side of an ideological conflict.
I hope you see the irony here.
When PFOF is involved, Robinhood users do not buy stocks from Robinhood. They buy them from the Robinhood customer who buys order flow.
> What nefarious activity are you suggesting they're doing?
I pointed out a troubling conflict of interest and a potential ability to act on that conflict in a legally ambiguous manner. For what it's worth, one of Robinhood's customers was recently sanctioned for old-timey tradeahead front running.
> I hope you see the irony here.
I don't see the irony. Can you explain it to me? I was trying to be opinionated, but intellectually honest. Did I fail?
I don't agree with this and I doubt many other people do either. I'm fine with them paying 20% on $99 and then 40% of 80.20/share they inherit. Due to multiplying percentages, that's only a 51.88% rate.
Of course, you're ignoring a lot when you say "other exemptions". Like the first 5.35 million to each descendant being a "gift" before the estate tax is applied.
Here's why that step-up doesn't really matter. For round numbers, let's imagine Bezos acquires shares of Amazon at $1 each. Fast forward a few decades and they're now worth $100 each. He's accrued $99 in taxable gains. But he blows up in space, so it's all left for heirs. At transfer, the cap gains part is thrown away. But this is only to avoid double taxation, as the heirs now pay 40% on current market value for assets > $1m. Making them pay 20% CG on $99 and 40% would be far too high. So the gov lets them only pay 40% on ~$100, which is roughly 2x the total receipts.
(If the assets are left in trust, you can avoid the estate taxes. But then you're back to paying cap gains when the money is withdrawn.)
EDIT: Technically it's assets over $1m + other exemptions and deductions. In practice it kicks in more like $10-12m depending on particulars. But the amounts in question here are way, way above that baseline.