Re:Buy payphones and retire
by throwaway2037 on Tuesday October 29, 2024 @05:19AM
(#41981283)
My comment is very specific about the ultra rich who use tax sheltering to reduce taxable burden on passive income from bonds: In the US, there is (was?) a special class of municipal (state/local) bonds call "triple tax-free"/TTF, where the owner can receive interest, but pay no federal, state, or local taxes. Of course, there are limits, but it is a big business, and the buyers are almost always ultra rich. To be clear, under the Alternative Minimum Tax (AMT) rules in the US, I doubt you can pay zero taxes, but you can certainly greatly reduce your taxable burden using TTF muni bonds.
Well, you can also use the buy-borrow-die strategy in the US to avoid capital gains taxes.
Here in my adopted home of Singapore we don't have such silly things as capital gains taxes. Makes things a lot simpler for the average person who doesn't want to pay for the lawyers and accountants.
The average person doesn't pay capital gains tax - at least in the UK; there is a 12 3000 GBP allowance per year of gains which means that you need to have significant assets (think top 10% of the country) before it becomes an issue.
> If you have $20M and your lifestyle requires no more than $800K/yr of income taxed a waaaaay lower rates than the working stiffs pay on the same, then a 4% return more than suffices to live off of income that is waaaaay more passive than most passive income frauds even come close to promising.
Assuming you are in eg the US than a 4% nominal return is actually taxed quite severely in real terms, ie after you adjust for inflation.
That's because capital gains taxes and taxes on interest don't account for inflation.