Are you aware of a policy that allows Strava when within sight of shore, but bans it when under more sensitive operation?
Or is this article perhaps better interpreted as an example of a dangerous behavior that could be happening also during those sensitive times (in which case, it is unlikely that French media would be even running a story with a map of the sensitive location)?
If I understand correctly, the "buy borrow die" strategy of tax avoidance hinges on these aspects of the tax code: Buying an asset is not a taxable event. Holding onto an asset and letting it appreciate is not a taxable event. Borrowing money is not a taxable event. Holding an appreciated asset until death will step up its cost basis to the current market value (thus erasing any capital gains taxes), and it can be passed on but large amounts will trigger inheritance taxes.
In the Canadian approach, as I understand it, all capital gains taxes are assessed upon disposition; including disposition at death.
In the US approach, capital gains disposed at death avoid capital gains taxes.
Here are two similar scenarios where the difference in actions is small, but the difference in net estate distributed to heirs is large.
Both scenarios: Parent P buys (split adjusted) 100,000 shares AMZN on Jan 3, 2000 at close for $4.47. Parent P has no other assets.
Scenario 1: Parent P sells March 9, 2026 at close for $213.49 per share; realizing $209.02 in capital gains per share, ~ $20.9M capital gains, $21.4M proceeds. Parent P dies March 10, 2026. If cap gains tax is 20% uniformly (which it isn't), ~ $4.2M goes to income tax, the estate at time of death is $17.2M. If estate tax is uniformly 40% of amounts over $15M (which it isn't), the estate tax is about ~ $0.9M, and the net estate is $16.3M
Scenario 2: Parent P dies March 10, 2026, without selling. The estate promptly sells at close for $214.33. $21.4M proceeds, ~ $20.9M capital gains, but no capital gains tax is due. Again assuming 40% estate tax over $15M, estate tax is $2.6M and the net estate is $18.8M
How is it fair for the heirs of Parent P in scenario 2 to get so much more than in scenario 1 when the circumstances are so similar?
If you use actual tax brackets, you could make the example numbers more accurate, but I don't think it will change the results significantly.
Have you considered these factors when considering fairness..?
1) Many estates contain illiquid assets- family farms, small businesses, etc. Forcing a deemed disposition at death can force heirs to sell just to pay the tax bill
2) Death isn't a voluntary transaction, and cannot be forecast well, so we are essentially creating an arbitrary tax event/hardship
3) Determining original cost basis across decades of an ancestor's holdings can create an enormous administrative burden for heirs
4) Bunching all accumulated gains in a single year at death will push the estate into an artificially high marginal tax bracket
5) Taxing gains at death discourages long-term wealth building and pushes people toward consumption instead of investment
IMHO, these are reasonable things to consider, and I acknowledge the hardships. However, my opinion is that similar circumstances leading the similar outcomes is the most fair, and wiping out unrealized capital gains at death can easily result in similar circumstances having unsimilar outcomes.
Specific suggestions or responses to your list:
1) Reasonable alternatives to assessing capital gains tax, due immediately exist. The cost basis could be transfered, as in a gift while living (point 3 applies however); or the tax could be assessed and recorded as a lien on the property, possibly with payment over several years.
2) Death isn't generally voluntary or scheduled or easy to predict a specific date. However, it is easy to forecast that everyone alive today will die at some point. No specific advice other than planning for your estate is something people should probably do once a decade or so.
3) I agree. Especially with assets like homes where cost basis isn't simply the purchase price but also includes improvements. At least for stocks and mutual funds, record keeping requirements for brokerages changed so they have to keep cost basis information in most cases, which helps a lot; but doesn't help for real estate or other capital assets. This is a hard one, and I recognize the value that a step up in basis provides, but I still find it unfair.
4) Yes. It would be nice if there was a way to spread capital gains over many years; not just for the deceased. Perhaps a carryback or carryforward. Or an enhanced 0% capital gains bracket for the deceased or for property disposed upon death; possibly with a carryback to help those who sold capital assets to pay for multi-year end-of-life care and etc.
5) Certainly, avoiding capital gains tax by dieing with unrealized capital gains is an incentive to not sell capital investments. I don't know that it encourages wealth building. Incentivising people to not sell things with unrealized capital gains at end of life causes problems for people too: waiting to sell someone's house, even though they moved into a care home and will never move back distorts the housing market; many people refuse to spend their savings, even when adequate, and instead rely on financial help from relatives or suffer hardships from lack of spending.
401k and home ownership count as "wealthy" in many circles. It's not "I can do whatever I want any time" wealth, but it does still mean "this is not an option for people who likely need it the most" which is the real issue.
How are income taxes a serious burden on “people who likely need it the most”?
Those who truly need it the most are typically well into the plus column on government transfer payments: On net, the government is paying them far more than they’re paying it.
Talking about homes: if a wealthy person see a depreciation of the equity they have a parachute (more homes, stocks, etc), if middle class sees a depreciation of the equity they're on the street. The risk profile is absolutely not the same.
Before ACA, insurance had a more traditional "insurancey" role by excluding pre-existing conditions (aka managing moral hazard) in order to make money via premiums. In the "guaranteed issue" world post-ACA, insurance companies have pivoted instead to extracting as much money as they can from an increasingly vertically integrated ecosystem (PBMs etc)
You have the two mixed up. Insurance companies - even for group insurance like through your company where they always had to accept everyone - required you to have “continuing coverage” and not have gaps or you had waiting periods.
The ACA also was written to enforce that through mandates and subsidies - a carrot and stick approach. The moral hazard was caused once there weren’t any mandates because of lawsuits by Republicans and the insurance companies still had to accept everyone.
We are talking past each other. When I said moral hazard I'm talking about adverse selection(1), my bad if that was unclear. And I was responding to some comments about denial for pre-existing conditions, which as you point out is irrelevant for continuous coverage group policies. Removing the mandate penalty without also adjusting the pre-existing condition protections did introduce adverse selection in the current regime. None of that disqualifies my argument about the current state of affairs though re the business model of modern insurance companies
If you were just looking to shout "dems good GOP bad" and find others who agree with you, that's cool too.
Before ACA, insurance had a more traditional "dump you when you were in need" role that leveraged pre-existing conditions rules by, if you fell ill in a way which was likely to be sufficiently expensive to make this profitable, looking for any minimally tenable evidence of an undisclosed pre-existing condition (just to have something to cite as a pretext, it didn't need to be convincing), using it to justify cancelling your insurance, and avoiding any legal remedy by refunding your entire lifetime of premium payments.
Of course, whether or not you actually had a pre-existing condition when you had signed up for the original insurance, you now have one that prevents you from getting new insurance,
The problem here is that pre-ACA you didn't have insurance, either.
Yes, they would (maybe--some plans saw huge sticker shock because the original didn't actually pay much of anything) sell you "insurance". They would offer a plan for a few years, then close it, offer something new. The old plan would see patients getting sick, costs would rise. Premiums were based on costs *for that plan*. Soon the healthy jump ship for something else, now the old plan is only the sick and the premiums go into a death spiral.
Thus the reality was that any ongoing problem soon you were uninsured.
>For example Cigna requires all maintenance medication be purchased through express scripts
Important note: Cigna owns Express Scripts. Today the biggest "insurance" companies are actually massive conglomerates that own the clinics, the doctors and the pharmacies. United = Optum. Aetna = CVS + Caremark. Humana = CenterWell. Elevance/Blue Cross/Anthem/Carelon. Centene = Envolve
Once a giant like United gets big enough in a city, say ~40% of the population, they lower the reimbursement rates for independent doctors and if the doctor refuses the contract, they are kicked out of network and lose 40% of their patients. Go bankrupt or sell to Optum.
Digi is also right about Medicare upcoding. It is a well-documented $$billions scam where Medicare Advantage insurers comb through patient records to add diagnostic codes making the patient look sicker on paper than they actually are so the government pays the insurer a higher flat rate for that patient.
Why wasn't it set up so the government is the insurer. Rather than 3rd partying it. It is akin to federal reserve using wells fargo to store their money.
Pharmaceuticals are a small component of overall US health spending. Upcoding is endemic across the entire system; it's endemic across the whole system. Ironically, the complaint you'd be making with upcoding under Advantage is that Medicare should be denying coverage to people; Advantage upcoding involves altering risk scores to authorize more care.
Yeah basically this. These shenanigans water down the value of QQQ. The bottom line is if you don't like QQQ, then dont buy it. Buy the stocks separately or a different index. But for people who don't pay attention, or for people whose 401k's limit their investment options, it is difficult / impossible to avoid the shenanigans
Or is this article perhaps better interpreted as an example of a dangerous behavior that could be happening also during those sensitive times (in which case, it is unlikely that French media would be even running a story with a map of the sensitive location)?
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