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Do you think UBI will be the future of the world? (lemmy.world)
submitted 1 week ago by to c/asklemmy@lemmy.world
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I was once talking with one of my classmates and he said that in the future, there will be universal basic income implemented by entire world. I was not convinced at that time and thought he is just being stupid but given the layoffs happening and massive amount of unemployment, I am thinking about this possibility. What do you say?

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[–] 1 point 1 week ago (1 child)

If that were true the rich wouldn't spend fortunes selling tax cuts, they'd just pass the costs directly to the workers instead. The reason the rich spend hundreds of millions to avoid paying taxes is that they know the worker makes the same they did 50 years ago, and the value of the work the rich get to keep has gone up 10x.

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  • [–] 1 point 6 days ago (1 child)

    rich wouldn’t spend fortunes selling tax cuts

    What tax cuts? Highest income bracket is US is taxed at like 37% while lowest is 10%.

    worker makes the same they did 50 years ago

    Citation needed

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  • [–] 1 point 6 days ago (1 child)

    Yeah rich don't pay income tax, income tax is for the working class. Rich get money through debt (0% tax rate) and maybe dividends (0% tax on the first 100k, up to 20% tax at 600k/yr).

    Here ya go:

    https://www.pewresearch.org/short-reads/2018/08/07/for-most-us-workers-real-wages-have-barely-budged-for-decades/

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  • [–] 1 point 6 days ago (1 child)

    https://www.pewresearch.org/short-reads/2018/08/07/for-most-us-workers-real-wages-have-barely-budged-for-decades/

    Fair enough

    Rich get money through debt (0% tax rate)

    You know debts need to be repaid with interest? You have to have taxable income to pay them off.

    Dividends

    It's a taxable income. And it comes with a risk of the business failing and your stock losing value.

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  • [–] 2 points 6 days ago (1 child)

    That's how debt works for poor people. Rich people do what's colloquially known as a "buy borrow die". But an asset, take out loans using the asset as collateral for your entire lifetime, and then die in debt, while passing the asset (minus the debt) along to your heirs.

    Dividends and cap gains are not taxes as income, they have separate (lower) tax rates. And those tax rates can be further avoided using the above strategy.

    And the nice thing about stock is that poor people have 401(k)s now. Which are legally required to buy certain stocks. Meaning that even if the company shits the bed, every working class person with more than two cents to rub together is still propping up the stock price.

    That's kinda why the spaceX ipo was so fucked. They specifically changed the rules so 401(k) plans would be legally required to buy shares after 15 days instead of 3 or 6 or whatever months. That allowed Elon musk to effectively pump and dump the entire US retirement system.

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  • [–] 1 point 6 days ago* (1 child)

    Rich people do what’s colloquially known as a “buy borrow die”. But an asset, take out loans using the asset as collateral for your entire lifetime, and then die in debt, while passing the asset (minus the debt) along to your heirs.

    I agree this is a loophole that needs to be patched - in most civilized countries this is not a thing (taxes are deducted when you die and then debts are repaid)

    But I doubt it's as popular as media claim it is. If you borrow against your assets say, at 3% interest, you end up with 30% interest after just 10 years. Paying taxes is cheaper than paying interest in the long run.

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  • [–] 1 point 6 days ago* (1 child)

    First off, if you're paying 3% interest on a collateralized loan where the collateral is earning 5-8% interest (like stock market returns) you both don't pay taxes and come out ahead at the end of the year.

    Second, I know people that are firmly working class (though earn decent money) doing buy borrow die with real estate. Its pretty much standard among the wealthy.

    Further, using equity lines of credit (ELOCs) you can multiply money. The closest a normal person will get to an ELOC is a HELOC, or a reverse mortgage, which are tightly controlled. Rich people have a lot more freedom.

    Say you have 100m stock portfolio. You take out an 80m loan using it as collateral, and then buy a business for that 80m. Then you use the 80m business as collateral to take out a 60m loan, to buy a jet. Then you use the 60m jet as collateral to take out a 40m loan, and use that to buy a yacht. Then you use the 40m yacht as collateral on a 20m loan...and you suddenly have 280m of leveraged assets under your control paying for the interest, and a tax free 20m loan for pocket change. As long as you don't sell the original stock, you don't owe taxes on any of that.

    Edit: and there isn't a single civilized country in the world that allows inheriting debt. That's the whole point. You transfer the assets to your heirs and die in debt with no assets. Nothing to tax, nothing to reclaim.

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  • [–] 1 point 6 days ago (1 child)

    you suddenly have 280m of leveraged assets under your control

    Yes, this doable. In this scenario you pay 3% on effectively 200 million loan, effectively 6 million of interest every year. Leverage isn't free money - it requires an extremely careful risk management. The moment your assets lose part of their value or interest rates go up, you're royally fucked

    I did something like this when crypto trading, and it's an exceptionally difficult thing to manage. Leveraging youself is not free money - you're trading exposure for risk and interest.

    I know people that are firmly working class (though earn decent money) doing buy borrow die with real estate

    I imagine a lot of people like that got WIPED during the 2008 financial crisis. Running this strategy with a single asset type also exposes them to additional risk.

    As for Elon and SpaceX IPO I'm amazed how many people willingly bought that garbage. Don't weep for the stupid, you'll be crying all day. That 401k situation is horrible tho.

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  • [–] 1 point 6 days ago*

    So I think the issue here is you fundamentally misunderstand the level of wealth that the ownership class owns.

    Sure, plenty of people doing this get wiped during economic recessions, because much like crypto bros, they're gamblers with delusions of grandeur. The people that are the problem didn't get wiped, they got government bailouts.

    Edit: and even if they are getting wiped, my point still stands: they aren't paying taxes.

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