> Death is a popular escape from deferred taxes. When you die, your obligations to the government vanish. Your heirs inherit assets/property at market value. Their assets depreciate from new cost bases.
The article talks about taxes in the USA, and I think the treatment of taxes at death is unfair by giving a significant tax advantage to people who hold assets till death, especially with the step-up basis. The way Canada handles it seems more reasonable to me:
> Capital property generally includes real estate, such as homes and cottages, investments like stocks, mutual funds or crypto-assets, and personal belongings like artwork, collections or jewelry. When a person dies, they are considered to have sold all their property just prior to death, even though there is no actual disposition or sale. This is called a deemed disposition and may result in a capital gain or capital loss
-- https://www.canada.ca/en/revenue-agency/services/tax/individ...
In exchange, Canada does not have an inheritance tax. All taxation is resolved in the estate of the deceased person before the money or assets are passed on without further taxation.
Mom and dad buy a house for $100,000. When they die it's worth $1,000,000. In Canada, you'd pay gains on the $900,000 difference. In America, you'd pay inheritance tax on the full $1,000,000 (but no capital gains). So in America you're paying tax on a little bit more (I'm of course ignoring the cap gains baseline exception).
But the reason America does it the way it does is because imagine it's not a house but a piece of art that mom and dad bought 50 years ago. No one know how they got it or what they paid for it. How does Canada even reconcile such a thing? How can you pay cap gains on it if you have no idea what it cost and no one is alive to even help you guess?
Some U.S. states have an additional inheritance tax (payable by the inheritors). Those rules vary. [1]
[0] https://www.irs.gov/businesses/small-businesses-self-employe... [1] https://www.investopedia.com/terms/i/inheritancetax.asp
I can understand step up being considered unfair but the alternative is someone inheriting their family's stuff and getting slapped with a potentially huge tax bill they don't have the cash to afford.
Easy stuff. If your benefactors care about taxes on their estate they will properly document capital assets. If not? Oh well. It was a windfall gain either way.
This is such a non-issue given the inheritance/gift tax limit being so high I don’t understand why it’s ever talked about.
It’s also not as onerous as people assume. I’ve established cost basis 15 years later on an asset I had no paperwork for by simply looking up the daily average price for said asset when I knew I acquired it. This can even be used for stuff like buying an expensive retail purchase - just use advertised retail cost. The IRS allows broad leeway so long as you are consistent and can explain your reasoning.
- A taxable threshold, so people who can’t afford lawyers and accountants don’t need to deal with it. Works well for family gifting.
- You don’t need to tax immediately, tax it when it the profit is realized, eg. When you sell that art.
- Taking out a loan against an asset at an increased valuation should trigger a taxable event. (Eg. Stocks go from 1b to 2b valuation and you take out a 500m loan. You are realizing 250k of gains and should pay tax on that gain.)
- Eliminate stepped up cost basis. This is a ridiculous give away.
You don’t suddenly owe taxes you maybe can’t afford when inheriting the family house.
You can afford those taxes when selling it for a massive profit so you should owe then. Likewise for realizing gains by taking a loan
The value of homes is very well known and assessed annually in many provinces (some have weirdly become laggards). So no real problem there.
Any piece of art that is of any real value would have a provenance and it would be very well known what the value it was at any given time and at sale. If no one knows the artist or can determine the value it is very safe to say its value is nil.
But these types of things are found all the time in attics and basements. Art especially is moved around without sales records all the time, and jewelry even more-so.
Heck, I have things I bought myself that I have no idea what I paid for them.
But I'd sure be upset if I had to pay cap gains taxes on these things assume their prior value was zero.
On the other hand, cost basis in a house is not just the purchase price. Many improvements add to the cost basis, and good luck finding records to support that. Especially for a home owned by your parents since the 1970s.
That doesn't make it equitable to step-up on death; but it does make it very convenient.
I think the government now actually does keep tax records of buying and selling homes (became a bit of a question during the foreign buying debate) so going forward it's going to be no concern.
You paid income taxes on the money when you earned it because it left your employer's pocket and went into yours: the ownership of the value (money) has moved. You paid sales tax when you bought it because you exchanged money for the ring: the ownership of value (money, and a ring) has moved. And you pay an estate tax on it when it transfers from your estate to your children because, you guessed it, the ownership of value has moved.
(And you don’t enter into the equation. You are dead by the time the taxation happens.)
Because their parents already bought and paid the taxes.
They also pay for education and use networks and names to get their kids jobs and status.
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.
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 investmentSpecific 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.
Homes get a step up basis on inheritance like any other capital asset, and home equity loans are quite popular.
Less common but not obscure financial options include borrowing against your 401(k) or other equities.
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.
Because getting a multi million dollar inheritance isn't something a typical person would feel sad about I would think
Depreciation is recaptured if you sell an asset for more than its depreciated basis. People sometimes get into trouble with this if they rapidly depreciate real estate and then sell it. Even if you sell for less than your purchase price it is possible to owe taxes.
You also aren't going to be able to pay no taxes since you do need to realize some income to pay for mortgage/rent, food, transportation, etc. I guess if you had assets you could borrow against it would be possible to pay for these using the loan proceeds (which are not taxable).
But in the U.S. you can't rapidly depreciate real estate, it is generally straight-line over 27.5 or 39 years (residential vs. non-residential). The gain on real estate due to depreciation is technically referred to as Section 1250 gain, and if there is no gain (which is calculated against your adjusted basis, not purchase price), then it follows that there is no Sec. 1250 gain (often mistakenly called "depreciation recapture").
Also worth noting, if you don’t sell (or you 1031), that recapture can be deferred, which is why a lot of investors still use cost segregation aggressively.
This is a pretty clear breakdown of how 1245 vs 1250 recapture actually works on sale if anyone wants the full picture:
https://notaxcompromise.com/cost-segregation/depreciation-re...
Your heirs inherit your stocks, with their cost basis reset to the current price. This means that they have zero appreciation of your purchase of $RIVN at $67, despite it being at $420. They can then sell the shares, to pay the loans, and not owe capital gains, because there are no gains. Additionally, at this step cash can be extracted for no gains as well if desired.
So you avoid taxes while alive by taking loans (not income), avoiding capital gains (never selling), and then gains evaporate through a stepped up basis. There are some exceptions here - estate taxes, etc with ways around them like trusts, but this is the general mechanism.
Its worth noting though, that its not ironclad. In a significant downturn you can be forced to liquidate and it will hurt (see the news on Musk right after X purchase). Additionally, while people talk about this as being super popular, realize that in practice people who take advantage of these strategies also still have millions in cash flow, so its not a true borrow only $0 tax lifestyle, they will use already taxed money to manage them as well.
https://www.theatlantic.com/economy/archive/2025/03/tax-loop... (viewable by disabling JS)
There is no balloon payment ever due if you simply pay off the interest indefinitely.
Of course there is always the possibility of a margin call against the loan where if you lose X% of value on the securing asset you may be liquidated of it and the proceeds used to pay off said line of credit.
There are a million caveats and different loan structures so I’m sure some finance bro will be along to correct me shortly. But overall for normalish folks this is more or less the correct mental model.
If your assets are growing faster than the interest it would also be possible to payoff the loan with a new (larger) loan, so you are still kicking the can down the road but eventually you would die and never need to pay the taxes while you were alive. I doubt this is done that often in practice, but who knows.
I.e. what kinds of loans can be tax deductible? To be clear theres decent effort into this, you can't just do a cash-out refi on a home, but loopholes exist for those who find it worth the effort.
This is the strategy that people follow.
Everyone is way too strong a word. Unlike a regular job, there is no course or qualification needed to become a landlord. In the Bay Area I know lots of people in tech who bought a house, couldn’t afford mortgage payments (perhaps after a layoff) and decided to rent out parts of their house. Or perhaps just a particularly smooth talking real estate convinced someone to sell their stocks and buy investment property.
You might say that not knowing about all housing related costs upfront is evidence of financial illiteracy. You might also say not knowing about depreciation before buying a house is also evidence of financial illiteracy. You might even say committing to a mortgage payment while your own job prospects disappear is evidence of bad risk management. But in real life many people make bad financial decisions, landlords included. Landlords do not inherently have more financial aptitude.
If they didn't claim depreciation in prior years they can still get it via Form 3115. Yes this is complicated/annoying to do (almost certainly need a CPA), which you can argue is unfair, but I'm still going to have limited sympathy for anyone DIYing in this space without talking to a professional.
A W-2 job isn't an investment. It's a job.
A hobby isn't a job or investment, it's a hobby.
You absolutely do have tax consequences if quitting the hobby involves selling equipment, particularly if that equipment was something that has to be registered, like a boat, car, ATV, etc.
Since I'm not a financial adviser, someone asked me take on which 4k projector to buy last Xmas.
I explained that the tech has improved so much lately, they've become somewhat affordable, I recommended a model and pointed ou that he would certainly get a better device next Xmas, for half the price. I thought he would follow suit given his budget was a bit below the retail price. That would just wait.
His response was he would rather go ahead and up the budget a few hundred dollars to get it right away. That projectors will surely get much better by next year, but that he, certainly, will not.
There are also some loopholes where capital gains taxes deferred until after death just don't get paid at all. This is the "step-up basis" where your inheritors get to reset the basis of capital assets and neither you nor they has to pay taxes on the capital gain.
This all seems to benefit from low interest rates. Was it a thing in the 90's? Or even the 80s when rates were much higher?
(Also, if you live in the house for 2 years and then sell it, you can exclude $250K-$500K in gains, but that has nothing to do with inheritance).
Family farms are the sympathetic example of choice. Let's say your parent's family farm, that they started from nothing in the 1950s is now worth $20M. If you have to sell it to pay the taxes, because the estate doesn't have $4M to pay capital gains tax, plus $2M for estate taxes, then another family farm goes corporate.
Maybe you can inherit the capital property at the original owner's basis... then you'd only owe the cap gains tax if you sold it, and you'd have money to pay it because you sold it. That could work... although one nice thing about the step-up in basis on death is that nobody has to dig through to find the old records to establish basis when there's a clearly established death instead.
What you are doing by delaying taxes is hoping you have a lower rate later. Say you make less in retirement or die untaxed and your kids get a step up in basis. But without a change in rate (which might go up even), there’s no difference.
But yeah that's a second order effect. There aren't really any scenarios where you have a fixed nominal tax that can be deferred without locking up the money, so I think you're mostly right that it comes back to lower tax rate and step-up.
In the meantime, I gave all the assets to my children while I was alive
The answer is nothing. The government eats the loss.
In other words: Gamble that (1) your investments appreciate, or (2) that you will find credit rates drop when convenient.
In 1 word: Gamble.
So, either you are rich and have spare money to gamble, which sure, might be beneficial against taxes. But you could also gamble against any other sector (stocks, housing, startups...)
Or, if you are not rich, just put it in the 401k (or eq).
I can't figure out the thought process of someone who finds this sensible. Maybe there isn't one.
Do you have an example? I've seen dozens of IRS letters for dozens of different taxpayers and none of them had any "angry" language in them.
The myth that the IRS is trying to scare or traumatize you is just a dark pattern by certain 3rd party "tax resolution" services. The IRS is quite tolerant of the person who breaks the law by not filing and paying on time and provides many opportunities to come into compliance, starting with an automatic first-time abatement of the most common penalties.
https://www.irs.gov/individuals/understanding-your-irs-notic...
They weren't angry with me. They were, however, obstinate. They disputed an education related credit. Each time I called them, they told me what documents they would need. I'd send it, and they'd continue the dispute. The cycle would repeat.
Here's what happened:
University sends me tax form. I file with my taxes.
"Just because they sent you the form doesn't mean you actually attended the school and paid your fees. Send us proof you paid them."
Sent proof of payments to the university.
"Just because you gave them money doesn't mean it was for tuition. For all we know they could be parking tickets. Send us the billing statement"
Called the university[1] to get a copy of the billing statement. Sent to the IRS to show the payments matched the tuition billed.
"Sorry, that's not enough. Send us a statement from the university with a line item showing the tuition was paid."
Sent it. They finally accepted it.
The university told me they'd never heard from any student that the IRS didn't simply accept the original tax form they send out.
[1] Keep in mind that this conversation happened 2-3 years after graduating.
It’s a lot like the old saw about Microsoft Excel: No one uses more than 20% of the features, but everyone uses a different 20%.
The sum owed I had calculated at the end of 2025 was less than 2% off from the sum our IRS equivalent came up with.
Their sum was the most favorable to me, though - they had adjusted a deduction I qualified for last year which I had missed.
This level of accuracy is down to our IRS knowing just about all there is to know about our income, assets, debts &c of course - oh, and on there being fewer loopholes in our tax code...
One of the early adopters was https://en.wikipedia.org/wiki/B._C._Forbes the founder of Forbes.
He expensed lavish Gatsby style parties and everything.
I remember reading a biography of his that one way in 1920s he accomplished was by having bought some big mostly useless plot of land and technically his lavish parties were sales presentations to sell this land. Occasionally some of his acquintances would actually buy a parcel of mostly useless land in middle of nowhere thus the business use was actually maintained. Again, highly unlikely to fly today with IRS and even then there were tax lawsuits.
The issue is that it is impossibly hard to pull off without going into tax fraud territory.
Another interesting case of "Expense everything" were ABBAs stage dresses and suits. They were purposely flashily impractical to avoid falling afoul of Swedish tax laws.
That said tax authorities in most countries do allow some leeway for the small fish. Basically pragmatic tax authorities give you certain limits for certain expenses that you can expense.
So in my European country you can expense a certain amount of gas, travel, clothing, eating out, etc as a self-employed. Yes you should have receipts, but if you stay within limits, it is up to you how honest you want to be about that "business" lunch.
I remember it being it common in US too, someone takes you to lunch and you are supposed to mention their business and talk a few minutes about their business, then in their eyes it was a business expense.
However, the moment you start going over these limits you will face increased scrutiny and you are in for a bad time for claiming as business expense lunch with your friends at Dorsia.
Our government in my generation failed me and my kids, they are busy in fighting wars, manufacturing crises abroad, and doing other nefarious things.
Question: can I use the means in this article to avoid my last year's tax? What asset categories are available to invest to defer my taxes, where can I learn more?
The article only addresses a subset of economic activity. The larger portion of the adult population are wage earners or retirees, not business owners. For them, large investments in Traditional IRAs or 401k plans are most definitely not able to escape upon death the income taxes that were deferred.
This blogspam is advocating tax fraud.
Depreciation is permitted for business assets. In order to depreciate the lawnmower, you would need to claim it as a business expense. In order to claim a business expense, you also need to have some business income (net business losses are okay, but not having any income, or having only de minimis income, is a huge red flag). And importantly, you can't use the asset for personal use. Ever.
This type of tax fraud is the #1 cause of tax penalties. And because it's fraud, it also means the IRS has an unlimited time to audit and penalize you for it.
Rich people don't defer their U.S. taxes by buying depreciable property. They do so by buying investment property like stocks, and making charitable donations.
Be really careful when doing this. Make sure you have a great accountant - if you go more than a few years without turning a measurable profit, your risk of being audited apparently goes up. My accountant personally cautioned me about this since my business has been in an R&D phase for 5 years so we've been showing a small loss every year. The last thing you want is for the IRS to decide you've been cheating on your taxes.
Not entirely, no. Any of those reinvestments that count as capital expenditures aren't immediately deductible, but only on a throttled schedule, which is why the concept of depreciation exists in tax law:
Please consult a real tax lawyer before even following such advice...
Why? They have skin in the game such losing their license if they do something wrong and illegal...
In FY2025, the U.S. federal deficit was $1.78 trillion, with total revenue at $5.23 trillion, so clearly it's a majority of revenue.
I live in Minneapolis, MN. The Federal government has cut public health grants, Medicaid, laid off a large portion of he Department of Health, cut Department of Human services, cut school funding, cut University of Minnesota funding, cut heating assistance, cut flood mitigation, cut USDA programs, and cut SNAP. This is just the things I can remember! Our city hosts Hennepin County Medical Center, which provides emergency care to the entire state, and it is risking closing due to federal cuts.
Minnesota has historically paid more in federal taxes than other states, and contributes more than it gets back. I think it's time for a change.
Not paying taxes isn't going to re-fund these things. In fact, it will ensure they don't get funded.
There are always people who don't agree with a particular government's funding priorities; if we didn't pay when we don't agree, government would happen when we do support its priorities.
Why pay taxation without getting representation?
So like influencers get to hear other influencers explaining this "you can reinvest your profits and then you won't have profits" type of advice... but then they will put it right next to unsound advice about "by the way, a great way is to invest in a "business" trip to Greece to sail the Mediterranean, it is "team-building" between you and your spouse and kids who are all employees of your little influencer company, oh by the way you should buy fancy watches so that you can show them off in your videos, and get a very expensive hairstylist to do your hair -- as long as you make a video about it!"
And it's like, no, the tax courts actually have procedures they follow to determine if those things are personal expenses or business expenses and 90% of the advice that you hear here are some form of tax fraud.
But from the point of view of a company, as the tax year comes to an end you hopefully have extra money left in the bank, now you can either use it to buy things that the company needs and thus grow the company, or you can hold onto it where if you're a C-corp the government will take 21% of the year-on-year delta, or you can pay it back to the shareholders as a dividend and they pay 15% capital gains tax on it. (And of course you don't have to dump the whole account into just one bucket, you can choose how much goes into each of the three.) And when it gives the advice "pssst, you should probably reinvest most of it," that's a standard practice explicitly sanctioned by the government.
You do have to be sure you follow the rules and avoid various gotchas that other people in this section have pointed out, but otherwise it is entirely legal and routine.
Actively involved owners live off of a salary paid by the company.
Living tax free is easy enough for everyone except Americans.
The fact is that the country whereever you carry any legal activity will require you to prove you're taxed elsewhere not to tax you in place.
To carry out economic activity you'll need a presence, if it's a company it's corporate tax, if you're freelance you'll need a registered address.
Most banks will freeze you without a TIN and and address.
Plus the whole can of worms of the centre of vital interests or source-based taxation systems.
In the moment you input an address in the financial system, the tax administration will know, and they will knock your door for any significant income, plus arrears, pulling one of the cards from your house, and it's not going to be pretty.
Picking a random country: Italy. Please explain under what legislation or mechanism an Italian citizen who spends 3 months in Japan, 3 months in South Korea, 3 months in the U.S., 3 months in Norway and then repeats the loop for the rest of their life would owe any taxes to any tax authority?
Almost every country except the United States only taxes their residents, not citizens. Almost every country follows the typical 180 day rule for tax residency.
If you add the legislative decree 209/2023 article 1 that modifies the tax code and sets the basis for the centre of vital interests, it complicates things even further for the "permanent traveler" for simply having a family or ever having been long term resident in a country.
If you regularly return to Germany and generally to the same place there (i.e. family, friends), and you're not tax resident elsewhere, the tax administration will consider it your habitual abode. And, you guessed it, under the German Fiscal Code (Abgabenordnung), you are a tax resident if you have a domicile or habitual abode in Germany.
Plus, under Extended Limited Tax Liability (Erweiterte beschränkte Steuerpflicht), any significant economic presence in Germany (assets, German clients, participation in a company, bank accounts) will pull you into the tax jurisdiciton for 10 years, not only as permanent traveler but also if you move to a low-tax country.
So while different, it's similarly difficult. It's technically possible but you have to leave Germany and basically cut all ties, difficult if you're German.
If you're not German, you can completely escape the claws of the German fisc with relative ease. But if you're say Spanish, Hacienda will consider you tax resident in Spain even if you never ever lived in Spain (i.e. born abroad). There's all sort of sticky tax rules in numerous countries: you're tax resident until you prove you're tax resident elsewhere, the aforementioned nationality fallback, essential ties rules, the "domicile" concept (i.e. where you intend to live until you die).
Plus, and I reiterate, the difficulty in obtaining a simple bank account without a TIN and proof of address in most countries.
I'm sure there are corner cases with exotic nationalities and carefully selected tax jurisdictions with lax "tax residency" tests to rotate along, and numerous nomads fly under the radar for various reasons (illegally of course), but I assure you it's way more complicated than "lol just don't be American/Eritrean and travel all the time", plus tax laws constantly change, and not to leave you more loopholes.
You're doing what so many people who make this argument do. You're taking an extreme example that laws have been crafted to tackle and using it to represent the norm. A normal German citizen with a normal amount of money leaving Germany to become a nomad and travel the world, never establishing tax residency in any other country, will not need to open a bank account anywhere else, nor will they be subject to Extended Limited Tax Liability which is designed to capture tax from people who try to terminate their tax residency before realizing substantial gains on local assets. Completely irrelevant to almost every person on earth.
My original assertion is that unless you are American (or, apparently, Italian) the normal person can up sticks one day and wander the world, and so long as they never establish tax residency anywhere, they will be living an entirely legal tax free[1] life. Of course doing so requires giving up the things humans need, like stability, so it is a terrible life for most, but the point is, it is legal and easy.
> [...] and numerous nomads fly under the radar for various reasons (illegally of course), but I assure you it's way more complicated than "lol just don't be American/Eritrean and travel all the time"
"illegally of course" again, false. There is no universal tax law that we are all subject to. The Common Reporting Standard is intended to combat tax evasion. A person who does not have tax residency is not engaging in tax evasion, they are just a person without tax residency.
Rather than speak in theory and hypotheticals, can you point to any real world examples of someone being charged / tried / accused of tax evasion because they didn't have tax residency?
> plus tax laws constantly change, and not to leave you more loopholes.
Why are you framing it as a loophole? Not having tax residency isn't a loophole, just as not having a car isn't a loophole for a drivers license.
Despite my argument, I am pro taxation. Taxation is needed to support society. We pay taxes to contribute to the society we are a part of. Taxation isn't punitive. But if someone opts out of being a part of a society, if they choose to wander the world, without the benefits of having a home and community, why would they be expected to pay taxes? And to who? Tax residency is a good system, a fair system.
[1] tax free is a bad term anyway because tourists pay consumption taxes but we're talking about income taxes
That will make you tax resident in Germany as all of your financial interests are in Germany. It's not an extreme example at all, it's the basic case to catch.
>My original assertion is that unless you are American (or, apparently, Italian) the normal person can up sticks one day and wander the world, and so long as they never establish tax residency anywhere,
Or Spanish. Or Belgian. Or French. Or Germany. Or basically any OECD country, and most non-OECD ones.
>they will be living an entirely legal tax free[1] life.
Legal as long as they don't generate any income, and even then, wealth taxes could kick in.
>Of course doing so requires giving up the things humans need, like stability, so it is a terrible life for most, but the point is, it is legal and easy.
It's really not easy at all to do legally, but at least we agree it's difficult to do emotionally.
>"illegally of course" again, false. There is no universal tax law that we are all subject to.
That's the fun part: virtually all OECD tax laws are universal.
>The Common Reporting Standard is intended to combat tax evasion. A person who does not have tax residency is not engaging in tax evasion, they are just a person without tax residency.
That's sovereign citizen tier of delusional. Plus I proved again and again that tax residence isn't bound to only where you are/live, at all, for over a decade, for any developed country and most developing ones.
>Rather than speak in theory and hypotheticals, can you point to any real world examples of someone being charged / tried / accused of tax evasion because they didn't have tax residency?
https://www.bbc.co.uk/news/entertainment-arts-67472496
She played the "I didn't stay anywhere for too long lol" card because she was touring most of the time, and she was slammed by the Spanish fisc on the basis of her centre of vital interests.
Literally most rock/pop stars would be living tax free if what you said was true, unfortunately for them it's not the case.
You won't find many high profile cases because the people who make money use expensive tax advisors who tell them not to do what you suggest, but since you're familiar with Germany, here's another: https://www.theguardian.com/world/2002/oct/25/germany.tennis
> Why are you framing it as a loophole? Not having tax residency isn't a loophole, just as not having a car isn't a loophole for a drivers license.
Not having a tax residency prevents you from legally doing business pretty much anywhere where it's worth doing business. I have to ask for a work visa in some countries I visit because of work even if there's a tourist visa-free regime for me, I literally am not allowed to do any work there. Would they notice? Probably not. But what happens if they do? That I and most importantly my company are in deep shit.
Why? So my government has more missiles to blow up children? No thanks.
You can make tax-exempt donations, or start your own non-profit organization.
Some people hoard money without building businesses, without participating in government, without contributing to welfare. People who take more than they give are assholes.
100%. I hate welfare leeches too
In my state (NY), I pay income tax to the feds and NY state. I pay property tax to my county and town. This pays for things like roads, cleanup and maintenance, the school district, the library, the parks and sports recreations. The community trails and wildlife preserves.
My point was that local and state governments do need your tax dollars, in the sense that that is literally their income. But for the federal government it's different. If federal tax revenue declines, they can just sell more treasury notes and continue to spend as much as before. In that sense, federal tax revenue has no direct effect on federal spending.
If you want to play concerned citizen get out and protest, vote with your dollars by not throwing them at big tech companies who kowtow to politicians and fund their campaigns. But if you think you’re sending kind of message by withholding your taxes, it’s really just that you’re a selfish asshole.
Abstaining is not voting. If you want to vote with your dollar, spend it actively undermining big tech companies. Get out there and blind some cameras or something.
Fair if you’re already not giving them money. But if you manage a sizable chunk of cloud spend at AWS, GCP, Azure etc, you can send a meaningful signal by taking away that revenue and shifting it to a company that’s not aiming for neo-feudalism.