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Originally Posted by Chung Tran
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The boys over at Renaissance Capital, led by James Simons the big Democratic Party donor, have made a science out of this -- getting money into a Roth IRA and then building huge fortunes tax free with 70% per year returns on their "retirement" money.
Thiel, the subject of your link, is a libertarian. Living in the People's Republic of California, with its 37% federal and state income tax rate rate on long term capital gains and 50%+ rate on other investment income, he had plenty of motivation to invest through his IRA.
He wisely has a backup plan. He became a citizen of New Zealand so can move there if the politicians in the USA get too rapacious. New Zealand politicians, including the prime minister Jacinda Ardern and other members of the her leftist Labour Party that's currently in power, aren't dead set on fucking over the investors, the businessmen, and the people who bust their asses and make a lot of money. That appears to be the trend now in the USA. New Zealand has no capital gains tax and tax rates are capped at 33%. And they don't tax your worldwide income if you're a New Zealand citizen who lives in another country, unlike the USA and Eritrea.
They need to get rid of the loopholes, like the one that Thiel and Simons took advantage. And make the system simpler with lower maximum tax rates. Right now high income taxpayers spend billions of dollars and lots of time on tax compliance and looking for ways not to get robbed, i.e. ways to shelter income from tax. If they were paying 25% or 30% headline rates, instead of 40.8% (Texas) to 55.6% (New York City) and jumping through hoops to pay less tax, the system would work better. And I suspect the actual amount of money they pay in taxes would increase, as a result of getting rid of the loopholes, lowering the motivation to use tax shelters, and causing capital to be used more productively.
