Recent Posts OC Registration We discussed a $150 million home for sale in South Orange County.
A rare 42-acre estate in San Juan Capistrano, known for decades as “Porcupine Hill,” has hit the market for the first time for $150 million.
The property, marketed as “Casa Grande,” includes an existing 21,000-square-foot building of three apartments, office and storage space completed in 2010, and permitted plans for a 38,000-square-foot main residence along the ridge with 360-degree views.
The plan, which has been in the works for more than 40 years, also includes two 10,000-square-foot guest houses for the existing agricultural operations and unlimited maintenance quarters.
Future homes will be subject to Proposition 13, while agricultural businesses will be taxed under the Williamson Act, which allows them property tax savings based on production.
It’s not at all clear that farms should pay lower tax rates than other businesses, and it’s hard to imagine that Congress had these “gentleman farmers” in mind when it wrote tax breaks for agriculture. Soaring housing prices are driving many young people out of Orange County, yet the state is providing tax breaks to protect a 42-acre “farm” in an area with a desperate housing shortage.
In the past, I often visited New York City. Manhattan Condominiums Homes owned by billionaires at tax rates far lower than those owned by blue-collar workers in Queens. We also discussed the fact that progressive politicians worked hard to repeal the federal luxury tax on large private yachts. Many of these same politicians also supported the SALT tax credit, which is overwhelmingly applied to high-income earners.
New York and California are both theoretically “progressive” states, with plenty of politicians who claim to support a more equal society. They will probably claim that their lawmakers in Washington support higher taxes on “corporations” – as if non-human beings could actually pay taxes. What can we infer about a politician’s values when he or she supports high taxes on the wealthy’s investments while opposing high taxes on the wealthy’s consumption?
Some on the left argue that the best way to tax the wealthy is through income and wealth taxes, but these taxes can be evaded through clever means. Tax evasion schemes:
For example, let’s say you own a successful business. That business is so successful that the amount you invested in it is worth $1 billion. How should you cover those expenses? If you pay yourself a salary of $20 million a year, the federal government takes 37%, or about $7.4 million. So, you might take a salary of $1 and sell $20 million worth of stock. If those shares were gifted to you when you started the company, the full amount would be a capital gain and you would be taxed 20%, resulting in a loss of $4 million. What if, instead, you contacted a wealth manager and agreed to pledge $100 million worth of stock as collateral for a $20 million loan? In 2021, interest on the loan might have been only 2% per year. That means the proceeds from holding the stock instead of selling it could have easily covered the cost of paying back the loan. Doing so would have generated no tax liability at all, because the proceeds from the loan that you would eventually have to pay back are not considered income. When the owner of the asset dies, the capital gains assessment is “raised” from the purchase price to its value at the time of death. Thus, “buy, borrow, die” can completely eliminate capital gains tax, not just postpone it.
