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In my superhero tale, the protagonist acquires (long story) ~14 trillion dollars worth of nickel-iron chunks (: . Over a time period of 10 days he lands 14 trillion tonnes of the metal onto a sand sea in eastern Mauritania (he's a Superman clone, and via superhero fizix and eons-advanced alien tech). He offers it to the international metal industry for a buck a ton and free delivery (: .

April 15 comes to pass. Could anyone here give a very rough estimate for what the IRS would demand for income taxes for the current year? Say, 28% or so?

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    $\begingroup$ My landlord with just the property of 5 houses was able to play all the financial tricks needed to pay less taxes than due. Someone with that amount of money will surely do the same and maybe even receive a subsidy for low income. $\endgroup$
    – L.Dutch ♦
    Commented Dec 31, 2019 at 17:35
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    $\begingroup$ That's a good chunk of the national debt. I guarantee you that how to pay taxes on that (if he does, at all) is going to be the subject of in-person negotiations at a very high level of government. A congressional hearing on the matter and/or direct meetings with the president would not strike me as strange. Before you even think about mere taxes, I would be trying to figure out what effect that is going to have on international economies. $\endgroup$
    – Matthew
    Commented Dec 31, 2019 at 17:57
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    $\begingroup$ Capital gains taxes are due when a specific type asset is sold, not when it is acquired. It's not clear that a "mass of nickel-iron" would qualify for the capital gains tax rate instead of normal income tax rate or another tax rate. $\endgroup$
    – user535733
    Commented Dec 31, 2019 at 18:42
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    $\begingroup$ I don't know much about the American tax system, but in most countries simply coming into the possession of a resource would not trigger income taxes; those apply only when the resource is exploited and the product sold for money. (That is, unless the U.S.A. is the only country in the world where taxes apply to the wealth instead of to the profit obtained from said wealth.) $\endgroup$
    – AlexP
    Commented Dec 31, 2019 at 18:45
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    $\begingroup$ @AlexP: Despite the suggestions of certain politicians, the US (as a country) does not tax property, only income. (States tax real estate, and some tax other kinds of personal property - for instance, if I moved to California, I'd have to pay tax on my plane.) So those nickel-iron chunks would be no different than e.g. discovering a gold mine: you'd pay taxes on the profit (that is, minus your expenses) from the gold you mined & sold that year. $\endgroup$
    – jamesqf
    Commented Dec 31, 2019 at 19:28

2 Answers 2

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During acquisition, the US-based protagonist would pay no USA income taxes ($0.00) on the new valuable mass: Nickel-iron is not cash or otherwise negotiable.

  • If the mass of nickel-iron is located on Earth, local property taxes may apply, but that's outside the scope of the question.

  • If the protagonist instead received cash (or a negotiable instrument) for the full $14T, then income taxes would be due immediately. But that's also not what the question asked.

  • If the protagonist is not a US citizen AND is not working in the USA, then the USA IRS has no claim.

As the assets are sold, the protagonist pays USA income taxes on income from those sales. Even if those sales occur outside the USA. The IRS may use a "fair market" valuation, which may be higher than the sales price - this prevents sweetheart deals, false forced sales, and other frauds to avoid taxes.

  • Since the Earth's entire iron ore market is worth only around $200 billion annually, obviously it will take decades for the protagonist to successfully liquidate without enormously disrupting the market.

If the protagonist instead donates or gifts part of the mass to somebody else, the protagonist may owe taxes on the increase in value that occurred during the time that the protagonist owned it.

  • Since the mass of nickel-iron seems enough to depress the price of the commodity, and to keep it depressed for at least 10 years, it seems unlikely that the protagonist will owe any taxes from change-of-value.
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    $\begingroup$ Key here: if you own something valuable (that is not property) but do not sell it, you do not need to pay tax on it. You pay tax when you sell it. $\endgroup$
    – Willk
    Commented Dec 31, 2019 at 19:18
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Given the number of lawyers, accountants, and politicians the protagonist could buy, I would expect taxes to be whatever the protagonist chooses.

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    $\begingroup$ Tax evasion might seriously crimp a superhero's credibility as a paragon of virtue. If you cannot trust a superhero to always do the right thing, the slippery slope leads to corruption, oversight, regulation, and popular disdain instead of adoration. "A Daily Planet investigation today revealed apparent payoffs from criminals to Superman. In exchange for money, Superman failed to catch the criminal in the act. The District Attorney is re-evaluating two dozen bank robberies with Superman as a possible accomplice. The President has resumed development of Kryptonite weapons." $\endgroup$
    – user535733
    Commented Jan 3, 2020 at 17:52
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    $\begingroup$ @user535733 That is why I wrote "whatever the protagonist chooses" rather than "zero". If the protagonist thinks the proper tax on their income is 90%, it will turn out to be 90%. $\endgroup$
    – Patricia Shanahan
    Commented Jan 3, 2020 at 17:58
  • $\begingroup$ Understood. I think that makes the slippery-slope even more interesting to explore: How much (perceived) cheating will people tolerate and still embrace the hero? Your point seems that the hero gets to legitimately choose (it's not cheating). My point is that the public provides indirect feedback afterward on how they feel about that. $\endgroup$
    – user535733
    Commented Jan 3, 2020 at 18:01
  • $\begingroup$ My protag is definitely super but the hero tag is pretty shaky in his case. $\endgroup$
    – catsteevens
    Commented Jan 3, 2020 at 19:31
  • $\begingroup$ Cheating the govt out of any taxes would make the protagonist a hero to those who hate the govt. $\endgroup$
    – StephenS
    Commented Jan 3, 2020 at 20:09

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