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There's some truth to it ... but why is that a bad thing exactly?
because taxes should be paid on money that exist and can spent. you wanna take a loan against your stock? you pay taxes on that loan. you wanna sell your stock? you pay taxes on the stock you sell. you just get your salary from the company and never sell stock? you pay taxes on your salary, and not on stock that are doing nothing.
That’s exactly the problem —- loans aren’t income, they’re debt, and debt isn’t taxed. Worse yet, the ultra-elite can carry out “buy (or ‘found’), borrow, die” strategies that let them pass the debt onto their kids, who can sell the securities at a tax advantage due to the stepped-up basis loophole.
An altogether _very_ reasonable price for what we're getting in return.
Earlier quoted context omitted.
if you start a company you should be able to continue to own that company until you decide you're ready to sell it
There are no mom and pop store billionaires.
The idea that it would apply to everyone, and be 20% was literally laughed out of the debate on implementing a national income tax as a "crazy conspiracy", it took less than 50 years before that crazy conspiracy was reality.
There is little reason to believe history will not play out the same, and it will not be long before this expands beyond the evil billionaires you despise soo much to those mom and pop stores you seem to claim love for...
I'm actually in favor of this. I've long held that there should be public liquidity in all companies over a certain valuation and the company should not be allowed to bar you from selling the stock (though it could retain right to beat any pending offers) It's asinine that companies are allowed to treat equity pay as pay, and IRS can tax it as realized (AMT), but the worker does not in fact have any instrument with w…
Somehow I think Elon giving himself a multi-billion dollar salary to cover a jump in Tesla stock would upset a lot of people.
Teslas market cap is 1030m on 31.5m of revenue. GM is 79m on revenue of 122.5m. That's 50x the market cap per revenue.
There's some truth to it ... but why is that a bad thing exactly?
Well, one workaround would be to treat securitization of shares (eg for a loan) as a taxable event. This is a common (and currently legal) tax avoidance strategy. Another consideration is that maybe having sole control of a massive pot of cash or financial instruments by an individual is just a Bad Thing. Consider how Zuckerberg structured FB so that while he it's a public company, the bulk of the stock is non-voting…
IMHO, if the CEO's decisions are destructive of public goods, shareholders aren't the ones we should go to. We should be able to stop the CEO via government powers.
>but would the economy or the gaming world be worse off if he no longer had founder control?
Shareholder activism has a very double edged record. Their interests aren't necessarily the public's interest or the company's. Maybe they like dividends now rather than investment - their incentives definitely point that way. Giving them more power is unlikely to end well.
It will also add very odd incentive to not grow your company after you reach the billionaire tax-level. A. you'll maintain ownership B. you wont have to pay taxes on the gains Tons lot of founders care about 'A' a lot more than is "rational". It sounds okay, but the USA will miss out on a lot of potential wealth and tax revenue from people who choose not to grow their companies into huge multinational corporations.
Smaller companies may be a net benefit over the long term. These super large companies tend to become over dominant in their markets and and start engaging in anti-competetive behaviours.
The current tax situation is like property taxes in California before Prop 19: nobody sells, so ownership and control never changes. This facilitates wealth transfer from generation to generation (in the equity case, though the use of trusts) and perpetuates wealth inequality.
Wealth inequality is a good thing too. People who work harder necessarily live better lives. If you want to start stealing their hard work to give to the lazy, you're going to find that the hard-working flee the country à la the USSR.