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Tim Sweeney: Tax bill would likely end founder control of independent companies

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Re: Tim Sweeney: Tax bill would likely end founder control of independent companies

#81

Post by threeseed »

WalterBright wrote: post #69
anigbrowl wrote: post #11

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…

I doubt SpaceX or Tesla would exist if they were controlled by a committee. Doing great things usually requires control by a single person who is able to say "screw it, we're going for X".

This is simply nonsense.

All companies once they reach a certain size (including Tesla, SpaceX) have a Senior Leadership Team which decides on the critical decisions affecting the company.

This personality obsession is really only perpetuated by people who haven't worked in business and don't realise just how much of a team effort it is.

Re: Tim Sweeney: Tax bill would likely end founder control of independent companies

#82

Post by WalterBright »

dcolkitt wrote: post #66
nicoburns wrote: post #29

Earlier quoted context omitted.

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.

Decades of economic research has consistently confirmed that large corporations have substantially higher productivity and efficiency.

Big businesses are the engines the drive the economy. Small businesses are the future big businesses.

A healthy economy needs both.

After Japan was burned to the ground in WW2, the US sent in academics to structure the economic recovery. They thought big business was bad, and only allowed small companies to operate. The economy flatlined.

Finally, they allowed big business to resume operations. The economy went straight up until 1990 or so when it became moribund for other reasons.

Re: Tim Sweeney: Tax bill would likely end founder control of independent companies

#83

Post by WalterBright »

randyrand wrote: post #39
nicoburns wrote: post #29

Earlier quoted context omitted.

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.

I'd expect that we'd just see more large companies overseas, and fewer in America.

If the government succeeds in breaking up America's huge companies, the US's economic advantage will be ceded to other countries.

All the FAANG companies are American. What country wouldn't like to have just one of them?

Re: Tim Sweeney: Tax bill would likely end founder control of independent companies

#84

Post by kyleee »

fernandotakai wrote: post #20
anigbrowl wrote: post #11

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…

> 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. agreed. that should 100% be a taxable event and it's totally absurd that it's not. and i'm sure there's a lot of... lobbying that will never allow that kind of law to pass.

It does seem like a loophole, such funds when used as income should be taxed. Probably more complicated in practice but it does seem like a strategy that runs counter to the intent of taxation laws.

And I'd bet if it was a strategy employed effectively by the 99% it would be vigorously labelled as tax evasion and dealt with accordingly

Re: Tim Sweeney: Tax bill would likely end founder control of independent companies

#85

Post by Msw242 »

hellbannedguy wrote: post #28
new_realist wrote: post #6

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.

You mean old middle class, and poor homeowners, can stay in the house they raised a family in? The only reason my high school educated 80 years old mother in declining health can stay in a home, and county, she feels somewhat safe is because of prop 13. Her biannual property taxes are still a big deal when they arrive. I've said this before, but I'm beginning to think if you didn't live through the craziness before P…

Prop 13 disincentivizes building housing.

Stop calling people evil just because your grandmother isn't the center of their policy concerns.

Re: Tim Sweeney: Tax bill would likely end founder control of independent companies

#86

Post by WalterBright »

threeseed wrote: post #65
xbar wrote: post #24

Earlier quoted context omitted.

This is the kind of myopic reading of the law that will curtail entrepreneurial endeavors and lead to corporate-only wealth.

I fail to see how. Entrepeneurs aren't going to not build a company because of some specific tax treatment that only applies whilst they are wildly successful.

Taking away the money, though, will cripple their ability to grow the companies.

No SpaceX, no Tesla, no iPhone, etc.

Re: Tim Sweeney: Tax bill would likely end founder control of independent companies

#87

Post by rsj_hn »

threeseed wrote: post #81
WalterBright wrote: post #69

Earlier quoted context omitted.

I doubt SpaceX or Tesla would exist if they were controlled by a committee. Doing great things usually requires control by a single person who is able to say "screw it, we're going for X".

This is simply nonsense. All companies once they reach a certain size (including Tesla, SpaceX) have a Senior Leadership Team which decides on the critical decisions affecting the company. This personality obsession is really only perpetuated by people who haven't worked in business and don't realise just how much of a team effort it is.

The thing is, it's really critical to have that dictatorCEO in charge of the company to reign in the senior leadership, otherwise what happens is the creation of fiefdoms and intra-oligarchicturf battles at the expense of overall success.

Someone on this site mentioned Pournelle's Iron Law of Bureaucracy: https://en.wikipedia.org/wiki/Jerry_Pournelle#Pournelle's_ir...

And the CEO is the counterweight to that oligarchic rule. You see this, for example, in the constant battles that kings wage against the nobility.

Re: Tim Sweeney: Tax bill would likely end founder control of independent companies

#88

Post by Msw242 »

dsizzle wrote: post #14
d23 wrote: post #8

Earlier quoted context omitted.

It still seems problematic. Even if my company goes public, if I haven't actually sold the shares and made any money, why should this be taxed? If there are loopholes that let the founder avoid those taxes at sale time, fix those, but otherwise why should we effectively take away ownership of a company just because someone has built it up successfully.

One loophole is the step-up basis that applies when the owner dies. Not sure why that wasn't targeted instead (maybe because the current plan produces revenue more quickly?).

Reads like a cash grab to me.

Re: Tim Sweeney: Tax bill would likely end founder control of independent companies

#89

Post by abeyer »

tedunangst wrote: post #45
dsizzle wrote: post #14

Earlier quoted context omitted.

One loophole is the step-up basis that applies when the owner dies. Not sure why that wasn't targeted instead (maybe because the current plan produces revenue more quickly?).

"Billionaire tax" plays better than "death tax" so we get tax policies that fit into 30 second commercials, not those that make economic sense.

So why not a "dead billionaire tax"? The heirs to fortunes seem likely to get even less sympathy than the ones who actually built them.

Re: Tim Sweeney: Tax bill would likely end founder control of independent companies

#90

Post by WalterBright »

threeseed wrote: post #75
jimbob45 wrote: post #40

Earlier quoted context omitted.

Generational wealth transfer is a good thing. It's the main reason most people work hard in life - to provide a better life for their offspring. 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.

This comment is insulting and has no basis in fact. There is no evidence that rich people work harder than poor people. In fact the opposite is far more likely to be true given the unique stresses of manual labour. And there is no evidence that the driver of success is providing for their offspring. There are a whole range of factors at play.

> There is no evidence that rich people work harder than poor people.

It's not about working hard, it's about working smart. I.e. leverage.

For example, my patio door kept getting stuck. I spend a lot of time with a file and chisel trying and failing to get it to fit properly. Finally, I bought a grinder for a few bucks from the pawn shop and had it fixed in a couple minutes, and it looked a lot better, too.

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