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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

#151

Post by rsj_hn »

Ericson2314 wrote: post #139
rsj_hn wrote: post #133

Earlier quoted context omitted.

> That's no true with deficits. Honestly, that's not much of a rebuttal. If you believe in Ricardian Equivalence, then sure, the future deficits are matched by private savings to offset future tax liabilities. Well, what do you think an increase in networth is other than an increase in private savings? But if you do not believe in Ricardian Equivalence, then the deficit spending is an increase in net-wealth, which ag…

Well I certainly do not agree with Ricardian equivalence. For it to hold, one must assume lump sun taxes which one cannot avoid by being poor. That's a ridiculous assumption. > But if you do not believe in Ricardian Equivalence, then the deficit spending is an increase in net-wealth, which again shows up disproportionately on the balance sheets of the wealthy. My whole point was that this is not necessarily true, and…

> My whole point was that this is not necessarily true, and depends on the form the spending takes place. Did you miss that?

Nope, I didn't miss it, because it's not relevant. Giving money to poor tenants ends up in the pocket of landlords. Letting poorer people buy iPhones ends up in the money of shareholders and is realized as an increase in Apple stock price, etc.

When you have a small group of the people disproportionately own the capital stock, then giving people more spending money absolutely ends up benefiting those people disproportionately.

> Even if a UBI eventually trickles up, we must not conflate solvency and liquidity.

Neither is being discussed here. I am saying that if you have an economy in which people earn unequal incomes which, you know, must happen given that people make unequal contributions to society, then things like supports for the poor have to be funded with taxes, otherwise this will drive more inequality.

And given that the wealthy pay by far the most taxes, then deficit spending disproportionately benefits the wealthy.

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

#152

Post by adrr »

coenhyde wrote: post #72

Bad idea to tax unrealized capital gains. Proposal; How about we gut our entire tax code and replace it with a single tax that taxes when money moves from one entity to another. Let's call it a Transaction Tax. It would replace Sales Tax, Income Tax, Capital Gains Tax, Inheritance Tax, etc and introduce tax on debt creation (when the bank gives you the money). This would close all loop holes and put the entire tax in…

Would it tax loans? If not, how do you tax billionaires who never sell their stock and just get loans with their stock as collateral. How bezos pays minimal taxes without having realize gains by selling his stock.

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

#153

Post by ansible »

coenhyde wrote: post #72

Bad idea to tax unrealized capital gains. Proposal; How about we gut our entire tax code and replace it with a single tax that taxes when money moves from one entity to another. Let's call it a Transaction Tax. It would replace Sales Tax, Income Tax, Capital Gains Tax, Inheritance Tax, etc and introduce tax on debt creation (when the bank gives you the money). This would close all loop holes and put the entire tax in…

Sales tax is regressive, meaning that it taxes the poor at a much higher relative tax rate than the rich.

Any transaction tax would need to take that into account.

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

#155

Post by artdigital »

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.

I kinda disagree. Yes it's a loophole to get around tax, but taking a loan against assets you own should not be taxable. It's the same pathway that people use to take a loan against their property and other assets, and having to pay tax on that is absurd

Similarly, stocks (or things like gold) that one owns have some worth, and using it as collateral for taking a loan against it is a completely valid thing to do

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

#156

Post by dragonwriter »

adrr wrote: post #152
coenhyde wrote: post #72

Bad idea to tax unrealized capital gains. Proposal; How about we gut our entire tax code and replace it with a single tax that taxes when money moves from one entity to another. Let's call it a Transaction Tax. It would replace Sales Tax, Income Tax, Capital Gains Tax, Inheritance Tax, etc and introduce tax on debt creation (when the bank gives you the money). This would close all loop holes and put the entire tax in…

Would it tax loans? If not, how do you tax billionaires who never sell their stock and just get loans with their stock as collateral. How bezos pays minimal taxes without having realize gains by selling his stock.

> Would it tax loans?

“introduce tax on debt creation (when the bank gives you the money).”

> If not, how do you tax billionaires who never sell their stock and just get loans with their stock as collateral.

Depending on how serious you are about taxing gross transfers, giving a collateral interest is also a transfer of interest in money, so you could tax that, too. Valuing the collateral interest could be tricky, though.

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

#157

Post by digitaltrees »

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".

Bring back kings!

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

#158

Post by WalterBright »

ameetgaitonde wrote: post #144
WalterBright wrote: post #86

Earlier quoted context omitted.

Taking away the money, though, will cripple their ability to grow the companies. No SpaceX, no Tesla, no iPhone, etc.

A tax on personal unrealized capital gains will not take away any money from the company. It's privately-held, and has no effect on a company's balance sheet.

> no effect on a company's balance sheet

Selling masses of stock to pay the tax will push the value of the stock down. That has a large effect on the company's ability to raise capital.

As for the entrepreneur, he'll have much less capital to invest.

It's a fantasy that one can extract endless billions from a company and its investors without consequences.

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

#159

Post by rsj_hn »

flurben wrote: post #150
rsj_hn wrote: post #106

Some observations: 1. Whatever happened to increasing tax rates, like pretty much every other country? Why these weird gimmicks? 2. A much greater cause of elite wealth accumulation is running deficits. Deficits are when you want to spend on social welfare but don't have the courage to pay for it with taxes. So you make both sides happy and increase spending while running up deficits. The reason we've seen this astro…

Taxing incomes and not wealth is fundamentally unfair to people without wealth.

The thing is, it is really foolish to make economic policy based on what, as the economist Brad deLong likes to call our East African Plain Ape brain, thinks of as fair. That's just atavistic sentiment. If you run an economy based on these types of emotions, you will end up with a terrible economy in which people are worse off.

Instead, we want to make economic policy based on what will do the most good, not what we think of as being "fair" or "equitable".

The idea of "fairness" says you should shut down gifted programs because they don't support "equity" -- another name for fairness. The smart policy is to have gifted programs even if the result does not seem fair to you. Because that improves living standards for everyone. Having those people drive innovation in the economy is a good thing, even if they are not racially balanced according to whatever bucket system you are using. Constantly worrying that someone else might have more than you is a great way to create an impoverished society, even though that is what the Plains Ape brain worries about.

Now we already disproportionately tax people -- quite a bit. There is no need to disincentivize entrepreneurship in order to satisfy our base instincts for "fairness". If you want to raise marginal rates -- fine, do that. If you want to eliminate the preferential tax treatment for long term capital gains, fine, do that. I'm happy treating all income the same and taxing it according to a single progressive rate. But I would not support taxing paper wealth or unrealized gains merely as a result of repricing of assets. There are other tax reforms that are less harmful to capital formation.

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

#160

Post by rektide »

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".

it makes it all the more important to decide who you get funding from too, since control dissipates more. this would be interesting.
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