Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

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

twitter.com

Post reply on HN
Print view View original

181–190 of 498 posts

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

#181

Post by opportune »

gfodor wrote: post #166
fernandotakai wrote: post #20

Earlier quoted context omitted.

> 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.

That doesn’t make any sense, presuming you meant “collateralize.” I put up $100k of stock for a $100k loan, I do nothing, turn around and pay the money back, and now I have a tax bill? If I repeat this process, I can have an infinite tax liability with no realized gain or net income. Am I missing something?

The “repeating the process” is entirely the problem. If you perpetually roll over your loans you are able to spend large amounts of money without ever realizing a cent of it, thus never paying taxes (since your estate would end up paying it but then financial trickery makes the realization there non taxable).

It would be easy to avoid this infinite tax liability by not taking out an infinite amount of loans…

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

#182

Post by rsj_hn »

fooey wrote: post #172
posguy wrote: post #145

Earlier quoted context omitted.

Samsung (South Korea), TSMC (Taiwan) and Intel (US, Israel) locate their fabs in small countries that are heavily dependent on the US for ensuring their neighbors do not attack. Two of those three (TSMC & Intel) are building fabs in Arizona due to political pressure, hefty subsidies and geological stability of the area (reducing the number of defects in chips).

The fabs in AZ are them fishing for ultra massive government handouts. I'll believe it when I see it if the things actually start producing chips within a couple decades.

You don't think AZ already has a massive fab industry? What is so hard to believe about two more fabs opening up to add to the four Intel already has in the state, together with the new fab already opened by NXP? It's true that Motorola shut down it's old plant in Mesa, but still there is a large workforce in the area.

https://www.allaboutcircuits.com/news/semiconductor-fabs-dot...

https://www.phonearena.com/news/construction-of-tsmc-5nm-fab...

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

#183

Post by AngryData »

Factorium wrote: post #34
brnt wrote: post #5

An altogether _very_ reasonable price for what we're getting in return.

[flagged]

You lose credibility when you throw out nonsense like "The USA is turning rapidly communist." I do not see any argument that could be made to justify such a claim.

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

#184

Post by dsizzle »

DennisP wrote: post #107
dsizzle wrote: post #21

Earlier quoted context omitted.

He could also himself shares with super-voting power, like what Facebook and Google have done.

Is it possible to do that after taking outside investment? I always assumed share classes like that had to be set up at the beginning.

Yes, it's possible: Google, for instance, did it not only after taking outside investment, but after it went public (in 2014, 10 years after it went public) https://www.investopedia.com/ask/answers/052615/whats-differ...

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

#185

Post by opportune »

toast0 wrote: post #163
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. I suspect it would be harder to stop this strategy than it might seem, because someone could happen to make me a large personal loan at a low interest rate when I happened to have a large portfolio with them. If the numbers are big enough, it makes sense…

Mortgage and auto loans are usually cash secured, so there are no gains to realize. This tax treatment could (I would say should) only apply to e.g. shares on the difference between the cost basis and amount used to collateralize the loan.

One quirk of that is that regular Joe could then get a loan against their cost basis in their portfolio and still have no taxes. E.g. they bought 10shares of $X at $100 and now it’s $200. A loan secured against those shares would not be taxable up to $1000 and the portion between $1000 and $2000 would be taxable. This still stops mega billionaires from never paying taxes because the cost bases on their shares are usually very low.

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

#186

Post by [deleted] »

opportune wrote: post #181
gfodor wrote: post #166

Earlier quoted context omitted.

That doesn’t make any sense, presuming you meant “collateralize.” I put up $100k of stock for a $100k loan, I do nothing, turn around and pay the money back, and now I have a tax bill? If I repeat this process, I can have an infinite tax liability with no realized gain or net income. Am I missing something?

The “repeating the process” is entirely the problem. If you perpetually roll over your loans you are able to spend large amounts of money without ever realizing a cent of it, thus never paying taxes (since your estate would end up paying it but then financial trickery makes the realization there non taxable). It would be easy to avoid this infinite tax liability by not taking out an infinite amount of loans…

[deleted]

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

#187

Post by [deleted] »

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…

[deleted]

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

#188

Post by mywittyname »

cosmotic wrote: post #126
young_unixer wrote: post #98

Earlier quoted context omitted.

If a company is doing tons of R&D, and everything suggests that that R&D will give huge dividends in the future, then it seems perfectly normal for such a company to have a high market-cap/revenue ratio. If having too big of a market cap relative to revenue is wrong, then you're basically saying that companies should not invest too much in their future, just use their money to sell as much as possible right now. You…

I think Tesla does a good job of making folks think they are doing a lot of R&D, but that's about it. Based on some quick internet research, Tesla is a quarter of the R&D of either Ford or GM... Unless you think it's higher quality or in a different area... but the whole world is going toward electric cars and autonomous driving. Tesla AutoPilot comes in a distant second to GM according to Consumer Reports: https://w…

There's a reasonable chance of Tesla creating patents that generate a license fee from every car produced, basically in the globe.

It's kind of the reason Toyota has a monopoly on hybrids: they have a patent on the best kind of hybrid system. Ford held a similar enough patent that Toyota entered into a license agreement with them.

Getting a 20 year monopoly on key EV/battery tech will be worth an unimaginable sum.

I don't agree with Telsa's valuation, but I can appreciate why investors support them at their current price.

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

#189

Post by ncallaway »

zchrykng wrote: post #138
Wowfunhappy wrote: post #131

Earlier quoted context omitted.

Steve Jobs, who became CEO when Apple, as a public company, hired him from outside the company?

Who literally saved Apple from their attempted corporate suicide? Yeah, I think he is a good example of why you need a strong founder sometimes.

I think their point is that you can have a strong leader that doesn't have control of the company through ownership mechanism.

Steve Jobs at Apple is a perfect example, since it was a publicly traded company that Steve Jobs didn't control. However, he was still able to be an extremely effective leader as the CEO.

Post reply on HN