Tim Sweeney: Tax bill would likely end founder control of independent companies • Hacker News Board

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

#251

Post by [deleted] » Thu, Oct 28, 2021, 2:35 AM UTC

bananabreakfast wrote: post #220

threeseed wrote: post #81

Earlier quoted context omitted.

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.

Hard disagree. A senior leadership team without a key decision maker is fundamentally lost and seeks only self preservation through short term goals. Here's another example: every government on Earth. All have a single key decision maker at the top. In democracies they can be kicked out, but they have total control while they're in power.

[deleted]

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

#252

Post by Accujack » Thu, Oct 28, 2021, 2:35 AM UTC

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…

> If he's great at his job I presume shareholders would want to keep him on as CEO and would compensate him handsomely in cash money.

This really isn't how the real world works. It's easy to design rules that would work acceptably if no humans were involved, but in reality this would ensure there are no sole owners of companies with control. Sooner or later, every CEO does something that "conventional wisdom" doesn't agree with, and if he doesn't have corporate control, he's out.

Yes, this would "hurt" gaming and the economy, because it would change the ownership of companies for the worse. If every game company was Bethesda, mediocrity and micropayments would rule the gaming world, because every company would pursue whatever strategy is perceived to be "obvious" to make shareholders' money increase.

If this tax had existed when Doom came out, Id software and the effects it had on gaming as we know it would never have existed.

On a side note, the people here commenting that companies could just pay a salary to their CEOs large enough to cover the wealth tax apparently have never owned or run a company. Any company being forced to pay out liquid cash equal to 20% of its stock valuation would go under. The usual killer of small to medium companies is cash flow.. having enough money to buy what you need to keep producing and paying bills until your customers pay their bills.

Also, if they're trying to tax theoretical gains, are they also going to pay out when companies' valuation decreases?

In corporate performance, you get what you measure. If the tax is charged based on companies gaining value, companies won't gain value.

That plus the fact that certain corporations are exempted from it (hedge funds) makes it a non starter.

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

#253

Post by Barrin92 » Thu, Oct 28, 2021, 2:35 AM UTC

hncurious wrote: post #233

threeseed wrote: post #81

Earlier quoted context omitted.

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.

They tend to stagnate after the founder leaves.

any actual data to back that up? Looking at the top 50 American businesses by market cap probably 90%+ aren't run by founders, and plenty of the largest ones have continued to grow just fine. Apple, Microsoft just two name to trillion dollar businesses.

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

#254

Post by bryanlarsen » Thu, Oct 28, 2021, 2:36 AM UTC

WalterBright wrote: post #162

anigbrowl wrote: post #149

Earlier quoted context omitted.

I'm in sympathy with that argument, but I don't think that singularly driven people are motivated by profit alone, and that they'll stop if there's some change is the underlying property ownership calculus. Also, it's worth considering that not everything great is good, so perhaps a braking or governance system (in the sense of an engine) is worth requiring on any enterprise sufficiently large to become a juggernaut.

If a committee can reject their initiatives, how are they going to implement them? > it's worth considering that not everything great is good, so perhaps a braking or governance system (in the sense of an engine) is worth requiring on any enterprise sufficiently large to become a juggernaut. Yeah, let's just throw SpaceX in the trash heap. Nevermind that NASA, the organization run by committee, has failed to make spa…

SpaceX is already run by committee. The president of SpaceX is Gwynne Shotwell and she is widely believed to regularly reign in Elon Musk. For example Elon wanted to cancel the Falcon Heavy project when NASA said they would never man-rate it, but Shotwell over-ruled him until he changed his mind.

Musk controls enough shares that he could get rid of Shotwell at any time, or reduce her power, but he chooses not to.

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

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Post by wolverine876 » Thu, Oct 28, 2021, 2:36 AM UTC

TameAntelope wrote: post #119

Okay, doesn't it feel crazy that we're just throwing ideas out there and if it seems to justify the spending for something totally unrelated, it'll have a reasonable chance of becoming literally the highest law of the land? Maybe it's because I'm not in the room, but this feels incredibly slapdash for something so incredibly important.

> if it seems to justify the spending for something totally unrelated

Income taxes pay for almost everything; should they only pay for things related to income? I don't understand that.

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

#256

Post by gruez » Thu, Oct 28, 2021, 2:36 AM UTC

adam_arthur wrote: post #248

It'd be pretty easy to levy completely fair and progressive tax structure that only directly impacts the wealthy, and is sufficient to cover the spending. - Tax capital gains >1m a year as regular income. - Fix loopholes that allow for equity as collateral for perpetual loans without ever selling the underlying. - Remove step up in cost basis on inheriting assets. - Tax stock buybacks at same level as dividends. - Do…

>- Remove step up in cost basis on inheriting assets.

my impression is that the step-up cost basis is there because you've already paid the estate tax when the assets were transferred to you? otherwise you'd end up getting double-taxed.

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

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Post by WalterBright » Thu, Oct 28, 2021, 2:36 AM UTC

ncallaway wrote: post #189

zchrykng wrote: post #138

Earlier quoted context omitted.

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.

He had de facto control. Nobody was able to successfully defy him. He used this control to force his vision upon Apple. No committee would have done what he did.

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

#258

Post by flurben » Thu, Oct 28, 2021, 2:36 AM UTC

rsj_hn wrote: post #159

flurben wrote: post #150

Earlier quoted context omitted.

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…

Modern societies are not capital constrained, so capital formation is superfluous. The world is awash in excess capital among the rich, so providing government subsidies to facilitate further capital formation among the rich will not improve living standards.

What you're describing is the failed mentality of the early 1980's : the idea that the wealthy are "better" at capital allocation than everyone else. What it leads to is not some utopia, but simply bigger yachts, and more expensive sports teams, and more expensive land, while the human capital of the poor goes neglected and untapped.

What does the most good for living standards is the government investing in humans and households without capital. More broadly distributed capital, in other words.

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

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Post by missedthecue » Thu, Oct 28, 2021, 2:38 AM UTC

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.

The loan eventually must be repaid. If it's repaid after death, a 40% federal estate tax (+16% if you're in NY or CA) takes it's cut.

I'm not sure who originated this "loans are an infinite money cheat" narrative, but I've been seeing it all over the internet recently and it's simply not true.

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

#260

Post by hedora » Thu, Oct 28, 2021, 2:38 AM UTC

vburg wrote: post #244

Buffet/Gates/Bloomberg/Soros/Cuban have been saying for years the rich need to pay more taxes. Propose a tax increase that actually hits the super-rich and the screaming begins. Guess all along they meant the "other rich", anyone making 200k.

In the Twitter thread, Sweeney proposes a progressive capital gains tax maxing out at 75%. It would hit him personally, but still allow him to run his company. He’s not complaining about the magnitude of the tax. He’s complaining about the mechanism.