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

#271

Post by WalterBright » Thu, Oct 28, 2021, 2:40 AM UTC

bryanlarsen wrote: post #254

WalterBright wrote: post #162

Earlier quoted context omitted.

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.

Smart leaders have a nay-sayer to whisper in their ears when they're making a mistake. That doesn't mean they aren't in command, though.

The fact that Musk can get rid of her at any time speaks for itself. It doesn't mean she's a committee, either.

I've long suspected that the reason McCartney and Lennon wrote great songs for the Beatles, and not-so-great ones afterwards, is because each was willing to tell the other when their work was crap. Afterwards, they just had sycophants who'd tell them every note they wrote was fantastic.

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

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Post by wolverine876 » Thu, Oct 28, 2021, 2:42 AM UTC

gonehome wrote: post #42

Factorium wrote: post #34

Earlier quoted context omitted.

[flagged]

I think the law is bad, but if we had a sane center-right party we wouldn't be in this situation. We're missing a liberal center and it's not found in either party, many (myself included) think the stuff like denying the election results are higher risk so I'm forced to vote against them on that alone. I mostly agree otherwise re: innovation (though think the southern border is not that relevant).

> We're missing a liberal center

The White House and most of the Democratic party are centrists.

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

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Post by souplesse » Thu, Oct 28, 2021, 2:42 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.

I found quotes from Mark Cuban, but I’m not seeing any comments on this proposal from Buffett/Gates/Bloomberg/Soros. Can you share your sources?

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

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Post by missedthecue » Thu, Oct 28, 2021, 2:43 AM UTC

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.

You don't work harder than south east Asian ship breakers, who work 16 hour shifts in carsophaguses of asbestos and rust.

But you earn orders of magnitude more.

Income and wealth aren't solely functions of who worked the hardest and they never have been.

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

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Post by hedora » Thu, Oct 28, 2021, 2:43 AM UTC

chollida1 wrote: post #170

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.

We’ll when musk started both those companies he wouldn’t be affected by this tax. In fact it wouldn’t have hit him until a few years ago and he hasn’t given either company money in longer than that. And Steve jobs did t inject money into apple when they were creating the iPhone. So you’re entire point has been pretty much invalidated

Musk currently has a controlling interest in Tesla because of his stock holdings. Under the proposal, he would no longer have the holdings, and thus no longer control the company.

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

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Post by gruez » Thu, Oct 28, 2021, 2:44 AM UTC

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?

You can presumably adjust this for how much money you actually took out. If you got a line of credit on your house/stocks, but you didn't take out a cent, then you don't owe anything. If you took out 10% of your portfolio value in cash, and the LTV ratio was 50% (that is, you can borrow up to 50% of your portfolio's value), then you're deemed to have sold 20% of your portfolio and have to pay capital taxes. You're free to play around with the parameters when it comes to how the capital gains are calculated (eg. tax lot, which stock was "sold").

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

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Post by typ » Thu, Oct 28, 2021, 2:45 AM UTC

threeseed wrote: post #221

WalterBright wrote: post #95

Earlier quoted context omitted.

> nonsense May I present Steve Jobs, another obvious example? Ray Croc who built McDonald's from a single location into a world empire.

I worked at Apple when Steve Jobs was there. Yes he's amazing. But people like Avie Tevanian, Tim Cook, Bertrand Serlet, Bob Mansfield, Johnny Ive, Dan Riccio etc. all played critical roles in turning Apple around. iPhone simply isn't a success without all of the above functioning at a high level.

The point is there has to be someone to make the final decisions, be they talented or not. You could vote on everything, but I don't think that would be efficient or even make sense for all circumstances.

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

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Post by chii » Thu, Oct 28, 2021, 2:45 AM UTC

gruez wrote: post #265

ethbr0 wrote: post #246

Earlier quoted context omitted.

Which opens the government up to actually having to pay back substantial sums from the IRS, in the event of an equity downturn.

that's going to wreak havoc on finances during a recession. if the economy goes to shit, the government has to come up with money to stimulate the economy AND pay back all the capital gains taxes they collected during the boom times, all while tax revenues are down because businesses are imploding.

which is why academic professionals such as Aswath Damodaran say that this law is a bit stupid, and poorly thought out - it appeals to popular mindset, but it would be ineffective at collecting new tax revenue, and at worst discourage entrepreneurship leading to long term damage.

https://www.youtube.com/watch?v=lQddA58hZdQ

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

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Post by Rebelgecko » Thu, Oct 28, 2021, 2:45 AM UTC

anonporridge wrote: post #264

Question I've had for a while. Assuming a wealth tax gets through, couldn't the wealthy just take out a loan at near 0% against their stocks to pay the bill? Could they get away without selling any stock at all? Especially in an inflationary environment that many people think will get even more inflationary and a Fed that seemingly won't let the stock market crash.

In today's environment, yeah. But a few decades ago those loans would have interest rates more like 20%

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

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Post by belltaco » Thu, Oct 28, 2021, 2:45 AM UTC

codyb wrote: post #226

belltaco wrote: post #209

Earlier quoted context omitted.

A twitter reply says this: >I think everyone needs to read the bill and calm down. "Gains on private assets -- including harder-to-value assets like real estate, art and private companies -- would escape the annual levy, and only be taxable when sold. "

Isn’t Sweeney talking about publicly traded companies here though?

One of his tweets in the chain:

>Every time a company’s value doubles, the government would force founders like me to sell 25% of our stake to pay the government. Epic’s value has doubled 8 times in the past 5 years. If this tax scheme had been place, I’d have been forced to liquidate nearly my entire ownership.

Epic Games has always been a private company.