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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

#281

Post by Accujack »

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…

1) They're trying to create a billionaire tax that will somehow pass the corrupt mess in the US Federal government and also not permit loopholes for tax evasion. I think it might be just a dog and pony show since there's little chance of anything passing the Senate at the moment and because it's a non starter for Republicans.

2) I don't agree with your reasoning here.

3) The US is pushing extraterritoriality pretty well, and the nations of the world have agreed to try to eliminate tax havens. Pretty soon there won't be an "overseas" to go to.

4) I don't accept the terms "liberal" or "conservative" to mean what most of the people who use them mean. As labels, they promote sloppy thinking. I consider the authors of this tax to be the Democratic party, who have already proven they are far too establishment to be allowed to continue to exist.

5) Not really possible, because raising those interest rates has other effects. Rather than taxing theoretical company values, tax purchases, VAT- style.

6) You're treating "the left" here as if it's a hard and fast definition of a group of people. Politics in the US is far more complicated than that. There may be some truth to what you say here if you are talking about specific groups of people, but just equating Democrats/the authors of this bill to "the left" isn't accurate, and that sort of inaccuracy perpetuates political partisanship and extremist thinking.

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

#282

Post by missedthecue »

belltaco wrote: post #211

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. " So this wouldn't have even applied to Epic Games?

That's really just another reason not to like it. It's a massive disincentivize to go public, because as described, everyone's stake will get whittled down to zero by this tax over time.

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

#283

Post by IG_Semmelweiss »

dragonwriter wrote: post #270
chii wrote: post #239

Earlier quoted context omitted.

if you tax unrealized capital gains, it's only fair to return unrealized losses. so > stock tanks to near $0 means you get all your paid tax back.

I think that the proposal is, much as with taxes on realized gains and losses , unrealized losses would be allowed to offset unrealized gains and be carried forward if there was an excess of losses.

Ouch. If I understand you correctly, this is then a really awful scenario for founders.

As a founder, my only assets were the stock of my company . I don't own any other stock, certainly none that would go thru the roof over a year or 2.

If the company goes south after a hot streak, I end up with excess unrealized losses that I can't use, because I have no other assets with unrealized gains to book against my carryforward losses.

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

#284

Post by missedthecue »

RNCTX wrote: post #169
jonas21 wrote: post #23

Earlier quoted context omitted.

I'm not sure what you mean by this, but Walmart started as a mom and pop store, and the Walton family maintains majority ownership to this day.

Walmart didn't go from mom and pop store to national corporation without an IPO. I'm going by wiki data here, which says they had 18 stores and annual revenue of 9 million in 1968. If they had stayed private they were probably clearing a million dollars a year, give or take. To get from there to billions they had to raise outside money, specifically by selling stock and debt to someone else. That is by definition "no…

Koch industries does over $100B in revenue and has never gone public.

Bloomberg is another example.

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

#285

Post by Rebelgecko »

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.

Basically they're trying to figure out how to increase revenue while still being able to claim they're not increasing personal income or corporate tax rates. That's why theyre also looking at schemes like reducing maximum retirement contributions- it's technically not a tax increase, it's just a change that increases the taxes you'll have to pay in retirement

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

#286

Post by Accujack »

Ericson2314 wrote: post #117
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…

That's no true with deficits. The way we have historically choosen to do monetary policy has some bad distributional effects, but regular fiscal policy or a UBI does not. This is, frankly, an extremely dangerous misunderstanding because it's austerity and slack labor markets markets that have immiserated the non-rich. Deficits themselves are never the problem. Look mo further than the pandemic checks causing us to li…

>causing us to live in a time of renewed labor unrest rather than a second great depression.

So far, it's showing signs of being both.

UBI is a non starter for at least the next three or four decades except in limited cases. Education of all the rural ("red state") voters has to happen before anything like that would be possible to enact... right now their perception that other people are having an easier time in life because they're given things that the first group had to work for is reason enough for them to have put Trump in power.

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

#287

Post by dragonwriter »

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.

> that's going to wreak havoc on finances during a recession.

No, among other reasons, because its not going to happen, just as it doesn't with the taxes on realized capital gains and losses, where losses can offset gains, and if there is excess a certain amount of regular income, and if there is still excess (or not enough taxable regular income to use the full offset) end up as carryforward losses that can be used as future-year losses, but don't result in negative liability on their own.

> 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

If they were to write the law so that unrealized capital losses resulted in tax refunds, that would be stimulus, not an extra thing on top or stimulus. It might not be optimally targeted stimulus, but that rarely happens, anyway.

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

#289

Post by bryanlarsen »

bananabreakfast wrote: post #216
kyleee wrote: post #84

Earlier quoted context omitted.

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

This is not a loophole. Collateralizing a loan against assets does not produce income. It produces cash and an even larger liability. That loan still has to be paid off with separate, regularly taxed, income. Also this is a strategy used all the time by the 99%. It's called a second mortgage. This proposal would mean that taking out a loan against the equity in a home would become a taxable event.

Of course it's a loophole. Elon Musk takes essentially no salary, never sells his shares yet lives the life of a workaholic billionaire. The only reason he has any taxes at all is because he is taxed on his stock grants. He also has > $1B in debt.

The first $500K in residential capital gains aren't taxable. I sure hope your second mortgage is less than that.

Taxing the securitization of assets should cause a step up in the base cost of the asset. So it doesn't reduce the amount of tax you owe, it just changes when you owe it. (Unless you avoid the tax by dying).

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

#290

Post by bskrobisz »

WalterBright wrote: post #93
bskrobisz wrote: post #73

Earlier quoted context omitted.

I think the primary issue is not precisely 'wealth inequality' but rather a lack of accountability and responsibility from people with large amounts of wealth. If one has assets whose value is representative of the life's work of several thousand people, it's one thing to have someone who is demonstrably capable and responsible manage it, and another thing entirely to have someone /own/ it. If I had to guess (and I c…

If you own your house, is it unfair that you don't share it with all the people who contributed to building it? Or is it fair that you paid them what they asked for their efforts?

This is not really the point that I'm arguing--my point would be that if you wanted your house entirely encrusted in precious jewels, each of which was individually polished by a team of people paid 50 USD an hour to do this weekly, nothing stops you from making that decision even though you are monopolizing a large quantity of resources for status, almost entirely. Someone with a large amount of wealth is generally within their rights to do this, which I would view as a problem.

This isn't to say that I would accuse the majority (or even very many) individuals in positions where they're able to leverage a lot of wealth of anything specifically this egregious, but rather that because they're able to control many resources because their efforts have enormous leverage (and therefore are worth more to the system they operate in), they can consume orders of magnitude more resources to gain comparably minuscule increases in personal utility.

In addition, because of how valuable their leverage makes their effort, when they cause damage whose negative value is on the scale of individuals, the disparity leads a system that's self-interested to forgive them much more quickly--if someone can get 1% more value out of 10 billion dollars' resources than anyone else, that system doesn't have any purely value-driven reason to replace them in their position if they should murder someone and its negative effects never amount to more than a couple million dollars' loss in value. From any ethical standpoint that holds "death at the whims of billionaires" incompatible with "certain unalienable rights", this is a problem.

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