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

301–310 of 498 posts

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

#301

Post by dragonwriter »

IG_Semmelweiss wrote: post #283
dragonwriter wrote: post #270

Earlier quoted context omitted.

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 carryfo…

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

It makes having all your eggs in one basket (very slightly) worse than the generally bad idea it already is (if its a billion dollar basket so that you qualify for this treatment in the first place.)

But if all your eggs are in that basket, either the company bounces back later or you are wiped out anyway, so its not that much of a change from the status quo in that respect.

Not that I like the proposal, mind you

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

#302

Post by flurben »

narrator wrote: post #238
IG_Semmelweiss wrote: post #231

Curious. Doesn't this open up the possibility of debt slavery of the entrepreneur, to the government ? If my stock in my biotech startup goes thru the roof and i get taxed X, i could perhaps sell some stock to cover. More likely, though, I will get into an installment plan with the IRS since the gains are so massive its going to be tough to sell so much stock without a discount, to pay the IRS off. Next year, FDA doe…

The idea of this is that private control of companies by independent minded founders should not exist. Only large financial companies like Vanguard and Blackrock should own large stakes in public companies. The practical effect is not to raise more tax revenue, it's to seize control from founders and give it to the financial oligarchy by forcing them to sell. This is what happens in Russia, Eastern Europe, Saudi Arab…

The goal of the legislation is to shift the tax burden towards high net worth individuals, and away from wage-earners.

Raising cap gains rates and/or increasing top marginal income tax rates are not very effective ways to achieve this goal.

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

#303

Post by TameAntelope »

wolverine876 wrote: post #255
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.

Technically only half [0].

And my point is I would expect something more thought through than trotting out each legislator's favorite pet taxation overhaul. A few days to consider amongst the options doesn't really seem like enough time, but I guess we're still talking about "a framework" so there will be more time. They're not attempting to pass any of this right now.

[0] - https://www.taxpolicycenter.org/briefing-book/what-are-sourc...

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

#304

Post by magicalist »

typ wrote: post #277
threeseed wrote: post #221

Earlier quoted context omitted.

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.

But what does that have to do with that person having a majority interest in the company?

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

#305

Post by WalterBright »

Anon1096 wrote: post #201
opportune wrote: post #181

Earlier quoted context omitted.

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…

The problem here is with the step up in cost basis upon death, not getting loans against unrealized shares.

Don't overlook the estate tax.

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

#306

Post by whakim »

WalterBright wrote: post #295
whakim wrote: post #268

Earlier quoted context omitted.

This isn't true. There are lots of recorded instances of wealth taxes (e.g. France prior to the abolition of the ISF several years ago; many countries which levied temporary wealth taxes after WWII, etc.)

There are indeed. And those countries wound up repealing them because of the disastrous effects.

Most evidence suggests that wealth taxes levied in the past have indeed reduced inequality and have not led to the type of tax avoidance their detractors would suggest.

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

#307

Post by threeseed »

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.

> 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

This isn't remotely correct.

a) All democracies I can think of are derived from the Westminister system where there are branches of government e.g. House/Senate who need to agree to get laws passed. Pretty far from total control as Biden is experiencing now.

b) Many democracies e.g. Australia don't have the PM/President be directly elected and instead are appointed by the winning party. Thus their power and control is limited to what is gifted by the party and can be withdrawn at any time at which point a new leader is appointed. Again pretty far from total control.

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

#308

Post by bryanlarsen »

Barrin92 wrote: post #253
hncurious wrote: post #233

Earlier quoted context omitted.

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.

Also look at the top 50 businesses and how many still have founder control. In none of them does the founder still control 50% of the stock, and only a few of them (at least Facebook and Google) do the founder(s) control over 50% of the voting stock.

For example, Bezos only owns 16% of the voting stock of Amazon, Musk only owns 22% of the voting stock of Tesla yet neither are in any danger.

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

#309

Post by flurben »

IG_Semmelweiss wrote: post #231

Curious. Doesn't this open up the possibility of debt slavery of the entrepreneur, to the government ? If my stock in my biotech startup goes thru the roof and i get taxed X, i could perhaps sell some stock to cover. More likely, though, I will get into an installment plan with the IRS since the gains are so massive its going to be tough to sell so much stock without a discount, to pay the IRS off. Next year, FDA doe…

Yes, you're reading this wrong. Referring to tax obligations as "Slavery" is disconnected from reality, and pretty insulting to all the Americans for whom real, actual American slavery is still impactful.

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

#310

Post by narrator »

flurben wrote: post #302
narrator wrote: post #238

Earlier quoted context omitted.

The idea of this is that private control of companies by independent minded founders should not exist. Only large financial companies like Vanguard and Blackrock should own large stakes in public companies. The practical effect is not to raise more tax revenue, it's to seize control from founders and give it to the financial oligarchy by forcing them to sell. This is what happens in Russia, Eastern Europe, Saudi Arab…

The goal of the legislation is to shift the tax burden towards high net worth individuals, and away from wage-earners. Raising cap gains rates and/or increasing top marginal income tax rates are not very effective ways to achieve this goal.

If you have high net worth that means you have control, not that you are necessarily living lavishly. If you want to pay for personal expenses and buy yachts and the usual kinds of things that socialist complain about, you need to take that out in income or through capital gains. Thus, they want to pay for everything by forcing founders to sell control to the country's financial oligarchs like Blackrock and Vanguard who already own large amounts of most public companies.
Post reply on HN