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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

#321

Post by flurben »

narrator wrote: post #310
flurben wrote: post #302

Earlier quoted context omitted.

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…

Blackrock and Vanguard are just intermediaries, they do not actually own the shares in their ETFs, they manage the assets on behalf of clients.

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

#322

Post by WalterBright »

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…

> Why should capital gains get favorable tax treatment over income

Because the income has already been taxed when it was the corporation's profit.

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

#323

Post by dragonwriter »

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.

> Here's another example: every government on Earth. All have a single key decision maker at the top.

No, they don't. A system with a council with a chair with no significant additional decisionmaking power over other members is not unheard of.

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

#324

Post by bryanlarsen »

ajsnigrutin wrote: post #217
flurben wrote: post #150

Earlier quoted context omitted.

Taxing incomes and not wealth is fundamentally unfair to people without wealth.

Your grandma bought a house for cheap, you inherited it, and because it's in the silicon valley, that house and the plot is now worth eg. $10mio. Your buddies grandma did the same, but her house is in bumfuck alabama, and it's worth $50k. Technically you two own the same thing, but you'll get fucked by taxes and he wont. Why would you be taxed on something you you already paid tax for to buy? Renting out the house? S…

Just get a HELOC to pay all the tax. Having a bank own a third of your $10M house puts you way ahead of your buddy who owns 100% of a $50K house.

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

#325

Post by ncallaway »

I think the comments here miss a couple of factors.

First, and primarily, Tim Sweeny states: "If this tax scheme had been place, I’d have been forced to liquidate nearly my entire ownership." This is absolutely false.

The proposed law (legislative text available here: https://www.finance.senate.gov/chairmans-news/wyden-unveils-...) would not apply the tax scheme to Epic Games. At all.

See Section 491, which applies the new tax scheme to "tradable covered assets", and Section 497 which defines "Tradable Covered Assets". Those are defined assets traded on established securities markets or readily available on secondary markets. Epic Games is a privately held company, and not traded on established securities markets or readily available on secondary markets.

Additionally, the law allows each person to designate up to $1B of normally "tradable covered assets" as "nontradable covered assets". Which means if this law did apply to Tim Sweeny, it wouldn't have impacted his holdings by as much as he implies, as $1B of his assets is removed from his "assets" at the start of the calculation. This significantly reduces the amount of shares he would have to liquidate to cover his take burden.

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

#326

Post by TameAntelope »

wolverine876 wrote: post #312
TameAntelope wrote: post #303

Earlier quoted context omitted.

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-b…

The options have been considered and developed for years, decades even. There should be public debate, but these aren't new ideas that some novices are pulling out of a hat.

How would I be able to verify that? It seems like these are not very well considered options, based on my limited view.

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

#327

Post by bradgessler »

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…

Another problem with taxing unrealized capital gains is that if the gov’t wants to collect more tax revenue, they could print money, inflate the dollar value of assets, then tax the gains.

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

#328

Post by chii »

mandevil wrote: post #296
gruez wrote: post #256

Earlier quoted context omitted.

>- 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.

I buy stock at price A and sell, it later, at price B. Assuming B > A, (if it isn't this is a whole different thing) then I am taxed on the gain the stock made, I pay tax on the value of (B-A). On the other hand, I do have all of the (B-A) cash, which is nice. (Or as my tax professor once said, it's always better to have more money rather than less, and to die later rather than sooner.) Now let's say I still buy the…

> government never got it's cut of that (B-A) difference

because the person who should be paying that cut is dead! You don't tax the dead.

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

#329

Post by the_optimist »

flurben wrote: post #258
rsj_hn wrote: post #159

Earlier quoted context omitted.

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 le…

You have cause and effect backwards. The modern world is not capital constrained because capital formation is (in certain locations) superfluous. When it is not, it is.

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

#330

Post by bryanlarsen »

WalterBright wrote: post #316
artdigital wrote: post #155

Earlier quoted context omitted.

I kinda disagree. Yes it's a loophole to get around tax, but taking a loan against assets you own should not be taxable. It's the same pathway that people use to take a loan against their property and other assets, and having to pay tax on that is absurd Similarly, stocks (or things like gold) that one owns have some worth, and using it as collateral for taking a loan against it is a completely valid thing to do

> Similarly, stocks (or things like gold) that one owns have some worth, and using it as collateral for taking a loan against it is a completely valid thing to do It's how the entire banking system works. Taking out loans against collateral deposited in the bank. People also take out a loan every time they use a credit card. Is that income, too?

No, a credit card isn't collaterizing an asset because it's unsecured.
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