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

#411

Post by PaulDavisThe1st » Thu, Oct 28, 2021, 5:16 AM UTC

PaulDavisThe1st wrote: post #374

robbedpeter wrote: post #363

Earlier quoted context omitted.

So if you make improvements to your house over the course of a year, and/or the property value in the region goes way up, you could face an unpayable tax bill and lose your house. I don't have much sympathy for renters complaining about gentrification, but property tax laws like this are hot garbage. Sounds like a great way to import rich people and exploit poor people by capping their level of home value. Thanks for…

If you can afford the cost of the improvements, the chances of you being unable to pay X% (where X is likely a single digit) taxes on the value of those improvements is ... small. Sure, Georgism has a lot to recommend it (more or less exclusively taxing land), but that's not happening in the US any time soon.

Also, notice that most property tax assessments are based on purely physical exterior-visible aspects of a home. If you convert that rats nest of a bathroom into a wondrous home spa, in most places no tax assessment change will follow.

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

#412

Post by rsj_hn » Thu, Oct 28, 2021, 5:20 AM UTC

PaulDavisThe1st wrote: post #401

rsj_hn wrote: post #398

Earlier quoted context omitted.

> I mean, c'mon, there's a gigantic tax avoidance industry just for regular income tax. Because we have an extremely complex tax code. But seriously, eliminate all corporate taxes and replace that with a 10% VAT. Treat all income the same -- I don't care whether it's a long term capital gain, or a meteor filled with gold crashing into your yard, don't distinguish at all. Put it all into a single bucket, get one numbe…

The correct answer in my opinion has nothing to do with corporate taxation. The US government for some reason(s) (for another day) is almost completely unwilling to simply redistribute money to fund things it decides are worthy goals. Instead it creates tax credits and deductions that are supposed to do the same thing (at least for "the worthy"). We need to stop using tax code to implement policy. Taxes should be tax…

Yeah, I agree on the households. The point about corporate taxes is we have so many loopholes. Historically, nations adopted a VAT because it's great at squashing tax-avoidance, as it encourages snitching. Basically you report you paid someone X, and then they have to pay the VAT instead of you. So it's a very clean and elegant solution to dealing with the problem of corporate accounting and tax avoidance.

In terms of treating a corporation the same as a household -- so that it pays taxes on all revenue, the problem is the economic distortions. There are just some businesses - like grocery stores -- that have high turnover and low margins. Other businesses have low turnover and high margins. And the tax code should not really penalize one at the expense of another. E.g. groceries just don't last, they have to be sold quickly. Furniture lasts a while. The reality of that natural difference trumps any appeals to logical symmetry in treating corporations the same as households.

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

#413

Post by pmorici » Thu, Oct 28, 2021, 5:22 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…

"SALT is a direct handout to wealthy homeowners."

The SALT deduction benefits people in high tax states which happen to also be states where democrats hold political power. Many of them ran on restoring the SALT deduction. It benefits states that have high tax rates not exclusively 'wealthy' home owners.

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

#414

Post by anonporridge » Thu, Oct 28, 2021, 5:26 AM UTC

Rebelgecko wrote: post #279

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%

Wouldn't the loans be fixed interest rates?

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

#415

Post by chii » Thu, Oct 28, 2021, 5:28 AM UTC

seoaeu wrote: post #365

chii wrote: post #328

Earlier quoted context omitted.

> 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.

> You don't tax the dead. Why not? If someone owes a bunch of taxes when they die, their estate should still be on the hook for it. I don't see any reason that money owed to the government should go to someone's heirs instead just because they happened to die at a specific time

> money owed to the government

but the money wasn't owed - because the gains were never realized, so the person (who died) never got to enjoy the consumption of that money, so therefore, it doesn't seem fair to take tax from somebody who would not be alive to defend themselves from it.

The heir receiving inheritance should get taxed - on the whole value (B in the OP's nomenclature). But the heir should not have to also pay B-A capital gains, which is a tax that would've been levied on the now dead, had they decided to sell instead of dying.

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

#416

Post by whakim » Thu, Oct 28, 2021, 5:30 AM UTC

WalterBright wrote: post #396

whakim wrote: post #393

Earlier quoted context omitted.

Sure, some people will move their assets around in order to avoid wealth taxes (to which there are, of course, solutions). That being said, in France revenue from the wealth tax grew at more than twice the rate of GDP from 1990-2018. Which means that even though some people were avoiding the tax, and oversight was extremely lax, there's no evidence that it was being serially evaded. And this is in the context of the…

Note the part about the wealth taxes generated less revenue than the ordinary income taxes would have, since the rich left the country. The fact is, those wealth taxes were repealed . Because they didn't work.

First, I assume the estimates on capital flight in the WSJ are based on Pichet's 2007 paper, which makes a number of huge assumptions to arrive at its estimate. This isn't necessarily a criticism, more a statement that there isn't a lot of good evidence and other approaches to estimation yield much more modest sums.

Second, the article does not say that "the wealth taxes generated less revenue than the ordinary income taxes would have." It says that "the government was losing revenue from income taxes that the wealthy would have paid." There isn't a comparison there. Sure, the government was losing some revenue from income taxes, but nothing on the order of magnitude of the revenue brought in by the ISF. Those who are extremely wealthy actually do not tend to pay much in income taxes, especially outside of the US where top salaries are significantly lower.

Third, the assertion of widespread capital flight in France is provably false. If we look at French national accounts, the larger a fortune (and therefore the greater percentage of which is made up of financial assets), the more it grew relative to smaller estates (which are predominantly composed of property). Under the hypothesis of capital flight, we'd expect to see exactly the opposite.

Fourth, the effectiveness of the wealth tax had nothing to do with its repeal - it had to do, in large part, with the specific politics of the internationalist-global coalition that Macron spearheaded.

Fifth, even if capital flight becomes an important concern (and I do believe it is important, simply not at the level that is often cited), there are plenty of ways it can be circumvented, especially given the very different dynamics of the US tax system and the US place in the world.

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

#417

Post by rsj_hn » Thu, Oct 28, 2021, 5:37 AM UTC

whakim wrote: post #416

WalterBright wrote: post #396

Earlier quoted context omitted.

Note the part about the wealth taxes generated less revenue than the ordinary income taxes would have, since the rich left the country. The fact is, those wealth taxes were repealed . Because they didn't work.

First, I assume the estimates on capital flight in the WSJ are based on Pichet's 2007 paper, which makes a number of huge assumptions to arrive at its estimate. This isn't necessarily a criticism, more a statement that there isn't a lot of good evidence and other approaches to estimation yield much more modest sums. Second, the article does not say that "the wealth taxes generated less revenue than the ordinary incom…

> the article does not say that "the wealth taxes generated less revenue than the ordinary income taxes would have."

The loss of income tax revenue from the departure of the wealthy was twice as much as the revenue generated from the wealth tax from all of those who didn't leave. Therefore the tax was a net negative, hurting French finances to the tune of 7 billion euros of lost revenue as a result of the tax[2]

"The revenue it raised was rather paltry; only a few billion euros at its peak, or about 1% of France’s total revenue from all taxes. At least 10,000 wealthy people left the country to avoid paying the tax; most moved to neighboring Belgium, which has a large French-speaking population. When these individuals left, France lost not only their wealth tax revenue but their income taxes and other taxes as well. French economist Eric Pichet estimates that this ended up costing the French government almost twice as much revenue as the total yielded by the wealth tax."[1]

> Those who are extremely wealthy actually do not tend to pay much in income taxes, especially outside of the US

In France they certainly do, but they did not pay much in wealth taxes due to the difficulty in collecting the tax.

And here we have the main problem. Perhaps there is debate about how many tax refugees left and how much capital left the country -- that's fine.

But is the purpose of the tax to hurt the rich or is the purpose of the tax to raise money?

There is no debate about how much money the tax raised, regardless of whether you agree with Pichet's study. The money raised is known and was just 5.2 billion euros in 2015[2]. For all of France - a nation whose 2015 GDP was 2.2 Trillion euros. And this was a tax valued at 0.5% for all wealth above 1.3 million and an extra 1% for wealth above 10 million euros (so two rates of .5% and 1.5%). So even if you disagree that the net effect was negative because you don't agree with Pichet's methodology, there is no disputing the tax was ineffective at raising money.

[1] https://www.bnnbloomberg.ca/france-tried-soaking-the-rich-it...

[2] https://www.investorschronicle.co.uk/education/2021/02/11/le...

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

#418

Post by thoughtstheseus » Thu, Oct 28, 2021, 5:38 AM UTC

rsj_hn wrote: post #398

PaulDavisThe1st wrote: post #395

Earlier quoted context omitted.

If there are taxes, there's a tax avoidance industry. I mean, c'mon, there's a gigantic tax avoidance industry just for regular income tax. The proposed law under discussion here explicitly excludes privately held businesses and artwork.

> I mean, c'mon, there's a gigantic tax avoidance industry just for regular income tax. Because we have an extremely complex tax code. But seriously, eliminate all corporate taxes and replace that with a 10% VAT. Treat all income the same -- I don't care whether it's a long term capital gain, or a meteor filled with gold crashing into your yard, don't distinguish at all. Put it all into a single bucket, get one numbe…

We should implement a digital central bank currency and use it to implement a progressive consumption tax. Vats are great.

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

#419

Post by Rebelgecko » Thu, Oct 28, 2021, 5:40 AM UTC

anonporridge wrote: post #414

Rebelgecko wrote: post #279

Earlier quoted context omitted.

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

Wouldn't the loans be fixed interest rates?

As far as I know, every sort of margin loan or pledged asset line of credit is indexed against the daily SOFR, LIBOR, or a similar benchmark (onto which the lenders add their profit margin, which is usually negotiable if you throw enough money at them). If you know any with fixed interest rates let me know, that'd be a helluva deal!

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

#420

Post by hellbannedguy » Thu, Oct 28, 2021, 5:40 AM UTC

satyrnein wrote: post #94

hellbannedguy wrote: post #28

Earlier quoted context omitted.

You mean old middle class, and poor homeowners, can stay in the house they raised a family in? The only reason my high school educated 80 years old mother in declining health can stay in a home, and county, she feels somewhat safe is because of prop 13. Her biannual property taxes are still a big deal when they arrive. I've said this before, but I'm beginning to think if you didn't live through the craziness before P…

What seems odd to me (if I understand it correctly) is that prop 13 keeps your property tax low, but you still get the full benefit of the appreciation in price when you sell the property. It kind of seems like if it's artificially keeping the tax low, the full tax bill should come due at some point, which would logically be at the change of ownership.

1. Name one other perk government gave poor, or middle class, homeowners. If you are lucky, and hard working, you might end up being a homeowner. You will appreciate a reasonable tax bill when you arn't spunky, and making money, later in life.

2. Not all of us are budding business owners--excuse me Start-ups. We don't have business deductions, or anything else fancy. We fill out the short form.

3. I saw my father cry twice. Once at his mother's funeral, and yes when he opened that ever increasing property tax bill in the 70's.

4. People have no idea how county officials wasted those funds in the 70's. There were pet political projects, and just waste.

5. America was different back then. Most stuff was made here. Blaming Prop 13 is misdirected.

6. There's a part of me that wants to let the youngsters have their wish. I will sit back and watch homes being snatched up by wealthy foreigners, and corporations.

They will buy up those homes, and we be in the same spot.