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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

#491

Post by candiodari »

ncallaway wrote: post #466
candiodari wrote: post #461

Earlier quoted context omitted.

What is to prevent "franking" of capital gains the way dividends are franked (ie. every shareholder gets paid back whatever capital gains taxes they would need to pay to keep their stocks/control stable) ? Obviously shareholders who are all equally affected by this would find this to be a fair deal. Likewise these companies exist because of the vision of the founders (or at least, that's a good argument to make. See…

I don't think anything would prevent it, but I doubt many companies would have equally affected shareholders. The point that I agree with Tim the most is that this legislation only affects individuals, not corporate owners. I'd absolutely want to apply it to those owners as well. But, an investment group would not be taxed the same way as individual owners, and so might be less inclined to approve such payments. Also…

If it only affects individuals, it's trivial to circumvent. Have a holding company under your control "owned" by a bunch of people (who are well paid for that role, but have no control. You could even do it the middle eastern way and use extended family for that). Besides, I'm personally much more worried about Blackrock than I am about Bezos, or any billionnaire.

But "doing something" while doing nothing. That, I imagine, is the intention.

any tax rule can be circumvented, because the US allows international share ownership ... which they in fact do:

https://www.forbes.com/sites/danielmitchell/2012/05/11/faceb...

So this needs compromise, talking. The main talking point of these founders seem to be that they want to maintain control of these companies, and choose their successor. Do we care about that with this legislation? Why not give them that?

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

#492

Post by professoretc »

lazide wrote: post #463
professoretc wrote: post #460

Earlier quoted context omitted.

I just got the form from the county for this for some improvements to my house, so I can answer. Permits for "improvements" are sent on to the county tax assessor, and they send you a form basically asking for the value of the improvement. Note that "maintenance" doesn't count, only "improvements" (and then only specific improvements; e.g., adding solar doesn't count). The value gets added to your Prop 13 value, but…

The property I’m currently renting has an assessed value of $248k. A nearby comparable house just sold for $2m. It’s not unusual around here for that to be the case.

That means that your landlord would have to spend $2M on improvements alone in order for their tax bill to 10x.

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

#493

Post by lazide »

professoretc wrote: post #492
lazide wrote: post #463

Earlier quoted context omitted.

The property I’m currently renting has an assessed value of $248k. A nearby comparable house just sold for $2m. It’s not unusual around here for that to be the case.

That means that your landlord would have to spend $2M on improvements alone in order for their tax bill to 10x.

Looks like you’re right! Ref for those curious [https://leginfo.legislature.ca.gov/faces/codes_displayText.x....]

Thanks

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

#494

Post by TameAntelope »

wolverine876 wrote: post #489
TameAntelope wrote: post #483

Earlier quoted context omitted.

Nice! I read The Economist weekly (the old fashioned way, from the mail), as well as WSJ, WaPo, NYT, Newsweek, probably ~40 articles a day from Memeorandum, whatever dreck gets put on Twitter, here, and Reddit. I've also got a handful of daily newsletters I subscribe to that I usually get through most of, as well. I'm a bit of a news junky. :) I don't really have time today to compile a list of proposed tax legislati…

Sorry, I misunderstood you about what you read. Now I'd like to know how you have time! If you have any highly efficient curated news aggregation (high value information, generally non-partisan), I'd love to know. > My point is that the "filter of politics" is exhausting and not necessary (to this degree). I do not think it's okay to propose legislation without explaining why it will do what you say, rather than some…

> If you have any highly efficient curated news aggregation (high value information, generally non-partisan), I'd love to know.

Hah! Literally exactly the thing I'd like to build (productize my process, attach relevant metadata for filtering/sorting, imagine being able to "dial in" your partisan feed to get a sense of what each wing is saying) when I somehow do find some time. I've been spewing ideas at my wife about it for over a year now, but life circumstances threw me in a different direction temporarily.

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

#495

Post by pmorici »

adam_arthur wrote: post #436
pmorici wrote: post #413

Earlier quoted context omitted.

"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.

Texas was the number 4 state for number of SALT deduction claims due to the high property tax. The vast majority taking the deduction are going to be well off homeowners. But yes for sure, high state income tax and other factors play in as well.

Texas is an outlier.

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

#496

Post by adam_arthur »

mrep wrote: post #475
adam_arthur wrote: post #473

Earlier quoted context omitted.

Qualified dividends are taxed as long term capital gains, which is 20% for most. So if you have a 10% buyback tax, they are still more tax efficient than dividends. A 20% buyback tax puts them roughly at par. Dividends are "double taxed" today and buybacks are not. Not sure where you got your information, but it's wrong. Your source confirms what I'm saying, so maybe try reading it again.

No it does not because the person who they buy the stock back from has to pay cap gains still. The wiki page even has an example of how a dividend effectively reduces the shares price whereas buybacks effectively transfer the money into the share price which raises it over time proportionally and you will have to pay cap gains on it when you do sell.

They pay the capital gain at some point, but the most wealthy tend to never sell. They tend to take loans against their assets and hold in perpetuity.

I agree that raising the value of the share leads to a deferred taxable event, just a question of whether that deferral is permanent or not.

Presumably it would be realized at some point.

There is also a compounding effect to deferring gains, which leads to higher wealth concentration. e.g. you make gains on the portion of your investment that would be taxed, because dont owe the tax until you sell.

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

#497

Post by MisterBastahrd »

WalterBright wrote: post #386
PaulDavisThe1st wrote: post #357

Earlier quoted context omitted.

For almost every US person, it IS a world without an estate tax. Nobody pays that in 2021 without an estate worth more than US$11.7M

The figure is $2,193,000 for Washington State. Considering that even starter houses are over a million bucks here, I bet that sweeps in quite a bit more than "nobody".

The median house price in Washington State is $450K. If you have another $1.7M in assets when you die, you died rich.

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

#498

Post by ric2b »

tfehring wrote: post #342
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.

The estate tax is almost always double taxation in general. If you just save up money from working and then you die, you'll have paid income tax on that money, then you'll be taxed again on that same money under the estate tax. If you invested it and realized capital gains, you'll pay capital gains tax on those gains, then you'll be taxed on those same gains again under the estate tax. Unrealized capital gains are th…

Isn't double taxation when a tax applies on top of another tax? I think some people are trying to co-opt what it means to apply the "bad" reputation of double taxation to other things.

My own country has a famous issue with double taxation as I know it: diesel/gasoline have a specific tax and then VAT is calculated on top of original_price * gas_tax, instead of the original price.

So if the gas tax goes up 1% we end up paying more than 1% because it also the increases the value of the VAT.

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