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Because of asset seizures, I am starting my new company outside California

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Re: Because of asset seizures, I am starting my new company outside California

#31
post #4

here is the relevant info i could find about the taxes/asset seizure the author is referring to: "Proposition 30 creates three new upper income tax brackets for the next seven years. For example, folks with $250,000 to $300,000 a year in income will pay 10.3%, up from 9.3%. The new top income tax rate–for folks with income of $1 million-plus–will be 13.3%, up from a current top rate of 10.3%. That eclipses New Yorker…

> Still, all Californians will be chipping in: Proposition 30 also raises the state sales tax from 7.25% to 7.5% for four years, starting Jan. 1, 2013. But not chipping in equally or proportionally. Only the very top tier have an increased income tax, so they will be paying more from the start. And the simple reasoning that "people with more money tend to spend more money" says that the top tier will also be chipping…

>> Still, all Californians will be chipping in: Proposition 30 also raises the state sales tax from 7.25% to 7.5% for four years, starting Jan. 1, 2013.

> But not chipping in equally or proportionally. Only the very top tier have an increased income tax, so they will be paying more from the start. And the simple reasoning that "people with more money tend to spend more money" says that the top tier will also be chipping in more of that sales tax.

that totally depends on what you use to determine proportionality or equality.

A sales tax is equally proportional from the persective that everyone pays the same amount for the same amount of dollars spent, regardless of net worth. It's progressively proportional from the perspective that people who spend more have to pay more taxes, and up until a certain point, people spend all or nearly all their income. It's regressively proportional from the perspective that the rich do not in actuality spend all or even most of their income (ie your simple reasoning fails to be consistent with reality somewhere between $100k/year and $1M/year) and instead park it investments which are not taxed through sales tax (depending on who you talk to, it's because the rich have run out of things to buy, or because they are being responsible with their money).

A flat income tax is equally proportional from the perspective that everyone pays the same percentage of income. A flat income tax is progressively proportional from the perspective that the rich must pay more dollars than the poor since they have benefited more. A flat income tax is regressively proportional from the perspective that the rich have much more discretionary funds than the poor people after taxes, since many expenses, like food, housing, rent, gas, and car maintenance are relatively inelastic until at least the upper-middle end of the quality spectrum.

A graduated income tax is equally proportional from the perspective that equal amounts of income is taxed at the same rate regardless of the total amount of income (eg: two brackets, x 100 := 3.25. An income of 105 has a tax of 100 * .03 + 5 * .05 = 8.05 and not 105 * .05 = 5.25). A graduated income tax is progressively proportional since the people in a higher bracket pay a larger percentage of income than those in a lower bracket. A graduated income tax might be regressively proportional from the perspective that the total amount of tax paid is supposed to be roughly equal to the benefits received from being a part of that society and if the beneefits from being a part of the society are much more progressively proportional than the tax rates and brackets.

> Prop 30 was a piece of shit. I personally voted for the competing Prop that would have given a equally proportionate income tax bump across the board.

I agree with you that the tax increases should have been across the board, and I think the increase should be progressively proportionate. But prop 38 did a bunch of things wrong outside of getting the tax increase part right:

"For example, none of it could be used to increase salaries. But the restraints appear to deter some kinds of reform, such as lengthening school days or years, creating regional pools of resources or offering more instruction online. And the measure bars the Legislature from changing any provisions that prove problematic; instead, any amendments would have to be made by the voters.

The biggest shortcoming of Proposition 38, though, is what its supporters consider its main selling point: the fact that it walls off from the general fund most of the money it raises. That's a real problem for the current fiscal year, which will be over before much of the funding would kick in.

. . .

In addition, the singular focus of Proposition 38 on education is misplaced, particularly in light of the deep and damaging cuts the state has been making in programs that aren't already guaranteed half the state's general fund. As much as the schools need help, they aren't the only ones in need of rescue. And walling off another chunk of the state's revenues would only make it harder for lawmakers to address the breadth of the state's needs." [1]

[1]: http://www.latimes.com/news/opinion/endorsements/la-ed-end-p...

Re: Because of asset seizures, I am starting my new company outside California

#32
post #17

Earlier quoted context omitted.

The big one that likely upset him (and which he more specifically calls out in a previous piece) was the elimination of the qualified small business exclusion: Not only did the state's Franchise Tax Board (FTB) eliminate a tax break on capital gains for small business owners and investors, it announced the tax would be reinstated retroactively. This means those who benefitted from the break can expect a bill for unpa…

The whole retroactive thing strikes me as incredibly wrong and should be illegal.

Constitutionality of law indicates otherwise.

Re: Because of asset seizures, I am starting my new company outside California

#33
post #17
post #4

here is the relevant info i could find about the taxes/asset seizure the author is referring to: "Proposition 30 creates three new upper income tax brackets for the next seven years. For example, folks with $250,000 to $300,000 a year in income will pay 10.3%, up from 9.3%. The new top income tax rate–for folks with income of $1 million-plus–will be 13.3%, up from a current top rate of 10.3%. That eclipses New Yorker…

The big one that likely upset him (and which he more specifically calls out in a previous piece) was the elimination of the qualified small business exclusion: Not only did the state's Franchise Tax Board (FTB) eliminate a tax break on capital gains for small business owners and investors, it announced the tax would be reinstated retroactively. This means those who benefitted from the break can expect a bill for unpa…

That was an extremely rare tax deduction that few had every even heard of before an article about it came out in January.

It was struck down by courts as unconstitutional, so the deduction had to be disqualified retroactively.

Re: Because of asset seizures, I am starting my new company outside California

#34
post #24
post #6

Earlier quoted context omitted.

Income != Assets His bio describes him as a "failed investment banker", so perhaps his lack of that kind of basic knowledge should come as no surprise. This Proposition was passed back in November, yet somehow it appears to be news to the author.

Stupid question, but once your income has been taxed and you turn the net into an asset, and then the state comes back in and tell you that the money you used to buy this asset really belonged to the state, isn't that asset seizing? Edit 1: SP

Stupid question, but how did you pay 2012 taxes before 2012 was over?

Re: Because of asset seizures, I am starting my new company outside California

#35

While I don't think these current retroactive taxes are intentional hard core redistribution of wealth (because there might be some technicality or specific quark we are dealing with here) it is none-the-less a soft beginning and a peak into what's to come. When a State becomes a welfare and entitlement land, the hordes that it will bread will have a voting power that will outmatch those that work and earn. Just look…

> While I don't think these current retroactive taxes are intentional hard core redistribution of wealth (because there might be some technicality or specific quark we are dealing with here) it is none-the-less a soft beginning and a peak into what's to come.

> When a State becomes a welfare and entitlement land, the hordes that it will bread will have a voting power that will outmatch those that work and earn.

Perhaps, but the US's domestic policy from about 1980 has been an intentional distribution of wealth: [1].

And on top of that, americans prefer much more evenly distributed wealth than the current situation: [2].

Source article for [1] and [2] is [3].

> Just look at any city or state that's failing. They all have the same thing in common. Too many resource consumers (and destroyers), not enough resource producers (and creators).

The US has a consumer based economy, so wouldn't more consumers be a good thing since it would require the producers to produce more, which would create more jobs? Also, wasn't the main problem with the recession that most companies couldn't find enough consumers willing to buy their product? I think you have this part backwards.

> There is no doubt that in the next 20-50 years we will probably see this redistribution mostly in the form of higher taxes, and taxation without representation will become the norm (see - http://www.wnd.com/2013/03/suburbs-secede-from-atlanta/ for an intresting example of this last part). And it will always fail and just make things worse.

It seemed to work pretty well in the 1930's and 1940's.

[1]: http://assets.motherjones.com/politics/2011/inequality-p25_a... [2]:http://assets.motherjones.com/politics/2011/inequality-page2... [3]: http://www.motherjones.com/politics/2011/02/income-inequalit...

Re: Because of asset seizures, I am starting my new company outside California

#36
post #31

Earlier quoted context omitted.

> Still, all Californians will be chipping in: Proposition 30 also raises the state sales tax from 7.25% to 7.5% for four years, starting Jan. 1, 2013. But not chipping in equally or proportionally. Only the very top tier have an increased income tax, so they will be paying more from the start. And the simple reasoning that "people with more money tend to spend more money" says that the top tier will also be chipping…

>> Still, all Californians will be chipping in: Proposition 30 also raises the state sales tax from 7.25% to 7.5% for four years, starting Jan. 1, 2013. > But not chipping in equally or proportionally. Only the very top tier have an increased income tax, so they will be paying more from the start. And the simple reasoning that "people with more money tend to spend more money" says that the top tier will also be chipp…

The equal and proportional was with regard to the income tax bump. Since not everyone was given an increase, it can neither be equal or proportional. Sales tax is of course a dollar for dollar match. We all got hit with that. But my simple reasoning was not "people with more money spend all their money"... it was that people with more money tend to spend more money. Their dinners out are often more frequent and more expensive. Their cars are often more expensive. They often have more gadgets and stuff. So while the sales tax bump itself was equal, the net gain is going to be higher from those that spend more money. That was not so much a criticism of fairness but just another point of getting more from the rich... who were already being asked to pay more from the start. Sure, Prop 38 was not perfect either, true. But, IMO, it was more balanced and fair. It was less likely to drive people away like 30.

Re: Because of asset seizures, I am starting my new company outside California

#37
post #13
post #6

Earlier quoted context omitted.

Income != Assets His bio describes him as a "failed investment banker", so perhaps his lack of that kind of basic knowledge should come as no surprise. This Proposition was passed back in November, yet somehow it appears to be news to the author.

The issue is that it's retroactive. That income had become an asset to suddenly be considered as income again. The retroactive nature of the proposition was not in any of the official summary documentation for the election either.

That's not what happened, the tax law was found to be invalid by a court, so all taxes paid under the law had to revert to the rate paid under the previous law.

Re: Because of asset seizures, I am starting my new company outside California

#38
post #17

Earlier quoted context omitted.

The big one that likely upset him (and which he more specifically calls out in a previous piece) was the elimination of the qualified small business exclusion: Not only did the state's Franchise Tax Board (FTB) eliminate a tax break on capital gains for small business owners and investors, it announced the tax would be reinstated retroactively. This means those who benefitted from the break can expect a bill for unpa…

The whole retroactive thing strikes me as incredibly wrong and should be illegal.

the tax law was found to be invalid by a court, so all taxes paid under the law had to revert to the rate paid under the previous law. However, only taxes paid in the last four years are subject to court rulings like this due to statutes of limitation, which is why the CFTB went back four years, and not zero (everyone paying after the law was found to be invalid would have a 14th amendment suit since the law is invalid), three (see previous) or five (statute of limitations).

Re: Because of asset seizures, I am starting my new company outside California

#39
post #31

Earlier quoted context omitted.

>> Still, all Californians will be chipping in: Proposition 30 also raises the state sales tax from 7.25% to 7.5% for four years, starting Jan. 1, 2013. > But not chipping in equally or proportionally. Only the very top tier have an increased income tax, so they will be paying more from the start. And the simple reasoning that "people with more money tend to spend more money" says that the top tier will also be chipp…

The equal and proportional was with regard to the income tax bump. Since not everyone was given an increase, it can neither be equal or proportional. Sales tax is of course a dollar for dollar match. We all got hit with that. But my simple reasoning was not "people with more money spend all their money"... it was that people with more money tend to spend more money. Their dinners out are often more frequent and more…

> it was that people with more money tend to spend more money

And somewhere between $100k/year and $100M/year this no longer holds. Instead of spending the money, it gets invested. Generally speaking, Someone with $1B spends about as much as someone with $5B and about as much as someone with $500M.

> the net gain is going to be higher from those that spend more money. > [the rich] were already being asked to pay more from the start

That's true of literally every tax except for a flat tax. The general reasoning behind non-flat taxes is that the richer you are, the more you have benefited from society (so the more you should pay back to society) and you are more able to pay a tax (eg: 30% of $30k per year will have a huge impact on lifestyle, but 30% on $300M or even $300k, will have much less of an impact, because the absoulte after-tax income is so high, even though the tax rates are the same)

> Sure, Prop 38 was not perfect either, true. But, IMO, it was more balanced and fair. It was less likely to drive people away like 30.

Prop 38's issues weren't that it was unfair or unbalanced, but that it was not nearly as effective as 30 and/or that it would have more negative consequences than 30, because of how it required money to be spent.

Re: Because of asset seizures, I am starting my new company outside California

#40
post #34
post #24

Earlier quoted context omitted.

Stupid question, but once your income has been taxed and you turn the net into an asset, and then the state comes back in and tell you that the money you used to buy this asset really belonged to the state, isn't that asset seizing? Edit 1: SP

Stupid question, but how did you pay 2012 taxes before 2012 was over?

well i didn't! hypothetically, we'd be talking about my 2011 earnings, already taxed, being retroactivity taxed (again) in fiscal year 2012.
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