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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

#131

Post by Wowfunhappy »

WalterBright wrote: post #95
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.

> nonsense May I present Steve Jobs, another obvious example? Ray Croc who built McDonald's from a single location into a world empire.

Steve Jobs, who became CEO when Apple, as a public company, hired him from outside the company?

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

#132

Post by ameen »

Would this also not affect angel investing/seed investing by individuals?

If there's no huge incentive for an investor once a company makes it to hold their stock, every successful company will be led by corporate hedge funds/investment firms.

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

#133

Post by rsj_hn »

Ericson2314 wrote: post #117
rsj_hn wrote: post #106

Some observations: 1. Whatever happened to increasing tax rates, like pretty much every other country? Why these weird gimmicks? 2. A much greater cause of elite wealth accumulation is running deficits. Deficits are when you want to spend on social welfare but don't have the courage to pay for it with taxes. So you make both sides happy and increase spending while running up deficits. The reason we've seen this astro…

That's no true with deficits. The way we have historically choosen to do monetary policy has some bad distributional effects, but regular fiscal policy or a UBI does not. This is, frankly, an extremely dangerous misunderstanding because it's austerity and slack labor markets markets that have immiserated the non-rich. Deficits themselves are never the problem. Look mo further than the pandemic checks causing us to li…

> That's no true with deficits.

Honestly, that's not much of a rebuttal.

If you believe in Ricardian Equivalence, then sure, the future deficits are matched by private savings to offset future tax liabilities. Well, what do you think an increase in networth is other than an increase in private savings?

But if you do not believe in Ricardian Equivalence, then the deficit spending is an increase in net-wealth, which again shows up disproportionately on the balance sheets of the wealthy.

So there is really no way around it. Merely calling this "wrong" and "dangerous" is not an argument -- when a government wants to pay benefits but refuses to fund them with taxes, then given that taxes are disproportionately paid for by the wealthy, you are going to have distributional effects.

This is just the flip-side of the old Keynesian saw about balanced budget multipliers.

I really don't see how this is controversial except for the crowd that wants more spending but knows there is not the political will to fund it with taxes. Then this is an unpleasant side effect that they don't want to think about, but that doesn't make it "not true".

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

#134

Post by movedx »

dcolkitt wrote: post #77
new_realist wrote: post #6

The current tax situation is like property taxes in California before Prop 19: nobody sells, so ownership and control never changes. This facilitates wealth transfer from generation to generation (in the equity case, though the use of trusts) and perpetuates wealth inequality.

Except there’s a 40% estate tax still levied at each generation. Plus unlike European aristocracy, American plutocrats rarely intermarry. Even if you’re only reproducing at replacement, your wealth gets diluted by 50% each generation. Stack the two and you’re getting slashed by 80% every generation. Don’t take my word for it. How many fourth generational heirs do we see among America’s wealthiest billionaires? Essent…

There are ways around this in the UK system, however. It's probably the same case in the US. The short of it is you transfer the wealth well before (15-20 years) the death occurs, thus there is no inheritance.

This was used recently by an MP.

That being said I agree with your thoughts, however:

> How many fourth generational heirs do we see among America’s wealthiest billionaires? Essentially zero.

This is probably true but I'd like to ask the question: how many of them simply inherit a lot of money without any of the fame associated with it, and just go unnoticed? I've met such a person, actually.

EDIT: https://www.bbc.com/news/business-36009963 - this is what I was thinking about.

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

#135

Post by yodon »

dsizzle wrote: post #15
anigbrowl wrote: post #11

Well, one workaround would be to treat securitization of shares (eg for a loan) as a taxable event. This is a common (and currently legal) tax avoidance strategy. Another consideration is that maybe having sole control of a massive pot of cash or financial instruments by an individual is just a Bad Thing. Consider how Zuckerberg structured FB so that while he it's a public company, the bulk of the stock is non-voting…

Actually, why wouldn't the Epic's of the world just issue themselves shares with super voting power, like what Facebook and Google did. That would address the concern in his tweet.

You only get to do that if you're printing money at such an astounding rate that investors will do anything to get you to let them invest in you. FB and Google, yes, most other companies, not so much.

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

#136

Post by sneak »

losvedir wrote: post #129
sneak wrote: post #125

Earlier quoted context omitted.

I expect to see a lot of crazy selfdestructive, self-sabotaging schemes from the USA during the remainder of the attempt at empire, which I expect to last the entirety of the rest of my life. Most of the up and coming interesting industries that have been happening in the last ten years are mostly happening outside of the USA, and this trend will only continue as it becomes harder and harder to operate there.

Curious to know what up and coming industries you mean?

Cryptocurrencies, advanced semiconductors, and cheap per-passenger rail/aircraft.

USA is winning on rockets and EVs but that is 100% because of one person and not wider US policy (and I assume most of his production of the latter will be non-US within 5 years).

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

#137

Post by rsj_hn »

DennisP wrote: post #114
rsj_hn wrote: post #106

Some observations: 1. Whatever happened to increasing tax rates, like pretty much every other country? Why these weird gimmicks? 2. A much greater cause of elite wealth accumulation is running deficits. Deficits are when you want to spend on social welfare but don't have the courage to pay for it with taxes. So you make both sides happy and increase spending while running up deficits. The reason we've seen this astro…

I agree with a lot of that but regarding (3), there's already an exit tax, which is the same as the capital gains tax if you sold everything. This is less of an issue for those who inherited wealth, since a lot of it might already be in offshore trusts. Company founders don't have an easy out.

That's a valid point. Short term, you'll soak some founders, but future founders can set up the offshore trust, or just start their business elsewhere.

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

#138

Post by zchrykng »

Wowfunhappy wrote: post #131
WalterBright wrote: post #95

Earlier quoted context omitted.

> nonsense May I present Steve Jobs, another obvious example? Ray Croc who built McDonald's from a single location into a world empire.

Steve Jobs, who became CEO when Apple, as a public company, hired him from outside the company?

Who literally saved Apple from their attempted corporate suicide? Yeah, I think he is a good example of why you need a strong founder sometimes.

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

#139

Post by Ericson2314 »

rsj_hn wrote: post #133
Ericson2314 wrote: post #117

Earlier quoted context omitted.

That's no true with deficits. The way we have historically choosen to do monetary policy has some bad distributional effects, but regular fiscal policy or a UBI does not. This is, frankly, an extremely dangerous misunderstanding because it's austerity and slack labor markets markets that have immiserated the non-rich. Deficits themselves are never the problem. Look mo further than the pandemic checks causing us to li…

> That's no true with deficits. Honestly, that's not much of a rebuttal. If you believe in Ricardian Equivalence, then sure, the future deficits are matched by private savings to offset future tax liabilities. Well, what do you think an increase in networth is other than an increase in private savings? But if you do not believe in Ricardian Equivalence, then the deficit spending is an increase in net-wealth, which ag…

Well I certainly do not agree with Ricardian equivalence. For it to hold, one must assume lump sun taxes which one cannot avoid by being poor. That's a ridiculous assumption.

> But if you do not believe in Ricardian Equivalence, then the deficit spending is an increase in net-wealth, which again shows up disproportionately on the balance sheets of the wealthy.

My whole point was that this is not necessarily true, and depends on the form the spending takes place. Did you miss that?

Even if a UBI eventually trickles up, we must not conflate solvency and liquidity. The boss has power because the worker's consumption is more time sensative than the production. A good UBI takes away that coercive power not (just) by increasing worker savings, but by making an income floor. (Stock vs flow).

That's like giving people the ability to go longer without food and water so long as their nutritional needs are still met on a (longer term) average.

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

#140

Post by [deleted] »

threeseed wrote: post #75
jimbob45 wrote: post #40

Earlier quoted context omitted.

Generational wealth transfer is a good thing. It's the main reason most people work hard in life - to provide a better life for their offspring. Wealth inequality is a good thing too. People who work harder necessarily live better lives. If you want to start stealing their hard work to give to the lazy, you're going to find that the hard-working flee the country à la the USSR.

This comment is insulting and has no basis in fact. There is no evidence that rich people work harder than poor people. In fact the opposite is far more likely to be true given the unique stresses of manual labour. And there is no evidence that the driver of success is providing for their offspring. There are a whole range of factors at play.

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