So if you own a small biz(with or without partners), the gains you realise from it are tax exempted, if you put the gains back into the company and take it after 5 years. Is that right?
Obama proposes no capital gains tax on qualified small business stock
21–30 of 44 posts
Re: Obama proposes no capital gains tax on qualified small business stock
#22Won't this just lead to businesses changing their organizational structure, then carrying on as before? For example, instead of creating departments in a big company, one could split it into several smaller companies. (I don't really know the tax law in question, but it sounds like a potential loophole).
I wouldn't think so, because this applies only to capital gains tax, i.e. only becomes relevant when the company is sold.
I don't think there would be any advantage in transforming departments into separate companies, and then cayying on as before..
Re: Obama proposes no capital gains tax on qualified small business stock
#23This looks pretty good -- I'm not sure what kind of event I'd want in 5 years to exit from a bootstrapped company, but having more options is always great.
The cynic in me thinks that Obama recognizes startups and small businesses will be the only bright points in the economy, so he wants to do something to make it appear he helped them, or possibly even was the primary reason for their success, by the time 2012 rolls around. However, wanting to be on the winning team isn't a bad thing in public policy.
Re: Obama proposes no capital gains tax on qualified small business stock
#24Earlier quoted context omitted.
I don't see that as exclusionary; I read it as intending to exclude professional corporations, i.e. where you bill for time (performance of services) as opposed to charging for a product . I imagine if they didn't exclude such, you'd have a rash of LLPs turning into C-Corps; not sure what other negative consequences they're hoping to prevent.
they should state that more clearly then, if that is their intention.. like this it seems to me as if an engineer who designs some important technological invention and starts a startup around it, would be excluded... Also, would it be that bad if a significant amount of companies changed their formal structure in order to take advantage of this? It would mean an across-the-board incentive to create (and grow) compan…
The actual tax code defines "PSC" professional services corporations as described in the above summary, so I assume the implementation of this policy will just exempt PSCs by name.
Re: Obama proposes no capital gains tax on qualified small business stock
#25too little too late mister president. I agree with winterspeak in that what we need is severely reduced payroll taxes to stimulate aggregate demand.
This makes no sense to me, even when I've seen it before. I'm the classic saver. I'm the individual who they want to spend more right now. I'm saving because it's not a certainty that my contract will be renewed right now. I could very well end up living off the savings I'm accumulating right now. If you reduce my payroll tax, I won't spend more. I'll save more. ___ If someone is unemployed, reducing the payroll tax…
A sales tax break for goods originating from US is, in all ways, a trade barrier. You can expect global mutual treatment. That means decreased foreign demand for US products.
So you end up sponsoring US companies that were not capable to compete with more efficient foreign companies. Which is in itself a more interesting problem. Most European countries have as high, or higher, standard in working conditions (and TAXES!) and they do have positive trade balance.
Does it really seem like a wise decision to make US produced products less attractive on the global market, for the hope that tax cuts on domestic products will match up, and then some, with increased income tax from the new jobs?
An alternative is to instead use taxes to set up better public transport, so the time-and-cost-to-get-to-work radius around companies increase. Making it both easier to find the right competence (larger area, more people to chose from) and making more real estate close (time-wise) to the city, making the cost of living lower.
Re: Obama proposes no capital gains tax on qualified small business stock
#26Earlier quoted context omitted.
I don't see that as exclusionary; I read it as intending to exclude professional corporations, i.e. where you bill for time (performance of services) as opposed to charging for a product . I imagine if they didn't exclude such, you'd have a rash of LLPs turning into C-Corps; not sure what other negative consequences they're hoping to prevent.
they should state that more clearly then, if that is their intention.. like this it seems to me as if an engineer who designs some important technological invention and starts a startup around it, would be excluded... Also, would it be that bad if a significant amount of companies changed their formal structure in order to take advantage of this? It would mean an across-the-board incentive to create (and grow) compan…
Yes, it matters. Most smaller companies tend to be service companies, because they don't have huge economies of scale. Most product companies tend to be larger -- it's easy to moonlight as a designer who figures out what box you should sell a lightbulb in, but you can't moonlight as the guy building the lightbulbs, because you need tens of millions of dollars to manufacture them profitably.
A subsidy to small businesses that didn't exclude service businesses would have the effect of making more people want to work for service companies. Which is fine, except that they produce negligible exports. If you're selling lightbulbs, you make money in India by selling them there; if you're a lawyer, the way you make money in India is by hiring an Indian lawyer in India, and somehow convincing this lawyer to give you a fraction of his billings (so most of the money stays behind).
Given the potential trade deficit problems, I suspect Obama wants to focus on subsidizing businesses that can export.
Re: Obama proposes no capital gains tax on qualified small business stock
#27too little too late mister president. I agree with winterspeak in that what we need is severely reduced payroll taxes to stimulate aggregate demand.
This makes no sense to me, even when I've seen it before. I'm the classic saver. I'm the individual who they want to spend more right now. I'm saving because it's not a certainty that my contract will be renewed right now. I could very well end up living off the savings I'm accumulating right now. If you reduce my payroll tax, I won't spend more. I'll save more. ___ If someone is unemployed, reducing the payroll tax…
http://en.wikipedia.org/wiki/Paradox_of_thrift
Also, I'm a big fan of a revenue neutral tax shift from payroll to energy/carbon.
Re: Obama proposes no capital gains tax on qualified small business stock
#28This is cool, but we incorporated in January. If this passes, do we redo it now?
If I read the article correctly, you can issue new stock and sell it to investors, and those investors would get the benefit of the new law.
Re: Obama proposes no capital gains tax on qualified small business stock
#29too little too late mister president. I agree with winterspeak in that what we need is severely reduced payroll taxes to stimulate aggregate demand.
This makes no sense to me, even when I've seen it before. I'm the classic saver. I'm the individual who they want to spend more right now. I'm saving because it's not a certainty that my contract will be renewed right now. I could very well end up living off the savings I'm accumulating right now. If you reduce my payroll tax, I won't spend more. I'll save more. ___ If someone is unemployed, reducing the payroll tax…
People further down the income scale are going to save less of their marginal income. If someone is working but for so little money that they're constantly thinking "this week, should I buy food, or try to catch up with the rent?", and their take-home pay suddenly goes up by $20 a week, they are not likely to put that $20 in a savings account.
Re: Obama proposes no capital gains tax on qualified small business stock
#30too little too late mister president. I agree with winterspeak in that what we need is severely reduced payroll taxes to stimulate aggregate demand.
This makes no sense to me, even when I've seen it before. I'm the classic saver. I'm the individual who they want to spend more right now. I'm saving because it's not a certainty that my contract will be renewed right now. I could very well end up living off the savings I'm accumulating right now. If you reduce my payroll tax, I won't spend more. I'll save more. ___ If someone is unemployed, reducing the payroll tax…
The increased demand would come as businesses would be more willing to hire new employees- as without payroll tax, it would be cheaper for them. If this increases the employment by 5% (Or even 1%) it would put a lot of people back to work- and your your job much more secure.