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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

#231

Post by IG_Semmelweiss »

Curious.

Doesn't this open up the possibility of debt slavery of the entrepreneur, to the government ?

If my stock in my biotech startup goes thru the roof and i get taxed X, i could perhaps sell some stock to cover. More likely, though, I will get into an installment plan with the IRS since the gains are so massive its going to be tough to sell so much stock without a discount, to pay the IRS off.

Next year, FDA does not approve my device, and my stock tanks to near $0. Now even if i sold all my stock, I can't even pay back the IRS for my tax debt.

I now have lost my company, but I have also incurred massive debt in the process. And if I am not mistaken, IRS debt is not dis-chargeable in bankruptcy.

Am I reading this wrong ?

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

#232

Post by WalterBright »

novok wrote: post #205
rsj_hn wrote: post #87

Earlier quoted context omitted.

The thing is, it's really critical to have that dictator CEO in charge of the company to reign in the senior leadership, otherwise what happens is the creation of fiefdoms and intra-oligarchic turf battles at the expense of overall success. Someone on this site mentioned Pournelle's Iron Law of Bureaucracy: https://en.wikipedia.org/wiki/Jerry_Pournelle#Pournelle's_ir... And the CEO is the counterweight to that oligar…

I've been in companies that became founder led to professional CEO led, and you can see the difference in how effective a company is. I think there is great shareholder value also in founder led companies too, which have led to the growth of some of the largest and most successful companies in the world. When gates left microsoft was probably the begining of the company becoming somewhat irrellevant. Apple, tesla, ep…

The Space Shuttle is what happens with design by committee.

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

#233

Post by hncurious »

threeseed wrote: post #81
WalterBright wrote: post #69

Earlier quoted context omitted.

I doubt SpaceX or Tesla would exist if they were controlled by a committee. Doing great things usually requires control by a single person who is able to say "screw it, we're going for X".

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.

They tend to stagnate after the founder leaves.

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

#234

Post by BigJono »

Dracophoenix wrote: post #199
over_bridge wrote: post #141

Earlier quoted context omitted.

Why would a billionaire leave the US? There they are like gods with services to cater to their every whim. Nowhere else in the world will roll out the carpet for big money like the US does (excluding maybe Monaco and other small states). I just see 3 as a false assumption, as any country they 'flee' to will have higher taxes anyway. I live in New Zealand and a billionaire here can have a lot of land but otherwise we…

Warren Buffet lives in a 6000 sq ft (~600 sqm) house, drives a 2014 Cadillac, and has McDonald's for breakfast. Despite owning one of the most valuable companies in the world at most one could say he lives like a single-digit millionaire. If your characterization of the "average people" of New Zealand is true, then it seems like he would have no problem fitting right in.

So why would he uproot his entire life that he's happy with to move somewhere with a slightly lower tax rate when he can still support his relatively modest lifestyle a thousand times over?

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

#235

Post by scythe »

rsj_hn wrote: post #151
Ericson2314 wrote: post #139

Earlier quoted context omitted.

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…

> My whole point was that this is not necessarily true, and depends on the form the spending takes place. Did you miss that? Nope, I didn't miss it, because it's not relevant. Giving money to poor tenants ends up in the pocket of landlords. Letting poorer people buy iPhones ends up in the money of shareholders and is realized as an increase in Apple stock price, etc. When you have a small group of the people dispropo…

>Nope, I didn't miss it, because it's not relevant. Giving money to poor tenants ends up in the pocket of landlords. Letting poorer people buy iPhones ends up in the money of shareholders and is realized as an increase in Apple stock price, etc.

That's a little extreme. It's fair to argue that giving money or benefits to poor people may not directly reduce inequality. More importantly, since progressive taxes do reduce inequality, it follows that the same level of spending with lower tax rates results in higher inequality than the spending with a balanced budget up to inflation.

But it also has positive externalities, such as improved public health. By contrast quantitative easing, almost by definition, has minimal externalities, although I'm partial to the argument that subsidizing real estate prices tends to increase inequality. These externalities disproportionately accrue to the poor because rich people tend to manage their personal environments in a way that insulates them from the winds of the societal landscape. Sometimes these are not easy to account for financially but that does not impugn their value.

So deficit spending on the war in Afghanistan, for example, is probably worse for inequality than deficit spending on education.

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

#236

Post by WalterBright »

threeseed wrote: post #221
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.

I worked at Apple when Steve Jobs was there. Yes he's amazing. But people like Avie Tevanian, Tim Cook, Bertrand Serlet, Bob Mansfield, Johnny Ive, Dan Riccio etc. all played critical roles in turning Apple around. iPhone simply isn't a success without all of the above functioning at a high level.

Of course those people helped.

But there's no doubt who was in charge and who set the direction. From everything I've read about Apple, it was Jobs who was in command, and everyone else followed.

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

#237

Post by missedthecue »

IG_Semmelweiss wrote: post #231

Curious. Doesn't this open up the possibility of debt slavery of the entrepreneur, to the government ? If my stock in my biotech startup goes thru the roof and i get taxed X, i could perhaps sell some stock to cover. More likely, though, I will get into an installment plan with the IRS since the gains are so massive its going to be tough to sell so much stock without a discount, to pay the IRS off. Next year, FDA doe…

You're not. There are a lot of good reasons why governments don't implement or keep unrealized capital gains taxes for long.

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

#238

Post by narrator »

IG_Semmelweiss wrote: post #231

Curious. Doesn't this open up the possibility of debt slavery of the entrepreneur, to the government ? If my stock in my biotech startup goes thru the roof and i get taxed X, i could perhaps sell some stock to cover. More likely, though, I will get into an installment plan with the IRS since the gains are so massive its going to be tough to sell so much stock without a discount, to pay the IRS off. Next year, FDA doe…

The idea of this is that private control of companies by independent minded founders should not exist. Only large financial companies like Vanguard and Blackrock should own large stakes in public companies. The practical effect is not to raise more tax revenue, it's to seize control from founders and give it to the financial oligarchy by forcing them to sell.

This is what happens in Russia, Eastern Europe, Saudi Arabia, and other corrupt oligarchies. When a business gets successful enough, the oligarchs of the countries show up and offer a deal that the person running the company can't refuse and force them to sell to the local oligarch gang at a bad price.

If they wanted to raise more tax revenue, they could just raise the top marginal income tax rate up to 98% or raise capital gains tax rates and not totally screw up things by forcing the confiscation of companies from their founders.

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

#239

Post by chii »

IG_Semmelweiss wrote: post #231

Curious. Doesn't this open up the possibility of debt slavery of the entrepreneur, to the government ? If my stock in my biotech startup goes thru the roof and i get taxed X, i could perhaps sell some stock to cover. More likely, though, I will get into an installment plan with the IRS since the gains are so massive its going to be tough to sell so much stock without a discount, to pay the IRS off. Next year, FDA doe…

if you tax unrealized capital gains, it's only fair to return unrealized losses. so

> stock tanks to near $0

means you get all your paid tax back.

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

#240

Post by satronaut »

belltaco wrote: post #209
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…

A twitter reply says this: >I think everyone needs to read the bill and calm down. "Gains on private assets -- including harder-to-value assets like real estate, art and private companies -- would escape the annual levy, and only be taxable when sold. "

what does the government need all that money for anyways?
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