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How to have a billion dollar exit with zero capital gains tax

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Re: How to have a billion dollar exit with zero capital gains tax

#281

Post by epistasis »

lukas099 wrote: post #180
epistasis wrote: post #71

Earlier quoted context omitted.

This isn't a loophole as much as a completely designed tax break. That's a different deal than some body squeaking around tax law; this was all about trying to change parts of the nature of capitalism's tendency to rerun money to capital more than to labor. If you think it's misguided, I do too. Though I think it's good to invest in under invested areas, I also think we need to counteract the effects of the Henry Geo…

> That's a different deal than some body squeaking around tax law; this was all about trying to change parts of the nature of capitalism's tendency to rerun money to capital more than to labor. No, this was a small group successfully lobbying to reduce their share of the costs of running society. AKA special interests. > Until we have that base level of security for all, we need things like massive redistribution, wh…

While I think UBI is great, there still needs to be local investment to build communities, beyond just giving people money. I'm not convinced that opportunity zones are the way to do it, but in addition to giving people money, we need to build the economic infrastructure for people to use it in good ways. For example, in food deserts, getting grocery stores. That may require incentivizing businesses to take what they see as additional risks.

Re: How to have a billion dollar exit with zero capital gains tax

#283

Post by ChrisLomont »

HWR_14 wrote: post #269
ChrisLomont wrote: post #238

Earlier quoted context omitted.

... by investing in places deemed in need of investment, thereby providing jobs and skills and tax base (property, services, income taxes, unemployment taxes, growth in surrounding infrastructure)...... When an investor gets a billion dollar return, remember that is the value from a company that likely provides billions more to local economies.

> When an investor gets a billion dollar return, remember that is the value from a company that likely provides billions more to local economies. I have no idea why that would be true, especially if it's an online business where highly paid people go to a campus and don't leave until it's time to drive home.

All Forbes 400 are billion dollar businesses. A tiny, tiny fraction are the type you describe. What makes you think most businesses are your cherry picked type? I see no evidence they constitute any more than a miniscule number of such companies.

Want a bigger list? Here's several thousand billion dollar companies: https://companiesmarketcap.com/

How many don't pay local property, income, unemployment, and other taxes?

Not every new company is an online mythical virtual company. When someone presents reasonable evidence, if your first reaction is to latch onto outliers and pretend they're common, you should check your biases versus reality.

Re: How to have a billion dollar exit with zero capital gains tax

#284

Post by HWR_14 »

rdl wrote: post #276
HWR_14 wrote: post #270

Earlier quoted context omitted.

Pharma is no longer a great choice for PR. Several of the various federal advantages to locating there have expired

It still is relatively better to do pharma in PR than many other industries in PR, since it has an established workforce and a bunch of facilities, and there are PR-specific tax breaks under IRC 933 (just no longer 936). There's established pharma, and sometimes line extensions; not sure if anyone would put a new pharma startup here. Microsoft lost their tax case so they're GTFO after >10 years, though; that probably…

True. If you have to locate in PR, might as well be pharma. And there are no reasons to move existing lines.

Re: How to have a billion dollar exit with zero capital gains tax

#285

Post by [deleted] »

ChrisLomont wrote: post #283
HWR_14 wrote: post #269

Earlier quoted context omitted.

> When an investor gets a billion dollar return, remember that is the value from a company that likely provides billions more to local economies. I have no idea why that would be true, especially if it's an online business where highly paid people go to a campus and don't leave until it's time to drive home.

All Forbes 400 are billion dollar businesses. A tiny, tiny fraction are the type you describe. What makes you think most businesses are your cherry picked type? I see no evidence they constitute any more than a miniscule number of such companies. Want a bigger list? Here's several thousand billion dollar companies: https://companiesmarketcap.com/ How many don't pay local property, income, unemployment, and other taxe…

[deleted]

Re: How to have a billion dollar exit with zero capital gains tax

#286

Post by HWR_14 »

ChrisLomont wrote: post #283
HWR_14 wrote: post #269

Earlier quoted context omitted.

> When an investor gets a billion dollar return, remember that is the value from a company that likely provides billions more to local economies. I have no idea why that would be true, especially if it's an online business where highly paid people go to a campus and don't leave until it's time to drive home.

All Forbes 400 are billion dollar businesses. A tiny, tiny fraction are the type you describe. What makes you think most businesses are your cherry picked type? I see no evidence they constitute any more than a miniscule number of such companies. Want a bigger list? Here's several thousand billion dollar companies: https://companiesmarketcap.com/ How many don't pay local property, income, unemployment, and other taxe…

The Forbes 400 are people (the 400 richest). You are thinking about the Fortune 100/500.

We're on a site about tech startups, reading an article about tax avoidance by a tech startup and many people on the board are saying they want to do that tax avoidance. I don't think I have to worry that I cherry picked the type of company as a tech startup.

> How many don't pay local property, income, unemployment, and other taxes?

Well, we're only talking about the founders/investors paying taxes (cause this is referencing their capital gains). So, the founders wouldn't pay local property (in the low-income district they commute to) or unemployment taxes at all, and the vast majority of their income comes from capital gains, which this is avoiding, so yeah, they don't really pay that either.

Re: How to have a billion dollar exit with zero capital gains tax

#287

Post by vineyardmike »

bombcar wrote: post #261
11thEarlOfMar wrote: post #255

Earlier quoted context omitted.

The eligibility criteria: The Opportunity Zone Selection Process As prescribed by law, governors nominated which census tracts should be designated as Opportunity Zones by the U.S. Department of the Treasury. To be eligible for designation, a census tract must: - Have a poverty rate of at least 20 percent; or - Have a median income below 80 percent of that in the State or metropolitan area, or for rural census tracts…

I see the idea behind it, but I feel the end result will just be gentrification - which may not be a bad thing in the long run.

> I feel the end result will just be gentrification

It is literally a tax break for gentrifying. "Build in this poor area and you don't pay taxes".

Re: How to have a billion dollar exit with zero capital gains tax

#288

Post by titzer »

whywhywhywhy wrote: post #266
titzer wrote: post #223

Earlier quoted context omitted.

You were this close to getting it. The system will move heaven and Earth to get $2k from a random joe blow but will let a corporation just "sudo pay no taxes" and get out from paying BILLIONS. The system is rigged.

My point is there are reasons for both those things. Yet the system isn’t honest about them.

Why would they be honest with you? The system always benefits the rich, since the beginning of time. Americans tell themselves a lot of lies about how low taxes mean freedom, when it just means we are getting screwed harder by the ultra-wealthy.

Re: How to have a billion dollar exit with zero capital gains tax

#289

Post by imgabe »

nobodyandproud wrote: post #221
imgabe wrote: post #54

Earlier quoted context omitted.

Tax returns with AGI over $200k represent 5.7% of returns filed and account for 61.7% of taxes paid. [1] What ratio would you consider fair? [1] Data is from 2019, the latest available from the IRS: https://www.irs.gov/statistics/soi-tax-stats-individual-stat...

For starters, how about paying at least the capital gains rate? For large businesses, they’re finding ways to pay less than 20%. But tabulate all of the ongoing costs to build and maintain our national infrastructure, legal system (no business without the courts), law enforcement branches, etc. Deduct the income taxes currently levied on wage earners. Roughly, the rest of the money needs to come from corporate taxes…

> For starters, how about paying at least the capital gains rate?

> For large businesses, they’re finding ways to pay less than 20%.

People do pay capital gains tax when they realize capital gains. What makes you think they don't?

Businesses pay corporate income tax which is a different thing altogether. They're already double-taxed (when the company turns a profit, and again when they distribute those profits to shareholders).

> But tabulate all of the ongoing costs to build and maintain our national infrastructure, legal system (no business without the courts), law enforcement branches, etc.

> Deduct the income taxes currently levied on wage earners.

> Roughly, the rest of the money needs to come from corporate taxes and capital gains.

Not true at all. There are excise taxes, import duties, sales and property taxes (these fund local and state governments, which handle a lot of the courts and law enforcement), payroll taxes (paid by the employer, not part of the income tax). There are other options that are not implemented in the US, like VAT, land-value taxes, financial transaction taxes. The government also has other sources of funding like fines, fees, bonds, inflation. There are many things besides capital gains and corporate income taxes.

> If you recall, property tax deductions were capped and so overnight the Republican government found a way to increase the average earners’s budget. Mortgage interest deductions are next.

The average earner doesn't itemize deductions because they won't exceed the standard deduction, which was raised at the same time that the state and local tax deductions were capped. Those deductions were mainly a way to subsidize states that charge high state taxes (which happen to have more high earners) at the expense of states which charge low income taxes (and happen to have lower earners).

Mortgage interest deductions are already capped and again mainly benefit higher earners who can afford large mortgages that would actually have enough interest to make it worthwhile to itemize.

Re: How to have a billion dollar exit with zero capital gains tax

#290

Post by imgabe »

nobodyandproud wrote: post #230
imgabe wrote: post #146

Earlier quoted context omitted.

The "money" the very wealthy have is not cash sitting in a checking account but usually shares in some corporation. That absolutely has utility if you want to continue having a say in how your company is run. Besides, should the government come around and check for any property that it deems you're not sufficiently utilizing and confiscate it from you? It seems like that policy could be abused. The government already…

Not the OP but > The "money" the very wealthy have is not cash sitting in a checking account but usually shares in some corporation. That absolutely has utility if you want to continue having a say in how your company is run. So what? That’s the cost of of going public. That the wealthy found a way to abuse it (share classes) means they’ve made the stock market less useful for everyone else. > Besides, should the gov…

> A government is expected to be involved with limited resources, and discourage undesirable outcomes while encouraging good ones. My government does this through tax benefits and tax penalties.

You mean like offering a tax break to incentivize investment in certain areas?

I don't think someone being able to continue owning a portion of a company they created is a undesirable outcome, do you?

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