[HN Gopher] Tim Sweeney: Tax bill would likely end founder contr...
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Tim Sweeney: Tax bill would likely end founder control of
independent companies
Author : hncurious
Score : 33 points
Date : 2021-10-27 22:21 UTC (39 minutes ago)
(HTM) web link (twitter.com)
(TXT) w3m dump (twitter.com)
| kinghajj wrote:
| It looks like Epic Games is a private company, so from what I
| understand in the proposal, this wouldn't affect him, since his
| shares are not publicly tradable. The proposal might affect him
| when/if he were to sell any shares, though, since it has a
| provision to accrue tax liability on illiquid assets like
| art/etc, to be owed at time of sale.
| DLTADragonHawk wrote:
| From what seems to be the intention of the tax plan it would be
| regardless of if the asset was available in a stock exchange so
| if the value of Tim's shares put him above the threshold he
| would still have to pay the tax. His wealth through epic would
| likely be less then if it were a publicly traded company
| though. The effect of paying tax on shares was always true as
| it becomes a realized capital gain and is already covered under
| the current tax system.
| dsizzle wrote:
| The stories I see, like
| https://www.cnbc.com/2021/10/25/senate-democrats-push-for-
| bi..., says the tax on unrealized gains only applies to
| "tradeable assets." It doesn't seem like that would cover
| private companies. From what that article says, it would
| invoke an increased tax due to the deferral of taxes though.
| d23 wrote:
| It still seems problematic. Even if my company goes public, if
| I haven't actually sold the shares and made any money, why
| should this be taxed? If there are loopholes that let the
| founder avoid those taxes at sale time, fix those, but
| otherwise why should we effectively take away ownership of a
| company just because someone has built it up successfully.
| dsizzle wrote:
| One loophole is the step-up basis that applies when the owner
| dies. Not sure why that wasn't targeted instead (one reason
| might be this plan produces revenue more quickly).
| lugged wrote:
| Watch progressives double down and spin this tweet as alt right.
| maerF0x0 wrote:
| I'm actually in favor of this.
|
| I've long held that there should be public liquidity in all
| companies over a certain valuation and the company should not be
| allowed to bar you from selling the stock (though it could retain
| right to beat any pending offers)
|
| It's asinine that companies are allowed to treat equity pay as
| pay, and IRS can tax it as realized (AMT), but the worker does
| not in fact have any instrument with which to pay the bill.
|
| Edit: Also this is a really smart tweet IMO
| Give yourself a salary that pays for your wealth tax obligations.
| You don't have to sell anything.
|
| https://twitter.com/macrofacet/status/1453487461989076997
|
| The valuation would grow slower due to burn rate, but the
| ownership % would not change.
| brnt wrote:
| An altogether _very_ reasonable price for what we're getting in
| return.
| new_realist wrote:
| 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.
| AdamN wrote:
| There's some truth to it ... but why is that a bad thing exactly?
| wod3m wrote:
| if you start a company you should be able to continue to own
| that company until you decide you're ready to sell it
| RNCTX wrote:
| There are no mom and pop store billionaires.
| anigbrowl wrote:
| 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 so he has _de facto_ sole control of the firm. No matter
| how destructive of shareholder value or public goods his
| executive decisions, it 's virtually impossible for anyone else
| to overturn them barring some novel legal line of attack.
|
| I have no particular feelings about Tim Sweeney/Epic, but would
| the economy or the gaming world be worse off if he no longer had
| founder control? If he's great at his job I presume shareholders
| would want to keep him on as CEO and would compensate him
| handsomely in cash money.
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(page generated 2021-10-27 23:01 UTC)