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Two problems: 1) Acquiring a company worth $100mm pre-tax? - After tax, the cost just went up to $125mm. 2) Global competition - Foreign exchanges would und
by joelhaus 16y ago
Two problems:
1) Acquiring a company worth $100mm pre-tax?
- After tax, the cost just went up to $125mm.
2) Global competition
- Foreign exchanges would under-cut domestic exchanges, attracting many US based companies to list there and if the US attempted to tax foreign transactions by domestic persons, then foreign investors would end up with an unfair advantage.
The idea of disincentivising short-term investments is a good one. Changes to existing capital gains rules or a progressive per transaction tax may be more feasible though.
- ahlatimer 16y agoAfter tax, the cost just went up to $125mm That's only assuming the company is trading at $1/share, which Cuban's proposal is saying should be taxed at $0.05/share, raising the cost to $105mm. The actual tax will be dependent on the valuation of the company divided by the number of shares there are. It's not a straight 25% tax across the board.
- joelhaus 16y agoThanks, this illustrates the first problem well, I was just pointing out the kind of impact Cuban's proposal could have on a valuation. Any tax implemented like this would still have a proportionate effect on returns. Not sure that anyone is trying to make a case that we need less shares; rather, we need a system that incentivises a focus on fundamentals.