8 ms·

That tax season will hurt!

clarkevans 9y ago
The taxes (what, 20% capital gains?) seems an excellent deal for the ecosystem where he grew his company: a stable political system, strong asset protection enforced by strict laws, an educated workforce in a relatively unpolluted environment, etc.
- loeg 9y ago
  20% capital gains rate + 3.8% NIIT to the federal government. (And another 7.9% to WA under governor Inslee's December 2016 proposal — which, to be clear, has not actually become law.)
  - tyingq 9y ago
    Is that all though? I'm guessing that plus whatever regular income tax for his bracket is...which is higher than all that combined. Edit: Why downvote a question? I appreciate the answers, and suspect I'm not the only interested party.
    - beardicus 9y ago
      > I assume that plus whatever regular income tax for his bracket is No. Capital gains aren't income.
      - manigandham 9y ago
        Yes they are. Ordinary income = salary/wages, bonuses, commissions, etc. Capital gains are income, but short-term (within a year) are taxed at ordinary income rates, while long-term (greater than a year) are charged at special capital gains tax rate.
    - hkmurakami 9y ago
      It's long term capital gains and does not get taxed at ordinary income rates. If you are in a state with income tax, they will usually tax your capital gains at your ordinary state income tax bracket.
    - jbusma 9y ago
      Provided the security/asset is held for a year or more, it is taxed as Long-Term Capital Gains, and given quite the tax break. It is even possible to pay 0% federal rate on sale of stock, I did it on my 2016 return.
      - loeg 9y ago
        > It is even possible to pay 0% federal rate on sale of stock, I did it on my 2016 return. Up to the top of the 15% bracket, yes, or $37,950 in total income for single earners in 2017 ($75,900 joint). It's easy to pay little in long-term cap. gains taxes if you are retired (or unemployed) with a cheap-to-moderate lifestyle. But not possible for ~$1 billion in gains, like Bezos' sale :-).
        TuringNYC 9y ago
        >> But not possible for ~$1 billion in gains Quite possible given enough trust lawyers and accountants. Mitt Romney managed to own a lot of his stock in his Roth IRA. The PayPal gang is famous for paying almost zero taxes though the same tricks. Yes, you dont get to spend it until retirement, but he isnt spending the billion, he is just reinvesting it.
        loeg 9y ago
        No, the Romney move is still not possible in Bezos' shoes. Bezos couldn't have invested in Amazon in his IRA when it was worth nothing: https://en.wikipedia.org/wiki/Self-directed_IRA#Permitted_investments https://en.wikipedia.org/wiki/Self-directed_IRA#Permitted_in... > IRA funds are allowed to be invested in private companies. ... The IRS puts restrictions on private equity investments that can be made by an IRA. It cannot purchase stock that the IRA holder already owns. ... In most cases, neither the IRA holder nor any disqualified persons to the plan can be employed by the company while the IRA has an equity position in that company.
        KGIII 9y ago
        It is also possible that he never realized the gain. An example would be to gift the shares directly to a trust which sells and then 'loans' BO the money. Tada! You made a billion dollars disappear. That is, I believe, lawful. Consult a qualified legal representative, however.
- jbusma 9y ago
  Looking up Bezos' salary data, I'm wondering why chose to take a salary of ~$81,840 If he was under the $37,950 mark, his Long Term Capital Gains rate would have been 0%
  - jjeaff 9y ago
    That's not how it works. The capital gains themselves count toward the $37k cap. $1B in cap gains puts him a bit out of range to fall under the $37k max.
  - jjeaff 9y ago
    Also, he likely received tens of millions of dollars in company stock, which will be taxed at regular income rates, not capital gains.
- Consultant32452 9y ago
  20% does seem like a good deal for all those things, but it's important to remember that the top 20% already pays 95% of the taxes. So if those things are good they're only good because he's already been paying for them. So if you enjoy the stable political system, strong asset protection, your free education, and relatively unpolluted environment it might be time to add Jeff Bezos to your Christmas card list to thank him for funding all that for you.
  - oblio 9y ago
    The real question is: how much do the top 20% make and/or own? If it's 95% or more, then those taxes seem quite fair, don't they? Found some data: https://en.m.wikipedia.org/wiki/Wealth_inequality_in_the_United_States https://en.m.wikipedia.org/wiki/Wealth_inequality_in_the_Uni... Top 20% owned 93% of wealth in 2014, and I don't see why that number wouldn't go up. It's a bit harder to find numbers for income, though.
    - Consultant32452 9y ago
      I don't take incident with the 20% mark. I only take incident with the insinuation that the great societal benefits Bezos enjoys for his 20% was provided by someone else.
      - oblio 9y ago
        If Amazon does shenanigans to hide money you and I couldn't hide from the taxman, then that might still be true.
        Consultant32452 9y ago
        That doesn't matter unless you believe that Bezos/Amazon is pulling some unique shenanigans compared to every other wealthy person/company. Because even after the cumulative shenanigans of all the wealthy people they're still paying 95% of the taxes.
- grandalf 9y ago
  I would much rather that Bezos be allowed to keep all of his capital gains but have appropriate antitrust enforcement step in and reduce Amazon's market power a bit. The recent upsurge of counterfeit products are evidence that Amazon is abusing its market power to the point of harming consumers.
  - toast0 9y ago
    What market does Amazon have a monopoly, and how are they abusing it or what prohibited practices did they use to establish such a monopoly? It looks like they may have 44% of internet retail by public companies; and that's big, but it doesn't include private companies, and it doesn't fit my definition of a monopoly. It is certainly large enough that they should be scrutinized and attempts to increase share through prohibited practices should result in enforcement actions.
    - grandalf 9y ago
      I don't think Amazon has fully crossed any lines just yet, but I do think it's bound to happen fairly soon just due to scale. My point is meant to compare antitrust enforcement to the other mechanisms that are viewed by some as necessary to prevent large corporations from causing negative externalities. Arguably if proper antitrust enforcement had been done in the finance industry, then no firms would have become too big to fail and all of the perverse incentives underscored by regulators post 2008 could have been avoided. The problem is that since our regulatory state rewards size, there is a strong incentive to become large and hence too big to fail. As Amazon becomes a bigger and bigger part of the economy, it could start using the same rent-seeking tactics that financial firms used in 2008 to get major corporate welfare.
  - skellera 9y ago
    Seriously, all the bait and switches happening on Amazon is crazy. So many people getting screwed because a product built up good reviews then switches out for a counterfeit.
    - grandalf 9y ago
- refurb 9y ago
  Pretty sure offering those things to Bezos didn't cost the gov't $200M. And at any rate, most of the money will probably go for an airport that will never be used in some influential senator's state.
  - goialoq 9y ago
    The highways that carry his shipments cost a lot. The Commerce Clause that protects his sales from state sales tax and made his mail-older company competitive against local stores made him a bundle too. Most Federal tax revenue is spent on military (low gas prices for Amazon deliveries) and entitlements, not infrastructure projects.
charlesdm 9y ago
Who says it's not going into a tax free foundation or some sort of trust? Don't assume he's paying taxes if there is a way to avoid.
- thinkling 9y ago
  If you wanted the money to go to your foundation, you would donate the stock to the foundation and sell it there. If you sell it first and then donate the cash, I believe charitable donations are phased out as deductions above a certain income level. (Or maybe the AMT wipes them out?)

The taxes (what, 20% capital gains?) seems an excellent deal for the ecosystem where he grew his company: a stable political system, strong asset protection enforced by strict laws, an educated workforce in a relatively unpolluted environment, etc.

loeg 9y ago
20% capital gains rate + 3.8% NIIT to the federal government. (And another 7.9% to WA under governor Inslee's December 2016 proposal — which, to be clear, has not actually become law.)
- tyingq 9y ago
  Is that all though? I'm guessing that plus whatever regular income tax for his bracket is...which is higher than all that combined. Edit: Why downvote a question? I appreciate the answers, and suspect I'm not the only interested party.
  - beardicus 9y ago
    > I assume that plus whatever regular income tax for his bracket is No. Capital gains aren't income.
    - manigandham 9y ago
      Yes they are. Ordinary income = salary/wages, bonuses, commissions, etc. Capital gains are income, but short-term (within a year) are taxed at ordinary income rates, while long-term (greater than a year) are charged at special capital gains tax rate.
  - hkmurakami 9y ago
    It's long term capital gains and does not get taxed at ordinary income rates. If you are in a state with income tax, they will usually tax your capital gains at your ordinary state income tax bracket.
  - jbusma 9y ago
    Provided the security/asset is held for a year or more, it is taxed as Long-Term Capital Gains, and given quite the tax break. It is even possible to pay 0% federal rate on sale of stock, I did it on my 2016 return.
    - loeg 9y ago
      > It is even possible to pay 0% federal rate on sale of stock, I did it on my 2016 return. Up to the top of the 15% bracket, yes, or $37,950 in total income for single earners in 2017 ($75,900 joint). It's easy to pay little in long-term cap. gains taxes if you are retired (or unemployed) with a cheap-to-moderate lifestyle. But not possible for ~$1 billion in gains, like Bezos' sale :-).
      - TuringNYC 9y ago
        >> But not possible for ~$1 billion in gains Quite possible given enough trust lawyers and accountants. Mitt Romney managed to own a lot of his stock in his Roth IRA. The PayPal gang is famous for paying almost zero taxes though the same tricks. Yes, you dont get to spend it until retirement, but he isnt spending the billion, he is just reinvesting it.
        loeg 9y ago
        No, the Romney move is still not possible in Bezos' shoes. Bezos couldn't have invested in Amazon in his IRA when it was worth nothing: https://en.wikipedia.org/wiki/Self-directed_IRA#Permitted_investments https://en.wikipedia.org/wiki/Self-directed_IRA#Permitted_in... > IRA funds are allowed to be invested in private companies. ... The IRS puts restrictions on private equity investments that can be made by an IRA. It cannot purchase stock that the IRA holder already owns. ... In most cases, neither the IRA holder nor any disqualified persons to the plan can be employed by the company while the IRA has an equity position in that company.
      - KGIII 9y ago
        It is also possible that he never realized the gain. An example would be to gift the shares directly to a trust which sells and then 'loans' BO the money. Tada! You made a billion dollars disappear. That is, I believe, lawful. Consult a qualified legal representative, however.
jbusma 9y ago
Looking up Bezos' salary data, I'm wondering why chose to take a salary of ~$81,840 If he was under the $37,950 mark, his Long Term Capital Gains rate would have been 0%
- jjeaff 9y ago
  That's not how it works. The capital gains themselves count toward the $37k cap. $1B in cap gains puts him a bit out of range to fall under the $37k max.
- jjeaff 9y ago
  Also, he likely received tens of millions of dollars in company stock, which will be taxed at regular income rates, not capital gains.
Consultant32452 9y ago
20% does seem like a good deal for all those things, but it's important to remember that the top 20% already pays 95% of the taxes. So if those things are good they're only good because he's already been paying for them. So if you enjoy the stable political system, strong asset protection, your free education, and relatively unpolluted environment it might be time to add Jeff Bezos to your Christmas card list to thank him for funding all that for you.
- oblio 9y ago
  The real question is: how much do the top 20% make and/or own? If it's 95% or more, then those taxes seem quite fair, don't they? Found some data: https://en.m.wikipedia.org/wiki/Wealth_inequality_in_the_United_States https://en.m.wikipedia.org/wiki/Wealth_inequality_in_the_Uni... Top 20% owned 93% of wealth in 2014, and I don't see why that number wouldn't go up. It's a bit harder to find numbers for income, though.
  - Consultant32452 9y ago
    I don't take incident with the 20% mark. I only take incident with the insinuation that the great societal benefits Bezos enjoys for his 20% was provided by someone else.
    - oblio 9y ago
      If Amazon does shenanigans to hide money you and I couldn't hide from the taxman, then that might still be true.
      - Consultant32452 9y ago
        That doesn't matter unless you believe that Bezos/Amazon is pulling some unique shenanigans compared to every other wealthy person/company. Because even after the cumulative shenanigans of all the wealthy people they're still paying 95% of the taxes.
grandalf 9y ago
I would much rather that Bezos be allowed to keep all of his capital gains but have appropriate antitrust enforcement step in and reduce Amazon's market power a bit. The recent upsurge of counterfeit products are evidence that Amazon is abusing its market power to the point of harming consumers.
- toast0 9y ago
  What market does Amazon have a monopoly, and how are they abusing it or what prohibited practices did they use to establish such a monopoly? It looks like they may have 44% of internet retail by public companies; and that's big, but it doesn't include private companies, and it doesn't fit my definition of a monopoly. It is certainly large enough that they should be scrutinized and attempts to increase share through prohibited practices should result in enforcement actions.
  - grandalf 9y ago
    I don't think Amazon has fully crossed any lines just yet, but I do think it's bound to happen fairly soon just due to scale. My point is meant to compare antitrust enforcement to the other mechanisms that are viewed by some as necessary to prevent large corporations from causing negative externalities. Arguably if proper antitrust enforcement had been done in the finance industry, then no firms would have become too big to fail and all of the perverse incentives underscored by regulators post 2008 could have been avoided. The problem is that since our regulatory state rewards size, there is a strong incentive to become large and hence too big to fail. As Amazon becomes a bigger and bigger part of the economy, it could start using the same rent-seeking tactics that financial firms used in 2008 to get major corporate welfare.
- skellera 9y ago
  Seriously, all the bait and switches happening on Amazon is crazy. So many people getting screwed because a product built up good reviews then switches out for a counterfeit.
  - grandalf 9y ago
refurb 9y ago
Pretty sure offering those things to Bezos didn't cost the gov't $200M. And at any rate, most of the money will probably go for an airport that will never be used in some influential senator's state.
- goialoq 9y ago
  The highways that carry his shipments cost a lot. The Commerce Clause that protects his sales from state sales tax and made his mail-older company competitive against local stores made him a bundle too. Most Federal tax revenue is spent on military (low gas prices for Amazon deliveries) and entitlements, not infrastructure projects.

charlesdm 9y ago

Who says it's not going into a tax free foundation or some sort of trust? Don't assume he's paying taxes if there is a way to avoid.

thinkling 9y ago
If you wanted the money to go to your foundation, you would donate the stock to the foundation and sell it there. If you sell it first and then donate the cash, I believe charitable donations are phased out as deductions above a certain income level. (Or maybe the AMT wipes them out?)