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It likely posed an appreciable risk to his business ventures that CA at some point will try to tax unrecognized capital gains, People like Musk leverage their
by sidlls 6y ago
It likely posed an appreciable risk to his business ventures that CA at some point will try to tax unrecognized capital gains,
People like Musk leverage their paper wealth into real (risky) loans and the like to support their business ventures (and personal lives)--part of the "socialize risk, privatize profits" model of pseudo-capitalism they practice.
A thoughtless approach to taxing unrecognized gains is not a good idea, but I certainly understand why it might be considered, at least for some minimum threshold. There's already something like this in the way some stock options are handled: individuals are taxed at exercise on the difference between the FMV and the strike price, whether they sell or not. I don't see why a similar principal couldn't be made to work with actual equities, at least for some high-value accounts/holdings.
- gradys 6y agoWhy does taking private loans against his private assets count as socializing risk? The banks he gets these loans from understand the risk and do not represent "society".
- InitialLastName 6y agoAs we've seen, when banks' habits of making bad loans catch up with them they tend to get bailed out by the federal government.
- gradys 6y agoIf you mean 2008, yeah, you're right, but those were mostly loans to relatively low income people buying homes, not loans against billionaires' unrealized capital gains.
- sidlls 6y agoThose were mostly covering obligations in the huge CDS market that grew up around bad loans, not the loans themselves.
- elindbe2 6y agoSocializing what risk? What are you even talking about? Musk put his entire fortune from PayPal on the line for Tesla knowing that in all probability it would fail. It turned out well for him but it was still a huge risk he took. I would argue that the opposite is true. California wants a larger cut of profits from business activity within their borders without any risk on their part, or even having to provide better services than competing states.
- selectodude 6y agoI'm curious how many people educated by the University of California work for Elon Musk.
- elindbe2 6y agoYeah I wonder how many people work for Musk and pay taxes to California while building EVs that reduce pollution in California.
- cryptica 6y ago>> Musk put his entire fortune from PayPal on the line for Tesla knowing that in all probability it would fail. It turned out well for him but it was still a huge risk he took. For sure Elon Musk is a very smart guy and he works really hard and he knows how to deliver amazing products and his PR skills are amazing... That said, we can't deny that he got a lot of support from the US government. Without US government help (e.g. subsidies, grants, carbon credits), he probably would have failed flat on his face like all other geniuses. His ability to secure government support had more to do with luck (history and social connections) than skill. So as great as Elon Musk is, he did socialize a lot of his risk.
- elindbe2 6y ago> For sure Elon Musk is a very smart guy and he works really hard and he knows how to deliver amazing products and his PR skills are amazing... And again, don't ignore the part where he used his entire PayPal fortune to build a company that he thought had a high probability of failure. That's key to this conversation about risk. The government chose to take on the risk of providing subsidies in order to get the benefits it enjoys today due to Musk's efforts, which is a growing electric vehicle industry. That wasn't Musk's choice to socialize risk, it was elected officials'. And that choice has paid off well for everyone.
- deleted 6y ago[deleted]