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> probably for the rest of his life. At a net worth of $1 billion and assuming he lives to 100 that is $23 million dollars a year to spend, which reasonably, he

> probably for the rest of his life. At a net worth of $1 billion and assuming he lives to 100 that is $23 million dollars a year to spend, which reasonably, he could only spend around $5-10 Million if he tried. He is worth what, $150 Billion? By the fall he probably will be. He could find a group of 10,000 people of the same age, spit the money evenly and each person would have $340k per year, a large enough sum to reasonably travel all year long around the world for each person never working agin. Nobody should ever have a $1B worth.

lotsofpulp 6y ago
> Nobody should ever have a $1B worth. How does this work? Forced sale of assets? Who determines the market price of the assets, if they’re not highly liquid?
- PaulDavisThe1st 6y ago
  When you get issued stock options at a company, you immediately become liable for taxes on them, since they are treated as income. This is true even if there is no public market for the shares at that time (something that caused headaches for many early dotcom stock option grantees). It's is an obvious precedent for taxing somebody who has "received" wealth via the route that Bezos has done.
  - lotsofpulp 6y ago
    How about land? IP? Or a private company? Surely, only people that get issued options aren’t subject to a $1B max.
    - PaulDavisThe1st 6y ago
      no need to set a max. Just set the marginal rate so high that earning (or, if a wealth tax, owning) more than some amount becomes pointless.
      - gher-shyu3i 6y ago
        And disincentivize people from working? That's not a sustainable economic system. For a properly sustainable system, consider how Islam solved this problem over 1400 years ago. Zakat is the only form of "tax" if you will that is mandated. Interest and other predatory practices are prohibited (e.g. shorting). Once the fundamentals are correct, everything else naturally falls into place. It has been reported that during the rule of Umar II, there were no poor people left in Iraq to accept Zakat (charity) since everyone paid their share. It would be nice to see that happen again, but the modern financial system won't let it happen.
        PaulDavisThe1st 6y ago
        One might argue that having $1B of assets (certainly liquid assets) is a fairly major disincentive to working. High marginal tax rates on super-high levels of income and/or wealth doesn't discourage working. It just makes doing something to add another chunk to your income/wealth require something other than financial renumeration. There's plenty of evidence that humans do their best work when they have intrinsic and not extrinsic motivation. Bezos is a case in point. I believe him to have an almost absurdly high level of intrinsic motivation (I worked with him for 15 months). He might like the wealth he has, but the things he will continue to do with his life, just like Amazon itself, get done for reasons beyond money.
        gher-shyu3i 6y ago
        First, I really appreciate your response :) > High marginal tax rates on super-high levels of income and/or wealth doesn't discourage working. Do we have precedence for this? From what I'm aware, even when the US had high marginal tax rates which some dems seem to be calling to bring back, no one ever paid those rates because there are always ways for the very rich to reduce their income on paper, while still increasing their wealth. I do agree with you that it takes a very special kind of person to have the wealth of Elon or Bezos and still continue to want to work, it's obviously more than money at that point. But those people are outliers. I know I wouldn't be motivated to spend more effort if it meant a proportional decrease in the total amount of money I would end up pocketing due to increased taxes.
  - creddit 6y ago
    > When you get issued stock options at a company, you immediately become liable for taxes on them, since they are treated as income. This is false, right? It's only taxable on exercise. That or I know 1,000s of people at major companies that owe back taxes.
    - PaulDavisThe1st 6y ago
      In the 1990s, I knew dozens of people who faced major financial problems because they immediately owed taxes on options they had just exercised, on shares that were not tradable. These were just regular developers (or in some cases, shipping crew), and they didn't have $50-500k sitting around to cover taxes like that. Maybe the rules have been changed since then? I do know that by the early 2000's there were financial services companies offering wierd loans to help cover the taxes (obviously using the stocks as collateral).
      - azinman2 6y ago
        This is the difference between RSUs, NSOs, and ISOs. ISOs don't make you pay taxes until you exercise it (a qualifying event), which means you actually took this piece of paper and converted it into tangible value. I'm not sure how they could have exercised it and not had it turn into cash (perhaps their company got acquired and they got options of another non-IPO'd company?).
        PaulDavisThe1st 6y ago
        Let's put it like this. The year after I exercised my one and only set of amzn stock options, I owed US$43k in taxes based on their nominal value. The stock was not publically traded at the time, and I had to find savings to cover the tax bill. I retained the piece of paper and started selling later that year after the IPO. At least one other early hire at amzn owed a lot more than this.
        fossuser 6y ago
        Yeah - options are taxed on exercise, not on grant (that’s the dispute with your original comment). Also, you’re taxed on the spread at exercise between the strike price and the fair market value at the time of exercise. If you’re able to exercise when the shares are granted (which early employees can often do by early exercising unvested shares) then there is no spread and there is no tax (at time of exercise, you still pay tax when you eventually sell the shares). Doing this and filing an 83b election with the IRS is important for people joining a startup where they hold lots of equity that’s valued near zero. It’s even a little more complicated than that if you get ISOs since you can exercise some of them tax free until you hit AMT (but AMT has not increased over time so this is less useful than it used to be). NSOs don’t have this ability. RSUs are different and you do get taxed on grant and some are withheld to cover (FB started this and they’re colloquially called FB-style RSUs). This is a relatively recent invention that started because private companies with high valuations had options with strikes too expensive for normal employees to exercise prior to the mandatory ten year expiration. Also old employees who held the option contracts wouldn’t be able to pay the exercise tax on the spread you mention and would hit the 10yr expiration (at which point they need to make a loan shark deal or risk floating a lot of cash). This used to not be an issue because companies didn't stay private this long. With RSUs employees don’t have to worry about any of this, but they lose more on grant to income tax than they could by exercising and holding options optimally. RSUs aren’t strictly better though because if you can exercise options you can hold the stock for 1yr and get long term cap gains which is 15% up to 400k and 20% after. This is a lot more potential upside than just getting hit with income tax. Though in CA you still get hit with a large percentage state income tax on it anyway. (13% after 1M I think). All of the above commentary is unrelated to a wealth tax (or capping net worth) which I think is dumb policy. This grew into a kind of long comment, but if you’re dealing with equity it’s worth learning this stuff for yourself since leveraging equity effectively is probably the best way to actually get wealth in a timeframe shorter than a lifetime of index funds investing.
  - PeterStuer 6y ago
    Depends on the country/jurisdiction. In some places it is upon issue, in some places it is upon exercise or a mix thereof. Sadly over here in Belgium a non trivial tax (18%, but it varies according to some parameters such as runlenght) is due upon issue, turning stock options into a potential substantial risk.
vasco 6y ago
Why would you give that money to worse allocators of capital? He's generated 1.3 million jobs. How many jobs would you sacrifice in order to limit Bezos to whatever wealth cap you think is appropriate? By definition you will sacrifice them, so the question is at what cost is it too much and how much money is too much money? Also who decides that, is it you?
- anotherman554 6y ago
  The demand for products has generated 1.3 million jobs. It's a fallacy to think the jobs wouldn't exist without this company or this billionaire.
- dralley 6y ago
  How are you measuring "efficient allocation of capital"? Amazon has been very successful at squeezing "efficiency" out of their employees, where "efficiency" is defined largely as abusive conditions and poor wages. While they may be a large employer in raw numbers, vast numbers of their employees depend on public assistance. UPS, USPS, and FedEx seem to pay consistently higher wages. And on top of that, like most "supermassive" companies, they are very "efficient" at dodging taxes. Yes, this is "efficiency" in the financial sense, but it is by no means net positive at the societal level. https://www.seattletimes.com/business/amazon/amazons-turnover-rate-amid-pandemic-is-at-least-double-the-average-for-retail-and-warehousing-industries/ https://www.seattletimes.com/business/amazon/amazons-turnove... https://www.ttnews.com/articles/amazon-thrives-fedex-delivery-model-driver-pay-challenges-persist https://www.ttnews.com/articles/amazon-thrives-fedex-deliver...
- bluedino 6y ago
  How many companies has Amazon out out of business?

lotsofpulp 6y ago

> Nobody should ever have a $1B worth. How does this work? Forced sale of assets? Who determines the market price of the assets, if they’re not highly liquid?

PaulDavisThe1st 6y ago
When you get issued stock options at a company, you immediately become liable for taxes on them, since they are treated as income. This is true even if there is no public market for the shares at that time (something that caused headaches for many early dotcom stock option grantees). It's is an obvious precedent for taxing somebody who has "received" wealth via the route that Bezos has done.
- lotsofpulp 6y ago
  How about land? IP? Or a private company? Surely, only people that get issued options aren’t subject to a $1B max.
  - PaulDavisThe1st 6y ago
    no need to set a max. Just set the marginal rate so high that earning (or, if a wealth tax, owning) more than some amount becomes pointless.
    - gher-shyu3i 6y ago
      And disincentivize people from working? That's not a sustainable economic system. For a properly sustainable system, consider how Islam solved this problem over 1400 years ago. Zakat is the only form of "tax" if you will that is mandated. Interest and other predatory practices are prohibited (e.g. shorting). Once the fundamentals are correct, everything else naturally falls into place. It has been reported that during the rule of Umar II, there were no poor people left in Iraq to accept Zakat (charity) since everyone paid their share. It would be nice to see that happen again, but the modern financial system won't let it happen.
      - PaulDavisThe1st 6y ago
        One might argue that having $1B of assets (certainly liquid assets) is a fairly major disincentive to working. High marginal tax rates on super-high levels of income and/or wealth doesn't discourage working. It just makes doing something to add another chunk to your income/wealth require something other than financial renumeration. There's plenty of evidence that humans do their best work when they have intrinsic and not extrinsic motivation. Bezos is a case in point. I believe him to have an almost absurdly high level of intrinsic motivation (I worked with him for 15 months). He might like the wealth he has, but the things he will continue to do with his life, just like Amazon itself, get done for reasons beyond money.
        gher-shyu3i 6y ago
        First, I really appreciate your response :) > High marginal tax rates on super-high levels of income and/or wealth doesn't discourage working. Do we have precedence for this? From what I'm aware, even when the US had high marginal tax rates which some dems seem to be calling to bring back, no one ever paid those rates because there are always ways for the very rich to reduce their income on paper, while still increasing their wealth. I do agree with you that it takes a very special kind of person to have the wealth of Elon or Bezos and still continue to want to work, it's obviously more than money at that point. But those people are outliers. I know I wouldn't be motivated to spend more effort if it meant a proportional decrease in the total amount of money I would end up pocketing due to increased taxes.
- creddit 6y ago
  > When you get issued stock options at a company, you immediately become liable for taxes on them, since they are treated as income. This is false, right? It's only taxable on exercise. That or I know 1,000s of people at major companies that owe back taxes.
  - PaulDavisThe1st 6y ago
    In the 1990s, I knew dozens of people who faced major financial problems because they immediately owed taxes on options they had just exercised, on shares that were not tradable. These were just regular developers (or in some cases, shipping crew), and they didn't have $50-500k sitting around to cover taxes like that. Maybe the rules have been changed since then? I do know that by the early 2000's there were financial services companies offering wierd loans to help cover the taxes (obviously using the stocks as collateral).
    - azinman2 6y ago
      This is the difference between RSUs, NSOs, and ISOs. ISOs don't make you pay taxes until you exercise it (a qualifying event), which means you actually took this piece of paper and converted it into tangible value. I'm not sure how they could have exercised it and not had it turn into cash (perhaps their company got acquired and they got options of another non-IPO'd company?).
      - PaulDavisThe1st 6y ago
        Let's put it like this. The year after I exercised my one and only set of amzn stock options, I owed US$43k in taxes based on their nominal value. The stock was not publically traded at the time, and I had to find savings to cover the tax bill. I retained the piece of paper and started selling later that year after the IPO. At least one other early hire at amzn owed a lot more than this.
        fossuser 6y ago
        Yeah - options are taxed on exercise, not on grant (that’s the dispute with your original comment). Also, you’re taxed on the spread at exercise between the strike price and the fair market value at the time of exercise. If you’re able to exercise when the shares are granted (which early employees can often do by early exercising unvested shares) then there is no spread and there is no tax (at time of exercise, you still pay tax when you eventually sell the shares). Doing this and filing an 83b election with the IRS is important for people joining a startup where they hold lots of equity that’s valued near zero. It’s even a little more complicated than that if you get ISOs since you can exercise some of them tax free until you hit AMT (but AMT has not increased over time so this is less useful than it used to be). NSOs don’t have this ability. RSUs are different and you do get taxed on grant and some are withheld to cover (FB started this and they’re colloquially called FB-style RSUs). This is a relatively recent invention that started because private companies with high valuations had options with strikes too expensive for normal employees to exercise prior to the mandatory ten year expiration. Also old employees who held the option contracts wouldn’t be able to pay the exercise tax on the spread you mention and would hit the 10yr expiration (at which point they need to make a loan shark deal or risk floating a lot of cash). This used to not be an issue because companies didn't stay private this long. With RSUs employees don’t have to worry about any of this, but they lose more on grant to income tax than they could by exercising and holding options optimally. RSUs aren’t strictly better though because if you can exercise options you can hold the stock for 1yr and get long term cap gains which is 15% up to 400k and 20% after. This is a lot more potential upside than just getting hit with income tax. Though in CA you still get hit with a large percentage state income tax on it anyway. (13% after 1M I think). All of the above commentary is unrelated to a wealth tax (or capping net worth) which I think is dumb policy. This grew into a kind of long comment, but if you’re dealing with equity it’s worth learning this stuff for yourself since leveraging equity effectively is probably the best way to actually get wealth in a timeframe shorter than a lifetime of index funds investing.
- PeterStuer 6y ago
  Depends on the country/jurisdiction. In some places it is upon issue, in some places it is upon exercise or a mix thereof. Sadly over here in Belgium a non trivial tax (18%, but it varies according to some parameters such as runlenght) is due upon issue, turning stock options into a potential substantial risk.

vasco 6y ago

Why would you give that money to worse allocators of capital? He's generated 1.3 million jobs. How many jobs would you sacrifice in order to limit Bezos to whatever wealth cap you think is appropriate? By definition you will sacrifice them, so the question is at what cost is it too much and how much money is too much money? Also who decides that, is it you?

anotherman554 6y ago
The demand for products has generated 1.3 million jobs. It's a fallacy to think the jobs wouldn't exist without this company or this billionaire.
dralley 6y ago
How are you measuring "efficient allocation of capital"? Amazon has been very successful at squeezing "efficiency" out of their employees, where "efficiency" is defined largely as abusive conditions and poor wages. While they may be a large employer in raw numbers, vast numbers of their employees depend on public assistance. UPS, USPS, and FedEx seem to pay consistently higher wages. And on top of that, like most "supermassive" companies, they are very "efficient" at dodging taxes. Yes, this is "efficiency" in the financial sense, but it is by no means net positive at the societal level. https://www.seattletimes.com/business/amazon/amazons-turnover-rate-amid-pandemic-is-at-least-double-the-average-for-retail-and-warehousing-industries/ https://www.seattletimes.com/business/amazon/amazons-turnove... https://www.ttnews.com/articles/amazon-thrives-fedex-delivery-model-driver-pay-challenges-persist https://www.ttnews.com/articles/amazon-thrives-fedex-deliver...
bluedino 6y ago
How many companies has Amazon out out of business?