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Not rich here. Wife's company got COVID loans. They were forgiven. Company had to prove money was spent on rent, salaries, benefits. Company didn't make mon

Not rich here. Wife's company got COVID loans. They were forgiven. Company had to prove money was spent on rent, salaries, benefits. Company didn't make money on it. Employees were able to keep their jobs. No bonuses involved there.

aeturnum 5y ago
The COVID relief has helped the rich in the same way that the mortgage tax deduction 'mostly' helps the rich[1]: the majority of the dollars go to aid wealthy people, despite the number of non-wealthy beneficiaries being much higher. [1] https://thehill.com/opinion/finance/358922-mortgage-interest-deduction-mostly-benefits-the-rich-end-it https://thehill.com/opinion/finance/358922-mortgage-interest...
- Karunamon 5y ago
  That always struck me as an ass-backwards way of looking at taxes. $100 saved by someone near the poverty line is a big deal to them, $100 saved by someone making six figures is not near as much. The recent doubling of the standard deduction is probably one of the biggest (in terms of impact) tax cuts to the lower/middle earners (read: the vast majority of people) in a long time.
  - treeman79 5y ago
    Low earners don’t pay federal income tax. Bottom 50% make up 3% Top 1% paid 40% of taxes. https://taxfoundation.org/publications/latest-federal-income-tax-data/ https://taxfoundation.org/publications/latest-federal-income...
  - aeturnum 5y ago
    I agree that poor-er people have much higher marginal utility for $1, but I think that observation supports this critique! The 'cost' of spending $1,000,000 on a wealthy person should be measured in terms of how much utility less-wealthy recipients would get out of that money. In the same way, your example with the standard deduction also, I think, supports this critique: either standard deduction is marginal once you reach a high enough level of income, but at lower levels of income it is much, much better (and results in higher tax rebates for poor people). It's an example of a tax policy that does the reverse of the mortgage tax deduction - it becomes less proportionally beneficial at higher levels of income. P.s. I may have misread your comment, and if we are actually in agreement I apologize!
    - novok 5y ago
      I'll be honest, the mortgage tax deduction doesn't deduct that much either as a proportion of income if you make a multi six figures income, much like the standard deduction. For example, if you have a $1mm house, your interest on a $800k mortgage @ %2.7 APR is a ~$30k/yr interest deduction, which is in the same range as the standard deduction, representing around $15k/yr paid in less taxes. For those kinds of people, it's easier to just make $30k/yr more per year too. These people often live in states with an income tax, so they can't deduct their property tax anymore either, since it gets dwarfed by their state tax bill. On a dollar aggregate, they of course get the most benefit from the deduction, because most middle & lower income americans don't pay a lot of taxes to get much of an aggregated benefit. But as a percentage of their own income, its not actually that much!
      - Retric 5y ago
        The mortgage deduction on it’s own isn’t such a big deal but it suddenly makes a lot of things tax deductible which aren’t if you take the standard deduction. The tax code is complex largely to enable such seemingly subtle interactions.
        novok 5y ago
        What kind of stuff becomes tax deductible once you get beyond the standard deduction, that doesn't involve having a business, which doesn't have that standard deduction limit anyway? Charitable donations? Medical expenses if you have a really bad time and need to spend more than %4 of your income to cover it?
        Retric 5y ago
        It’s a long list, the major one is state income taxes, also charitable deductions can cover charities you create which can be a big deal if something you’re doing anyway could qualify. However, some oddities like theft of investments such as gold or artwork and even some fines can be deductible. So sure on it’s own the mortgage tax deduction isn’t always huge, but it’s rarely the only deduction someone could take.
  - ajsnigrutin 5y ago
    Someone making six figures still pays a lot more tax, in both net numbers and percentage (=tax brackets) than someone poor(er). If we want to go down your route, 10% of all clothes in ShoppingCentre(TM) is unfair too, because someone buying an Armani suit saves more money than someone buying a $10 5pack of white tshirts.
mdorazio 5y ago
Yes, and what did those employees who would have otherwise been unemployed spend their money on? Likely rent was the #1 item, thus transferring wealth from tax dollars to asset holders.
- birken 5y ago
  I'm sure the employees would much rather have been laid off to stick it to the asset holders.
  - manquer 5y ago
    With weaker demand rents would have actually fallen a lot more than now. That in turn would have an impact on asset prices in the long term. Will it be fairer to employees ? I don't know, there will be lot more pain for employees without government intervention. However with Quantitative Easing or bailouts and COVID loans means the rich are not paying the same price as well, that is why rich are becoming richer, poor suffer either way.
    - sangnoir 5y ago
      > With weaker demand rents would have actually fallen a lot more than now In this sentence, is "weaker demand" euphemism for mass homelessness?
      - diordiderot 5y ago
        It's amazing how sociopathic economics is without context
      - manquer 5y ago
        Not necessarily, demand in Bay Area for example is not really connected to homelessness all that much. While rents have dropped a bit here, it more likely to get 2 months rent free rather than actual drops. In a tough economy I would expect rents to drop and in turn asset prices as well. The 6 trillion pumped in has to go somewhere, if it’s not inflation of consumer goods, it is inflation of capital goods. This has made it incredibly harder for mobility and wealth inequality
garmaine 5y ago
What did they do with the regular income they had during that period that would have gone to rent, salaries, etc.?
- hdhjebebeb 5y ago
  you're so close...
- quickthrowman 5y ago
  Paid it out as to owners/execs as dividends/bonuses, this is what happened in my industry to the companies that took PPP loans but had plenty of work and receivables to pay the bills. Plenty of PPP money was ‘used for payroll’ when there was already money for payroll, then the company is free to do as it wants with it (cash out to owners)
- sokoloff 5y ago
  You’re asking what booking.com (a travel booking agency that lives on fees earned when people are traveling and using them to buy it) did with all that money they were earning from their normal business operations given the collapse of travel volumes from March of 2020 to now?
  - garmaine 5y ago
    No, the post I was replying to was talking about his wife’s company.
itake 5y ago
the company basically got free labor for 2 months. instead of needing to pay employees, the company got to keep its cash (and pay them out to the owners).
trhway 5y ago
>Wife's company got COVID loans. They were forgiven. those relatively useful (at least in the cases where it wasn't abused/cheated) programs is a minor part and basically a window dressing of that multi trillion transfer of wealth to the rich. It is just a bone thrown to the populace to detract the attention and to derail the public discourse they way you just did.
lmeyerov 5y ago
Sort of. $ can go to payroll, but net revenue is still up by PPP amount. So owners can get a performance bonus, and it just happens to be the PPP amount. But if there was no PPP, there wouldn't have been that extra cash, so less $ for bonuses. This only works if the company was breakeven, or had $ reserves (eg, VC funded w expectation of ever-growing losses)
anigbrowl 5y ago
That seems ancillary to the GP's point, which was pointing out an overall wealth transfer rather than inveighing against COVID loans.
csomar 5y ago
Two things: One, this was the supposed goal of such a loan (keep jobs, and not sign multi-million bonuses to CEOs). Two, you could give this to a small business and keep as many jobs (on total) if not more. However, bigger companies have better means to navigate complex governmental schemes. This means people who have substantially more wealth (owners of big companies) get an easy ride during such a crisis while the smaller guys get screwed. Or, you know, don't give money to anybody. You'll have some people bailed out through deflation, and some other screwed because they are over-leveraged. Whatever happened to being responsible and putting some money aside for a crisis?
ab_testing 5y ago
Just a data point here. My company got a five million loan that got written off. The company claimed that around 120 jobs were at risk. However the truth is that since we are a consulting firm and our clients continued our services, the jobs were never really at risk and the owners made off with 5 million. For a company that has yearly profits in the low one million range, the owners did hit a lottery while cutting our salaries at the same time .
- nixgeek 5y ago
  If it’s truly as simple as what you describe then the owners committed fraud.

aeturnum 5y ago

The COVID relief has helped the rich in the same way that the mortgage tax deduction 'mostly' helps the rich[1]: the majority of the dollars go to aid wealthy people, despite the number of non-wealthy beneficiaries being much higher. [1] https://thehill.com/opinion/finance/358922-mortgage-interest-deduction-mostly-benefits-the-rich-end-it https://thehill.com/opinion/finance/358922-mortgage-interest...

Karunamon 5y ago
That always struck me as an ass-backwards way of looking at taxes. $100 saved by someone near the poverty line is a big deal to them, $100 saved by someone making six figures is not near as much. The recent doubling of the standard deduction is probably one of the biggest (in terms of impact) tax cuts to the lower/middle earners (read: the vast majority of people) in a long time.
- treeman79 5y ago
  Low earners don’t pay federal income tax. Bottom 50% make up 3% Top 1% paid 40% of taxes. https://taxfoundation.org/publications/latest-federal-income-tax-data/ https://taxfoundation.org/publications/latest-federal-income...
- aeturnum 5y ago
  I agree that poor-er people have much higher marginal utility for $1, but I think that observation supports this critique! The 'cost' of spending $1,000,000 on a wealthy person should be measured in terms of how much utility less-wealthy recipients would get out of that money. In the same way, your example with the standard deduction also, I think, supports this critique: either standard deduction is marginal once you reach a high enough level of income, but at lower levels of income it is much, much better (and results in higher tax rebates for poor people). It's an example of a tax policy that does the reverse of the mortgage tax deduction - it becomes less proportionally beneficial at higher levels of income. P.s. I may have misread your comment, and if we are actually in agreement I apologize!
  - novok 5y ago
    I'll be honest, the mortgage tax deduction doesn't deduct that much either as a proportion of income if you make a multi six figures income, much like the standard deduction. For example, if you have a $1mm house, your interest on a $800k mortgage @ %2.7 APR is a ~$30k/yr interest deduction, which is in the same range as the standard deduction, representing around $15k/yr paid in less taxes. For those kinds of people, it's easier to just make $30k/yr more per year too. These people often live in states with an income tax, so they can't deduct their property tax anymore either, since it gets dwarfed by their state tax bill. On a dollar aggregate, they of course get the most benefit from the deduction, because most middle & lower income americans don't pay a lot of taxes to get much of an aggregated benefit. But as a percentage of their own income, its not actually that much!
    - Retric 5y ago
      The mortgage deduction on it’s own isn’t such a big deal but it suddenly makes a lot of things tax deductible which aren’t if you take the standard deduction. The tax code is complex largely to enable such seemingly subtle interactions.
      - novok 5y ago
        What kind of stuff becomes tax deductible once you get beyond the standard deduction, that doesn't involve having a business, which doesn't have that standard deduction limit anyway? Charitable donations? Medical expenses if you have a really bad time and need to spend more than %4 of your income to cover it?
        Retric 5y ago
        It’s a long list, the major one is state income taxes, also charitable deductions can cover charities you create which can be a big deal if something you’re doing anyway could qualify. However, some oddities like theft of investments such as gold or artwork and even some fines can be deductible. So sure on it’s own the mortgage tax deduction isn’t always huge, but it’s rarely the only deduction someone could take.
- ajsnigrutin 5y ago
  Someone making six figures still pays a lot more tax, in both net numbers and percentage (=tax brackets) than someone poor(er). If we want to go down your route, 10% of all clothes in ShoppingCentre(TM) is unfair too, because someone buying an Armani suit saves more money than someone buying a $10 5pack of white tshirts.

mdorazio 5y ago

Yes, and what did those employees who would have otherwise been unemployed spend their money on? Likely rent was the #1 item, thus transferring wealth from tax dollars to asset holders.

birken 5y ago
I'm sure the employees would much rather have been laid off to stick it to the asset holders.
- manquer 5y ago
  With weaker demand rents would have actually fallen a lot more than now. That in turn would have an impact on asset prices in the long term. Will it be fairer to employees ? I don't know, there will be lot more pain for employees without government intervention. However with Quantitative Easing or bailouts and COVID loans means the rich are not paying the same price as well, that is why rich are becoming richer, poor suffer either way.
  - sangnoir 5y ago
    > With weaker demand rents would have actually fallen a lot more than now In this sentence, is "weaker demand" euphemism for mass homelessness?
    - diordiderot 5y ago
      It's amazing how sociopathic economics is without context
    - manquer 5y ago
      Not necessarily, demand in Bay Area for example is not really connected to homelessness all that much. While rents have dropped a bit here, it more likely to get 2 months rent free rather than actual drops. In a tough economy I would expect rents to drop and in turn asset prices as well. The 6 trillion pumped in has to go somewhere, if it’s not inflation of consumer goods, it is inflation of capital goods. This has made it incredibly harder for mobility and wealth inequality

garmaine 5y ago

What did they do with the regular income they had during that period that would have gone to rent, salaries, etc.?

hdhjebebeb 5y ago
you're so close...
quickthrowman 5y ago
Paid it out as to owners/execs as dividends/bonuses, this is what happened in my industry to the companies that took PPP loans but had plenty of work and receivables to pay the bills. Plenty of PPP money was ‘used for payroll’ when there was already money for payroll, then the company is free to do as it wants with it (cash out to owners)
sokoloff 5y ago
You’re asking what booking.com (a travel booking agency that lives on fees earned when people are traveling and using them to buy it) did with all that money they were earning from their normal business operations given the collapse of travel volumes from March of 2020 to now?
- garmaine 5y ago
  No, the post I was replying to was talking about his wife’s company.

itake 5y ago

the company basically got free labor for 2 months. instead of needing to pay employees, the company got to keep its cash (and pay them out to the owners).

trhway 5y ago

>Wife's company got COVID loans. They were forgiven. those relatively useful (at least in the cases where it wasn't abused/cheated) programs is a minor part and basically a window dressing of that multi trillion transfer of wealth to the rich. It is just a bone thrown to the populace to detract the attention and to derail the public discourse they way you just did.

lmeyerov 5y ago

Sort of. $ can go to payroll, but net revenue is still up by PPP amount. So owners can get a performance bonus, and it just happens to be the PPP amount. But if there was no PPP, there wouldn't have been that extra cash, so less $ for bonuses. This only works if the company was breakeven, or had $ reserves (eg, VC funded w expectation of ever-growing losses)

anigbrowl 5y ago

That seems ancillary to the GP's point, which was pointing out an overall wealth transfer rather than inveighing against COVID loans.

csomar 5y ago

Two things: One, this was the supposed goal of such a loan (keep jobs, and not sign multi-million bonuses to CEOs). Two, you could give this to a small business and keep as many jobs (on total) if not more. However, bigger companies have better means to navigate complex governmental schemes. This means people who have substantially more wealth (owners of big companies) get an easy ride during such a crisis while the smaller guys get screwed. Or, you know, don't give money to anybody. You'll have some people bailed out through deflation, and some other screwed because they are over-leveraged. Whatever happened to being responsible and putting some money aside for a crisis?

ab_testing 5y ago

Just a data point here. My company got a five million loan that got written off. The company claimed that around 120 jobs were at risk. However the truth is that since we are a consulting firm and our clients continued our services, the jobs were never really at risk and the owners made off with 5 million. For a company that has yearly profits in the low one million range, the owners did hit a lottery while cutting our salaries at the same time .

nixgeek 5y ago
If it’s truly as simple as what you describe then the owners committed fraud.