5 ms·

Yes, this is what it was made for. I got mine up to $150,000 based on the annual increment and a few smart buy/sell. I wish I had bought $50,000 Apple at $2, i

Yes, this is what it was made for. I got mine up to $150,000 based on the annual increment and a few smart buy/sell. I wish I had bought $50,000 Apple at $2, it would have turned into $25 million. A few like Thiel do better. Want to hurt Thiel? Hurt us all is your only way. Block options etc, so only trading shares can go in. No 'popcorn' shares that expand by 100 to one or more after they vest etc.

vernie 5y ago
The usual response to any criticism of Thiel on HN: Actually this rocks!
- aurizon 5y ago
  I did not criticise Thiel at all, he did well. That said he did have the ability to capture the entire leap from option pennies into mature trading stock at many many dollars, and roll that over a few times.
  - deleted 5y ago
    [deleted]
- papito 5y ago
  Any suggestion on HN that Peter Thiel is a shit-tier human and a monster will get you downvotes. The funny thing is, there is never any verbal defense - just downvotes.
  - peter422 5y ago
    I thought his book on startups was very well done and interesting. However this seems quite shady. The rich should still have to pay taxes.
    - lotsofpulp 5y ago
      They do have to pay taxes. Maybe Congress should not pass laws that exempt them from paying taxes, or require them to pay more taxes.
      - papito 5y ago
        Congress doesn't write laws - people like Peter Thiel do. You sound like these billionaires are innocent virgins. "Oppsies, I made all these billions because the incompetent congress let me do it". Uh huh.
- cinntaile 5y ago
  It's a pretty smart loophole but it's not like he came up with this. He has tax specialists for that. Now, it's probably not a good idea for loopholes like these to exist. Articles like these can certainly make a difference to close them. Although it's definitely not black and white, excluding private shares would be too broad imo but maybe a different mechanism to determine the value should be used. More general I'd say Peter Thiel is both loved and hated and everything in between on HN, there is no real consensus.
  - jrochkind1 5y ago
    Why would excluding private shares be too broad? What portion of non-super-rich IRA's do you think have private shares in them? Probably approaching zero, right? Do people really need private shares to be able to set up retirement accounts? People can buy private shares when they have access to do so, they just can't use their IRA for it.
    - cinntaile 5y ago
      I don't have any experience with the US tax system but where I live we have certain accounts that exclude private shares (and many other things). The main problem is valuing these shares correctly and if this can be done in an appropriate way I think it makes sense to not exclude them. For example... Private shares can be traded and are sometimes relatively liquid even though they're not public, in that case the trading price should be pretty representative of its real value.
not2b 5y ago
No, it isn't what it was made for. You're limited to a $2000 contribution. Claiming that the value of a share of PayPal was 1/10 of a cent was nonsense. He found a loophole, sure, but it's morally fraudulent even if legally allowed. To close the loophole, putting private shares into a Roth IRA should be banned because they have no true market price that indicates their worth.
- bklyn11201 5y ago
  Precisely. Was anyone else allowed to buy Paypal shares at 1/10 of a cent in 1999? If he alone marked this price, how would it not be fraudulent?
  - jandrese 5y ago
    He basically bought those shares from himself, which is why he was able to set the price arbitrarily low. The point of the Roth IRA is to encourage middle and lower class people to invest in their retirement by offering a tax incentive. But to avoid being abused by the rich the total yearly contribution limit is set very low. Thiel avoided this limit by simply selling himself a huge amount of stock for fractions of a penny on the dollar, knowing the actual price on the open market would be far higher. However, nobody can prove that the price of the private share would have been higher at the time because they weren't on a market. It would be like if you were trying to avoid taxes by selling your 1,000 acre mansion to a LLC that you own for $1 and paying the tax on that $1. This doesn't work for real estate, but the Roth IRA system is not as sophisticated so you can get away with it.
- icedchai 5y ago
  $2000 hasn't been the contribution limit for almost 20 years. It's $6K now, but we could argue that it's still not enough. Private companies that are raising money have a valuation on them done periodically ("409A valuation"), and this is what private stock options and common shares are based on. This is the IRS's own rules.
- silicon2401 5y ago
  > He found a loophole, sure, but it's morally fraudulent even if legally allowed. Morality is relative. You can't legally police other people based on your personal morality. To me, morality is maximizing your self-benefit, so there's nothing wrong with what Thiel did. If other people disagree, then there are plenty of avenues to campaign for outlawing what he did.

vernie 5y ago

The usual response to any criticism of Thiel on HN: Actually this rocks!

aurizon 5y ago
I did not criticise Thiel at all, he did well. That said he did have the ability to capture the entire leap from option pennies into mature trading stock at many many dollars, and roll that over a few times.
- deleted 5y ago
  [deleted]
papito 5y ago
Any suggestion on HN that Peter Thiel is a shit-tier human and a monster will get you downvotes. The funny thing is, there is never any verbal defense - just downvotes.
- peter422 5y ago
  I thought his book on startups was very well done and interesting. However this seems quite shady. The rich should still have to pay taxes.
  - lotsofpulp 5y ago
    They do have to pay taxes. Maybe Congress should not pass laws that exempt them from paying taxes, or require them to pay more taxes.
    - papito 5y ago
      Congress doesn't write laws - people like Peter Thiel do. You sound like these billionaires are innocent virgins. "Oppsies, I made all these billions because the incompetent congress let me do it". Uh huh.
cinntaile 5y ago
It's a pretty smart loophole but it's not like he came up with this. He has tax specialists for that. Now, it's probably not a good idea for loopholes like these to exist. Articles like these can certainly make a difference to close them. Although it's definitely not black and white, excluding private shares would be too broad imo but maybe a different mechanism to determine the value should be used. More general I'd say Peter Thiel is both loved and hated and everything in between on HN, there is no real consensus.
- jrochkind1 5y ago
  Why would excluding private shares be too broad? What portion of non-super-rich IRA's do you think have private shares in them? Probably approaching zero, right? Do people really need private shares to be able to set up retirement accounts? People can buy private shares when they have access to do so, they just can't use their IRA for it.
  - cinntaile 5y ago
    I don't have any experience with the US tax system but where I live we have certain accounts that exclude private shares (and many other things). The main problem is valuing these shares correctly and if this can be done in an appropriate way I think it makes sense to not exclude them. For example... Private shares can be traded and are sometimes relatively liquid even though they're not public, in that case the trading price should be pretty representative of its real value.

not2b 5y ago

No, it isn't what it was made for. You're limited to a $2000 contribution. Claiming that the value of a share of PayPal was 1/10 of a cent was nonsense. He found a loophole, sure, but it's morally fraudulent even if legally allowed. To close the loophole, putting private shares into a Roth IRA should be banned because they have no true market price that indicates their worth.

bklyn11201 5y ago
Precisely. Was anyone else allowed to buy Paypal shares at 1/10 of a cent in 1999? If he alone marked this price, how would it not be fraudulent?
- jandrese 5y ago
  He basically bought those shares from himself, which is why he was able to set the price arbitrarily low. The point of the Roth IRA is to encourage middle and lower class people to invest in their retirement by offering a tax incentive. But to avoid being abused by the rich the total yearly contribution limit is set very low. Thiel avoided this limit by simply selling himself a huge amount of stock for fractions of a penny on the dollar, knowing the actual price on the open market would be far higher. However, nobody can prove that the price of the private share would have been higher at the time because they weren't on a market. It would be like if you were trying to avoid taxes by selling your 1,000 acre mansion to a LLC that you own for $1 and paying the tax on that $1. This doesn't work for real estate, but the Roth IRA system is not as sophisticated so you can get away with it.
icedchai 5y ago
$2000 hasn't been the contribution limit for almost 20 years. It's $6K now, but we could argue that it's still not enough. Private companies that are raising money have a valuation on them done periodically ("409A valuation"), and this is what private stock options and common shares are based on. This is the IRS's own rules.
silicon2401 5y ago
> He found a loophole, sure, but it's morally fraudulent even if legally allowed. Morality is relative. You can't legally police other people based on your personal morality. To me, morality is maximizing your self-benefit, so there's nothing wrong with what Thiel did. If other people disagree, then there are plenty of avenues to campaign for outlawing what he did.