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I think the comments here miss a couple of factors. First, and primarily, Tim Sweeny states: "If this tax scheme had been place, I’d have been forced to liquid

I think the comments here miss a couple of factors. First, and primarily, Tim Sweeny states: "If this tax scheme had been place, I’d have been forced to liquidate nearly my entire ownership." This is absolutely false. The proposed law (legislative text available here: https://www.finance.senate.gov/chairmans-news/wyden-unveils-billionaires-income-tax https://www.finance.senate.gov/chairmans-news/wyden-unveils-...) would not apply the tax scheme to Epic Games. At all. See Section 491, which applies the new tax scheme to "tradable covered assets", and Section 497 which defines "Tradable Covered Assets". Those are defined assets traded on established securities markets or readily available on secondary markets. Epic Games is a privately held company, and not traded on established securities markets or readily available on secondary markets. Additionally, the law allows each person to designate up to $1B of normally "tradable covered assets" as "nontradable covered assets". Which means if this law did apply to Tim Sweeny, it wouldn't have impacted his holdings by as much as he implies, as $1B of his assets is removed from his "assets" at the start of the calculation. This significantly reduces the amount of shares he would have to liquidate to cover his take burden.

seanmcdirmid 5y ago
> Epic Games is a privately held company, and not traded on established securities markets or readily available on secondary markets. So this law would lead to a proliferation of privately held companies as billionaires avoid the stock market and other tradable covered assets?
- ncallaway 5y ago
  Maybe, but there are a lot of factors that drive IPO decision making and I don't think this would be a huge one. It's not only traded on established securities market, it's also "readily available on secondary markets". Basically, if there's a significant number of shares trading hands between parties on an ongoing low-friction basis it's going to be subject to the tax rules. Which means a company that wants to have a really large pool of investors wouldn't be able to skirt this by just not listing. I think this law could affect the number of IPOs at the margins, but I suspect it wouldn't be the fundamental consideration for a lot of companies. I think if this law was paired with one that treated putting shares as a collateral for a loan as a taxable event (that is, if you use your shares as the collateral for a loan, those shares are taxed as capital gains at the value that they were assigned as collateral) it would mitigate most of the "IPO avoidance" concerns, since another primary tax avoidance strategy would also be shut down.
  - seanmcdirmid 5y ago
    There are lots of factors that drive IPO decisions, preferable treatment on capital gains is definitely one of them. You become taxed merely for holding shares (as a sort of share deprecation), then you won't do that if you have better options, so they will flock to better options. Building a private company is something they can do much more easily than anyone else, why wouldn't they? The complete avoidance of shares would then make the tax law meaningless.
hartator 5y ago
For now. Tomorrow is you paying capital gain on your home each year. What happen to be able to deduct inflation from capital gains?
- ncallaway 5y ago
  I mean, it's fair to say: "hey, where might this go in the future", but when discussing what this specific proposal is today, I'm suggesting that we have a more factually sound starting point. Sweeny's twitter thread doesn't tell the whole story, and this comment chain has been treating it largely as fact. I wanted to add context and correct some of those points, so we can have a reasonable discussion.
  - sieabahlpark 5y ago
    > I mean, it's fair to say: "hey, where might this go in the future", but when discussing what this specific proposal is today, I'm suggesting that we have a more factually sound starting point. Damn you really are pushing for this. I've seen you respond to many people. I think it's critical to think longer term than just the present because precedent is what people like you rely on to talk about the specifics of today. It's regressive and you're extremely subversive.
- PaulDavisThe1st 5y ago
  Today, you pay property taxes based on some assessed value of your home every year, and in most municipalities, your home gained value. You're already paying tax on the gain in value of your home, what would be so different about paying tax on the gain in value of other illiquid, capital holdings?
  - robbedpeter 5y ago
    So if you make improvements to your house over the course of a year, and/or the property value in the region goes way up, you could face an unpayable tax bill and lose your house. I don't have much sympathy for renters complaining about gentrification, but property tax laws like this are hot garbage. Sounds like a great way to import rich people and exploit poor people by capping their level of home value. Thanks for all that hard work on the house, sorry it's getting repo'd and auctioned. Next time, don't try to make a place to live so high quality! Property tax should be paid on square footage of the boundaries. Impose a property sales tax with progressive residency penalties or some other extractive mechanism, but have the common decency to let people invest in and improve their own homes.
luxuryballs 5y ago
“This significantly reduces the amount of shares he would have to liquidate to cover his take burden.” Well dang I’m so relieved that it’s a measurably less severe amount of bullshit.
chuckee 5y ago
> Epic Games is a privately held company, and not traded on established securities markets or readily available on secondary markets. But suppose it were publicly held, with Sweeney holding majority ownership. Why would that distinction make his criticism of this tax scheme invalid? It seems to me his criticism is still perfectly valid, it only applies to a smaller set of companies.
- ncallaway 5y ago
  Yes, but the strength of the criticism is really dependent on the number of companies that it applies to. If his criticism applied to every company and every founder in the country, it would be devastating and the law shouldn't be considered at all. If the criticism would affect the control of only a single company, then it's a much smaller concern. So, saying: "this criticism is quite a bit smaller in scope than it was being presented as" is a significant change. > Why would that distinction make his criticism of this tax scheme invalid? I didn't say his criticism was "invalid". I said that one factual claim he made was wrong (which it was), and that the commenters here were overlooking some of these mitigating factors. It doesn't mean we should entirely ignore the concerns that he raised, but I think we should evaluate those concerns in a complete and measured way. By the same token, I don't think raising a "valid" criticism also totally dooms the proposal. It's possible that there are other mitigations we can apply, but fundamentally every tax structure has to balance the good with the bad. We need to decide if the benefits of the structure outweigh the downsides. Is it possible that this tax scheme would require the founders of some companies to sometimes sell shares to cover their tax burden? Yes, it's possible. Is it possible that the amount of shares those founders would have to sell could impact their control over the company? Yes, it's certainly possible. How many companies that are founder controlled will be forced to no longer be founder controlled because of this tax scheme? Based on the legislative text, I suspect it's a very small number and might be 0, but I grant that it may not be 0.
  - sieabahlpark 5y ago
    > Yes, but the strength of the criticism is really dependent on the number of companies that it applies to. Not really. That's a subversive way of approaching it if anything. It's basically saying "you're not allowed to trade equity if you want to retain ownership"
throwawaylinux 5y ago
The bigger point it misses is that this will never pass, at least not without massive loopholes allowing the ultra wealthy backers of these politicians to pay practically nothing. It's a stunt. The people voting for it will be able to claim they've been struggling with all their might to go after the capitalist fatcats, and the people voting against it will be able to say they've protected you from communists, and they'll all be heroes.
- moneywoes 5y ago
  Yep, unfortunately it is all theater

seanmcdirmid 5y ago

> Epic Games is a privately held company, and not traded on established securities markets or readily available on secondary markets. So this law would lead to a proliferation of privately held companies as billionaires avoid the stock market and other tradable covered assets?

ncallaway 5y ago
Maybe, but there are a lot of factors that drive IPO decision making and I don't think this would be a huge one. It's not only traded on established securities market, it's also "readily available on secondary markets". Basically, if there's a significant number of shares trading hands between parties on an ongoing low-friction basis it's going to be subject to the tax rules. Which means a company that wants to have a really large pool of investors wouldn't be able to skirt this by just not listing. I think this law could affect the number of IPOs at the margins, but I suspect it wouldn't be the fundamental consideration for a lot of companies. I think if this law was paired with one that treated putting shares as a collateral for a loan as a taxable event (that is, if you use your shares as the collateral for a loan, those shares are taxed as capital gains at the value that they were assigned as collateral) it would mitigate most of the "IPO avoidance" concerns, since another primary tax avoidance strategy would also be shut down.
- seanmcdirmid 5y ago
  There are lots of factors that drive IPO decisions, preferable treatment on capital gains is definitely one of them. You become taxed merely for holding shares (as a sort of share deprecation), then you won't do that if you have better options, so they will flock to better options. Building a private company is something they can do much more easily than anyone else, why wouldn't they? The complete avoidance of shares would then make the tax law meaningless.

hartator 5y ago

For now. Tomorrow is you paying capital gain on your home each year. What happen to be able to deduct inflation from capital gains?

ncallaway 5y ago
I mean, it's fair to say: "hey, where might this go in the future", but when discussing what this specific proposal is today, I'm suggesting that we have a more factually sound starting point. Sweeny's twitter thread doesn't tell the whole story, and this comment chain has been treating it largely as fact. I wanted to add context and correct some of those points, so we can have a reasonable discussion.
- sieabahlpark 5y ago
  > I mean, it's fair to say: "hey, where might this go in the future", but when discussing what this specific proposal is today, I'm suggesting that we have a more factually sound starting point. Damn you really are pushing for this. I've seen you respond to many people. I think it's critical to think longer term than just the present because precedent is what people like you rely on to talk about the specifics of today. It's regressive and you're extremely subversive.
PaulDavisThe1st 5y ago
Today, you pay property taxes based on some assessed value of your home every year, and in most municipalities, your home gained value. You're already paying tax on the gain in value of your home, what would be so different about paying tax on the gain in value of other illiquid, capital holdings?
- robbedpeter 5y ago
  So if you make improvements to your house over the course of a year, and/or the property value in the region goes way up, you could face an unpayable tax bill and lose your house. I don't have much sympathy for renters complaining about gentrification, but property tax laws like this are hot garbage. Sounds like a great way to import rich people and exploit poor people by capping their level of home value. Thanks for all that hard work on the house, sorry it's getting repo'd and auctioned. Next time, don't try to make a place to live so high quality! Property tax should be paid on square footage of the boundaries. Impose a property sales tax with progressive residency penalties or some other extractive mechanism, but have the common decency to let people invest in and improve their own homes.

luxuryballs 5y ago

“This significantly reduces the amount of shares he would have to liquidate to cover his take burden.” Well dang I’m so relieved that it’s a measurably less severe amount of bullshit.

chuckee 5y ago

> Epic Games is a privately held company, and not traded on established securities markets or readily available on secondary markets. But suppose it were publicly held, with Sweeney holding majority ownership. Why would that distinction make his criticism of this tax scheme invalid? It seems to me his criticism is still perfectly valid, it only applies to a smaller set of companies.

ncallaway 5y ago
Yes, but the strength of the criticism is really dependent on the number of companies that it applies to. If his criticism applied to every company and every founder in the country, it would be devastating and the law shouldn't be considered at all. If the criticism would affect the control of only a single company, then it's a much smaller concern. So, saying: "this criticism is quite a bit smaller in scope than it was being presented as" is a significant change. > Why would that distinction make his criticism of this tax scheme invalid? I didn't say his criticism was "invalid". I said that one factual claim he made was wrong (which it was), and that the commenters here were overlooking some of these mitigating factors. It doesn't mean we should entirely ignore the concerns that he raised, but I think we should evaluate those concerns in a complete and measured way. By the same token, I don't think raising a "valid" criticism also totally dooms the proposal. It's possible that there are other mitigations we can apply, but fundamentally every tax structure has to balance the good with the bad. We need to decide if the benefits of the structure outweigh the downsides. Is it possible that this tax scheme would require the founders of some companies to sometimes sell shares to cover their tax burden? Yes, it's possible. Is it possible that the amount of shares those founders would have to sell could impact their control over the company? Yes, it's certainly possible. How many companies that are founder controlled will be forced to no longer be founder controlled because of this tax scheme? Based on the legislative text, I suspect it's a very small number and might be 0, but I grant that it may not be 0.
- sieabahlpark 5y ago
  > Yes, but the strength of the criticism is really dependent on the number of companies that it applies to. Not really. That's a subversive way of approaching it if anything. It's basically saying "you're not allowed to trade equity if you want to retain ownership"

throwawaylinux 5y ago

The bigger point it misses is that this will never pass, at least not without massive loopholes allowing the ultra wealthy backers of these politicians to pay practically nothing. It's a stunt. The people voting for it will be able to claim they've been struggling with all their might to go after the capitalist fatcats, and the people voting against it will be able to say they've protected you from communists, and they'll all be heroes.

moneywoes 5y ago
Yep, unfortunately it is all theater