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What is to prevent "franking" of capital gains the way dividends are franked (ie. every shareholder gets paid back whatever capital gains taxes they would need

What is to prevent "franking" of capital gains the way dividends are franked (ie. every shareholder gets paid back whatever capital gains taxes they would need to pay to keep their stocks/control stable) ? Obviously shareholders who are all equally affected by this would find this to be a fair deal. Likewise these companies exist because of the vision of the founders (or at least, that's a good argument to make. See Yahoo vs Google for example, or even Yahoo by itself)

ncallaway 5y ago
I don't think anything would prevent it, but I doubt many companies would have equally affected shareholders. The point that I agree with Tim the most is that this legislation only affects individuals, not corporate owners. I'd absolutely want to apply it to those owners as well. But, an investment group would not be taxed the same way as individual owners, and so might be less inclined to approve such payments. Also, since each individual can exempt up to $1B in assets, it would only be those individuals that hold a massive amount of the company that would typically be liable for the tax burden. So, an early employee that has $900M of Facebook shares wouldn't receive any of the tax-payback money that Zuckerberg would receive. Because the exposure would be fairly selective, it seems marginally less likely that enough shareholders would be equally affected at a company to find it to be a fair deal.
- candiodari 5y ago
  If it only affects individuals, it's trivial to circumvent. Have a holding company under your control "owned" by a bunch of people (who are well paid for that role, but have no control. You could even do it the middle eastern way and use extended family for that). Besides, I'm personally much more worried about Blackrock than I am about Bezos, or any billionnaire. But "doing something" while doing nothing. That, I imagine, is the intention. any tax rule can be circumvented, because the US allows international share ownership ... which they in fact do: https://www.forbes.com/sites/danielmitchell/2012/05/11/facebook-billionaire-gives-up-citizenship-to-escape-bad-american-tax-policy/?sh=53e1b6641995 https://www.forbes.com/sites/danielmitchell/2012/05/11/faceb... So this needs compromise, talking. The main talking point of these founders seem to be that they want to maintain control of these companies, and choose their successor. Do we care about that with this legislation? Why not give them that?

ncallaway 5y ago

I don't think anything would prevent it, but I doubt many companies would have equally affected shareholders. The point that I agree with Tim the most is that this legislation only affects individuals, not corporate owners. I'd absolutely want to apply it to those owners as well. But, an investment group would not be taxed the same way as individual owners, and so might be less inclined to approve such payments. Also, since each individual can exempt up to $1B in assets, it would only be those individuals that hold a massive amount of the company that would typically be liable for the tax burden. So, an early employee that has $900M of Facebook shares wouldn't receive any of the tax-payback money that Zuckerberg would receive. Because the exposure would be fairly selective, it seems marginally less likely that enough shareholders would be equally affected at a company to find it to be a fair deal.

candiodari 5y ago
If it only affects individuals, it's trivial to circumvent. Have a holding company under your control "owned" by a bunch of people (who are well paid for that role, but have no control. You could even do it the middle eastern way and use extended family for that). Besides, I'm personally much more worried about Blackrock than I am about Bezos, or any billionnaire. But "doing something" while doing nothing. That, I imagine, is the intention. any tax rule can be circumvented, because the US allows international share ownership ... which they in fact do: https://www.forbes.com/sites/danielmitchell/2012/05/11/facebook-billionaire-gives-up-citizenship-to-escape-bad-american-tax-policy/?sh=53e1b6641995 https://www.forbes.com/sites/danielmitchell/2012/05/11/faceb... So this needs compromise, talking. The main talking point of these founders seem to be that they want to maintain control of these companies, and choose their successor. Do we care about that with this legislation? Why not give them that?