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This is one of the most frustrating article to read I've ever seen on HN. The proposal is completely ridiculous. Ellison and Jobs never selling shares has so

by frisco 15y ago

This is one of the most frustrating article to read I've ever seen on HN. The proposal is completely ridiculous. Ellison and Jobs never selling shares has so much less to do with avoiding taxation as it does with maintaining control and upside exposure. This proposal would effect a slow creep of management being universally excised from their companies over time, as they're compelled to sell shares to cover their tax liability. I fail to see any good whatsoever that would come of this. All it does is introduce a time decay of company control for founders and owners. The secondary effects of trying to collect a little more tax here would redefine industries.

jhurliman 15y ago
This article must be some form of NYTimes trollbait. Catastrophic unintended consequences aside, it would be hilariously ironic to use Enron's accounting system in a misguided attempt at tax reform (http://en.wikipedia.org/wiki/Enron_scandal#Mark-to-market_accounting http://en.wikipedia.org/wiki/Enron_scandal#Mark-to-market_ac...).
asto 15y ago
Yes, this is a very big problem especially for startups. Ex: Let's say I set up a nice startup that receives attention from an investor who purchases a 10% stake in my company for a million dollars. My company is now worth 10 million "marked to market". So I will need to pay tax on the appreciation of my 90% stake from next to nothing to 9 million when I haven't actually earned a single buck! Badly thought out article in my opinion. This move is practically untenable.
- edoloughlin 15y ago
  There are problems with the proposal, but it does explicitly say it's for publicly traded stocks only and, thus, wouldn't apply to startups.
- Flenser 15y ago
  The author said it was only for publicly traded stock. In your scenario you'd only have to pay tax if you did an IPO, at which point you would have the money.
atakan_gurkan 15y ago
Regardless of Jobs's and Ellison's intentions, they did avoid taxation despite accumulating large wealth. Furthermore, the people who inherit from them will not pay taxes over this accumulation of wealth, either. This could be a side effect, but it is a real effect. It is possible to prevent the creep you are referring to, just decouple control from the wealth brought by the shares. After all, this is by design. You can distribute voting rights independent of the share of income. I realize one has to be intelligent about this, but I don't see how it is inherently impossible. The good it brings is fairness. I am taxed on the wealth I accumulate, so should the others. Now, there are exceptions to this; e.g., very poor should not be taxed since that does more harm than good. Perhaps what is suggested in the article would also do more harm than good, but to me it looks like the harm can be prevented.

by frisco 15y ago

jhurliman 15y ago

This article must be some form of NYTimes trollbait. Catastrophic unintended consequences aside, it would be hilariously ironic to use Enron's accounting system in a misguided attempt at tax reform (http://en.wikipedia.org/wiki/Enron_scandal#Mark-to-market_accounting http://en.wikipedia.org/wiki/Enron_scandal#Mark-to-market_ac...).

asto 15y ago

Yes, this is a very big problem especially for startups. Ex: Let's say I set up a nice startup that receives attention from an investor who purchases a 10% stake in my company for a million dollars. My company is now worth 10 million "marked to market". So I will need to pay tax on the appreciation of my 90% stake from next to nothing to 9 million when I haven't actually earned a single buck! Badly thought out article in my opinion. This move is practically untenable.

edoloughlin 15y ago
There are problems with the proposal, but it does explicitly say it's for publicly traded stocks only and, thus, wouldn't apply to startups.
Flenser 15y ago
The author said it was only for publicly traded stock. In your scenario you'd only have to pay tax if you did an IPO, at which point you would have the money.

atakan_gurkan 15y ago

Regardless of Jobs's and Ellison's intentions, they did avoid taxation despite accumulating large wealth. Furthermore, the people who inherit from them will not pay taxes over this accumulation of wealth, either. This could be a side effect, but it is a real effect. It is possible to prevent the creep you are referring to, just decouple control from the wealth brought by the shares. After all, this is by design. You can distribute voting rights independent of the share of income. I realize one has to be intelligent about this, but I don't see how it is inherently impossible. The good it brings is fairness. I am taxed on the wealth I accumulate, so should the others. Now, there are exceptions to this; e.g., very poor should not be taxed since that does more harm than good. Perhaps what is suggested in the article would also do more harm than good, but to me it looks like the harm can be prevented.