I wonder how many people would leave the US and give up citizenship. Alternatively this could spur investment into more risk capital as capital preservation might not be a sufficient strategy.
Yes, renounce your citizenship. Don't forget to pay your expatriation tax and get used to the 30% taxation the US applies to many countries that don't have tax agreements with us.
Here's a scenario of punishing the American dream:
Imagine you're a startup founder who has a high-flying startup. You own 20%. It just got valued at $800,000,000. Now you're worth $160,000,000 ON PAPER. That's awesome. But it's not the same is being rich.
Imagine your salary is $150,000. With the Warren plan you now owe $2,200,000 PER YEAR in taxes from cash you don't actually have. So you now what, sell your company? Try to secondary? Congrats you just got taxed real money on fantasy paper gains that you never realized.
Sorry I haven't looked through that site or even understood the plan - can someone summarize how the valuation is done? Will there be money back or credit if the valuation drops the next year?
Also IIUC This seems to be a number that need paid (19MM per Billion?) every year - is that right? About a 2% tax.
At the point where a startup is being valued at 800M (and therefore raising rounds of ~100M?) are the founders still making 150k? At this point, wouldn't your business have hundreds of employees?
Also IIUC startup equity value (for tax purposes) is typically based on the startup's 409(a) price, which I think is pretty different from investor valuations, since investors get preferred stock (among other differences)
If we learned anything it's that american financial institution are excellent at developing novel financial tools to resolve these issues.
You're right, an owner of $160M paper money might not have 2m/year liquid, but I am sure there will be many banks willing to provide equity secured debt (perhaps no payment needed until exit!) to pay for the taxes. Also, if this pushes startups to profitability/IPO earlier, I think that's probably a good thing.
I have great idea. Since poor people can't pay very much in taxes, how about we have required government work programs to make up the difference? IE: you won't get paid, you will work your tax bill off in the form of labor..during your free time and on weekends.
Many countries have tried taxing net worth. The result is always the same: billionaires leave the country and investors think twice about building a business there...which means less jobs and a worse-off economy for the rest of us.
The government just isn't good at innovating and will waste that money on 'administrative costs'.
The funny thing is that the rich already pay the majority of federal taxes in the US. This isn't including all of the people they employ that are also contributing taxes to the government till.
It never seems to be enough because all of that money is pissed away and nobody is ever held accountable.
The upper middle class pay the majority of payroll taxes by far. The wealthy are almost exclusively taxed via dividend and capital gains taxes and at a much lower rate than most of us.
Poor people are working two to three jobs to make ends meet, especially single mothers. Being poor is bad enough, have a higher mortality rate now you want to destroy their health?
Some of these poor people made poor desicisons (due to how they were raisedin their early life)that still hold them back and have lots of mental problems due to family bringing and the environment they grew up in.
"Poor people are working two to three jobs to make ends meet, especially single mothers. Being poor is bad enough, have a higher mortality rate now you want to destroy their health"
I will say the same thing that many say when they want the middle class and anyone earning money to become more of a slave to the government: They need to pay their fair share.
When all of the wealthy people leave, the next ones on the chopping block will be the middle class. Why should everyone successful be punished for making the right decisions in life?
"Some of these poor people made poor desicisons (due to how they were raisedin their early life)that still hold them back and have lots of mental problems due to family bringing and the environment they grew up in."
This is making lots of assumptions about poor people with no proof to back any of it up. Giving someone free money for making poor decisions will only lead to future generations of people being dependent on government handouts. We need to stop this trend, not continue it.
> This isn't including all of the people they employ that are also contributing taxes to the government till.
>Since poor people can't pay very much in taxes, how about we have required government work programs to make up the difference?
Maybe we should have a living wage. If the threat of wealth taxes is the catalyst that gets us there then good. The extremely wealthy will always hire people to hide their assets and minimize their tax burden regardless of whether the govt implements an appeasement policy. Hoarding capital and removing it from the economy also harms everyone, taxing that effect seems entirely reasonable.
We already have a living wage. Amazon is paying at least $15/hour in all their warehouses and many other companies pay well over minimum wage for jobs that require little to no education. The amount of truly minimum wage jobs is miniscule.
"If the threat of wealth taxes is the catalyst that gets us there then good"
A wealth tax won't get us there. The wealthy will move to a country that has less-restrictive tax laws (and most of these countries would be happy to have the new income) and the customer and the middle class will end up paying more out of their pockets.
a "living wage" is always a moving goal post and doesn't really mean anything. If I'm single and have 3 kids to support, my 'living wage' will be much higher than a person that is single with no kids.
Why should a company pay for the poor life decisions of all its employees?
One of the greatest lies perpetuated in America is that billionaires should pay less taxes than the average person because one day, you too could be a billionaire, and you wouldn't want to become less of a billionaire because of taxes.
One of the greatest lies perpetuated in America is that people's objection to things like a wealth tax is based on a belief they could one day be billionaire's. It isn't. See Davidu's comment.
There are better ways to do what the wealth tax candidates want but they aren't imaginative enough for that task.
This "calculator" is a political stunt. Billionaires have their own financial advisors. They don't care about this calculator, and they're definitely not confused.
18 comments
[ 2.9 ms ] story [ 53.2 ms ] threadImagine you're a startup founder who has a high-flying startup. You own 20%. It just got valued at $800,000,000. Now you're worth $160,000,000 ON PAPER. That's awesome. But it's not the same is being rich.
Imagine your salary is $150,000. With the Warren plan you now owe $2,200,000 PER YEAR in taxes from cash you don't actually have. So you now what, sell your company? Try to secondary? Congrats you just got taxed real money on fantasy paper gains that you never realized.
Also IIUC This seems to be a number that need paid (19MM per Billion?) every year - is that right? About a 2% tax.
When the news came out this week the Uber dropped in price it was naturally accepted it was because the lock out for employee stock sales ended.
Also IIUC startup equity value (for tax purposes) is typically based on the startup's 409(a) price, which I think is pretty different from investor valuations, since investors get preferred stock (among other differences)
Yes.
> At this point, wouldn't your business have hundreds of employees?
Also yes. Why does this imply you'd be making more than $150k?
In most places outside of SV, $150k is enough to qualify as "Affluent".
You're right, an owner of $160M paper money might not have 2m/year liquid, but I am sure there will be many banks willing to provide equity secured debt (perhaps no payment needed until exit!) to pay for the taxes. Also, if this pushes startups to profitability/IPO earlier, I think that's probably a good thing.
Many countries have tried taxing net worth. The result is always the same: billionaires leave the country and investors think twice about building a business there...which means less jobs and a worse-off economy for the rest of us.
The government just isn't good at innovating and will waste that money on 'administrative costs'.
The funny thing is that the rich already pay the majority of federal taxes in the US. This isn't including all of the people they employ that are also contributing taxes to the government till.
It never seems to be enough because all of that money is pissed away and nobody is ever held accountable.
Some of these poor people made poor desicisons (due to how they were raisedin their early life)that still hold them back and have lots of mental problems due to family bringing and the environment they grew up in.
I will say the same thing that many say when they want the middle class and anyone earning money to become more of a slave to the government: They need to pay their fair share.
When all of the wealthy people leave, the next ones on the chopping block will be the middle class. Why should everyone successful be punished for making the right decisions in life?
"Some of these poor people made poor desicisons (due to how they were raisedin their early life)that still hold them back and have lots of mental problems due to family bringing and the environment they grew up in."
This is making lots of assumptions about poor people with no proof to back any of it up. Giving someone free money for making poor decisions will only lead to future generations of people being dependent on government handouts. We need to stop this trend, not continue it.
>Since poor people can't pay very much in taxes, how about we have required government work programs to make up the difference?
Maybe we should have a living wage. If the threat of wealth taxes is the catalyst that gets us there then good. The extremely wealthy will always hire people to hide their assets and minimize their tax burden regardless of whether the govt implements an appeasement policy. Hoarding capital and removing it from the economy also harms everyone, taxing that effect seems entirely reasonable.
We already have a living wage. Amazon is paying at least $15/hour in all their warehouses and many other companies pay well over minimum wage for jobs that require little to no education. The amount of truly minimum wage jobs is miniscule.
"If the threat of wealth taxes is the catalyst that gets us there then good"
A wealth tax won't get us there. The wealthy will move to a country that has less-restrictive tax laws (and most of these countries would be happy to have the new income) and the customer and the middle class will end up paying more out of their pockets.
a "living wage" is always a moving goal post and doesn't really mean anything. If I'm single and have 3 kids to support, my 'living wage' will be much higher than a person that is single with no kids.
Why should a company pay for the poor life decisions of all its employees?
There are better ways to do what the wealth tax candidates want but they aren't imaginative enough for that task.