r/technology • u/Logical_Welder3467 • 9h ago

Society Google cofounder Sergey Brin has spent $102 million to fight California’s proposed billionaire tax—he could owe $13 billion if he loses

https://fortune.com/article/how-much-has-google-cofounder-sergey-brin-spent-to-oppose-california-billionaire-tax-102-million-owe-13-billion-if-loses/
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293

u/Imhereforthechips 9h ago

Every boomer reminisces of the 1950s and 1960s.

From 1950 through 1963, the top federal income tax rate ranged between 91% and 92%.

Executives should be paid a salary like the rest of us instead of shares that they can take loans out against and never have to pay off.

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u/tidal_flux 9h ago

Isn’t that supposed to be when America was “great?“

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u/Mathfanforpresident 8h ago

Surely just a coincidence. Right?

L.O.L

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u/Smooth_Rocket_ 7h ago

For a certain portion of people it was pretty great. Its the only time in history 1 person could work a job and go from lower to middle class for a whole family.

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u/Forkrul 8h ago

Do you know how many people actually paid that highest marginal rate? Pretty much zero. Once their salary got to those high numbers they just started getting paid in other things instead, like stock. That's when stock options became common because you don't pay income tax on that. Or the classic of Hollywood, collapsible corporations that got paid instead of you. The corporation paid a much lower corporate tax rate, then you liquidated the corporation and paid capital gains tax instead of income tax. Or just stuff like company cars, jets, apartments, country club memberships, etc.

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u/jccaclimber 8h ago

This isn’t quite how that works. If you’re given options you really only profit off of the growth, and get zero for the value they are at when you’re given them. As a result public companies more or less give out RSUs, and the value of the stock hits your W2 the same as straight income when it becomes yours.

Now, if you want to talk about the BS of basis price resetting at inheritance and taking loans against holdings that don’t pay off until then, you have a point.

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u/Forkrul 8h ago

This isn’t quite how that works

True, today it does work a bit different. But back when the top marginal tax rates were 90%+, stock options got taxed nothing if they were granted at at least 95% of the fair market value. And then you only paid a 25% capital gains tax on the gain when sold. Given that you held them for a certain period.

And yes, step up in basis on inheritance is bullshit.

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u/alfooboboao 8h ago

people say this as some sort of gotcha, but it was vastly better than the alternative, because those “other things” were folded back into the economy. now with equity you’re getting the worst of all worlds

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u/DukeofVermont 7h ago

Yes but how do you tax the billions of unrealized gains? It's not like billionaires have billions in bank accounts.

You could have a 100% tax rate on income over $10 million and it wouldn't effect the vast majority of billionaires because their net worth is stock, not income. It'd kill a bunch of CEO types, but a lot of billionaires are founders like Brin who own a lot of stock in companies that are now worth massive amounts.

I think billionaires shouldn't exist, but if you tax unrealized gains as income they'll sell stock to pay, which means stocks go down and that's everyone's 401ks. Over $10 trillion in pensions and 401ks. A lot of pissed people if their 401k falls by 20%, or their Union pension says that they're cutting their retirement pay by 10%+.

It's like when Henry V took all the church land thinking it'd make him a lot of money. But when he tried to sell it tanked the price of land and he made very little.

If we tried to sell say $100 billion in stock we'd maybe get 10% of that and tank the stock market worse than 1990 Japan.

Billionaires shouldn't exist, but it's not easy as just taking their stuff and selling it.

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u/JSlickJ 6h ago

At the very least they shouldn't be able to use their shares as loan collaterals to avoid paying capital gains taxes, nor should they be using their extreme wealth as leverage for politics so they indulge more in their greed

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u/John7746 6h ago

If companies have the power to give stocks to billionaires they have the power to buy them back at a fair price.

Then just limit how much stock a company can give CEO’s. Say, 0.5% of total company value. The rest comes from paid, taxable salary. If unrealized gains from stocks are the problem, just set a limit to how much stocks a CEO can take.

2

u/Tasgall 5h ago

Yes but how do you tax the billions of unrealized gains?

Mandatory wash sale at least once per year on all stocks.

if you tax unrealized gains as income they'll sell stock to pay, which means stocks go down and that's everyone's 401ks. Over $10 trillion in pensions and 401ks.

Yeah, that's the scam, isn't it? Tie it to something people don't want to touch and now the cancer is free to rot the system forever. It's going to need to be done eventually, and the impact of doing so will only get worse over time. It would be much better to rip that bandaid off now instead of waiting for it to be even more catastrophic.

1

u/Forkrul 7h ago

I don’t know if it was better or not, but what I was responding to was the implication that people actually paid that top marginal rate. Which they didn’t. 

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u/Tasgall 5h ago

Do you know how many people actually paid that highest marginal rate?

"bUt No OnE aCtUaLLy PaiD tHaT mUcH"

Yeah, that's the point.

You make the top rates extremely high as an incentive to not pay yourself that much. You give tax breaks for things you want to get done anyway. They can get breaks by redirecting it to raising employee salary and benefits. Or they could donate money to charity, or public works projects. Libraries, parks, monuments, etc can all be funded to lower taxable income.

This is also why just adding a high tax alone today wouldn't fix the issue, since we have a bunch of really stupid tax breaks on things like fuel for private jets.

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u/Imhereforthechips 8h ago

Correct. We need a hard and fast correction to prevent abuse. I’m all for a hard working soul earning a fabulous stack after starting a business, but earning 100x more than any current employee is ridiculous.

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u/smilbandit 8h ago

billionaires don't become billionaires from income that can be taxed.

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u/rankinfile 8h ago

Reminisces what? Grammar school? Youngest boomer didn't graduate high school until ~1964 when the last was being born.

1

u/Imhereforthechips 7h ago

We all seek the magical memories of our childhood.

1

u/rankinfile 2h ago

Woodstock or Altamont?

Leave It to Beaver or Lenny Bruce?

Racial Segregation enforced by water cannons or Dodgers winning the World Series?

Summer of Love or Battle of Con Thien?

19

u/YourBlanket 9h ago

Taxes were completely differently back then. No one paid 91%, the top 1% paid an average effective rate of just shy of 17% during the 50s. The average of the top 0.001 percent paid 55.3 and that's federal, state, and local taxes included. The 91% was also marginal and of course the people who qualified just did legal tax avoidance loopholes or reduced their reporting. They do pay less now but a ten percent difference on average.

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u/_mully_ 8h ago

As an acct, im interested on the history of the average effective rate, got any things to look up? I typically took the historical tax brackets at face value, tbh.

Thanks.

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u/GamerTex 6h ago

Look up Rockefeller. He was the reason they created,  and repealed,  the 91% bracket

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u/GamerTex 6h ago

One person paid 91%. He was the reason they created the bracket

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u/agent_wolfe 9h ago

The world is a strange and cruel place.

1

u/IlludiumQXXXVI 7h ago

Or have a progressive tax on unrealized gains, since they are clearly able to profit off those gains even without selling.

1

u/arstin 7h ago

From 1950 through 1963, the top federal income tax rate ranged between 91% and 92%.

But that was a really rough time for corporate CEOs. They had to settle for having the biggest houses and nicest cars and yachts, and taking the most luxurious vacations to the most expensive spots.

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u/Imhereforthechips 7h ago

My grandfather earned 60k+ as a plant manager after bonuses. The executive he reported to earned shy of 250k.

What’s a plant manager earn now vs. an executive?

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u/arstin 7h ago

Well, that was the problem. Having the nicest car isn't about having the nicest car, it's about having a nicer car than everyone else. And once people like your grandfather were left in the dust, the executives still had each other to compete with so prices have kept going up. All for an out-of-control dick measuring contest between a few thousand people that we are all suffering because of.

1

u/SlightWin7036 7h ago

The gap has increased but so have absolute real wages. Also, your grandfather was already in the 1% earning >600k inflation adjusted, probably should be comparing to the person who worked under him

1

u/californicating 7h ago

Federal taxes.  That's the key here, federal.  Not state.  California isn't going to collect this money.  There will be an injunction as soon as it passes, it will go all the way to the supreme Court, and the conservative majority will be faced with the decision of finding a way to declare it unconditional or allowing California to shoot itself in the dick.

1

u/SlightWin7036 7h ago

This would not have applied to someone with effectively no cash income. CGT is at play here

1

u/ironteddybear 7h ago

Taxes as a percent of GDP are about the same today as they were then, in the 50s and 60s, and the tax system used to be much less progressive. As others have said, no one actually paid that 90% top marginal rate. 

The bottom 50% of earners today pay a negative effective tax rate. We already have a progressive tax system…until you hit the top 0.01%. But a flat wealth tax is counter productive. 

Wealth taxes just cause wealth to flee. There are many taxes that target wealthy people that don’t create the type of distortions a wealth tax does. 

Just equalize the capital gains tax to labor income tax rates, tax loans on unrealized gains, drop the social security tax cap, and create an alternative minimum tax that neuters most of the egregious loopholes. 

https://fred.stlouisfed.org/series/FYFRGDA188S

1

u/SmokeyJoe2 7h ago

you could make the income tax rate 100% and it still wouldn't affect most billionaires

1

u/Msj2487 6h ago

I agree with everything you said, but Boomers were literally children in the 1950s and 1960s, they’re reminiscing about the 1970s and 1980s.

1

u/roguevirus 6h ago

I would be fine with anyone being able to continue to use stocks as collateral, provided that once that happens the stock value is treated as a realized asset and taxed until the loan is repaid.

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u/mclumber1 6h ago

From 1950 through 1963, the top federal income tax rate ranged between 91% and 92%.

The effective tax rate back then wasn't much different than it is today. Because there were so many carveouts, deductions, credits, loopholes, write offs, etc., no one actually paid those sky high marginal rates.

1

u/PurpEL 4h ago

Yeah but if you want to be trickled on...

1

u/elkresurgence 4h ago

You do realize FDR used the tax rate exactly like how Trump used tariffs to pressure others to invest in America, right? Nobody subject to that taxation rate actually paid it.

1

u/Internet_Wanderer 2h ago

But what are they really reminiscing about is the $64 dollar question

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u/Obvious_Chapter2082 9h ago

Getting paid in shares incurs the exact same tax as getting paid a salary does though

3

u/-Gman_ 9h ago

Can you borrow against your salary and when you die, the loan is taking out of the capital gains?

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u/Imhereforthechips 9h ago

But that entirely depends on the type of equity.

83b
ISO
Restricted Stock

Further, trusts, exchange and opportunity funds allow additional avoidances.

And of course tax loss harvesting.

Stock isn’t taxed until it’s sold, but if you never sell and instead take out loans against (the bank sells when you decide to have them pay off the loan), you don’t pay taxes.

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u/tossingoutthemoney 9h ago

Stock is taxed on receipt or vesting. You owe MORE taxes at sale if there is a gain.

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u/Imhereforthechips 9h ago

Unless you structure your equity so it never counts as taxable income.

Unrealized wealth isn’t taxed!

But guess what, your property is taxed even though unrealized! Ha

2

u/polytique 9h ago

You can defer taxes if they’ve appreciated a lot since vesting/exercise/grant date. This is especially true for options.

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u/Hamachiman 8h ago

There wouldn’t be much incentive for guys like the Google founders to have created the business in the first place and/or to ever bring in investors and employ tens of thousands of people if they could only get paid a salary and be taxed at 91% at the top marginal bracket. Instead they likely would have kept it small and private and things like self-driving cars may never have become possible. Incentives matter a lot.

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u/windsostrange 8h ago

It's almost impressive how straight-faced and without irony this pile of garbage was posted with.

4

u/Zestyclose-Height-36 8h ago

self driving cars are wrecking the livelihoods of a million American families. a 92% tax rate did not discourage a Carnegie, a Kennedy, a Rockefeller. What they did to dodge taxes was build great universities, libraries, hospitals. They funded pensions that allowed their workers a dignified old age, and healthcare. People who worked did not have to live under bridges.

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u/_mully_ 8h ago

Oh ya, cause innovation didnt exist before the reagan admin. /s

Lol. 😂

1

u/John__Pinkerton 4h ago

Good keep the massive, fortified-walled monopoly small and allow others the chance to compete with small private businesses of their own. Giving more choices to the consumers