Current Income Gains are Unequal

  • You are viewing Orangepower as a Guest. To start new threads, reply to posts, or participate in polls or contests - you must register. Registration is free and easy. Click Here to register.
Mar 11, 2006
4,326
2,404
1,743
#61
What I’m seeing as the biggest barrier to success of those financially challenged in today’s world is a lack of finance understanding, lack of exposure to finance in youth and lastly an almost cultural shunning of fiscal responsibility.
Preach!

I am not for mandates on school instruction, but we do a disservice to youth by not teaching more about personal finance (mortgages, loans, compounding of money, time value of money, budgeting).
 

llcoolw

Territorial Marshal
Feb 7, 2005
8,683
3,847
1,743
Sammamish, Washington.Dallas, Texas.Maui, Hawaii
#62
Preach!

I am not for mandates on school instruction, but we do a disservice to youth by not teaching more about personal finance (mortgages, loans, compounding of money, time value of money, budgeting).
Rereading it, it was a little preachy. I guess until society sees leaderships across the country stay within budgets, maybe it’ll catch on then.
 

Duke Silver

Find safe haven in a warm bathtub full of my jazz.
A/V Subscriber
Sep 17, 2004
30,863
14,338
1,743
Cozy's Bar
#63
Preach!

I am not for mandates on school instruction, but we do a disservice to youth by not teaching more about personal finance (mortgages, loans, compounding of money, time value of money, budgeting).
I learned it in high school. It was called home ec back then. I took it because I thought it was a bunch of girls making pillows to pillow fight with. Ended up learning a lot
 

TheMonkey

Territorial Marshal
A/V Subscriber
Sep 16, 2004
7,266
3,068
1,743
47
DFW
#64
But that's exactly what a wealth tax is. Elon's wealth that Warren wants to get at is his Tesla stock. It's the fundamental issue of a wealth tax.
I can’t do what Elon does. I am self-employed, so I can take a percentage of my business income and put it into an SEP account, which can include stock investments. But that tax-deferred contribution is capped. If I understand correctly, Elon is taking his entire annual compensation in the form of stock options. Unless there’s something I’m missing, that is obviously abusing a loophole to avoid taxes. Why are the privileged elite allowed to defer taxes on 100% of compensation when the rest of us play by a different set of rules? It’s not to give more money to the inept government, but it’s more about good citizenship.
 
Mar 11, 2006
4,326
2,404
1,743
#65
I can’t do what Elon does. I am self-employed, so I can take a percentage of my business income and put it into an SEP account, which can include stock investments. But that tax-deferred contribution is capped. If I understand correctly, Elon is taking his entire annual compensation in the form of stock options. Unless there’s something I’m missing, that is obviously abusing a loophole to avoid taxes. Why are the privileged elite allowed to defer taxes on 100% of compensation when the rest of us play by a different set of rules? It’s not to give more money to the inept government, but it’s more about good citizenship.
Stock options are can be a big risk. In his case, there was nothing to tax as he had nothing because Tesla had not received the set milestones. Stock options are not generally taxable until executed.

And many stock options never get above water and are worthless. I imagine there are several on this board that have been awarded stock options and my guess is that most of those stock options were never executed.

Are you saying that all stock options for all people should be taxed when granted or that only people of a certain net worth should have their stock options taxed when granted?
How would you value a stock option that has not been executed? If you tax a stock option when granted what do you do when that stock option is not executed due to being underwater?
 
Last edited:

TheMonkey

Territorial Marshal
A/V Subscriber
Sep 16, 2004
7,266
3,068
1,743
47
DFW
#66
Stock options are generally a big risk. In his case, there was nothing to tax as he had nothing because Tesla had not received the set milestones. Stock option generally not are taxable until executed.

And many stock options never get above water and are worthless. I imagine there are several on this board that have been awarded stock options and my guess is that most of those stock options were never executed.

Are you saying that all stock options should be taxed when granted or that only people of a certain net worth should have their stock options taxed when granted?
Neither. I’m saying people shouldn’t be able to accept 100% of their annual compensation in an untaxed form.
 
May 4, 2011
3,049
1,446
1,743
Charleston, SC
#67
Neither. I’m saying people shouldn’t be able to accept 100% of their annual compensation in an untaxed form.
Doesn't it get taxed once he's able to and does sell it? I'm sure there are other loopholes, but that's an issue of timing. If I have an asset that I can't sell, it's actual monetary value right now is $0. Maybe it's worth more in the future if and when I can sell it, but in that scenario I couldn't sell it right now to pay down the taxes levied. I'd have to have cash from other resources.

If he's required to hold onto the stock for any real length of time, that's fairly risky compensation. Who really knows if Tesla will still be a highly valued company when all of the other automakers do catch up on EVs? Musk sure seems to be betting a lot on that.
 

TheMonkey

Territorial Marshal
A/V Subscriber
Sep 16, 2004
7,266
3,068
1,743
47
DFW
#69
Doesn't it get taxed once he's able to and does sell it? I'm sure there are other loopholes, but that's an issue of timing. If I have an asset that I can't sell, it's actual monetary value right now is $0. Maybe it's worth more in the future if and when I can sell it, but in that scenario I couldn't sell it right now to pay down the taxes levied. I'd have to have cash from other resources.

If he's required to hold onto the stock for any real length of time, that's fairly risky compensation. Who really knows if Tesla will still be a highly valued company when all of the other automakers do catch up on EVs? Musk sure seems to be betting a lot on that.
Yes, he eventually gets taxed. And Tesla is taxed on their revenue as an entity, so the government is getting paid on the corporate income, but not his personal income. The benefit is really about timing (the same as my SEP contribution). He can try to cash it in based on stock value and the tax benefits of the administration at that time. I can realize my gains later when I am retired and have no income, so my tax rate is lower (or not, which is my risk).

The question is whether he should be able to do this with 100% of his personal income. I can’t.
 
Nov 23, 2010
1,251
611
1,743
#70
I can’t do what Elon does. I am self-employed, so I can take a percentage of my business income and put it into an SEP account, which can include stock investments. But that tax-deferred contribution is capped. If I understand correctly, Elon is taking his entire annual compensation in the form of stock options. Unless there’s something I’m missing, that is obviously abusing a loophole to avoid taxes. Why are the privileged elite allowed to defer taxes on 100% of compensation when the rest of us play by a different set of rules? It’s not to give more money to the inept government, but it’s more about good citizenship.
I don't think it's good that the super wealthy can shield themselves from taxes in this way, but I don't think a wealth tax is a good way to go about getting tax revenue from them. The national sales tax which would tax their lifestyle heavily seems more effective than the wealth tax to me, although it has its own problems as does any tax.
 
May 4, 2011
3,049
1,446
1,743
Charleston, SC
#73
Yes, he eventually gets taxed. And Tesla is taxed on their revenue as an entity, so the government is getting paid on the corporate income, but not his personal income. The benefit is really about timing (the same as my SEP contribution). He can try to cash it in based on stock value and the tax benefits of the administration at that time. I can realize my gains later when I am retired and have no income, so my tax rate is lower (or not, which is my risk).

The question is whether he should be able to do this with 100% of his personal income. I can’t.
I'm more concerned with the tax rate he's paying once he pulls it out or tries to realize it in some other way. As long as there's a reasonable rate and good enforcement on that. Ditto for any dividends he's allowed to take. Also, in theory couldnt your business express your pay as a number of shares rather than dollars that you then invest in some account?
 

Rack

Legendary Cowboy
Oct 13, 2004
26,396
10,982
1,743
Earth
#74
But that's exactly what a wealth tax is. Elon's wealth that Warren wants to get at is his Tesla stock. It's the fundamental issue of a wealth tax.
The form of "envy" (this is exactly what it is) "tax" that Warren want's when taken to extreme is dangerous for our society.

James 3:16
 
Last edited:
Mar 11, 2006
4,326
2,404
1,743
#75
Yes, he eventually gets taxed. And Tesla is taxed on their revenue as an entity, so the government is getting paid on the corporate income, but not his personal income. The benefit is really about timing (the same as my SEP contribution). He can try to cash it in based on stock value and the tax benefits of the administration at that time. I can realize my gains later when I am retired and have no income, so my tax rate is lower (or not, which is my risk).

The question is whether he should be able to do this with 100% of his personal income. I can’t.
So your issue is not that he gets stock options, , but that he is taking 100% of his payment this way? Are you saying that you believe there should be a limit?

I admire Musk willing to risk payment only if Tesla truly performs in the market. I wish we would see more of this not less.
 

kaboy42

Territorial Marshal
May 2, 2007
8,456
7,962
1,743
#77
HOd on to the cash and wait for a market correction.
I'm cracking up at the number of student loan rants in my Facespace feed right now... The "I shouldn't have to pay this back" crowd is in full shame mode on the "ummm... do you not understand how a loan works" crowd?*




*I get the students where the institutions shut down and they just lost course credits... but other than that, sorry, you signed for the loan.
 

llcoolw

Territorial Marshal
Feb 7, 2005
8,683
3,847
1,743
Sammamish, Washington.Dallas, Texas.Maui, Hawaii
#78
Stock options are can be a big risk. In his case, there was nothing to tax as he had nothing because Tesla had not received the set milestones. Stock options are not generally taxable until executed.

And many stock options never get above water and are worthless. I imagine there are several on this board that have been awarded stock options and my guess is that most of those stock options were never executed.

Are you saying that all stock options for all people should be taxed when granted or that only people of a certain net worth should have their stock options taxed when granted?
How would you value a stock option that has not been executed? If you tax a stock option when granted what do you do when that stock option is not executed due to being underwater?
I execute them to offset the good ones. Comes out as a wash.
 

TheMonkey

Territorial Marshal
A/V Subscriber
Sep 16, 2004
7,266
3,068
1,743
47
DFW
#79
I'm more concerned with the tax rate he's paying once he pulls it out or tries to realize it in some other way. As long as there's a reasonable rate and good enforcement on that. Ditto for any dividends he's allowed to take. Also, in theory couldnt your business express your pay as a number of shares rather than dollars that you then invest in some account?
I can’t because my company is a passive entity.
So your issue is not that he gets stock options, , but that he is taking 100% of his payment this way? Are you saying that you believe there should be a limit?
That is my point. For me, it boils down to why we’re paying taxes in the first place. Infrastructure. Education. Creating upward mobility. Things that make our society better and help its members contribute in the future.

When individuals are able to "opt-out" of supporting that society while taking full advantage of the benefits it offers, then selfishness will prevail over citizenship. They effectively stand on the shoulders of giants while knocking future climbers off their own.

I could be completely wrong about this, but it seems Musk is using loopholes (perfectly legally) to the point of not supporting the very economy that made his wealth possible. It looks like he is going to pay monster-sized taxes for the 2021 tax year. I think he may have been waiting until his residency was established in Texas so he wouldn't have to pay state income tax while he was in California.
The form of "envy" (this is exactly what it is) "tax" that Warren want's when taken to extreme is dangerous for our society.

James 3:16
1 Timothy 6:10
 
Mar 11, 2006
4,326
2,404
1,743
#80
That is my point. For me, it boils down to why we’re paying taxes in the first place. Infrastructure. Education. Creating upward mobility. Things that make our society better and help its members contribute in the future.

When individuals are able to "opt-out" of supporting that society while taking full advantage of the benefits it offers, then selfishness will prevail over citizenship. They effectively stand on the shoulders of giants while knocking future climbers off their own.

10
He paid at least $455M in taxes over the five years from 2014 to 2018. So $91M per year average. A person in higher middle class paying $75K in income tax would need to multiply their payment by over 1,200x to equal his payment.
I don’t see how anyone can interpret that as opting-out. Especially knowing he is getting ready to pay over $10B in income taxes.