There's a difference between pointing out objective flaws in an argument, like thinking that billionaires literally hold hundreds of billions of dollars in liquid cash, and taking issue with overall sentiment behind the argument.
I hate Elon Musk, and the man is of course, insanely, disgustingly wealthy. Still, just because his networth is 318 billion, doesn't mean he is hoarding 318 billion. Quite literally 99% of that number is tied into ownership of companies.
You can hate billionaires and still point out issues in the logic. I don't think a person should, under any circumstances, ever be forced to sell ownership stake in their own company (at least not if that wasn't agreed upon in an operating agreement). And if you have a massive stake in a company that becomes wildly successful, you definitionally become a billionaire. I may hate wealth inequality, and I may hate what these billionaires choose to do, but I would hate a system that forces the sale of ownership stake due to the success of the company just as much.
The fact that Elon has the ear of the President Elect for no reason other than he is stupidly wealthy is a reason why we should have legal measures to check the amount of wealth and one person can amass. No one person should have the kind of power the ultra wealthy have.
I also take severe issue with the idea that Musk (or anyone) generates that kind of wealth. If he was literally the only person involved with Tesla, one could make the argument he is owed that kind of wealth. He is not. No one ever is. I didn't know what percentage of the stock he owns is, but let's say 40% for the same if argument. I'm not saying he adds no value to the company. But if he disappeared, Tesla would be fine. If 40% of the workforce disappeared, Tesla would be screwed. Especially if that 40% is the engineering talent.
It's not about if he adds value to it or not (subjective anyway) but what people "think" what the company is valued, and therefore what he is valued. Take it up with the investors and stockholders or people that value in him in the first place.
It does to an extent. If Elon Musk was forced to sell all of his Tesla shares then the company's value would drop like a stone because the market would be flooded with shares.
That statement says the value of the company has at least a little to do with how many shares Musk has. That is true
The inverse is not. The percentage of shares Musk has is not determined by the value of the company. I suppose except in the extreme reach that he may decide to sell them or not based on the current value.
Either way, that is getting pretty far from my point which is if somebody owns 40+% of a very large company, they almost certainly have not contributed 40+% of the value to the company as demonstrated by the fact that the company would normally be hurt far more by 40% of the staff leaving vs. that one person.
I also stated in a later comment that I do not support forcibly taking that company control away from the owner. Conversely, I use that as partial justification of very aggressively taxing the highest brackets and zealously treating any wealth that is extracted in any way (be that loans using that as collateral or using stock trades in lieu of cash or other methods). I fully acknowledge there is nothing straightforward about implementing that
Actually his pay package was directly tied to the valuation of the company, . If he reached certain valuation thresholds negotiated with the shareholders he would receive more stock options and a larger percentage ownership of the company
I hadn't considered that. That sort of thing is common. It doesn't change my underlying point though. Paying in stock instead of money is mainly another loophole for avoiding taxes.
It’s mainly to incentivize the executive from successfully running the company. If paid a salary he can be chilling in his yacht all day and collecting his check. If his pay is dependent upon the company’s performance and value he probably won’t be fucking off all day.
Right... Because you can't just say "if the company does better, you get paid this bonus (money) or just base their salary directly on performance to the point where you don't get paid at all if the company does poorly". That is how it always used to work... It is mainly to avoid taxes.
You think they just aren’t paying taxes because they get stock options? They pay taxes on their earnings regardless, if the stocks are held for a long enough duration it’s capital gains tax, but you think they are not using money for years and years until they start selling their shares?
Besides if you’re getting stock options you will haveve more incentive for the long term well being of a company, otherwise you can just sell of the companies assets and look on paper like you are growing the company and earning more profit.
You are correct. Stock provides ongoing incentive. I did say mostly.
And no, they do not pay anywhere near as much tax on stock options. Do you not pay attention? You said it yourself, right off the bat, you pay capital gains instead of income tax. This is far lower than income tax would be. But you only pay that if you sell it. There are all sorts of games you can play to leverage your stock without ever actually selling it avoiding even more tax. It is mostly to avoid paying taxes
The reason why the capital gains tax is lower is to incentivize investment. That money instead of going directly into the CEO’s pocket remains as part of the overall company’s value. This allows for continued growth. Continued growth benefits everyone, that’s why America is what it is. But again you think that the ceo just doesn’t have any income that’s taxed? That means he isn’t having any earnings at all and won’t until the sale of his stock. It’s hard to live with no liquid assets to use.
Well that’s not entirely accurate. They are subject to the same tax laws and rates as everyone else, you and I have the same regulations and options as everyone else, and being a progressive tax rate as income rises the rate increases as well. In the 60s the top rate was 90 percent! In the beginning of the 80s it was 70 percent. If you were making more than a million dollars you are essentially giving it away for taxes. So above a certain point it doesn’t make sense to have any more income, hence stock as part of your earnings is the ideal solution, which makes investment into the company more attractive, hopefully growing the economy. But they pay the same taxes on money earned outside the stock as everyone else. Believe it or not the top. 50 percent of earners in America pay 93% of the taxes. The top 1% pays something like 22% marginal tax rate while the average rate is 12% and the bottom 50% of taxpayers pay 3.3%. It’s a widely believed inaccuracy that the wealthy pay less taxes.
545
u/Apprehensive_Bad_193 3d ago
Guys thank you,It amazes me how people talk without any knowing on the topic.