Elon Musk now owns 9.2% of twitter...update.. will soon be the sole owner as Board of Directors accepts his purchase offer

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Brovane

Diamond Member
Dec 18, 2001
5,688
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I disagree. I think that money came from the misdirected fruits of the people who produced it… the workers.

Well the workers are free to purchase shares if they want. I think Tesla even gives out options to employees for Tesla shares and has a employee stock purchase program.
The value of the shares is really directed by what the market thinks the shares are worth. Some companies have a higher share price than they deserve.
 

pmv

Lifer
May 30, 2008
13,675
8,580
136
What should we use instead?

Political and historical analysis? Just not simple extrapolation of a single variable. That seems woefully unconvincing, when it is itself the outcome of the complicated contingent process that is human history.

That point is part of my objection to Stephen Pinker's Panglossian thesis (that he's been peddling for some time now, when not hanging out with Epstein). He does things like collect stats to show violence has 'declined' over some recent period of time and then imply that means it will necessarily continue to do so. Given that it would only take a few nuclear weapons going off for that 'trend' to suddenly disappear in a mushroom cloud, it just doesn't seem a convincing argument, to me.

(It also seems to depend on how one defines 'violence', seems as if he only counts certain forms and ignores "the violence inherent in the system" - which may be a Monty Python quote, but still seems a valid point, to me - were the deaths at Bhopal not 'violence'? Or all the deaths from Fentanyl overdoses? Or deaths from extreme weather events due to climate change?)

I'd be a lot more convinced if I had, rather than some selective statistical trends, some ideological/political faith in a way of organising society and the economy that didn't have obvious massive flaws, that seemed likely to undo it.

That's the dream that socialism once seemed to offer (and libertarians and anarcho-capitalist types, and even the neo-liberal movement seem to have had their analogous 'grand solution to everything' - just none of them seem convincing to me at this point. Neo Liberalism seems to have failed entirely at it's original purpose, of ensuring 1930's type "Strongmen" never come to power again).

[Edit] This might just be low-serotonin levels talking.
 
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ivwshane

Lifer
May 15, 2000
32,565
15,449
136
Well the workers are free to purchase shares if they want. I think Tesla even gives out options to employees for Tesla shares and has a employee stock purchase program.
The value of the shares is really directed by what the market thinks the shares are worth. Some companies have a higher share price than they deserve.

That’s true but that misses the point. It’s the workers that created the products, the investors allowed that creation to happen (to some extent). We value investment over labor which is why our workers get treated like shit compared to over industrial nations. Hell, we’ve been brainwashed to think that we are lazy or aren’t worth anything unless we are making six figures. We have such low regard for ourselves that we take less vacations than workers in other countries, we think universal health care is a handout (despite being paid for with taxes), we think doing our jobs and nothing extra is “quiet quitting”.
 

Brovane

Diamond Member
Dec 18, 2001
5,688
1,962
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That’s true but that misses the point. It’s the workers that created the products, the investors allowed that creation to happen (to some extent). We value investment over labor which is why our workers get treated like shit compared to over industrial nations. Hell, we’ve been brainwashed to think that we are lazy or aren’t worth anything unless we are making six figures. We have such low regard for ourselves that we take less vacations than workers in other countries, we think universal health care is a handout (despite being paid for with taxes), we think doing our jobs and nothing extra is “quiet quitting”.

So really, investors making money on stock returns would be fine if the companies treated their workers better?
 

ivwshane

Lifer
May 15, 2000
32,565
15,449
136
So really, investors making money on stock returns would be fine if the companies treated their workers better?

Who knows, but why is that relevant to the discussion? Do you hold the same regard to people who play the lotto and consider them vital to schools? What about people who bet on sports? Are they also contributors to the sports they bet on? Do you think people who day trade contribute to society as much as the actual workers in the companies they trade?
 

uclaLabrat

Diamond Member
Aug 2, 2007
5,586
2,946
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So really, investors making money on stock returns would be fine if the companies treated their workers better?
Outside of an IPO investors dont actually "invest" anything in the company; they really only stand to profit if the stock appreciates for some fairly arcane reasons or the firm pays shareholders a dividend. Outside of buying your way into ownership and thus voting rights, its honestly a pretty absurd system.
 
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cytg111

Lifer
Mar 17, 2008
24,030
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Who knows, but why is that relevant to the discussion? Do you hold the same regard to people who play the lotto and consider them vital to schools? What about people who bet on sports? Are they also contributors to the sports they bet on? Do you think people who day trade contribute to society as much as the actual workers in the companies they trade?
It gets even better when we get to high frequency trading… Some heavy duty rationalization and papers begin flying, imagine jordan peterson on acid… oh wait
 

Brovane

Diamond Member
Dec 18, 2001
5,688
1,962
136
Who knows, but why is that relevant to the discussion? Do you hold the same regard to people who play the lotto and consider them vital to schools? What about people who bet on sports? Are they also contributors to the sports they bet on? Do you think people who day trade contribute to society as much as the actual workers in the companies they trade?

I really don't care what other people do with their money.

Most of my 401k is just invested in Index funds. I do hold some individual stocks in a separate brokerage account. Do you not own any stocks?
 

Brovane

Diamond Member
Dec 18, 2001
5,688
1,962
136
Outside of an IPO investors dont actually "invest" anything in the company; they really only stand to profit if the stock appreciates for some fairly arcane reasons or the firm pays shareholders a dividend. Outside of buying your way into ownership and thus voting rights, its honestly a pretty absurd system.

What would you replace the stock system with?
 

uclaLabrat

Diamond Member
Aug 2, 2007
5,586
2,946
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What would you replace the stock system with?
I dont know that i would replace it. Its a seemingly arcane system but so is fiat currency, but it works. But the system clearly needs to be modified because its been rigged in favor of the rich making the rules.

Europe (specifically germany i believe) has rules about worker reps sitting on the boards of companies so that they have a voice in decisions like mass layoffs, etc. I think that should be done here.

Id go further and argue EVERY single employee should have a specific percentage of their compensation be in equity, so at least they profit from their contributions. Compensation packages at public companies skew equity to the higher levels of management (because equity is expensive!) And lower rate workers are boxed out of reaping the benefits of their work. That's exploitation.

On the trading side the whole securities market needs to be re-balanced. All the shenanigans weve seen pulled by wall street that go unpunished (the whole robinhood/citadel/gamestop saga, naked shorts and sheer volume of "failed to deliver" shares are just blatant corruption and market rigging). Its really absurd what theyre allowed to get away with and have basically no consequences. Burn those fucks to the fucking ground.
 
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Dec 10, 2005
25,097
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I dont know that i would replace it. Its a seemingly arcane system but so is fiat currency, but it works. But the system clearly needs to be modified because its been rigged in favor of the rich making the rules.

Europe (specifically germany i believe) has rules about worker reps sitting on the boards of companies so that they have a voice in decisions like mass layoffs, etc. I think that should be done here.

Id go further and argue EVERY single employee should have a specific percentage of their compensation be in equity, so at least they profit from their contributions. Compensation packages at public companies skew equity to the higher levels of management (because equity is expensive!) And lower rate workers are boxed out of reaping the benefits of their work. That's exploitation.

On the trading side the whole securities market needs to be re-balanced. All the shenanigans weve seen pulled by wall street that go unpunished (the whole robinhood/citadel/gamestop saga, naked shorts and sheer volume of "failed to deliver" shares are just blatant corruption and market rigging). Its really absurd what theyre allowed to get away with and have basically no consequences. Burn those fucks to the fucking ground.
Some other ideas for consideration also include reducing the special treatment that capital gains get vs ordinary income, removing the whole stepped up basis when people die nonsense, and making it unfavorable to do stock buybacks vs paying out dividends or reinvesting in the company.
 

brycejones

Lifer
Oct 18, 2005
27,739
26,901
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Some other ideas for consideration also include reducing the special treatment that capital gains get vs ordinary income, removing the whole stepped up basis when people die nonsense, and making it unfavorable to do stock buybacks vs paying out dividends or reinvesting in the company.
All of the above. Income should be treated as income. Treating capital gains as regular income 100% of the time would go a long way to reducing stock buybacks.
 

Brovane

Diamond Member
Dec 18, 2001
5,688
1,962
136
Some other ideas for consideration also include reducing the special treatment that capital gains get vs ordinary income, removing the whole stepped up basis when people die nonsense, and making it unfavorable to do stock buybacks vs paying out dividends or reinvesting in the company.

I agree just treat income as income. That is what they do in CA for the income tax, there is no separate Capital Gains tax. Not sure about the stepped up basis for when people die. Maybe just put a limit on it as inheritance.
 

Zorba

Lifer
Oct 22, 1999
15,286
10,882
136
e just treat income as income. That is what they do in CA for the income tax, there is no separate Capital Gains tax. Not sure about the stepped up basis for when people die. Maybe just put a limit on it as inheritance.
I think the idea of the step up was that the inheritance would be taxed, so taxes would've already been paid on the full amount. But we keep raising the inheritance tax exemption amount. It should be no step up on anything that didn't have inheritance tax withheld.
 

Brovane

Diamond Member
Dec 18, 2001
5,688
1,962
136
I think the idea of the step up was that the inheritance would be taxed, so taxes would've already been paid on the full amount. But we keep raising the inheritance tax exemption amount. It should be no step up on anything that didn't have inheritance tax withheld.
I disagree on the step-up but just put a limit on how much you can step-up. If someone inherits $200k on stock, they should be able to do a step-up the basis of that stock. Besides this also helps when selling because a lot of times with inheriting stock you might not have the records going back decades for the original purchase price.
 

fskimospy

Elite Member
Mar 10, 2006
85,710
51,001
136
I disagree on the step-up but just put a limit on how much you can step-up. If someone inherits $200k on stock, they should be able to do a step-up the basis of that stock. Besides this also helps when selling because a lot of times with inheriting stock you might not have the records going back decades for the original purchase price.
I don't see why step-up basis should be a thing for any stock. It makes no sense to me why if I sell a stock I bought myself I have to pay taxes on the difference between purchase and sale price but if I die then my kid can sell it for pure profit the next day. If records of the purchase price aren't available then cost basis could be determined the same way it is now if you don't enter a cost basis - your cost basis is zero.

I'm genuinely unaware of any economic case for why a stepped up cost basis is a good thing but I can think of lots of reasons why it's bad. Just seems like a way for rich people to dodge taxes and it should be eliminated.
 

Brovane

Diamond Member
Dec 18, 2001
5,688
1,962
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It makes no sense to me why if I sell a stock I bought myself I have to pay taxes on the difference between purchase and sale price but if I die then my kid can sell it for pure profit the next day.

I'm genuinely unaware of any economic case for why a stepped up cost basis is a good thing but I can think of lots of reasons why it's bad. Just seems like a way for rich people to dodge taxes and it should be eliminated.
Makes perfect sense to me because if someone transfers ownership of $200k in stock as part of inheritance that stock is going to be passed on as based on the current value of the stock not it's original purchase price. Stock transferred ownership as part of inheritance, the new owner has the current cost basis as of the day ownership transferred.
 

fskimospy

Elite Member
Mar 10, 2006
85,710
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Makes perfect sense to me because if someone transfers ownership of $200k in stock as part of inheritance that stock is going to be passed on as based on the current value of the stock not it's original purchase price. Stock transferred ownership as part of inheritance, the new owner has the current cost basis as of the day ownership transferred.
I understand the logic behind it in a technical sense, it is just has no logic behind it from a public policy perspective. The exact same asset sale should not be taxed differently based on who is selling it.

The purpose of step-up cost basis is to enable generational wealth transfers to a greater extent and frankly we need to REDUCE generational wealth transfers. This rule isn't just not helpful, it's actively harmful to society.
 

Brovane

Diamond Member
Dec 18, 2001
5,688
1,962
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I understand the logic behind it in a technical sense, it is just has no logic behind it from a public policy perspective. The exact same asset sale should not be taxed differently based on who is selling it.

The purpose of step-up cost basis is to enable generational wealth transfers to a greater extent and frankly we need to REDUCE generational wealth transfers. This rule isn't just not helpful, it's actively harmful to society.

I disagree, I think we need to make it possible to encourage generational wealth transfers not reduce them. Allowing a step-up-basis in assets as they are transferred helps encourage this intergenerational transfer of wealth which is important tool in building a families wealth. Especially for assets that have been held for a long time. For example, parents own a house and they both pass away. That house was worth $500k when they passed away and that wealth can then be transferred over to their children. The fact that the children can do a step-up basis when selling the house will allow them to keep more of that equity within the family. Another example from my family. My grandfather worked for SDGE for 40+ years and spent decades purchasing SDGE stock a couple of shares at a time through payroll deductions starting in the 1940's. Started out sweeping the floor in 1939 and eventually retired as a supervisor. There was no way for us to reconcile the cost basis for the stock that he purchased because it had been done so long ago and over such a long time. My grandparents used the dividends from the stock to supplement Social Security and his pension when they retired. After they both passed this stock then transferred to my Mom as part of the inheritance and my Mom was easily able to sell the stock based on the step-up-basis. My Mom was then able to pay off her house and she made large deposits into my children's 529 accounts to help pay for college. Let's let the government focus on how to tax the wealthy instead of trying to grab more money from middle class families to pay for more tax breaks for the wealthy.
 
Dec 10, 2005
25,097
8,382
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I disagree, I think we need to make it possible to encourage generational wealth transfers not reduce them. Allowing a step-up-basis in assets as they are transferred helps encourage this intergenerational transfer of wealth which is important tool in building a families wealth. Especially for assets that have been held for a long time. For example, parents own a house and they both pass away. That house was worth $500k when they passed away and that wealth can then be transferred over to their children. The fact that the children can do a step-up basis when selling the house will allow them to keep more of that equity within the family. Another example from my family. My grandfather worked for SDGE for 40+ years and spent decades purchasing SDGE stock a couple of shares at a time through payroll deductions starting in the 1940's. Started out sweeping the floor in 1939 and eventually retired as a supervisor. There was no way for us to reconcile the cost basis for the stock that he purchased because it had been done so long ago and over such a long time. My grandparents used the dividends from the stock to supplement Social Security and his pension when they retired. After they both passed this stock then transferred to my Mom as part of the inheritance and my Mom was easily able to sell the stock based on the step-up-basis. My Mom was then able to pay off her house and she made large deposits into my children's 529 accounts to help pay for college. Let's let the government focus on how to tax the wealthy instead of trying to grab more money from middle class families to pay for more tax breaks for the wealthy.
Generational wealth transfers exacerbate inequality. Someone paying some taxes on something they couldn't figure out the basis for is honestly NBD - they're already getting a huge amount of free money.
 
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fskimospy

Elite Member
Mar 10, 2006
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I disagree, I think we need to make it possible to encourage generational wealth transfers not reduce them. Allowing a step-up-basis in assets as they are transferred helps encourage this intergenerational transfer of wealth which is important tool in building a families wealth. Especially for assets that have been held for a long time. For example, parents own a house and they both pass away. That house was worth $500k when they passed away and that wealth can then be transferred over to their children. The fact that the children can do a step-up basis when selling the house will allow them to keep more of that equity within the family.
Encouraging generational wealth transfers discourages productive work and causes huge economic distortions. Housing is a great example, actually. Basically the only way anyone can afford to buy a house in high cost coastal areas is if their parents die and leave them money and/or a house to sell. This is in fact a very bad thing and goes against the idea of merit based success.

Put more simply you should be rewarded for what you do, not what someone else you're related to did.

Another example from my family. My grandfather worked for SDGE for 40+ years and spent decades purchasing SDGE stock a couple of shares at a time through payroll deductions starting in the 1940's. Started out sweeping the floor in 1939 and eventually retired as a supervisor. There was no way for us to reconcile the cost basis for the stock that he purchased because it had been done so long ago and over such a long time. My grandparents used the dividends from the stock to supplement Social Security and his pension when they retired. After they both passed this stock then transferred to my Mom as part of the inheritance and my Mom was easily able to sell the stock based on the step-up-basis. My Mom was then able to pay off her house and she made large deposits into my children's 529 accounts to help pay for college. Let's let the government focus on how to tax the wealthy instead of trying to grab more money from middle class families to pay for more tax breaks for the wealthy.
See above - this is actually very bad public policy. Basically it encouraged your parents to hoard their wealth until death because there were large tax advantages to doing so. Why do we want to spend/forego tax money on making sure they sit on it? If they wanted their kids to benefit from their wealth they should be able to spend it on helping their descendants whenever they wanted, not be heavily incentivized by the tax code to wait until someone dies.

The step up rule has zero public policy benefit and is actively harmful. It should be immediately abolished. To me your examples are not examples of it being good - they are exactly why it is bad.
 

Ajay

Lifer
Jan 8, 2001
16,094
8,109
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Encouraging generational wealth transfers discourages productive work and causes huge economic distortions. Housing is a great example, actually. Basically the only way anyone can afford to buy a house in high cost coastal areas is if their parents die and leave them money and/or a house to sell. This is in fact a very bad thing and goes against the idea of merit based success.

Put more simply you should be rewarded for what you do, not what someone else you're related to did.
Well, benefiting to some degree from your parent's success is a time honored tradition. And, IMHO, is very reasonable as many parents hope to pass on to their children greater financial stability. That said, wrt to taxes, the allowed limits w/o taxes is getting very high - and this when people are having less children. So a reset in taxes on wealth transfers, capital gains as normal income and a truly progressive tax system would all help even out our silly system designed to benefit the top 10% of wage earners instead of the bottom 90%. And, at this point, not designed to fund the government to as reasonable a degree as possible. I really don't understand what is wrong with someone being taxed at 70¢ on the dollar for the portion of income that's over $1M.
 
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Brovane

Diamond Member
Dec 18, 2001
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Encouraging generational wealth transfers discourages productive work and causes huge economic distortions. Housing is a great example, actually. Basically the only way anyone can afford to buy a house in high cost coastal areas is if their parents die and leave them money and/or a house to sell. This is in fact a very bad thing and goes against the idea of merit based success.

Put more simply you should be rewarded for what you do, not what someone else you're related to did.

If I want to pass on wealth to my children that is my decision not the government or you to decide and judge what I can do and not do with my wealth.

See above - this is actually very bad public policy. Basically it encouraged your parents to hoard their wealth until death because there were large tax advantages to doing so. Why do we want to spend/forego tax money on making sure they sit on it? If they wanted their kids to benefit from their wealth they should be able to spend it on helping their descendants whenever they wanted, not be heavily incentivized by the tax code to wait until someone dies.

The step up rule has zero public policy benefit and is actively harmful. It should be immediately abolished. To me your examples are not examples of it being good - they are exactly why it is bad.

I disagree. Let's let the government focus on how to tax the wealthy instead of trying to grab more money from middle class families to pay for more tax breaks for the wealthy.