Re: G & J, in cahoots?

From: Jeff Bone (jbone@jump.net)
Date: Tue Mar 20 2001 - 12:42:12 PST


Dave Long wrote:

> Why do I find it strange when Mr. Bone and Ms. Schuman agree?

Damn, the secret's out: Geege and I are actually the same person. Drat, foiled
again...

> So both of you say that there is a class,
> either "working poor", or "upper-upper
> middle class" (they both mean about the
> same here), that The Man is keeping under
> His thumb?

If by "The Man" you mean "systemic failure to let market forces reign coupled
with rampant personal irresponsibility, intolerance, and a fondness for
large-scale regulation and prophylactic law..." then, yeah. ;-)

> > And yet, for every one of us that's had a liquidity event and managed
> > to generate real dinero, there's ten of us we know who are living in
> > shared houses where there's six geeks and a T1.
>
> What's wrong with that?

Nothing at all wrong with that, and no implication there.

> Say there were a conspiracy

Fond as I am of the artistic qualities of conspiracy theory, I daresay that most
things which people think of as conspiracies are really just conspiracies of
circumstance and attitude, not intent.

> > This is all a direct result of progressive income tax, onerous
> > short-term capital gains tax, ABSOLUTELY INSANE regulation of securities
> > and commodities trading, myriad Byzantine tax laws, and the "infinite
> > regress" of taxation that occurs when an asset appreciates, so you sell
> > a little to pay taxes, which generates another taxable event, which you
> > sell to cover... (recurse infinitely until you're destitute.)
>
> Substantiate this direct result claim?

I think the picture painted in the message does a pretty decent job. If you
don't, too bad.

> - progressive income tax: Why would this
> not affect those over the low 8 figure
> amount? (was that wealth or income?)

Okay, stay with me --- I'll be moving in a slightly circular fashion, but I
promise there's a point. Most people --- even those *with* lots of money ---
can't spend 8 figures in a year on goods and services. Most of the excess goes
to investment. So let's say I buy a restaurant. Money goes in, that's a
deduction. The restaurant starts generating profits. I can either pay taxes on
that income, or I can sink it back into the business and grow, expand: I can
either pay 39.6% to the gov't, or I can hire new employees; and in essence, in
doing so, I'm paying $0.60 on the dollar for these new salaries, etc. In
addition, I get tax breaks on that growth investment, etc.

When you're worrying about buying goods and services for yourself, your tax
breaks are limited; hence, the progressive system most penalizes folks whose
assets and income are most tied up in furnishing their own needs in terms of
personal / family goods and services. When you move it into business, there's
all kinds of ways to grow your asset value without paying taxes: just grow
aggressively and avoid taking profits to the bottom line.

That's how it works.

> - onerous short-term capital gains tax:
> How is this onerous? It's no more than
> the income rate, and still progressive.

It's too damned high: it's derivative income, and you've already paid tax on
that income once before investing it.

> - insane regulation:
> - byzantine tax laws:
> Maybe you have something here. Care to
> elaborate on something better than a
> conspiracy theory basis?

Again, I'm no conspiracy theorist. The only proof you need here is this: order
yourself a copy of the tax code and a copy of the SEC code. It'll get delivered
in multiple trucks. That's insane.

> - "infinite regress" of taxation:
> There is no infinite regress. "Tax
> basis" ensures convergence, with no
> need for infinities. (ever try to
> move from point A to point B?)

Yeah, yeah... it does go to zero, you're right, I was exaggerating for comic
effect. The point remains, though, that there *is* finite regress. I'm dealing
with this right now: selling six figures of CMGI stock last year to cover taxes
generated a taxable event for which I'll probably owe five figures this year,
which I'll have to sell stuff to cover... etc. This goes to zero pretty quickly,
but it's still a FUCKING SHITTY situation.

> > the aggregate tax rate across the board once income's into six figures
> > is about 2/3, so I'm going to put in *at least* double the effort to
> > actually achieve a net gain of about 33%.
>
> Two bits of free advice:
> - change states,

Why? Texas has no income tax. Texas is better than most on aggregate and hidden
tax schemes.

> get off the payroll,

I've been off the payroll for over two years --- I'm an entrepreneur, remember?
:-) We only get paid in upside. ;-) Even in the fat times, when the paychecks
are flowing, we get paid less than most of the star-quality developers we hire.

> form
> a C corp --

Yeah, yeah, done that 9 times already.

> it shouldn't be difficult to
> cut 22% or so off that aggregate rate
> - follow the invisible hand, and get other
> people to put in the effort which makes
> the income. (capitalism, remember?)

Yeah, yeah, done that 9 times already.

> Not true.

At least you're accurate here...

jb



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