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i dont have all the info, but in way back times. That was the deal, pay higher taxes or invest in your mfg output or your employees otherwise pay the tax to the government. Now the company would just invest all over the world, so that would not work for u.s workers. there was a time though.....
I'm not even super rich and my bank was willing to give me a 1.5 percent line of credit (JPMorgan Chase) for six figures. I maxed that out, made some money investing, and then paid it back.
I don't even know why they offered me something lower than inflation. They were literally giving me free money. I'm Private Client there but they were handing out free money.
2023! They eventually took it away. I had about a million invested with them and they gave me an unlimited 150k line of credit to do whatever I wanted with for just 1.5 percent annually. I would have maxed it out way more if they allowed me to.
Once I became disabled from a hit and run they took it away :(
Aww. That was a rollercoaster. Hit and runs which cause injury make my blood boil. I've seen some shit.
Congrats on seeing the leverage opportunity and making the most of it, though, that's awesome! A little financial education goes a long way when the right deal shows up.
Also, there’s something ironic about simultaneously wanting to ban buybacks and incentivize a company to give stock to employees. What a dilution frenzy
They're popular because the companies doing them also issue a ton of new shares constantly, and need to do buybacks to reverse their massive share dilution. They're not doing it to benefit shareholders' tax treatment.
Warren Buffett prefers stock buybacks to dividends for just this reason. If a company buys back stock, it returns value to the investor, but the tax on the gain is deferred so the investor can choose the optimal time to take the hit on the taxable sale (i.e. capital gains).
Since dividends come on a regular schedule, the investor has to pay taxes regardless of the situation.
For someone working, a stock buyback is much better because they can defer the tax until they're done working, lowering their tax rate before they take the capital gain.
>Neither a buyback nor a dividend forces the stock price upward
Excuse me, what? You are saying that reducing the supply of available stock doesn't cause the price to rise? Demand remaining the same with reduced supply is a textbook example of causing price to increase. While true it's not a guarantee, it is an observed effect of stock buybacks that it happens in the overwhelming majority of instances in which it occurs.
Unless suddenly you have decided that reduced supply somehow doesn't impact equilibrium price somehow?
A buyback does not effect a shareholder directly, the point is to raise the stock price by restricting supply. If a shareholder then sells, they pay tax. For long term gains, the tax rate is the same as dividends. There is no economic difference except that buybacks allow shareholders to differ the taxable event, whereas dividends force a taxable event. The difference is $100 share with a $2 taxable dividend, or a $102 dollar share which might or might not be sold.
We both have a stock in a company. If the company pays dividend of 1 euro, we both pay capital gains tax on a 1 euro dividend. In total we pay the tax on 2 euros.
Let us now say that the stocks are valued at 2 euros. The price we both bougjt was 1 euroz but after the buyback was announced the price is 3. You sell the stock to the company buy back, I don't. You pay the capital gains tax on 2 euros, I don't pay taxes. The state still gets the same amount of money.
While this is a simplification, it is more or less accurate.
They big problem is that any argument in which they’re the same ignores accounting and tax obligations.
Ignoring accounting and taxation while talking about how companies chose to distribute money is like assuming perfect information in a market or assuming the solid is undeformable and air resistance is negligible, it’s very convenient to simplify things but it’s not an accurate depiction of the real world.
No they don't? Tax rate is the same for LTCG as dividends, and no specific shareholder is obligated to sell in a buyback. Effective tax rate is identical in both scenarios (excluding STCGs), dividends just force a taxable event.
Very much suggest you learn basic financial literacy before hopping on reddit and trying to comment on stuff like this.
>Buybacks and dividends are mechanically identical.
They are, objectively, not. One is a distribution of cash to every shareholder, one is a purchase of outstanding shares at a given price.
I think, what you maybe meant to say, was that buybacks and dividends are identical in their tax realization (Based on your follow up responses below). But this is obviously also not true.
From the tax policy center: https://taxpolicycenter.org/sites/default/files/publication/165800/what_is_the_us_tax_advantage_of_stock_buybacks_over_dividends.pdf
>US taxable shareholders strongly prefer buybacks from a US tax perspective, as they tend to reduce their
tax liability by 9.3 percentage points, on average. US nontaxable shareholders are indifferent between
dividends and buybacks, and foreign shareholders strongly prefer buybacks, which reduces their US tax
liability by 14.5 percentage points.
>The average difference in US taxes between dividends and buybacks across all shareholders is 7.2 cents
for $1 distributed for 2022.
27 For just US taxable shareholders, the difference is 2.6 cents (9.3 cents times 28
percent), and for foreign shareholders the difference is 4.6 cents (14.5 cents times 32 percent). This implies
that roughly 36 percent of the dividend-buyback tax differential can be attributed to US taxable shareholders,
while 64 percent of the differences can be attributed to foreign shareholders.
So obviously, they're not identical either mechanically or from a tax perspective.
>You can’t simultaneously be against a company distributing cash to investors and for a company distributing cash to investors
The Wharton Budget model estimates that an excise tax of ~4.6% on stock repurchases would be the minimum necessary to create a level preference field from a tax standpoint, and doing so would net the US government an additional 260B across a decade, or 26B annually. The Primary deficit is around 800B, so about a 3.25% reduction in annualized primary deficits from simply collecting all of the tax you would on dividends from buyback activity as well.
Bro rly on an economics subreddit and doesn’t realize share price = market cap / # shares. 💀 Share buyback —> fewer shares —> prices rises —> unrealized appreciation for stockholders. This is an accounting identity
What a hilarious formula identity you set up. Market cap = share price x outstanding shares. When shares decline, this means that market cap declines, not that the share price rises to keep market cap the same
Stock buybacks are contra-equity. They reduce both equity and assets of the company, so that value per remaining share is unchanged
> Stock buybacks are contra-equity. They reduce both equity and assets of the company,
Yes
>so that value per remaining share is unchanged
No.
Shares are valued based on two primary pieces of information - the first is their claim to the net assets represented by that sliver of ownership. You are correct that this figure does not shift.
The second however is their claim to the company's future earnings, discounted back to a present value. That value absolutely changes, as there are fewer shares of stock now laying claim to the same stream of earnings.
Therefore, mathematically speaking, buybacks necessarily increase the per share value of a given equity. To sit there and argue otherwise shows a glaring lack of basic financial literacy, which is beyond hilarious given your attitude in this comment lol.
Fundamentally, your ignorance here is driven by a gap in understanding around how a given equity is valued. At it's core one will perform various financial analysis to determine how much a company is worth, that is their market cap. The share price is then derived by dividing the market cap by the number of outstanding shares. Shifts in outstanding shares that otherwise do not impact market cap will necessarily impact the value of an individual share.
Dividends and buybacks are taxed identically for US shareholders. Buybacks also have an entity-level tax that dividends don’t. Foreign investors do technically pay more tax on dividends, but it’s not super common
>and do not inflate share price
Dividends and buybacks have the same impact on share price
No they are not, and I know exactly the hideous shape you’re going to have to contort yourself into to argue that they are taxed the same, so don’t bother. There’s objectively a tax differential between buybacks and dividends, and that’s why buybacks are preferred. You’d also have to argue that tax planning flat out does not exist in order to pretend that they are the same. Save your dignity.
Buybacks raise (read: inflate) share price and dividends decrease it. This is an observable phenomenon.
Dividends generally reduce share price according to how much cash leaves the issuing firm, due to that firm no longer having that cash as an asset.
Stock price is mostly supply and demand, yes. But stock price does fall with dividend issuance. It also usually slightly rises before a dividend is issued as investors crowd in.
Okay 10/4 that's pretty much what I thought. A=L+OE
How does this change if they issue stock dividend versus cash dividend? I understand what it does to the accounting equation, but I mean specifically tax liabilities and share price changes.
Buybacks are preferred b/c they're targeted. Some investors want to hold their position and not deal with dividend income (either the taxable event or then just having to do the reinvesting).
Buybacks let shareholders self-select who takes some money off the plate and who stays in. And that is the theory on share price increase from buybacks, you're taking out your least bullish shareholders and b/c more discretionary on timing they signal to market that mgmt thinks stock price is undervalued. As others have pointed out, from pure valuation accounting there should be no share price effect otherwise.
Honestly, the hate on buybacks is so misguided. If the topic is what companies do when republicans give tax break. Yes, the data on buybacks shows that that money is primarily flowing back to investors not 'trickling down'. But if you banned buybacks, that same money would go to investors except as dividends.
Buybacks are not the problem, but they get talked about alongside real issues with republican BS claims around 'trickle-down' economics.
Go look at more progressive liberal countries, they don't ban buybacks (does anywhere?).
Those investors should be forced to reckon with their companies’ oversupply of cash and make decisions accordingly, rather than simply receiving more deferred compensation. Dividends avoid a lot of negative aspects of buybacks.
Dividends are taxed higher.
Other countries have totally different macroeconomic environments which make asset price inflation much less of a problem, to say the least. The USA stands in a particular place in history, where we are vulnerable to assets inflating out of control.
Dividends from a US operating corp to US holders who have held the shares for anything other than a short period of time are going to be qualified dividends. qualified dividends are taxed on parity with capital gains. Could there be some leakage from one versus the other? Sure, dunno, i'm not a tax guy. All sorts of classes of investors and tax planning. But again that simply is not the motivating factor as between the two as a general matter.
>Dividends avoid a lot of negative aspects of buybacks.
like what?
>Other countries have totally different macroeconomic environments which make asset price inflation much less of a problem, to say the least. The USA stands in a particular place in history, where we are vulnerable to assets inflating out of control.
first, buybacks are not a material driver of stock price change, so that's irrelevant. second, no clue how US is unique in that. asset bubbles, including within equities markets, is hardly unique to the US. look at the situation in korea right now for example.
Really getting the sense you have no idea what you're talking about on this topic.
I do know. Dividends ultimately are taxed higher than buybacks once realized.
Buybacks inflate asset prices, while dividends do not. Buybacks artificially inflate executive performance while also bribing investors to look the other way. Dividends raise questions.
If buybacks were not a material driver of stock price change, they wouldn’t be done.
The USA is a net absorber of international capital, which has been a pretty hot topic for about a decade now. Our assets are broadly inflated due to persistent current account deficits and corresponding capital account surpluses. Korea and other nations like them are net exporters of capital. Totally different environment.
I think that buybacks represent pressure to feed short term investors. Dividends represent pressure to feed long term investors.
A company with enough excess cash to do one or both should fundementally be encouraged through tax and other policies to invest in the growth of their business and/or the growth in their employees.
Dividends encourage long term holding of stocks, and combined with employee ownership incentives encourage long term employment with a company.
Companies will stop compensating their employees with any form of equity otherwise they will dilute themselves to the bottom. It’s pretty clear you do not understand the function of stock buybacks.
Companies are investing at a record rate in 2026 and now people have totally reversed course and want to ban what they invest in and also want to complain that we are in a bubble and they need to stop investing so much.
While this is technically true, it isn't really true in the way you are implying. Companies is the correct word, but the actual quantitative value of that plural is not a large number of companies, and the direction of investment is not in investing in the growth of their company but rather the reduction in headcount.
I think you need to think a bit broader and longer term when you think of alternatives.
A lot of my personal beliefs about economics are informed by the deep belief that once a certain percentage of the population is struggling, political instability is inevitable and the exact time and nature of that instability is nearly impossible to predict.
Paying people to dig ditches is the original make work program that our ancestors knew more than 4000 years ago was required to prevent political violence on a large scale, and it is a lot cheaper than the effects of that violence.
That works until it doesn't. Digging ditches is nice for awhile. Europe is going to learn this the hard way. You need to keep widening your productivity and production . Otherwise your tax base shrinks while benefits increase.
Suddenly in 10 years you look over at the capitalist hellscape of America and it has a much much larger tax base that can fund the benefits you once thought immense easily by just the nature of compounding growth. Suddenly your hole digging job doesn't look so nice anymore and the benefits- while the same as 10 years ago- look way worse comparatively.
Doing things that stagnate GDP/growth and the economy is the most dangerous thing you can do. But agree there is a balance here but I think its worth being careful because there is immense tradeoffs either way if you get it wrong.
I totally agree. But it can work for a very long time, and governing is really the art of successfully kicking a can.
>You need to keep widening your productivity and production . Otherwise your tax base shrinks while benefits increase
Not to sound cheeky, by that only works until it doesn't too. More to the point, there is not really any reason a society can't approach the problem of preventing political instability through multiple strategies.
>Doing things that stagnate GDP/growth and the economy is the most dangerous thing you can do.
I don't think that is true at all. I think the most dangerous thing you can do is to try to purposefully accelerate political instability and violence.
My point is to forgo stock compensation entirely and ban buybacks. This has effects on how the overall company is run, not just a simple compensation matter. Chasing stock price over the health of a company is not always good
Or, take the route of George Eastman of Eastman Kodak Company. George held that shareholders were due a dividend of 10% and anything over 10% would be split by the shareholders and the workers. It was the first profit sharing of the industrial age.
Because then all the other shareholders receive untaxed compensation in the form of inflation of the stock price. Even once they realize their gains, they typically pay several percentage points less in tax than they would have had they received dividends.
Inflation of the stock price has additional negative externalities. Asset price inflation in general is a problem, as it causes increasingly severe misallocation of capital. You see it any time you’re downtown and a lot of prime storefront space is inexplicably empty. You see it when you can’t buy a house off an old couple who can no longer even dream of being able to maintain the space they’ve got. You see it in how dividend yields have been dropping for decades because of how bloated the firms they come from have become. You see it in how insurance companies increasingly choose to abandon huge markets altogether, rather than claim responsibility for assets within them.
You also then have executives who are judged on stock price performance and compensated through stock price performance patting themselves on the back for paying themselves money. This is not good for firms, either.
There are good reasons for buybacks to exist, but they are WAY out of control and are largely a malign influence.
> Because then all the other shareholders receive untaxed compensation in the form of inflation of the stock price. Even once they realize their gains, they typically pay several percentage points less in tax than they would have had they received dividends.
If I'm a shareholder, a buyback is taking cash off the balance sheet that I am partially entitled to and paying it to someone who no longer wants to be shareholder in the company. I receive no untaxed compensation off of that event. A buyback also does not increase the share price by default, it raises earnings per share, but the multiple the market pays for those earnings is outside the companies control. Nike has had buybacks throughout the last few years and their stock continues to fall.
When compared to dividends though, sure, perhaps capital gains should be taxed more highly.
>Asset price inflation in general is a problem, as it causes increasingly severe misallocation of capital. You see it any time you’re downtown and a lot of prime storefront space is inexplicably empty. You see it when you can’t buy a house off an old couple who can no longer even dream of being able to maintain the space they’ve got. You see it in how dividend yields have been dropping for decades because of how bloated the firms they come from have become. You see it in how insurance companies increasingly choose to abandon huge markets altogether, rather than claim responsibility for assets within them.
I don't understand trying to conflate buybacks with asset price inflation, and many of those things have nothing to do with "asset price inflation". A storefront might be vacant because of local rent dynamics, zoning, etc.
How are dividend yields correlated to bloat? If a company pays a $3 per share annual dividend, and the stock price is $100, the yield is 3%. If the company invests money to open new stores, instead of raising the dividend yield, the company may soon trade at $200 per share, and still pay $3. The yield is 1.5% but no bloat occurred.
It is a general rule that buybacks increase share price. Just because a company uses it to try to stop a backslide, and it’s not a silver bullet that completely halts the slide, doesn’t mean it doesn’t inflate share price. It does. This is not at all controversial. It wouldn’t be employed in such cases if it didn’t!
I don’t think we need to raise capital gains taxes. I don’t even think buybacks need a surcharge like they have since the IRA. I think they just need to be regulated mostly out of existence so that the better-supported structure of dividends can be properly used.
Buybacks inflate share price, asset price inflation is a social ill. That was the case I was trying to make to you. In the case of empty storefronts, what you’re seeing is an asset (real estate) that is so inflated that the returns it demands (rents) cannot keep up. That’s because the entities that pay rent typically dwell in the real-world economy of labor, goods, and services. Asset prices are increasingly divorced from that economy. Buybacks are a small part of this, but they contribute to asset price inflation.
It's not a general rule. All a buyback does is decrease the cash on the balance sheet and decrease the share count. That's all a company can control, as corporate actions do not create extra wealth out of thin air when they occur.
It's the same principle why buying a stock before a dividend is issued is not "free" money. If a company trades at $100 and issues a $2 per share dividend, you then have $98 worth of stock and $2 in cash.
The theory goes that before buybacks, companies were incentivized to spend excess money in employee benefits and salaries. I found a decent video on this a while back, let me dig it up...
And yet, they could still do dividends! They choose buybacks because their shareholders can evade taxes that way, while the firm also gets to inflate their own share prices.
Don't forget almost all executives have incentives tied to share price. Buybacks are a way of lining their own pockets because now their shares/options are more valuable
What we've learned from the last ~40 years is that if you give someone with an MBA a lever to pull to earn themselves money but destroy everything, they'll pull that lever until it breaks or the planet does.
Absolutely. The C-suite can decide in a 5-minute phone call to automatically meet at least one major performance metric for their fiscal year, while also giving themselves a pay raise. And the kicker is that they bribe shareholders at exactly the same time by doing so, so shareholders have no reason to complain.
Okay but unless you force them to pay more via legislation there’s no way to guarantee that employees would be paid more. It could easily just be dividends instead.
Because it’s a tax evasion scheme that also distorts the market by inflating asset values. Pay a dividend or invest the money into products and services. Making the stuff that asset value is allegedly based on.
With how it's being utilized, sure, but buy backs can be utilized in ways that I believe are legitimate, such as to prevent dilution of value fron the issuing of new shares such as the vesting of stock options.
Companies like Meta are well known for reducing salary expenses via stock options, which means millions of shares are issued every year for worker compensation. You let those shares hit the market and evemtually they'll continue to dilute shareholder value causing investors to leave and so on and so forth. Why not just cash instead of stock options and then buy backs? Time value of money.
My employer does it all: dividends, buybacks, pay employees with RSUs, and invest heavily. If they don't do buybacks, they need to issue more shares and that dilutes the share price and EPS.
The excise tax is assessed at the time of the buyback, which is good (and only very recent, as of the IRA), but you’re obfuscating the fact that the shareholders only owe tax on the capital gains from buybacks once they realize them. That’s a tax evasion scheme. They should take their dividends and pay taxes on them, and see their objectively overpriced (thus the buyback) shares settle back down to a reasonable level.
Instead we have infinite share price inflation because every firm has decided their top priority should be doing shareholders’ taxes for them. The reason they do buybacks at all is because there’s a roughly 4-8% differential in taxation in favor of buybacks.
And all this when dividends are an available option.
I’m aware we’re in an economics sub. “Involuntary timing of taxation” is usually just known as “taxation.” It’s not a special crime to have to pay taxes on getting paid. It IS a peculiar evasion of tax law to turn a taxable dividend into an untaxed and artificial increase in value of assets held.
Buybacks are a tax evasion scheme and there is already a perfectly acceptable alternative in the form of dividends, which are taxed higher and reduce share price appropriately.
Before stock buybacks were made legal in 1982 (thanks Reagan), a LOT more public companies paid dividends. Stock buybacks were more tax friendly than dividends because they are not taxed for owners until they are sold, whereas dividends are taxed as income. They also boost EPS artificially, which is a metric often used for CEO bonuses.
I agree that it is basically just a way to give tax advantages to shareholders. If they want to re-invest their dividends, then by all means, but they should be taxed on it.
That’s fine, because dividends are taxed appropriately and tend to reduce share price, rather than inflating it for the sake of the tax evasion of key shareholders.
Dividends are taxed the way they are for a reason. Buybacks are a scheme to both inflate share price and also cut taxes for shareholders by around 4-8%. Dividends are a perfectly appropriate method to deal with excess capital, without any of the antisocial aspects of buybacks.
> Making the stuff that asset value is allegedly based on
the stuff the asset value is based on might be monopoly or quasi-monopoly, and without competition there is no reason to invest in products or services. but you can invest money into figuring out how to sell shittier products and services.
Stock buyback bans are the new ban loans to billionaires. It is purely emotion that sounds legit but has no bearing on reality or how things actually work.
Hear me out: But if I own the stock my company is buying back that’s a good thing for me and my fellow employees, who are also stock holders. Isn’t this why employees want vested stock or stock options?
This is what Mark Cuban is proposing. The key is that employees have to paid a meaningful amount of stock and not just $100/yr worth, so legislation would need to cover that too
If a company doesn't have a better use of cash on hand should it be forced to either hold the cash or invest it in ways it doesn't think will net a return? Stock buybacks just frees up the money to go elsewhere.
"You won't let them pay themselves extra, and you won't let them build whatever the fuck they want next to your homes and ask that you help pay for it so I truly don't know what you want them to do"
It’s working out for me homie, go ahead and spend all day on the street corner in your 1 intersection town with your little signs they’ll still get built
Right, let's deregulate everything and bring back child laborers in factories. The free market needs to be regulated if you don't want things to look like shit for the bottom 80%
You’re right. I’m envious that some giant corporation is building a data center in my rural community that will increase utility rates, have no positive impact on the community and be a general nuisance due to all the noise.
Whatever the costs are they’re not zero, so why should my community be expected to bear any costs for a private company that will be returning minimal, if any, value to them. The internet has really empowered simple people to think they’re clever.
You whine they’re not keeping their money, so they go out and spend billions of dollars constructing the next generation of computing annnnndd you whine about that too.
I suppose you’ll whine about anything that isn’t them putting money into your pocket.
Right, because Johnson & Johnson and DuPont are building data centers. I think you forget that goverment laws exist to serve the people and not just majority shareholders.
If you pay dividends, you keep the people who want to milk the firm, possibly to death. If you use stock buybacks you don't.
If firms like Intel operated using stock buybacks, they could have probably maintained enough investment to keep themselves in the lead, or at least close to the frontier, but instead the need to keep investors happy with dividends ensured long-term underinvestment.
That is the lions share of the substantive info. To put it in technical terms, rates were sufficiently high that the resulting tax liabilities created an incentive for employers to use productive tax expenditures (what the US Treasury defines as tax credits, deductions, exclusions, and exemptions) to reduce that liability. At the time, internal revenue code was significantly less laden with expenditures that benefit only the VERY wealthy, so employers would do things like pay higher wages so they could deduct those costs, or reinvest in R&D, or in their underlying infrastructure, etc.
This structure was largely dismantled with the tax reform act of 1986, though the slow erosion of new deal policies began about a decade earlier.
If a conservative is bitching about the current state of our nation, they only have their own philosophy to blame.
Lower corporate taxes reduces the incentives to pay you a higher wage, which is why I said employer, referring to the corporate tax rate, and not personal rates. Please don’t strawman my comment.
Regardless, if you’re making less than about 4 million, you wouldn’t have been in the personal bracket which had rates cut significantly from their 90% peak.
You're right. The marginal tax rate for the most wealthy was over 90%. However, they never had to pay that, because they invested in their workers or gave their funds to charitable causes.
Makes sense to me, if a company has to choose between paying taxes or reinvesting their profits into the company/their employees it makes sense they would rather choose the later.
Yup. I'm old enough to recall when Reagan asked if we'd all be better off if employers got to keep their profits or hand them over to the government. People assumed that if employers got to keep more, it would trickle down into factory improvements and higher wages. Oops....
Sounds an awful lot like Co-Operatives a model the capitalists spent a lot of effort fighting against as it often turns out very effective. Workers having a stake in the company and its decision making, makes them far more motivated towards their work.
Not really. Cooperatives haven't had much success. Remember, in a Cooperative, all the workers are capitalists. So it's silly to say captialists fought it. It's just not very competitive.
Plus, Over 99.9% of all companies in the United States do not have publicly traded stocks.
Out of the roughly 36.2 million businesses operating in the US, fewer than 4,000 are public companies listed on stock exchanges like the NYSE or NASDAQ. This leaves more than 36.19 million private companies that do not offer public shares.
Post WWII when the middle class really flourished. Well most of them but was much easier for someone to support a family on a single factory worker income and still retire comfortably.
Now all of the goes to shareholders and ceo bonuses while the middle class is left fend for themselves.
Sorry, but this doesn’t describe anything like what the guy above is talking about? When were companies given a choice between a higher tax burden or paying more?
We also have to remember that the rest of the modern world was still rebuilding after WWII while we didn’t have to. Companies weren’t just going to jump to a different country for cheaper labor. Now it’s much more competitive globally.
Yeah we really got a good head start in the modern economy because of that. Looks like the current admin is trying everything it can to erase what was left of that advantage
They’re essentially grasping at straws trying to get us back to the top of hegemonic power. That’s why they’re using techniques like tariffs that were used in the 1890s-1920s. It’s not going to happen, it’s basically over. The world has caught up. There’s two answers to this. The US learns to survive in a world with less hegemonic power, or war.
How would this work for large private companies? Giving internal ownership shares is all well and good, but couldn’t the company just keep issuing shares to the ownership group to dilute value? How would a fair stock valuation be determined for companies that don’t have to open their books?
That would be good. They would have to mandate that private companies can’t issue internal ownership shares otherwise workers could be (even more) easily exploited
If you give out stock or options you need to have an independent assessment of the company value (409a) otherwise, as you said, how would anyone know how to value the company.
Private companies that issue stock in the US need to follow IRS Code Section 409A, which requires independent valuation (you can search for 409A valuations - there's a ton of info on them).
A more difficult part of this is that the stock issuance is a taxable event, so you'd be putting a tax burden onto the employees but they (generally) couldn't sell any of the stock to pay it off.
It would work with certain types of options, but there's a whole other can of worms with that.
Private company stock lets you vote on stockholder issues, receive any distributions of company profits, and the primary benefit is getting paid if the company is sold.
If the company does not issue distributions and doesn't get sold, you don't really get a benefit from it. There are some markets for private company stock, but they're not going to buy something that is not likely to get sold.
I've made a bit over a million dollars through being granted private company stock options and I expect to make several more million within the next five years. It can be very beneficial if you are in a fast growing company.
It is not that valuable for a company that is not seeing much growth.
They’ll put a cap on what businesses have to pay and I’d bet my money the number of employees cap will be large enough that even medium sized businesses can get around it as well as larger companies will just hire more contract workers via contract companies.
Loophole Whack-A-Mole is the best.
Another option is employee ownership of profits, for example you could mandate 10% of profit must be divided equally to every employee.
That would require a disclosure to the IRS of the valuation of the company, not just the profits. I would figure that avoiding that kind of scrutiny is one of the reasons some of the large private companies stay private.
If you issue equity based compensation then you have to have an independent valuation. 409A valuations are supposed to be done annually or on a triggering event. You face large penalties if you skip out.
You have to remember too that if you’re truly a LARGE private company then either through your bankers, a PE backer, or some other medium, you are going to be required to have an audit under US GAAP and if you’re doing share based comp then they’re going to audit the valuation.
Reissuing shares to dilute out employees can obviously be done, but that misses a handful of points. First, if this is new regulation it would be easy to ensure it included penalties for dilutive practices. Second, It could mandate the minimum ratio of “owner” to employee equity. Third, authorizing and issuing new shares would likely force material changes and be a triggering event for all the big wigs to have a taxable event which is what they always want to avoid.
Don't let perfect be the enemy of good. How far do we have to go down the list of most valuable companies to hit a private one? Anthropic at #14. And if we skip Anthropic and Open AI, the next is Stripe all the way down at #75.
These companies aren't going to privatize and get rid of all that potentially investment/liquidity. Every retirement fund in the country is holding up their stock value.
Easier is to set up another offshore company which you manage the company from and pay yourself there. Bleed the US company dry - profit? What profit. There’s tax breaks to this too (I’m looking into this now for myself). Gotta love the good old American tax code - written by millionaires for billionaires
Private companies who want to have employees more literally invested in the company offer some form of profit sharing and/or some form of shares that can't be traded normally (they may be able to be sold back to the company, etc). They don't grant common stock that can be traded and sold because that's essentially just going public without an IPO, just a direct listing, and legally once you hit a certain number of stockholders you're forced to do so IIRC.
Granting each employee a "profit share" and then paying them out on a defined basis is a pretty reasonable strategy - they may not have any sort of voting rights (other than voting with their feet, and so on) but the more top-line profit the company generates the fatter their check is in a directly correlated way. Ideally this means they're more incentivized (crucially: along with everyone else) to focus on efficiency and profitability, versus just shrugging and saying "fuck it not my money."
Many private companies are owned through a partnership and that partnership still may be audited or at least reviewed, which typically may include a valuation. Obviously if something this is enacted all companies would have to.
And then yes you would need agreements in place that make it impossible to dilute the way you are describing.
Better way to do this would be shadow equity with a pension like minimum risk requirement and oversight.
Shhhhh, you aren't supposed to point out the part where they still have onerous leverage over you. God forbid we just try to actually pay people what they are worth.
Right? And I suspect those businesses would try some funny devaluation or non-compete business for any employees that want to cash out and go to a different company.
In general this could be part of a push to mandate more compensation for workers beyond just dollars in the paycheck. The dollars are important, but free cash flow is also the one thing that doesn't really bend to any ideological preferences. It might be morally best if workers salaries doubled overnight, but if that causes most major businesses to fold that same night we have only caused problems for ourselves.
If enough shares were given to workers they would have to agree to the issuance of any new shares, and all companies could be required to open their books as a stipulation of being chartered by the state.
Want the protection of incorporating? Make basic financial disclosures!
I can’t get over the blindness in many of the comments regarding equity. It’s something that can benefit everyone: The employee by providing partial ownership of their company, and the company itself as the workers have a stake in the org’a success.
Yep. I've thought about this before. Wealth inequality and workers feeling left behind could be dramatically improved if we required a small ownership allocation to workers. 10% of a company owned by employees with a board seat and voting rights. What would our welfare programs and poverty levels look like if regular employees enjoyed the valuation growth in assets that capital owners have enjoyed over the last 40 years? What would our communities look like if we democratized business?
I honestly agree with this. If excess surplus value is being extracted by the corporations, tax it. If they're willing to share with the workers, then they can pay less taxes. Very marxist of you, Mark.
A Marxist approach would be abolishing private ownership of companies altogether and turning them over to the labor class (which includes abolishing the stock exchange), wherein profit isn’t rung out of companies but instead they provide the necessary means for people to live comfortably and leisurely.
If an economic proposal involves profit, it’s not Marxist, it’s capitalist. That’s like literally Das Kapital 101.
This is just a BS proposal to not pay taxes or give wage/salary raises to people, all while maintaining the aristocracy’s clutches over mega-corporations.
Edit: if anything this proposal is pretty damn capitalist by trying to convince the labor class that they have a vested interest in maintaining the private ownership and profitability (by being good hard working little laborers) of private corporations.
That's not fair to Marx. Marx spilled a great deal of ink justifying the indiscriminate use of political violence and enumerating the ethnic groups he felt were responsible for all the world's problems.
Without that blueprint the 20th century would have looked very different.
Marxism is initially a paradigm for understanding how the world works. It has since been turned into an ideology by ideologues.
Marxism understands the modern world as a conflict between classes, namely the bourgeoisie (capitalists) and the proletariat (laborers), wherein the former is exploiting the latter for profit (a system Marx called Capitalism).
Marx proposed a possible resolution to this conflict as the end of the exploitation of the labor class via the abolition of privately owned enterprises. The stock market is a means of upholding the capitalist system of economics.
That being said, Marx also posited that doing so would require unimaginable inequality that it naturally happens.
As such, Marxism isn’t inherently in favor or opposed to anything. It’s just one of many ways to possibly try to understand the world. That’s also being said, since the writings of Marx and Engels, ideologues have corrupted his theorizing into an ideology, attempting to force an end to capitalism and bring about a Marxist and/or communist revolution.
People are opposed to Marxism for a variety of reasons. People of scholarly merit are generally opposed to it as a paradigm as they believe there are other more fitting paradigms for explaining the world. Lay people are generally opposed to it because they don’t understand it.
It's true that Marx presented his theories and paradigms as scientific, but at the same time he very much believed that this process was a good thing, and he was committed to actually bringing them to fruition in the real world
It should also be noted that Marx to my knowledge never really treated his theory as a theory, but rather he treated Marxism as basically an inevitable social fact. That "this is what will happen". In a lot of ways, Orthodox Marxism feels almost like a religion with its own prophecy
Finally there are plenty of academics and even fields of academia where Marxism is very much alive and well. Sociology comes to mind. However in most of academia there are splits between the truly Orthodox Marxists who think Marx got it right the first time and more revisionist ones who try to account for the fact that the theory hasnt worked as predicted
Eh this way employees are more invested in the overall company performance. Might be biased since an ESOP literally changed my life but I’m a fan of this model.
Once you work for an ESOP, you never want to go back to another structure. I believe a lot of these comments are negative because they've never had company stock as a part of their compensation.
You are literally arguing that all the comments form people who had the significantly more common experience of working for a typical business are wrong because I in particular made a lot of money.
The only argument I've fought against is that companies purposely try to lower their stock price to fuck over their employees. That's the perspective of a cynical loser without relevant life experience. I don't think I've argued against anything else in here.
Also, the vast majority of people who accumulate employee stock make profit from it. I'm not a special case in the slightest, I'm the most average case imaginable.
That's my subjective opinion. If I'm speaking to someone IRL who has this view of company stock that's going to be my impression. That being said, I don't know an adult who feels this way. Everyone bitches about how companies prioritize their valuation above all else and now I have to pretend the exact opposite is true? Like they're going to arbitrarily dilute their stock to fuck over their own company? C'mon. That's not an opinion I can take seriously.
That doesn't happen outside of extreme edge cases, mostly due to being illegal.
My stock has no vesting period.
I don't worry about my company firing me.
The stock is in addition to a competitive 401k match
The topic is companies increasing stock distributions to their employees and this is your response? How miserable it must be to see the worst in everything.
It isn't about you. It's about control. My suggestion does not imply that being paid stock is a venture that will never benefit and individual. My suggestion is that there is a reason that elites purporting to want to address inequality still won't just pay you the cash value that you are worth. You can buy stock with cash. The reason is they want control.
Cash devalues over time, stock appreciates. You're also ignoring tax implications of buying stock with income over receiving it. Honestly, you might have a strong opinion but it reeks of financial literacy. You think it's control when you don't even understand the basic concepts at play.
Employees still vest over time in an ESOP, like most long-term incentive plans. haven’t read the full details on what Cuban is proposing that may differ though.
my ESOP vested after 4 years and all subsequent contributions were mine free and clear. I made a lot of money at that company and the ESOP contribution (5% match to my 401(k)) eventually eclipsed my 401(k) account that I was contributing 12-18% to.
Beyond the practical and legal problems with forcing a firm to pay someone what they are "worth", how do you even define that? How much "value" does someone create? What even is "value created"? How much of it is an individual worker responsible for?
Letting the markets decide this through wages sidesteps these issues. Then, if we're unhappy with the outcomes (as you and I both are, I think), we can tax the companies, institute minimum wages, or force them to distribute stocks. Those are far better solutions
Ultimately this is where I land as well. It's definitely the easiest way to go. It's just not possible in this world without a broad attitude adjustment that says squeezing out an extra point or two of profit margin might be possible but isn't worth it given the overall cost to society. It seems belief in 'the greater good' never took root in some people or died out as they accumulated wealth.
No, that's their negotiated pay. Capitalism ensures that the majority of workers are paid somewhat under their worth. It's an intrinsic part of capitalism.
There is no argument with someone who is not informed enough to have an argument.
Nothing about capitalism necessitates paying people "under their worth". Claiming as much demonstrates a total ignorance of the factors involved in production, and takes a childish, simplistic view of value creation.
Seriously, just try to elaborate on the claim that you made. Walk us through your reasoning. It will immediately become apparent that you have no idea what you are talking about.
>Seriously, just try to elaborate on the claim that you made. Walk us through your reasoning. It will immediately become apparent that you have no idea what you are talking about.
The argument is that there is a reason he and his buddies are willing to give you stock instead of equivalent cash and that puts employees at a disadvantage. No econ 101 slop capitalism worship where all negotiations are perfectly fair bullshit changes that.
What someone is worth is DEPENDENT on negotiation. A house is only worth what 2 people negotiated on. So the negotiated price of labor IS what someone is worth. You don’t get to claim your house is worth 100M just because you feel like it. Someone else also has to agree too. Workers aren’t paid below their worth, they’re paid exactly their worth based on skill demand by other people.
Capitalism actually increases what people’s skills are worth by allowing negotiation to happen in the first place. Imagine the government capping your worth because it decided from top down to cap your skill through some sort of quota. That’s why Communism and whatever system you’re thinking of results in most people being poor.
Yes. Marx wrote that the workers should control the means of production so they can keep the full value of their labor instead of having some of it redistributed to people who already have lots of money (Capitalists).
One way for the workers to control the means of production is for them to own and run the companies they work for.
It's still capitalism if some of the profits go to non working shareholders, but as a Marxist it's certainly a step in the right direction!
> the workers should control the means of production
This proposal doesn't seem to be doing that. The workers wouldn't control anything. This just incentivizes companies to reward their employees with more stock.
It’s not exactly Marxist, but has some echoes of it. In a very brief nutshell, Marxism is the control of corporations by the workers rather than the capital class/investors. Giving workers stock or making corps pay more taxes doesn’t really give control to workers but it does transfer benefits of the production of companies either to the state or workers.
Even ignoring the larger definition of Marxism as a theory of social history, even if we just look at the type of economic system advocated, most Marxists think "workers owning the means of production" should be in a very abstract, societally collective sense
This is why many socialists react fairly badly to market socialism/cooperative capitalism
Correct me if im thinking incorrectly about this, but wasnt this sorta the idea when unions had their golden era and corporate tax rates were high? Maybe not stock but, companies reinvested in their workers with pensions and sometimes reinvested in R&D and something about Henry Ford saying his own workers should be able to afford the cars they're building. Idk. I feel like used too loosely and Marxism could be conflated with just any working class empowerment no?
Nah, Marxism is specific about retooling the economic system. That’s just a more benevolent form of capitalism. Ford realized he needed more demand for his cheap (relatively cheap) cars that he was pumping out so he needed a middle/upper middle class to buy them and his workforce was more motivated by getting paid more than anywhere else.
ETA: the unions were initially a response by workers to counter capital’s power and the golden era was after WW2 when workers were scarce, the economy was booming, and everything got reinvested back into workers/r&d or it went to taxes. Then the tax rate got cut and the incentives changed massively for companies.
The stocks would be internalized as compensation and result in a lower salary. Most people would sell the stocks at first opportunity because they need the cash.
I think there might be some fruit to the idea that we need to try and make more people capitalists and that would make more people better off in capitalism. But we need a more detailed plan.
Companies collect tax ID’s from their workers (social security numbers or the equivalent). If any of those tax IDs are also used to file for public benefits, the cost of those benefits should be assessed to the employer as taxes, perhaps with a graduated penalty as well. Pay living wages and healthcare or have the equivalent extracted as tax. Businesses that can’t survive without taxpayer subsidies can close.
Stock compensation sounds great in theory because people base it on the belief that stocks always go up, but it’s a poor idea for most employees to be heavily invested in their own company.
If you’re middle class or lower, you don’t want your paycheck to be dependent on how well the company is doing. You don’t want a bad quarterly earnings report to mean that the kids don’t get Christmas presents or you can’t take the annual vacation.You want a steady income stream that can be used as the basis for a budget, and that stays the same even if the company is losing money.
You also have the added risk of Enron-type situations. You get laid off in conjunction with all your savings in stock taking a huge hit.
Conventional wisdom is typically to liquidate company owned positions as soon as financially feasible to defray risk.
They are orthogonal concerns though. You can certainly sell your stock ASAP to avoid risk / reverse DCA kinda thing but it’s still nice knowing you will be compensated more if the company does well. In theory your base pay would still provide for you in downturns.
It’s heavily predicated on your base pay. For upper-middle class and above, I think that holds since base pay is high enough to get you buy if the company is doing poorly.
For middle class, I feel like additional base compensation would be more valued and help retain better talent than stock compensation.
the value of your cash doesn't go down when your company runs into financial trouble.
to put it another way, when you work for a company, you have invested your human capital in that company. if you also invest your financial capital in that company through holding their stock, not only do you lack diversification in your stock portfolio, but also in the broader picture which includes your human capital. tl;dr diversification good, idiosyncratic risk bad.
Agree. Cuban's idea is really just a tech-bro gimmick. It works in Silicon Valley where employees are well compensated with base pay and can afford to gamble a bit with stock options. But most Americans just need a steady paycheck and a retirement plan. The retirement plan should not be based on the company stock simply due to diversification.
If a company has money to give employees stock, it has money to simply pay them more. Let the employee decide what to do with that money.
I also see the idea a lot for leftists. I think the base idea of “workers owning the company” sounds great, but the reality of that meaning their wellbeing is even more tied to company performance is not.
I agree with you that it really should just be incentivizing higher pay.
Owning the means of production is not the same as workers owning the company. Silicon Valley companies where stock is employee compensation are not leftist. They are, in fact, more often than not, ultra-capitalist. The workers are still alienated from their labor.
the “right” way to do this is a co-op structure or profit sharing.
So then hand out shares when things are going well? This does not seem like a good argument against this idea. Dividends work the same way: when times are rough, dividends get reduced or cancelled, happens all the time.
It’s not about using shares. The core issue is what happens with those shares down the line.
Ownership of stock is inherently a risk. You’re doubling up on that risk by tying your net worth and income to the exact same source.
Look at the people that got wrecked by Enron as an example. In the same day they learned their ownership was worthless and that they no longer had a job.
Sure, but that should be the exception to the rule. Most big enough companies do okay, in general indexes go up, income should not be exchanged for shares, rather those should be additional.
Income enjoyed is income enjoyed, just like usual. Companies that don’t do general employee SBC also can go tits up, that’s a given constant, not a good argument to not do this.
Also if you have shares, and they’re publicly tradeable, employees can decide if they want to sell them or keep them.
If they don’t have the shares, they can’t.
To me this is like saying: if employees get a car and drive they can have accidents, therefore it’s better no one drives but the board and investors. What?
You’re right, indexes go up pretty reliably. There’s a significant amount of noise outside of those indexes though.
The argument also isn’t about the company being more or less likely to go “tits up.” It’s about the distribution of risk if tit does. Obviously both companies that do and don’t engage in stock-based comp can fail. The issue is that ownership of company stock concentrates risk in a single company. So if that company fails, you’re exposed to additional risk as your stocks crash and you get laid off.
You’re also looking at this in the vacuum of base compensation staying static, and they just get additional stock compensation. So yeah, that’s obviously better for employees.
For an accurate comparison though, you need to determine whether additional compensation should be given in cash or stock. And in that case cash is significantly better for employees.
There's also a business finance reason why it's not the best solution. If your employees and managers all have a major chunk of their savings tied into the performance of the company, then there's less incentive to take risk. That sounds good until you realize that many large companies already avoid innovative ideas in favor of very "safe" options despite their being a demand for the innovation.
That problem would just get worse.
Better solution is to just pay higher wages to employees and frame it as an investment in the company rather than a cost. Better pay generally leads to better performing employees and lower turnover.
Let’s deviate a bit from Mark Cuban’s plan. What if the choice was btwn higher taxes on the shareholders or giving shares to the employees as a whole (eg employee representation on the board)?
I’ve been curious how different levels of employee representation/ownership would affect business decisions.
I like that a lot better. Essentially tie X% of ownership, earnings, and dividends to employees as a whole vs distributing shares to individual employees.
What we need is a solid floor that no worker can fall through. What the oligarchs and plutocrats want is suffering poverty to help keep workers in check. Plutocratic government will never provide a solid floor to anyone except those who benefit from it.
Cuban probably thinks of himself as one of the good ones, but he's just selling smoke and gas light.
The whole "stock" and "perpetual growth" thing is completely unsustainable. It's based on the idea of perpetual growth.
They're resorting to financial devices to generate money that doesn't actually exist. Much of it is just based on credit, either directly or indirectly.
I never knew Mark Cuban of Shark Tank actually openly agrees with others in corporate business, Nvidia and politics, Bernie Sanders warning us about wealth inequality and Cuban suggests a policy and business practice featuring sensible ideas to take a crack at stabilizing wealth inequality. It's about time.
What an employee is worth is hard to say. Some can point to income they personally made for the company, like salesmen, others are parta of large teams. Still others keep the company running but dont provide any income. Like an accountant.
Distributing shares to the employees to give workers control over the means if production to a limited extent sounds progressive.
> What an employee is worth is hard to say. Some can point to income they personally made for the company, like salesmen, others are parta of large teams. Still others keep the company running but dont provide any income. Like an accountant.
What is worth anyway? Nothing but a lie agreed upon?
I'm not the billionaire trying to solve inequality. I don't have an algorithm for defining true worth of labor. But I do know that this suggestion won't work.
Certainly there are risks, but to blatantly claim it won't work without any research or critical thought beyond "This must mean he doesn't pay his employees enough!" is... a silly conclusion to draw.
In a worker co-op, the employees own the business via shares. If everyone gets equal share, then everyone has equal say.
A corporate legal structure built on this principle is called market socialism.
It's highly progressive and, depending on exactly what problem you're talking about, it probably is a better solution than the current one.
I'm simplifying a bit, but depending on implementation it can, in fact, solve quite a lot of problems and help bring inequality down.
But, go ahead, champ. Let everyone know why decades and decades of economic and political theory is wrong, why you're right, and why we should let perfection be the enemy of better.
Short sighted and you're making a reach when an entrepreneur, talking about all of society and the damn country, makes a claim that we need to do thing. He isn't saying "I must do this to make my business more attractive," and it says nothing about the wages he pays his employees.
However good an idea it might be, it has essentially no chance of happening within the next 25 years.
If all employees are given stock, all that will happen is that a new industry of grifters will spring up to find ways to part them from their holdings.
The mercenary classes have a stranglehold on US society, and they won't let it go voluntarily. The civil war is effectively over, with most people not even realizing that they've already lost.
We had this till about 24 years ago. It was REALLY nice then.
Then Congress made changes that punishes companies that gave stock to all employees. So companies stopped giving them to all and just gave them to executives.
I made far more on stock options from '95 to '02 than I did on salary. (Silicon Valley)
Silicon Valley still compensates employees with equity.
The mechanism shifted from options to RSU for tax reasons, but there are still plenty of tech companies giving generous stock compensation to employees.
I had it happen with my previous employer. Each employee was granted stock options the longer they were with the company. I was with them for about 10 years before moving into a new environment.
Granted though, this is definitely not every employer out there by a long shot.
Not only that, but I 100% guarantee you that corporations would find ways to abuse the policy.
Like, for instance, keeping your total compensation $ the same but making ESOP 50% of your income- as options that vest after three years.
Yesterday, you made $100k. Tomorrow, you make $50k plus stock options with a discount that makes the current strike price on all options add up to the remaining $50k. But since you've just basically taken a 50% pay cut, you can't afford to purchase the options and wait three years (during which the strike price could go down). So you just use the money you're left with for survival.
That's probably a crappy example. Sadly, there are people with multiple PhDs in Employee Screwing who will quite certainly come up with something equally evil and much more plausible.
stocks with voting rights as a shareholder, right cuban. awww, you mean stocks with no rights. so they cant vote out the ceo or the board CEO or have any say in how the company is run!
I don’t care how companies invest in the people in America. But what is clear and has been for multiple decades. Is that businesses believe they should be allowed the privilege of operating on our soil without paying back to the society in which they take from. This cannot be the case, corporate welfare must be resolved before we can seriously tackle citizens welfare in this country.
The better economic policy is banning stock buybacks, giving preferential tax treatment and deferred treatment to reinvesting in companies, giving tax treatment to tools that complement labor but are not labor displacing, and equalizing capital gains with ordinary income. And, most importantly, removing carried interest entirely from the tax code.
Workers need higher wages. Let them use those higher wages to invest in broad-based index funds.
So on the face of it, it sounds noble. But what about all the workers not at a mid to large size corp? It could create a "worker benefit" monopoly where everyone wants to go work for corps that are profit sharing instead of smaller ish businesses. Idk, just thinking out loud here. Taxing them and benefiting everyone seems better.
I think the top 4 biggest employers in my county all operate as non-profits. If this plan was implemented I could imagine a mass exodus from an area that is already struggling.
Democrats should be campaigning that capitalism is by far the best system and is in jeopardy because of unfettered greed. People and communities over shareholder value and third second homes.
I’m personally of the opinion that when a private actor uses their own money to provide welfare in a way that makes it so the government doesn’t have to also spend the money to provide that exact amount of welfare, the private actor should get a tax deduction. So I’m definitely for this.
With lower employment levels, less employees would receive stock under option 2 and the laid off masses would receive nothing. The only option is higher taxes for the ultra wealthy.
Companies will find every way under the sun to try and reduce the value of the stock they give their employees. We’re seeing that with laid off tech workers now.
Putting more money in my pocket would make the difference, not shares in a company
"Companies will find every way under the sun to try and reduce the value of the stock they give employees" is the most ignorant and misguided comment I've read on Reddit in a moment.
Please don't listen to this person, both company stock and higher paychecks are worth pursuing.
The vast majority of wealth is from equity though. There literally isn’t enough cash to create the pay increases you’re thinking of.
For private companies the closest thing would be profit sharing. Though, you can’t be mad when the company you’re at doesn’t turn a profit one quarter, which happens.
I get it when a company does well, but when a company does poorly the paycheck is worth substantially more.
But I don’t understand “There literally isn’t enough cash to create the pay increases.” Like, the massive companies wouldn’t be able to pay the proposed higher taxes with SBCs. If they don’t have the money for pay increases, where would they get the money for taxes? And if they have the money for tax increases, wouldn’t it make more sense to encourage them to pay their employees more?
If the company is doing poorly, how are they going to pay your paycheck? Have you ever been at a company that physically ran out of cash? I have. You don’t get paid.
Have you ever been at a publicly traded company that's posting quarterly profits but the stock price still goes lower because the value is based on speculation rather than health of the company? I have.
I don't necessarily think SBC is the worst thing in the world. But the stocks I've been given by the company have just lost value. The paycheck is worth considerably more to me, and given the choice I would take that over SBC 99% of the time. At least then I can take the paycheck and invest in ETFs or something more likely to offer a steady return.
This is why many people don’t get ahead. They don’t forgo the bonus in return for long-term benefits of ownership.
Nearly every founder of a business has done this.
This is missing the point. People literally can’t afford to place long term benefits ahead of short term needs unless those short term needs are well covered.
Looks interesting until you look at the details. Should McDonald's CEO be paid much less than an investment bank CEO? What about contract CEOs services as company services: the CEO makes almost no salary, but his company, of which he is the CEO, charges sizeable fees for his services..
Yeah. The problem in my view is that corporations are rent seeking. It's great that OpenAI employees get a piece of the pie. But the average American doesn't need more AI. We need houses and roads and schools and clean water.
We don't need stock options, we need companies market values to be tied to the economic trade offs that society makes.
I think labour expense should be proportionate to earnings. That is to say, if your labour expense doesn’t meet a certain threshold amount then there are tax consequences as a result.
Is that what they call a hobson's choice. It really doesn't sound like much of a choice to me. Not many people would choose higher taxes over getting free stock.
The article's math needs a little work. In q2 2016 the bottom 50% had 1.02T and the top .1 had 10.75T. In 2026, it was 4.27T at the 50% mark (4.27x) and 25.07T at the top (2.33x). So the data show the rate of increase at the top is significantly slower than the bottom - which is a good thing - but the article somehow thinks that's bad.
Have one tax bracket for companies that pay middle class wages and have one tax bracket for companies that pay other wages.
Figure out what the number is that creates a middle class lifestyle ( two parents, one can stay home with the kids the other can work, they can afford a home, they can afford one to two cars, they can afford one to two vacations a year even if it's in the backseat of a station wagon, they can afford to send their kids to college, they can afford a modest retirement) and give massive tax breaks the company's paying people to live a Standard American Middle Class Life.
And tax the shit out of everyone else because what the fuck are you doing this is America.
We do not maximize for CEO wealth we maximize for the wealth of the entire corporation and America is not in need of some socialist resolution it is in need of a restoration of the promise that came out of The New Deal.
We need to return to liberalism.
And we desperately need a tax policy that works to maximize the middle class rather than billionaire wealth and for the last 30 years we've had a tax policy that maximizes billionaire wealth rather than the wealth of the middle class.
Talk is cheap. This is a guy who takes credit for inventing the idea of streaming, when he was not even the founder of the streaming business he made his billions with.
Billionaire directed national economic and legal policies have for decades built up income inequality and corporate profiteering. Giving average corporate workers skin in a rigged game is a poor approach imo.
Tax revenue from corporations needs to be increased (#1), and income & wealth inequality needs to be decreased. A plan for that would be something to see in the Shark Tank.
>"But the famed investor has now taken the suggestion a step further: If founders and CEOs don't seek to share the wealth generated by their companies with their employees, they should be forced to give back to society by paying higher corporate taxes."
>Compared to historical trends and other advanced economies, corporate tax revenues in the United States are low. With the national debt rising unsustainably, increasing corporate tax revenue is one way to reduce the structural imbalance between spending and revenues. Below are charts that illustrate key trends and insights about the U.S. corporate income tax system, examining reasons for the downward trend in revenue generation.
Fyi, spoke to my mortgage company, they would prefer that I paid them in U. S Dollars and didn't seem to have any interest in taking my employers stock as payment. Darn. BTW, My boss in the back room printing up a whole bunch more shares so we can use thme to pay our taxes.
I’ll pass on the stock tbh. I’ve never once worked at an even halfway competently run company. Just make these idiots pay their fair share of taxes and that’d be great.
Both of those options mean that your money is taken away from you unwillingly. Just give full money to the people and let them decide what to do with it.
I always thought you could have a tax structure set up where if your executives are making more than X times the amount of an average employee salary, they have to pay higher taxes. Works both ways too because they can avoid the taxes by increasing the average employee salary as well, etc.
Or we could just raise taxes on the rich and not have stupid schemes. This doesn’t pass a basic sniff test of say, anybody who isn’t employed by a public ally traded company wouldn’t benefit from this.
Just pay for our heath care. All of it. You keep the rest of the money, we get healthy, you have loyal employees and a robust pool of healthy people to take the jobs. We can reduce the birth rate and then maintain
People have to take care of themselves health wise buddy. Healthcare means squat if Billy Bob won’t stop eating Chicken fried steaks and drinking a 30 pack every weekend.
Just stop taxing income and tax wealth instead. All tax is a way to redistribute wealth anyway so why not just aim directly at the wealth?
Base the rate on what the federal budget will be. If excess/shortfall is collected lower/raise the rate the next year. Leave ss tax and the program in place - maybe remove the earnings cap. States and cities could still raise funds however they do now. Provide an exemption for primary residence equal to the median home price for the county it is in. There are some other situations where things would need to be sorted - none of which are insurmountable.
What this would do is make it so that those that have no wealth would pay no tax regardless of income. Those with a lot of wealth would pay the most tax - regardless of income.
I have never heard a better way regardless of possible problems.
>Which could use the money for investment in their business.
No. Businesses would have the same incentive to immediately return capital to their owners for consumption, since otherwise that capital would be taxed if invested.
If wealth were to be taxed instead of income - the tax rate would only need to be around 4%. The vast majority of people would be better off. In the event you are someone that has accumulated a huge amount of wealth it would mean a lot more tax for you. Same for a business. Accumulated wealth is the target of the tax. Thats the point - it addresses wealth inequality vs what we do now which basically does the opposite.
You are making the mistake of thinking of wealth as gold in a vault. Your tax would destroy actual wealth—factories, infrastructure, machines—that make us all fabulously wealthy compared to any time in history.
I don’t see wealth as gold in a vault at all. What I see is a very small percentage of people that control an increasing percentage of all wealth. Our current tax system encourages this and places the burden of paying for most of our society on an ever dwindling middle class. Making the people and companies that have gotten the most wealth from our society pay the most for our society won’t destroy wealth at all - just the accumulation of it into fewer hands.
>Our current tax system encourages this and places the burden of paying for most of our society on an ever dwindling middle class.
This just isn't true. The top 1.5% pay 50% of income taxes (more than their share of income). They also pay the lion's share of corporate taxes (if you attribute them away from companies to the real parties in interest) and capital gains taxes.
If you look at overall tax burden (every form of tax, including regressive and flat taxes), the top 1% pay 23.9% of all taxes on 20.1% of consumption.
>just the accumulation of it into fewer hands.
Why would a small business owner, or anyone else, buy a machine to make their small business more productive if that machine was going to be taxed at 7% per year?
It wouldn’t though. Unless you are super wealthy or have a huge savings or investment portfolio it would still be less tax than income tax. People would still save and invest and most would have more ability to do so.
If I knew the government would take 6% of the value of all my assets at the end of the year, why would I ever invest in productive assets? Much better to spend everything and pay 0 tax.
If you earned 100000 a year and were able to save 10000 and had to pay tax on that at 4% you would pay $400. Currently if you earn 100000 and pay income tax on it you would pay between 13 and 17 thousand. This would benefit the vast majority of people. It would allow more people to save or simply afford to live - all while creating huge amounts of economic activity.
Ok maybe not a perfect analogy but, It’s all on paper until it becomes realized income or a realized gain. You’re taxiing a hypothetical, almost like with the presumption of guilt instead of innocence. convicting on what hypothetical (wealth) instead of the facts (income). I think a better solution is to incentivize greater asset/equity transfer to the middle class, equity compensation, rent to own, savings/market accounts. Penalizing wealth creation is a horrendous idea with numerous unintended consequences
If it can be borrowed against or used as collateral it has real value. We tax houses. We tax cars. We tax land. Every year based on an assessed value. You are pretending that wealth is hypothetical. It is not. Taxing wealth is not penalizing wealth creation any more than taxing income is penalizing work. It’s just more effective at allowing more people to grow wealth.
If his wealth is less he pays less tax. No refunds. Do they sell stock to buy food? I have owned a business. I contribute nearly every day - real, tangible worthwhile projects that improve kids lives, help create community and save those communities money. I don’t support any politician - they are all crooks and I don’t believe we need them. I agree the tax code is too complicated. It’s been written to benefit the wealthy and help them stay that way at the expense of the working class. I disagree with a flat tax on income - you would ask a single parent earning the median income who owns nothing to pay 15 % of everything they have while asking a billionaire to pay nothing because they take all their money as stock?
I would personally prefer a less markety compensation solution. The speculative nature of stock values and the over-reliance on them as a source of compensation and leverage is just asking for more trouble in my opinion.
My own over-the-top, unhinged, wacky, radical solution is to just offer better public services. So the tax option I guess, though I kind of don't trust the national government with this one either.
But basically, if US citizens had access to universal basic health care, would employers have to offer it as an incentive? No they would not. Instantly that weight gets lifted off the books of businesses, and the employees still have access to care.
Of course, I also think we shouldn't be taxing companies based on per employee criteria anyway, that discourages hiring.
I haven't done thorough research on this, so there are details and issues undoubtedly, but maybe businesses should be taxed more similarly to property taxes. What is the assessed value of the business or what is the businesses market cap? That will determine its tax burden that year.
This would discourage reckless capital expansion and tighten expectations for ROI. And yes, it would put a damper on the AI build out, but frankly it probably needs it.
But lets shift the tax burden off of labor and compensation, and onto the businesses that are actually soaking up all the capital. It's called capitalism, right? Tax the capital.
I can't help but feel like it's actually a bit of a trap. Compensate us all with a pittance in stocks, so we're less likely to want to do things that curb the excesses of the stock market, so the people who are making a lot of money off the stock market can continue to make more money off stocks than most of us will ever see in our lives.
This is a terrible idea and doesn't solve fundamental problems in our economy. It simply dilutes the balance sheet with unpaid liabilities. Then it denies payment to employees in exchange for high risk assets? This is opposite of how an economy should work. Investment isn't the end all. What those invesments make to be consumed is.
This doesn't get at the huge piles of wealth already concentrated in private hands. Go after the oligarchs, AND prevent new oligarchs from ever getting excessively rich in the first place with taxes.
Yeah, this is why he isn't suggesting that we actually just pay people what they are worth. It has to be tied into this system where your corporate lords still have control over you.
Mark Cuban is so dumb he's trying to re-invent socialism. Mark, giving workers ownership stakes in their employer sounds a lot like laborers having ownership of the means of production.
I think having employees as stakeholders makes for a more efficient and bought in employee. I think ESOPs and equity grants to front line workers is a great incentive to reduce turnover of the people that are often the face of a business.
Workers owning the means of production seems like a good start. I’m sure there is some additional nuance to sort out - like they need to be voting shares.
Just make the corporate tax rate inversely proportional to the ratio of total CEO compensation to the average compensation of the bottom 10% of staff.
You want to pay the CEO 100x what the worker bees are making? Fine. Your company gets to pay the highest corporate tax rate. CEO pay is only 3x? It's the lowest rate for your company.
Pay taxes to a government to build bridges, roads, schools, pay teachers, firefighters, police, fund watchdogs and regulatory groups, fund the military, public healthcare…
Or give workers stocks that can devalue on a moments notice and will eventually devalue, that Congress can impose stiff taxes on on a moments notice, leaving the companies still not paying taxes to build schools, PDs, fire stations, etc. so then the plebs can then sell their stocks to afford the privatized version of all those services.
No thank you.
This just sounds like another BS fantasy to sell to the mob the maintenance of the capitalist aristocracy at the cost of a socialized world. It’s just another ploy not dissimilar to trickle down economics.
Funny how when Cuban was investing in and starting up companies, he wasnt handing out stock to all employees. I guess now that he made his money, he feels self rightious enough to lecture everyone else about how they should run their businesses in a way he never did. If he really cared about "income equality", perhaps he can explain why he charges up to $9,000 for courtside seats to see a 26-56 Dallas Mavericks game.
Stock is worthless without profit. You’re getting a stake in a nonprofit making it worth essentially zero. Unless you plan to take profit in the future…
I think it's a great idea. Doesn't have to be just stock though, could be annual profit-sharing bonuses. The amount of your company's profit that goes to bonuses could become a tax credit. Notice I said credit not deduction as anything you pay your employees would already be deducted from profit. A credit means a company can choose between paying $X in taxes or giving $X to non-executive employees. I'm sure we'd need some sort of limits and exceptions but I like the general idea.
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SeaEmployee787 | 13 hours ago
i dont have all the info, but in way back times. That was the deal, pay higher taxes or invest in your mfg output or your employees otherwise pay the tax to the government. Now the company would just invest all over the world, so that would not work for u.s workers. there was a time though.....
SpicyRice99 | 12 hours ago
Now it just goes into stock buybacks. Worth looking into baning those again
lolexecs | 11 hours ago
That's just the beginning of the problems. The system is still biased towards debt-based finance (as opposed to equity or internal cash flows).
https://www.mercatus.org/students/research/policy-briefs/role-interest-deduction-corporate-tax-code
>Using debt to finance investment under the pre-2018 tax code had an effective tax rate of negative 6 percent for C corporations.
Unsurprisingly, the TCJA didn't seem to rebalance financing modes all that well.
Fletch71011 | 10 hours ago
I'm not even super rich and my bank was willing to give me a 1.5 percent line of credit (JPMorgan Chase) for six figures. I maxed that out, made some money investing, and then paid it back.
I don't even know why they offered me something lower than inflation. They were literally giving me free money. I'm Private Client there but they were handing out free money.
LightningSunflower | 8 hours ago
Woahhhh how much do you have to have in an account to get offered that kind of a deal?!?
slfnflctd | 8 hours ago
When was this? No way it could've been recently.
Fletch71011 | 8 hours ago
2023! They eventually took it away. I had about a million invested with them and they gave me an unlimited 150k line of credit to do whatever I wanted with for just 1.5 percent annually. I would have maxed it out way more if they allowed me to.
Once I became disabled from a hit and run they took it away :(
slfnflctd | 8 hours ago
Aww. That was a rollercoaster. Hit and runs which cause injury make my blood boil. I've seen some shit.
Congrats on seeing the leverage opportunity and making the most of it, though, that's awesome! A little financial education goes a long way when the right deal shows up.
Obvious_Chapter2082 | 12 hours ago
Why? Companies will just pay dividends instead
Also, there’s something ironic about simultaneously wanting to ban buybacks and incentivize a company to give stock to employees. What a dilution frenzy
Mr60SPX | 12 hours ago
> Why? Companies will just pay dividends instead.
Thats kinda the point.
Obvious_Chapter2082 | 12 hours ago
Buybacks and dividends are mechanically identical. There should be no “point” to prefer one over the other
You can’t simultaneously be against a company distributing cash to investors and for a company distributing cash to investors
holbourn | 12 hours ago
Pretty sure dividends are taxed much differently. A buy back would increase the value of what you already own without trigger a tax payment
ElbowWavingOversight | 10 hours ago
Right, buybacks are essentially just like dividends but much more tax-efficient. It’s precisely why they’re so popular.
TheirSam | 10 hours ago
They're popular because the companies doing them also issue a ton of new shares constantly, and need to do buybacks to reverse their massive share dilution. They're not doing it to benefit shareholders' tax treatment.
Obvious_Chapter2082 | 12 hours ago
A buyback is a taxable sale, the shareholder owes capital gains tax
max_vette | 12 hours ago
A buyback is only a taxable sale if you sell, otherwise it is an unrealized gain as the company uses cash or debt to inflate the stock price
A dividend is income and taxed as such regardless of what you do with it.
Careless_Wishter | 10 hours ago
Warren Buffett prefers stock buybacks to dividends for just this reason. If a company buys back stock, it returns value to the investor, but the tax on the gain is deferred so the investor can choose the optimal time to take the hit on the taxable sale (i.e. capital gains).
Since dividends come on a regular schedule, the investor has to pay taxes regardless of the situation.
For someone working, a stock buyback is much better because they can defer the tax until they're done working, lowering their tax rate before they take the capital gain.
FWIW
Obvious_Chapter2082 | 12 hours ago
>A buyback is only a taxable sale if you sell
…right, just like how a dividend is only taxable if you’re a shareholder that receives it. The other shareholders are irrelevant
Neither a buyback nor a dividend forces the stock price upward
7818 | 11 hours ago
>Neither a buyback nor a dividend forces the stock price upward
Excuse me, what? You are saying that reducing the supply of available stock doesn't cause the price to rise? Demand remaining the same with reduced supply is a textbook example of causing price to increase. While true it's not a guarantee, it is an observed effect of stock buybacks that it happens in the overwhelming majority of instances in which it occurs.
Unless suddenly you have decided that reduced supply somehow doesn't impact equilibrium price somehow?
ReturnOfBigChungus | 11 hours ago
A buyback does not effect a shareholder directly, the point is to raise the stock price by restricting supply. If a shareholder then sells, they pay tax. For long term gains, the tax rate is the same as dividends. There is no economic difference except that buybacks allow shareholders to differ the taxable event, whereas dividends force a taxable event. The difference is $100 share with a $2 taxable dividend, or a $102 dollar share which might or might not be sold.
anarchaavery | 8 hours ago
Buybacks decrease cash on hand, causing them to have neutral effects on stock prices.
alexcarchiar | 12 hours ago
We both have a stock in a company. If the company pays dividend of 1 euro, we both pay capital gains tax on a 1 euro dividend. In total we pay the tax on 2 euros.
Let us now say that the stocks are valued at 2 euros. The price we both bougjt was 1 euroz but after the buyback was announced the price is 3. You sell the stock to the company buy back, I don't. You pay the capital gains tax on 2 euros, I don't pay taxes. The state still gets the same amount of money.
While this is a simplification, it is more or less accurate.
Bouboupiste | 11 hours ago
They big problem is that any argument in which they’re the same ignores accounting and tax obligations.
Ignoring accounting and taxation while talking about how companies chose to distribute money is like assuming perfect information in a market or assuming the solid is undeformable and air resistance is negligible, it’s very convenient to simplify things but it’s not an accurate depiction of the real world.
Obvious_Chapter2082 | 11 hours ago
When I talk about these methods being identical, I’m talking about their accounting treatment
If we discuss taxes, then buybacks have a higher tax burden than dividends, at least for US shareholders
ReturnOfBigChungus | 11 hours ago
No they don't? Tax rate is the same for LTCG as dividends, and no specific shareholder is obligated to sell in a buyback. Effective tax rate is identical in both scenarios (excluding STCGs), dividends just force a taxable event.
Obvious_Chapter2082 | 10 hours ago
Buybacks face an entity-level tax, whereas dividends don’t
Mr60SPX | 12 hours ago
>Buybacks and dividends are mechanically identical. There should be no “point” to prefer one over the other
Let’s test that
Mechanically the same:
Both move cash off the balance sheet and reduce net worth by the same dollar amount
Both reduce the cash cushion / raise leverage identically for a given dollar amount
Under zero taxes, no information asymmetry, and buybacks done at fair value, both leave total shareholder wealth unchanged
Mechanically different:
Who gets paid — dividends pay every holder pro-rata. buybacks pay only the holders who choose to sell
Tax — dividends are a taxable event for 100% of holders immediately. buybacks let holders defer tax indefinitely and pay only on the gain
RIP_Soulja_Slim | 10 hours ago
Very much suggest you learn basic financial literacy before hopping on reddit and trying to comment on stuff like this.
>Buybacks and dividends are mechanically identical.
They are, objectively, not. One is a distribution of cash to every shareholder, one is a purchase of outstanding shares at a given price.
I think, what you maybe meant to say, was that buybacks and dividends are identical in their tax realization (Based on your follow up responses below). But this is obviously also not true.
From the tax policy center: https://taxpolicycenter.org/sites/default/files/publication/165800/what_is_the_us_tax_advantage_of_stock_buybacks_over_dividends.pdf
>US taxable shareholders strongly prefer buybacks from a US tax perspective, as they tend to reduce their tax liability by 9.3 percentage points, on average. US nontaxable shareholders are indifferent between dividends and buybacks, and foreign shareholders strongly prefer buybacks, which reduces their US tax liability by 14.5 percentage points.
>The average difference in US taxes between dividends and buybacks across all shareholders is 7.2 cents for $1 distributed for 2022. 27 For just US taxable shareholders, the difference is 2.6 cents (9.3 cents times 28 percent), and for foreign shareholders the difference is 4.6 cents (14.5 cents times 32 percent). This implies that roughly 36 percent of the dividend-buyback tax differential can be attributed to US taxable shareholders, while 64 percent of the differences can be attributed to foreign shareholders.
So obviously, they're not identical either mechanically or from a tax perspective.
>You can’t simultaneously be against a company distributing cash to investors and for a company distributing cash to investors
The Wharton Budget model estimates that an excise tax of ~4.6% on stock repurchases would be the minimum necessary to create a level preference field from a tax standpoint, and doing so would net the US government an additional 260B across a decade, or 26B annually. The Primary deficit is around 800B, so about a 3.25% reduction in annualized primary deficits from simply collecting all of the tax you would on dividends from buyback activity as well.
Be serious my guy.
https://budgetmodel.wharton.upenn.edu/p/2023-03-09-the-excise-tax-on-stock-repurchases/
Radical_Coyote | 12 hours ago
Dividends are taxable income. Unrealized asset appreciation caused by buybacks is not taxable income. Hope this helps
Obvious_Chapter2082 | 12 hours ago
You’re assuming unrealized asset appreciation from a buyback, but there’s no reason to assume that
A stock buyback generates taxable income to the selling shareholders, and the tax they pay is at the same rates as qualified dividends
Radical_Coyote | 12 hours ago
Bro rly on an economics subreddit and doesn’t realize share price = market cap / # shares. 💀 Share buyback —> fewer shares —> prices rises —> unrealized appreciation for stockholders. This is an accounting identity
Obvious_Chapter2082 | 11 hours ago
What a hilarious formula identity you set up. Market cap = share price x outstanding shares. When shares decline, this means that market cap declines, not that the share price rises to keep market cap the same
Stock buybacks are contra-equity. They reduce both equity and assets of the company, so that value per remaining share is unchanged
RIP_Soulja_Slim | 9 hours ago
> Stock buybacks are contra-equity. They reduce both equity and assets of the company,
Yes
>so that value per remaining share is unchanged
No.
Shares are valued based on two primary pieces of information - the first is their claim to the net assets represented by that sliver of ownership. You are correct that this figure does not shift.
The second however is their claim to the company's future earnings, discounted back to a present value. That value absolutely changes, as there are fewer shares of stock now laying claim to the same stream of earnings.
Therefore, mathematically speaking, buybacks necessarily increase the per share value of a given equity. To sit there and argue otherwise shows a glaring lack of basic financial literacy, which is beyond hilarious given your attitude in this comment lol.
Fundamentally, your ignorance here is driven by a gap in understanding around how a given equity is valued. At it's core one will perform various financial analysis to determine how much a company is worth, that is their market cap. The share price is then derived by dividing the market cap by the number of outstanding shares. Shifts in outstanding shares that otherwise do not impact market cap will necessarily impact the value of an individual share.
Gamer_Grease | 11 hours ago
Also with a side of asset price inflation, which is an economic plague on the world.
Gamer_Grease | 11 hours ago
If they were mechanically identical, then we wouldn’t have separate names and taxation schemes for them. Ridiculous.
kingkeelay | 8 hours ago
I love semantics too, but I’m going to sit this out.
Imaginary_Zone_4319 | 12 hours ago
Right? Like, companies do buybacks to AVOID the dilution that comes with employee stock programs
Gamer_Grease | 12 hours ago
Dividends are taxed appropriately and do not inflate share price. They’re much, MUCH less antisocial as a financial strategy than buybacks.
Obvious_Chapter2082 | 12 hours ago
Dividends and buybacks are taxed identically for US shareholders. Buybacks also have an entity-level tax that dividends don’t. Foreign investors do technically pay more tax on dividends, but it’s not super common
>and do not inflate share price
Dividends and buybacks have the same impact on share price
Gamer_Grease | 11 hours ago
No they are not, and I know exactly the hideous shape you’re going to have to contort yourself into to argue that they are taxed the same, so don’t bother. There’s objectively a tax differential between buybacks and dividends, and that’s why buybacks are preferred. You’d also have to argue that tax planning flat out does not exist in order to pretend that they are the same. Save your dignity.
Buybacks raise (read: inflate) share price and dividends decrease it. This is an observable phenomenon.
GhostofBeowulf | 11 hours ago
So I am not super well versed in the legal or tax side of finance, but is this basically a result of reduction in RE/cash in the accounting equation?
I always thought common stock price was purely supply and demand. I am not arguing, just seeking clarification.
Gamer_Grease | 11 hours ago
Dividends generally reduce share price according to how much cash leaves the issuing firm, due to that firm no longer having that cash as an asset.
Stock price is mostly supply and demand, yes. But stock price does fall with dividend issuance. It also usually slightly rises before a dividend is issued as investors crowd in.
GhostofBeowulf | 10 hours ago
Okay 10/4 that's pretty much what I thought. A=L+OE
How does this change if they issue stock dividend versus cash dividend? I understand what it does to the accounting equation, but I mean specifically tax liabilities and share price changes.
ChornWork2 | 11 hours ago
Buybacks are preferred b/c they're targeted. Some investors want to hold their position and not deal with dividend income (either the taxable event or then just having to do the reinvesting).
Buybacks let shareholders self-select who takes some money off the plate and who stays in. And that is the theory on share price increase from buybacks, you're taking out your least bullish shareholders and b/c more discretionary on timing they signal to market that mgmt thinks stock price is undervalued. As others have pointed out, from pure valuation accounting there should be no share price effect otherwise.
Honestly, the hate on buybacks is so misguided. If the topic is what companies do when republicans give tax break. Yes, the data on buybacks shows that that money is primarily flowing back to investors not 'trickling down'. But if you banned buybacks, that same money would go to investors except as dividends.
Buybacks are not the problem, but they get talked about alongside real issues with republican BS claims around 'trickle-down' economics.
Go look at more progressive liberal countries, they don't ban buybacks (does anywhere?).
Gamer_Grease | 10 hours ago
Those investors should be forced to reckon with their companies’ oversupply of cash and make decisions accordingly, rather than simply receiving more deferred compensation. Dividends avoid a lot of negative aspects of buybacks.
Dividends are taxed higher.
Other countries have totally different macroeconomic environments which make asset price inflation much less of a problem, to say the least. The USA stands in a particular place in history, where we are vulnerable to assets inflating out of control.
ChornWork2 | 10 hours ago
Dividends from a US operating corp to US holders who have held the shares for anything other than a short period of time are going to be qualified dividends. qualified dividends are taxed on parity with capital gains. Could there be some leakage from one versus the other? Sure, dunno, i'm not a tax guy. All sorts of classes of investors and tax planning. But again that simply is not the motivating factor as between the two as a general matter.
>Dividends avoid a lot of negative aspects of buybacks.
like what?
>Other countries have totally different macroeconomic environments which make asset price inflation much less of a problem, to say the least. The USA stands in a particular place in history, where we are vulnerable to assets inflating out of control.
first, buybacks are not a material driver of stock price change, so that's irrelevant. second, no clue how US is unique in that. asset bubbles, including within equities markets, is hardly unique to the US. look at the situation in korea right now for example.
Really getting the sense you have no idea what you're talking about on this topic.
Gamer_Grease | 10 hours ago
I do know. Dividends ultimately are taxed higher than buybacks once realized.
Buybacks inflate asset prices, while dividends do not. Buybacks artificially inflate executive performance while also bribing investors to look the other way. Dividends raise questions.
If buybacks were not a material driver of stock price change, they wouldn’t be done.
The USA is a net absorber of international capital, which has been a pretty hot topic for about a decade now. Our assets are broadly inflated due to persistent current account deficits and corresponding capital account surpluses. Korea and other nations like them are net exporters of capital. Totally different environment.
domuseid | 10 hours ago
Buybacks are essentially lighting cash on fire in 99.9% of circumstances from the perspective of the business.
There are very few reasons it would make economic sense to do that
awildstoryteller | 12 hours ago
Or, they may actually invest in their companies.
Obvious_Chapter2082 | 12 hours ago
Banning buybacks (or dividends) won’t impact the decision for a company to invest or not invest
awildstoryteller | 11 hours ago
I think that buybacks represent pressure to feed short term investors. Dividends represent pressure to feed long term investors.
A company with enough excess cash to do one or both should fundementally be encouraged through tax and other policies to invest in the growth of their business and/or the growth in their employees.
Dividends encourage long term holding of stocks, and combined with employee ownership incentives encourage long term employment with a company.
BroughtBagLunchSmart | 11 hours ago
Perfect, so let's ban them and see what happens.
Individual_Laugh1335 | 11 hours ago
Companies will stop compensating their employees with any form of equity otherwise they will dilute themselves to the bottom. It’s pretty clear you do not understand the function of stock buybacks.
PSUVB | 11 hours ago
Companies are investing at a record rate in 2026 and now people have totally reversed course and want to ban what they invest in and also want to complain that we are in a bubble and they need to stop investing so much.
awildstoryteller | 11 hours ago
>Companies are investing at a record rate in 2026
While this is technically true, it isn't really true in the way you are implying. Companies is the correct word, but the actual quantitative value of that plural is not a large number of companies, and the direction of investment is not in investing in the growth of their company but rather the reduction in headcount.
PSUVB | 10 hours ago
So what is the alternative? force companies to put money in unproductive assets? Europe has having fun with that with their auto industry
awildstoryteller | 10 hours ago
I think you need to think a bit broader and longer term when you think of alternatives.
A lot of my personal beliefs about economics are informed by the deep belief that once a certain percentage of the population is struggling, political instability is inevitable and the exact time and nature of that instability is nearly impossible to predict.
Paying people to dig ditches is the original make work program that our ancestors knew more than 4000 years ago was required to prevent political violence on a large scale, and it is a lot cheaper than the effects of that violence.
PSUVB | 10 hours ago
That works until it doesn't. Digging ditches is nice for awhile. Europe is going to learn this the hard way. You need to keep widening your productivity and production . Otherwise your tax base shrinks while benefits increase.
Suddenly in 10 years you look over at the capitalist hellscape of America and it has a much much larger tax base that can fund the benefits you once thought immense easily by just the nature of compounding growth. Suddenly your hole digging job doesn't look so nice anymore and the benefits- while the same as 10 years ago- look way worse comparatively.
Doing things that stagnate GDP/growth and the economy is the most dangerous thing you can do. But agree there is a balance here but I think its worth being careful because there is immense tradeoffs either way if you get it wrong.
awildstoryteller | 9 hours ago
>That works until it doesn't.
I totally agree. But it can work for a very long time, and governing is really the art of successfully kicking a can.
>You need to keep widening your productivity and production . Otherwise your tax base shrinks while benefits increase
Not to sound cheeky, by that only works until it doesn't too. More to the point, there is not really any reason a society can't approach the problem of preventing political instability through multiple strategies.
>Doing things that stagnate GDP/growth and the economy is the most dangerous thing you can do.
I don't think that is true at all. I think the most dangerous thing you can do is to try to purposefully accelerate political instability and violence.
SpicyRice99 | 12 hours ago
My point is to forgo stock compensation entirely and ban buybacks. This has effects on how the overall company is run, not just a simple compensation matter. Chasing stock price over the health of a company is not always good
WRB2 | 11 hours ago
Dividend or short-term cash. You want to make the employees be involved with ownership of the company.
JockoMayzon | 7 hours ago
Or, take the route of George Eastman of Eastman Kodak Company. George held that shareholders were due a dividend of 10% and anything over 10% would be split by the shareholders and the workers. It was the first profit sharing of the industrial age.
Individual_Laugh1335 | 11 hours ago
Average Redditor doesn’t understand the premise of stock buybacks and just think it’s inherently an evil thing.
-R3DF0X | 12 hours ago
For a company to buy back stock, it means there's a seller on the other side and that triggers a taxable event for the seller.
Whether or not capital gains should be taxed more highly is it's own debate, but I don't see the issue with buybacks.
Gamer_Grease | 11 hours ago
Because then all the other shareholders receive untaxed compensation in the form of inflation of the stock price. Even once they realize their gains, they typically pay several percentage points less in tax than they would have had they received dividends.
Inflation of the stock price has additional negative externalities. Asset price inflation in general is a problem, as it causes increasingly severe misallocation of capital. You see it any time you’re downtown and a lot of prime storefront space is inexplicably empty. You see it when you can’t buy a house off an old couple who can no longer even dream of being able to maintain the space they’ve got. You see it in how dividend yields have been dropping for decades because of how bloated the firms they come from have become. You see it in how insurance companies increasingly choose to abandon huge markets altogether, rather than claim responsibility for assets within them.
You also then have executives who are judged on stock price performance and compensated through stock price performance patting themselves on the back for paying themselves money. This is not good for firms, either.
There are good reasons for buybacks to exist, but they are WAY out of control and are largely a malign influence.
-R3DF0X | 11 hours ago
> Because then all the other shareholders receive untaxed compensation in the form of inflation of the stock price. Even once they realize their gains, they typically pay several percentage points less in tax than they would have had they received dividends.
If I'm a shareholder, a buyback is taking cash off the balance sheet that I am partially entitled to and paying it to someone who no longer wants to be shareholder in the company. I receive no untaxed compensation off of that event. A buyback also does not increase the share price by default, it raises earnings per share, but the multiple the market pays for those earnings is outside the companies control. Nike has had buybacks throughout the last few years and their stock continues to fall.
When compared to dividends though, sure, perhaps capital gains should be taxed more highly.
>Asset price inflation in general is a problem, as it causes increasingly severe misallocation of capital. You see it any time you’re downtown and a lot of prime storefront space is inexplicably empty. You see it when you can’t buy a house off an old couple who can no longer even dream of being able to maintain the space they’ve got. You see it in how dividend yields have been dropping for decades because of how bloated the firms they come from have become. You see it in how insurance companies increasingly choose to abandon huge markets altogether, rather than claim responsibility for assets within them.
I don't understand trying to conflate buybacks with asset price inflation, and many of those things have nothing to do with "asset price inflation". A storefront might be vacant because of local rent dynamics, zoning, etc.
How are dividend yields correlated to bloat? If a company pays a $3 per share annual dividend, and the stock price is $100, the yield is 3%. If the company invests money to open new stores, instead of raising the dividend yield, the company may soon trade at $200 per share, and still pay $3. The yield is 1.5% but no bloat occurred.
Gamer_Grease | 10 hours ago
It is a general rule that buybacks increase share price. Just because a company uses it to try to stop a backslide, and it’s not a silver bullet that completely halts the slide, doesn’t mean it doesn’t inflate share price. It does. This is not at all controversial. It wouldn’t be employed in such cases if it didn’t!
I don’t think we need to raise capital gains taxes. I don’t even think buybacks need a surcharge like they have since the IRA. I think they just need to be regulated mostly out of existence so that the better-supported structure of dividends can be properly used.
Buybacks inflate share price, asset price inflation is a social ill. That was the case I was trying to make to you. In the case of empty storefronts, what you’re seeing is an asset (real estate) that is so inflated that the returns it demands (rents) cannot keep up. That’s because the entities that pay rent typically dwell in the real-world economy of labor, goods, and services. Asset prices are increasingly divorced from that economy. Buybacks are a small part of this, but they contribute to asset price inflation.
-R3DF0X | 10 hours ago
It's not a general rule. All a buyback does is decrease the cash on the balance sheet and decrease the share count. That's all a company can control, as corporate actions do not create extra wealth out of thin air when they occur.
It's the same principle why buying a stock before a dividend is issued is not "free" money. If a company trades at $100 and issues a $2 per share dividend, you then have $98 worth of stock and $2 in cash.
ReturnOfBigChungus | 11 hours ago
> Even once they realize their gains, they typically pay several percentage points less in tax than they would have had they received dividends.
How do you figure that? Tax rates for dividends are identical to tax rates for long term capital gains.
RIP_Soulja_Slim | 10 hours ago
https://taxpolicycenter.org/sites/default/files/publication/165800/what_is_the_us_tax_advantage_of_stock_buybacks_over_dividends.pdf
Gamer_Grease | 10 hours ago
I’m citing these folks, but also just the fact that shareholders prefer buybacks, and they wouldn’t if they couldn’t get an advantage from them.
https://bipartisanpolicy.org/explainer/how-the-u-s-taxes-stock-buybacks-and-dividends/
Overtons_Window | 10 hours ago
You're assuming the seller is an individual investor. There are plenty of situations where the seller corporation is not creating a taxable event.
-R3DF0X | 9 hours ago
Other than it occurring in an IRA/401k, what situations would avoid a taxable event?
Overtons_Window | 9 hours ago
55% of all volume is high frequency trading. Those firms do not book individual sales as taxable events.
-R3DF0X | 9 hours ago
If an HFT firm sells a share to a company, that's still taxable.
It's part of their overall trading activity of which they pay ordinary business tax rates.
PhenomeNarc | 12 hours ago
You must work at a hedge fund...
vishbar | 12 hours ago
Why?
Rufio69696969 | 12 hours ago
We’re in an economics sub. Why should stock buybacks be banned?
Any_Sale2030 | 12 hours ago
They previously were banned until the 80s. Generally were considered to be stock manipulation.
SpicyRice99 | 12 hours ago
The theory goes that before buybacks, companies were incentivized to spend excess money in employee benefits and salaries. I found a decent video on this a while back, let me dig it up...
Gamer_Grease | 11 hours ago
And yet, they could still do dividends! They choose buybacks because their shareholders can evade taxes that way, while the firm also gets to inflate their own share prices.
MarkIsARedditAddict | 11 hours ago
Don't forget almost all executives have incentives tied to share price. Buybacks are a way of lining their own pockets because now their shares/options are more valuable
What we've learned from the last ~40 years is that if you give someone with an MBA a lever to pull to earn themselves money but destroy everything, they'll pull that lever until it breaks or the planet does.
Gamer_Grease | 11 hours ago
Absolutely. The C-suite can decide in a 5-minute phone call to automatically meet at least one major performance metric for their fiscal year, while also giving themselves a pay raise. And the kicker is that they bribe shareholders at exactly the same time by doing so, so shareholders have no reason to complain.
Rufio69696969 | 12 hours ago
Okay but unless you force them to pay more via legislation there’s no way to guarantee that employees would be paid more. It could easily just be dividends instead.
Gamer_Grease | 12 hours ago
Because it’s a tax evasion scheme that also distorts the market by inflating asset values. Pay a dividend or invest the money into products and services. Making the stuff that asset value is allegedly based on.
ezodochi | 12 hours ago
With how it's being utilized, sure, but buy backs can be utilized in ways that I believe are legitimate, such as to prevent dilution of value fron the issuing of new shares such as the vesting of stock options.
Companies like Meta are well known for reducing salary expenses via stock options, which means millions of shares are issued every year for worker compensation. You let those shares hit the market and evemtually they'll continue to dilute shareholder value causing investors to leave and so on and so forth. Why not just cash instead of stock options and then buy backs? Time value of money.
Big-Profit-1612 | 12 hours ago
My employer does it all: dividends, buybacks, pay employees with RSUs, and invest heavily. If they don't do buybacks, they need to issue more shares and that dilutes the share price and EPS.
Obvious_Chapter2082 | 12 hours ago
Tax evasion? Buybacks aren’t tax-deductible, they owe an excise tax at the corporate level, and shareholders owe income tax on them
Buybacks literally owe more tax than any other thing a corporation does with its money
Gamer_Grease | 11 hours ago
The excise tax is assessed at the time of the buyback, which is good (and only very recent, as of the IRA), but you’re obfuscating the fact that the shareholders only owe tax on the capital gains from buybacks once they realize them. That’s a tax evasion scheme. They should take their dividends and pay taxes on them, and see their objectively overpriced (thus the buyback) shares settle back down to a reasonable level.
Instead we have infinite share price inflation because every firm has decided their top priority should be doing shareholders’ taxes for them. The reason they do buybacks at all is because there’s a roughly 4-8% differential in taxation in favor of buybacks.
And all this when dividends are an available option.
Obvious_Chapter2082 | 11 hours ago
>once they receive them
The buyback causes them to receive them. A buyback is a company buying shares from selling shareholders. There’s no deferral here
You keep conflating a buyback with share price appreciation, which are completely independent of each other
Gamer_Grease | 11 hours ago
There is deferral for all current shareholders at the time of the buyback. Otherwise it would not even be close to a dividend equivalent.
Them being independent implies one does not beget the other, but of course you know that it does.
sailing_oceans | 12 hours ago
Paying a dividend and buying back stock both return money to owners.
A dividend is involuntary timing of taxation and while a buyback allows the ownership to actually choose.
We’re in economics sub but hyper political talking points like exceptionally ignorance of basic economics is common place here
Gamer_Grease | 12 hours ago
I’m aware we’re in an economics sub. “Involuntary timing of taxation” is usually just known as “taxation.” It’s not a special crime to have to pay taxes on getting paid. It IS a peculiar evasion of tax law to turn a taxable dividend into an untaxed and artificial increase in value of assets held.
Buybacks are a tax evasion scheme and there is already a perfectly acceptable alternative in the form of dividends, which are taxed higher and reduce share price appropriately.
artbystorms | 9 hours ago
Before stock buybacks were made legal in 1982 (thanks Reagan), a LOT more public companies paid dividends. Stock buybacks were more tax friendly than dividends because they are not taxed for owners until they are sold, whereas dividends are taxed as income. They also boost EPS artificially, which is a metric often used for CEO bonuses.
I agree that it is basically just a way to give tax advantages to shareholders. If they want to re-invest their dividends, then by all means, but they should be taxed on it.
Rufio69696969 | 12 hours ago
So what do you think are the positive outcomes of banning stock buybacks? They’re basically the same thing as dividends.
Gamer_Grease | 12 hours ago
Increased investment in the production of goods and services.
Rufio69696969 | 12 hours ago
And how do you guarantee the money used for stock buybacks goes into that? It could just as likely go to dividends
Gamer_Grease | 12 hours ago
That’s fine, because dividends are taxed appropriately and tend to reduce share price, rather than inflating it for the sake of the tax evasion of key shareholders.
Rufio69696969 | 12 hours ago
But stock buybacks are taxed. 1% excise tax
And if the shareholder ever reaps their gains it’s also taxed again. That shouldn’t be a reason
Gamer_Grease | 11 hours ago
Dividends are taxed the way they are for a reason. Buybacks are a scheme to both inflate share price and also cut taxes for shareholders by around 4-8%. Dividends are a perfectly appropriate method to deal with excess capital, without any of the antisocial aspects of buybacks.
dust4ngel | 11 hours ago
> Making the stuff that asset value is allegedly based on
the stuff the asset value is based on might be monopoly or quasi-monopoly, and without competition there is no reason to invest in products or services. but you can invest money into figuring out how to sell shittier products and services.
RIP_Soulja_Slim | 10 hours ago
This: https://taxpolicycenter.org/sites/default/files/publication/165800/what_is_the_us_tax_advantage_of_stock_buybacks_over_dividends.pdf
Then this: https://budgetmodel.wharton.upenn.edu/p/2023-03-09-the-excise-tax-on-stock-repurchases/
Individual_Laugh1335 | 11 hours ago
Nobody in here can give you a well thought out reason. Buybacks are essential for the model that the article is pushing for.
Individual_Laugh1335 | 11 hours ago
You realize stock buybacks are essential when you pay your employees in equity?
PSUVB | 11 hours ago
Stock buyback bans are the new ban loans to billionaires. It is purely emotion that sounds legit but has no bearing on reality or how things actually work.
Imaginary_Zone_4319 | 12 hours ago
Most stock buybacks are for companies to give them back to employees and avoid dilution.
LikesPez | 10 hours ago
Hear me out: But if I own the stock my company is buying back that’s a good thing for me and my fellow employees, who are also stock holders. Isn’t this why employees want vested stock or stock options?
SpicyRice99 | 10 hours ago
This is what Mark Cuban is proposing. The key is that employees have to paid a meaningful amount of stock and not just $100/yr worth, so legislation would need to cover that too
zhnki | 10 hours ago
You know that’s just another way of giving returns back to investors right? Nobody stopping you from buying that stock.
anarchaavery | 8 hours ago
If a company doesn't have a better use of cash on hand should it be forced to either hold the cash or invest it in ways it doesn't think will net a return? Stock buybacks just frees up the money to go elsewhere.
Open_Pollution_8038 | 12 hours ago
Well companies are building giant ass factories called data centers instead of buybacks and they’re getting bitched at for that also.
People are just envious of others.
Lemp_Triscuit11 | 12 hours ago
This is such disingenuous horseshit lol
"You won't let them pay themselves extra, and you won't let them build whatever the fuck they want next to your homes and ask that you help pay for it so I truly don't know what you want them to do"
Open_Pollution_8038 | 12 hours ago
lol it’s not Microsoft’s job to pay you more than your skills can get on the public market
They’re not paying themselves extra, it’s their fucking money to start with that’s capitalism baby
Lemp_Triscuit11 | 12 hours ago
I hope they let you take your collar off a day a week as a treat
Open_Pollution_8038 | 12 hours ago
I own the stocks so I’ll just continue to make money while you whine about muh community, that shit is getting built enjoy getting steamrolled
asminaut | 12 hours ago
Yikes
Open_Pollution_8038 | 12 hours ago
It’s working out for me homie, go ahead and spend all day on the street corner in your 1 intersection town with your little signs they’ll still get built
asminaut | 12 hours ago
Comment just screams "insecure"
Lemp_Triscuit11 | 12 hours ago
Chewing their leftovers and licking their toes lol
Open_Pollution_8038 | 12 hours ago
Better than eating my own poop to show them whose boss
Lemp_Triscuit11 | 12 hours ago
I have a feeling I probably have more of that thing you value most than you do. I just have friends also, so it's not that exciting to me
SpicyRice99 | 12 hours ago
Right, let's deregulate everything and bring back child laborers in factories. The free market needs to be regulated if you don't want things to look like shit for the bottom 80%
Open_Pollution_8038 | 12 hours ago
lol imagine being an adult in 2026 America and identifying with child labor in the 1910’s
Far gone bruh
SpicyRice99 | 10 hours ago
Yes, be we regulated the market and banned it. The market needs to be regulated or we will go back
Open_Pollution_8038 | 8 hours ago
Ahh yeah data centers show up next to me and fuck next step is my children are working there
I just didn’t see the connection before thanks for sharing
PricklyyDick | 12 hours ago
That wasn’t even the argument. Bot detected.
Open_Pollution_8038 | 12 hours ago
Cool it’s their money we agree then
bigbirds_dick | 12 hours ago
You’re right. I’m envious that some giant corporation is building a data center in my rural community that will increase utility rates, have no positive impact on the community and be a general nuisance due to all the noise.
Open_Pollution_8038 | 12 hours ago
Are they building on your land? If not, take a number it’s not your property.
bigbirds_dick | 12 hours ago
You’re posting in an economics forum, but don’t understand external cost? Typical.
Open_Pollution_8038 | 12 hours ago
lol let me guess you think the water they used it worth a few billion am I right?
bigbirds_dick | 11 hours ago
Whatever the costs are they’re not zero, so why should my community be expected to bear any costs for a private company that will be returning minimal, if any, value to them. The internet has really empowered simple people to think they’re clever.
Open_Pollution_8038 | 11 hours ago
I highly doubt you’re being billed for their water charges.
I didn’t know I had to fill your pockets when I drank water.
bigbirds_dick | 11 hours ago
What a refined take on ownership and who gets to benefit. I’ll be praying for you.
KartoffelLoeffel | 12 hours ago
How could that possibly be your interpretation
Open_Pollution_8038 | 12 hours ago
You whine they’re not keeping their money, so they go out and spend billions of dollars constructing the next generation of computing annnnndd you whine about that too.
I suppose you’ll whine about anything that isn’t them putting money into your pocket.
SpicyRice99 | 12 hours ago
Right, because Johnson & Johnson and DuPont are building data centers. I think you forget that goverment laws exist to serve the people and not just majority shareholders.
Open_Pollution_8038 | 12 hours ago
Ahh so you’re cool with datacenters?
SpicyRice99 | 11 hours ago
Personally I think they are necessary in the global AI race, but I also don't live near where any are being built
impossiblefork | 12 hours ago
Stock buybacks actually make economic sense.
If you pay dividends, you keep the people who want to milk the firm, possibly to death. If you use stock buybacks you don't.
If firms like Intel operated using stock buybacks, they could have probably maintained enough investment to keep themselves in the lead, or at least close to the frontier, but instead the need to keep investors happy with dividends ensured long-term underinvestment.
whatfappenedhere | 11 hours ago
That is the lions share of the substantive info. To put it in technical terms, rates were sufficiently high that the resulting tax liabilities created an incentive for employers to use productive tax expenditures (what the US Treasury defines as tax credits, deductions, exclusions, and exemptions) to reduce that liability. At the time, internal revenue code was significantly less laden with expenditures that benefit only the VERY wealthy, so employers would do things like pay higher wages so they could deduct those costs, or reinvest in R&D, or in their underlying infrastructure, etc.
This structure was largely dismantled with the tax reform act of 1986, though the slow erosion of new deal policies began about a decade earlier.
If a conservative is bitching about the current state of our nation, they only have their own philosophy to blame.
cdazzo1 | 6 hours ago
Low taxes are why I take home less of my earned income? Hope I'm not the only one surprised by that
whatfappenedhere | 6 hours ago
Lower corporate taxes reduces the incentives to pay you a higher wage, which is why I said employer, referring to the corporate tax rate, and not personal rates. Please don’t strawman my comment.
Regardless, if you’re making less than about 4 million, you wouldn’t have been in the personal bracket which had rates cut significantly from their 90% peak.
JaracRassen77 | 12 hours ago
You're right. The marginal tax rate for the most wealthy was over 90%. However, they never had to pay that, because they invested in their workers or gave their funds to charitable causes.
ReturnOfBigChungus | 11 hours ago
No, the marginal top rate was 90%, the effective rate was about 50%.
JaracRassen77 | 10 hours ago
Thanks for the correction!
Tifoso89 | 9 hours ago
Yeah 90% was just the rate for the income over a certain (very high) threshold
dust4ngel | 11 hours ago
> they invested in their workers
can you say more about this?
awhaling | 8 hours ago
Makes sense to me, if a company has to choose between paying taxes or reinvesting their profits into the company/their employees it makes sense they would rather choose the later.
JockoMayzon | 7 hours ago
Yup. I'm old enough to recall when Reagan asked if we'd all be better off if employers got to keep their profits or hand them over to the government. People assumed that if employers got to keep more, it would trickle down into factory improvements and higher wages. Oops....
roamingandy | 11 hours ago
Sounds an awful lot like Co-Operatives a model the capitalists spent a lot of effort fighting against as it often turns out very effective. Workers having a stake in the company and its decision making, makes them far more motivated towards their work.
Key-Organization3158 | 9 hours ago
Not really. Cooperatives haven't had much success. Remember, in a Cooperative, all the workers are capitalists. So it's silly to say captialists fought it. It's just not very competitive.
GPT_2025 | 8 hours ago
Plus, Over 99.9% of all companies in the United States do not have publicly traded stocks.
Out of the roughly 36.2 million businesses operating in the US, fewer than 4,000 are public companies listed on stock exchanges like the NYSE or NASDAQ. This leaves more than 36.19 million private companies that do not offer public shares.
carlos_the_dwarf_ | 12 hours ago
When was that the deal?
SmurfStig | 12 hours ago
Post WWII when the middle class really flourished. Well most of them but was much easier for someone to support a family on a single factory worker income and still retire comfortably.
Now all of the goes to shareholders and ceo bonuses while the middle class is left fend for themselves.
carlos_the_dwarf_ | 10 hours ago
Sorry, but this doesn’t describe anything like what the guy above is talking about? When were companies given a choice between a higher tax burden or paying more?
Bobcat-Stock | 12 hours ago
It’s how the American middle class grew to the size it did during the 50s and 60s.
squish042 | 11 hours ago
We also have to remember that the rest of the modern world was still rebuilding after WWII while we didn’t have to. Companies weren’t just going to jump to a different country for cheaper labor. Now it’s much more competitive globally.
Bobcat-Stock | 11 hours ago
Yeah we really got a good head start in the modern economy because of that. Looks like the current admin is trying everything it can to erase what was left of that advantage
squish042 | 11 hours ago
They’re essentially grasping at straws trying to get us back to the top of hegemonic power. That’s why they’re using techniques like tariffs that were used in the 1890s-1920s. It’s not going to happen, it’s basically over. The world has caught up. There’s two answers to this. The US learns to survive in a world with less hegemonic power, or war.
CylonSandhill | 12 hours ago
How would this work for large private companies? Giving internal ownership shares is all well and good, but couldn’t the company just keep issuing shares to the ownership group to dilute value? How would a fair stock valuation be determined for companies that don’t have to open their books?
bloodphoenix90 | 12 hours ago
Maybe it defaults to pay more taxes if you cant issue stock 🤷♀️
CylonSandhill | 12 hours ago
That would be good. They would have to mandate that private companies can’t issue internal ownership shares otherwise workers could be (even more) easily exploited
Duke_ | 9 hours ago
Pay more salary.
toomanypumpfakes | 12 hours ago
If you give out stock or options you need to have an independent assessment of the company value (409a) otherwise, as you said, how would anyone know how to value the company.
MrSquicky | 12 hours ago
Private companies that issue stock in the US need to follow IRS Code Section 409A, which requires independent valuation (you can search for 409A valuations - there's a ton of info on them).
A more difficult part of this is that the stock issuance is a taxable event, so you'd be putting a tax burden onto the employees but they (generally) couldn't sell any of the stock to pay it off.
It would work with certain types of options, but there's a whole other can of worms with that.
CylonSandhill | 12 hours ago
This is good information, thank you.
When would the employee enjoy the benefits of the stock? At retirement or termination of employment only?
MrSquicky | 12 hours ago
None of those.
Private company stock lets you vote on stockholder issues, receive any distributions of company profits, and the primary benefit is getting paid if the company is sold.
If the company does not issue distributions and doesn't get sold, you don't really get a benefit from it. There are some markets for private company stock, but they're not going to buy something that is not likely to get sold.
CylonSandhill | 12 hours ago
That makes it sound like the benefit may be overstated. At least in the case of private companies.
MrSquicky | 12 hours ago
I've made a bit over a million dollars through being granted private company stock options and I expect to make several more million within the next five years. It can be very beneficial if you are in a fast growing company.
It is not that valuable for a company that is not seeing much growth.
WoodsLovelyDarkNDeep | 9 hours ago
Of course it overstated it’s meant to take away from the benefits we see from taxing them
handsoapdispenser | 12 hours ago
More importantly, how does it work for small businesses since most people work for small businesses.
battlepi | 11 hours ago
It's actually a little less than half.
luxveniae | 10 hours ago
They’ll put a cap on what businesses have to pay and I’d bet my money the number of employees cap will be large enough that even medium sized businesses can get around it as well as larger companies will just hire more contract workers via contract companies.
crowcawer | 12 hours ago
Also, how does this work for public sector, where pay is typically stunted at the expense of stability dreams and realized benefits.
The reality is that the idea is at 80% at best.
Maybe tax coupons could be offered, but we are talking about the 22% bracket here. They aren’t benefiting that much from tax coupons.
nonamenomonet | 12 hours ago
Lmao I’m imagining people getting bonds.
crowcawer | 11 hours ago
Oh God
_dirt_vonnegut | 6 hours ago
>most people work for small businesses
False. 54% of private-sector employees work at firms with 500 or more employees.
DyingDesertPoppy | 12 hours ago
Loophole Whack-A-Mole is the best. Another option is employee ownership of profits, for example you could mandate 10% of profit must be divided equally to every employee.
corporaterebel | 10 hours ago
How would movies work then?
DyingDesertPoppy | 9 hours ago
It could be a percent of profit is distributed in proportion to all workers in proportion to hours worked.
corporaterebel | 9 hours ago
The joke is that movies don't have profit.
https://en.wikipedia.org/wiki/Hollywood_accounting
See LOTR.
DyingDesertPoppy | 8 hours ago
:(
Imaginary_Zone_4319 | 12 hours ago
So a bonus? I already get one of those every year
DyingDesertPoppy | 12 hours ago
The purpose of this wouldn’t be to give more money to you specifically.
Willinton06 | 10 hours ago
What? I refuse to accept anything that doesn't benefit me directly
bleeh805 | 12 hours ago
I mean it's kinda why stock options exist anyways they have a steady buyer of said stock.
polar_nopposite | 12 hours ago
Could it not just be purely equity-based? I.e. distribute at least X% ownership of your company equally to every employee, or else pay the tax.
CylonSandhill | 12 hours ago
That would require a disclosure to the IRS of the valuation of the company, not just the profits. I would figure that avoiding that kind of scrutiny is one of the reasons some of the large private companies stay private.
polar_nopposite | 12 hours ago
They would already have to be doing that via routine 409A evaluations if they have any form of equity compensation program.
CylonSandhill | 12 hours ago
Thank you. Are there any restrictions on how many shares they issue internally?
Oddworld777 | 12 hours ago
If you issue equity based compensation then you have to have an independent valuation. 409A valuations are supposed to be done annually or on a triggering event. You face large penalties if you skip out.
You have to remember too that if you’re truly a LARGE private company then either through your bankers, a PE backer, or some other medium, you are going to be required to have an audit under US GAAP and if you’re doing share based comp then they’re going to audit the valuation.
Reissuing shares to dilute out employees can obviously be done, but that misses a handful of points. First, if this is new regulation it would be easy to ensure it included penalties for dilutive practices. Second, It could mandate the minimum ratio of “owner” to employee equity. Third, authorizing and issuing new shares would likely force material changes and be a triggering event for all the big wigs to have a taxable event which is what they always want to avoid.
casino_r0yale | 12 hours ago
It doesn’t!
unforgivableness | 12 hours ago
When SpaceX was a private company they had liquidity events where employees with equity could liquidate their shares.
vanquishedfoe | 11 hours ago
My private company does this with yearly independent audits that determine the share price.
OpticalDelusion | 10 hours ago
Don't let perfect be the enemy of good. How far do we have to go down the list of most valuable companies to hit a private one? Anthropic at #14. And if we skip Anthropic and Open AI, the next is Stripe all the way down at #75.
These companies aren't going to privatize and get rid of all that potentially investment/liquidity. Every retirement fund in the country is holding up their stock value.
CylonSandhill | 9 hours ago
Cargill is 21 at $175bn in revenue Koch Industries is 30 with $125bn. I think revenue is very applicable when we’re talking about taxes.
There’s also Publix and Mars at around $60bn in revenue.
We don’t necessarily know the actual value of the private companies because they are private.
While they may have lower revenue, there are loads of huge private companies that employee thousands of workers.
Retired-Yam8988 | 9 hours ago
Easier is to set up another offshore company which you manage the company from and pay yourself there. Bleed the US company dry - profit? What profit. There’s tax breaks to this too (I’m looking into this now for myself). Gotta love the good old American tax code - written by millionaires for billionaires
Available_Editor4383 | 9 hours ago
My old company gave out “ghost stock” which basically served as a secondary yearly bonus.
Not sure about the legality, and it was only offered to middle-manager levels and up.
gimpwiz | 9 hours ago
Private companies who want to have employees more literally invested in the company offer some form of profit sharing and/or some form of shares that can't be traded normally (they may be able to be sold back to the company, etc). They don't grant common stock that can be traded and sold because that's essentially just going public without an IPO, just a direct listing, and legally once you hit a certain number of stockholders you're forced to do so IIRC.
Granting each employee a "profit share" and then paying them out on a defined basis is a pretty reasonable strategy - they may not have any sort of voting rights (other than voting with their feet, and so on) but the more top-line profit the company generates the fatter their check is in a directly correlated way. Ideally this means they're more incentivized (crucially: along with everyone else) to focus on efficiency and profitability, versus just shrugging and saying "fuck it not my money."
Cypher1388 | 5 hours ago
Many private companies are owned through a partnership and that partnership still may be audited or at least reviewed, which typically may include a valuation. Obviously if something this is enacted all companies would have to.
And then yes you would need agreements in place that make it impossible to dilute the way you are describing.
Better way to do this would be shadow equity with a pension like minimum risk requirement and oversight.
But at that point it's just a pension.
Oh wait!
ToneShop | 12 hours ago
Shhhhh, you aren't supposed to point out the part where they still have onerous leverage over you. God forbid we just try to actually pay people what they are worth.
CylonSandhill | 12 hours ago
Right? And I suspect those businesses would try some funny devaluation or non-compete business for any employees that want to cash out and go to a different company.
ToneShop | 12 hours ago
And all over this thread there are big brains praising this "Yes Master Please Master" shit.
Cybertronian10 | 12 hours ago
Maybe instead of stock its bonds?
In general this could be part of a push to mandate more compensation for workers beyond just dollars in the paycheck. The dollars are important, but free cash flow is also the one thing that doesn't really bend to any ideological preferences. It might be morally best if workers salaries doubled overnight, but if that causes most major businesses to fold that same night we have only caused problems for ourselves.
Alcophile | 12 hours ago
If enough shares were given to workers they would have to agree to the issuance of any new shares, and all companies could be required to open their books as a stipulation of being chartered by the state.
Want the protection of incorporating? Make basic financial disclosures!
CylonSandhill | 12 hours ago
Couldn’t a company issue non-voting or low vote value shares that are just good for cash? Like Berkshire Hathaway A and Berkshire Hathaway B?
CountryGuy123 | 12 hours ago
I can’t get over the blindness in many of the comments regarding equity. It’s something that can benefit everyone: The employee by providing partial ownership of their company, and the company itself as the workers have a stake in the org’a success.
WestCoastBestCoast01 | 11 hours ago
Yep. I've thought about this before. Wealth inequality and workers feeling left behind could be dramatically improved if we required a small ownership allocation to workers. 10% of a company owned by employees with a board seat and voting rights. What would our welfare programs and poverty levels look like if regular employees enjoyed the valuation growth in assets that capital owners have enjoyed over the last 40 years? What would our communities look like if we democratized business?
petroleum-lipstick | 7 hours ago
It always comes back to unions.
blubrry-pie | 13 hours ago
I honestly agree with this. If excess surplus value is being extracted by the corporations, tax it. If they're willing to share with the workers, then they can pay less taxes. Very marxist of you, Mark.
triscuitsrule | 12 hours ago
It’s not Marxist at all?
A Marxist approach would be abolishing private ownership of companies altogether and turning them over to the labor class (which includes abolishing the stock exchange), wherein profit isn’t rung out of companies but instead they provide the necessary means for people to live comfortably and leisurely.
If an economic proposal involves profit, it’s not Marxist, it’s capitalist. That’s like literally Das Kapital 101.
This is just a BS proposal to not pay taxes or give wage/salary raises to people, all while maintaining the aristocracy’s clutches over mega-corporations.
Edit: if anything this proposal is pretty damn capitalist by trying to convince the labor class that they have a vested interest in maintaining the private ownership and profitability (by being good hard working little laborers) of private corporations.
Richandler | 10 hours ago
Marx didn't have an approach, he made a critque. Anything else afterwards are made-up solutions by people with power.
ants_are_everywhere | 8 hours ago
That's not fair to Marx. Marx spilled a great deal of ink justifying the indiscriminate use of political violence and enumerating the ethnic groups he felt were responsible for all the world's problems.
Without that blueprint the 20th century would have looked very different.
StrebLab | 12 hours ago
Wait, Marxism is in favor of abolishing the stock market? That is a terrible idea lol no wonder everyone hates it
triscuitsrule | 11 hours ago
Marxism is initially a paradigm for understanding how the world works. It has since been turned into an ideology by ideologues.
Marxism understands the modern world as a conflict between classes, namely the bourgeoisie (capitalists) and the proletariat (laborers), wherein the former is exploiting the latter for profit (a system Marx called Capitalism).
Marx proposed a possible resolution to this conflict as the end of the exploitation of the labor class via the abolition of privately owned enterprises. The stock market is a means of upholding the capitalist system of economics.
That being said, Marx also posited that doing so would require unimaginable inequality that it naturally happens.
As such, Marxism isn’t inherently in favor or opposed to anything. It’s just one of many ways to possibly try to understand the world. That’s also being said, since the writings of Marx and Engels, ideologues have corrupted his theorizing into an ideology, attempting to force an end to capitalism and bring about a Marxist and/or communist revolution.
People are opposed to Marxism for a variety of reasons. People of scholarly merit are generally opposed to it as a paradigm as they believe there are other more fitting paradigms for explaining the world. Lay people are generally opposed to it because they don’t understand it.
Cuddlyaxe | 10 hours ago
I think you're way overcorrecting tbh
It's true that Marx presented his theories and paradigms as scientific, but at the same time he very much believed that this process was a good thing, and he was committed to actually bringing them to fruition in the real world
It should also be noted that Marx to my knowledge never really treated his theory as a theory, but rather he treated Marxism as basically an inevitable social fact. That "this is what will happen". In a lot of ways, Orthodox Marxism feels almost like a religion with its own prophecy
Finally there are plenty of academics and even fields of academia where Marxism is very much alive and well. Sociology comes to mind. However in most of academia there are splits between the truly Orthodox Marxists who think Marx got it right the first time and more revisionist ones who try to account for the fact that the theory hasnt worked as predicted
ToneShop | 12 hours ago
God forbid they actually just give the workers a pay rate they are worth.
Shannalligation1886 | 12 hours ago
Eh this way employees are more invested in the overall company performance. Might be biased since an ESOP literally changed my life but I’m a fan of this model.
TheDadThatGrills | 12 hours ago
Once you work for an ESOP, you never want to go back to another structure. I believe a lot of these comments are negative because they've never had company stock as a part of their compensation.
ToneShop | 12 hours ago
You are literally arguing that all the comments form people who had the significantly more common experience of working for a typical business are wrong because I in particular made a lot of money.
TheDadThatGrills | 12 hours ago
The only argument I've fought against is that companies purposely try to lower their stock price to fuck over their employees. That's the perspective of a cynical loser without relevant life experience. I don't think I've argued against anything else in here.
Also, the vast majority of people who accumulate employee stock make profit from it. I'm not a special case in the slightest, I'm the most average case imaginable.
dust4ngel | 11 hours ago
> That's the perspective of a cynical loser without relevant life experience
bro... come on.
TheDadThatGrills | 11 hours ago
That's my subjective opinion. If I'm speaking to someone IRL who has this view of company stock that's going to be my impression. That being said, I don't know an adult who feels this way. Everyone bitches about how companies prioritize their valuation above all else and now I have to pretend the exact opposite is true? Like they're going to arbitrarily dilute their stock to fuck over their own company? C'mon. That's not an opinion I can take seriously.
dust4ngel | 10 hours ago
i'm not taking issue with your point of view, but how you're expressing it.
TheDadThatGrills | 10 hours ago
That's your baggage, I'm not going to carry it. Zero issue with how I expressed my opinion within the context.
ToneShop | 12 hours ago
So you are ok with an employer being able to terminate you just prior to your stock vesting and fucking you over?
TheDadThatGrills | 11 hours ago
That doesn't happen outside of extreme edge cases, mostly due to being illegal.
My stock has no vesting period.
I don't worry about my company firing me.
The stock is in addition to a competitive 401k match
The topic is companies increasing stock distributions to their employees and this is your response? How miserable it must be to see the worst in everything.
ToneShop | 11 hours ago
It isn't about you. It's about control. My suggestion does not imply that being paid stock is a venture that will never benefit and individual. My suggestion is that there is a reason that elites purporting to want to address inequality still won't just pay you the cash value that you are worth. You can buy stock with cash. The reason is they want control.
TheDadThatGrills | 11 hours ago
Cash devalues over time, stock appreciates. You're also ignoring tax implications of buying stock with income over receiving it. Honestly, you might have a strong opinion but it reeks of financial literacy. You think it's control when you don't even understand the basic concepts at play.
bran_the_man93 | 11 hours ago
You can also sell stocks for cash, thats the point of fungibility.
PabloBablo | 10 hours ago
I have espp and this has been nice, but ESOP sounds pretty sweet
ToneShop | 12 hours ago
This way employees are under thumb. Don't be a fool.
Shannalligation1886 | 12 hours ago
Employees still vest over time in an ESOP, like most long-term incentive plans. haven’t read the full details on what Cuban is proposing that may differ though.
ToneShop | 12 hours ago
That's the fucking point. The vestment is the under the thumb part.
Fly_Rodder | 12 hours ago
my ESOP vested after 4 years and all subsequent contributions were mine free and clear. I made a lot of money at that company and the ESOP contribution (5% match to my 401(k)) eventually eclipsed my 401(k) account that I was contributing 12-18% to.
amayle1 | 12 hours ago
Should someone really own part of the company on their first day of work? I mean come on, some amount of vesting period makes sense.
ToneShop | 12 hours ago
That's why pay should be cash value.
ryan1894 | 12 hours ago
in the general case, employers arbitrage the market value of the employee’s labour with their output.
if it was more lucrative to offer stock to employees instead of cash, then they would already be doing so.
there’s a reason why higher value employees are generally offered equity, founders take $1 annual salaries, etc.
if you think you’re getting the better side of the deal by taking cash then i have a bridge to sell you
ToneShop | 12 hours ago
If you are paid the same value in cash you can buy the stock. Stop with these weak ass points.
bran_the_man93 | 12 hours ago
Then they can just quit...?
ToneShop | 12 hours ago
No, they can't because they are now tied up in unvested stocks. That's the fucking point.
bran_the_man93 | 12 hours ago
Having shares of a company doesn't make someone an indentured servant.
They can still quit, that's not how stocks work.
ToneShop | 12 hours ago
And it's still not the same as getting a check for cash. ownership is power. Mark knows this. You should figure it out.
bran_the_man93 | 12 hours ago
You're right, ownership is better than getting an equivalent amount in cash.
Thank you for making my point for me, you're very helpful.
ToneShop | 12 hours ago
Thanks for displaying your dipshittery so clearly.
Shannalligation1886 | 12 hours ago
Except they will be paid out the portion they have vested.
bran_the_man93 | 12 hours ago
What someone is "worth" is ultimately a negotiation between the employee and the employer.
If someone is willing to do the job for a given compensation, that is what they're worth.
There is no universal or objective "pay rate" that speaks to someone's value to the firm, it's always contextual and subjective.
RashmaDu | 12 hours ago
Beyond the practical and legal problems with forcing a firm to pay someone what they are "worth", how do you even define that? How much "value" does someone create? What even is "value created"? How much of it is an individual worker responsible for?
Letting the markets decide this through wages sidesteps these issues. Then, if we're unhappy with the outcomes (as you and I both are, I think), we can tax the companies, institute minimum wages, or force them to distribute stocks. Those are far better solutions
GurProfessional9534 | 12 hours ago
If they weren’t giving employees what they were worth, no one would agree to work for them. That is what defines what the employees were worth.
ToneShop | 12 hours ago
Thanks econ 101.
yrotsihfoedisgnorw | 12 hours ago
Ultimately this is where I land as well. It's definitely the easiest way to go. It's just not possible in this world without a broad attitude adjustment that says squeezing out an extra point or two of profit margin might be possible but isn't worth it given the overall cost to society. It seems belief in 'the greater good' never took root in some people or died out as they accumulated wealth.
tachyonvelocity | 10 hours ago
Why do you think workers are paid below what they are worth? Isn’t the pay already negotiated at the hiring process?
ToneShop | 10 hours ago
No, that's their negotiated pay. Capitalism ensures that the majority of workers are paid somewhat under their worth. It's an intrinsic part of capitalism.
TheBigGees | 10 hours ago
This is a nonsensical take from someone who does not understand what they are talking about...
ToneShop | 10 hours ago
This is cope from a loser who has no argument.
TheBigGees | 9 hours ago
There is no argument with someone who is not informed enough to have an argument.
Nothing about capitalism necessitates paying people "under their worth". Claiming as much demonstrates a total ignorance of the factors involved in production, and takes a childish, simplistic view of value creation.
Seriously, just try to elaborate on the claim that you made. Walk us through your reasoning. It will immediately become apparent that you have no idea what you are talking about.
ToneShop | 6 hours ago
You're fooling yourself.
TheBigGees | 5 hours ago
>Seriously, just try to elaborate on the claim that you made. Walk us through your reasoning. It will immediately become apparent that you have no idea what you are talking about.
Oh look, you couldn't do it.
ToneShop | 4 hours ago
The argument is that there is a reason he and his buddies are willing to give you stock instead of equivalent cash and that puts employees at a disadvantage. No econ 101 slop capitalism worship where all negotiations are perfectly fair bullshit changes that.
tachyonvelocity | 7 hours ago
What someone is worth is DEPENDENT on negotiation. A house is only worth what 2 people negotiated on. So the negotiated price of labor IS what someone is worth. You don’t get to claim your house is worth 100M just because you feel like it. Someone else also has to agree too. Workers aren’t paid below their worth, they’re paid exactly their worth based on skill demand by other people.
Capitalism actually increases what people’s skills are worth by allowing negotiation to happen in the first place. Imagine the government capping your worth because it decided from top down to cap your skill through some sort of quota. That’s why Communism and whatever system you’re thinking of results in most people being poor.
ToneShop | 6 hours ago
Good sheep.
bloodphoenix90 | 12 hours ago
Is it Marxist? Am i a Marxist if it makes sense to me?
Alcophile | 12 hours ago
Yes. Marx wrote that the workers should control the means of production so they can keep the full value of their labor instead of having some of it redistributed to people who already have lots of money (Capitalists).
One way for the workers to control the means of production is for them to own and run the companies they work for.
It's still capitalism if some of the profits go to non working shareholders, but as a Marxist it's certainly a step in the right direction!
Kershiser22 | 10 hours ago
> the workers should control the means of production
This proposal doesn't seem to be doing that. The workers wouldn't control anything. This just incentivizes companies to reward their employees with more stock.
emtheory09 | 12 hours ago
It’s not exactly Marxist, but has some echoes of it. In a very brief nutshell, Marxism is the control of corporations by the workers rather than the capital class/investors. Giving workers stock or making corps pay more taxes doesn’t really give control to workers but it does transfer benefits of the production of companies either to the state or workers.
Cuddlyaxe | 10 hours ago
That isn't really what Marxism is though
Even ignoring the larger definition of Marxism as a theory of social history, even if we just look at the type of economic system advocated, most Marxists think "workers owning the means of production" should be in a very abstract, societally collective sense
This is why many socialists react fairly badly to market socialism/cooperative capitalism
bloodphoenix90 | 12 hours ago
Correct me if im thinking incorrectly about this, but wasnt this sorta the idea when unions had their golden era and corporate tax rates were high? Maybe not stock but, companies reinvested in their workers with pensions and sometimes reinvested in R&D and something about Henry Ford saying his own workers should be able to afford the cars they're building. Idk. I feel like used too loosely and Marxism could be conflated with just any working class empowerment no?
emtheory09 | 12 hours ago
Nah, Marxism is specific about retooling the economic system. That’s just a more benevolent form of capitalism. Ford realized he needed more demand for his cheap (relatively cheap) cars that he was pumping out so he needed a middle/upper middle class to buy them and his workforce was more motivated by getting paid more than anywhere else.
ETA: the unions were initially a response by workers to counter capital’s power and the golden era was after WW2 when workers were scarce, the economy was booming, and everything got reinvested back into workers/r&d or it went to taxes. Then the tax rate got cut and the incentives changed massively for companies.
bloodphoenix90 | 12 hours ago
That's kinda what I figured
EVOSexyBeast | 12 hours ago
The stocks would be internalized as compensation and result in a lower salary. Most people would sell the stocks at first opportunity because they need the cash.
I think there might be some fruit to the idea that we need to try and make more people capitalists and that would make more people better off in capitalism. But we need a more detailed plan.
OdessyOfIllios | 10 hours ago
No. Lol.
Mark is advocating for private ownership. A redistribution of private ownership, but private ownership nonetheless.
That's goes directly against anything Marx advocated for.
At "best" you could call it American-left capitalism.
audacesfortunajuvat | 11 hours ago
Companies collect tax ID’s from their workers (social security numbers or the equivalent). If any of those tax IDs are also used to file for public benefits, the cost of those benefits should be assessed to the employer as taxes, perhaps with a graduated penalty as well. Pay living wages and healthcare or have the equivalent extracted as tax. Businesses that can’t survive without taxpayer subsidies can close.
Snlxdd | 12 hours ago
Stock compensation sounds great in theory because people base it on the belief that stocks always go up, but it’s a poor idea for most employees to be heavily invested in their own company.
If you’re middle class or lower, you don’t want your paycheck to be dependent on how well the company is doing. You don’t want a bad quarterly earnings report to mean that the kids don’t get Christmas presents or you can’t take the annual vacation.You want a steady income stream that can be used as the basis for a budget, and that stays the same even if the company is losing money.
You also have the added risk of Enron-type situations. You get laid off in conjunction with all your savings in stock taking a huge hit.
Conventional wisdom is typically to liquidate company owned positions as soon as financially feasible to defray risk.
dust4ngel | 10 hours ago
> it’s a poor idea for most employees to be heavily invested in their own
amayle1 | 12 hours ago
They are orthogonal concerns though. You can certainly sell your stock ASAP to avoid risk / reverse DCA kinda thing but it’s still nice knowing you will be compensated more if the company does well. In theory your base pay would still provide for you in downturns.
Snlxdd | 11 hours ago
It’s heavily predicated on your base pay. For upper-middle class and above, I think that holds since base pay is high enough to get you buy if the company is doing poorly.
For middle class, I feel like additional base compensation would be more valued and help retain better talent than stock compensation.
amayle1 | 10 hours ago
Yeah it is a trade off. The risk / reward of the possibility of upward mobility vs stability
dust4ngel | 10 hours ago
> In theory your base pay would still provide for you in downturns
during which you get laid off
amayle1 | 10 hours ago
What’s your point? you can get laid off whether you were paid in stock or not.
dust4ngel | 8 hours ago
the value of your cash doesn't go down when your company runs into financial trouble.
to put it another way, when you work for a company, you have invested your human capital in that company. if you also invest your financial capital in that company through holding their stock, not only do you lack diversification in your stock portfolio, but also in the broader picture which includes your human capital. tl;dr diversification good, idiosyncratic risk bad.
Own-Chemist2228 | 11 hours ago
Agree. Cuban's idea is really just a tech-bro gimmick. It works in Silicon Valley where employees are well compensated with base pay and can afford to gamble a bit with stock options. But most Americans just need a steady paycheck and a retirement plan. The retirement plan should not be based on the company stock simply due to diversification.
If a company has money to give employees stock, it has money to simply pay them more. Let the employee decide what to do with that money.
Snlxdd | 11 hours ago
I also see the idea a lot for leftists. I think the base idea of “workers owning the company” sounds great, but the reality of that meaning their wellbeing is even more tied to company performance is not.
I agree with you that it really should just be incentivizing higher pay.
fathovercats | 10 hours ago
Owning the means of production is not the same as workers owning the company. Silicon Valley companies where stock is employee compensation are not leftist. They are, in fact, more often than not, ultra-capitalist. The workers are still alienated from their labor.
the “right” way to do this is a co-op structure or profit sharing.
Snlxdd | 10 hours ago
Those methods still have the same drawbacks. Namely that your compensation and financial wellbeing is tied to company success.
Great when the company does well, sucks otherwise. People want to share profits, but not losses.
michahell | 9 hours ago
So then hand out shares when things are going well? This does not seem like a good argument against this idea. Dividends work the same way: when times are rough, dividends get reduced or cancelled, happens all the time.
Snlxdd | 9 hours ago
It’s not about using shares. The core issue is what happens with those shares down the line.
Ownership of stock is inherently a risk. You’re doubling up on that risk by tying your net worth and income to the exact same source.
Look at the people that got wrecked by Enron as an example. In the same day they learned their ownership was worthless and that they no longer had a job.
michahell | 9 hours ago
Sure, but that should be the exception to the rule. Most big enough companies do okay, in general indexes go up, income should not be exchanged for shares, rather those should be additional.
Income enjoyed is income enjoyed, just like usual. Companies that don’t do general employee SBC also can go tits up, that’s a given constant, not a good argument to not do this.
Also if you have shares, and they’re publicly tradeable, employees can decide if they want to sell them or keep them.
If they don’t have the shares, they can’t.
To me this is like saying: if employees get a car and drive they can have accidents, therefore it’s better no one drives but the board and investors. What?
Snlxdd | 8 hours ago
You’re right, indexes go up pretty reliably. There’s a significant amount of noise outside of those indexes though.
The argument also isn’t about the company being more or less likely to go “tits up.” It’s about the distribution of risk if tit does. Obviously both companies that do and don’t engage in stock-based comp can fail. The issue is that ownership of company stock concentrates risk in a single company. So if that company fails, you’re exposed to additional risk as your stocks crash and you get laid off.
You’re also looking at this in the vacuum of base compensation staying static, and they just get additional stock compensation. So yeah, that’s obviously better for employees.
For an accurate comparison though, you need to determine whether additional compensation should be given in cash or stock. And in that case cash is significantly better for employees.
cjog210 | 12 hours ago
There's also a business finance reason why it's not the best solution. If your employees and managers all have a major chunk of their savings tied into the performance of the company, then there's less incentive to take risk. That sounds good until you realize that many large companies already avoid innovative ideas in favor of very "safe" options despite their being a demand for the innovation. That problem would just get worse.
Better solution is to just pay higher wages to employees and frame it as an investment in the company rather than a cost. Better pay generally leads to better performing employees and lower turnover.
Wafelze | 11 hours ago
Let’s deviate a bit from Mark Cuban’s plan. What if the choice was btwn higher taxes on the shareholders or giving shares to the employees as a whole (eg employee representation on the board)?
I’ve been curious how different levels of employee representation/ownership would affect business decisions.
Snlxdd | 11 hours ago
I like that a lot better. Essentially tie X% of ownership, earnings, and dividends to employees as a whole vs distributing shares to individual employees.
crashorbit | 12 hours ago
What we need is a solid floor that no worker can fall through. What the oligarchs and plutocrats want is suffering poverty to help keep workers in check. Plutocratic government will never provide a solid floor to anyone except those who benefit from it.
Cuban probably thinks of himself as one of the good ones, but he's just selling smoke and gas light.
ToneShop | 12 hours ago
Yes, they only want to compensate with stock because that keeps you under thumb.
amayle1 | 12 hours ago
Under thumb more so than just a W2?
ToneShop | 12 hours ago
Yes, that's the very point of vestment.
Major_Shlongage | 10 hours ago
The whole "stock" and "perpetual growth" thing is completely unsustainable. It's based on the idea of perpetual growth.
They're resorting to financial devices to generate money that doesn't actually exist. Much of it is just based on credit, either directly or indirectly.
nicetriangle | 10 hours ago
Reminder: if your company is not public, the stock is probably worth jack shit as far as you're concerned (with statistically few exceptions).
[OP] settebella | 13 hours ago
I never knew Mark Cuban of Shark Tank actually openly agrees with others in corporate business, Nvidia and politics, Bernie Sanders warning us about wealth inequality and Cuban suggests a policy and business practice featuring sensible ideas to take a crack at stabilizing wealth inequality. It's about time.
ToneShop | 12 hours ago
This is misguided dipshittery designed to trick fools. He should just pay his employees what they are worth. Stop with this slop.
gc3 | 12 hours ago
What an employee is worth is hard to say. Some can point to income they personally made for the company, like salesmen, others are parta of large teams. Still others keep the company running but dont provide any income. Like an accountant.
Distributing shares to the employees to give workers control over the means if production to a limited extent sounds progressive.
AlorsViola | 10 hours ago
> What an employee is worth is hard to say. Some can point to income they personally made for the company, like salesmen, others are parta of large teams. Still others keep the company running but dont provide any income. Like an accountant.
What is worth anyway? Nothing but a lie agreed upon?
ToneShop | 12 hours ago
I'm not the billionaire trying to solve inequality. I don't have an algorithm for defining true worth of labor. But I do know that this suggestion won't work.
GhostofBeowulf | 11 hours ago
Please explain why?
Certainly there are risks, but to blatantly claim it won't work without any research or critical thought beyond "This must mean he doesn't pay his employees enough!" is... a silly conclusion to draw.
ToneShop | 10 hours ago
It’s very simple, this scheme is designed only to keep workers under the owner class.
KaneK89 | 9 hours ago
It literally makes them owners. What?
In a worker co-op, the employees own the business via shares. If everyone gets equal share, then everyone has equal say.
A corporate legal structure built on this principle is called market socialism.
It's highly progressive and, depending on exactly what problem you're talking about, it probably is a better solution than the current one.
I'm simplifying a bit, but depending on implementation it can, in fact, solve quite a lot of problems and help bring inequality down.
But, go ahead, champ. Let everyone know why decades and decades of economic and political theory is wrong, why you're right, and why we should let perfection be the enemy of better.
Iveneverbeenbanned | 11 hours ago
what's wrong with it?
GhostofBeowulf | 11 hours ago
Short sighted and you're making a reach when an entrepreneur, talking about all of society and the damn country, makes a claim that we need to do thing. He isn't saying "I must do this to make my business more attractive," and it says nothing about the wages he pays his employees.
No_Sense_6171 | 12 hours ago
However good an idea it might be, it has essentially no chance of happening within the next 25 years.
If all employees are given stock, all that will happen is that a new industry of grifters will spring up to find ways to part them from their holdings.
The mercenary classes have a stranglehold on US society, and they won't let it go voluntarily. The civil war is effectively over, with most people not even realizing that they've already lost.
oboshoe | 12 hours ago
We had this till about 24 years ago. It was REALLY nice then.
Then Congress made changes that punishes companies that gave stock to all employees. So companies stopped giving them to all and just gave them to executives.
I made far more on stock options from '95 to '02 than I did on salary. (Silicon Valley)
Own-Chemist2228 | 11 hours ago
Silicon Valley still compensates employees with equity.
The mechanism shifted from options to RSU for tax reasons, but there are still plenty of tech companies giving generous stock compensation to employees.
oboshoe | 11 hours ago
They do. I still work in the same industry.
But it's not like it used to be. It used to be stock options and far more quantity.
Today it's RSUs and far less.
I would estimate it's 10% of what it was in 2001 and I'm way more senior now.
Key-Organization3158 | 9 hours ago
Depends on the company. I still get about 50% of my comp is stocks.
I'd much rather just have the money. You can always choose to buy stock.
But a broad mutual fund is smarter.
ThatGuyBackThere280 | 10 hours ago
I had it happen with my previous employer. Each employee was granted stock options the longer they were with the company. I was with them for about 10 years before moving into a new environment.
Granted though, this is definitely not every employer out there by a long shot.
Leftunders | 9 hours ago
Not only that, but I 100% guarantee you that corporations would find ways to abuse the policy.
Like, for instance, keeping your total compensation $ the same but making ESOP 50% of your income- as options that vest after three years.
Yesterday, you made $100k. Tomorrow, you make $50k plus stock options with a discount that makes the current strike price on all options add up to the remaining $50k. But since you've just basically taken a 50% pay cut, you can't afford to purchase the options and wait three years (during which the strike price could go down). So you just use the money you're left with for survival.
That's probably a crappy example. Sadly, there are people with multiple PhDs in Employee Screwing who will quite certainly come up with something equally evil and much more plausible.
aquavelva23 | 7 hours ago
stocks with voting rights as a shareholder, right cuban. awww, you mean stocks with no rights. so they cant vote out the ceo or the board CEO or have any say in how the company is run!
McCool303 | 12 hours ago
I don’t care how companies invest in the people in America. But what is clear and has been for multiple decades. Is that businesses believe they should be allowed the privilege of operating on our soil without paying back to the society in which they take from. This cannot be the case, corporate welfare must be resolved before we can seriously tackle citizens welfare in this country.
Key-Organization3158 | 9 hours ago
They pay loads of taxes. There's no significant data to support your conclusion.
Median real pay has been growing faster than inflation for 50 years.
pineapplejuniors | 11 hours ago
Hear hear.
It is a sinister betrayal to the country making them rich beyond all reason.
Medium_Owl_4119 | 11 hours ago
The better economic policy is banning stock buybacks, giving preferential tax treatment and deferred treatment to reinvesting in companies, giving tax treatment to tools that complement labor but are not labor displacing, and equalizing capital gains with ordinary income. And, most importantly, removing carried interest entirely from the tax code.
Workers need higher wages. Let them use those higher wages to invest in broad-based index funds.
StatelyTree | 12 hours ago
So on the face of it, it sounds noble. But what about all the workers not at a mid to large size corp? It could create a "worker benefit" monopoly where everyone wants to go work for corps that are profit sharing instead of smaller ish businesses. Idk, just thinking out loud here. Taxing them and benefiting everyone seems better.
davewashere | 11 hours ago
I think the top 4 biggest employers in my county all operate as non-profits. If this plan was implemented I could imagine a mass exodus from an area that is already struggling.
curt_schilli | 11 hours ago
Small businesses can still profit share with employees, even if they aren’t publicly traded corporations
WestCoastBestCoast01 | 11 hours ago
It would have to be graduated on size for sure. Big names already pull in talent too, and can outcompete on wages and benefits like health insurance.
UmpireDapper1757 | 10 hours ago
It's essentially the same as taxing employee's stock compensation at a lower rate than employee's cash compensation
AdNo2342 | 9 hours ago
they already do this. bigger companies afford better salaries
Namaste421 | 12 hours ago
Democrats should be campaigning that capitalism is by far the best system and is in jeopardy because of unfettered greed. People and communities over shareholder value and third second homes.
Medium_Owl_4119 | 11 hours ago
This is capitalism.
Namaste421 | 10 hours ago
I didn’t need mid low hanging fruit lecture but thank you.
Zeddo52SD | 12 hours ago
I’m personally of the opinion that when a private actor uses their own money to provide welfare in a way that makes it so the government doesn’t have to also spend the money to provide that exact amount of welfare, the private actor should get a tax deduction. So I’m definitely for this.
ReckedRambler | 11 hours ago
With lower employment levels, less employees would receive stock under option 2 and the laid off masses would receive nothing. The only option is higher taxes for the ultra wealthy.
Plus-Glove-4850 | 12 hours ago
I’d rather just be paid more.
Companies will find every way under the sun to try and reduce the value of the stock they give their employees. We’re seeing that with laid off tech workers now.
Putting more money in my pocket would make the difference, not shares in a company
TheDadThatGrills | 12 hours ago
"Companies will find every way under the sun to try and reduce the value of the stock they give employees" is the most ignorant and misguided comment I've read on Reddit in a moment.
Please don't listen to this person, both company stock and higher paychecks are worth pursuing.
ToneShop | 12 hours ago
You're fooling yourself. People should be paid what they are worth, not with IOU's.
TheDadThatGrills | 12 hours ago
The fool is the one viewing stock as an IOU... that's just financial illiteracy
ToneShop | 12 hours ago
OK bubba.
Key-Organization3158 | 9 hours ago
Giving you shares on the company would just reduce your pay by the same amount. Every $1 in stock would come out of your paycheck, effectively.
You get paid based on the value you create. How you get paid doesn't change that. You won't get more in total. It's just split up differently.
editor_of_the_beast | 12 hours ago
The vast majority of wealth is from equity though. There literally isn’t enough cash to create the pay increases you’re thinking of.
For private companies the closest thing would be profit sharing. Though, you can’t be mad when the company you’re at doesn’t turn a profit one quarter, which happens.
Plus-Glove-4850 | 5 hours ago
I get it when a company does well, but when a company does poorly the paycheck is worth substantially more.
But I don’t understand “There literally isn’t enough cash to create the pay increases.” Like, the massive companies wouldn’t be able to pay the proposed higher taxes with SBCs. If they don’t have the money for pay increases, where would they get the money for taxes? And if they have the money for tax increases, wouldn’t it make more sense to encourage them to pay their employees more?
editor_of_the_beast | 5 hours ago
If the company is doing poorly, how are they going to pay your paycheck? Have you ever been at a company that physically ran out of cash? I have. You don’t get paid.
Plus-Glove-4850 | 4 hours ago
Have you ever been at a publicly traded company that's posting quarterly profits but the stock price still goes lower because the value is based on speculation rather than health of the company? I have.
I don't necessarily think SBC is the worst thing in the world. But the stocks I've been given by the company have just lost value. The paycheck is worth considerably more to me, and given the choice I would take that over SBC 99% of the time. At least then I can take the paycheck and invest in ETFs or something more likely to offer a steady return.
Chemisflav | 12 hours ago
This is why many people don’t get ahead. They don’t forgo the bonus in return for long-term benefits of ownership.
Nearly every founder of a business has done this.
Elderwastaken | 12 hours ago
This is missing the point. People literally can’t afford to place long term benefits ahead of short term needs unless those short term needs are well covered.
HRslammR | 12 hours ago
a CEO pay ratio to average salary law would be stellar.
Pyrostemplar | 12 hours ago
Looks interesting until you look at the details. Should McDonald's CEO be paid much less than an investment bank CEO? What about contract CEOs services as company services: the CEO makes almost no salary, but his company, of which he is the CEO, charges sizeable fees for his services..
HRslammR | 12 hours ago
I meant to the average salary of the company theyre running.
Pyrostemplar | 12 hours ago
His salary would be well bellow the limit. The service fees.of the "CEO services Inc" company he owns would be another matter.
ToneShop | 12 hours ago
But that doesn't keep you under thumb.
SuppleWinston | 13 hours ago
This is nice, but doesn't solve essential worker problems in industries that do not grow significantly. This just dilutes the stock for everybody.
We need maximum wealth taxes. End dynasties. End billionaires.
Sweet_Baby_Cheezus | 12 hours ago
Yeah. The problem in my view is that corporations are rent seeking. It's great that OpenAI employees get a piece of the pie. But the average American doesn't need more AI. We need houses and roads and schools and clean water.
We don't need stock options, we need companies market values to be tied to the economic trade offs that society makes.
Rand_alThor_ | 12 hours ago
Currently the problem with stock payments is that companies then immediately buy back shares on the market and hide this cost from the accounts.
Anyway it’s a good idea just need our current accounting “best practices” to be fixed
Royal_Tie_3410 | 12 hours ago
I think labour expense should be proportionate to earnings. That is to say, if your labour expense doesn’t meet a certain threshold amount then there are tax consequences as a result.
shwarma_heaven | 12 hours ago
Seriously. The top tax bracket used to be 92%!!! It was also a time that income inequality was the best it has been in our country.
(And yes, I get that their effective tax rate is not 92%... , don't tell me they didn't more in taxes than they do today...)
Ok_Crazy_648 | 11 hours ago
Is that what they call a hobson's choice. It really doesn't sound like much of a choice to me. Not many people would choose higher taxes over getting free stock.
Test-User-One | 11 hours ago
The article's math needs a little work. In q2 2016 the bottom 50% had 1.02T and the top .1 had 10.75T. In 2026, it was 4.27T at the 50% mark (4.27x) and 25.07T at the top (2.33x). So the data show the rate of increase at the top is significantly slower than the bottom - which is a good thing - but the article somehow thinks that's bad.
alilhillbilly | 10 hours ago
Have one tax bracket for companies that pay middle class wages and have one tax bracket for companies that pay other wages.
Figure out what the number is that creates a middle class lifestyle ( two parents, one can stay home with the kids the other can work, they can afford a home, they can afford one to two cars, they can afford one to two vacations a year even if it's in the backseat of a station wagon, they can afford to send their kids to college, they can afford a modest retirement) and give massive tax breaks the company's paying people to live a Standard American Middle Class Life.
And tax the shit out of everyone else because what the fuck are you doing this is America.
We do not maximize for CEO wealth we maximize for the wealth of the entire corporation and America is not in need of some socialist resolution it is in need of a restoration of the promise that came out of The New Deal.
We need to return to liberalism.
And we desperately need a tax policy that works to maximize the middle class rather than billionaire wealth and for the last 30 years we've had a tax policy that maximizes billionaire wealth rather than the wealth of the middle class.
Overtons_Window | 9 hours ago
Talk is cheap. This is a guy who takes credit for inventing the idea of streaming, when he was not even the founder of the streaming business he made his billions with.
stoched | 9 hours ago
Why not charge federal sales taxes on security purchases, and tax capital gains the same as income? That would go a long way to help as well.
oneseason2000 | 9 hours ago
Billionaire directed national economic and legal policies have for decades built up income inequality and corporate profiteering. Giving average corporate workers skin in a rigged game is a poor approach imo.
Tax revenue from corporations needs to be increased (#1), and income & wealth inequality needs to be decreased. A plan for that would be something to see in the Shark Tank.
>"But the famed investor has now taken the suggestion a step further: If founders and CEOs don't seek to share the wealth generated by their companies with their employees, they should be forced to give back to society by paying higher corporate taxes."
>Compared to historical trends and other advanced economies, corporate tax revenues in the United States are low. With the national debt rising unsustainably, increasing corporate tax revenue is one way to reduce the structural imbalance between spending and revenues. Below are charts that illustrate key trends and insights about the U.S. corporate income tax system, examining reasons for the downward trend in revenue generation.
hottertime | 7 hours ago
Fyi, spoke to my mortgage company, they would prefer that I paid them in U. S Dollars and didn't seem to have any interest in taking my employers stock as payment. Darn. BTW, My boss in the back room printing up a whole bunch more shares so we can use thme to pay our taxes.
The1TruRick | 6 hours ago
I’ll pass on the stock tbh. I’ve never once worked at an even halfway competently run company. Just make these idiots pay their fair share of taxes and that’d be great.
FrancoisTruser | 6 hours ago
Both of those options mean that your money is taken away from you unwillingly. Just give full money to the people and let them decide what to do with it.
notmyclementine | 6 hours ago
I always thought you could have a tax structure set up where if your executives are making more than X times the amount of an average employee salary, they have to pay higher taxes. Works both ways too because they can avoid the taxes by increasing the average employee salary as well, etc.
jnakhoul | 9 hours ago
Or we could just raise taxes on the rich and not have stupid schemes. This doesn’t pass a basic sniff test of say, anybody who isn’t employed by a public ally traded company wouldn’t benefit from this.
LurkinOff | 12 hours ago
Just pay for our heath care. All of it. You keep the rest of the money, we get healthy, you have loyal employees and a robust pool of healthy people to take the jobs. We can reduce the birth rate and then maintain
Timelycommentor | 11 hours ago
People have to take care of themselves health wise buddy. Healthcare means squat if Billy Bob won’t stop eating Chicken fried steaks and drinking a 30 pack every weekend.
LurkinOff | 9 hours ago
Oh yes thats the only reason people get sick.
Reddit_Is_a_jokee | 12 hours ago
Honestly one place to start is the government caping auto insurance, or forcing an end of year rebate.
Most people sub 45 are paying nearly as much for insurance as the car payment.
Most people are netting 25K in income for the year and insurance alone is 20% of it.
Flimsy-Eye-4406 | 11 hours ago
Just stop taxing income and tax wealth instead. All tax is a way to redistribute wealth anyway so why not just aim directly at the wealth?
Base the rate on what the federal budget will be. If excess/shortfall is collected lower/raise the rate the next year. Leave ss tax and the program in place - maybe remove the earnings cap. States and cities could still raise funds however they do now. Provide an exemption for primary residence equal to the median home price for the county it is in. There are some other situations where things would need to be sorted - none of which are insurmountable.
What this would do is make it so that those that have no wealth would pay no tax regardless of income. Those with a lot of wealth would pay the most tax - regardless of income.
I have never heard a better way regardless of possible problems.
Person_756335846 | 7 hours ago
This would mean that anyone who earned $100,000/year and spent it all on consumption instead of savings would pay 0 tax.
Which would basically annihilate savings and investment.
Flimsy-Eye-4406 | 6 hours ago
Which would mean more economic activity putting money into the hands of businesses. Which could use the money for investment in their business.
Person_756335846 | 6 hours ago
>Which could use the money for investment in their business.
No. Businesses would have the same incentive to immediately return capital to their owners for consumption, since otherwise that capital would be taxed if invested.
Flimsy-Eye-4406 | 5 hours ago
If wealth were to be taxed instead of income - the tax rate would only need to be around 4%. The vast majority of people would be better off. In the event you are someone that has accumulated a huge amount of wealth it would mean a lot more tax for you. Same for a business. Accumulated wealth is the target of the tax. Thats the point - it addresses wealth inequality vs what we do now which basically does the opposite.
Person_756335846 | 5 hours ago
You are making the mistake of thinking of wealth as gold in a vault. Your tax would destroy actual wealth—factories, infrastructure, machines—that make us all fabulously wealthy compared to any time in history.
Flimsy-Eye-4406 | 3 hours ago
I don’t see wealth as gold in a vault at all. What I see is a very small percentage of people that control an increasing percentage of all wealth. Our current tax system encourages this and places the burden of paying for most of our society on an ever dwindling middle class. Making the people and companies that have gotten the most wealth from our society pay the most for our society won’t destroy wealth at all - just the accumulation of it into fewer hands.
Person_756335846 | 3 hours ago
>Our current tax system encourages this and places the burden of paying for most of our society on an ever dwindling middle class.
This just isn't true. The top 1.5% pay 50% of income taxes (more than their share of income). They also pay the lion's share of corporate taxes (if you attribute them away from companies to the real parties in interest) and capital gains taxes.
If you look at overall tax burden (every form of tax, including regressive and flat taxes), the top 1% pay 23.9% of all taxes on 20.1% of consumption.
>just the accumulation of it into fewer hands.
Why would a small business owner, or anyone else, buy a machine to make their small business more productive if that machine was going to be taxed at 7% per year?
Flimsy-Eye-4406 | 5 hours ago
It wouldn’t though. Unless you are super wealthy or have a huge savings or investment portfolio it would still be less tax than income tax. People would still save and invest and most would have more ability to do so.
Person_756335846 | 5 hours ago
What do you mean “it wouldn’t”?
If I knew the government would take 6% of the value of all my assets at the end of the year, why would I ever invest in productive assets? Much better to spend everything and pay 0 tax.
Flimsy-Eye-4406 | 3 hours ago
And what would you spend it on ?
Flimsy-Eye-4406 | 2 hours ago
If you earned 100000 a year and were able to save 10000 and had to pay tax on that at 4% you would pay $400. Currently if you earn 100000 and pay income tax on it you would pay between 13 and 17 thousand. This would benefit the vast majority of people. It would allow more people to save or simply afford to live - all while creating huge amounts of economic activity.
credible_srce | 10 hours ago
Taxing wealth is analogous to guilty until proven innocent.
Flimsy-Eye-4406 | 5 hours ago
How so?
credible_srce | 5 hours ago
Ok maybe not a perfect analogy but, It’s all on paper until it becomes realized income or a realized gain. You’re taxiing a hypothetical, almost like with the presumption of guilt instead of innocence. convicting on what hypothetical (wealth) instead of the facts (income). I think a better solution is to incentivize greater asset/equity transfer to the middle class, equity compensation, rent to own, savings/market accounts. Penalizing wealth creation is a horrendous idea with numerous unintended consequences
Flimsy-Eye-4406 | 3 hours ago
If it can be borrowed against or used as collateral it has real value. We tax houses. We tax cars. We tax land. Every year based on an assessed value. You are pretending that wealth is hypothetical. It is not. Taxing wealth is not penalizing wealth creation any more than taxing income is penalizing work. It’s just more effective at allowing more people to grow wealth.
SockDem | 10 hours ago
That’s a not particularly great idea.
Wild_Height_901 | 6 hours ago
How would tax work if their networth drops?
So you tax a guy with 20 million in stock. And then it drops to 10 million. Does he get a refund? Do they have to sell stock to pay it?
This is the idea of someone who has never owned a business. Never contributed anything to society. Probably supports Bernie sanders.
The US tax code is like millions of pages. It needs to be simplified.
15% income tax flat. Across the board. For everyone. No loopholes. No write offs. The tax code should be 3 pages long and in plain English.
Flimsy-Eye-4406 | 3 hours ago
If his wealth is less he pays less tax. No refunds. Do they sell stock to buy food? I have owned a business. I contribute nearly every day - real, tangible worthwhile projects that improve kids lives, help create community and save those communities money. I don’t support any politician - they are all crooks and I don’t believe we need them. I agree the tax code is too complicated. It’s been written to benefit the wealthy and help them stay that way at the expense of the working class. I disagree with a flat tax on income - you would ask a single parent earning the median income who owns nothing to pay 15 % of everything they have while asking a billionaire to pay nothing because they take all their money as stock?
ICLazeru | 11 hours ago
I would personally prefer a less markety compensation solution. The speculative nature of stock values and the over-reliance on them as a source of compensation and leverage is just asking for more trouble in my opinion.
My own over-the-top, unhinged, wacky, radical solution is to just offer better public services. So the tax option I guess, though I kind of don't trust the national government with this one either.
But basically, if US citizens had access to universal basic health care, would employers have to offer it as an incentive? No they would not. Instantly that weight gets lifted off the books of businesses, and the employees still have access to care.
Of course, I also think we shouldn't be taxing companies based on per employee criteria anyway, that discourages hiring.
I haven't done thorough research on this, so there are details and issues undoubtedly, but maybe businesses should be taxed more similarly to property taxes. What is the assessed value of the business or what is the businesses market cap? That will determine its tax burden that year.
This would discourage reckless capital expansion and tighten expectations for ROI. And yes, it would put a damper on the AI build out, but frankly it probably needs it.
But lets shift the tax burden off of labor and compensation, and onto the businesses that are actually soaking up all the capital. It's called capitalism, right? Tax the capital.
MekaLiza | 11 hours ago
I like your words magic man.
a57782 | 9 hours ago
I can't help but feel like it's actually a bit of a trap. Compensate us all with a pittance in stocks, so we're less likely to want to do things that curb the excesses of the stock market, so the people who are making a lot of money off the stock market can continue to make more money off stocks than most of us will ever see in our lives.
Richandler | 10 hours ago
This is a terrible idea and doesn't solve fundamental problems in our economy. It simply dilutes the balance sheet with unpaid liabilities. Then it denies payment to employees in exchange for high risk assets? This is opposite of how an economy should work. Investment isn't the end all. What those invesments make to be consumed is.
Law_Student | 12 hours ago
This doesn't get at the huge piles of wealth already concentrated in private hands. Go after the oligarchs, AND prevent new oligarchs from ever getting excessively rich in the first place with taxes.
ToneShop | 12 hours ago
Yeah, this is why he isn't suggesting that we actually just pay people what they are worth. It has to be tied into this system where your corporate lords still have control over you.
CarsonWentzGOAT1 | 12 hours ago
No, but this is a good solution.
Commercial-Lychee700 | 10 hours ago
Mark Cuban is so dumb he's trying to re-invent socialism. Mark, giving workers ownership stakes in their employer sounds a lot like laborers having ownership of the means of production.
Marc_Quadzella | 12 hours ago
I think having employees as stakeholders makes for a more efficient and bought in employee. I think ESOPs and equity grants to front line workers is a great incentive to reduce turnover of the people that are often the face of a business.
Consistent-Set-9490 | 12 hours ago
Workers owning the means of production seems like a good start. I’m sure there is some additional nuance to sort out - like they need to be voting shares.
oboshoe | 12 hours ago
Nice. We did the opposite around 2002. We punished companies that give stock with higher taxes. This was done to help close inequality.
Guess what happened? They stopped giving stock to regular employees and just gave them to executives.
Before that I regularly got stock options, now it's rare.
red_engine_mw | 12 hours ago
Just make the corporate tax rate inversely proportional to the ratio of total CEO compensation to the average compensation of the bottom 10% of staff.
You want to pay the CEO 100x what the worker bees are making? Fine. Your company gets to pay the highest corporate tax rate. CEO pay is only 3x? It's the lowest rate for your company.
triscuitsrule | 12 hours ago
Pay taxes to a government to build bridges, roads, schools, pay teachers, firefighters, police, fund watchdogs and regulatory groups, fund the military, public healthcare…
Or give workers stocks that can devalue on a moments notice and will eventually devalue, that Congress can impose stiff taxes on on a moments notice, leaving the companies still not paying taxes to build schools, PDs, fire stations, etc. so then the plebs can then sell their stocks to afford the privatized version of all those services.
No thank you.
This just sounds like another BS fantasy to sell to the mob the maintenance of the capitalist aristocracy at the cost of a socialized world. It’s just another ploy not dissimilar to trickle down economics.
psychohistorian8 | 12 hours ago
I don’t want stock in my company, that’s a concentration risk
also they are private so it would be a liquidity nightmare if they even had such a thing
I’d be fine with a higher 401(k) match or something though
Alone-Supermarket-98 | 12 hours ago
Funny how when Cuban was investing in and starting up companies, he wasnt handing out stock to all employees. I guess now that he made his money, he feels self rightious enough to lecture everyone else about how they should run their businesses in a way he never did. If he really cared about "income equality", perhaps he can explain why he charges up to $9,000 for courtside seats to see a 26-56 Dallas Mavericks game.
pugwalker | 10 hours ago
Stock is worthless without profit. You’re getting a stake in a nonprofit making it worth essentially zero. Unless you plan to take profit in the future…
HappyGnumff | 10 hours ago
But it’s a great incentive to work hard to make the company profitable
sonofagunn | 12 hours ago
I think it's a great idea. Doesn't have to be just stock though, could be annual profit-sharing bonuses. The amount of your company's profit that goes to bonuses could become a tax credit. Notice I said credit not deduction as anything you pay your employees would already be deducted from profit. A credit means a company can choose between paying $X in taxes or giving $X to non-executive employees. I'm sure we'd need some sort of limits and exceptions but I like the general idea.