Buybacks at $46B a Month Dwarf Everything in U.S. Market (2015)

Re:Buybacks at $46B a Month Dwarf Everything in U.S. Market ... by downandout on Monday April 04, 2016 @02:41AM (#11419815)

>California also taxes long term capital gains (LTCG) at a top rate of 13%

I'm sure that Zuckerberg et al have brilliant tax accountants, but this is one thing that has never made sense to me. Volunteering to pay an extra 13% simply for the privilege of living in Northern California seems insane to me. Any of these guys could move a few hours down the road to Tahoe or Reno and save themselves billions of dollars in state taxes, even if they left the company headquarters in CA.

I'd also like to see Pricenomics do a study measuring the market cap impact of California's high corporate income tax rates on major publicly traded Silicon Valley companies. I'm guessing investors would be sickened by the results.

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Re:Buybacks at $46B a Month Dwarf Everything in U.S. Market ... by lyncnshare on Monday April 04, 2016 @03:10AM (#11419945)

The tax only applies to realized gains. As long as they aren't selling their shares they aren't being taxed. They can also sometimes contribute the shares to tax advantaged vehicles (remember Romney having $101 million in his IRA [1]) or set up other structures to minimize their tax burden. That being said, Northern California is a wonderful place and housing and cost of living prices indicate that many people are willing to pay to live there.

[1] http://www.reuters.com/article/us-usa-campaign-romney-ira-id...

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Re:Buybacks at $46B a Month Dwarf Everything in U.S. Market ... by downandout on Monday April 04, 2016 @03:30AM (#11420039)

>That being said, Northern California is a wonderful place and housing and cost of living prices indicate that many people are willing to pay to live there.

No place is wonderful enough to pay billions of dollars in extra taxes just to live there. If you are a top engineer making $500K/yr, you're only paying ~$65K/yr in CA taxes, and you wouldn't make anywhere close to $500K in other cities. So the decision to live in CA makes perfect financial sense in that scenario. But in the case of a billionaire founder, it simply doesn't make any sense to sell shares while living as a California resident. You're essentially volunteering to pay a ~65% increase in total capital gains taxes over what they would be in a tax-free state.

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Re:Buybacks at $46B a Month Dwarf Everything in U.S. Market ... by sokoloff on Monday April 04, 2016 @05:59AM (#11420568)

There's the fact that Facebook is headquartered in California, and having to establish and maintain NV residency might be more of a burden than Mark is willing to do. (Imagine that CA will scrutinize that claim carefully.)

If Mark has to stay 183 nights in NV (or stay in NV more nights than anywhere else), that might be more of a personal burden and inconvenience than paying CA tax. And if it harms his ability to lead his company, it might ultimately be more expensive as well...

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Re:Buybacks at $46B a Month Dwarf Everything in U.S. Market ... by adrianN on Monday April 04, 2016 @02:57AM (#11419882)

Maybe they're rich enough that it doesn't matter to them. Whether you make 10 Million a year or 15 maybe doesn't have an impact on your lifestyle at all.

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Re:Buybacks at $46B a Month Dwarf Everything in U.S. Market ... by downandout on Monday April 04, 2016 @05:46AM (#11420508)

Yes, but at $15M/yr, the 13% is only $1.95M. That's high, but not singlehandedly-supporting-the-government high. In 2013, Mark Zuckerberg paid an estimated $2.3 billion in total income tax [1]. About 40% - nearly $1 billion - likely went to California state taxes - for the mere privilege of living near the beach.

If he wants to give $1 billion in cash away, there are alot better uses than to give it to state government bureaucrats. For example, he could have moved to Nevada, saved the $1 billion, and taken 50,000 homeless people off the streets for a year for that much money (which, by the way is ~10% of the entire homeless population in the United States - imagine the positive social impact of doing such a thing).

The point is that federal taxes are inescapable, while state taxes are not. It makes no financial sense for someone with nine or ten figure tax liabilities to be living in high tax states.

[1] http://www.forbes.com/sites/robertwood/2013/12/20/mark-zucke...

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Re:Buybacks at $46B a Month Dwarf Everything in U.S. Market ... by freddie_mercury on Monday April 04, 2016 @03:05AM (#11419922)

You pay state taxes based on where the income is generated from (for most states but definitely for California), not where your house is. Putting their house in Tahoe/Reno but leaving the HQ in California wouldn't affect their income taxes.

They'd have to move the company HQ to Reno/Tahoe to avoid the taxes.

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Re:Buybacks at $46B a Month Dwarf Everything in U.S. Market ... by downandout on Monday April 04, 2016 @03:26AM (#11420018)

Not true in the case of shareholders. For example, if MZ became a Nevada resident and quit working for Facebook but still had all of his shares, he would not be subject to California taxes when he sold them. Even if he continued working or consulting for FB, California taxes would likely only apply to the income or options derived from that work (though California has some onerous and complex "substantial nexus" rules that may apply if he still worked there, yet another reason to simply not startup there in the first place).

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