$40m under management is not $40m net worth. Not by a long shot. And the bill certainly doesn't define it that way.
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Replying to @sethbannon @JeffLonsdale
Do you have a link? I can’t find the bill details anywhere so we’ll see. if private stocks are considered assets then ownership of funds should be too - whatever the latest value of the fund is - so if it’s 3x on paper, then less 1x, 20% is your net worth, no?
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Replying to @dunkhippo33 @JeffLonsdale
Let's say carry counts and do the math. Say you 3x your $40m under management. ($40m * 3 - $40m) * 20% = $16m for you You still wouldn't qualify! First $15m is excempt. And I assume that entire $16m isn't just yours, but your partners also. 1/3
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At what multiple would this kick in, assuming all carry is yours only? 4.125x of your $40m under management to have to pay anything. Math: Need $25m net worth for tax to apply ($165m - $40m) * 20% = $25m Only last $10m of that is taxed .4% = only $40k / year! 2/3
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Seems pretty reasonable. You have huge wealth to draw on at that point. You gonna leave CA for that $40k? And sacrifice the networks that allowed you to build the $25m of wealth??? Maybe. I bet not We should define them well, but wealth taxes can be extremely reasonable. 3/3
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Replying to @sethbannon @JeffLonsdale
1st off - that’s what we have right now... lots unsaid in this thread... so agree w your calc but wrong
#s... 2ndly, I might have to! $40k is a lot of $$. (maybe not for you but for many new mgrs...) My networks will be around since I mostly zoom w ppl - even pre covid :)1 reply 0 retweets 2 likes -
Replying to @dunkhippo33 @JeffLonsdale
Once you've created ***$25 MILLION*** of equity value for yourself, there are many options to create $40k cash if you need it. Sell a part of the management company, for instance. Very common. And a very small inconvenience to pay for the system that allowed for your new wealth.
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Replying to @sethbannon @JeffLonsdale
Would disagree here - private markets are incredibly mispriced (both ways) & hurt entrepreneurs and new fund mgrs. it’s much better to revoke prop13 where the real estate mkts are a lot more liquid / transparent - can sell fractional ownership in houses fairly.
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keep in mind the law carves out real estate, strengthening CA's already best-in-class regime of tax subsidies for real estate wealth http://leginfo.legislature.ca.gov/faces/billNavClient.xhtml?bill_id=201920200AB2088 …
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Yes that's why I say this was poorly designed. Why should a real estate mogul who bought a home in Los altos hills in 1980 and has made all his / her money in real estate pay basically no taxes under this bill? It's not really a wealth tax. It's targeting startup founders.
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Kim-Mai Cutler Retweeted Jeremy B. White
It’s a symbolic bill that exists to make a political statement that the governor isn’t going to sign anyway, because 50% of the state’s personal income tax revenue comes from the 1% and he’s not going to blow up the tax base in an economic depression.https://twitter.com/jeremybwhite/status/1294375279280812032?s=21 …
Kim-Mai Cutler added,
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Replying to @kimmaicutler @dunkhippo33 and
I hope you are right. They passed and implemented AB5, seemingly as a symbolic bill against gig economy tech companies, before understanding who else it could really impact. So it makese sense to really push back against badly designed things coming out of the CA legislature.
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Replying to @JeffLonsdale @dunkhippo33 and
There was a California Supreme Court ruling, the Dynamex case, that that preceded AB5 and essentially pressured the legislature to come up with a new test.
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