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Non-Tech : Who Really Pays Taxes? -- Ignore unavailable to you. Want to Upgrade?

To: Lizzie Tudor who wrote (273)	8/15/2000 4:46:17 PM
From: KLP	Respond to of 666

Speaking of "Social Security"....how many groups are currently excluded from paying into this fund???? What groups are they and how large are they? KLP

To: Lizzie Tudor who wrote (273)	8/15/2000 4:52:54 PM
From: BWAC	Respond to of 666

Don't forget that there would be no Yahoo if the investor had not (at some point) put his already taxed and saved money at risk. Employee is making money that is being taxed for the first time. When that employee puts that money to work elsewhere, then it can be taxed at capital gains rates. Or put another way, the investor had already complete the process in the above example. He was one step ahead of you in the game.

To: Lizzie Tudor who wrote (273)	8/15/2000 4:54:05 PM
From: PMS Witch	Read Replies (1) \| Respond to of 666

In your example, the investor's purchase costs her $20,000. This $20,000 comes from what's left after paying tax on a much greater amount earned. If the investment appreciates, this investor is rewarded: If not, the the investor loses. The employee pays nothing for the options because they're granted. The only reason she gets options is because she works for the company. This is, and should be, taxed as income. Similarly, her salary is only paid because she works there, and this too is clearly income received as a result of employment. I think company supplied cars and other benefits get taxed similarly too. (They do in my country.) The employee doesn't face the same risks as the investor. Even if the options expire worthless, the employee, with a cost base of zero, hasn't lost. Hope this explains things. Cheers, PW.

To: Lizzie Tudor who wrote (273)	8/15/2000 4:55:26 PM
From: TimF	Respond to of 666

But taking a real world example, you work at yahoo for 80K/year and have 2000 stock options at 10$. Somebody else works at some other company for the same salary and buys yahoo stock - where it promptly goes to 200$. So you are looking at about 400K taxed as income for one guy and taxed as a lt capital gain for the other person. The yahoo worker is creating all the wealth, why reward the armchair quarterback? If someone else is working at another company for the same salary and also has good stock options then he is paying taxes on the stock options. If he does not have stock options then he is effectively paid much less, so it does not seem unfair that he gets taxed less. If he bought Yahoo stock he probably paid more then $10 per share for it and also took a risk with money that came out of his salary. The guy who has the options for $10 still has the stock options and the $80k salary. He didn't have to risk any of the $80k on buying stock to get the return. Tim

To: Lizzie Tudor who wrote (273)	8/15/2000 11:43:25 PM
From: Win-Lose-Draw	Read Replies (1) \| Respond to of 666

So you are looking at about 400K taxed as income for one guy and taxed as a lt capital gain for the other person. The person who purchased the stock on the open market risked their own capital. If the Yahoo employee exercised the options and held the stock they would be taxed in a similiar fashion to the non-employee. It's only when the options are cashed out (exercised and sold in what is basically one transaction) that it looks like income.

To: Lizzie Tudor who wrote (273)	8/16/2000 2:36:58 AM
From: Mama Bear	Read Replies (1) \| Respond to of 666

"But taking a real world example, you work at yahoo for 80K/year and have 2000 stock options at 10$. Somebody else works at some other company for the same salary and buys yahoo stock - where it promptly goes to 200$." For one thing the 'armchair quarterback' risked 20k, the Yahoo! was granted the options. If they expire worthless, he still has his 80k. Another is that Yahoo! wouldn't have gone to 200 without all the 'armchair quarterbacks'. Also, didn't the Yahoo! had the option of exercising the options when the stock was at 10 and keeping the stock? Then he'd get lt capital gains treatment as well. Of course the best thing would be to get rid of the personal income tax and all it's convoluted mechanisms. There are other legitimate ways to generate the revenue necessary to run the limited gov't that we need. Regards, Barb