Bear Pit: now the sole domicile of politics at LuLa

[Alan Klein]

So you've come around to my way of thinking regarding giving tax concessions to corporations to relocate.

What about air traffic control? Should taxpayers subsidize the minority of people who fly?

There's no bottom to this rabbit hole.

State tax concessions that are eventually recaptured to bring a new business to their states is not the same as Federal tax rebates picking winners and losers at the taxpayers expense.   I would prefer that the state's didn't do that. But the intentions and costs are different.


I think the government should stay out of financing airports and other things that should be borne by private Enterprise except in rare situations where it needs government input. Then those costs should be recaptured in some way from the parts of the public that infrastructure is serving.

[LesPalenik]

54%? Shouldn't it be 15%? Capital gains.

The options will expire in August of next year. Yet in order to exercise them, Musk has to pay the income tax on the gain. Since the options are taxed as an employee benefit or compensation, they will be taxed at top ordinary-income levels, or 37% plus the 3.8% net investment tax. He will also have to pay the 13.3% top tax rate in California since the options were granted and mostly earned while he was a California tax resident.

Combined, the state and federal tax rate will be 54.1%. So the total tax bill on his options, at the current price, would be $15 billion.

[Alan Klein]

The options will expire in August of next year. Yet in order to exercise them, Musk has to pay the income tax on the gain. Since the options are taxed as an employee benefit or compensation, they will be taxed at top ordinary-income levels, or 37% plus the 3.8% net investment tax. He will also have to pay the 13.3% top tax rate in California since the options were granted and mostly earned while he was a California tax resident.

Combined, the state and federal tax rate will be 54.1%. So the total tax bill on his options, at the current price, would be $15 billion.

Isn't the question is whether he's exercising sales of his options or his original stock that he owned for more than a year making them long-term capital gains?

In other words, let's say you buy 100 shares of Tesla three years ago.  Then you buy another 100 shares six months ago and decide to sell 100 shares now.  Which shares are you selling?  The original three-year-old long-term ownership ones that get taxed at 15%?  Or the short-term 6-month shares whose gain gets taxed as ordinary income?

[Alan Klein]

Oh I see.  These are stock options not a simple purchase of stock so it's handled differently.   Does he also have to pay 1.25% for Medicare?

[Peter McLennan]

Why Alan is naive and wrong about "the free market".  We have no idea how manipulated the "free" markets really are.

Airlines' reward programs are more valuable than the airlines themselves.  Airlines are in fact financial institutions.

https://youtu.be/ggUduBmvQ_4

[Alan Klein]

Why Alan is naive and wrong about "the free market".  We have no idea how manipulated the "free" markets really are.

Airlines' reward programs are more valuable than the airlines themselves.  Airlines are in fact financial institutions.

https://youtu.be/ggUduBmvQ_4

I've never said America is a 100% true free-market system.  No such thing can exist as long as there is a government.  Frankly, there's a lot of corporate welfare in America; the Fed contributes to a lot of it and the government the rest. 

But there is a huge free-market component in America and the more free-market there can be, the better off it is for the people, the country, and its economy. 

Your link to frequent flyer miles and airlines being banks reminds me of what happened to General Electric.  GE was a premier jet engine, washing machine, and locomotive company, as well as other electric products like light bulbs, transformers, electric power plants, etc.  Then they got into the loan business and created GE Credit which became one of their largest if not the largest component.  Then there was a bad economic situation and it nearly bankrupted the company.  They never really recovered.

Of course, the airlines similarly faced bankruptcy last year because of Covid. But the government bailed them out to the tune of $100 billion or so instead of letting a few of them go bankrupt to be reorganized.  That would save the taxpayers all that wasted money for some zombie corporations. That's corporate welfare and wrong.  So we agree on that.

[Robert Roaldi]

I've never said America is a 100% true free-market system.  No such thing can exist as long as there is a government.  Frankly, there's a lot of corporate welfare in America; the

There can be no free markets without governments. Read a book, would you.

[LesPalenik]

Isn't the question is whether he's exercising sales of his options or his original stock that he owned for more than a year making them long-term capital gains?

In other words, let's say you buy 100 shares of Tesla three years ago.  Then you buy another 100 shares six months ago and decide to sell 100 shares now.  Which shares are you selling?  The original three-year-old long-term ownership ones that get taxed at 15%?  Or the short-term 6-month shares whose gain gets taxed as ordinary income?

I think, IRS uses the First-In, First-Out rule for calculation of taxes. Or the average price. Definitely not Last-in, First-Out.
Speaking of timing, Monday should be a good day for adding more TSLA shares to your portfolio. The recent sale of Elon Musk's shares pushed the share price down, so next week may be your last opportunity to buy it under $1000. He has sold by now about 75-85% of the 18 million shares lot, so soon the downward pressure on the shares should ease off and next year they will take off and go to the Moon.

[Alan Klein]

There can be no free markets without governments. Read a book, would you.

A free market does not need a government and predated governments.  People traded long before politicians got involved.

What is a Free Market?
The free market is an economic system based on supply and demand with little or no government control. It is a summary description of all voluntary exchanges that take place in a given economic environment. Free markets are characterized by a spontaneous and decentralized order of arrangements through which individuals make economic decisions. Based on its political and legal rules, a country's free market economy may range between very large or entirely illegal.
https://www.investopedia.com/terms/f/freemarket.asp

[Alan Klein]

I think, IRS uses the First-In, First-Out rule for calculation of taxes. Or the average price. Definitely not Last-in, First-Out.
Speaking of timing, Monday should be a good day for adding more TSLA shares to your portfolio. The recent sale of Elon Musk's shares pushed the share price down, so next week may be your last opportunity to buy it under $1000. He has sold by now about 75-85% of the 18 million shares lot, so soon the downward pressure on the shares should ease off and next year they will take off and go to the Moon.

You apparently own some, so I wish you luck.  Personally, I think they're overpriced but I said the same thing about Apple and Amazon.

[LesPalenik]

You apparently own some, so I wish you luck.  Personally, I think they're overpriced but I said the same thing about Apple and Amazon.

They are overpriced, looking at their last year financials. But undervalued looking forward.

[Robert Roaldi]

A free market does not need a government ...
...

On which planet?

[Alan Klein]

On which planet?

Free markets don't need a government.  They predated them and worked fine.  Today, because there are governments everywhere, and they influence free markets, that only limits their true nature and value to society.  So we'd be better off limiting government influence as much as possible.

Unfortunately, we don't.  So we face enormous problems caused by government interference such as misallocation of private resources, false interest rates mandated by the Fed and other central banks instead of allowing the free market to determine them, printing, regulation, taxes, etc. 

You ought to re-read the definition:

What is a Free Market?
The free market is an economic system based on supply and demand with little or no government control.[ It is a summary description of all voluntary exchanges that take place in a given economic environment. Free markets are characterized by a spontaneous and decentralized order of arrangements through which individuals make economic decisions. Based on its political and legal rules, a country's free market economy may range between very large or entirely illegal.
https://www.investopedia.com/terms/f/freemarket.asp

[Alan Klein]

They are overpriced, looking at their last year financials. But undervalued looking forward.

Tesla is being sued due to Musk's tweets and stock sales.  I should have had such problems like Musk when I was in business. 

Tesla Hit With Investor Lawsuit Over Musk’s Market-Moving Tweets
https://news.bloomberglaw.com/esg/tesla-hit-with-investor-lawsuit-over-musks-market-moving-tweets

[LesPalenik]

Tesla is being sued due to Musk's tweets and stock sales.  I should have had such problems like Musk when I was in business. 

Tesla Hit With Investor Lawsuit Over Musk’s Market-Moving Tweets
https://news.bloomberglaw.com/esg/tesla-hit-with-investor-lawsuit-over-musks-market-moving-tweets

Tesla spends zero dollars on advertising. Elon takes care of keeping Tesla's name in news by his tweets. But it is all insignificant noise which will be forgotten in the next few months.
Below is the TSLA share price chart for the last 5 years. (the recent drop in price caused by the macroeconomics and Elon's sale of 18M shares). The exponential trajectory should continue for the next 5 years.

[Alan Klein]

Tesla spends zero dollars on advertising. Elon takes care of keeping Tesla's name in news by his tweets. But it is all insignificant noise which will be forgotten in the next few months.
Below is the TSLA share price chart for the last 5 years. (the recent drop in price caused by the macroeconomics and Elon's sale of 18M shares). The exponential trajectory should continue for the next 5 years.

He's so good at tweets.  He should run for president. 

Remember, a trend is a trend until it ends.  Exponential trajectories have a limit.  In this case, it's easy money driving the markets.  At some point, valuation is required to match the stock price.  That comes from earnings.  Right now, Tesla's stock valuation is greater than Toyota and a couple of other of the largest car manufacturers in the world.  That's unsustainable. Musk is smart. He knows the valuation is overpriced and is selling a bunch to get out while its price is still overly high. 

[LesPalenik]

He's so good at tweets.  He should run for president. 

Remember, a trend is a trend until it ends.  Exponential trajectories have a limit.  In this case, it's easy money driving the markets.  At some point, valuation is required to match the stock price.  That comes from earnings.  Right now, Tesla's stock valuation is greater than Toyota and a couple of other of the largest car manufacturers in the world.  That's unsustainable. Musk is smart. He knows the valuation is overpriced and is selling a bunch to get out while its price is still overly high.

That would be true based on the oversimplified facts which you see now. Not when you consider that next year they will introduce two or three new vehicles and start two new gigafactories much bigger than existing two in Fremont and Shanghai. Just these two things will easily double their revenue. Providing charging to other EVs, seling FSD to a good portion of Tesla owners, licensing it to some other manufacturers and expanding Tesla insurance to all 50 states will triple their revenue. Which is in line with analyst's $2500-$3,000 target.

[Alan Klein]

That would be true based on the oversimplified facts which you see now. Not when you consider that next year they will introduce two or three new vehicles and start two new gigafactories much bigger than existing two in Fremont and Shanghai. Just these two things will easily double their revenue. Providing charging to other EVs, seling FSD to a good portion of Tesla owners, licensing it to some other manufacturers and expanding Tesla insurance to all 50 states will triple their revenue. Which is in line with analyst's $2500-$3,000 target.

Well follow your own advice.  Don't listen to me.  I always get stocks wrong.  My wife's better at it. 

[digitaldog]

Don't listen to me. 
I always get stocks wrong. 
My wife's better at it. 

1.Most here don't.
2.This isn't limited to stocks (resolution, calibration, scanning, Covid-19, the web is sRGB; as just five examples.)
3.Could she post here instead? 👌

[PeterAit]

Free markets don't need a government.  They predated them and worked fine. 

Worked fine? Really? Free markets brought the world slavery, serfdom, and peonage. The slaughter of whales and inhumane meat factories. Child labor, sweat shops, and vast pollution. The list goes on. If you, Alan, think these things are OK then just say so.