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by dragonwriter 3258 days ago
> Which means, in any year, she can take $150MM in income taxed at say 55%, and pay $0 in taxes on it.

55% is greater than the maximum combined federal and state marginal income tax rate on normal income, and no one making that much does it as normal (mainly, labor) rather than long-term capital gains (which pays lower rates) income in the first place, because no one pays that kind of money for labor, you only make it by capital returns, so, no, she can't even in principal, and even if the tax rates were such that she could in principal, she still wouldn't be likely to be able to in practice.
1 comments
Denzel 3258 days ago
Firstly, 55% is not greater than the maximum tax rate one could pay on income (especially in CA) [1].

Secondly, you understand that RSUs (restricted stock units) are taxed as normal W-2 income at the time of vesting, right! You pay capital-gains tax on any appreciation in value after said vesting -- should you choose to sell the stock.

You should probably stop spreading misinformation on topics you don't have experience in.

[1]: https://smartasset.com/taxes/california-tax-calculator

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dragonwriter 3258 days ago
> Firstly, 55% is not greater than the maximum tax rate one could pay on income

But it is, AFAICT, greater than the maximum marginal income tax rate [0]; since the deduction affects only income taxes and not other taxes on income, it is the maximum marginal income tax rate, not the maximum marginal rate of taxation on income, that is relevant.

> Secondly, you understand that RSUs (restricted stock units) are taxed as normal W-2 income at the time of vesting

Yes, I do. That doesn't change anything I said. People that are making hundreds of millions of dollars of income in a year aren't making it from RSU vesting, or any other source of income subject to regular income taxes.

[0] just barely; the maximum marginal income tax rate in any US jurisdiction seems to be 39.6% federal + 13.3% CA state + 1.5% SF local, or 54.4%.

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Denzel 3258 days ago
Uhm, they do make significant (>$40MM) amounts of money from cash+RSU compensation. [1-5] That's literally what you can find with a cursory search; no digging. Furthermore, the tax writeoff carries through 5 years since it was a stock donation.

And sure, use 54.4% instead of 55%. Don't miss the forest for the trees though.

[1]: http://www.cnbc.com/2017/04/28/google-ceo-sundar-pichais-com...

[2]: http://money.cnn.com/2015/10/14/technology/twitter-omid-kord...

[3]: http://www.marketwatch.com/story/googles-sundar-pichai-is-li...

[4]: https://www.sec.gov/Archives/edgar/data/1288776/000130817913...

[5]: https://www.sec.gov/Archives/edgar/data/1652044/000130817916...

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