Editor's notes

When public schools can no longer afford to buy paper, it's time to reconsider the tax system

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tredmond@sfbg.com

I got a message the other day from my son's public school, begging parents to go out and buy a few reams of paper, because the school is almost out and can't afford any more. Seriously: A public middle school in San Francisco doesn't have enough paper for the school year and has to ask parents to go to Costco and pick some up.

Then there's the protest over renting out Coit Tower for private parties. It's a public facility, part of the city's park system, and the Recreation and Parks Department wants to use it to raise revenue — because there's not enough city money to pay the staff to maintain the parks.

So I'm really glad to hear that Facebook is going public, and a lot of people — including, based on Facebook's public filing information, a total of eight in San Francisco — will be worth hundreds of millions of dollars. The shares of those eight range in value from $5.16 billion (Dustin Moskovitz) to $425 million (Mark Pincus), and they average out to $1.117 billion a person.

When these folks sell some of their shares and start to cash in on that wealth, the most they'll pay in taxes is 35 percent (state and federal combined), since that's what you pay for capital gains.

The nation's debt is approaching World War II-era levels; back then, President Franklin Roosevelt addressed the issue by taxing the highest levels of income — including capital gains — at 90 percent. As my friend Bruce Anderson writes in the Anderson Valley Advertiser, that was not the end of gilded wealth; the very rich continued to be very rich, but the public debt came down and the nation was better off for it.

I know, yes, shut up — I talk too much about taxes. Every week. I'm getting sick of it. But San Francisco is about to get another addition to the roles of the 1 percent (or even the top half of the 1 percent) and while I'm happy for them all, I think they would probably do just fine with a little less of their new wealth.

Supposed we taxed stock gains of, say, more than $20 million at the rate FDR did? Moscovitz would wind up with about $51 million. How can you possibly spend that much money? Isn't $50 million enough? When the schools can't buy paper?

Have we no decency?

Comments

Your math is off - you skipped a decimal point.

If Moscovitz makes $5.16 billion and the first $20M is taxed at 35% and the rest is taxed at 90%, he's left with $13M of the $20M and $514M of the remaining $5.14 billion, for a total after-tax income of $527 million, not $51 million. Even Pincus would end up with $53.5 million after tax.

Which makes your point even more solid: a 90% tax on income over $20 million/year won't put a crimp in anyone's lifestyle. They could each still buy a fleet of ferraris and several of the nicest houses in San Francisco to park them by, and have plenty left over to put their kids and grandkids through college, travel the world at leisure, and hire as many maids, gardeners, and chauffeurs as they could make use of, for life.

Posted by Guest on Feb. 08, 2012 @ 12:37 pm

Your math is off - you skipped a decimal point.

If Moscovitz makes $5.16 billion and the first $20M is taxed at 35% and the rest is taxed at 90%, he's left with $13M of the $20M and $514M of the remaining $5.14 billion, for a total after-tax income of $527 million, not $51 million. Even Pincus would end up with $53.5 million after tax.

Which makes your point even more solid: a 90% tax on income over $20 million/year won't put a crimp in anyone's lifestyle. They could each still buy a fleet of ferraris and several of the nicest houses in San Francisco to park them by, and have plenty left over to put their kids and grandkids through college, travel the world at leisure, and hire as many maids, gardeners, and chauffeurs as they could make use of, for life.

Posted by Guest on Feb. 08, 2012 @ 12:40 pm

Yep, yr right, put the point in the wrong place, but you get the point: These folks will have plenty left.

Posted by tim on Feb. 08, 2012 @ 2:40 pm

Hey- I appreciate your unending passion but...

Why do you think you have a divine right to other people's money?

I think a better question to ask is - why does Santa Clara County have 31 separate school districts.

I also think these successful folks would be smarter investors with their retained earnings than the City of San Francisco, the State of California or the federal government investing with rewarding financial supporters as a primary objective.

Posted by Guest on Feb. 08, 2012 @ 3:27 pm