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Comment by WJW | Hacker News Reader

For the US maybe. Income tax in the Netherlands (my country) in the top bracket is 52%. On the second hand, we have no capital gains tax so he might come out ahead when exercising options. On the third hand, we have a wealth tax of 1.2% on your entire capital above a certain floor (of about 20k) so he might not come out ahead in the end.

It's always interesting to see the opinions of different cultures about how much tax is reasonable :)

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Not bad, but doesn't that come with social services like free medical care and greatly subsidized education?

Here in he US the middle income pays taxes and receives almost no directive social benefit, as most social programs are geared towards lower income and the rich can afford accountants and lawyers to keep their tax burden very light.

I'm not sure how you can say that the rich keep their tax burden light when the topic of this thread is how Musk paid tax amounting to 44% of his income totalling over half a billion dollars.

If it were common for rich people to pay 44 percent of their income in tax, it wouldn't be a newsworthy story.

Are there people who receive millions of dollars in income via stock options who pay a lower rate? If so, how does that work?

Here's a Bloomberg article from 2012 that lists ten techniques: https://www.bloomberg.com/news/articles/2012-04-17/how-to-pa...

It's worth mentioning that none of these techniques actually apply to the case where you exercise stock options - other than the one that says basically "take options as compensation if you can because you don't pay taxes until you exercise them" which is true for everyone who gets options (because you don't get any liquidity) not just rich people with expensive accountants.

The only techniques that apply to income taxes are the "borrow against stock technique" (has a big caveat about a rich person who lost in court when he used it) and the deferred compensation example (which is also zero liquidity; presumably you pay all of the income taxes when you actual get the money).

The article makes a better case for ways to avoid death taxes or real estate taxes though.

I think the story here was the dollar amount, not the percentage.

>rich can afford accountants and lawyers to keep their tax burden very light.

The top 5% in the US pay 55% of all Federal income taxes.

In the Netherlands, his bonus and income would have been structured differently, he'd have had a personal holding to 'catch' the money before it would have been taxed income or capital taxes, and he'd have paid next to nothing (yet). He could have delayed selling off stock to pay taxes for as long as he'd have wanted.

I'm not sure how entrepreneurs do this in the US, is Musk being patriotic paying so much taxes, or is there really no way to delay/avoid having to sell stock to pay taxes?

The top bracket is 52.9% in California. Of course, the Netherlands' tax brackets are much less progressive than those in the US/California; the top bracket is around ~$80K vs. ~$1M.

I'm not sure if the figure in the piece is only federal tax, but if so there's another 13% for California state taxes.

>It's always interesting to see the opinions of different cultures about how much tax is reasonable :)

I think you're missing his point. The raw percentage isn't as unreasonable as the difference between the parent-poster's and Musk's tax rate.

There's a big difference between tax rate and effective tax paid.

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