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[Date Prev][Date Next][Thread Prev][Thread Next][Date Index][Thread Index] Re[8]: HOMESTEAD: accounting and time limited investment
I assumed that income and capital gains taxes went to the Feds rather than to the State? At 01:11 PM 8/6/2000 , you wrote: >Do you think a special tax would be necessary to maintain revenue neutrality? >It seems possible existing income and cap gains taxes might do the trick. But >as with any tax incentives, is it possible to measure the resulting tax loss >and >gain with enough precision to reassure policy-makers? > >____________________Reply Separator____________________ >Subject: Re[7]: HOMESTEAD: accounting and time limited investment >Author: <EOsubnat@cog.kent.edu> >Date: 6/8/00 12:27 PM > >Equity Quid Pro Quo for State taxes may well provide sufficient incentive >to encourage conversion to an OTC program. The problem may not be with the >ability of the State to provide concessions on land, payroll, sales taxes >etc. to initiate such a converson but on obtaining an offset for the loss >of State revenues from the ownership transfer. > >The state may need to introduce a special tax on the income transferred to >local citizens by the OTC? > >Regards > >Shann > >At 12:02 PM 8/6/2000 , you wrote: >>Basically, I'm trying to figure out if a state government, like Hawaii, could >>put together a tax incentive package on its own (without corresponding federal >>govt tax breaks) that would be sufficiently lucrative to make a difference. >>But >>I don't think you can tell me that without more info about Hawaii's business >>taxes. >> >>____________________Reply Separator____________________ >>Subject: Re[6]: HOMESTEAD: accounting and time limited investment >>Author: <EOsubnat@cog.kent.edu> >>Date: 6/7/00 1:52 PM >> >>At 01:14 PM 7/6/2000 , you wrote: >>>Thanks again for the quick reply. So based on what you said below and in >>>response to Karen May, do you agree with the following statement: >>> >>>Even complete tax holidays for firms which choose to become OTCs will not >>>guarantee the proliferation of OTCs within the jurisdiction of the governing >>>entity offering the tax holiday if investment opportunities in that >>>jurisdiction >>>still are not globally competitive. AGREED, BUT THIS WOULD ALSO MEAN THAT >>INVESTMENTS WOULD NOT BE MADE IN CONVENTIONAL COMPANIES WITH THE SAME >>BUSINESS ACTIVITY. WHAT EVER THE BUSINESS ACTIVITY IT WOULD BECOME MORE >>GLOBALLY COMPETITIVE WITH OTC TAX CONCESSIONS NOT AVAILABLE IN CONVENTIONAL >>LEGAL STRUCTURES. I DON'T UNDERSTAND THE POINT YOU MAY BE MAKING. >>> >>>This also links back to the question I asked you earlier this year re: >whether >>>or not even the most generous tax breaks on the sub-national government level >>>would be adequate to entice the creation of a substantial number of OTCs >>on the >>>sub-national level. >>> >>>____________________Reply Separator____________________ >>>Subject: Re[5]: HOMESTEAD: accounting and time limited investment >>>Author: <homestead@cog.kent.edu> >>>Date: 6/7/00 12:53 PM >>> >>>At 12:23 PM 7/6/2000 , you wrote: >>>>Shann, >>>> >>>>I'm going to repeat this back to you in my own words to see if I now >>>>understand. >>>> >>>> >>>>OTC offspring would not get preferential treatment in terms of obtaining >>>>financing from the parent OTC. IT IS NOT THE PARENT THAT PROVIDES FUNDS >>>TO THE OFFSPRING BUT THE OTHER WAY AROUND AS THE OFFSPRING WILL NEED TO PAY >>>FUNDS TO THE PARENT TO ACQUIRE SECTIONS OF ITS BUSINESS. THE OFFSPRING >>>RAISES FUNDS FROM MAKING A RIGHTS ISSUE TO THE SHAREHOLDERS OF THE PARENT. >>>The offspring would have to compete for >>>>investment capital along with all other investment options, both local and >>>>non-local. But because the parent OTC was BECOMING locally owned, >>>all/SOME profits would be >>>>captured locally. This would increase the locally-controlled pool of >>>>investment. YES AND INCREASE THE PROPENSITY OF LOCAL SHAREHOLDERS IN THE >>>PARENT TO FINANCE NEW COMPANIES. >>>>capital. >>>> >>>>In turn, this would increase the likelihood--but would not >>guarantee--that OTC >>>>offspring would not have to secure non-local investment capital. YES >>>Therefore, >>>>proliferation of the OTC model would not be guaranteed, but would depend on >>>>whether or not the local owners of the parent OTC had a preference for local >>>>investments even if the potential ROI was less than non-local investments >>>after >>>>factoring in any local tax incentives for investing in OTCs. NO. >>> >>>THE OTC MODEL COULD BE CONTINUED IN ANY OFFSRPING COMPANY. >>>IT WOULD NOT MATTER IF THE INITIAL SHAREHOLDERS WERE OUTSIDERS BECAUSE >>>LOCAL OWNERHIIP AND CONTROL IS REGAINED OVER TIME. >>>ALL OFFSPRING ENTERPRISES WOULD NEED TO OFFER A COMPETIVE ROI OTHERWISE THE >>>BUSINESS WOULD AND SHOULD DIE OUT. >>>> >>>>Is this correct? >>>> >>>>Thanks for your time and patience. >>>> >>>>Tom Brandt >>>> >>>> >>>> >>>> >>>> >>>>____________________Reply Separator____________________ >>>>Subject: Re[4]: HOMESTEAD: accounting and time limited investment >>>>Author: <homestead@cog.kent.edu> >>>>Date: 6/6/00 4:53 PM >>>> >>>>Thomas >>>> >>>>No you did not misunderstand. >>>>OTCs automatically transfer any alien ownership to stakeholders who have >>>>voting rights to eliminate the export of surplus profits to aliens. In >>>>this way they accelerate the rise in local incomes. >>>> >>>>Regards >>>> >>>>Shann >>>> >>>>At 04:39 PM 6/6/2000 , you wrote: >>>>>Please forgive my continued confusion, but I could swear in a recent >>posting >>>>>you >>>>>reiterated what I thought was your belief that decreasing dependency on >>>>>external >>>>>financing was a core component of your efforts to find a way to replicate >>>>>Mondragon. Did I misunderstand that, too? >>>>> >>>>>____________________Reply Separator____________________ >>>>>Subject: Re[3]: HOMESTEAD: accounting and time limited investment >>>>>Author: <homestead@cog.kent.edu> >>>>>Date: 6/6/00 2:03 PM >>>>> >>>>>Thomas >>>>> >>>>>New Mondragon coop are financed by their banker not by other coops. >>>>>You are quire correct that offspring of OTCs will need to compete with all >>>>>other investment options. >>>>>This is a contributing reason of why efficiency is improved. >>>>>There is no guarantee for perpetuation of any business. >>>>>This is why I call it eclogical ownership as in nature all things must die. >>>>> >>>>>Regards >>>>> >>>>>Shann >>>>> >>>>>At 12:48 PM 6/6/2000 , you wrote: >>>>>>Thanks for the quick response. But I'm still confused. I thought >>Mondragon >>>>>>created new coops by requiring that some portion of the earnings of the >>>>parent >>>>>>coop be used as start-up capital for the offspring. What you are >>describing >>>>>>below seems different in that it sounds like the offspring will have to >>>>>compete >>>>>>(with all other investment options) for the investment capital generated >>>>>by the >>>>>>profits of the parent coop. If so, how would this guarantee the >>>>>>perpetuation of >>>>>>OTCs? >>>>>> >>>>>>____________________Reply Separator____________________ >>>>>>Subject: Re[2]: HOMESTEAD: accounting and time limited investment >>>>>>Author: <homestead@cog.kent.edu> >>>>>>Date: 6/6/00 12:36 PM >>>>>> >>>>>>Thomas >>>>>> >>>>>>Offspring companies would be financed by re-investment of the dividends >>>>>>from their parent companies. >>>>>> >>>>>>Parent OTCs will have a much higher dividend payout as they could be >paying >>>>>>out all their earnings and even some of their non-cash costs such as >>>>>>depreciation and depletion allowances. Shareholders will need to >>>>>>continually re-invest their returns. Shareholders have the choice of >>>>>>re-investing in many other situations be it real estate, bonds, regular >>>>>>corporations or OTCs. Corporate re-investment decisions will largely be >>>>>>transferred from management to shareholders to improve the efficiency of >>>>>>allocating investable funds. Management will need to continuously compete >>>>>>for new funds. This will reduce investments by managers who may be >>>>>>motivated by the self-indulgences of management. >>>>>> >>>>>>Investments in OTCs will be continually self-liquidating. This is why >>>>>>shareholders will continually need to find new investments. The need to >>>>>>create "offspring" corporations to finance expansion will complement this >>>>>>situation by continually creating new investment opportunities. A much >>>>>>more dynamic and competitive capital market is created. This is why I got >>>>>>my very early articles published by the Australian Stock Exchange Journal >>>>>>as it provided a way to make stockbrokers a "Growth Industry"! Something >>>>>>they might now be even more interested in as the internet displaces them. >>>>>> >>>>>>Hope this clears up the matter. >>>>>> >>>>>>Regards >>>>>> >>>>>>Shann >>>>>> >>>>>> >>>>>>At 12:07 PM 6/6/2000 , you wrote: >>>>>>>Shann, >>>>>>> >>>>>>>You probably explain this in many of your writings, some of which I've >>>>read. >>>>>>>But I confess that I have forgotten how your offspring financing idea >>would >>>>>>>work. If the formation of offspring companies will be necessary to >>>>>>finance the >>>>>>>growth of OTCs, it is not clear to me from the excerpt below how the >>>>>>offsprings >>>>>>>will be financed. From some combo of conventional debt or equity >>>>financing? >>>>>>>This is how I interpret the excerpt below, but I know that can't be right >>>>>>>because you are trying to replicate Mondragon's independence from >external >>>>>>>financing. Could you please clear this up for me? >>>>>>> >>>>>>>I've also separated out the following sentence because it is particularly >>>>>>>confusing to me. >>>>>>> >>>>>>>Aloha! >>>>>>> >>>>>>>"Investors obtain continuity of investment by taking up new share >>issues to >>>>>>>create a much more efficient capital market." >>>>>>> >>>>>>>However, many businesses will want to grow and this will require new >>>>>>>investment. Investors in OTCs will demand full payout of earnings so >>>growth >>>>>>>will need to be financed by establishing what I refer to as "offspring" >>>>>>>enterprises. I call them offspring because they do not become >>>>>subsidiaries of >>>>>>>their parent company who gave birth to them. >>>>>>> >>>>>>>Offspring companies could be new OTCs formed by a new share issue to the >>>>>>>investors of the parent OTC and any others new investors who took up >>shares >>>>>>>not first taken up by the parent company shareholders. The parent >company >>>>>>>would play the role of the Mondragon "Godfather" who are used to >guide the >>>>>>>development of new ventures. >>>>>> >>>>>>Shann Turnbull >>>>>>P.O. Box 266 Woollahra, Sydney, Australia, 1350 >>>>>>Phone: 02 9328 7466 office; 02 9327 8487 home >>>>>>Fax: 02 9327 1497 home & office. Mobile 0418 222 378 >>>>>>Outside Australia, replace first "0" with "61" after international access >>>>code >>>>>>Life long E-mail: sturnbull@mba1963.hbs.edu >>>>>>Alternate:sturnbull@optusnet.com.au >>>>>>http://members.optusnet.com.au/~sturnbull/index.html >>>>>> >>>>>> >>>>>> >>>>>> >>>>>> >>>>> >>>>>Shann Turnbull >>>>>P.O. Box 266 Woollahra, Sydney, Australia, 1350 >>>>>Phone: 02 9328 7466 office; 02 9327 8487 home >>>>>Fax: 02 9327 1497 home & office. Mobile 0418 222 378 >>>>>Outside Australia, replace first "0" with "61" after international access >>>code >>>>>Life long E-mail: sturnbull@mba1963.hbs.edu >>>>>Alternate:sturnbull@optusnet.com.au >>>>>http://members.optusnet.com.au/~sturnbull/index.html >>>>> >>>>> >>>>> >>>>> >>>>> >>>> >>>>Shann Turnbull >>>>P.O. Box 266 Woollahra, Sydney, Australia, 1350 >>>>Phone: 02 9328 7466 office; 02 9327 8487 home >>>>Fax: 02 9327 1497 home & office. Mobile 0418 222 378 >>>>Outside Australia, replace first "0" with "61" after international access >>code >>>>Life long E-mail: sturnbull@mba1963.hbs.edu >>>>Alternate:sturnbull@optusnet.com.au >>>>http://members.optusnet.com.au/~sturnbull/index.html >>>> >>>> >>>> >>>> >>>> >>> >>>Shann Turnbull >>>P.O. Box 266 Woollahra, Sydney, Australia, 1350 >>>Phone: 02 9328 7466 office; 02 9327 8487 home >>>Fax: 02 9327 1497 home & office. Mobile 0418 222 378 >>>Outside Australia, replace first "0" with "61" after international access >code >>>Life long E-mail: sturnbull@mba1963.hbs.edu >>>Alternate:sturnbull@optusnet.com.au >>>http://members.optusnet.com.au/~sturnbull/index.html >>> >>> >>> >>> >>> >> >>Shann Turnbull >>P.O. Box 266 Woollahra, Sydney, Australia, 1350 >>Phone: 02 9328 7466 office; 02 9327 8487 home >>Fax: 02 9327 1497 home & office. Mobile 0418 222 378 >>Outside Australia, replace first "0" with "61" after international access code >>Life long E-mail: sturnbull@mba1963.hbs.edu >>Alternate:sturnbull@optusnet.com.au >>http://members.optusnet.com.au/~sturnbull/index.html >> >> >> >> >> > >Shann Turnbull >P.O. Box 266 Woollahra, Sydney, Australia, 1350 >Phone: 02 9328 7466 office; 02 9327 8487 home >Fax: 02 9327 1497 home & office. Mobile 0418 222 378 >Outside Australia, replace first "0" with "61" after international access code >Life long E-mail: sturnbull@mba1963.hbs.edu >Alternate:sturnbull@optusnet.com.au >http://members.optusnet.com.au/~sturnbull/index.html > > > > > Shann Turnbull P.O. Box 266 Woollahra, Sydney, Australia, 1350 Phone: 02 9328 7466 office; 02 9327 8487 home Fax: 02 9327 1497 home & office. Mobile 0418 222 378 Outside Australia, replace first "0" with "61" after international access code Life long E-mail: sturnbull@mba1963.hbs.edu Alternate:sturnbull@optusnet.com.au http://members.optusnet.com.au/~sturnbull/index.html
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