If your code is too dense it actually becomes harder for the next guy to figure out.
And if it isn't dense enough, it also becomes harder.
When the braces line up, readability increases as the eye will naturally follow the brace down to its partner.
I don't see the advantage here. Your eye is going to see the indentation and naturally follow the indentation down to where the indentation stops. You don't need a brace to do that.
Moving the brace on the same line produces asymmetric code that is rather unnatural for humans to read.
It's not any more or less natural to put the brace on the other line. You're just not used to it. If you were, you'd find just the opposite.
In addition, having the braces on separate lines helps if your formatting ever gets screwed up.
There are plenty of programs out there that will reformat your text for you in this (extremely rare) situation.
However, I have to say that I've lost far more time trying to read the same-line brace code (especially when idiots mix tab and space indents)
Is it so hard to change your tab spacing to match that of the "idiot"? Alternatively, you could go ahead and run indent or some similar program. Neither take very much time.
The bracers are not vertically aligned in the same column, thus breaking my the ability to quickly, visually align blocks of related code on-screen. Note that plenty of people find your method more readable. I don't.
That one's probably just a matter of which one you learned with. Personally I did most of my early C coding in HP/UX kernel code, which used essentially K&R-style, so what is most readable to me is K&R-style.
Few people who code that way will put the start brace to a function in the same place; they tend to start a newline and put the brace on it. Usage tends to be inconsistant, making other people's code more difficult to read.
Well, if you're not using ANSI C function declarations, then you can't put the brace on the same line as the function name. Consider:
int old_school(f)
float f; { }
That's probably where that originates, as K&R C does not allow "int old_school(float f)". In any case, one advantage is that you can skip to the next function by searching (in vi) for "^{". In fact, we had a vi macro for just that search.
When you start a new block of code without a conditional, where do you put the brace?
At the end of the nonexistant conditional:). IOW, on a line by itself. Granted, this is something I personally don't do very often (and probably should never do except for testing). It's cleaner to use a function, possibly inline, or even a define if you really need the performance and don't trust the optimizer. But maybe I'm missing something.
If you want to test a block of code, you can easily comment-out the conditional if the brace has its own line. If you put it after the conditional, you have to comment that line out and add another brace, then delete it when you're done.
That's a damn good point, and one I've never thought of. Maybe that's enough to convince me to switch... Well, that and the popularity of the BSD-style.
K&R didn't even use their own style consistantly. As I mentioned, they failed to use that style on function definitions.
That's not fair, though. They use the style consistently, they just have a different rule for different positions. And as I pointed out, that rule was pretty much necessary with the K&R C function prototypes (the alternative would be horribly ugly).
Dare I ask what the point of putting it on a new line is? Seems like a waste of space to me. I'm especially annoyed by people who use: } else { when they could get along perfectly fine with: } else { Why waste all that space?
Ah, the first contact problem. "Address: tepples(a)spamcop.net; put 'slashdot' in the subject line." Let's see spambots try to parse that.
Let's see my realtor try to parse that...
Signing and/or encrypting outgoing mail using an OpenPGP implementation takes CPU time, which especially slows down those spammers that use images in their messages.
True, of course this won't stop those spammers using stolen resources, but maybe this would be enough to slow things down a little.
Besides, OpenPGP signatures open up a whole new method of whitelisting through the PGP web of trust, although granted, the key signing logistics of the web of trust work best either within a small geographic area or among people who travel.
If you're going to redesign the whole system like that, it'd probably be easier to add the signature at the domain name level. This would make the web of trust much smaller, and it'd also make commercial buy-in to the web of trust more feasible. Of course, SPF is a protocol already out there which would be about as good a solution. The problem is convincing people to implement it. If we had assurance that the domain name in the from address was accurate, the end of spam would be right around the corner.
In my experience, no spammer has ever PGP-signed a message, correctly forged a family member's from address, or used the keyword of a legit mailing list that I get.
And when someone asks you for your email adress, what do you tell them? I've got a million different accounts at my domain name, but keeping track of them all is more time consuming than just deleting (or more likely, ignoring, now that I've got gmail) the spam.
There's also the problem that your "solution" only works because there aren't many other people using it. Maybe no spammer has ever PGP-signed a message in the past, but you can bet it'll happen in the future if PGP signatures become a standard for email.
Eliminating spam could be free, if it weren't for the 2 idiots out of 1 million who actually buy the spammers products.
And I'd be able to fly, if it weren't for that damn gravitational force.
And while we're talking about the high cost of eliminating spam, what about the high cost of maintaing the e-mail system, of which 60% of so is used only for sending spam, according to a recent slashdot article.
High cost? E-mail is virtually free. In fact, it's so close to free that companies are competing to give it away.
The cost of all of that infrastructure increases our taxes, and the price of consumer goods and services.
Once you've got the infrastructure in place, the additional costs are slim to none.
Therefore, I contend that filtering is not a solution, since it only eliminates the end-user inconvenience, not the cost of the infrastructure used to convey the spam.
That's the problem with spam, the end-user inconvenience. In comparison to the inconvenience costs the other costs are negligible.
Is it a natural conclusion that people would become more accepting of spam emails? Well, I suppose it's possible. After all, the original draw of cable TV was "hey look! no commercials!" and now cable TV is just as polluted as over the air TV.
Well, if you're going to compare all advertising to spam, one of the big draws to gmail is that there is a spam filter; and at the right of every message is a bunch of paid messages.
In fact, I just clicked on a message from a mailing list and on the right the google ads are "Opt In Bulk Email / Large Volume Bulk Email Solution Opt In List Rental, Deployment", "Legally Email Millions / Email 81 million targeted prospects Never be accused of spamming again!", and "College Degree in Days / Earn Legal & Verifiable BA, MBA, & PhD Degrees. No Coursework! Aff." OK, I clicked on an email talking about fake universities, but still...
Spam isn't a system, though. In fact, spam is more nearly the lack of a system.
The cost of elminating spam would be very high. If you took the legal approach, you'd have to create a global police state over every email that anyone sends. Even then you're likely not to get full cooperation, so you'd lose whole countries full of people from the internet. If you took the technical approach, then you'd lose the ability to send an email to anyone, from anywhere, without any passwords or keys, and without even necessarily telling the truth about who you are.
The third solution is a partial one - filtering. It sucks in that it allows some spam to get through and more importantly it runs the risk of having legitimate mail dropped, but it seems for most it's the most acceptable of the possible solutions.
So, if you call filtering nothing, then I'd guess that nothing will be done about spam as long as there is still e-mail.
people accept the state, because they do not know about any alternatives
Alternatives to spam? Surely you're not claiming you have an alternative to spam which involves still having an email account.
What we have to do is to educate people, teach them not to click "yes" to everything they see
Agreed.
and to filter as much spam as possible.
Filter it? Why do we have to teach people to filter spam? What do you care if I filter spam or not? Why does it make me stupid to tolerate the spam I receive?
There are alternatives to spam, but they don't involve email. The way email is designed makes spam inevitable. The alternatives are instant messaging, phone calls, faxes, and sometimes even good old snail mail.
When spammers (and phisers) stop getting money, maybe they will stop.
Spam will never completely stop. Not as long as email remains a free, global, unauthenticated medium, anyway. There are a lot of idiots in the world, not just on the receiving end of spam but also on the sending side. Hopefully the studies that say that most spam comes from a small number of spammers is true, but cutting an exponentially growing phenomenon by a factor of even 10 isn't going to accomplish very much.
For continuous speech, the best continuous voice recognition programs still have around 2-5% word error rates with *good* sound quality.
I guess I'll take your word for it. It seems to me though that you're restricting this to off-the-shelf software, though. I'd imagine the best continuous voice recognition programs are the ones that you and I don't even know about.
Imagine the error rate with the lousy sound quality (and background noise) from most cell phones.
The whole point of this device is cradle *eliminate* background noise.
Then consider a speech synthesis program where every 50th word is completely wrong.
So, basically, one that could generate the text I've written just now (I didn't say "cradle").
In fact, all those people commuting from their homes to the cities in the morning could, in the future, be replaced with robots and there would be no more massive amounts of morning/afternoon casualties from those long commutes.
You say that as though it's a bad thing. Sure, it might require some changes in the economy, but a world where no one is required to work is a good thing.
The kind of workers this would displace aren't exactly highly paid or highly skilled workers. The money saved by the more efficient work will open up plenty of extra jobs for unskilled labor. Maybe instead of constructing a McDonalds they'll have to ask people whether or not they want fries with that, but at least they'll have air conditioning.
Those with more skill would still be needed. Sure, a robot might be able to handle a straight course of brick or block, but most houses I've seen have windows and doorways. Yes, a skilled mason will have to adapt and learn how to direct robots rather than laborers, but that's something which can be done.
Until we actually achieve strong artificial intelligence even an unskilled worker is going to have something he or she can do better than a computer. When true AI comes around this will of course change, but the whole economy is going to go through a tremendous overhaul at that point anyway. Depending if you take the optimistic or pessimistic view it means either that we'll no longer have to work at all (for a living, anyway) or that we'll become slaves to the machines themselves. But either way, we're not there yet, and having machines that can do specific tasks like builing houses if anything brings us closer to the optimistic point of view.
I suppose it's possible for the stock to go down dramatically between the end of year (when you could sell to avoid the AMT liability) and the time you file your taxes.
Actually, if you then sold the stock (within a year from the time you received it), you'd have a disqualifying disposition, and wouldn't be subject to AMT.
The original poster is most certainly correct that the AMT caused many, many problems for option holders, especially during the dot-com boom.
It caused them to pay tax. That is certainly correct.
I think you're forgetting that for AMT purposes, ISO exercises are taxable events, unlike for regular tax purposes (where taxes aren't assessed on ISO exercises, but rather on the sale of the underlying stock).
I realize this. It's the way things should be. People who receive options should pay their taxes when they earn the income, and they should pay it at the same rate as any other earned income. People and companies shouldn't be able to avoid taxes by paying their employees a different way.
But no matter what, they had to pay the AMT the year it arose, which is why you hear about people declaring bankruptcy because of their huge AMT liability -- they just didn't have the cash or the assets to sell to cover.
First of all, that wasn't the scenario that was presented. In the scenario that was presented the person did have the assets to cover the taxes, but they chose instead of liquidating those assets to instead take out a loan (possibly on their house) to pay for the taxes. Not a smart thing to do.
I suppose it's possible for the stock to go down dramatically between the end of year (when you could sell to avoid the AMT liability) and the time you file your taxes. But that's the gamble you took by not selling the stock. I feel sorry for you, but no worse than someone who hits the lottery in December and then loses it all in roulette in January. That person is going to have a huge tax bill to pay by April, and unlike in the AMT situation, they'll never get that money back. If you don't want to risk bankruptcy, you shouldn't spend money you don't have, and that includes money you don't have because you owe it in taxes and just haven't paid your bill yet.
It's hard not to blame the AMT for forcing such a big disparity in effect on the taxpayer. Without the AMT, the optionholders would have exercised and sat on the stock until the ISO holding periods ran and they felt comfortable selling; then, they'd be assessed capital gains rates on their gain.
I'd blame the special treatment of incentive stock options. Without that special treatment, they'd pay taxes on their earnings when they receive them, and they would have sold at least some of the stock to pay for the taxes they owed. Except, I guess that's not true, since they didn't do that. I guess the real blame is on the ignorance of how incentive stock options work.
With the AMT, they're assessed AMT taxes on the "income" from the spread of the option exercise price and the fair market value of the stock at the time of exercise; THEN, after selling the stock, they're assessed regular taxes on the gain, and the basis isn't even stepped up to the AMT basis (i.e., fair market value at time of exercise).
However, they are eligible for the AMT credit.
Anyway, the real problem here is that you have two completely different tax laws, which is confusing as hell. You can say the problem is AMT, but you can equally say the problem is the regular tax law. In fact, if there were no regular tax law, just AMT, companies wouldn't enter into schemes to try to avoid taxes like incentive stock options in the first place.
Ignoring the hypothetical scenarios, it boils down to a question of what the tax law should be. If a company pays you in stock options, how should that be taxed? I'd say it should be taxed like any other non-monetary asset. If your company paid you in gold, what would be the tax consequence? You'd pay tax on the fair market value of the item at the time it vests, and then you'd pay capital gains taxes (or recognize a capital loss) at the time you sell it. If you get paid in gold in December, and the price of gold drops to 0 in January, you're going to get screwed over, but I don't know of any fair way to address that.
Except of course to just eliminate income taxes completely. I'm OK with that solution, too.
Additionally, Google does not have to pay matching FICA on their salaries (yes you only pay half of your FICA burden in the US, your employer has to match).
No, instead Google has to pay corporate income taxes, at a 35% marginal rate. So 15%+35%=50% vs. 33%+2.9%+12.4%*(87,900/370,000)+6.2%*(7,000/370,00 0)=39% (2.9%=medicare tax, 12.4%=social security tax, $87,900=max salary for social security tax, $370,000=amount of salary each was getting before, 6.2%=FUTA, $7,000=max salary for FUTA). So due to this change in salary the government gets an additional 11%, or $40,700 in tax revenue.
The scenario is based on real life occurances of which I have personal knowledge.
It may be based on them, but I guarantee you you didn't represent them accurately. I will make the bold assertion that anyone who has ever gone bankrupt due to AMT taxation of stock options did not have his taxes calculated correctly.
I personally know 3 people who had to file for bankruptcy during the dotcom bubble burst in 2000.
Doesn't mean that was due to AMT. If they went bankrupt, it was because they put more money into the stock market than they had and lost it.
Their scenarios were such that they had tax liabilty on AMT income of over a million dollars.
That may very well be the case, but that means they at one point had a net worth of over a million dollars and chose to gamble with that money rather than invest it wisely.
Don't get me wrong, I feel sorry for them, but it's not the fault of AMT.
I also know several more who had to obtain 2nd mortgages to pay their AMT tax bill on income they never (to this day) ever realized.
That's their choice not to realize it, though. Incentive stock options allow you to defer and/or eliminate taxes on certain forms of employee compensation. AMT just limits how much tax you can defer or avoid. If you want the money today, then you can sell the option or exercise the option and sell the stock. If you want to gamble in order to try to defer and/or avoid taxes, you can mortgage your house and roll the dice. If anything, the problem is that the government recognizes incentive stock options in the first place.
Yes, you can offset AMT losses in following years, but there is a yearly limit and you'd end up spending many years trying to find ways to offset the total amount. And you still need to come up with money to pay your tax bill for the year in which you had the tax liability.
Here's a hint, mortgaging your house isn't a risk-averse way to do it.
And AMT tax rate was higher than the tax rate bracket these people were in.
Only if you don't count the income they received in the form of incentive tax options.
Finally, AMT and regular taxes are not just alike. There are things that are income for AMT which are not income for regular taxes. There are things you can deduct from regular taxes which you cannot deduct from AMT.
Do you happen to know if LLCs can get around this?
Depends. An LLC is a strange legal beast, and can be treated for tax purposes as a C-corp, an S-corp, or a partnership/sole proprietorship. I would imagine if an LLC chooses to be taxed as an S-corp they would be subject to the same rules regarding paying themselves a fair wage. The "fair wage" rule comes from the tax courts, not a specific law, so I would assume that an LLC which is treated as an S-corp for tax purposes would receive the same ruling.
As long as you have 40 credits is there any reason to keep paying FICA if you can somehow get out of it?
Social security benefits are based on the highest 35 years of taxable earnings. So if you haven't worked for 35 years for more money than you're currently making, then you might want to pay in. I say might, because this assumes you're actually going to receive social security benefits when you retire, which for someone say 30 years old or younger, is a big if.
If they have less than 40 credits, then they should pay themselves the minimum that counts, which I think is somewhere around $360 per month. Tip for those of you looking into self-employment.
If you're the owner of a non-closely held C-corporation, maybe. If not, the government is going to require you to pay yourself a fair wage. They even send out reminders every year to the owners of S-corporations that if they don't pay themselves a fair wage then the government can declare their dividends as wages and charge FICA and FUTA taxes (and penalties).
I'm not sure this applies to a publicly traded C-corp though. The government is probably getting more money here, through corporate income taxes, plus they've got a smaller liability for future social security taxes.
Slashdot Mirror
Whitespace if your friend.
Not in excess, it isn't.
If your code is too dense it actually becomes harder for the next guy to figure out.
And if it isn't dense enough, it also becomes harder.
When the braces line up, readability increases as the eye will naturally follow the brace down to its partner.
I don't see the advantage here. Your eye is going to see the indentation and naturally follow the indentation down to where the indentation stops. You don't need a brace to do that.
Moving the brace on the same line produces asymmetric code that is rather unnatural for humans to read.
It's not any more or less natural to put the brace on the other line. You're just not used to it. If you were, you'd find just the opposite.
In addition, having the braces on separate lines helps if your formatting ever gets screwed up.
There are plenty of programs out there that will reformat your text for you in this (extremely rare) situation.
However, I have to say that I've lost far more time trying to read the same-line brace code (especially when idiots mix tab and space indents)
Is it so hard to change your tab spacing to match that of the "idiot"? Alternatively, you could go ahead and run indent or some similar program. Neither take very much time.
The bracers are not vertically aligned in the same column, thus breaking my the ability to quickly, visually align blocks of related code on-screen. Note that plenty of people find your method more readable. I don't.
:). IOW, on a line by itself. Granted, this is something I personally don't do very often (and probably should never do except for testing). It's cleaner to use a function, possibly inline, or even a define if you really need the performance and don't trust the optimizer. But maybe I'm missing something.
That one's probably just a matter of which one you learned with. Personally I did most of my early C coding in HP/UX kernel code, which used essentially K&R-style, so what is most readable to me is K&R-style.
Few people who code that way will put the start brace to a function in the same place; they tend to start a newline and put the brace on it. Usage tends to be inconsistant, making other people's code more difficult to read.
Well, if you're not using ANSI C function declarations, then you can't put the brace on the same line as the function name. Consider:
int
old_school(f)
float f;
{
}
That's probably where that originates, as K&R C does not allow "int old_school(float f)". In any case, one advantage is that you can skip to the next function by searching (in vi) for "^{". In fact, we had a vi macro for just that search.
When you start a new block of code without a conditional, where do you put the brace?
At the end of the nonexistant conditional
If you want to test a block of code, you can easily comment-out the conditional if the brace has its own line. If you put it after the conditional, you have to comment that line out and add another brace, then delete it when you're done.
That's a damn good point, and one I've never thought of. Maybe that's enough to convince me to switch... Well, that and the popularity of the BSD-style.
K&R didn't even use their own style consistantly. As I mentioned, they failed to use that style on function definitions.
That's not fair, though. They use the style consistently, they just have a different rule for different positions. And as I pointed out, that rule was pretty much necessary with the K&R C function prototypes (the alternative would be horribly ugly).
Hard to classify HTTP as a standard. It's more of a protocol.
A widely used protocol is a standard.
Dare I ask what the point of putting it on a new line is? Seems like a waste of space to me. I'm especially annoyed by people who use:
}
else
{
when they could get along perfectly fine with:
} else {
Why waste all that space?
You can't RMA the bits.
Why not? Just say it fell down some stairs.
Yeah, just smash it.
Ah, the first contact problem. "Address: tepples(a)spamcop.net; put 'slashdot' in the subject line." Let's see spambots try to parse that.
Let's see my realtor try to parse that...
Signing and/or encrypting outgoing mail using an OpenPGP implementation takes CPU time, which especially slows down those spammers that use images in their messages.
True, of course this won't stop those spammers using stolen resources, but maybe this would be enough to slow things down a little.
Besides, OpenPGP signatures open up a whole new method of whitelisting through the PGP web of trust, although granted, the key signing logistics of the web of trust work best either within a small geographic area or among people who travel.
If you're going to redesign the whole system like that, it'd probably be easier to add the signature at the domain name level. This would make the web of trust much smaller, and it'd also make commercial buy-in to the web of trust more feasible. Of course, SPF is a protocol already out there which would be about as good a solution. The problem is convincing people to implement it. If we had assurance that the domain name in the from address was accurate, the end of spam would be right around the corner.
In my experience, no spammer has ever PGP-signed a message, correctly forged a family member's from address, or used the keyword of a legit mailing list that I get.
And when someone asks you for your email adress, what do you tell them? I've got a million different accounts at my domain name, but keeping track of them all is more time consuming than just deleting (or more likely, ignoring, now that I've got gmail) the spam.
There's also the problem that your "solution" only works because there aren't many other people using it. Maybe no spammer has ever PGP-signed a message in the past, but you can bet it'll happen in the future if PGP signatures become a standard for email.
Eliminating spam could be free, if it weren't for the 2 idiots out of 1 million who actually buy the spammers products.
And I'd be able to fly, if it weren't for that damn gravitational force.
And while we're talking about the high cost of eliminating spam, what about the high cost of maintaing the e-mail system, of which 60% of so is used only for sending spam, according to a recent slashdot article.
High cost? E-mail is virtually free. In fact, it's so close to free that companies are competing to give it away.
The cost of all of that infrastructure increases our taxes, and the price of consumer goods and services.
Once you've got the infrastructure in place, the additional costs are slim to none.
Therefore, I contend that filtering is not a solution, since it only eliminates the end-user inconvenience, not the cost of the infrastructure used to convey the spam.
That's the problem with spam, the end-user inconvenience. In comparison to the inconvenience costs the other costs are negligible.
Right, because taxing consumption is fair, easy to enforce, and can't be abused.
Is it a natural conclusion that people would become more accepting of spam emails? Well, I suppose it's possible. After all, the original draw of cable TV was "hey look! no commercials!" and now cable TV is just as polluted as over the air TV.
Well, if you're going to compare all advertising to spam, one of the big draws to gmail is that there is a spam filter; and at the right of every message is a bunch of paid messages.
In fact, I just clicked on a message from a mailing list and on the right the google ads are "Opt In Bulk Email / Large Volume Bulk Email Solution Opt In List Rental, Deployment", "Legally Email Millions / Email 81 million targeted prospects Never be accused of spamming again!", and "College Degree in Days / Earn Legal & Verifiable BA, MBA, & PhD Degrees. No Coursework! Aff." OK, I clicked on an email talking about fake universities, but still...
Spam isn't a system, though. In fact, spam is more nearly the lack of a system.
The cost of elminating spam would be very high. If you took the legal approach, you'd have to create a global police state over every email that anyone sends. Even then you're likely not to get full cooperation, so you'd lose whole countries full of people from the internet. If you took the technical approach, then you'd lose the ability to send an email to anyone, from anywhere, without any passwords or keys, and without even necessarily telling the truth about who you are.
The third solution is a partial one - filtering. It sucks in that it allows some spam to get through and more importantly it runs the risk of having legitimate mail dropped, but it seems for most it's the most acceptable of the possible solutions.
So, if you call filtering nothing, then I'd guess that nothing will be done about spam as long as there is still e-mail.
people accept the state, because they do not know about any alternatives
Alternatives to spam? Surely you're not claiming you have an alternative to spam which involves still having an email account.
What we have to do is to educate people, teach them not to click "yes" to everything they see
Agreed.
and to filter as much spam as possible.
Filter it? Why do we have to teach people to filter spam? What do you care if I filter spam or not? Why does it make me stupid to tolerate the spam I receive?
There are alternatives to spam, but they don't involve email. The way email is designed makes spam inevitable. The alternatives are instant messaging, phone calls, faxes, and sometimes even good old snail mail.
When spammers (and phisers) stop getting money, maybe they will stop.
Spam will never completely stop. Not as long as email remains a free, global, unauthenticated medium, anyway. There are a lot of idiots in the world, not just on the receiving end of spam but also on the sending side. Hopefully the studies that say that most spam comes from a small number of spammers is true, but cutting an exponentially growing phenomenon by a factor of even 10 isn't going to accomplish very much.
For continuous speech, the best continuous voice recognition programs still have around 2-5% word error rates with *good* sound quality.
I guess I'll take your word for it. It seems to me though that you're restricting this to off-the-shelf software, though. I'd imagine the best continuous voice recognition programs are the ones that you and I don't even know about.
Imagine the error rate with the lousy sound quality (and background noise) from most cell phones.
The whole point of this device is cradle *eliminate* background noise.
Then consider a speech synthesis program where every 50th word is completely wrong.
So, basically, one that could generate the text I've written just now (I didn't say "cradle").
$2000 in 1900 is about $44,000 today. I guess you could build a modern house for about $44,000 today, not counting the labor, of course.
Not many of us have $44,000 lying around though, and it'd probably be pretty damn hard to get a new construction loan for a do-it-yourself project.
Anyone got $44,000 they want to loan me? I'd only need it for 6 months or so...
In fact, all those people commuting from their homes to the cities in the morning could, in the future, be replaced with robots and there would be no more massive amounts of morning/afternoon casualties from those long commutes.
You say that as though it's a bad thing. Sure, it might require some changes in the economy, but a world where no one is required to work is a good thing.
"Mind readers" (such as Derren Brown), "clairvoyants" and other such con artists use this technique, amongst others.
Sounds like something useful for a poker player.
The accuracy of even the best voice recognition software is still too poor to be used in general applications
Where do you get that from?
(and requires a fast P4 to do the recognition in real-time)
You think the best voice recognition software runs on a P4?
The kind of workers this would displace aren't exactly highly paid or highly skilled workers. The money saved by the more efficient work will open up plenty of extra jobs for unskilled labor. Maybe instead of constructing a McDonalds they'll have to ask people whether or not they want fries with that, but at least they'll have air conditioning.
Those with more skill would still be needed. Sure, a robot might be able to handle a straight course of brick or block, but most houses I've seen have windows and doorways. Yes, a skilled mason will have to adapt and learn how to direct robots rather than laborers, but that's something which can be done.
Until we actually achieve strong artificial intelligence even an unskilled worker is going to have something he or she can do better than a computer. When true AI comes around this will of course change, but the whole economy is going to go through a tremendous overhaul at that point anyway. Depending if you take the optimistic or pessimistic view it means either that we'll no longer have to work at all (for a living, anyway) or that we'll become slaves to the machines themselves. But either way, we're not there yet, and having machines that can do specific tasks like builing houses if anything brings us closer to the optimistic point of view.
I suppose it's possible for the stock to go down dramatically between the end of year (when you could sell to avoid the AMT liability) and the time you file your taxes.
Actually, if you then sold the stock (within a year from the time you received it), you'd have a disqualifying disposition, and wouldn't be subject to AMT.
The original poster is most certainly correct that the AMT caused many, many problems for option holders, especially during the dot-com boom.
It caused them to pay tax. That is certainly correct.
I think you're forgetting that for AMT purposes, ISO exercises are taxable events, unlike for regular tax purposes (where taxes aren't assessed on ISO exercises, but rather on the sale of the underlying stock).
I realize this. It's the way things should be. People who receive options should pay their taxes when they earn the income, and they should pay it at the same rate as any other earned income. People and companies shouldn't be able to avoid taxes by paying their employees a different way.
But no matter what, they had to pay the AMT the year it arose, which is why you hear about people declaring bankruptcy because of their huge AMT liability -- they just didn't have the cash or the assets to sell to cover.
First of all, that wasn't the scenario that was presented. In the scenario that was presented the person did have the assets to cover the taxes, but they chose instead of liquidating those assets to instead take out a loan (possibly on their house) to pay for the taxes. Not a smart thing to do.
I suppose it's possible for the stock to go down dramatically between the end of year (when you could sell to avoid the AMT liability) and the time you file your taxes. But that's the gamble you took by not selling the stock. I feel sorry for you, but no worse than someone who hits the lottery in December and then loses it all in roulette in January. That person is going to have a huge tax bill to pay by April, and unlike in the AMT situation, they'll never get that money back. If you don't want to risk bankruptcy, you shouldn't spend money you don't have, and that includes money you don't have because you owe it in taxes and just haven't paid your bill yet.
It's hard not to blame the AMT for forcing such a big disparity in effect on the taxpayer. Without the AMT, the optionholders would have exercised and sat on the stock until the ISO holding periods ran and they felt comfortable selling; then, they'd be assessed capital gains rates on their gain.
I'd blame the special treatment of incentive stock options. Without that special treatment, they'd pay taxes on their earnings when they receive them, and they would have sold at least some of the stock to pay for the taxes they owed. Except, I guess that's not true, since they didn't do that. I guess the real blame is on the ignorance of how incentive stock options work.
With the AMT, they're assessed AMT taxes on the "income" from the spread of the option exercise price and the fair market value of the stock at the time of exercise; THEN, after selling the stock, they're assessed regular taxes on the gain, and the basis isn't even stepped up to the AMT basis (i.e., fair market value at time of exercise).
However, they are eligible for the AMT credit.
Anyway, the real problem here is that you have two completely different tax laws, which is confusing as hell. You can say the problem is AMT, but you can equally say the problem is the regular tax law. In fact, if there were no regular tax law, just AMT, companies wouldn't enter into schemes to try to avoid taxes like incentive stock options in the first place.
Ignoring the hypothetical scenarios, it boils down to a question of what the tax law should be. If a company pays you in stock options, how should that be taxed? I'd say it should be taxed like any other non-monetary asset. If your company paid you in gold, what would be the tax consequence? You'd pay tax on the fair market value of the item at the time it vests, and then you'd pay capital gains taxes (or recognize a capital loss) at the time you sell it. If you get paid in gold in December, and the price of gold drops to 0 in January, you're going to get screwed over, but I don't know of any fair way to address that.
Except of course to just eliminate income taxes completely. I'm OK with that solution, too.
Additionally, Google does not have to pay matching FICA on their salaries (yes you only pay half of your FICA burden in the US, your employer has to match).
No, instead Google has to pay corporate income taxes, at a 35% marginal rate. So 15%+35%=50% vs. 33%+2.9%+12.4%*(87,900/370,000)+6.2%*(7,000/370,00 0)=39% (2.9%=medicare tax, 12.4%=social security tax, $87,900=max salary for social security tax, $370,000=amount of salary each was getting before, 6.2%=FUTA, $7,000=max salary for FUTA). So due to this change in salary the government gets an additional 11%, or $40,700 in tax revenue.
The scenario is based on real life occurances of which I have personal knowledge.
It may be based on them, but I guarantee you you didn't represent them accurately. I will make the bold assertion that anyone who has ever gone bankrupt due to AMT taxation of stock options did not have his taxes calculated correctly.
I personally know 3 people who had to file for bankruptcy during the dotcom bubble burst in 2000.
Doesn't mean that was due to AMT. If they went bankrupt, it was because they put more money into the stock market than they had and lost it.
Their scenarios were such that they had tax liabilty on AMT income of over a million dollars.
That may very well be the case, but that means they at one point had a net worth of over a million dollars and chose to gamble with that money rather than invest it wisely.
Don't get me wrong, I feel sorry for them, but it's not the fault of AMT.
I also know several more who had to obtain 2nd mortgages to pay their AMT tax bill on income they never (to this day) ever realized.
That's their choice not to realize it, though. Incentive stock options allow you to defer and/or eliminate taxes on certain forms of employee compensation. AMT just limits how much tax you can defer or avoid. If you want the money today, then you can sell the option or exercise the option and sell the stock. If you want to gamble in order to try to defer and/or avoid taxes, you can mortgage your house and roll the dice. If anything, the problem is that the government recognizes incentive stock options in the first place.
Yes, you can offset AMT losses in following years, but there is a yearly limit and you'd end up spending many years trying to find ways to offset the total amount. And you still need to come up with money to pay your tax bill for the year in which you had the tax liability.
Here's a hint, mortgaging your house isn't a risk-averse way to do it.
And AMT tax rate was higher than the tax rate bracket these people were in.
Only if you don't count the income they received in the form of incentive tax options.
Finally, AMT and regular taxes are not just alike. There are things that are income for AMT which are not income for regular taxes. There are things you can deduct from regular taxes which you cannot deduct from AMT.
Right, that's the whole point of AMT.
Do you happen to know if LLCs can get around this?
Depends. An LLC is a strange legal beast, and can be treated for tax purposes as a C-corp, an S-corp, or a partnership/sole proprietorship. I would imagine if an LLC chooses to be taxed as an S-corp they would be subject to the same rules regarding paying themselves a fair wage. The "fair wage" rule comes from the tax courts, not a specific law, so I would assume that an LLC which is treated as an S-corp for tax purposes would receive the same ruling.
As long as you have 40 credits is there any reason to keep paying FICA if you can somehow get out of it?
Social security benefits are based on the highest 35 years of taxable earnings. So if you haven't worked for 35 years for more money than you're currently making, then you might want to pay in. I say might, because this assumes you're actually going to receive social security benefits when you retire, which for someone say 30 years old or younger, is a big if.
If they have less than 40 credits, then they should pay themselves the minimum that counts, which I think is somewhere around $360 per month. Tip for those of you looking into self-employment.
If you're the owner of a non-closely held C-corporation, maybe. If not, the government is going to require you to pay yourself a fair wage. They even send out reminders every year to the owners of S-corporations that if they don't pay themselves a fair wage then the government can declare their dividends as wages and charge FICA and FUTA taxes (and penalties).
I'm not sure this applies to a publicly traded C-corp though. The government is probably getting more money here, through corporate income taxes, plus they've got a smaller liability for future social security taxes.