Key Takeaways:
– Jeff Bezos plans to sell $5 billion worth of Amazon stock, following an $8.5 billion stock offload earlier in the year.
– His move to Florida, a state with no capital gains tax, reportedly saved him around $1 billion.
– Washington’s capital gains tax generated $786 million in its first year, exceeding projections.
– The tax has sparked controversy, leading to concerns that companies and individuals may leave the state.
– Despite his move, Bezos still remains Amazon’s chairman with a 8.8% stake in the company.
Stock Sale Spurs Revenue Speculations
Jeff Bezos, Amazon’s founder, is planning to sell around 25 million shares of his company, amounting to nearly $5 billion, according to a recent regulatory filing. This announcement comes after he sold $8.5 billion of his shares earlier in 2021 and could potentially move his tax savings close to the $1 billion mark.
Capital Gains Tax Fuels Migration Controversy
Relocating from Seattle, his longtime home, to tax-friendly Miami, Bezos has triggered discussions around Washington state’s capital gains tax. Introduced in 2021, this tax imposes a 7% levy on gains over $262,000 from the sale of stocks and bonds, a policy from which Florida is exempt. Proponents of the tax argue it provides funding for education and childcare programs and facilitates school construction projects.
Impact of Tax Policy on Tech Industry
With the majority of its revenue generated from sales, property, and business and occupation taxes, Washington last year raised $786 million, surpassing initial expectations. However, this tax has ruffled feathers in the tech industry, which relies heavily on stocks for compensation. Critics argue it targets high-income earners and could drive them out of the state.
Differing Opinions on Wealth Tax
State Senator Noel Frame, an advocate for a state wealth tax, disputes the assumption that high taxes deter wealthy individuals. However, economist Cristobal Young states that the pandemic has led households to reevaluate the value of living in pricey, high-tax states.
Moving for Personal or Tax Reasons?
Although his Instagram post announcing his move mentioned wanting to be closer to family and focusing on his Blue Origin space venture, there is speculation that tax savings was a factor.
Implications of Tax Dependence on Wealthy
Jared Walczak, VP of state projects at the Tax Foundation, noted that the relocation of high-net-worth individuals like Bezos could impact Washington’s tax revenue, reflecting the potential risks of over-reliance on a small base of taxpayers.
Fate of Capital Gains Tax
As per recent developments, Initiative 2109, seeking to repeal the tax, has entered the November ballot. This move follows the US Supreme Court’s decision not to hear an appeal against a Washington state court ruling that the tax was lawfully imposed.
Bezos’ Stake Post-Sale
Following the proposed sale, Bezos, currently the second richest person globally, will hold approximately 8.8% of Amazon’s shares, according to Bloomberg. Sales notwithstanding, Amazon’s stock continues on an uphill ride, with over 30% gain this year and a $2 trillion market capitalization.
Conclusion: Bezos’ Evolution
Bezos’ links to Seattle have tapered off lately, following his divorce from MacKenzie Scott and departure as Amazon’s CEO. Despite these changes, he remains the firm’s chair while grappling with challenges at The Washington Post, which he acquired in 2013.
