The Liquidity Event Podcast: Episode 53

 

Episode 53: Glossier, Golf Courses, and, Generational Wealth

It’s a long one folks. Our hosts are extra passionate about taxes and bronzer this week. Shane starts us off with some NFT optimism with the news that Muse will sell 1000 digital copies of their next album to lucky fans. Rock and Roll is the only feasible use case our hosts see for Non Fungible Tokens. Then we have the news that Glossier will be sold in Sephora stores which AJ thinks is a key indicator the millennial-focused beauty brand will be acquired by LVMH. In other news, the Jetblue and Frontier battle for Spirit Airlines comes to a close and summer travelers should strap in for higher fares now that the bargain basement airline is getting a shiny coat of blue paint. Our hosts wrap up with three tax avoidance schemes involving Bill Gates, Shakira, and Donald Trump. This one is elevated.

Read the Full Transcript:

Speaker 1:

This podcast is for informational purposes only and should not be considered tax or investment advice. Welcome to the Liquidity Event. A show about all things, personal finance, with a laser focus on equity compensation. Hosted by AJ and Shane of Brooklyn FI. Each episode will take you through the week's news on FinTech, IPOs, SPACs, founder wins and fails, crypto and whatever else these nerds think is interesting. Learn more and subscribe today at brooklynfi.com.

Shane Mason:

Hello and welcome to the Liquidity Event. This is episode number 53. We are your host, Shane Mason.

AJ Ayers:

And I'm AJ Ayers.

Shane Mason:

Thank you for joining us today. It is August 3rd. This will be airing on August 5th. RIP to July. Today we have some cool articles about Shakira. We've got Muse and NFTs. We've got Glossier heading to Sephora. We've got Trump burying his ex on his golf course, other fun stuff. What do you say, AJ?

AJ Ayers:

Yeah, I can't wait. You also forgot Spirit Airlines and JetBlue, love to talk about airline rewards. So excited to dive into that with you. How you doing, Shane?

Shane Mason:

Cool. Got a bit of a cough. So sorry, listeners for any hacking that might come through on the today's podcast. AJ's been putting up with my hacking all day today. We have our full day traction meeting today where we hang out for about eight hours and talk shop.

AJ Ayers:

Yeah. Shout out to the EOS life, the entrepreneurial operating system. If you're a business owner and don't use EOS get with the program. Like hello. Anything fun going on in your life these days, Shane?

Shane Mason:

Let's see. I'm actually trying to not have fun on purpose.

AJ Ayers:

Okay.

Shane Mason:

Dieting, working out, eating grilled chicken breasts nonstop, watching my drinking a lot, drinking black coffee on this podcast. I saw a funny tweet the other day, somebody said, I mean, the summer's been awesome. Somebody said, "My August budget is $0." Trying to catch up from June and July.

AJ Ayers:

The free cash flow is not available. Yeah, I hear that. I've been a bit spendy as well, and looking forward to a bunch of travel this fall. So I am also doing a bit of belt tightening at the moment, which is really helpful.

Shane Mason:

[inaudible 00:02:32] Literally a bunch of power tools on the couch behind you. And I know you just [inaudible 00:02:35].

AJ Ayers:

[inaudible 00:02:35]. Well, I did buy a drill, which is my new favorite thing in the whole world. I've become a DIY or HGTV, classic story. I always warn our clients about that and here I am falling prey to it. I painted my bathroom last night by myself, which was really fun, very satisfying, the motion of like painting and then using a roller. And I'm pretty good at it. I've discovered [inaudible 00:02:59]

Shane Mason:

[inaudible 00:02:59] Here's the question.

AJ Ayers:

Yes.

Shane Mason:

What album do you listen to while you paint and why is it Beach House?

AJ Ayers:

Actually, yes, it was. So first problem is that unfortunately, our speakers are not set up, because I cannot get the Sonos to work. Don't at me. I've tried everything. I've been on customer service with them. It's really hard. So I've literally been listening like on my phone.

Shane Mason:

If, I had a nickel for every time you told me to buy a Sonos.

AJ Ayers:

It's just really hard to, [inaudible 00:03:28], love Sonos. They're not working. So I'm very frustrated. So I've been listening on speaker phone. It's not Beach House. It's Taylor Swift. I mean, come on. It's literally all I listen to. You know me, Taylor's Swift and Led Zeppelin. Speaking of music, we have some music news. We got Muse, the rock band selling an eco-friendly NFT on a NFT platform called Serenade, which is kind of cool, because a lot of the NFT platforms require you to have a crypto wallet. Serenade does not.

AJ Ayers:

So this sort of seems like a play to attract music fans who aren't necessarily like into crypto. Typically, the NFT space attracts people who are already into the not traditional buying channels market. But this definitely seems like a play for like art collectors or music lovers who are maybe not your cutting edge of technology crowd. Also, the song slaps by the way side, it's like a Guardian article covering the release, that's coming out next month. Listen to it. The single's called Kill Or Be Killed. Kind of sounds like Queens Of The Stone Age, kind of like similar era, early 2000s. Are you buying this Muse album as an NFT?

Shane Mason:

No. No fucking tokens is my NFT of choice, but no, I get it like this is the first use case that's exciting, not the first, yeah probably the first one that like seems like a toe in the water and there will be a whole body in the water within the next five years regarding NFTs. And they're only selling a thousand of them, which is interesting. And I feel like they got almost there, with the use of NFTs here. They're only going to sell a thousand of them and they're like 20 bucks each, I guess, part of the article, what they're trying to say is that, this is also one of the first albums that we'll qualify for the charts. If you sell this via NFT, it will also count towards your chart listening. So with only a thousand albums going out, it's not going to have a material impact, which The Guardian makes clear. But what I think is cool is that these thousand people will have their names registered somewhere as the purchasers of the album.

AJ Ayers:

Yeah.

Shane Mason:

Which is kind of rad, and I think that's cool. I don't think that gets you anything. I guess people can Google that and see like who it was that purchased those albums. But I think the cool thing that they can also do is they can resell these albums. And an interesting thing about the music [inaudible 00:05:54], is that Warner Music will get 15% of all resales, which is kind of a bummer that they'll get. They're the ones that get the long tail, does the artists get any? And the resales also do not count towards the charts, which is cool.

Shane Mason:

And digitizing all of these things, it's kind of like taking Beanie Babies and I literally used a Beanie Baby analogy, [inaudible 00:06:20]. So I'm doing it again today. And it's just kind of making it all traceable and trackable, which is good and bad, in my opinion. I'm just imagining a world in the future where you have purchased an NFT or like the sixth holder of the album and you can load it into some Spotify-ish program that allows you to use NFTs from wherever they're purchased. Kind of like decentralizing it, which is the whole promise of 3.0, if the corporations don't lock it down before things actually become decentralized via 1.0 internet.

Shane Mason:

But yeah, it would be dope to be the six owner of this album and see like the other people that have owned it. And like how many times they played it, how long they owned it, where they listened to it, where they lived and like cool little digital artifacts like that. And I think the last thing that they need to figure out, is how to give people that own these NFT special access as a key owner, because the VIP section of every show I've ever been to is a mixture of people that actually give a shit and somebody that was just given a plus one and they're there to drink for free.

Shane Mason:

And they're on TikTok all day or like during the whole show and they're not paying attention at all. So like I'm imagining two VIP sections and I'm guilty of that as well. Like a VIP section for people that actually give a shit and there's not some six foot five dude, standing in front of you who is just there for the free drinks and is blocking your view, because you actually care about the band. So it's cool. It's like a key, right?

AJ Ayers:

Yeah. I have a little bit of experience in this space, because I used to work at Bandcamp and Bandcamp's whole mission statement is that fans care about music and fans care about being recognized for being fans of music. So take NFTs, like being known as one of the first thousand people to be the Muse super fan carries a lot of like cultural capital and weight. So I see this actually working very well in this space. I mean Bandcamp's already proven that it works really well.

AJ Ayers:

Bandcamp has Bandcamp Fridays where they literally give away their profits to the artists. They don't take their revenue share at all. One Friday a month. They started this during COVID and music fans will literally pay more for albums to support the artists. The list price of the album is $10, they'll literally pay $10, a hundred percent over asking as like a tip just because they want to be that fan, they want to show their support. So this is cool. I agree that I was not into the ugly ape art as one of the most more famous use cases of NFT, this is cool and promising.

Shane Mason:

I think you mean the Bored Ape, is that what you're going for?

AJ Ayers:

Well, it's called Bored Ape, but they are quite ugly. So I added the adjective. What else you got from me here?

Shane Mason:

Well, speaking of locking things down.

AJ Ayers:

I was going to say, speaking of bored.

Shane Mason:

Ah yeah, that's better than mine.

AJ Ayers:

Yeah. Speaking of being bored, the financial planning association, the FPA, which is one of our professional organizations that we belong to, has staked their flag in the sand and they have said, "We are going to try to get legal recognition for the title of financial planner." So you and I call ourselves financial planners, we are in fact certified financial planners, but there are a lot of folks in the world who call themselves financial planners. So the FPA is basically starting the legal process to get recognition to say, you have to do these qualifications, [inaudible 00:09:37] this designation, these qualifications in order to hold yourself out as a financial planner. So that's, cool. Generally I think more clarity for the consumer is better. I think the best example that we have is CPA.

AJ Ayers:

Everyone knows what a CPA is, what they do, but even so I think there's a lot of confusion around a CPA can help you with your taxes or they can audit public companies. I think this is cool. I kind of have my doubts. I still think there are a lot of folks who sell insurance and sell products that hold themselves out as financial planners and I imagine they'll be able to get around whatever definition comes out of this. This is a thumbs up from me, but I remain very skeptical of its actual implementation.

Shane Mason:

Yeah, no, I second that skepticism, it's been one of the reasons that I got into the financial planning space, was as a CPA, just saw a lot of really terrible financial advice getting delivered to my clients and other folks. And it was really expensive and cost prohibitive and was reducing the financial freedom of those people that were getting bad advice from bad actors. Not everybody that sells insurance on commission is a bad actor, but if you're looking for financial freedom and somebody holds themself out as a independent third party, that's going to give you the best item or the best solution, in reality, they're pushing products that give them the highest commission. There's just too many conflicts of interest out there. So CPA's moving into this space is the whole reason we created this CPA to CFP track within our own company.

Shane Mason:

So we're trying to convert, not only like, do I think that CPAs make some of the best financial planners, but we're also putting our money where our mouth is and providing a path for them to get over there, because CPSs are so conservative and they're so client-centric, then we hear about financial planning. They're like, "Ugh, I don't know if I can do that. I'm skeptical of my abilities to do that." Which is like Dunning-Kruger effect, where in reality they're the most capable of providing that service. And we're just trying to provide that support for them to cross over the Dunning-Kruger gap.

AJ Ayers:

Yeah. It's interesting. You look at the typical like personality profile of a CPA or an accountant it's like... I mean, you have talked about this before. I chose a path that's like I'm good at math, I'm a smart person, I want a good steady job that's going to provide for my family. And then you look on the other end of the spectrum in the financial space, the investment advisor, the stock broker who typically trades on charisma and their network and other things. So in the middle of those is like financial planner. From financial planners, you got to have the technical stuff, but you also have to have the charisma and people skills, because you're interfacing with clients and you're trying to win their trust or win their business if you want to be crass about it.

AJ Ayers:

So I think, at Brooklyn FI, we're basically trying to like rescue CPAs who are like, "I love tax. I want to get into financial planning, but I don't know how to do it. I want to help people." So I'm really excited about that path. We have one CPA currently on that track, actually two. We've got two folks. And so, we're excited to have those folks get ready to meet clients. They're getting their CFP designations and they have all that deep tax knowledge, so the clients are going to benefit from that. But then also the layer the financial planning, the retirement planning, the cash flow planning, the college planning for kids on top of that and I think we're going to have some really excellent planners in the next couple years here. This show is brought to you by Brooklyn FI. That's true, we do already have fantastic planners. We got to add to them. We got to increase that number. I don't have a good segue for the next article.

Shane Mason:

Well, speaking of beautiful service.

AJ Ayers:

Glossier is heading to Sephora. Oh my gosh. I am so excited.

Shane Mason:

AJ, hold on. I got this one. Let me take this.

AJ Ayers:

No, do not even at me, I'm going to mute you. I don't have that power anymore. So for those who are not aware, Glossier, I've got some props here. Glossier is a New York City based direct to consumer makeup and skincare brand. I have been a fan of this brand since I don't know I was in college. It started as a [inaudible 00:13:53]

Shane Mason:

[inaudible 00:13:53] Can I ask you some questions during the rant? [inaudible 00:13:57]

AJ Ayers:

[inaudible 00:13:57] Yes. I would love to have conversation, not just a, me on my soapbox, talking about this company that I love, but there's financial and equity implications, I promise listeners. So if you're not into makeup, you're still going to be interested in this next segment. But go ahead, Shane.

Shane Mason:

I am fascinated by makeup, honestly. [inaudible 00:14:14]

AJ Ayers:

[inaudible 00:14:14]. I have recommended Glossier products to you and you have used them. Correct?

Shane Mason:

I have boy brow. Yes. It's kind of cool. I mean, I just find the fact like the transformation that somebody can do to their face, very intriguing and the science and the art behind it is very cool. We've got some fantastic makeup artists as clients and I've dated women before, so I'm into... [inaudible 00:14:36].

AJ Ayers:

Anyways, I'll let you cough [out 00:14:38].

Shane Mason:

Anyway, so just wanted to confirm that for the audience. Can you get Glossier physically in any retail outlet or is it online only?

AJ Ayers:

Yes you can. So Glossier's direct to consumer online, that's the main source of their business, but they started opening the... I know I'm getting there. They started opening these retail concept stores like five or six years ago. So they had like this huge store in Manhattan and in New York. And they have people working the store who wear these like iconic pink jumpsuits. So it's very much it's online and then it's in these very specific retail locations. It was like LA, New York, Seattle. They did a popup in like Atlanta, San Francisco. So those were the two places. I think COVID really hurt the retail business. Obviously they shut the stores down, but they have slowly been reopening them. There's actually one coming to Brooklyn in Williamsburg next year. So the only places you can buy Glossier in Glossier stores, which are very limited [inaudible 00:15:34] in major cities. Some of them are, but no, they're not permanent.

Shane Mason:

So it's probably 98% online [inaudible 00:15:45]? Okay.

AJ Ayers:

Definitely. So the brand's been around for a while. They started as this website called Into The Gloss where the founder, Emily Weiss would go to like cool girls' houses or like celebrities or makeup artists, and literally interview them about their makeup and skincare routine. Now, if you're into makeup and skincare, that was like the most exciting thing you could possibly read, because you get to learn what is Gwyneth Paltrow put on her face in the morning? What does Gwyneth Paltrow eat? What does Gwyneth Paltrow think about her career and beauty and all these things? So the editorial content launched the retail makeup brand. And I think the makeup and skincare is excellent. So the big news is, Sephora, which is one of the biggest makeup retailers, Sephora, Ulta, Nordstrom, those are like the big players, is now going to carry Glossier products. So now you'll be able to buy Glossier in hundreds or thousands of Sephora stores all throughout the world. So if you're a Glossier fan, this is very exciting.

Shane Mason:

I have three relevant points here. I have a Glossier sticker on my Subaru Outback. I have watched the talented Mr. Ripley lately, which has our goop star, Gwyneth Paltrow and Charlie, my dog, once pooped in a Sephora. Those are my three topics. So I'm contributing a lot to...

AJ Ayers:

Charlie was the recipient of the boy brow Glossier dog toy as well.

Shane Mason:

That's true. The [inaudible 00:17:16] is Glossier.

AJ Ayers:

I also have the Glossier passport holder, which you can only get in certain stores in the world. Anyway, I'm obviously a big fan.

Shane Mason:

You've got some stats here on the actual financials of the company?

AJ Ayers:

Yes. Okay. So Glossier was like about like pre COVID, on everyone's list of most exciting unicorns. It was Glossier, Glossier, Glossier, female founded, female controlled, female owned, they were a unicorn. They hit that $1 billion valuation and actually their last round of funding was a series E and I think that was like the summer of 2021. And that put them just shy of 2 billion. They were a $1.8 billion valuation, which is kind of small in the makeup space. So I think what's going to happen here... Oh, so there was like a bit of... 2020, 2021 was a bit of a rough go for them. So they were like exciting, positive press, all these things. And then they had to cut their staff. So they fired 30% of their staff in early 2022. So that, was a bit of a blow there. So it sounds like they were doing some restructuring, maybe they hired too quickly.

Shane Mason:

I was going to ask you, from a brand perspective, this is a $2 billion makeup brand. What sets this brand apart from an Estee Lauder from a, I don't even know. Why is this a unicorn? Why are they raising VC money for a direct to consumer makeup product?

AJ Ayers:

Someone in marketing could answer this better than I could, but I think it's because they really know their millennial customer. Hello. They know what I'm looking for. Their ads are on Instagram. They're talking to TikTok makeup influencers. They hired the WNBA stars to do their makeup campaigns. Olivia Rodrigo is like their new head of their new ad campaign star. So it's very much targeted at a very specific age group who has a lot of money, spends a lot of time online and wants to feel like part of a community. That's my take. I'm sure there's a better take on why they've been so successful.

Shane Mason:

I was just wondering why their market share or their value is in the billions while others...

AJ Ayers:

Yeah, it's a good question. I mean, yeah [inaudible 00:19:26]. Like why do I wear a Glossier sweatshirt? It's like a cool girl brand, I think is kind of... They've done such a good job in establishing, Glossier is cool and interesting. And it's not a Estee Lauder or Lancome, those are like old stuffy, French brands that your grandma wore in the thirties. This is new and cool and it's something different. What's most interesting, is I would say, if you had asked me a year ago, I would've been like, they're preparing to go public. They're going to go for it. But this Sephora situation, just to me, is a clear path to being acquired by Sephora's parent company, which is LVMH. I always get that wrong, which is just huge fashion and beverage conglomerate, Hennessy, Moet, Louis Vuitton, Mark Jacobs, Benefit and Fresh, which are two other like, kind of similar smaller, newer cosmetic brands. So my prediction is that Glossier will be acquired by LVMH within the next two years and Sephora is the first step.

Shane Mason:

All right. We'll hold you to that. Well, on the other end of the luxury brand [inaudible 00:20:31]

AJ Ayers:

[inaudible 00:20:31] On the opposite end.

Shane Mason:

On the very opposite end, we do have some updates on the Spirit Airlines Frontier merger, and JetBlue getting involved as well. Do you want to do three for three here? You want to take us into the merger? And we have an article here from the Times about why this is bad for consumers.

AJ Ayers:

Really, take us off. You want me to take flight?

Shane Mason:

[inaudible 00:20:52]

AJ Ayers:

Are we clear for take off? Okay.

Shane Mason:

We're clear.

AJ Ayers:

Strap in, fasten your seat belts, ladies and gentlemen. Yeah. So back in March, I think Frontier was going to buy Spirit. Jet blue comes in and says, "Don't do that." Starts like creating a bit of a ruckus and saying, "Spirit was not doing right by their shareholders." Initially Spirit had [inaudible 00:21:17] JetBlue's offer and they were focusing on the Frontier deal. Anyway, fast forward to now the JetBlue acquisition of Spirit is moving forward, is climbing elevation, has reached 10,000 feet and it's cruising altitude.

Shane Mason:

Oh my God.

AJ Ayers:

So it's going through, I mean, we talked about this a lot, I think two weeks ago, but you had an interesting share, a Scott's cheap flights opinion piece, basically about why this acquisition is actually bad for you as the traveler, as the seeker of cheaper fares. And basically the gist is if you take out the cheapest option, if you take out the lowest common denominator, which is Spirit, which if you need to get from New York to Chicago, based on that distance, Spirit is always going to be the cheapest.

AJ Ayers:

It's a low cost, no frills airline. So when you have that flight, let's say the lowest possible fare you could possibly charge for that is $140. Spirit's going to come in at 140, whereas your Delta's and your American Airlines are maybe going to be 180 or 200. So what Scott is saying or what his research is saying, is that if you take out that cheapest option, all the other prices are going to go up. So in the end, basically, JetBlue, they wanted access to all of Spirits routes, to all of their planes, to all that infrastructure, but maybe we'll apply JetBlue's higher prices. So we should see airline prices coming up. What is it about?

Shane Mason:

20%.

AJ Ayers:

20%. Yeah. They should come up about 20%.

Shane Mason:

Yeah. MIT did a research study in 2016 that shows when JetBlue enters the market, it drives down fairs by 7.7%. And when Spirit, the ultra low cost carrier, especially the Greyhound bus of the skies' comes in, it drives down fairs by 20%.

AJ Ayers:

The Megabus of the skies.

Shane Mason:

Spirit is Megabus?

AJ Ayers:

Well, I would say Greyhound is like your standard average bus company. Megabus is like your $1 from Saratoga Springs to New York City.

Shane Mason:

Spoken like somebody that's never ridden a Megabus before. Megabus, is so much nicer than Greyhound.

AJ Ayers:

But it's so much cheaper. No, I used to ride Megabus all the time. You'd have to like log in at like midnight. And if you wanted to travel like three months from now, you'd like log in a certain time and get those like $3 fares.

Shane Mason:

Yeah. But nobody's as psychotic as you are. So no one else actually gets [inaudible 00:23:43].

AJ Ayers:

So anyways, speaking of psychos, how's your JetBlue, I'm sorry, your Delta status going?

Shane Mason:

Hmm. Your boys a diamond. You've worn off on me. [inaudible 00:24:01] about one thing now. I'm becoming a good American consumer, everybody. I'm no longer Thoreauvian, used clothes, vintage, little rat, little [inaudible 00:24:13], I'm still a Podling in my heart, but I'm [inaudible 00:24:15] up.

AJ Ayers:

Getting airline points is not even boujee. It's just good planning.

Shane Mason:

Speaking of rich and poor friends...

AJ Ayers:

Nailed it.

Shane Mason:

Boom.

AJ Ayers:

A new study shows that the key to reducing poverty, more friendships between rich and poor. What you got Shane? Oh, you're still coughing.

Shane Mason:

Sorry.

AJ Ayers:

So this is an awesome study. Essentially, it was a study done, I forget which... A bunch of different researchers got together [inaudible 00:24:47]

Shane Mason:

[inaudible 00:24:47] from the Times?

AJ Ayers:

Yeah. The Times article, it was like Harvard was involved. Stanford was involved. Anyway. They looked at data from Facebook, which is really interesting. So they had [inaudible 00:24:56]

Shane Mason:

[inaudible 00:24:57] 20 billion friendships on Facebook.

AJ Ayers:

Yeah. Which is a really cool as much as we talk about how much we don't like Meta/ Facebook for other reasons like that data for like studying social things like this is really cool, but you have a take on this. What's that?

Shane Mason:

It's really simple, the article's pretty long and the study is I'm sure like 150 pages long, but it turns out that one of the biggest indicators of social mobility is your proximity to upper income or higher class people in your neighborhood. It says, "For poor children, living in an area where people have more friendships that cut across class lines, significantly increase how much they earn in adulthood, the new research found. The new analysis found the degree to which the rich and poor were connected, explained why a neighborhood's children did better later in life, more than any other factor."

AJ Ayers:

Crazy. Reader or listener, please read this article. It's also got great infographics as you scroll and the way that the Times does such great visuals. Huge. So whether your parents went to college, like how much your house costs, what college you went to, those factors matter much, much less than if you had access to rich people growing up who could expose you to other things or introduce you to partners at law firms and things like that.

Shane Mason:

Yeah. So, I mean, to your infographic point, you can see in very integrated parts of the country, like in the Northeast where you'll have school systems that are less privatized now, New York City of course, is one of the most segregated school systems in the world or in the country. But you do see a blue area of blue corridor of people that get exposed to higher class folks in their neighborhoods. And they've had more social mobility unsurprising in the deep south where your boy is from, there is embarrassing yet again, the ability to attain social mobility. And I know for a fact, because I went to schools down there, that it's much more segregated. It's still embarrassingly segregated down there where the public schools are generally for people of color or low income whites. And the private schools are for the high income, high class individuals in those areas that don't want their kids exposed to lower income or lower class folks.

Shane Mason:

So not surprising that there's not a lot of social mobility and a lot of progress down in the south. I have a question for you. Is social mobility is zero sum game? When I think about this, I'm thinking is so is more social mobility, just purely a good thing. If they're measuring income level increases, I would have to imagine that if we all... There's huge demand for financial planners, there's a huge demand for programmers. If we get everyone trained up, everyone's income, like rising tide lifts all boat situation, it's not a zero sum game.

AJ Ayers:

Totally. Yeah. I mean, what I got from this was like, wow, we have all this data. This study is amazing. Look at the actual result. There's so many government programs to try to decrease poverty and increase education and access to education. So I have low expectations, but high hopes for, how can we put in government policies to foster this? The data says this works, the data says this is better than all these other things that might cost taxpayers money. So how can we divert those tax Dollars into a program, mentorships, summer camps, things like that, where there's exposure and a lot more integration. I mean, looking at the infographics, the south was just like, oh Jesus, racism alive and well, segregation alive and well in the south.

Shane Mason:

With that said I did get an opportunity personally, I went to a private school for two years in high school and I got to see the other side of the tracks for a little bit. And that changed my life for sure. Like having the ability to see how other people think, other people do plan on going to college, other people do have role models and members of the community that have been to college, just really opening that door is what these kids in these higher income, like class intersection communities get access to. And it's like taking mushrooms, AJ, it opens your third eye, bro. You get to see what's on the other side.

AJ Ayers:

And also, it's not just rich and poor. Obviously, it has a much bigger impact, but even in white collar neighborhoods or middle class neighborhoods, it's like, oh, if you have access to someone who has the connections, that is a much better path to a higher salary, making partner faster, whatever your industry is, if you know the right people. Just because you went to Harvard and are smart that doesn't get you to the top, that might get you in the door, but those connections and that social mobility, that access to those people, is really what's going to get you ahead. There's like three timely tax pieces that I wanted to talk about. We got Bill Gates, we got Shakira and we got Donald Trump. Each of them very interesting in their own unique way.

AJ Ayers:

So Mr. Gates in the news, there's an article from Ars Technica, that's a mid global house [inaudible 00:29:58] Bill Gates to tank his wealth ranking, giving away $20 billion. Now, that headline is a farce, because he's not giving away $20 billion. He's just moving it from his personal net worth to the Bill and Melinda Gates Foundation, which is cool. I mean that's a great foundation. It employs hundreds of people, does a lot of great work, but this headline is a PR make oh, Billy look really good.

Shane Mason:

Yeah. It reminds me of the article from Forbes that just came out about the guy that won the $1.3 billion lottery is only taking home 400 million after taxes. Everyone goes insane, because they think that the IRS is taking 70% taxes, because no one understands the tax system and five paragraphs in, they explain that the 1.2 billion is what you win, if you take the annuity payment over 20 years, which is easier on the cash flow of the lottery. But if you take the upfront payment of 700 million, not 1.2 billion, then after taxes of 37%, it arrives at that number.

AJ Ayers:

That four [inaudible 00:31:04].

Shane Mason:

Yeah. Financial literacy is such a bummer. It's very low, is what it is. Anyway, so Gates in this case, this is a little bit more higher class financial literacy. Yeah, he's taking his personal [inaudible 00:31:18]

AJ Ayers:

[inaudible 00:31:18] speaking of rich friends.

Shane Mason:

And he is moving $20 billion into a foundation that he controls. So he is moving it from one pocket to the other. So yes, he's not directly controlling the $20 billion, but he is indirectly controlling it. I mean, how old is this guy anyways, in his sixties, and he's got 70 billion, like a 100 billion dollars to left over. What do you need to survive on 3, $5 million?

AJ Ayers:

Tax the fucking rich and stop rewarding them for giving away money. This money landed in Bill Gates' pocket, because it wasn't taxed properly in the first place. The reason he's worth a $100 billion, is because he has highly, highly appreciated stock in a public company that is not taxed properly. This is not his money. This is the American taxpayer's money. Why wasn't it there in the first place? We have to wait for old Billy to get to his sixties and decide that he's going to give it away. Like fuck this. I'm sorry. I'm so sick of this, like rewarding wealthy people for philanthropy. If it had been taxed properly at 30% in the first place, we would've had a hundred more schools or whatever, I get on my soapbox about this stuff, but I cannot read another article that congratulates rich people for basically just giving the taxpayers back the money that it should have been theirs in the first place.

Shane Mason:

It'll trickle down. AJ, don't worry.

AJ Ayers:

Oh, it'll trickle down. Yeah.

Shane Mason:

It's been trickling down for about 60 years, just a trickle.

AJ Ayers:

Yeah. It's like the movie scene where it's like, you're at the desert and they have their saddle bag pouch of water and there's like one [inaudible 00:33:02]. Pay for community colleges, please.

Shane Mason:

We have so many billionaires. We talk about billionaires all the time. We've got Shakira as another tax article. I don't really know what's going on with this [inaudible 00:33:19]

AJ Ayers:

[inaudible 00:33:19] Oh, I do. I know everything [inaudible 00:33:24].

Shane Mason:

Oh, cool.

AJ Ayers:

Let me break it down for you. These tax forms don't lie. [inaudible 00:33:29].

Shane Mason:

There it is.

AJ Ayers:

The hips were lying. The hips lied for sure. So this is a residency audit chain, which is one of our core service offerings here at Brooklyn FI, is that we help clients not avoid taxes, we help clients properly report their income in the place that they... Sorry. We help them avoid taxes, we don't help them evade taxes. Tax evasion is a federal crime, punishable with jail time and fines. Tax avoidance is legal understanding of the law and paying the taxes properly. So Shakira, whose full name is Shakira Isabel Mebarak Ripoll, Ripoll, sorry. So Spanish government says that Shakira owes them 14.5 million Euros with a fine of 24 million Euros on top of that. So the fine is almost twice the size of the tax that she owes. And Shakira obviously, has made millions and millions and millions Dollars international pop superstar and essentially she has been claiming full-time Bahamas residency since 2015. [inaudible 00:34:41]. In The Bahamas. [inaudible 00:34:43].

Shane Mason:

She's Colombian?

AJ Ayers:

She's Colombian. Bahamas having a much lower tax rate than Spain.

Shane Mason:

You don't say.

AJ Ayers:

I think where she got in trouble, is that she's been married to a FC Barcelona star and has two kids with him. And so, she's basically been living in Barcelona. And so, the tax authorities are going like, huh, your husband and your two kids are in Barcelona yet, you're a full-time resident of The Bahamas. How does that work? So that's, how she got in trouble. I don't know if the Spanish tax authorities had been working on this for a while, but she recently split from her husband of what, almost 11 years. So I wonder, [inaudible 00:35:26].

Shane Mason:

[inaudible 00:35:27] Shakira's single?

AJ Ayers:

Yeah, Shakira's single.

Shane Mason:

We got to wrap this podcast.

AJ Ayers:

[inaudible 00:35:38]. Shakira is single, but she owes the Spanish government, $35 million.

Shane Mason:

[foreign language 00:35:46].

AJ Ayers:

Everyone's got baggage.

Shane Mason:

[foreign language 00:35:51]. Everyone has baggage. Yes. So as a single [inaudible 00:35:58].

AJ Ayers:

Anyway, so I have a hypothesis, but I think her public split from this guy reinvigorated these Spanish tax authorities to go after her. I mean, maybe they forgot about her, but now that she's in the news, they want to be paid. She is denying this entirely. She rejected a plea deal to pay something lower. So I will be following this case closely.

Shane Mason:

Well, it looks like they're auditing her for the years, 2012 and '14. I mean the statute of limitations must be pretty big in Spain. This is 10 years ago that we're looking at here.

AJ Ayers:

There's no statute for fraud? You can go back [inaudible 00:36:30].

Shane Mason:

[inaudible 00:36:30] in the US, there is no statute for fraud. Yes, for lying on your returns.

AJ Ayers:

Yep. This is a residency audit. We see this all the time with our clients who leave New York, which is a high tax state and move to Florida or Texas, which is a zero income tax state. And New York has a very well funded residency audit department to go after those folks. And it appears that Spain does as well.

Shane Mason:

Yeah. I mean, you have to pay for the benefits that your citizens are provided. Like the subway needs to get paid for, that comes through tax Dollars. It's not like you pay $15 every time you ride the subway, you pay $3 every time you ride the subway, because people pay their taxes. So if you are benefiting from the Barcelona City government or the Spanish railway system and their airports, like you don't pay every time you go to the airport, do you? Just pay the airliner?

Shane Mason:

Those things need to get paid for. I love that the penalty is like one and a half times the actual amount of tax that she didn't have to pay, because that's what incentivizes people to actually, either stay out of the country and not use their resources. And with her private jets, I'm sure those resources are even more highly taxed, so to speak. Anyway, residency audit is all about making sure that wherever you spend your time and you're using public goods, you also contribute to the public coffers. And then you have this one last item here. This is a fun one.

AJ Ayers:

Yeah. So you may have seen the headlines that Donald Trump's ex-wife Ivana, unfortunately passed away tragically after a fall in her Manhattan apartment a couple weeks ago. And there was a funeral in Manhattan to send her off and her ex-husband Mr. Donald Trump, former president decided to bury her on the Trump family property in New Jersey, the golf course. But in New Jersey land of interesting tax law, there is a provision that says, if you designate an area as a cemetery or a burial ground, property income and sales tax are all eliminated. So a tax researcher was actually saying that they think that Donald Trump did not bury his ex-wife on his golf course out of respect and love also, his two children who are obviously, just lost their mother are obviously sad about that.

AJ Ayers:

Not because of that reason, but just because he could basically not pay any taxes on any of the income that he gets from the Trump golf course. So I think this person is right. I think he did it for the wrong reasons, but also what is this law? This seems like a Sopranos episode. This seems like Tony Soprano found like a tax loophole or shook hands with some state legislator and got this little thing slipped into the tax code. And it's like, if I bury grandma in my backyard, in New Jersey, do I not have to pay property tax on my $8 million waterfront mansion? Is that what this says?

Shane Mason:

This is going to be sad. But my dad passed. He liked to golf and at the casino, which was his whole life, because he was a company man. He got to golf for free at this place. And he took his gamblers there to make them have a good time. He was a party dude and his job was to help big people party, big gamblers party, big whales. And after he passed, we scattered his ashes and they put up a stone at the golf course, because that was his sacred place. This is not Ivana's sacred place. Why the hell would she get buried at a golf course? Does she ever golf there in New Jersey? Do you think that was her vibe? I don't know much about her, but I've seen the size of the pearls that she wears. I don't know. It's very odd. What is going on here? Why are golf courses getting special treatment in any regard? Tax the rich folks.

AJ Ayers:

Yep. Tax the rich. Yeah, she was buried in a plot close to the first tee of the golf course. Following her funeral, her resting place is marked with a rudimentary wreath of white flowers and an engraved granite stone. Another Guardian article, man. Guardian journalists are really hitting it out of the park here with their words. And they're [inaudible 00:40:55]

Shane Mason:

Guardian journalists. Don't give a fuck. Let's go.

AJ Ayers:

They're so disgusted by their own country's politics and even more so our politics. These crypto losers, rudimentary [inaudible 00:41:09].

Shane Mason:

Oh my God.

AJ Ayers:

Anyways. Yeah. Cool. This is a Soprano's episode. That's all I got. That's all I got.

Shane Mason:

All right. We got some other stuff. Maybe we'll do it next time. Less relevant. But listeners can email us at liquidityevent@brooklynfi.com. You can leave us a voicemail and we'll play it on the air. Show notes can be found at brooklynfi.com/episode53. BKFI [inaudible 00:41:33] can leave us a review if they want to be weird about it. Thanks guys

AJ Ayers:

Later.

Speaker 1:

Thanks for listening to the Liquidity Event, hosted by AJ and Shane of Brooklyn FI. Head on over to brooklynfi.com, where you can subscribe to the podcast or YouTube channel, or if you want to learn about their full service financial planning, tax and investment firm, specializing in tech professionals and creatives on the path of financial independence. We'll see you next time on the Liquidity Event.