Perhaps in a different context. In this one, I am pointing out that the headline implies that millionaires, as a collective group, are pushing for taxing billionaires. By adding "some", it points out the absurdity of the title. If I were talking about a group of people in a "No True Scotsman" sense, then yes, "some" would be a weasel word.
wait, is "covid is a ploy to transfer wealth to the companies providing a vaccine against the greatest global pandemic in a century" an actual anti-vax talking point?
Vaccines do not pay for themselves. The proposed tax is literally about paying for the vaccines. So you're literally talking about giving out corporate welfare. Want to silence this talking point? Abandon the effort to tax people to pay for the vaccine and obtain them purely at-cost so Moderna, et al. are unable to use "the greatest global pandemic in a century" to make a mint. I mean, if this is really about getting the vaccine out then you should have no problem backing a proposal like that... RIGHT?
The problem is that inflation destroys the value of money quicker than you realize. Nice houses can cost $30M in alpha cities. $20M is a goal post that will need to be moved regularly. It’s too difficult to say what is “enough”.
This is a common response but who's problem are you solving? How many people are affected by this? And it seems modern state banks aren't as scared as inflation at the macro level, why do we need to be concerned?
Then don't pin to a dollar amount, pin to relative wealth available in the world/country/region. Something like estimated total accumulated wealth / total pop.
Inflation destroys the value of money, not the underlying goods or services. Whether there are 100 dollars to go around or 10 billion, for the same "physical context"/material reality a rule along the lines of "no more than %5 of total wealth accumulated in 1 person's account" seems inflation-resistant.
How about this — we all agree that the entirety of wealth in the universe is made up of 21
Million bitcoin. Then the wealth cap is 21 million bitcoin. Of course, nobody can have it all, in fact, if they try they will only drive up the relative cost per unit.
If this seems insane to you, consider the insanity of trying to define a fixed container size with an infinite flow of water.
Income taxes are the ones that apply to income. Other taxes apply to other things, e.g. property taxes apply to property and sales taxes apply to sales.
There are already things in tax law for this kind of stuff. You can write off the losses. If you're rich enough to be hit by this stuff, you're rich enough for an accountant and lawyer to help out with this kind of thing.
I had a half baked idea of the government seizing shares, and those become non-voting shares. Those shares are then rolled into a huge fund whose shares are distributed along with tax returns. It would probably amount to essentially free $SPY shares.
Didn't think through it much, aiming for a national product that elevates everyone in the country. Kinda like a Norway oil fund.
95% of us aren’t American. And while I would never blame Americans for voting for an American government specifically on the basis of what they promise do for American citizens and without regard for the consequences for the rest of us, the overall effect on the world to which rich Americans can flee has been more up than down.
Right now, in America, you have more people suffering from poverty than you have people with wealth. You also have taxation which is regressive, not progressive -- which was what brought on the French Revolution.
We can have empathy now, or we can be surprised later.
Empathy is something that is sorely lacking in a post-COVID world. Apparently some people decided that certain groups are simply vermin to be exterminated and have been quite open about their abuse. Empathy, for them, simply isn't on the menu, because they have been told that these people pose an existential threat. It is left as an exercise for the reader to determine precisely who such parties are, and how this will end.
Before there's something to redistribute, that something needs to be created. Productive people do not need and do not depend on redistribution of wealth, they create it. Crooks and collectivists on the other hand, are only capable of redistributing someone else's wealth.
No one is suggesting taking the means of production and distributing it to the proletariat, so no you won't. It is literally impossible to get to Marxist communism through taxation. Communism is much more than simple wealth redistribution. It's about collective power and collection ownership of the means of economic growth. Progressive taxation is absolutely not that unless maybe it's a 100% or higher ... but that kind of ceases to be a tax and starts looking a lot like the state seizing people's property.
Most basic needs are or could be met already. Apart from Housing / Shelter. Which some how no government plans to tackle because the world economy is quite literally built or based on land and property prices. Even talks about UBI completely neglect housing prices.
Which I came to the sad conclusion, those that understand housing wont talk about it, those that dont understand will never talk about it.
We were on course to completely eradicate extreme poverty by 2030 if it wasn't for COVID. But then I would argue even today most of the extreme poverty are partly a results of politics in their region.
What we have now, with billionaires with toy rockets who pay no taxes and a voting system that allows you to choose between two candidates who will both perpetuate that, all while homelessness and destitute poverty are rampant -- that's a little authoritarian.
Let's say I start a Saas company and it does really well. Somebody offers to invest at a valuation of 25$ million bucks. By most standards of evaluation net worth- I'm worth $25 million bucks now.
who seizes ownership of my company?
What's to stop me from offering you $10 bucks for .0001% of your company and making you illegally rich?
Taxes on net worth won't work because net worth is abstract
The tax could be such that you are forced to turn over shares in the company to the state. The bigger you get, the more shares you have to give to them, the more influence they have on company decisions.
In theory, this would act sort of as a general purpose regulation. Instead of using the force of law to make companies comply, it uses the force of its share votes.
Of course, there are a bunch of ways this kind of scheme could go wrong too.
Ideally they wouldn't care much about the day to day operations of a company or even that it is profitable and they would use their voting shares only to prevent decisions that actively cause societal harm or to favor ones that actively benefit society.
Like I said, there's still a lot that could go wrong with that scheme, but it isn't like the current scheme doesn't have its problems too.
How would you manage this very site by these criteria?
Would you still cover cryptography, freedom of information, civil unrest and bills which damage fundamental rights?
Ok, assuming that we're treating HN like a business and that business is large enough to have significant government voting share under this scheme:
The government voting with its shares to silence those stories would potentially be actual censorship under the US constitution, and therefore illegal. The same cannot be said about private owners.
Of course, the government could opt to transition the site away from those topics entirely, but again that's something the private owners could do too.
And none of this prevents small competitors from coming in to run those stories.
Let me turn it around: Would Facebook have more or less freedom of speech with government control?
I’d assume Facebook would be appointed a partisan czar during each administration, much like many government agencies. Unlike the EPA or FCC though, controlling Facebook has huge political implications.
Centralizing state power has never gone wrong in the history of humanity right?
And we all know how efficient government bureaucrats are. I can just imagine the joys of having civil servants dictating how you should run your company.
> And we all know how efficient government bureaucrats are.
A common refrain in the private sector, but having worked in both I can assure you that any sufficiently large organization is at least as inefficient as a government.
> I can just imagine the joys of having civil servants dictating how you should run your company.
We do that today through regulation. There are reasons we collectively want some level of control over how companies are run.
We do that today through regulation. There are reasons we collectively want some level of control over how companies are run.
Regulations are different from a Washington bureaucrat far removed from your company having to approve your new fiscal year roadmap or plans to pivot the company
Why would that be significantly different than anyone else with a voting share? It's not like the government is incapable of hiring the kinds of people who sit on boards of directors.
Generally, a deeply intertwined state and corporations is called by a term that tends to get overused. State ownership of businesses is usually not seen as a good thing.
That sounds hilariously demoralizing. Talk about Pavlovian training in the wrong direction, every time I find a way to boost the value of my company, I have to sign more of it over the government.
It depend on what is done with said boost.
It would go straight into your wallet? Makes perfect sense to me for the government to get an additional cut.
It would go straight into the companies' salaries? No reason for the government to touch it more than it already does.
Obviously, there's room for nuance and it's not just one or the other.
obviously, just like I'm talking about what you _do_ with the increase. Are you really just saying to leave the increase in value alone? Then why pursue it?
I'm under the impression that an increase in company value is not an end to itself, it's a means to an end (more investment, more dividends, higher sell-off/buy-off price, increased stock price, etc - all are more probable when company valuation increases).
So why are you looking to increase your company's value?
Basically, for most founders past the point where material comfort stops mattering, I think it’s power. The power to do what you want in the world. More ambitious projects, especially. Eventually that can get to extreme heights, like trying to design rockets that go to Mars, or trying to stamp out malaria.
Yes, that's kinda the point I think. You could save a bunch of money by filling your product with asbestos and making employees pee in jugs, or you could just, you know, not do that because then you have to hand over more control of your business to the government.
Granted, this also disincentives societally beneficial efficiency increases.
You realize that those examples are the extreme exceptions that the press has made hay out of, and aren’t representative, right? Most company value boosting actions are much more boring.
I wonder how much of this backlash is just a result of people being propagandized to by the media’s steady drumbeat about corporate abuses since the GFC.
I am not convinced that these are exceptions. By and large, corporations are run by people who see no problem with exploiting others and the more successful they are, it seems, the more willing they are to exploit. That's why we invented unions, and labor regulations, and all the other regulations for that matter and it still isn't enough to stop them from doing it.
Texaco dumped a bunch of waste in the Amazon and refused to clean it up or pay for it. Why is this not surprising to anybody? Oh, right, because we all know that this sort of thing happens all the goddamned time.
Okay, so then people will start to invest in gold. A cap on raw materials? Let’s keep a herd of cattle or two. And ad nauseam.
As someone from a post-communist country: when you put a limit on capital, another form of accumulating one will be created. Some people will be more able and motivated to get the new form of the value, others will be less able or simply not interested in it, some will inherit it over time. And we will end almost exactly where we had begun.
Limiting ways to accumulate wealth will not get rid of the desire to do so. Such a law will only force it to change the way it is manifesting.
Such weird logic; we should level down everyone.
I don't live in a nice house, so everyone should be stuck like me in an old flat until everyone can get nice house.
I'm not happy -> Everybody should be unhappy
Not sure if they’ll be unhappy with their measly $20mm as much as they’ll be unhappy with not being allowed to continue playing the game. Imagine that any successful entrepreneur would be forced to sit on the sidelines after hitting $20mm of net worth.
Guess they'll have to start taking lessons from professional athletes who've had to figure out how to deal with not being able to "continue playing the game" and still be happy.
Speaking of which, why not sideline athletes which are exceedingly successful and leave some room for others? Nobody needs their 6th NBA championship or 10th Grand Slam title or 7th Formula 1 championship while their competitors, similarly talented and hard working, can spend entire careers not winning anything. Heck, it might even be better for the fans!
You need more than $20 million to be happy? Only having $20 million per person means you need to live in an "old flat?" Such weird logic: I need billions when others have no food.
You need more than $20million to build a reusable rocket company, a cold fusion reactor, or any number of other deep tech startups that require enormous investments which will likely never come from risk-averse governments.
Nuclear explosions and energy were initially developed because of military purposes.
Rockets were developed for military purposes.
I dont think the history of those things indicate we need rich individuals to make them.
NASA has developed into a bureaucratic machine with risk averse incentives.
The power of the state when it throws its weight behind something is awe-inspiring but the power of decentralized innovation leads to tinkering and unexpected breakthroughs that a government run project wouldn’t permit (due to the number of unnecessary bureaucracy and box checking)
So you need a $20 million house to feel like you live in a "nice house"?
Can you explain to me why your logic is less "weird" than the one you are replying to?
This is exactly the kind of misunderstanding—willful or not—that has been used to prevent progress on these types of issues for decades.
Even if we did what david927 suggests, and imposed a $20 million/person wealth cap globally, no one would be meaningfully "leveled down." The differences between the lifestyle of someone with $20 million and someone with $200 billion aren't that different: what's different is the level of power the latter has over people and governments. Power that has no checks and balances, no strings, no way of ensuring it's not massively abused. And given the kind of person you need to be to amass a fortune in the billions in the first place, it's nearly guaranteed that it will be abused.
The amount of money people are actually talking about taking from the billionaires will not affect their lifestyle. Period. They will still be vastly, unimaginably rich. They will go on accumulating more money, probably faster than any wealth tax will be able to appropriate it, without doing *anything*.
No one deserves to be paid more in a year for simply existing than an average human needs to spend in their entire lives on food, clothing, and shelter.
Such idea excludes that progressive taxation can be used for the same purpose - and "wealth cap" is near to being a special case of progressive taxation (0..20%; 0..50%; 0..99% ...)
The problem with that is not really to do with equality, it's to do with who runs companies and where investment in the economy comes from, and how everyone's basic needs are met. This would take the ownership of huge swathes of the companies in the world out of the hands of the people who created them and operate them and into the hands of random executives with little or no track record. You're not going to meet anybody's basic needs to you destroy the economy that provides them.
For example, Elon Musk would be forced to sell all but a minuscule sliver of his shares in Tesla, SpaceX, etc and give the proceeds to the tax man. He'd be out on his arse and replaced by an executive hired by whoever bought the shares. It would be the death of Tesla and SpaceX as we know them.
That's just a highly visible example, but the effect would be to take tens of thousands of companies out of the hands of the people who currently run them, and into the hands of random investors. It's not clear to me this would actually be any good for those companies, or the economy, or the people working at those companies, or their customers.
Finally, if everyone who's currently an investor in these companies, but has more than $20m also get taxed down to $20m, who is going to buy all the shares? You'd also tax out of existence the vast majority of the source of investment and capitalisation in the economy. There's be functionally nobody left capable of making significant investments.
These things matter. It's nonsense like this that is why Marxist experiments the world over have caused such havoc and misery on unimaginably vast scales.
Yes, that's a problem. But it's not as big a problem as the current economic divide. The very wealthiest have superfluous amounts of money -- enough to pay to find loopholes so that they pay no taxes.
If there was an island with 100 people and one person had almost all of the coconuts and others were starving, no one will care about details for very long. Fix it now because people won't ask nicely for long.
Right so instead we should take one of those 100 people and give them the power of violence to take all the coconuts and distribute as they see fit.
Likely to their friends and family.
So we end up with the same scenario again, inequality persists only this time it’s because of a centralized authority figure that now has a monopoly on violence.
Straw man. Taxation has existed for a long time and has worked well. The only new part would be a wealth tax that caps out to 100% at some level, and only until basic needs are met for the very poorest.
> Right so instead we should take one of those 100 people and give them the power of violence to take all the coconuts and distribute as they see fit.
No one is saying that.
We take all the coconuts, gather all the people, and work to come to a decision.
Or are you saying you need someone to tell you what to do, and you'd rather it be the guy that got rich off everyone else than someone randomly chosen? I can understand that at least, although I still disagree.
Suppose that's the only person who knows how to grow and harvest coconuts, and those coconuts are the seeds for next year. That's what real economies look like, not the simplistic naivety of so many Marxists who think that everyone is equally good at managing resources, and spreading out resources equally is just as good as investing them strategically. There are no simple answers to questions like this.
Billionaires building toy rockets when others starve is equivalent to "seed coconuts"? That's a terrible straw man.
There have long been simple answers but we have been to greedy to look at them. We have been able to eradicate hunger, homelessness and educational poverty for a long time. We have just chosen not to.
I find it funny that so many people are terrified of being capped to $20M/person and so few are concerned about children sleeping outside, hungry.
The whole coconuts example is a terrible straw man, but I tried to make it at least a little less infantile and look at least slightly like economics.
Yes these problems have been solvable for some time, but it’s not billionaires stopping that happening. Their job is creating companies, jobs, products and services not ending poverty. We have the resources in the public purse already. Richard Nixon came very close to announcing a basic income.
The problem is political. Too many Marxist on the left that are economically illiterate and don’t know how wealth works or even what it is (hint it’s not piles of money); and too many radical libertarians on the right that think western European style liberal welfare is communism.
> [The billionaires] job is creating companies, jobs, products and services not ending poverty
They're being asked to pay their fair share of taxes and instead are using their wealth to find loopholes so that they pay nothing. The US has regressive taxation.
> Too many Marxists on the left...
I'm not sure that there really are any Marxists on the left and that's certainly not what's holding back addressing poverty. Neither of the groups you mentioned have any real political power.
No, the political center has the power, and it's that center which has moved right to be more concerned with protecting wealth than helping the poorest, at least in America. As you said, Richard Nixon considered UBI and Milton Friedmann was quite clear about the need for a negative income tax. That was the right; now that's the radical left. See the problem?
I honestly didn't mean to start a fire with my first statement above. I'm saying that the wealth inequality gap is disastrously large and growing. The wealthiest, much like before the French Revolution, both won't pay taxes and frankly don't care how much poverty exists. And that's unacceptable. We should be talking about that and nothing else.
I have to say, I’m not entirely convinced by the growing wealth gap argument. Pickety’s numbers are all before taxes and transfers, there are huge holes in the analysis. On the other hand, there are too many renty ways to grow wealth. I believe the right approach is to recalibrate taxation and the incentive system, not just slap huge punitive taxes on top of what’s already there.
I agree, the problem is much more intricate and solutions need to be far more nuanced than “tax everyone down to 20m”.
I was thinking the other day about companies and the impetus behind patents. I agree we want Elon and Jobs and Bezos to have ownership and run the show, like they do now, and with as much “wealth” and power as they have, exclusively, for some amount of time. But I’m not sure if we want the mass of power they accrue to sit around indefinitely. Once the head leaves, as you saqy, the company is entirely different. Society does not really benefit from a scenario where say Jobs accrues tons of wealth doing great things and then leaves this zombie beast of a company lying around continuing to suck money out of people and transfer it to shareholders.
So I think something like a limited exclusive right to profits might work. You (a company) can profit no questions asked for say 14, extendable to 28, years if more time is needed and/or you’re still under a certain size. After that a company gets turned into a non profit. It may still operate and pay employees and staff and whatnot, but it may no longer pay owners out the wealth that it accrues. It either has to spend that wealth, pay taxes, or lower prices so that it’s not taxing people, essentially. Obviously this needs more ironing out but I think it is possibly a compromise that is radical enough to combat the large and dangerous wealth vacuuming machines that companies turn into while still preserving the incentives structure that drives capitalism.
I prefer a robust system of inheritance taxes. Build your company, run it, do a good job and reap the rewards, but there's no reason all of that must go to your descendants as against anyone else. Provide for them sure, even lavishly, but in the millions not tens or hundreds of millions.
There are a lot of people in the US deeply dissatisfied with the levels of inequality and the way the deck is stacked against low earners. That does need to be addresses, but plenty of countries have done so without turning to outright Communism and Marxism. Is Britain a Marxist state because it has a robust social security and public health system? Is Germany?
> For example, Elon Musk would be forced to sell all but a minuscule sliver of his shares in Tesla, SpaceX, etc and give the proceeds to the tax man. He'd be out on his arse and replaced by an executive hired by whoever bought the shares. It would be the death of Tesla and SpaceX as we know them.
The point is that Musk would/should never have gotten to such an oversized amount of control in the first place, and thus these businesses wouldn't be in any danger at all from such a move because they'd already be staffed by competent people who wouldn't need his approval or "executive powers" to run things. And if Tesla and/or SpaceX can't stay afloat without Musk, then I'd argue they're failures, or at the very least shouldn't have gotten this big while still being dependent on him.
Besides, so what if companies fail? They're not people, they should never be more important than people. As long as the people are taken care of we should be fine with businesses failing. It leaves room for others, and stops tying up human output for unproductive endeavors.
> This would take the ownership of huge swathes of the companies in the world out of the hands of the people who created them and operate them and into the hands of random executives with little or no track record.
Who's giving you this idea? The whole point is to give more power/control back to the people running those companies, i.e. the workers making stuff, serving people, maintaining, etc. No-one is arguing to blindly dilute ownership of companies among the populace _just_ to keep from having billionaires. This is scare-mongering at its finest.
> Finally, if everyone who's currently an investor in these companies, but has more than $20m also get taxed down to $20m, who is going to buy all the shares?
The wealth being taxed doesn't just vanish into thin air. If so many currently wealthy investors are being taxed down, it stands to reason that the redistribution of said wealth would mean that _more_ investors appear.
Also, from an ideological point of view, it seems more democratic to have many smaller investors, than allow a few to accrete such wealth that they can do such things as bully or starve projects of investment for personal reasons.
> It's nonsense like this that is why Marxist experiments the world over have caused such havoc and misery on unimaginably vast scales
Funny how someone who immediately thinks to reference "Marxist experiments" in response to an argument for better wealth redistribution, can't envision an economy without a top-level executive being vital for a company to survive, or investments being impossible if 1 person can't do it all by themselves. Seems like a really fragile model to me.
Meanwhile, these Marxist experiments aren't broiling the planet for an extra 50 years to milk profit off of fossil fuels, nor expecting people to sacrifice their health and time to themselves to work 50-,60-,70- hour workweeks without getting an ounce of recognition whether they do a good job or just adequate. Or how about leaving people to die of poverty because there's no direct profit to be had in them?
> The point is that Musk would/should never have gotten to such an oversized amount of control in the first place
There would never have been anything for people to be in control of without Musk. It isn't as if companies like SpaceX or Tesla just spontaneously "occur" from time to time, for whoever's standing nearby to claim as their own.
It's not clear to me at all that Tesla or SpaceX, or a whole list of other entrepreneur run companies, if run by a workers committees or hired executive team would even still exist at all, and if they did they'd look nothing like what they are now. Look at all the big companies that were launched by founder owners, they all slump into mediocrity once the visionary leadership is gone. Yours is an argument for enforced mediocrity and mandated groupthink, with no mechanism for renewal. We know how that works out, it's been tried over and over.
>Meanwhile, these Marxist experiments aren't broiling the planet for an extra 50 years...
Oh come on, the Soviet Union and China have been responsible for catastrophic environmental mismanagement on a scale that dwarfs anything in the democratic world. Authoritarian economic systems are only possible within authoritarian political systems, and as soon as you do that you're on a path to disaster.
I wonder how many have e.g. $1bn in cash, rather than in the form of owning shares they have no interest in selling in businesses that other people reckon they could squeeze that much out of? It isn’t zero, but the same reasoning that put a previous boss of mine on a rich list would (falsely!) turn me into a millionaire if I turned myself into a privately traded corporation.
The other question is: why $20 million? Looking at the rates on teleport.org, software developers in Nairobi look at the average Silicon Valley software engineer’s pay the same way the latter looks at someone who can earn $1-2 million per year, and I can’t think of any reason why the USA might care to limit its own salaries while other countries catch up.
Policies like this will cause the rich, who have extreme mobility, to leave your country. Maybe to some people this sounds nice, but generally it will lead to worse companies and less innovation.
Does it though? It seems to me that if the rich fled, the vacuum would probably be filled by smarter, more ambitious people who were being suppressed by incumbent wealth.
It won't be just the rich. It will be people like me who are upper middle class and see the writing on the wall - who strongly suspect that, when taking wealth from the billionaires didn't give you enough money, you're going to start on the millionaires and then the hundred-thousandaires.
I generally take that as an empty threat for the following reasons:
(1) Strongly suspect based on what? There's 0 precedent for the scenario you suggested, but plenty of examples of right-wingers using this idea to scaremonger.
(2) Where are you actually going to go? European countries already take higher taxes, and most other countries have higher inequality and lower general standards of living than the US. I don't doubt that some of the wealthy consider themselves "global citizens", but the majority of people aren't going to leave their home country over marginally higher taxes - especially at today's pitifully low rates.
(3) Most of the upper middle class people I know will stop being hysterical about paying higher taxes after a moment, and recognize that a billion is 1,000x more than a million, and 10,000x more than 100K. American's don't hate wealth, they hate aristocrats, which is what the billionaire class has become. The same logic does not apply to people with "mere" eight-figure wealth.
> 1. There's 0 precedent for taxes that are "only for the rich" being applied to everybody? Seriously? Start with the US income tax.
I guess that's somewhat true, yet the upper middle class only got stronger and stronger, which seems strange if they were all fleeing the jurisdiction because of high tax rates. It seems much stronger evidence that it's not a real threat that should concern the country - most high income Americans are reasonable and understand that we need to pay to maintain all this modern stuff we have, and hopefully improve upon it. It wouldn't seem to be a major concern if a small, selfish minority decided to pay the exit tax and go somewhere else.
> (1) Strongly suspect based on what? There's 0 precedent for the scenario you suggested, but plenty of examples of right-wingers using this idea to scaremonger.
I've always assumed that this is why early socialist and communist ideology strongly emphasized internationalism. To properly soak the rich, there must be no place for them to escape to.
Money makes things easier, and Musk isn’t originally an American. Even $1 million would’ve made me moving to Berlin completely trivial, $100 million means you can offer to bring your friends with you without any trouble, $musk-as-cash is “buy the entire sovereign nation of Cyprus and have $70 bn afterwards” levels of money.
(But, as I said on another comment, his theoretical net worth isn’t real money, it’s how much other people reckon they could extract from the companies he controls).
That would incent people to spend on consumption when their wealth approached the cap, while not actually paying any of the tax. Thus more of the world's productive capabilities would be redirected towards rich people consuming luxuries that they otherwise wouldn't have bothered with.
Not saying I disagree but to play devil's advocate here - wouldn't them spending on luxury items still benefit society overall rather than them keeping it locked up somewhere? Working class people are the one's making and selling the luxury items and once injected into the economy the money they spent on said items would be taxed further and spread around as others spent it.
Wealth being 'locked up' doesn't matter. If we're at near full employment and our tools and machines aren't sitting idle, then we're producing at full capacity.
Imposing a wealth cap like that is a fantastic way to assure that those basic needs will never be met.
Over the past two centuries, billions of humans have been lifted out of poverty. Approximately zero percent of that came from the redistribution of existing wealth. All of it came from raising economic productivity. And that vast majority of those productivity gains had foundations built by entrepreneurs seeking great fortunes.
Elon Musk was worth more than $20 million before taking over Tesla and SpaceX. Jeff Bezos was worth more than $20 million before Amazon started AWS. Sergey and Larry were worth well more than $20 million before Google launched Gmail. Jack Dorsey was well more than $20 million before starting Square. Stephane Bancel was worth much more than $20 million when he became CEO of Moderna. Steve Jobs was worth much more than $20 million before starting NeXT or Pixar, or returning to Apple to build the iPod, iPhone and iPad.
Andrew Carnegie was worth more than the equivalent of $20 million before US Steel. John Rockefeller was worth more than the equivalent of $20 million before starting Standard Oil. Edison was worth more than $20 million before starting General Electric. Howard Hughes was worth more than $20 million before starting his aviation business. Carl Bosch was worth more than $20 million before commercializing nitrogen fixation.
- Elon Musk took over Tesla and SpaceX. He was not the innovator there.
- Did Bezos think of AWS? I think not. It was literally selling excess processing capacity.
- Gmail was not innovative; it was just a better client. Web-based mail had been around for a while.
- I'm not sure how innovative Square is but I don't think any of it would have to do with Dorsey.
- The NeXT was based on innovation coming from Alan Kay. The iPod wasn't innovative; it was just a hit. The iPhone was already underway when Jobs came back. The iPad is a bigger iPhone.
Big companies don't mean innovation; they often mean acquiring innovation and monetizing it.
All the big innovations of the 20th century were accomplished by individuals who did not do so based purely on financial incentive. That's a myth.
"Let's not feed kids crying themselves to sleep at night from hunger because that might mean we won't get iPads with blue casing." Shame on you.
> Elon Musk took over Tesla and SpaceX. He was not the innovator there.
I remember before Tesla: electric cars were a joke, nothing more. Even if the only thing Musk did was convince rich people they were not-terrible, this was worth it. (Same RE: the iPod, which was infamously dismissed on slashdot, yet did in fact revolutionise the MP3 player market).
When it comes to SpaceX, however, Musk is an actual rocket scientist.
And of course, the iPods being popular created a lot of jobs that would otherwise not have existed, both for rich people like us and for the industrialisation in the same area as the Foxconn factories in China)
>Over the past two centuries, billions of humans have been lifted out of poverty. Approximately zero percent of that came from the redistribution of existing wealth.
really? you think land reform and mechanization in russia, china, and former colonies had nothing to do with that? wage raises and other victories of labor organizing? welfare and schools and transit and healthcare and other public services? most of the poverty in the world that one can say has been lifted probably comes directly from all those efforts.
it's easy to miss that viewpoint in america, where our wealth came from the homesteading of an entire continent (made available by genocide, pretty redistributive) and then food and manufacturing exports to a bombed-out world (implementing those reforms and supported by intentional redistributive funding from us) which turned around over decades and provided us manufacturing services to supply our consumption. when you don't look more than two steps ahead it looks like pure entrepreneurship. but you have to remember most of humanity doesn't live in the core of this empire, where land was free and consumption markets were far away.
> Over the past two centuries, billions of humans have been lifted out of poverty
> by entrepreneurs seeking great fortunes
No. It was technological innovation, made by the brightest heads of our species that did science themselves or at publicly funded institutions. The private sector took these innovations to manufacture and accumulate, while the innovators were criminally underpaid.
Honest question: have you ever successfully created and released a new product? Innovation isolated in a lab is all well and good, but ultimately does nothing to directly improve lives. It's only the first step in a long journey.
Now you need to figure out how do scale up production? How do we control costs to keep it affordable to the average person? How do we get people aware of the product? Who do we target as early adopters? How do we incorporate feedback from real usage back into the engineering of the product? How do we design the product so it's intuitive and appealing to use? How can we convince investors to take the risk and give us the capital needed to get this process under way? How do we plan and budget for production to accommodate projected growth? Are there legal or regulatory considerations? How do we coordinate all the people that need to work together to make this happen?
Ask anyone who's actually successfully launched a product how far the gap is between "works in a lab" to "widespread distribution and adoption". Engineers are part of the equation, but they often arrogantly assume they're the only ones that matter. That's why there's no such thing as a company that's only engineers. Entrepreneurs are the ones responsible for coordinating all the complex work that needs to come together to actually get a product into the hands of consumers.
> Now you need to figure out how do scale up production? How do we control costs to keep it affordable to the average person? How do we get people aware of the product? Who do we target as early adopters? How do we incorporate feedback from real usage back into the engineering of the product? How do we design the product so it's intuitive and appealing to use? How can we convince investors to take the risk and give us the capital needed to get this process under way? How do we plan and budget for production to accommodate projected growth? Are there legal or regulatory considerations? How do we coordinate all the people that need to work together to make this happen?
These are all valid questions whose answers are necessary, but ultimately they are solved problems for which we often can just copy the solution from previous iterations. Somebody just needs to do it and I don’t see why these persons should get far far more than the lions share. Let them get remunerated and also substantially, but not the most.
The vast majority of entrepreneurs does not deserve renumerations of such high proportions, they just get them because they can. Past accumulation, capital structures, capital dependency, path dependencies - which ultimately are all just positions of power - allow the entrepreneur class to squeeze out such high returns.
But they’re not even the root of the problem, because they are squeezed out by the financial class who has the privilege of squeezing others out by virtue of having squeezed out others before.
We have these systems of hierarchical exploitation and accumulation for thousands of years, but saw only real improvement with technological innovation.
At times it seems perverse that people indulge themselves in the most extravagant activities this planet has ever seen, wasting resources per person and day that could help thousands of people.
All while millions of humans go hungry and die from poverty. It’s about time this issue is discussed more publicly.
Don‘t get me wrong, I‘m no socialist whatsoever and have nothing against a decent lavish lifestyle. I just don‘t think the world needs more megayachts, shipping around the world to be near wherever the owner is, in case he/she might want to use it for a day or two. Or 15+ megamansions around the world per billionaire, stockpiled at all times with the most expensive and rare food money can buy.
At some point society has to think about a fair allocation of scarce resources.
But once you get $20M, why would you continue working? You've got $20M, and enough passive income from those $20M to cover your expenses... why would you continue growing your business, employing more people, and doing more?
I mean.. a $20M bakery is a huge bakery with a lot of people... but a $20M car factory is basically nothing.
No one owns a car factory; it's divided into shares. And anyone now with $20M can retire. And I don't think the problem would be that so many people hit $20M that everyone retired.
But people did own a $20M car factory. And it grew and grew. Once it hits $20M, you're basically forced to sell a part of it, and once those parts grow over, you have to sell another part, and another part...
You don't have to sell any physical piece of it, only shares in it. The company can still grow, but individuals would not be able to hoard the wealth it creates.
So let's say i have 1000 bitcoins... bought them for $0.01 a piece, and held them... now the price is around 40k.. so I have to sell half of them to keep only the $20M? Tomorrow the price will be $15k, so i'll be below again... what do I do now? The day after tomorrow they might be 100k.. sell more?
I create a bakery... it's successfull, it grows to 21M... now I have to sell a part of it... and it grows.. sell another part.. it grows.. sell another part.. what then? What if the second coowner bought a half of it, and the price has gone over 41M, do we now both have to sell a part of it? What if it loses value?
What if you own a farm somewhere, with many hectares of nice land, and someone decides to build a railway and a highway there, and that land becomes worth many millions overnight?
Hard limits on wealth are not practical. Taxing private persons for taking out and using that wealth is the solution.
The point I believe you are missing is that this will not meet basic needs of others.
If you distribute the excess wealth, you will create a lot of inflation because if people have twice the money they will be prone to pay a twice bigger rent or a twice bigger restaurant check, or twice the money for the same land plot.
If you decide to somehow destroy the excess wealth (for example, burning cash or the houses they don't need), you will shrink a bit the economy by creating some job losses for those today working on superfluous activities of the rich such as yatch cleaning.
> If you distribute the excess wealth, you will create a lot of inflation because if people have twice the money they will be prone to pay a twice bigger rent or a twice bigger restaurant check, or twice the money for the same land plot.
Ah, I see! So what you're saying is, if we tax the poor instead, that'll deflate the currency and make everyone richer!
That's such a simplistic view of economics, as to not bear the slightest examination.
E.g. the free market depends entirely upon the amount of money people have? And nothing to do with supply/demand and the elasticity of the market? In a more nuanced view demand creates supply, efficiencies of scale reduce cost, and everything is cheaper.
Folks love to throw out the "More money means prices go up!" as if it's a truism.
Most people, at least on this site, seem to have a severe Dunning-Kruger effect going on when it comes to economics. It's like they took Econ 101 and didn't realize it's an intro course with simplified models.
The interesting thing is if you tried that you’d find less people fed, less people sheltered and less education.
I mean the politicians would love this because they understand it is not about owning things but about having control. And then they could control the most.
The scary part to me is the amount of people who think this same way as you.
If we as humanity just confiscate others wealth, then the world will be better. Forgetting there has to be those in charge of confiscating it.
No, the problems in our society will not be solved that way. People get a president like trump because they deserved it, and then they got a president like Biden, because the people still haven’t learned and still get what th wet deserve.
The wealth distribution hockey stick is getting so extreme pretty soon it's going to be "workers... and upper middle class professionals... and millionaires... of the world unite!" Anyone with less than a billion dollars is the proletariat.
Paper value is not the same as realized value, and doesn’t make sense to be included as part of someone’s “fair share”. Especially true when assets are inflated to all time highs. People are willing to buy tiny fractions of Amazon stock at its current valuation, no one is offering to buy all or even most of it at that valuation.
Yes, I'm aware that all-time high prices are pretty normal, like anyone who's spent more than a couple of years investing. The current highs aren't just in nominal price terms, though, but also in a lot of normalized metrics, and that's not so normal.
Taxing the people who are accumulating all of the money is the only thing that makes sense. Writing it off as a folksy trope does not change that fact.
This may be unpopular, but the hard thing in this discussion is to differentiate between consumption and investment. It does not help much to take wealth in terms of equity paper money away from people who know how to invest it efficiently and distribute it. On the other hand, there are minimum basic needs for consumption of food, health services, shelter, education etc. I agree that the system to finance those services is broken. But then fix the system and don't only focus on punishing people when they build economically viable organisations that even help to support the economy in such a crisis.
> "the hard thing in this discussion is to differentiate between consumption and investment"
Indeed. Even harder is to acknowledge our government already has enough tax money, and further tax revenue will not be used prudently, in the best interest of our country.
Sure. But here is the thing: what consequences to billionaires face if they use their wealth in stupid and unproductive ways? At least for the government we have some recourse (elections, protests, public hearings).
But to the degree that the reason for doing this is "the rich shouldn't have that much money", to that degree there's no pressure on the government to use the money wisely.
And I don't like your question. Sure, billionaires can use their wealth badly. Why should they face consequences (other than no longer having what they have wasted)? That someone could misuse something is not a reason to take it from them and give it to someone else who could also misuse it. That is, I don't like your question because it implies that they should only be allowed to keep it if they are using it "properly". I think that the rule of law calls for a higher bar than that before taking peoples' stuff.
The original proposition was that essentially an oligarchy is more efficient than our current system: billionaires will waste less money than the government on inefficiencies. In that light I don’t mean consequences as punishment but rather incentive. Why should a billionaire spend money on socially useful project vs a self-serving or a socially harmful one?
Note: This was 5min of google search and reading abstracts/ overviews. Unfortunately I can't commit the amount of time necessary to provide a full rebuttal right now.
Along the points you bring up, John Cochrane had a fantastic series about why wealth taxes are such a terribly economic inefficient mechanism to raise revenue and why virtually no economists support them.
if you take a more literal view and see federal taxation as destruction of money rather than a means of raising revenue, its applications become clearer.
Further, I'm curious to know if he did a survey of economists to substantiate his claim of "no economists". Besides the three prominent ones mentioned above, there seems to be ongoing research on the subject and so it is hardly a settled matter:
Further, given how wrong the Chicago school has been on macroeconomics for the last few decades, I would question anything coming out of there. Fama and French for example have done good work on markets, but they are and were wrong on deficit spending and stimulus since 2009.
While I think you hit the nail on the head, I think what we're seeing is a belief that the money being invested by billionaires is not doing anything useful, that's why people are calling for it to be taken by the government and redistributed.
Rather we do have some idea what they do with their time and money: influence politics, lobby for regulatory capture, lobby against societally beneficial regulation, bust unions, rent-seek, astroturf, form monopolies and oligopolies, have outsized carbon footprints, avoid paying anything back to society, commit crimes and get away with them, etc.
We see them as mustache-twirling villains because, well, they act like mustache-twirling villains.
They also form dynasties of generations of extremely wealthy children, grand-children, and grand-grand-children, etc.
It's arguable whether the people who originally accumulated all this wealth "earned" it (when many of them in large part merely took the wealth their employees made), but their descendants who just inherit their money certainly have in no way earned it. So should they get to keep it?
For an insightful look in to the world of inherited wealth, see the documentary Born Rich[1], made by the heir to the Johnson & Johnson fortune, where he interviews all his other friends, who, like him, were born in to enormously wealthy families.
Anyone who has amassed a fortune in the billions has necessarily done so through one of only two ways: exploiting the labour of very large numbers of poorly-paid people, or receiving it from those who have done so.
Meanwhile, they have seen the plight of the billions of human beings who live in poverty and want, and chosen to use their vast resources almost purely to make more for themselves, rather than dedicate to alleviating such suffering even enough that their lifestyle is the slightest bit inconvenienced.
The sanctity of "property ownership" is not so sacred a principle that it should take priority over wholly preventable widespread suffering and death. There is no moral argument that could possibly support this much of humanity's productive output being hoarded by so few, rather than going to improve the world in a myriad of ways.
That is because every good investment causes deflation, which in other words is increased economic efficiency. Capital must be misallocated in order to create inflation.
It's a huge misconception that inflation is good for the economy. What actually happens, is that the economy on the whole gets more inefficient and wealth concentrates.
Wealthy don't hoard money. They hoard assets which appreciate with inflation, and they can get cheap debt against their assets. Inflation affects the poor the most, because their net worth is in cash, and they are dependent on their wage which doesn't increase hand in hand with asset prices.
> I think what we're seeing is a belief that the money being invested by billionaires is not doing anything useful
I mean, is it doing anything useful?
"Money Invested" is basically a number sitting in a giant key-value store at a brokerage, associated with a stock ticker or some other ownership totem. If I buy 100 shares of Walmart, it's not like Walmart suddenly has an extra $15,000 in their bank account they can suddenly use to improve the world. Those 100 shares or $15,000 are not really doing anything useful. They're ones and zeros in a database associating my name with a number and the string "WMT".
Not only that but there's a whole industry around just redistributing these shares, fake jobs for fake valued assets ... it's all just a circus to keep us busy...
Traditional investing doesn’t make billionaires, they needed to be good at running a business, inherit it, etc. Which doesn’t correlate to being a great investor.
So when you actually look at investments made by billionaires they tend to underperform. Part of this is simply seeking low risk diversification, but another part is many people assuming that because past risk taking worked so will future risk taking.
This becomes really obvious when you start looking into former billionaires. Vast fortunes regularly evaporate.
"It does not help much to take wealth in terms of equity paper money away from people who know how to invest it efficiently and distribute it."
This assumes what needs to be proven. Namely, the degree to which the wealth of billionaries under the status quo regulatory, financial, and tax regime reflects their outsized contributions to welfare.
If we make a number of assumptions (e.g. perfect information, perfect competition, equal initial endowments, etc.) it's tautologically true that great wealth would reflect outsized contribution to preference satisfaction. But these assumptions are wildly unrealistic, and conflict with both everyday experience and historical reflection.
More to the point, we all want our economic system to do more than merely satisfy preferences. Opioid manufacturers cultivated and satisfied preferences to the tune of billions of dollars. The impacts on well-being of users and their communities were, to put it lightly, mixed.
agreed. However, what alternatives to preference satisfaction do we have to steer an economy? Is the issue here not the miseducation and misculturization of harmful preferences?
I think it has been, dramatically, over the last 120 years. Plenty of countries have tried radical appropriation and redistribution, and it failed spectacularly every time. Meanwhile a prominent Marxist country, China, turned to capitalism and within a generation has raised hundreds of millions of people out of poverty and into urban middle class lives. Meanwhile Cuba, Venezuela and North Korea.
Of course Capitalism has failure modes, because people are imperfect. All the flaws levelled at Capitalism are also found in spades in alternate economic systems because they are flaws in us. That's where accountability through liberal democracy and a decent system of laws come in. Yes that's always a work in progress and no it's not perfect, but it does work.
This is a radical oversimplification of what has happened and is happening in China, conflating several things into one.
China is still very much a communist country, and the raising of many people out of poverty is in large part a result of the government distributing the gains that have come from "special economic zones" into rural areas on a scale that would make a "tax on billionaires" seem like a quaint half-step.
Allowing people to own and control private enterprises is a big step for China, but the gains from those private enterprises are still very much under the control of the Chinese government.
The vast majority of the cash flowing into rural areas is actually remittances from sons and daughters that went to work in the special economic zones, or the main urban centres to mainly work for private enterprises.
Anyway the hundreds of millions of people I'm taking about are the urban middle class. Their wealth almost entirely flows from the capitalist sector, in fact the majority of the wealth in the state sector comes from the capitalist sector one way or another. Source, my wife is Chinese and we have extensive family connections over there.
China is a single party state with a command economy, but is in no way shape or form Communist or even Marxist. It's social security system is barely existant; it's public health care is radically fee based to a degree that even makes the US system look socialist; many tens of millions of urban residents get zero public support or even schooling for their children because their families come from the countryside.
It’s not like the only alternative is Communism, seems like several Northern European countries are redistributive and don’t have 5 Year Everybody Must Die plans. Also I take the OP’s comments more as an indictment against trickle down economics which has been proven to not to have the claimed impact https://en.wikipedia.org/wiki/Trickle-down_economics
> I think it has been, dramatically, over the last 120 years. Plenty of countries have tried radical appropriation and redistribution, and it failed spectacularly every time.
How about non-radical redistribution?
In Capital in the Twenty-First Century, Piketty puts forward the idea of a (net) wealth tax on the order of something like:
* 0-10M net worth: 0%
* 10-100M: 0.1%
* 100M-1000M: 1%
* >1000M: 2%
This would allow two things: first the documentation of people's assets (and liabilities) to find their net worth for the tax regime, and second the skimming off the top of a not ridiculous amount of the assets of those that have a lot.
So if you have a $1B portfolio, and manage to grow it 8% in a year, then you end up with "only" 6% growth. This still allows for incentives for people to acquire wealth, but tamps down on some of the compounding that the largest estates end up getting (there's often only so much that can be spend, so a lot of the previous year's gains just end up sitting and accumulating).
The key would be for the US to get onside: by some measures it is one of the largest tax havens out there.
We arguably already have a weak form of this in capital gains. Invested wealth remains untaxed, since it's already working. Good. Liquidated investments are taxed on gains. Good. But I'd also support stronger forms of redistribution such as yearly re-taxation on uninvested wealth above a threshold, non-gains percentage tax on all liquidated investments above a threshold, a land value tax, and closing of tax loopholes. Just let invested wealth do its job!
Sure, it’s radical but not excessively. The US had a %90 tax bracket in the post war decades (not that I’m suggesting bringing it back) and the country and economy somehow managed to survive. There are countries in Europe that have wealth taxes.
I don’t think taxing more is an effective way of solving social and economic problems though and doing so doesn’t have to be cripplingly expensive. For example the US spends twice as much, per person, on health care than other OECD countries. You spend as much on health per person through the government, funded by your taxes, as Europe does just funding Medicare, Medicaid, CHIPS, etc, and then spend the same again through private health insurance. Why? Because the health insurance system drives costs across the board up through the roof. All you people with company plans you contribute thousands to, you already paid enough for a full first world health system in your taxes and got nothing for it, so you have to pay again for yourselves.
Why that isn’t issue number 1 for every American tax payer is beyond understanding. So don’t take my up thread comment to mean I’m some libertarian extremist, or this comment to mean I’m a radical socialist. It’s just a matter of looking at what works.
Good god, man. This is slavish. And - I'll note - not unpopular, which is distressing.
Tax isn't punishment. Ever. Especially when tax rate is already so low that the proposed "emergency tax" is still less than historical income tax rates.
Tax is part of the social contract that allowed those billionaires the stability, educated workforce, infrastructure, safety from theft, etc, etc, etc, needed to build and maintain their wealth.
The idea that billionaires "invest [their wealth] efficiently and distribute it" is laughably sophomoric, a parody of the Gilded Age's self-serving justification for robber barons. Billionaires invest efficiently _for the preservation of their wealth across generations of their family_, only the most credulously optimistic model of capitalism supposes that this aligns with "distribution" (whatever that means - trickling down, eh?) or with the best investments for society at large.
you should read again - systems for redistribution of wealth can be good if they are not broken. Income taxes e.g. are imo a great way to do this, if they cannot be avoided. However, to tax an increase in share price without any transaction is often counterproductive.
You're absolutely right. Once I saw you characterize a tax as a punishment, billionaires as "people who know how to invest [wealth] efficiently and distribute it," and wealth as solely the result of "build[ing] economically viable organisations," I dismissed the details of your argument.
Is a 100% tax on (eg) assets over $1bn a punishment?
I'm not suggesting that exactly but I'm not against a wealth cap. I'm not sure what sort of person thinks they realise genuine benefit from spending time trying to spend it. Build a hospital. Subsidise public transport in your area. Do some good.
I have no problem with billionaires personally. I do have a problem with people being billionaires if the "value" they've created is negative (obviously this is my opinion).
Consider two billionaries:
- One creates a cold nuclear fusion device the size of a 10" x 10" x 10" cube. You can plug anything to this device and it will power it, indefinitely.
- Another gets little boys and girls addicted to some sort of super candy, irresistible for those under 13.
Indirectly, yeah. Correctly calculating and taxing externalities might have prevented 'bad' billionaires from being made, but doesn't give us a plan on where to go from here.
Lots of gray area, though. Lots of arguments were made against Gates when Microsoft's value increased with anti-competitive practices, but it's hard to argue with what it's been spent on today.
The problem is that then billionaires spend millions on media and social media campaigns to carpet bomb people with the idea that up is down and that their venture isn't really a negative externality.
seems more explicit than implying. there's no market mechanism to handle externalities by definition, if you're going to have a market you really ought to handle it somehow
Well of course who are you to decide what is addictive vs. what is, by some type of utilitarian calculation, maximally happiness increasing in society.
To many people kids under 13 are addicted to video games. To many others the creators of those games are adding happiness to our society and the negative effects are minimal and outweighed.
Vice versa a cold nuclear fusion device can be used by the US military to try and oppress some group across the world for indefensible reasons.
It's not realistic to apply moral arguments to people's wealth accumulation in any legally binding type of way. Of course we know creating Playboy is a worse way to accumulate wealth than say inventing an efficient battery technology, but how to write this into law that can be applied equally to each new case isn't clear at all.
What's the line from The Big Labowski, "That's like... your opinion man."
That said the first thing is a bomb.
The second thing is a - presumably - harmless addiction foisted on a group that's not really in a position to harm other people and will have a reasonably hard time harming themselves. I mean, children, sure but honestly they don't really have all that much agency.
There's a lot of upside on #1 but I'd expect a huge amount of downside too. #2 doesn't have any upside but I don't see a lot of downside either.
Likewise, there's the idea of "creating value" and the idea of "extracting value".
- If one buys wheat, bakes bread and sells it making a profit, they're creating value.
- If one buys all the wheat in the region, creates a shortage and price spike, and then sells it at a profit, they're just exacting wealth.
The second case is not contributing any value to society -- quite the contrary, they're just redistributing the existing one for themselves, giving nothing in return (hence "extracting value").
Sure, the second option is legal, but that just seems like an oversight when law-making, and it definitely harms society more than anything else.
The problem with this argument is that reality isn’t black and white; and when we legislate what essentially then boils down to morality it tends to turn into a cluster fuck.
If you look at essentially all billionaires they don’t fit on either edge of your spectrum, and where they actually fall in the middle isn’t an easy question to answer either.
These millionaires are useful idiots, it will be fun to see how their houses get confiscated in the name of further down equality one day. Everyone must be equal, and the most equal place on earth is a collective graveyard, a thing that collectivists are so succesful at replicating every single time they try to bring equality into your lives.
* there is an enormous need for capital in modern economies
* everyone else refuses to actually keep any capital. Individuals max out their credit cards instead of saving. Voters demand tax cuts so governments are borrowers instead of lenders.
You can tax back the capital, but there are 2 issues doing so: as long as it's spent and not saved, it will rapidly end up back in billionaire's accounts AND in the mean time, the loss of investment when billionaires pull out capital to pay the tax will mean fewer jobs and higher prices.
These are the reasons no politician is willing to pull the trigger and go after the uber wealthy: you'll be celebrated for a week and then lynched when the economy falters.
You want to get out of this position? Require people to save and balance governmental budgets. But people don't want higher taxes, less services and lower spending power. At least they dislike it more than they like equality and opportunity.
If you really think billionaires have undue influence (and i do), cut your spending, invest and pay down debt and vote for higher taxes and lower state spending.
This tax should be retroactive, and it should be a wealth tax, not an income tax, as the ultra-wealthy often make very little income compared to their vast wealth.
Does anyone seriously believe that if the US gov levied this tax that it would actually use the revenue in an efficient way? Remember when they "lost" 2.3 trillion dollars? $2,300,000,000,000. Whoops!
As an aside, this [1] was extremely depressing to read. I was aware of the 2.3 trillion around 9/11 (what a coincidence!), but had no idea about the more recent discrepancies.
It should be noted that all of that money was for military use, and the article says that the Pentagon is the only agency which still does not comply with a 1996 law that would prevent this.
The obvious answer to that is to force compliance from the Pentagon. I’d personally add cutting military budget by “the amount that goes missing per year,” but that will never fly.
In any case, it’s important to specifically call out the Pentagon rather than blame the entire government.
Honestly, I don't really care if the government even uses the money. Even burning the money in a furnace would be beneficial, as the act would at least take a small bite out of inflation. The point is to move away from the status where the richest 1% of the population owns 35% of the country's total wealth.
While likely legal since the US Constitution only prohibits ex post facto criminal statutes, retroactive wealth confiscation is probably not a good precedent to set. A universal wealth tax would be much more palatable than a tax on wealth gained by certain people during a certain period of time.
I'm no more a fan of billionaires than the next guy, but is this argument not extremely hypocritical:
“Billionaire Jeff Bezos could personally pay for enough vaccines for the whole world, yet he would rather spend his wealth on a thrill ride to space. COVID-19 is turning the gap between rich and poor into an unbridgeable chasm” - millionaires.
Millionaires could personally alleviate so much suffering in the world, yet they would rather buy... Nice houses, cars, and whatever else millionaires buy. You could extrapolate this argument all the way down even to those in objectively unfortunate circumstances. It's turtles all the way down.
These pleas seem motivated more out of virtue signaling than anything else.
The problem, as always, is implementation. Millionaires, especially those on the low end of that spectrum, tend to be fairly easy to tax. Their income sources are mostly regular and standard forms of income tax work pretty well.
Billionaires are a very different animal. They have armies of lawyers and financial managers that help them navigate the movement of wealth through the global system to avoid taxation. They avoid recognizing income at all opportunities and strategically use debt to provide for themselves without exposing themselves to tax consequences that would come from getting the money they want to spend. They can traverse the globe looking for the most favorable taxation rates to maximize their wealth.
There’s been a lot of “tax billionaires” and “billionaires shouldn’t exist” rhetoric without much substance to how to actually achieve that goal. Billionaires aren’t just going to say “aww, shucks, guess we’ve got to pay up” when governments decide to up their taxes. They’re going to react in ways that are both hard to predict and harder to stop. Capital flight is a real threat and will require a massive, coordinated effort on the parts of all the nations that comprise the global financial system to curtail. The efforts towards a minimum corporate tax rate are a good start, but that’s only one step of many that are necessary before “tax billionaires” becomes a realistic target.
Billionaires are going to react by lobbying very heavily to get loopholes created in the legislation. And each country writes their own legislation, which means each country creates their own set of loopholes.
The net result is going to be that the tax system gets more byzantine, the government says "look, we started taxing billionaires", and the billionaires still aren't paying. But filing taxes will get more complicated for millionaires and upper-middle-class people.
I'm not normally a highly cynical person. But I am cynical about the government's ability to wisely write legislation in the face of a heavy lobbying blitz.
A lot of those people in congress would also be affected by the changes. They're not the kind to implement more taxes on themselves. After all - the difference in ideas between "conservatives" and "liberals" in office comes down to how much they want to wave a confederate vs pride flag. They have almost no fiscal differences and all want as low of taxes as possible on the highest NW individuals like themselves.
You don't go after the billionaires, but after the banks and such that the billionaires use. FACTA and the long arm of the IRS caused a lot of behaviour changes in the banking and finance industry:
That's only for evasion, I'm talking about avoidance. Most billionaires can easily spend their entire lifetime avoiding taxes. Taking out a low-interest ELOC against unrealized gains is 100% legal and a low-risk transaction for a bank. No amount of "going after the banks" changes that.
> 100% legal and a low-risk transaction for a bank. No amount of "going after the banks" changes that.
With the caveat that I don’t know if this is a good idea or not, a government can absolutely change the law if they want to give themselves the powers to prevent that from happening.
That would just punish people who can afford luxury goods - not billionaires. People who are wage slaves like the rest of us can afford luxury goods. Besides - what is a "luxury" good to you?
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[ 3.4 ms ] story [ 244 ms ] threadThanks for learning!
There. Saved everyone a read.
I guess I shouldn't be surprised.
We, as a collective humanity, should not allow anyone to have more than, say, $20 million, until the basic needs of others have been met.
Inflation destroys the value of money, not the underlying goods or services. Whether there are 100 dollars to go around or 10 billion, for the same "physical context"/material reality a rule along the lines of "no more than %5 of total wealth accumulated in 1 person's account" seems inflation-resistant.
If this seems insane to you, consider the insanity of trying to define a fixed container size with an infinite flow of water.
Government seizing shares of companies from people if their valuation rises too much?
Seems almost impossible to implement
Oh, but don't worry. Greed is such an amazing motivator that it wouldn't take a decade before we accomplished meeting those basic needs.
Didn't think through it much, aiming for a national product that elevates everyone in the country. Kinda like a Norway oil fund.
Everyday society is improving.
So they voted for an administration that would keep things that way. The world is weird.
We can have empathy now, or we can be surprised later.
Which I came to the sad conclusion, those that understand housing wont talk about it, those that dont understand will never talk about it.
Homes are a luxury.
who seizes ownership of my company?
What's to stop me from offering you $10 bucks for .0001% of your company and making you illegally rich?
Taxes on net worth won't work because net worth is abstract
In theory, this would act sort of as a general purpose regulation. Instead of using the force of law to make companies comply, it uses the force of its share votes.
Of course, there are a bunch of ways this kind of scheme could go wrong too.
Like I said, there's still a lot that could go wrong with that scheme, but it isn't like the current scheme doesn't have its problems too.
Ok, assuming that we're treating HN like a business and that business is large enough to have significant government voting share under this scheme:
The government voting with its shares to silence those stories would potentially be actual censorship under the US constitution, and therefore illegal. The same cannot be said about private owners.
Of course, the government could opt to transition the site away from those topics entirely, but again that's something the private owners could do too.
And none of this prevents small competitors from coming in to run those stories.
Let me turn it around: Would Facebook have more or less freedom of speech with government control?
And we all know how efficient government bureaucrats are. I can just imagine the joys of having civil servants dictating how you should run your company.
A common refrain in the private sector, but having worked in both I can assure you that any sufficiently large organization is at least as inefficient as a government.
> I can just imagine the joys of having civil servants dictating how you should run your company.
We do that today through regulation. There are reasons we collectively want some level of control over how companies are run.
Regulations are different from a Washington bureaucrat far removed from your company having to approve your new fiscal year roadmap or plans to pivot the company
Obviously, there's room for nuance and it's not just one or the other.
I'm under the impression that an increase in company value is not an end to itself, it's a means to an end (more investment, more dividends, higher sell-off/buy-off price, increased stock price, etc - all are more probable when company valuation increases).
So why are you looking to increase your company's value?
Granted, this also disincentives societally beneficial efficiency increases.
I wonder how much of this backlash is just a result of people being propagandized to by the media’s steady drumbeat about corporate abuses since the GFC.
Texaco dumped a bunch of waste in the Amazon and refused to clean it up or pay for it. Why is this not surprising to anybody? Oh, right, because we all know that this sort of thing happens all the goddamned time.
If it's abstract why can you use it as collateral? You have to make up your mind, it's funny money or real money?
Because that's what we're talking about here.
I don't know how the banking system works in the US but I doubt you'll be able to buy much money with your word alone.
As someone from a post-communist country: when you put a limit on capital, another form of accumulating one will be created. Some people will be more able and motivated to get the new form of the value, others will be less able or simply not interested in it, some will inherit it over time. And we will end almost exactly where we had begun.
Limiting ways to accumulate wealth will not get rid of the desire to do so. Such a law will only force it to change the way it is manifesting.
The power of the state when it throws its weight behind something is awe-inspiring but the power of decentralized innovation leads to tinkering and unexpected breakthroughs that a government run project wouldn’t permit (due to the number of unnecessary bureaucracy and box checking)
Consider that once companies got involved in space they had incentive to lobby congress to make NASA less competitive.
Sadly becoming more and more popular.
Even if we did what david927 suggests, and imposed a $20 million/person wealth cap globally, no one would be meaningfully "leveled down." The differences between the lifestyle of someone with $20 million and someone with $200 billion aren't that different: what's different is the level of power the latter has over people and governments. Power that has no checks and balances, no strings, no way of ensuring it's not massively abused. And given the kind of person you need to be to amass a fortune in the billions in the first place, it's nearly guaranteed that it will be abused.
The amount of money people are actually talking about taking from the billionaires will not affect their lifestyle. Period. They will still be vastly, unimaginably rich. They will go on accumulating more money, probably faster than any wealth tax will be able to appropriate it, without doing *anything*.
No one deserves to be paid more in a year for simply existing than an average human needs to spend in their entire lives on food, clothing, and shelter.
For example, Elon Musk would be forced to sell all but a minuscule sliver of his shares in Tesla, SpaceX, etc and give the proceeds to the tax man. He'd be out on his arse and replaced by an executive hired by whoever bought the shares. It would be the death of Tesla and SpaceX as we know them.
That's just a highly visible example, but the effect would be to take tens of thousands of companies out of the hands of the people who currently run them, and into the hands of random investors. It's not clear to me this would actually be any good for those companies, or the economy, or the people working at those companies, or their customers.
Finally, if everyone who's currently an investor in these companies, but has more than $20m also get taxed down to $20m, who is going to buy all the shares? You'd also tax out of existence the vast majority of the source of investment and capitalisation in the economy. There's be functionally nobody left capable of making significant investments.
These things matter. It's nonsense like this that is why Marxist experiments the world over have caused such havoc and misery on unimaginably vast scales.
If there was an island with 100 people and one person had almost all of the coconuts and others were starving, no one will care about details for very long. Fix it now because people won't ask nicely for long.
Likely to their friends and family.
So we end up with the same scenario again, inequality persists only this time it’s because of a centralized authority figure that now has a monopoly on violence.
No one is saying that.
We take all the coconuts, gather all the people, and work to come to a decision.
Or are you saying you need someone to tell you what to do, and you'd rather it be the guy that got rich off everyone else than someone randomly chosen? I can understand that at least, although I still disagree.
There have long been simple answers but we have been to greedy to look at them. We have been able to eradicate hunger, homelessness and educational poverty for a long time. We have just chosen not to.
I find it funny that so many people are terrified of being capped to $20M/person and so few are concerned about children sleeping outside, hungry.
Yes these problems have been solvable for some time, but it’s not billionaires stopping that happening. Their job is creating companies, jobs, products and services not ending poverty. We have the resources in the public purse already. Richard Nixon came very close to announcing a basic income.
The problem is political. Too many Marxist on the left that are economically illiterate and don’t know how wealth works or even what it is (hint it’s not piles of money); and too many radical libertarians on the right that think western European style liberal welfare is communism.
They're being asked to pay their fair share of taxes and instead are using their wealth to find loopholes so that they pay nothing. The US has regressive taxation.
> Too many Marxists on the left...
I'm not sure that there really are any Marxists on the left and that's certainly not what's holding back addressing poverty. Neither of the groups you mentioned have any real political power.
No, the political center has the power, and it's that center which has moved right to be more concerned with protecting wealth than helping the poorest, at least in America. As you said, Richard Nixon considered UBI and Milton Friedmann was quite clear about the need for a negative income tax. That was the right; now that's the radical left. See the problem?
I honestly didn't mean to start a fire with my first statement above. I'm saying that the wealth inequality gap is disastrously large and growing. The wealthiest, much like before the French Revolution, both won't pay taxes and frankly don't care how much poverty exists. And that's unacceptable. We should be talking about that and nothing else.
I have to say, I’m not entirely convinced by the growing wealth gap argument. Pickety’s numbers are all before taxes and transfers, there are huge holes in the analysis. On the other hand, there are too many renty ways to grow wealth. I believe the right approach is to recalibrate taxation and the incentive system, not just slap huge punitive taxes on top of what’s already there.
I was thinking the other day about companies and the impetus behind patents. I agree we want Elon and Jobs and Bezos to have ownership and run the show, like they do now, and with as much “wealth” and power as they have, exclusively, for some amount of time. But I’m not sure if we want the mass of power they accrue to sit around indefinitely. Once the head leaves, as you saqy, the company is entirely different. Society does not really benefit from a scenario where say Jobs accrues tons of wealth doing great things and then leaves this zombie beast of a company lying around continuing to suck money out of people and transfer it to shareholders.
So I think something like a limited exclusive right to profits might work. You (a company) can profit no questions asked for say 14, extendable to 28, years if more time is needed and/or you’re still under a certain size. After that a company gets turned into a non profit. It may still operate and pay employees and staff and whatnot, but it may no longer pay owners out the wealth that it accrues. It either has to spend that wealth, pay taxes, or lower prices so that it’s not taxing people, essentially. Obviously this needs more ironing out but I think it is possibly a compromise that is radical enough to combat the large and dangerous wealth vacuuming machines that companies turn into while still preserving the incentives structure that drives capitalism.
There are a lot of people in the US deeply dissatisfied with the levels of inequality and the way the deck is stacked against low earners. That does need to be addresses, but plenty of countries have done so without turning to outright Communism and Marxism. Is Britain a Marxist state because it has a robust social security and public health system? Is Germany?
The point is that Musk would/should never have gotten to such an oversized amount of control in the first place, and thus these businesses wouldn't be in any danger at all from such a move because they'd already be staffed by competent people who wouldn't need his approval or "executive powers" to run things. And if Tesla and/or SpaceX can't stay afloat without Musk, then I'd argue they're failures, or at the very least shouldn't have gotten this big while still being dependent on him.
Besides, so what if companies fail? They're not people, they should never be more important than people. As long as the people are taken care of we should be fine with businesses failing. It leaves room for others, and stops tying up human output for unproductive endeavors.
> This would take the ownership of huge swathes of the companies in the world out of the hands of the people who created them and operate them and into the hands of random executives with little or no track record.
Who's giving you this idea? The whole point is to give more power/control back to the people running those companies, i.e. the workers making stuff, serving people, maintaining, etc. No-one is arguing to blindly dilute ownership of companies among the populace _just_ to keep from having billionaires. This is scare-mongering at its finest.
> Finally, if everyone who's currently an investor in these companies, but has more than $20m also get taxed down to $20m, who is going to buy all the shares?
The wealth being taxed doesn't just vanish into thin air. If so many currently wealthy investors are being taxed down, it stands to reason that the redistribution of said wealth would mean that _more_ investors appear. Also, from an ideological point of view, it seems more democratic to have many smaller investors, than allow a few to accrete such wealth that they can do such things as bully or starve projects of investment for personal reasons.
> It's nonsense like this that is why Marxist experiments the world over have caused such havoc and misery on unimaginably vast scales
Funny how someone who immediately thinks to reference "Marxist experiments" in response to an argument for better wealth redistribution, can't envision an economy without a top-level executive being vital for a company to survive, or investments being impossible if 1 person can't do it all by themselves. Seems like a really fragile model to me. Meanwhile, these Marxist experiments aren't broiling the planet for an extra 50 years to milk profit off of fossil fuels, nor expecting people to sacrifice their health and time to themselves to work 50-,60-,70- hour workweeks without getting an ounce of recognition whether they do a good job or just adequate. Or how about leaving people to die of poverty because there's no direct profit to be had in them?
There would never have been anything for people to be in control of without Musk. It isn't as if companies like SpaceX or Tesla just spontaneously "occur" from time to time, for whoever's standing nearby to claim as their own.
>Meanwhile, these Marxist experiments aren't broiling the planet for an extra 50 years...
Oh come on, the Soviet Union and China have been responsible for catastrophic environmental mismanagement on a scale that dwarfs anything in the democratic world. Authoritarian economic systems are only possible within authoritarian political systems, and as soon as you do that you're on a path to disaster.
The other question is: why $20 million? Looking at the rates on teleport.org, software developers in Nairobi look at the average Silicon Valley software engineer’s pay the same way the latter looks at someone who can earn $1-2 million per year, and I can’t think of any reason why the USA might care to limit its own salaries while other countries catch up.
(1) Strongly suspect based on what? There's 0 precedent for the scenario you suggested, but plenty of examples of right-wingers using this idea to scaremonger.
(2) Where are you actually going to go? European countries already take higher taxes, and most other countries have higher inequality and lower general standards of living than the US. I don't doubt that some of the wealthy consider themselves "global citizens", but the majority of people aren't going to leave their home country over marginally higher taxes - especially at today's pitifully low rates.
(3) Most of the upper middle class people I know will stop being hysterical about paying higher taxes after a moment, and recognize that a billion is 1,000x more than a million, and 10,000x more than 100K. American's don't hate wealth, they hate aristocrats, which is what the billionaire class has become. The same logic does not apply to people with "mere" eight-figure wealth.
2. If I understand correctly, this proposal is not an income tax, it is a wealth tax. I know of no European country that has such a thing.
3. See 1.
Netherlands has a wealth tax system, just for reference. I agree with your 1. point
I guess that's somewhat true, yet the upper middle class only got stronger and stronger, which seems strange if they were all fleeing the jurisdiction because of high tax rates. It seems much stronger evidence that it's not a real threat that should concern the country - most high income Americans are reasonable and understand that we need to pay to maintain all this modern stuff we have, and hopefully improve upon it. It wouldn't seem to be a major concern if a small, selfish minority decided to pay the exit tax and go somewhere else.
You should read history books more often.
I'd be confident in calling out the rich on this bluff.
(But, as I said on another comment, his theoretical net worth isn’t real money, it’s how much other people reckon they could extract from the companies he controls).
Over the past two centuries, billions of humans have been lifted out of poverty. Approximately zero percent of that came from the redistribution of existing wealth. All of it came from raising economic productivity. And that vast majority of those productivity gains had foundations built by entrepreneurs seeking great fortunes.
$20 million per person is a great fortune. Show me any innovation that came from someone wanting more.
Andrew Carnegie was worth more than the equivalent of $20 million before US Steel. John Rockefeller was worth more than the equivalent of $20 million before starting Standard Oil. Edison was worth more than $20 million before starting General Electric. Howard Hughes was worth more than $20 million before starting his aviation business. Carl Bosch was worth more than $20 million before commercializing nitrogen fixation.
- Did Bezos think of AWS? I think not. It was literally selling excess processing capacity.
- Gmail was not innovative; it was just a better client. Web-based mail had been around for a while.
- I'm not sure how innovative Square is but I don't think any of it would have to do with Dorsey.
- The NeXT was based on innovation coming from Alan Kay. The iPod wasn't innovative; it was just a hit. The iPhone was already underway when Jobs came back. The iPad is a bigger iPhone.
Big companies don't mean innovation; they often mean acquiring innovation and monetizing it.
All the big innovations of the 20th century were accomplished by individuals who did not do so based purely on financial incentive. That's a myth.
"Let's not feed kids crying themselves to sleep at night from hunger because that might mean we won't get iPads with blue casing." Shame on you.
I remember before Tesla: electric cars were a joke, nothing more. Even if the only thing Musk did was convince rich people they were not-terrible, this was worth it. (Same RE: the iPod, which was infamously dismissed on slashdot, yet did in fact revolutionise the MP3 player market).
When it comes to SpaceX, however, Musk is an actual rocket scientist.
And of course, the iPods being popular created a lot of jobs that would otherwise not have existed, both for rich people like us and for the industrialisation in the same area as the Foxconn factories in China)
really? you think land reform and mechanization in russia, china, and former colonies had nothing to do with that? wage raises and other victories of labor organizing? welfare and schools and transit and healthcare and other public services? most of the poverty in the world that one can say has been lifted probably comes directly from all those efforts.
it's easy to miss that viewpoint in america, where our wealth came from the homesteading of an entire continent (made available by genocide, pretty redistributive) and then food and manufacturing exports to a bombed-out world (implementing those reforms and supported by intentional redistributive funding from us) which turned around over decades and provided us manufacturing services to supply our consumption. when you don't look more than two steps ahead it looks like pure entrepreneurship. but you have to remember most of humanity doesn't live in the core of this empire, where land was free and consumption markets were far away.
> by entrepreneurs seeking great fortunes
No. It was technological innovation, made by the brightest heads of our species that did science themselves or at publicly funded institutions. The private sector took these innovations to manufacture and accumulate, while the innovators were criminally underpaid.
Now you need to figure out how do scale up production? How do we control costs to keep it affordable to the average person? How do we get people aware of the product? Who do we target as early adopters? How do we incorporate feedback from real usage back into the engineering of the product? How do we design the product so it's intuitive and appealing to use? How can we convince investors to take the risk and give us the capital needed to get this process under way? How do we plan and budget for production to accommodate projected growth? Are there legal or regulatory considerations? How do we coordinate all the people that need to work together to make this happen?
Ask anyone who's actually successfully launched a product how far the gap is between "works in a lab" to "widespread distribution and adoption". Engineers are part of the equation, but they often arrogantly assume they're the only ones that matter. That's why there's no such thing as a company that's only engineers. Entrepreneurs are the ones responsible for coordinating all the complex work that needs to come together to actually get a product into the hands of consumers.
These are all valid questions whose answers are necessary, but ultimately they are solved problems for which we often can just copy the solution from previous iterations. Somebody just needs to do it and I don’t see why these persons should get far far more than the lions share. Let them get remunerated and also substantially, but not the most.
The vast majority of entrepreneurs does not deserve renumerations of such high proportions, they just get them because they can. Past accumulation, capital structures, capital dependency, path dependencies - which ultimately are all just positions of power - allow the entrepreneur class to squeeze out such high returns.
But they’re not even the root of the problem, because they are squeezed out by the financial class who has the privilege of squeezing others out by virtue of having squeezed out others before.
We have these systems of hierarchical exploitation and accumulation for thousands of years, but saw only real improvement with technological innovation.
All while millions of humans go hungry and die from poverty. It’s about time this issue is discussed more publicly.
Don‘t get me wrong, I‘m no socialist whatsoever and have nothing against a decent lavish lifestyle. I just don‘t think the world needs more megayachts, shipping around the world to be near wherever the owner is, in case he/she might want to use it for a day or two. Or 15+ megamansions around the world per billionaire, stockpiled at all times with the most expensive and rare food money can buy.
At some point society has to think about a fair allocation of scarce resources.
I mean.. a $20M bakery is a huge bakery with a lot of people... but a $20M car factory is basically nothing.
I create a bakery... it's successfull, it grows to 21M... now I have to sell a part of it... and it grows.. sell another part.. it grows.. sell another part.. what then? What if the second coowner bought a half of it, and the price has gone over 41M, do we now both have to sell a part of it? What if it loses value?
What if you own a farm somewhere, with many hectares of nice land, and someone decides to build a railway and a highway there, and that land becomes worth many millions overnight?
Hard limits on wealth are not practical. Taxing private persons for taking out and using that wealth is the solution.
If you distribute the excess wealth, you will create a lot of inflation because if people have twice the money they will be prone to pay a twice bigger rent or a twice bigger restaurant check, or twice the money for the same land plot.
If you decide to somehow destroy the excess wealth (for example, burning cash or the houses they don't need), you will shrink a bit the economy by creating some job losses for those today working on superfluous activities of the rich such as yatch cleaning.
Ah, I see! So what you're saying is, if we tax the poor instead, that'll deflate the currency and make everyone richer!
E.g. the free market depends entirely upon the amount of money people have? And nothing to do with supply/demand and the elasticity of the market? In a more nuanced view demand creates supply, efficiencies of scale reduce cost, and everything is cheaper.
Folks love to throw out the "More money means prices go up!" as if it's a truism.
I mean the politicians would love this because they understand it is not about owning things but about having control. And then they could control the most.
The scary part to me is the amount of people who think this same way as you.
If we as humanity just confiscate others wealth, then the world will be better. Forgetting there has to be those in charge of confiscating it.
No, the problems in our society will not be solved that way. People get a president like trump because they deserved it, and then they got a president like Biden, because the people still haven’t learned and still get what th wet deserve.
> you’d find less people fed, less people sheltered and less education
Countries with higher and progressive tax rates have better success in all of these issues.
what a "wonderful" principle, in the spirit of "people are already being raped, carry on, there's nothing wrong to see here"
We need to define "have." "Have" as in have X$ as personally owned liquid assets? Or "have" as in having X$ invested in economic development?
I'd agree with you in the former case, but not so much the latter.
Who needs to pay more taxes? Those people over there.
Those people who aren't paying their fair share. Especially those who are using their wealth / power to get out of paying taxes.
And I don't like your question. Sure, billionaires can use their wealth badly. Why should they face consequences (other than no longer having what they have wasted)? That someone could misuse something is not a reason to take it from them and give it to someone else who could also misuse it. That is, I don't like your question because it implies that they should only be allowed to keep it if they are using it "properly". I think that the rule of law calls for a higher bar than that before taking peoples' stuff.
Well this one's easy at least. They lose the wealth.
From Representatives:
From the Media: From Acadamiahttps://johnhcochrane.blogspot.com/2020/01/wealth-and-taxes-...
if you take a more literal view and see federal taxation as destruction of money rather than a means of raising revenue, its applications become clearer.
You mean besides Piketty, Stiglitz (Nobel), and Krugman (Nobel)?
* https://www.cnbc.com/2020/09/17/economists-stiglitz-and-pike...
* https://twitter.com/paulkrugman/status/1088529094478872578
While I'm sure he's good in his specialty, it seems like Cochrane does not understand macroeconomics and how debt-financed government spending works:
* http://krugman.blogs.nytimes.com/2009/01/27/a-dark-age-of-ma...
* http://krugman.blogs.nytimes.com/2010/02/23/brad-delongs-foo...
Further, I'm curious to know if he did a survey of economists to substantiate his claim of "no economists". Besides the three prominent ones mentioned above, there seems to be ongoing research on the subject and so it is hardly a settled matter:
* https://www.brookings.edu/blog/up-front/2019/09/05/estimatin...
* https://www.nytimes.com/2020/02/21/us/politics/the-liberal-e...
https://www.igmchicago.org/surveys/wealth-taxes/
And how was the criteria for this panel chosen? What would a random sampling of, say, NBER affiliated scholars give?
Given previous surveys from Chicago Booth were done, it seems that there's an ideological slant to those they ask for advice:
* https://krugman.blogs.nytimes.com/2013/01/05/ideology-and-ec...
Further, given how wrong the Chicago school has been on macroeconomics for the last few decades, I would question anything coming out of there. Fama and French for example have done good work on markets, but they are and were wrong on deficit spending and stimulus since 2009.
"The Internet's effect on the economy is no greater than the fax machine's.
https://www.snopes.com/fact-check/paul-krugman-internets-eff...
We see them as mustache-twirling villains because, well, they act like mustache-twirling villains.
It's arguable whether the people who originally accumulated all this wealth "earned" it (when many of them in large part merely took the wealth their employees made), but their descendants who just inherit their money certainly have in no way earned it. So should they get to keep it?
For an insightful look in to the world of inherited wealth, see the documentary Born Rich[1], made by the heir to the Johnson & Johnson fortune, where he interviews all his other friends, who, like him, were born in to enormously wealthy families.
[1] - https://www.youtube.com/watch?v=1sD3pG74Wv8
Meanwhile, they have seen the plight of the billions of human beings who live in poverty and want, and chosen to use their vast resources almost purely to make more for themselves, rather than dedicate to alleviating such suffering even enough that their lifestyle is the slightest bit inconvenienced.
The sanctity of "property ownership" is not so sacred a principle that it should take priority over wholly preventable widespread suffering and death. There is no moral argument that could possibly support this much of humanity's productive output being hoarded by so few, rather than going to improve the world in a myriad of ways.
It's a huge misconception that inflation is good for the economy. What actually happens, is that the economy on the whole gets more inefficient and wealth concentrates.
I mean, is it doing anything useful?
"Money Invested" is basically a number sitting in a giant key-value store at a brokerage, associated with a stock ticker or some other ownership totem. If I buy 100 shares of Walmart, it's not like Walmart suddenly has an extra $15,000 in their bank account they can suddenly use to improve the world. Those 100 shares or $15,000 are not really doing anything useful. They're ones and zeros in a database associating my name with a number and the string "WMT".
So when you actually look at investments made by billionaires they tend to underperform. Part of this is simply seeking low risk diversification, but another part is many people assuming that because past risk taking worked so will future risk taking.
This becomes really obvious when you start looking into former billionaires. Vast fortunes regularly evaporate.
This assumes what needs to be proven. Namely, the degree to which the wealth of billionaries under the status quo regulatory, financial, and tax regime reflects their outsized contributions to welfare.
If we make a number of assumptions (e.g. perfect information, perfect competition, equal initial endowments, etc.) it's tautologically true that great wealth would reflect outsized contribution to preference satisfaction. But these assumptions are wildly unrealistic, and conflict with both everyday experience and historical reflection.
More to the point, we all want our economic system to do more than merely satisfy preferences. Opioid manufacturers cultivated and satisfied preferences to the tune of billions of dollars. The impacts on well-being of users and their communities were, to put it lightly, mixed.
I think it has been, dramatically, over the last 120 years. Plenty of countries have tried radical appropriation and redistribution, and it failed spectacularly every time. Meanwhile a prominent Marxist country, China, turned to capitalism and within a generation has raised hundreds of millions of people out of poverty and into urban middle class lives. Meanwhile Cuba, Venezuela and North Korea.
Of course Capitalism has failure modes, because people are imperfect. All the flaws levelled at Capitalism are also found in spades in alternate economic systems because they are flaws in us. That's where accountability through liberal democracy and a decent system of laws come in. Yes that's always a work in progress and no it's not perfect, but it does work.
China is still very much a communist country, and the raising of many people out of poverty is in large part a result of the government distributing the gains that have come from "special economic zones" into rural areas on a scale that would make a "tax on billionaires" seem like a quaint half-step.
Allowing people to own and control private enterprises is a big step for China, but the gains from those private enterprises are still very much under the control of the Chinese government.
Anyway the hundreds of millions of people I'm taking about are the urban middle class. Their wealth almost entirely flows from the capitalist sector, in fact the majority of the wealth in the state sector comes from the capitalist sector one way or another. Source, my wife is Chinese and we have extensive family connections over there.
China is a single party state with a command economy, but is in no way shape or form Communist or even Marxist. It's social security system is barely existant; it's public health care is radically fee based to a degree that even makes the US system look socialist; many tens of millions of urban residents get zero public support or even schooling for their children because their families come from the countryside.
How about non-radical redistribution?
In Capital in the Twenty-First Century, Piketty puts forward the idea of a (net) wealth tax on the order of something like:
* 0-10M net worth: 0%
* 10-100M: 0.1%
* 100M-1000M: 1%
* >1000M: 2%
This would allow two things: first the documentation of people's assets (and liabilities) to find their net worth for the tax regime, and second the skimming off the top of a not ridiculous amount of the assets of those that have a lot.
So if you have a $1B portfolio, and manage to grow it 8% in a year, then you end up with "only" 6% growth. This still allows for incentives for people to acquire wealth, but tamps down on some of the compounding that the largest estates end up getting (there's often only so much that can be spend, so a lot of the previous year's gains just end up sitting and accumulating).
The key would be for the US to get onside: by some measures it is one of the largest tax havens out there.
* https://fsi.taxjustice.net/en/introduction/fsi-results
* https://en.wikipedia.org/wiki/Financial_Secrecy_Index
It has global reach which would probably change a lot of international behaviour. Just look at FACTA:
* https://en.wikipedia.org/wiki/Foreign_Account_Tax_Compliance...
We arguably already have a weak form of this in capital gains. Invested wealth remains untaxed, since it's already working. Good. Liquidated investments are taxed on gains. Good. But I'd also support stronger forms of redistribution such as yearly re-taxation on uninvested wealth above a threshold, non-gains percentage tax on all liquidated investments above a threshold, a land value tax, and closing of tax loopholes. Just let invested wealth do its job!
I don’t think taxing more is an effective way of solving social and economic problems though and doing so doesn’t have to be cripplingly expensive. For example the US spends twice as much, per person, on health care than other OECD countries. You spend as much on health per person through the government, funded by your taxes, as Europe does just funding Medicare, Medicaid, CHIPS, etc, and then spend the same again through private health insurance. Why? Because the health insurance system drives costs across the board up through the roof. All you people with company plans you contribute thousands to, you already paid enough for a full first world health system in your taxes and got nothing for it, so you have to pay again for yourselves.
Why that isn’t issue number 1 for every American tax payer is beyond understanding. So don’t take my up thread comment to mean I’m some libertarian extremist, or this comment to mean I’m a radical socialist. It’s just a matter of looking at what works.
Tax isn't punishment. Ever. Especially when tax rate is already so low that the proposed "emergency tax" is still less than historical income tax rates.
Tax is part of the social contract that allowed those billionaires the stability, educated workforce, infrastructure, safety from theft, etc, etc, etc, needed to build and maintain their wealth.
The idea that billionaires "invest [their wealth] efficiently and distribute it" is laughably sophomoric, a parody of the Gilded Age's self-serving justification for robber barons. Billionaires invest efficiently _for the preservation of their wealth across generations of their family_, only the most credulously optimistic model of capitalism supposes that this aligns with "distribution" (whatever that means - trickling down, eh?) or with the best investments for society at large.
I'm not suggesting that exactly but I'm not against a wealth cap. I'm not sure what sort of person thinks they realise genuine benefit from spending time trying to spend it. Build a hospital. Subsidise public transport in your area. Do some good.
Consider two billionaries:
- One creates a cold nuclear fusion device the size of a 10" x 10" x 10" cube. You can plug anything to this device and it will power it, indefinitely.
- Another gets little boys and girls addicted to some sort of super candy, irresistible for those under 13.
Surely one of these people is more valuable
Lots of gray area, though. Lots of arguments were made against Gates when Microsoft's value increased with anti-competitive practices, but it's hard to argue with what it's been spent on today.
To many people kids under 13 are addicted to video games. To many others the creators of those games are adding happiness to our society and the negative effects are minimal and outweighed.
Vice versa a cold nuclear fusion device can be used by the US military to try and oppress some group across the world for indefensible reasons.
It's not realistic to apply moral arguments to people's wealth accumulation in any legally binding type of way. Of course we know creating Playboy is a worse way to accumulate wealth than say inventing an efficient battery technology, but how to write this into law that can be applied equally to each new case isn't clear at all.
That said the first thing is a bomb.
The second thing is a - presumably - harmless addiction foisted on a group that's not really in a position to harm other people and will have a reasonably hard time harming themselves. I mean, children, sure but honestly they don't really have all that much agency.
There's a lot of upside on #1 but I'd expect a huge amount of downside too. #2 doesn't have any upside but I don't see a lot of downside either.
- If one buys wheat, bakes bread and sells it making a profit, they're creating value.
- If one buys all the wheat in the region, creates a shortage and price spike, and then sells it at a profit, they're just exacting wealth.
The second case is not contributing any value to society -- quite the contrary, they're just redistributing the existing one for themselves, giving nothing in return (hence "extracting value").
Sure, the second option is legal, but that just seems like an oversight when law-making, and it definitely harms society more than anything else.
If you look at essentially all billionaires they don’t fit on either edge of your spectrum, and where they actually fall in the middle isn’t an easy question to answer either.
Just tax them at the same rate you tax Johnny Average.
edit: and tax their companies at the same rate local mom-and-pop stores/bakeries/... get taxed.
This is the problem with net worth, its a made-up number. Most billionaires own companies which are "worth in principle" something to someone.
You can only tax that if you force them to sell, and if they can find a buyer.
Do that, and the number of billionaires would precipitously drop from a global few thousand, to a few hundred.
And also, compare taxes eg. amazon pays to taxes your local mom-and-pop store pays (percentual)... [0]
[0] https://www.cnbc.com/2019/04/03/why-amazon-paid-no-federal-i...
Surely they should. Every sane being with a hint of a sense of justice and empathy surely agree.
But they won't. Because they pay a lot less to just the right people so it will never happen.
* there is an enormous need for capital in modern economies
* everyone else refuses to actually keep any capital. Individuals max out their credit cards instead of saving. Voters demand tax cuts so governments are borrowers instead of lenders.
You can tax back the capital, but there are 2 issues doing so: as long as it's spent and not saved, it will rapidly end up back in billionaire's accounts AND in the mean time, the loss of investment when billionaires pull out capital to pay the tax will mean fewer jobs and higher prices.
These are the reasons no politician is willing to pull the trigger and go after the uber wealthy: you'll be celebrated for a week and then lynched when the economy falters.
You want to get out of this position? Require people to save and balance governmental budgets. But people don't want higher taxes, less services and lower spending power. At least they dislike it more than they like equality and opportunity.
If you really think billionaires have undue influence (and i do), cut your spending, invest and pay down debt and vote for higher taxes and lower state spending.
As an aside, this [1] was extremely depressing to read. I was aware of the 2.3 trillion around 9/11 (what a coincidence!), but had no idea about the more recent discrepancies.
[1]: https://www.city-journal.org/html/americas-missing-money-157...
edit: i forgot some zeroes!
The obvious answer to that is to force compliance from the Pentagon. I’d personally add cutting military budget by “the amount that goes missing per year,” but that will never fly.
In any case, it’s important to specifically call out the Pentagon rather than blame the entire government.
“Billionaire Jeff Bezos could personally pay for enough vaccines for the whole world, yet he would rather spend his wealth on a thrill ride to space. COVID-19 is turning the gap between rich and poor into an unbridgeable chasm” - millionaires.
Millionaires could personally alleviate so much suffering in the world, yet they would rather buy... Nice houses, cars, and whatever else millionaires buy. You could extrapolate this argument all the way down even to those in objectively unfortunate circumstances. It's turtles all the way down.
These pleas seem motivated more out of virtue signaling than anything else.
Billionaires are a very different animal. They have armies of lawyers and financial managers that help them navigate the movement of wealth through the global system to avoid taxation. They avoid recognizing income at all opportunities and strategically use debt to provide for themselves without exposing themselves to tax consequences that would come from getting the money they want to spend. They can traverse the globe looking for the most favorable taxation rates to maximize their wealth.
There’s been a lot of “tax billionaires” and “billionaires shouldn’t exist” rhetoric without much substance to how to actually achieve that goal. Billionaires aren’t just going to say “aww, shucks, guess we’ve got to pay up” when governments decide to up their taxes. They’re going to react in ways that are both hard to predict and harder to stop. Capital flight is a real threat and will require a massive, coordinated effort on the parts of all the nations that comprise the global financial system to curtail. The efforts towards a minimum corporate tax rate are a good start, but that’s only one step of many that are necessary before “tax billionaires” becomes a realistic target.
The net result is going to be that the tax system gets more byzantine, the government says "look, we started taxing billionaires", and the billionaires still aren't paying. But filing taxes will get more complicated for millionaires and upper-middle-class people.
I'm not normally a highly cynical person. But I am cynical about the government's ability to wisely write legislation in the face of a heavy lobbying blitz.
You don't go after the billionaires, but after the banks and such that the billionaires use. FACTA and the long arm of the IRS caused a lot of behaviour changes in the banking and finance industry:
* https://en.wikipedia.org/wiki/Foreign_Account_Tax_Compliance...
With the caveat that I don’t know if this is a good idea or not, a government can absolutely change the law if they want to give themselves the powers to prevent that from happening.