Bill Gates Objects to Elizabeth Warren’s Wealth Tax, and She Offers to Explain

$10 million is enough that you can take 2.5% every year as $250k of income, and spend 0.5% on the fiduciary wealth manager's fees, and still have investment distributions and interest on the principal that outpace inflation in the long term. A household of one or two people can live its entire lifespan on that, without ever trading hours of labor for cash again, and then pass the same privilege down to a single heir, until civilization collapses.

$250k/year is a reasonable and sufficient retirement income. $10M is a plausible sum to accumulate through labor-selling alone, for one or two people each working for 2000 hours/year over 40 years, at an average combined rate of $175/hr, all while spending $100k/year on expenses and devoting $250k/year to savings. It does not blatantly flaunt the "diligent and/or intelligent work generates wealth" story.

The temporarily embarrassed millionaires all around the US can plausibly get there, if nothing else goes wrong, and they don't even have to cut expenses down, if they get paid enough per hour.

$250k/year is about 4x the median household income in the US. It can support most lifestyles less profligate than a person addicted to luxury travel, high-stakes gambling, top-shelf companionship-for-hire, or ultra-pure cocaine. And $250k/year can still be spent wisely and effectively by one household.

The thing about the government spending the money poorly is that they are still actually spending it. Spending is better for the poor than investing. When you spend money, the person you trade it to can go on to spend all of it themselves. When you loan it to them, or invest it, they have to give it back someday; it has strings attached. So the advantage of the wealth tax is in taking money that is not being spent, and putting it back into genuine circulation.

So then I take this reasonable number, and pad it by one order of magnitude, to absorb the edge cases that are still reasonable in person, but look bad on paper. Start the tax at $100 million in accumulated wealth, and tax 2.5% of everything in excess of that. Then deduct from that tax the payer's total spending (not loans or investments) in excess of $2.5 million, which is money that will count as someone else's income. If they can spend that much, the government doesn't have to spend it for them, and that spending will get taxed at a higher rate anyway, as income.

It's been a long time since I looked in to this, but it used to be the case that if you gave up your US citizenship while having a net worth of over $100,000, it was assumed by the government that you were doing so for the purposes of tax evasion, and they'd continue to tax you for the next ten years.

The same could be done here, with the government getting 10 bites of 6% at wealth over $1 billion if the billionaire tries to run away. Taxation could also be made retroactive, if there was a political will to do it.

If some entrepreneurs leave others will step in to take their place.

As for the middle class being "decimated", I doubt it, as the median net worth in the US is only around $70k.

The majority of Americans won't be affected by taxes on millionaires.

Attempts to tax people at 70% in France (even if it was marginal tax) went south very quickly. Incentive matters a lot because good work is really really hard.

Funny enough Gates seemed alluded to this on some interview I watched a while back.

2) Sure, I'm glad Bill Gates is willing to double that amount. Fun fact, Mr Gates, you don't have to wait until a tax is implemented, if you really think that way, you can donate money straight to the government: [0]

3) Taxes, at least in my lifetime, have always been a tax rate, not a number-of-dollars paid thing. If Jeff Bezos made 20 billion dollars last year, and paid only 1 billion in taxes, that would be a 5% tax rate. Living in NY, depending on my expenses and deductions, I pay upwards of 40% of my income in taxes. Yes, in one year, Bezos would have paid more to the tax pool than I ever would have, but it seems incredibly unfair that a person who has so much would be forced to give comparatively so little, especially since wealth hoarders could also afford to give a substantially higher percentage of their income without an appreciable quality of life change.

Granted, I know Bill Gates is, by wealth-hoarder standards, not too bad a guy. I don't think anyone here is arguing that he is, but come on; even if his dishonest framing of "being taxed 100 billion dollars" was true, which it isn't, it's not like his life would even change that much; he'd still be worth billions, he'd still have more money than he knows what to do with, he'd still be able to live a life of luxury on bank interest. Forgive me for not crying over his plight.

[0] https://fiscal.treasury.gov/public/gifts-to-government.html

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EDIT: The 20 billion Bezos thing is a contrived example. I do not know the tax rate for billionaires in NY; it was more a direct response to the "paid more in taxes than I'll ever pay" comment.

So now it's a tough spot. On once hand, if you apply the Medicare caps universally, many hospitals will go belly up. If you remove the caps and let them bill whatever they want, you will end up with a rapidly growing hole in the budget.

I would say, instead we need a solid system of rules on what you can and cannot bill, some auditing body and a way for the patients to dispute inflated bills at an affordable cost. Whether it goes out-of-pocket or from a tax-filled fund is IMHO not as important as the cost audit/dispute mechanisms.

So... you think that Warren is trying to add funding like a wealth tax, but... has no idea what to spend the money on?

Uh... dude, I got some news for you, about the country you live in.

That's debatable. Many people think it is a problem, or at least an undesirable situation.

> Raising the standard of living at the bottom is what matters, and putting in proper safeguards so that those at the top cannot greatly interfere in things like government.

Easier said than done. It may be impossible or impractical to neuter the political power that comes with economic power.