The Billionaires Are Getting Nervous
nytimes.com
nytimes.com
Now, she's an incredibly smart woman and I'm sure she does know exactly how it's held and its problems, which just makes me think she's trying to grab headlines with her platform without any real plans on how to do it. (Which seems to fit with her pattern on her platform anyway).
Examples
Married couple with household net worth of $100,000—the median level in the United States
Pays zero tax because they are below the $50 million threshold
Pays zero tax because they are below the $50 million threshold
Pays zero tax because they are below the $50 million threshold
Pays a 2% tax on the $450 million in net worth above the $50 million threshold, producing a total annual liability of $9 million
Pays a 2% tax on the $950 million between $50 million and $1 billion, and a 3% tax on the remaining $19 billion, for a total annual liability of $589 million.
Your argument is, essentially, an "everything else being equal" one. But it won't be. Company structures, trusts etc will be restructured to best deal with whatever the new laws state. As they do with the current laws.
Of course, the corollary is that she's also well aware that it won't raise anything like the money that's suggested but, from her perspective, that's not a problem either. In fact, the opposite. Bringing in a wealth tax that the wealthy avoid is probably close to ideal: deliver on your promise and still have the bogeyman. Result.
What I think is genuinely interesting is that the whole idea of a wealth tax is now considered to be electorally sensible. That's a huge change from a decade or so ago and, potentially, makes way for much more radical policies to be touted without the usual faux-shocked response.
Btw it takes about 8 years to reduce the wealth to 60%. That will do the balance and you can have another president by then. It is not forever.
Btw it takes about 8 years to reduce the wealth to 60%. That will do the balance and you can have another president by then. It is not forever.
The effect would be similar to what typically happens to public stocks after employee lockups expire, except at a higher scale.
We either rock the boat in a controlled fashion or the boat sinks and we all metaphorically sink with it.
If so, then his wealth would not decline with a 6% wealth tax.
I've watched the clip several times now and this is horrible characterization by this journalist. The title of this piece even seems to be click bait-y. We're starting to have a national conversation about more heavily taxing billionaires again but so much of the media is pumping this up into a "the Populists are going to eat the rich" kind of hysteria.
IMO.
I'll almost certainly never be a billionaire. But I will probably do well enough, because I've learned how to live below my means and how to invest. Doing this properly will make anyone relatively wealthy after a reasonable working career.
The system works. These days, we have low unemployment, rising wages and a great market for retirees. It's not a good idea to mess with it.
And because most of his wealth is tied up in his stock, he would have to liquidate large portions of $AMZN to pay the yearly wealth tax bill. That kind of sustained mass influx of supply of $AMZN shares on the stock market would wreak havoc on its stock price, which would reverberate through retirement/pension funds. Few would gain from it.
If you took all of Bill Gates' wealth, you could fund the US Federal government for about 8 days. Not 8 days every year, 8 days total, one time. If you took all of the Forbes 400 wealth, you could fund the federal government for about 8 months. The upside is 8 months of runway, and the downside is that you would destroy decades of created wealth (wealth is not zero-sum), a tide which has lifted a lot of other boats, particularly those of the upper-middle class.
Not at all. He'd just have to sell that stock to someone else, with no operational effect whatsoever.
Our retirement system isn't sustainable. Most people have literally nothing saved in their 401ks, etc. It also assumes a growing economy. The system is already in a failure state, we're just ignoring it.
The article instead seems to be entirely about marginal tax rates.
A wealth tax has a lot more implications than changes to the marginal tax rates on income and capital gains-- it has different economic effects and requires far more invasive interactions from the government.
E.g. the content of Gates' home is largely his own private business, but under a wealth tax will he have to account for all his possessions and report them to the government? If not, then why wouldn't the tax be avoidable by buying expensive art?
In the past, including recently, Gates has been pretty consistent about supporting higher tax rates for the wealthy, in particular citing estate taxes and capital gains as areas that deserved focus. (https://www.cnbc.com/2019/02/13/bill-gates-suggests-higher-t...).
To me this suggests that NYT is just trying to create a bad guy opponent to make a boring policy discussion sound like something that requires pitchforks.
Gates barely has a normal income. What he does have is a ton of wealth that a lot of us see as something broken in the system.
You could cure cancer and you still shouldn't have THAT much wealth.
Real estate is already taxed in the US (at the state/local level). I doubt Bill Gates would have an enormous problem with adjustments to that either.
How are they all to be seen as not well written? Too many comma splices?
Are they factually accurate and you don’t agree with the tone?
Are they factually incorrect and you like the tone?
“Knee jerk hot take” is pretty unnecessary.
It makes it to the front page because people vote it up. This makes it de facto on-topic.
I think this is good, FWIW. I just don't think it's useful to argue that it shouldn't be removed just because it's upvoted because that's clearly not how HN is run.
afaict, HN mods generally remove submissions because their comments are a dumpster fire. Though I haven't witnessed it in a while. The last dumpster fire comment section I saw, dang just stickied his comment to try to encourage people to get back on the topic of the article and avoid the obvious knee-jerk response to it.
Such high quality discourse
Take everyone's favorite startup founder, Adam Neumann, of WeWork. Under Warren's plan, he would have been worth around 14 billion last year, based on a 30% stake in a $47 billion "valuation". So he'd owe close to a billion in taxes, when in fact, he was worth far less. And even if $47B was the correct valuation, there's not a great mechanism for him to actually get the liquidity to pay taxes.
So higher taxes on billionaires? I'm all for it. But we need realistic proposals to make it happen.
You're taking a whole system and applying it to a single variable and saying it doesn't make sense. WeWork should've never been worth that much and an inability to pay taxes would've shown that.
https://www.google.com/amp/s/amp.economist.com/finance-and-e...
Insurance costs going up and employers paying more for that doesn't mean people have been getting a better and better deal.
Also why is it that the standard of life is higher and has grown to be much higher in many European countries with the so called "slow growth" vs America?
Simplicity in taxes is where all the loopholes come from. Taxes become more complicated in order to close the loopholes.
However we tax, we’ll have to define terms. The goal should be to remove loopholes in those definitions. Not add loopholes. By adding the concept of wealth, we’ll just encourage behavior like undervaluing assets (like art, private stocks, etc). And we’ll be back to square one.
"The goal should be to remove loopholes in those definitions"
So, define income, without loopholes. Your plan depends on this.
p.s., There’s a difference in reducing loopholes and having absolutely zero loopholes (something that may be impossible)
If the solution is that those people should try to remove those loopholes from the definition of income and there is nothing beyond that to explain how those people should do that then it is a vacuous solution.
p.s, There’s a difference in reducing loopholes and having absolutely zero loopholes (something that may be impossible)
Obviosuly.
You’re basically arguing that I shouldn’t make this statement unless I have specific details about how to simplify taxes? I can’t make a general directional statement if I haven’t taken the time to learn about all the nuances? Do you always learn about all the nuances and define all the terms before starting a discussion?
Yeah and what was inflation? And what was Reagan doing to fix it? It wasn’t all economic unicorns and rainbows in the 70s to 80s transition.
https://www.irs.gov/businesses/small-businesses-self-employe...
The Estate Tax is a tax on your right to transfer property at your death. It consists of an accounting of everything you own or have certain interests in at the date of death (Refer to Form 706 (PDF)). The fair market value of these items is used, not necessarily what you paid for them or what their values were when you acquired them. The total of all of these items is your "Gross Estate." The includible property may consist of cash and securities, real estate, insurance, trusts, annuities, business interests and other assets.
Why mess with things now? I'd understand it if someone wanted to monkey with things when the economy was awful. But why mess with it when things are good?
Like a lot of things in life, you get what you pay for.
But you have to balance these concerns with what's practical. After all, a search engine is supposed to help people find things.
If an NYT article actually answers your search query, I don't think the greater good is for Google to not show you that result. I don't think that's what most people would want, either.
I feel the same way about Google hypothetically only indexing the part of the article that is shown above the paywall fold. What if the rest of the article can answer your search query? I don't think you're better off not knowing such an article exists.
There are only trade-offs.
The other things that Google bans are more obviously deceptive with few upsides to be found for the end-user, like cloaking a malicious website. I don't think you could enumerate the other sorts of things that Google blocks and compare them honestly to NYT's paywall, but I'd be curious to hear you build that case.
I argue that the only reason people are interested in this article is because of Bill Gates opinion not the ny times.
I think search results for the original opinion would be much more relevant than a random persons opinion of the opinion. The opinion of some one else's opinion is not worth money, if ny times considers that as quality journalism I think it says a lot about the quality of their journalism.
Bill Gates opinion is the only reason any one is interested in the article, and he gave his opinion for nothing because thats what opinions are worth.
Giving your opinion is free, doesn't require any investigation, doesn't require any fact checking, doesn't require any journalism.
To put it bluntly nytimes has added no value to Bill Gates opinion, they have done no work, total value of their contributions is 0 they don't need paid for nothing.
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Non-authoritative answer:
Name: archive.is
Address: 94.16.117.236> The available evidence strongly suggests that taxation exerts a minor influence on innovation.
No citation given.
> Congress has slashed taxation three times in the past four decades, each time for the stated purpose of spurring innovation and investment and growth. Each time, the purported benefits failed to materialize.
No citation given.
> President Trump initiated the most recent experiment in 2017. The International Monetary Fund concluded in a recent report that it had not worked.
This NYT piece is about individual income tax, whereas the IMF article exclusively analyzed corporate tax cuts.
> Decades of episodic tax cuts have left the government deeply in debt
Yes, though nobody in the article (or in the broader political arena) is all that interested in paying them off.
> The wealthiest Americans are paying a much smaller share of income in taxes than they did a half-century ago. In 1961, Americans with the highest incomes paid an average of 51.5 percent of that income in federal, state and local taxes. Half a century later, in 2011, Americans with the highest incomes paid just 33.2 percent of their income in taxes, according to a study by Thomas Piketty, Emmanuel Saez and Gabriel Zucman
There is no source for the 1961 number. That study says that the tax rate on the top 0.001% increased 185% from 1946-1980 and decreased 3% from 1980-2014. [1]
---
Aside from the typically bad NYT coverage, a point seldom brought up in many articles is the current income tax burden of the wealth relative the rest of the country.
More than 90% of individual income taxes come from the top 1% of taxpayers. [2]
I can't find that number for billionaires specifically, but some quick searching and math estimates that $9T from billionaires taxed at 23% accounts for $2T of $10T individual income tax.
So < 0.001% of individuals pay 20% of the income tax.
Makes me wonder what the opt-referred to "fair share" actually is.
[1] https://www.nber.org/papers/w22945.pdf Table 2
[2] https://taxfoundation.org/summary-latest-federal-income-tax-...
The worst problem with these tax proposals is that they won't even raise half as much revenue as they need for the programs they are supposed to fund.
The NYT and myself have a very different definition of “innovation”.
However, they always collect way less money than the people who made the initial promises said, because the people who were making the promises always assume that if they tax wealth at 75%, their income will be 75% of the current tax base, at the time the wealth tax is proposed and/or passed. The problem is, if you make staying within your tax zone suddenly cost, say, literally 3 billion dollars (and that's the sort of thing we're talking about here), then you just gave the wealth a 3 billion dollar incentive to leave before your tax can come into effect, and the end result is the tax base is much smaller than was anticipated.
So they don't "work" in the sense that they will not collect anything near what the advocates promise they will, and they also chase the wealth away, which, for all the rhetoric about inequality and such, isn't necessarily a good thing for a polity. Generally when people want "equality", they want their wealth level to be raised, not to attain "equality" by lowering the average wealth level. Chasing, say, Jeff Bezos out of the country, along with whatever bits of Amazon he decides to take with him, is not going to be a net gain for the US, just as one example.
They also "work" in the sense that the Gini coefficient probably will indeed go down, so advocates can claim success. But it may not be what you were looking for.
(Also, for the record, I am neither particularly celebrating nor particularly condemning anything or anyone here. This is just how the incentives line up. You can't wish incentive structures away. Effective law takes incentives into account and harnesses them for the desired result. Generally, solving the Big Problems requires something other than the most obvious, direct approach, because there's a selection effect; if the most obvious, direct approach solved the problem, we wouldn't have it.)
You can impose tax on leaving bigger than 3 billion dollars effectively removing leaving incentive.
Also you are assuming they are fluid and actually can leave and stay wealthy somewhere else, which is likely not the case for most of the wealth on the planet.
In the US, the country in question, you'd have some constitutional problems with that plan. That's a bad thing; you need this wealth confiscation to be clearly legal, because you have incentivized billions of dollars worth of legal expenditure to prevent it from happening. (There's those nasty incentives again.)
Also, it turns out that demonstrating to the entire world that you'll just take whatever you want, whenever you want, and punish anyone who tries to protect themselves from that, doesn't exactly incentivize a healthy business environment or encourage the kind of investment you need to create the wealth that you need to bring inequality down by bringing most people up. People need predictability to make plans for the future; this sort of thing extremely strongly incentivizes even shorter term planning than we sometimes get, because nobody knows whether you're going to come along and take most of their stuff tomorrow, or even retroactively. It's not a good plan to create a wealth-producing society.
It's really, really easy to "solve" the wealth inequality problem by simply destroying all (or almost all) wealth, everywhere. It's been done in several countries in the past century. It's not usually the solution people want when they're talking about wealth inequality... oh, they might take a small hit in spite if they knew it was really going to stick it to those "wealthy fat cats", but for the most part, people expect the end of "wealth inequality" to increase their own wealth, not destroy it.
"Also you are assuming they are fluid and actually can leave and stay wealthy somewhere else, which is likely not the case for most of the wealth on the planet."
It is the case for the sort of wealth we are talking about, though. Yes, you can indeed tax the lower and lower-middle classes very hard, because they tend to be unable to move. Not exactly a "wealth" tax anymore, though, is it? Billionaires can move wealth. After all, if we're talking a 75% confiscation rate, it's worth it to move overseas even if they take a 50% bath. Billions of dollars worth of incentives cover a lot of things.
I know this is a hawkish view, but certain individuals have so much wealth and political influence that it's not so far fetched to consider them like a hostile sovereignty that has effective regulatory capture of the the countries they exist in. People generally don't like to be treated like serfs. The taxes will eventually stick, or there will be trouble.
Also, the fact that was repealed doesn’t really say whether or not it was a good policy or not.
Now I'm sure any attempt to actually do that would end in a court case, but it's not really worth the risk to the owner of said wealth to offer the government all your Rembrants at bargain basement prices.
Let say you have Warren Buffett's shoes.
Warren Buffett paid $X for those shoes.
A pair of new shoes would cost him $Y.
Someone might pay $Z as they are Warren Buffett's shoes.
Someone might pay $V just to inconvenience Warren (so he would have to go to the shoe store).
Maybe they have some sentimental value to Warren, so he would pay $T not to lose them.
What are the shoes worth?
I mean, I don't know anything beyond what the person you're responding to said, but they made it pretty clear:
> the Government has the right to buy your property for whatever you've listed it for
If America could raise 1% of its revenue from wealth taxes, that would be a yearly revenue of ~$31.8B.
For reference, NASA's yearly budget is around $21B, and the cost of free college for all Americans would be around $45B depending on plan and how aggressive a single payer could reduce costs.
When one runs out of other ideas, and can't extract money from the bottom 50% of US citizens who do not pay taxes, yet want to continue spending instead of cutting entitlements - treating rich people as another revenue source will continue.
They own dramatically more than their fair share so it all balances out.
If, instead of starting from a vague sense of what feels fair, you instead see wealth as a measure of one's responsibility to a society and look at the actual effects of these various redistributive policies, you get a very different picture. It's often pointed out (including in TFA) that some of the most prosperous, productive periods of American history had extremely high tax rates, but it's amazing when you actually look at the raw numbers for yourself:
https://en.wikipedia.org/wiki/Income_tax_in_the_United_State...
It's baffling to me that faced with this, people continue to push this idea that the key to economic stimulation is tax cuts at the top end.
The next level of "fair" would be everyone paying the same tax rate, like 10% of their income.
Just because a tax can be shouldered by some group doesn't mean it ought to be levied. It's extremely unfair.
Equity is evil. Equality is good.
The point should be to seek an outcome that is good for the society as whole, and that means balancing a lot of different objectives. For example:
- People who are wealthy and successful should enjoy an elevated standard of living.
- Regardless of your birth and other factors outside your control (race, wealth of parents, etc), it should be possible to achieve wealth through hard work.
- No one who works hard should lack basic necessities like food and shelter.
The current system optimizes heavily for the first item at the expense of the other two, and the fact that someone can even propose with a straight face that a flat $1k/year taxation scheme would be "fair" is just a sign of how broken our attitudes around this are.
And if we're talking about fairness if you were always happy with one of these imbalances then it's only fair to accept the second.
Sure there are massive inequalities in the US - but it is not because of "wealthy people". I could suggest it is because of the mainly failings of humans as a barely evolved species to create scaleable entities (businesses) as it requires a huge human effort, skill, luck, and capaiblity to do. Most humans give up on the really hard stuff required to build strategic levers that multiply their monetary outcomes. And instead focus on small ROI skills (monetarily speaking).
I disagree - I believe this is mostly projection. Most wealthy people aren't exorbitantly wealthy. There are 607 billionaires in the US (thats not many). They're not all hiring lobbyists, and trying to corrupt the US. Neither are the deca-millionaires, they're just either building things (businesses to employ others) or getting better at their craft.
As one of many possible examples I could give, below is a table I compiled showing the highest marginal federal income tax rate and year-over-year real GDP growth in the US since 1950. Can you find a relationship?
My conclusion, so far: There's a tremendous amount of theory, and rhetoric, and posturing, and straw-man arguments... but very little or ZERO actual evidence that national economic growth is impacted one way or another. (In fact, in many cases the data shows higher economic growth during periods of higher taxation at the top of the income distribution.)
Highest Real GDP
Year Tax Rate Change
1950: 84.4% 8.7%
1951: 91.0% 8.0%
1952: 92.0% 4.1%
1953: 92.0% 4.7%
1954: 91.0% -0.6%
1955: 91.0% 7.1%
1956: 91.0% 2.1%
1957: 91.0% 2.1%
1958: 91.0% -0.7%
1959: 91.0% 6.9%
1960: 91.0% 2.6%
1961: 91.0% 2.6%
1962: 91.0% 6.1%
1963: 91.0% 4.4%
1964: 77.0% 5.8%
1965: 70.0% 6.5%
1966: 70.0% 6.6%
1967: 70.0% 2.7%
1968: 75.3% 4.9%
1969: 77.0% 3.1%
1970: 71.8% 0.2%
1971: 70.0% 3.3%
1972: 70.0% 5.3%
1973: 70.0% 5.6%
1974: 70.0% -0.5%
1975: 70.0% -0.2%
1976: 70.0% 5.4%
1977: 70.0% 4.6%
1978: 70.0% 5.5%
1979: 70.0% 3.2%
1980: 70.0% -0.3%
1981: 69.1% 2.5%
1982: 50.0% -1.8%
1983: 50.0% 4.6%
1984: 50.0% 7.2%
1985: 50.0% 4.2%
1986: 50.0% 3.5%
1987: 38.5% 3.5%
1988: 28.0% 4.2%
1989: 28.0% 3.7%
1990: 28.0% 1.9%
1991: 31.0% -0.1%
1992: 31.0% 3.5%
1993: 39.6% 2.8%
1994: 39.6% 4.0%
1995: 39.6% 2.7%
1996: 39.6% 3.8%
1997: 39.6% 4.4%
1998: 39.6% 4.5%
1999: 39.6% 4.8%
2000: 39.6% 4.1%
2001: 39.1% 1.0%
2002: 38.6% 1.7%
2003: 35.0% 2.9%
2004: 35.0% 3.8%
2005: 35.0% 3.5%
2006: 35.0% 2.9%
2007: 35.0% 1.9%
2008: 35.0% -0.1%
2009: 35.0% -2.5%
2010: 35.0% 2.6%
2011: 35.0% 1.6%
2012: 35.0% 2.2%
2013: 39.6% 1.8%
2014: 39.6% 2.5%
2015: 39.6% 2.9%
2016: 39.6% 1.6%
2017: 39.6% 2.4%
2018: 37.0% 2.9%
Year-over-year real GDP growth: https://fred.stlouisfed.org/graph/?g=pssP
Tax rates: https://www.taxpolicycenter.org/statistics/historical-highes...
Low taxes sure bolster economic growth in the short term and bolster investment but they also lead to forms of societal decay like income inequality which leads to crime which leads the more demand for order which leads to cementing the accumulation of power. Left unchecked the powerful will accumulate resources out of line with their actual merit to society through the leverage of their existing capital. We're in a situation now where it's increasingly obvious how the rich are overcompensated relative to their productive output but countries race to the bottom to compete for their capital. If this race to the bottom were not happening every country would be better off taxing the wealthy more fairly but we're in a tragedy of the commons situation.
Additionally, I hear a lot from the left about modern monetary theory which essentially claims government can just print more money when it is needed and therefore collecting taxes is not necessary.
Which is it then? Perhaps they are attacking the wealthy out of political hatred and vitriol not out of a desire to help the poor or build roads.