Make Billionaires Pay Act
cnbc.com
cnbc.com
I also imagine these billionaires will find some loophole or simply sue the government and keep this in the courts for years while they figure out a way to nullify it.
Honestly, this whole thing is a publicity stunt because the backers all know it has no chance of ever happening. Then they can pretend they care, and that they tried to do something. While in reality, they are doing nothing and never had any plan to do anything achievable.
Does Bernie not realise that stocks aren’t liquid assets that have already been sold? If he buys a house and it increases in value, or the government doesn’t demand that he sell the house or take out a mortgage and pay 60% of the increase as tax. The governments waits until he sells the house and then taxes the income. If it’s okay to tax people whose assets increase in value without liquidation then shouldn’t every baby boomer sitting in a million dollar home that they bought for 10k or whatever be forced to pay a tax as well?
Yes.
Bernie owns a range of houses, and my understanding is his capital gains will be levied equally on any/all of them. Which is fair.
Some people like collecting houses, some like collecting stocks, some like spending on holidays. Differential taxation is an inefficient activity that conjures very perverse incentives.
"Never reason from a price change."
With stocks it is the same. If you own a wide-range portfolio as an investment, this could be taxed of course, but with the people listed in the article, they own those shares not because they miraculously got rich and bought these shares with their money, they got the shares because they founded and built their respective companies. They hold to their shares not for capital gains, but to keep control of their companies. In this respect it is very much like the house you own.
Not to mention the disruption to the stock market, if suddenly stock in the value several hundred of billions of dollars get sold - this would especially hit the non-billionaires, that is everyone who has some savings (for retirement for example).
Suppose you're the founder of your company. You sold a 40% stake to investors to raise capital to get started, but it's still 60% yours, so you have control of the company.
If you're required to liquidate your shares to pay the tax on them, you lose control of the company -- which in turn could cause the stock to crash because investors trust the founder more than the random MBA they can expect mutual funds to install.
And stocks can be volatile. If the company is worth $50B in June, $100B in December and then $50B again in January, did the owner ever really have that much wealth? Do they get the money back from the government next year? Do they get the shares back?
Meanwhile nobody is even bothering to do the math on this from the perspective of the government. Because the government can borrow money at close to 0% interest, while index funds have been giving >4% average annual returns, which means taking the money today instead of borrowing it today and taking it whenever they actually sell the shares (including the share appreciation in the meantime) would require the other taxpayers to pay more to make up for the loss of government revenue that would cause.
It would behoove them not to scare away the tax cows that pay for their schools, medical care, infrastructure, and create the economy that allows even the very poor to enjoy lives that are the envy of much of the rest of the world.
There's enough land and natural resources in the US that not only can all of our citizens live, but there is so much extra besides that over half of all taxes are paid by 5% of our population.
Considering that right now many people are homeless, jobless, or without health insurance, we need to seriously consider the balance of power and wealth in the US. A better and more equitable society would address those problems in strong and comprehensive ways. If building that society scares away a billionaire or two, so be it; the US has enough wealth even without them.
Seen through that lens, applying higher statutory rates and more complex policies isn't driven by the realistic expectation that those rates will be paid in full. Rather, as some number of the very wealthy will fail to perfectly adjust to the new regime, even small increases in the rate collected are substantial increases in the absolute dollar amount.
Not to mention the "trust" aspect for those who are wealthy. It will guarantee preemptive shielding and other arrangements which ultimately just add further mud to the US economic system. Not worth a fistful of dollars to be frittered away on general expenditure anyway. IMHO.
Because there has to be a solution. Inequality is reaching levels where it's dangerous. No, it is not good nor stable for 1% of the population to control 99% of the assets, and we'll get there soon enough.
Redistribution will happen either by law or by knife and gun. This is not about who earned what or what was inconvenient for XYZ person. This is about the citizens of the country, supposedly equal under law, having no chance whatsoever of ever owning an equal part. It's about aristocracy, basically. And do we all remember how aristocracies end?
Real life is not some computer model. In real life, if a father of 6 cannot feed or house his children he will not be satisfied by you saying that "well, Jeff Bezos outcompeted you!". There will be a redistribution. Our only choice is how it happens. This is an attempt.
Basic income via the printing of money. What do you think those $600 checks were?
Inheritance tax. Make education at public schools and universities free. Reform government for greater efficiency.
Hi Weimar Republic. Hi Venezuela.
The question is, have you? Because inflation is precisely the biggest problem when it's applied. It works on certain scenarios but it's not a long term solution.
Any solution should be addressing these root causes while trying to not lose many of the great benefits.
One aspect should be creating a basic living standard.
Another aspect should be maximizing human potential. This isn’t just education but also opportunity. This isn’t just STEM but other human potential: music, art, etc...
The last issue is how to pay for it. Progressive taxation makes sense as does a luxury tax. An inheritance tax makes sense because it still motivates individuals to produce.
The thing is we can't relay on monetary policies that have never worked and made things worse.
But there is a very big problem and it will need to be addressed. Sanders is doing what he can. Maybe this is not the best approach but is doing nothing better?
Yeah, this act sucks! So let's make a better one. I just hated your nit picking attitude.
The real problem with our tax system is that equity capital skirt's the income tax, because it is illiquid. Jeff Bezos doesn't pay almost no income tax because the top tax bracket is too low. He pays very little income tax because he doesn't sell his stock, and that allows it to compound, tax-free. The tax-free compounding provided by long term asset holding in the United States is an incredible gift to capital, that labor does not receive - labor is paid a salary, upon which they are taxed every year. People who own capital assets that they do not sell receive the full 'time value' of their money, which adds up to an enormous amount if held over many years.
Address this issue, and you will address a major source of inequality. While you're at it, get rid of the tax break for 'long term capital gains', its based on some paternalistic false premise that "long term" investing is somehow good.
These things won't get rid of inequality, but they would meaningfully reshape the process that produces it, and they would do so in ways that preserve fundamental notions of fairness and property, in a way that Bernie Sander's proposal does not. We don't want a government that simply randomly expropriates property from targeted slivers of the population who happen to be unpopular at the moment. We want a government based on principle and system design. The real problem with Sander's proposal isn't that it's a stunt. It's that it contravenes principles of good governance. It's a hack, not a principle.
Maybe Bezos, et al up their support of universal healthcare, etc.. Maybe they willingly donate money to the U.S. govt above normal taxes. (Can we just setup a crowdfund so elites can donate and get applaud for helping out the country, their narcissism is appeased, and we get to eat, buy clothes, have a roof, and get healthcre).
It is money vs. society. If you can earn more money for yourself by impoverishing others, but the total wealth and stability of society goes down, is that a good thing? No I think it is not. There's a conflict here. Society vs. money.
This is a transitional phase and I believe money will be gone in 20 years, replaced by some kind of "shares in society" or something. I have ideas about how that works but there's no doing nothing. You can't have billionaires living in castles surrounded by millions of starving poor. It's not about "merit" it is about human life. Life will win every time.
Buybacks as part of acquisitions, using the acquired companies resources to take complete control for less than its market value, are a ridiculous accounting trick which should never have been permitted.
Buybacks combined with tiered stock are also pretty fraught.
Buybacks by existing leadership in pure-common-stock orgs are fine.
Imagine all the NASDAQ founders selling 50% of their shares. Who would buy them? The price would sink and they wouldn't be that wealthy any more and the government wouldn't get any money.
Higher interest rates.
There are already the tools to deal with billionaire's wealth. How these companies aren't broken up for being monopolies is beyond me.
Imagine a world where there are 5 Amazon's rather than one. Suddenly there's a cap on how much one person can control.
Many ancient cultures had at least this level of inequality and ruling stability. The Ptolemies made something last for longer than the US has existed, e.g..
(I agree that this is a dumb law, taxes should not be a one off thing. If they need to be raised, do it but for all)
VAT would collect sales tax from everybody including immigrants, so nobody can claim they're mooching. Could make VAT more for non-citizens.
But "stock isn't liquid money!" comes up every time anyone mentions wealth taxes, and I think it's worth digging into this a bit. Stock ultimately derives its value from the attached ability to vote on what the company does (a policy of "maximize profits, buybacks+dividends" is so popular that it's usually implied). So when socialists go around talking about spreading control of the means of production around, stock is what that control looks like in our society.
So if we're talking about a mass sale of stock reducing the price, that implies somebody is buying the stock at that new lower price. It's not the billionaires, since they're in the middle of trying to sell all their stock. But no stock is being destroyed either; it has to be going to someone with less net worth, and thus less concentrated ownership of stock. Which is, again, the thing that socialists are trying to do.
(Now, as a market socialist, I can think of better ways to do this than forcing the sale of a bunch of stock and hoping it gets spread around more equitably. I did say start with "It's not a very well designed bill.")
And what prevents another entity from buying up a huge portion of the stock using a different company? This new entity could be controlled by some other billionaire or group and you gained no diversity at all.
I bet it would be billionaires buying the stock, actually. Just not US ones.
It wasn't a wealth tax, as understood today.
It's really about who has power to control the economy of the country: private individuals or the banks and the government. It used to be way over on the private individual side before the fed and the income tax flipped power over to the banks and the government side. Previously, you had Carnegie and Rockefeller running very large portions of the economy and the banks and government were much less powerful.
Today it's govetnment borrowing and the banks that make most of the money. Yes, the banks create money. It's called fractional reserve banking and the money multiplier and it's all legal all totally out in the open. Keynesian economists will tell you that the banks are the most important organizations in the entire economy because they create money to increase aggregate demand.
Meanwhile in China, the government prints money whenever it needs it and tells the banks what to do and who to lend to and they haven't had a credit bust since the 80s, even though The Economist has regularly been predicting one since the early 90s.
Not all companies and stocks are doing well. Just look at airlines, retailers, etc... They are the losers in the new economy.
The wealthy pay an incredible amount of tax - Cuomo just said that a single percent of New Yorkers pay half of the entire tax take.
That may be good and just - it may even be right to increase that share - but to slap a retroactive tax on their POST-TAX wealth is heinous.
This is before we get into practicalities... if I recall correctly, nonpartisan modelling of Warren's wealth tax plan would've levied tax rates over 100% on certain people, and been incredibly inefficient (the cost of collecting the money, all said, negated a good portion of the takings... much more than any existing tax targeted at the wealthy does).
Class war greed. It should be opposed. IMHO.
I am one such person, though in a different country, who has felt these stocks are the safest place for a good chunk of my portfolio.
What alternatives are there? There's no argument for taxing the heck out of people who lead incredibly successful (and safe, for investors) companies, just because they have managed to make that situation so.
What is Fed Open Market Operations? What is unlimited QE easing? Do you know how big the Fed balance sheet grew to prop up stocks?
Billionaires don't have the physical resources required. Which means you either get to tax somebody else as well, or you get inflation.
A nation with its own currency has no need of the money of billionaires. In fact it makes them out to be more important than they are to suggest you do.
Beardsley Ruml explained this decades ago - Taxes for Revenue is an obsolete concept: http://home.hiwaay.net/~becraft/RUMLTAXES.html
Look after the unemployment and the numbers will look after themselves.
No it's not. It's a totally arbitrary proposal aimed at a small portion of the population. Why does it target billionaires? Why not all shareholders? Why does having the foresight to invest in quality businesses mean you should be taxed so highly when it pays off? Are they going to pay back 60% of losses to those billionaires who were holding shares that have gone down?
> will remain extremely wealthy after the tax is levied
But may loose substantial control of the businesses they're invested in. Musk would need to liquidate over half his Tesla shares.
Forcing Musk to sell off a substantial part of his stock could disrupt the stock value significantly and of course means, that Musk influence in the company would be significantly decreased. The control could end up with "investors" and financing organisations, which have ruined more than one company already.
How is that a bad thing? That would decentralize control of these companies. That alone would be a good thing.
For instance, someone or some group whose reason is blurred with anger and venom will do worse with such power. Instead of creating value, they will destroy it.
It is better to focus on creating fair conditions for competition and basic standards than dictating results of competition.
You spoke above with venom and hate instead of reason. That is the worse person to trust with power.
And also, it isn't a "lottery". This isn't money invested into random stocks for gains, this is the share of the company owned by the founders which still run the respective companies. This is wealth built by creating those companies not wealth that can be spent.
https://www.vox.com/future-perfect/2019/2/27/18243183/bill-g...
It is much better to aggressively enforce anti-trust than to increase the taxes afterward on the CEO's who benefited from such lax enforcement.
> [Q] ”What do you think the greatest threat to humanity is at this moment?”
> Gates: “There are some things that aren’t likely but we should worry about — nuclear bombs and bioterrorism (from nation states or terrorism), or a big pandemic. This is the 100th anniversary of the Spanish flu [which killed 50 million people] and if it came back the amount of travel would make it spread faster than it did last time.
Actually if I had to choose, I'd pick the solar panels. At least it would provide some work and it wouldn't turn to ashes most US companies.
Jeff Bezos through Amazon and the Walton family through Wal-Mart did more to help me and my family, and I suspect most Americans, get through the coronavirus than Bernie Sanders, Ed Markey, and Kirsten Gillibrand.
Businesses that solve the massive logistics problems of operating in a pandemic and provided needed goods to consumers should be rewarded. I am not any worse off that Bezos' and the Walton's stock value increased because of this. In fact, I am better off.
If they had been broken up due to anti-competitive behaviour years ago, you'd be much better off as can be easily verified historically in similar markets where this happened.
(TIL "Eat the rich" is attributed to Rousseau, not to Wells' Eloi/Morlock dynamic. I am disappoint. "Tax the rich" is apparently a 3rd rail in US politics. "Feast the rich", on the other hand, would use the carrot of exclusive membership — what Capitalist could resist such an incentive?)