Ten billionaires reap $400B boost to wealth during pandemic | Hacker News Reader

Ten billionaires reap $400B boost to wealth during pandemic

theguardian.com

37 pointsscottbucks42 comments

A related Fresh Air episode this month: https://www.npr.org/2020/12/23/949578530/how-covid-19-became...

The guest was an heir to the Oscar Mayer fortune who actually gave up his money and stated a non-profit focused on inequality; the discussion was pretty hand-wavy about solutions, but still interesting (IMHO)

I know this is usually brought up as a clearly bad thing, but I have a non-rhetorical question: what do we do about it?

In this case, the value of the company Bezos created, Amazon, has gone up because it provided a useful service during the pandemic. If we decide we want to tax that, it seems like the only means we'd have available is to force him to give up shares in his company. Are we essentially saying a company's success entitles the government to take over ownership?

>Are we essentially saying a company's success entitles the government to take over ownership?

This implies that the company is creating wealth all on its own, with no help from the local environment. In reality, we could turn the argument around and ask why these large companies aren't paying their fair share in light of all the pre-existing effort and wealth they benefit from and the negative externalities they disseminate.

What you’re calling “fair share” has no clear definition. It’s a goal post that keeps changing with the political winds, as some politicians/voters ask for more and more redistribution. Not to mention it is fundamentally meaningless when a high income person pays far more in taxes than the average person. That does not strike me as “fair” at all.

I wasn't trying to take a position either way. I'm just asking, literally, what technical means do people imagine the government taking to tax under these circumstances beyond what they already do by taxing at sale time?

If Bezos had sold all his shares 6 months ago and bought Bitcoins, what would your argument be about him getting much richer this year? And what did he do wrong in not doing this and keeping his shares instead?

I think that would be better actually: if he had sold all his shares he would have paid a great deal of taxes on it. Instead he'll keep his shares forever, fund his lifestyle with low-interest loans, funnel some of it to offshore accounts, and find all kinds of ways to pass his inheritance to his children while paying as little taxes as possible.

Who cares? Say he pays 50% in taxes on his 200 Billion in amazon shares. That's a drop in the bucket. I mean the US spends nearly a trillion dollars a year on military/defense. How about instead of whining about people using their tenacity to achieve financial success we actually bitch about the government's horrible mis-management of funds. They don't need more money from taxes, they need to learn how to use the money they have effectively, otherwise no matter how many billionaires you tax it won't move the needle on improving quality of life for our country.

You've changed the argument. Both issues can be tackled at once, they're not mutually exclusive.

I can agree with you to some extent, but the conversation on taxing the wealthy seems like a red herring if it does nothing to solve any of the major problems we face, so let's talk about both things at once instead of just posting tweets about how so-and-so's wealth sky rockets during a pandemic. I think rather than saying I've changed the argument, I feel like the original argument omits half the story. Anyway, just my $0.02 - I do certainly believe that if we want to look at what's "fair", then the mega rich have an unfair tax advantage, but I think for the other 90% of us, we would see a greater benefit being taxed less than if the rich were taxed more, because the funds ultimately end up mis-managed. I guess I'm a little cynical.

The problem is we're currently in the worst of both worlds. When politicians promise to tax the wealthy they usually end up taxing the upper middle class: people rich enough that nobody feels bad for them but "poor" enough that most of their income gets reported on a W2.

In my opinion building the infrastructure to adequately tax the wealthy is part of the solution to building a more equitable tax base. That's a separate issue from spending our tax money wisely.

My argument wasn't to assign blame specifically, but rather question the implied premise that government are acting entitled when taxing wealth or cutting up companies, and that companies bravely create wealth with no outside help. Amazon could not have been successful without the wealthy environment it started in. In turn, that environment did not appear out of thin air and is the result of many efforts.

Please help me understand. What "negative externalities" (a euphemism generally reserved for environmental destruction) is the likes of Amazon causing here? You could say that they increase carbon footprint, but that's generally false because the amount of carbon they create is quite limited for the number of people they employ. If you're talking about worker health, that's already very regulated through the likes of OSHA and similar organizations.

I'm not the GP, but if I had to guess: the negative externalities are reflected in all of the small, traditional retail businesses that have shrunk or failed outright as Amazon has grown to capture their markets. All the people who either owned or worked for those small businesses are now out of work and have to find some other way to earn a living. If they are not able to do so, then society suffers as a result.

Similar situations have happened in the past, such as when big grocery store chains drove mom-and-pop general stores out of business. It's the price we pay for efficiency.

Efficiency is a relative term. Let's say a company is good at what it does, but then becomes a monopoly that can dictate unfavorable terms and capture the surplus, was it an efficiency gain on the whole? Let's say companies do very well, but deplete natural resources and lobby against infrastructure projects, did society gain as a result? These questions are naturally difficult to answer but there's at least more to the story than just the inductive reasoning of creative destruction fixing everything. Less efficient actors getting booted out is only a small part of the process as usually the consequences are on the second order range.

Are you calling a predictable result of vanilla capitalism, that is, some companies succeeding while others fail, a “negative externality”?

Yes. "An externality is a cost or benefit caused by a producer that is not financially incurred or received by that producer." [0]

Dominating a market so thoroughly that your competitors go out of business and must find another line of work creates a cost for society that is not borne by the winner unless they pay for it through taxation. Namely those costs include retraining, possibly monetary assistance, etc, etc.

Beyond that, companies like Amazon[1] and Walmart[2] have well-established histories of paying their workers so little that they have to use SNAP to make ends meet.

[0] https://www.investopedia.com/terms/e/externality.asp [1] https://www.businessinsider.com/amazon-employees-on-food-sta... [2] https://www.cnbc.com/2020/11/19/walmart-and-mcdonalds-among-...

> Dominating a market so thoroughly that your competitors go out of business and must find another line of work creates a cost for society that is not borne by the winner unless they pay for it through taxation. Namely those costs include retraining, possibly monetary assistance, etc, etc.

I’m not an economist and I can’t give a formal account of externalities.

But, your reasoning, I think, leads to absurdity. For example, if I start a company to sell generic, mass produced pencils for $1000 a piece then no one will buy from my company and it will be forced out of the market and my principal will be lost. Then in your words, my company failed because of “externalities” from my competitors who are selling pencils at the market rate and who then owe me money.

> Beyond that, companies like Amazon[1] and Walmart[2] have well-established histories of paying their workers so little that they have to use SNAP to make ends meet.

So eliminate SNAP?

Maybe vanilla capitalism isn't the way to go then.

Your arguing for an economic system where no producers will fail?

I am not, no.

Ok, so what policy are you intimating?

A question to ask is whether bezos could have started Amazon if, instead of being a wealthy US citizen, he were a poor non English speaking citizen of say, Madagascar, back in the 90s. He almost surely wouldn’t have.

All that is to say that despite the founder genius culture of worship that exists, success is heavily dependent on the society you are in, and those who benefit the most (through a combination of work, skill, and luck) should be obligated to provide resources to maintain that system, commiserate with their ability to do so.

Bezos’ wealth is largely tied up in Amazon stock, so obviously he would have to sell off portions of that stock in order to pay his obligations, but it’s not like he has some mandate from god to be the king of Amazon à la medieval kings. Further, given that his taxes would be paid in dollars, not Amazon stock, I’m not sure how that constitutes a government takeover.

Antitrust litigation and Caps on personal and private equity fund wealth.

Bezos and the staff at amazon are not hero's even if their platform was very useful in this pandemic; they stand on the shoulders of giants and were only able to build their platform because of the kind of economic system the US built.

There is exactly zero expectation that even if the current group is honest and decent people, that once those staff are retired, die off, or move on, that their successors won't imoverish, abuse, mame, posion, threaten, intimiate, assassinate or kill the next generation of garage geeks inventing world changing technology. Quite to the contrary, that is exactly what monarchs do, and exceedinly rich capitalists always tend to eventually become robber-barrons and monarchs. One only needs to look at the scope of E-bays' cyberstalking campaign to see the threat companies like Amazon represent.

Furthermore, the US and EU governments use antitrust only when there is no other resort for the market and when the companies' entroachment into government is not sufficient to purchase political favors in order to cement their monopoly which many brand-name companies have done.

We need to view income as a form of power and need to cap personal and private equity income as a form of power the same as any law. You can start with a ridiculous number, say .1% of GDP for a company and .005% of GDP for an individual, which comes out to 200bn annual revenue for a company and .005% for an individual. For the company, once they hit that number, they get antitrust laws enforced. For the individual, if they hit that number in net worth\asset valuation, you impliment an absolute tax (no further income can be acquired, you pay all earnings in tax). If they want to keep the game going and not pay it to uncle sam they can give it away or just not save that much and instead spend it.

This does not have to be rocket science.

I'd like that. Simple and effective.

> If we decide we want to tax that, it seems like the only means we'd have available is to force him to give up shares in his company.

I assume you mean because he'd have to liquidate profitable shares in order to cover his taxes?

If the concern is the attachment of profit-sharing to control, we already have profit-sharing non-voting shares and non-profit-sharing voting shares. The necessary division for maintaining ownership while preventing infinite untaxed wealth accumulation already exists.

So it seems to me, then, that taxing unrealized gains only equates to giving up shares in your company in the same way that taxing income equates to giving up shares in your bank account. Do the taxes cost you future return/interest? Yes. And?

Unrealized gains are temporary in nature. Next year the pandemic could stop and the value of the company could drop back to previous values. Should the tax remain in effect in that case?

You'd end up with a system where volatile companies have their investors taxed more than non-volatile ones (as fluctuations create unrealized gains during snapshot periods such as end of year, despite reverting back to the mean afterwards).

Is there a reason why investors should be taxed more for increased volatility? Should one lose their wealth to taxation more aggressively based on the degree of the stock fluctuations?

P.S.: We shouldn't mix in general wealth vs income taxation. Paul Graham wrote an insightful article explaining the fundamental difference of outcomes between them - http://www.paulgraham.com/wtax.html .

> Next year the pandemic could stop

This is a red herring because taxation doesn't need to happen annually. Many wealth tax proposals focus exclusively on gift+inheritance intergenerational wealth transfers. Anyone in favor of un-earned wealth transfers from parent to child should also be in favor of taxing the rich more to feed, clothe, and house the poor.

> Anyone in favor of un-earned wealth transfers from parent to child should also be in favor of taxing the rich more to feed, clothe, and house the poor.

But I don’t care about the poor, I care about my children, and I want to pass my wealth on to people I care about.

> But I don’t care about the poor

Ah, well, that's definitely a position.

Do you care for/about the poor because you want to end suffering for all sentient beings, or for some other reason?

But the "ten billionaires" of this article isn't about inter-generational wealth transfers... An inheritance tax is quite a different thing than a wealth tax.

> But the "ten billionaires" of this article isn't about inter-generational wealth transfers

In the long run it absolutely is. People wouldn't care about this if all the wealth went back to the poor after each billionaire dies.

> An inheritance tax is quite a different thing than a wealth tax.

What do you think is being inherited?

Taxes. We tax the wealth. Aggressively, by raising rates, closing loopholes, and pressuring tax havens.

> entitles the government to take over ownership

Yes, successful or not, yes. Companies and their services exist within society, benefiting from our collective infrastructure, and society has absolute and final power over them. They are not people, with rights. Our economic system gives them extraordinary freedom to pursue wealth. That freedom is not a right. Capitalism is not morally equivalent to inalienable human rights.

This is what happens when the state acts like your nanny. Overzealous local restrictions on businesses is what led to this. The market would have dealt with the threat of infection perfectly. But it wasn't allowed to. And it shows that any sort of government regulation, regardless of intent, will always hurt the small guy, while the Bezos' of the world will find a way to profit from it.

Yes, the stock market is being pumped up by government fiat. What’s the point?

Government fiat = taxpayer fiat

How much is “actual value creation” and how much is “irrational exuberance”? Or is there no difference?

There's nothing wrong with reaping the benefits when you are providing people with direly needed goods that local governments foolishly prohibit small shops from selling.

yah there fucking is lol. mega-wealth like bezos has accumulated is so so far beyond "reaping the benefits" of any of his own labor or imagination. that's the lives of workers he's hoarding in the form of wealth too great for him to use.

that is extremely wrong by my moral standards, both personally on him for doing it and collectively on us for allowing it.

Arguably, those workers aren't paid below typical levels and would not earn more elsewhere. Not being extra generous is key to Amazon's profitability, which ensures those workers have job security. You could argue that Amazon should let workers benefit directly from the profits, but by going public, they let anyone who wants benefit directly by buying shares.

I'm way more concerned with Bezos' political ambitions (as oligarch with his own, pretty terrible and partisan, newspaper and who knows what other sorts of lobbying).

> that is extremely wrong by my moral standards

Selling people what they want for cheap prices is extremely wrong?

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