Billionaires and Taxes

[The Great Zaganza]

Disagreed. I think.you can have a Gates or Bezos making coin, and still doing the fair thing, simply because of dealing in a staggering volume. If you make a fair $20 each a year off 50,000,000 people, your billion has clean hands.

It is completely irrelevant how you make your money, ethically or not: if there is so much wealth in the hands of a single decision maker, it completely twists the market incentives for everyone.
For a Market to work, there must be a balance between the number of Buyers and Sellers, not just their combined purchasing power. And it will always be easier and more lucrative to provide for one billionaire than for 50,000,000 individuals.

The question is simple: if many people are starving, do you expropriate the full corn silos held by the Rich, even if they earned it fair and square, or not?

 

[Thermal]

It is completely irrelevant how you make your money, ethically or not: if there is so much wealth in the hands of a single decision maker, it completely twists the market incentives for everyone.
For a Market to work, there must be a balance between the number of Buyers and Sellers, not just their combined purchasing power. And it will always be easier and more lucrative to provide for one billionaire than for 50,000,000 individuals.

The question is simple: if many people are starving, do you expropriate the full corn silos held by the Rich, even if they earned it fair and square, or not?

Well yeah, keep everyone poor and we have a level playing field is one approach.

But if a billionaire has clean money, he can expand and innovate in new ways that the broke guy can't. That can speed up development for all.

 

[Trausti]

An economic model that allows for billioniares is certanly preferable to one that doesn't. When people vote with their feet and migrate, they don't head for those countries with few if any.

 

[Ivor the Engineer]

Well yeah, keep everyone poor and we have a level playing field is one approach.

But if a billionaire has clean money, he can expand and innovate in new ways that the broke guy can't. That can speed up development for all.

Most billionaires are not innovative in any meaningful sense of the word. They mostly acquire assets, such as property and land. This leaves less available for everyone else and pushes up the price, making the loans (from billionaires) ordinary people need to buy a home and the rents (to billionaires) ever larger.

Most billionaires massively over-consume. E.g., private jets, multiple massive mansions, luxury yachts etc., and encourage everyone else to over-consume also. The environmental damage from this also makes everyone's life less pleasant and more expensive through extreme weather events and ever increasing insurance premiums (with the profits to billionaires).

 

[Ivor the Engineer]

An economic model that allows for billioniares is certanly preferable to one that doesn't. When people vote with their feet and migrate, they don't head for those countries with few if any.

I agree. Just make sure the economic system limits the ratio of median to maximum wealth.

 

[Ivor the Engineer]

What do governments tax us for?

 

[The Great Zaganza]

Well yeah, keep everyone poor and we have a level playing field is one approach.

But if a billionaire has clean money, he can expand and innovate in new ways that the broke guy can't. That can speed up development for all.

wrong.
History is absolutely unambiguous about this: extreme wealth inequality is disastrous for a society - and it is unavoidable in a system of private property and lending at interest.
Hence the need, as every historical society had fixed in its rules and laws, for regular Debt Amnesties to dramatically reduce wealth inequality at the expense of the Rich.
The other option, historically, to reduce wealth inequality is war or revolution.

We are in an extremely rare point in world history were fortunes have been allowed to accumulated for centuries in some cases, and debts, too have been upheld for centuries (see Haiti 1825). Nothing like this has every happened before, and the only reason why it is working at all is because Central Banks keep on printing money to keep the game going.

Billionaires are keenly aware of this, which is why they are building their bunkers and hiring mercenaries - which won't protect them, of course.

 

[The Great Zaganza]

BTW, it's not like it's hard to tax the super-rich: massive progressive tax on luxury goods would do the trick.
And billionaires wouldn't really mind, as long as it hits them all: the mind of a Bezos or Musk who can't stop at 100 million don't really care about how much they have, just about having more than others.
Under Reagan, we had 90%+ top income taxes - not to get extra tax income, but to make it really expensive to pay individuals more than a socially acceptable amount. It worked then, it will work now, without destroying the economy.
On the contrary - as every economist knows: $20 in the hands of 20,000,000 is a boost to the economy. $1,000,000,000 in the hands of one does nothing.

 

[Trausti]

wrong.
History is absolutely unambiguous about this: extreme wealth inequality is disastrous for a society - and it is unavoidable in a system of private property and lending at interest.

Can you name a system other than capitalism that has substantially raised the human standard of living? Did China do better under Mao or Deng Xiaoping?

 

[Trausti]

 

[Brainster]

BTW, it's not like it's hard to tax the super-rich: massive progressive tax on luxury goods would do the trick.
And billionaires wouldn't really mind, as long as it hits them all: the mind of a Bezos or Musk who can't stop at 100 million don't really care about how much they have, just about having more than others.

Bill Clinton repealed a luxury tax on yachts back in 1993 when it became obvious that it wasn't raising much money and it was cutting into yacht sales.

Under Reagan, we had 90%+ top income taxes - not to get extra tax income, but to make it really expensive to pay individuals more than a socially acceptable amount. It worked then, it will work now, without destroying the economy.
On the contrary - as every economist knows: $20 in the hands of 20,000,000 is a boost to the economy. $1,000,000,000 in the hands of one does nothing.

The top marginal tax rate was 90% in the 1940s and 1950s; Kennedy lowered it to 70%, and Reagan lowered it to 50% and briefly 28% before it settled in at 37%.

 

[Ivor the Engineer]

Can you name a system other than capitalism that has substantially raised the human standard of living? Did China do better under Mao or Deng Xiaoping?

Why is taxing extreme wealth more and work less not compatible with capitalism?

What doing so is not compatible with is what people who have hoarded wealth want and they are very good at making sure you're brainwashed educated into thinking what they believe are in their interests are also in yours.

 

[Hlafordlaes]

Except for the Covid-related recession, iirc all recent recessions have started when consumer credit maxed out and consumption fell off strongly. It may also be observed that the workers at Walmart and other establishments often need public assistance to make ends meet. Meaning their total consumption is likely below their natural level of consumption if not living from paycheck to paycheck, constantly tripping over unexpected expenses and health crises. Add stagnant minimum wages. Capitalism is transactional, and it needs wealth to circulate to function well, and functions poorly, gee, when everyone is broke.

Keynesian management of aggregate demand, along with compatible monetary policy, is the only way to manage such debt-induced recessions and sustain growth, doing so by making a wealth transfer, which restarts the transactional economy. Wealth sitting idle does nothing, and without such demand management, wealth has worsened investment and income prospects. Bottom line is, a minimum low tax rate can be compensated by the higher levels of profits on the resulting transactions. Wealth transfers are necessary and healthy for capitalism. To refer to them as "socialism" is to repeat an oligarch talking point useful for political narrative, but hardly sound macroeconomics. Said differently, if that is socialism, then it is a part of healthy capitalism. (What is not is communism, viz, state ownership of productive assets, extreme wealth and political power concentration in the same hands, game over.) BTW, raising wages is one way to transfer wealth, perhaps one of the least costly in terms of bureaucracy, and so the best.

The underlying and bigger issue facing capitalism in the West today is that the above dynamic is about to meet up with steady population decline (the major country without major concerns just yet is the USA, ironically owing to immigration). At some point, ameliorated somewhat by increased value add in products (innovation) and therefore higher pricing and sales, the sales forecast for many enterprises will become permanently negative. Combine that with deflation, and there is a harmful feedback loop. This will also coincide with a net generational debt transfer in place of a wealth transfer. (TL;DR: No wonder no one cares about school shootings. They are mercy killings. /s)

Yes, tax the bastards. It's good for them. As for for high tax rates on upper brackets, also why not. That level of wealth translates poorly as demand, and the economy will eventually reach a limit in economies of scale anyway, meaning a limit on healthy investment.

But the best argument for taxes and healthy wealth transfers is that companies and independent professionals are chartered or licensed by the public to provide a service via their activity. The public, along with its government, both provide and embody the marketplace itself. Anyone and everyone operating in that market has a duty to sustain its health, provide for its smooth and fair conduct, and obey its laws.

It's our market; we make the rules. Bub.

 

[Trausti]

Why is taxing extreme wealth more and work less not compatible with capitalism?

What doing so is not compatible with is what people who have hoarded wealth want and they are very good at making sure you're brainwashed educated into thinking what they believe are in their interests are also in yours.

Elon Musk is the wealthest person in the US. It's due to all the businesses he started and his stock (from those businesses). That wealth did not exist 30 years ago - he created it. And many people have benefited from that. He did not steal anything from you. Instead of imagining all the ways you can have government take from people who are more successful than you, perhaps imagine why, if wealth is deemed so important, those on the political left seem to never offer ideas on how to create it.

 

[Hlafordlaes]

Elon Musk is the wealthest person in the US. It's due to all the businesses he started and his stock (from those businesses). That wealth did not exist 30 years ago - he created it. And many people have benefited from that. He did not steal anything from you. Instead of imagining all the ways you can have government take from people who are more successful than you, perhaps imagine why, if wealth is deemed so important, those on the political left seem to never offer ideas on how to create it.

Wealth creation happens at multiple levels, from small farms to big labs. Much of the dot.com and onward booms are based on new technology. New waves of technology rely heavily on basic science, which in turn largely relies on universities and public funding. That is what informed our startup's patent application in materials science, which, if funded and put on the market, provides huge savings in certain industries (not a request for expressions of investment interest). The many steps in our new processing method are derived from published research results, typical of most innovation, which usually consists in the next logical step in some system via application of a new research insight. And like all innovators, we, too, rely on there being the vast infrastructure that is "the market"*. No idea is an island.

What one consultant said over year ago to me, a lone amateur at the time, is apropos. "When all the world's engineers and scientists were trying to create a flying machine, it was two bicycle repairmen who made the first airplane. Go for it!" Knowledge and gumption, not super wealth, are the true fathers of invention.

Musk is like a blinding light of wealth, such that it is easy to lose sight of the basics.

ETA: TL;DR: I'm on the Left. I know about wealth creation. Gimmeabreak.
_________
* See my prior post regarding why that vast infrastructure, the market, actually requires taxation and wealth redistribution to function properly, and that any innovator, including Musk, is as dependent on others, via that market, as anyone else. No man is an island.

 

[The Great Zaganza]

1. He did not create any wealth, he managed to hype some companies to the point where the government gave it special privileges and free money, and investors overvalued them to levels completely divorced from reality.
The only real money im Tesla and SpaceX and Starlink is Taxpayer money and unpaid wages
2. Regardless on how he got the money, it is now objectively bad for the economy and society that he has it, and it is of great importance for the stability of the country that most of it is taken away from him as soon as possible
3. If you believe at all in Democracy and the concept of the separation of power, the richest man shouldn't be in charge of large parts of the most powerful country

 

[Ivor the Engineer]

Elon Musk is the wealthest person in the US. It's due to all the businesses he started and his stock (from those businesses). That wealth did not exist 30 years ago - he created it. And many people have benefited from that. He did not steal anything from you. Instead of imagining all the ways you can have government take from people who are more successful than you, perhaps imagine why, if wealth is deemed so important, those on the political left seem to never offer ideas on how to create it.

How much wealth creation do billionaires suppress to maintain their dominance? For example, it's very common for companies to file patents for ideas they have no intention of developing solely to prevent anyone else challenging them. The development of electric cars and renewable energy was delayed by decades because the ultra-wealthy in the fossil fuel industry knew what they were being told would be bad for them and suppressed it for as long as possible. When that no longer worked they employed FUD tactics (as used by the ultra-wealthy in the tobacco industry) to delay the inevitable. On balance the ultra-wealthy do far more harm than good. The reason people such as yourself are apparently fooled is because they have the resources to buy politicians, broadcast "their" successes and suppress or disown most of the damage that they do.

As for the personal contribution to wealth creation billionaires make, it is overstated and often misattributed. If I fund someone to do a PhD no one thinks I created new knowledge. Yet when Musk pays designers, scientists and engineers to develop stuff somehow he gets the credit.

I suspect, given his numerous demonstrations of low emotional intelligence, Musk's main contribution to the Tesla was the whoopee cushion function. Hilarious to all 10 year olds. It should also be noted that all his successful ventures have been in partnerships (which have often ousted him) or those that get bungs from government. Even Tesla is being propped up by tariffs. His purchase of Twitter is a good example of what happens when Musk is left to run a company by himself. DOGE is the latest example of his reckless and incompetent approach.

As for who is more successful, me or Musk, I am far more successful at life than Musk, who appears to becoming ever more mentally deranged.

 

[ahhell]

Why is taxing extreme wealth more and work less not compatible with capitalism?

What doing so is not compatible with is what people who have hoarded wealth want and they are very good at making sure you're brainwashed educated into thinking what they believe are in their interests are also in yours.

Wealth taxes are notoriously difficult to collect on and tend not to actually raise that much money, its why less than a dozen or so nations actually have a wealth tax. More have inheritance taxes which are probably better. Easier to collect on.

The other thing about the super rich like Bezos et al, a lot of their wealth is stock in their companies, basically Schrodinger's wealth. It not actually wealth until its sold and what it's worth could vary considerably. This is particularly true of Musk as Tesla is clearly over valued and has been for years, and what the hell is Twitter actually worth?

 

[ahhell]

Too late to edit my previous post but there's discussion about wealth taxes on a recent More or Less podcast.

BBC Radio 4 - More or Less: Behind the Stats, Could a 2% wealth tax raise £24bn?

Plus did trillions disappear from UK pensions? Why does the UK have a lot of old housing?

www.bbc.co.uk

 

[The Great Zaganza]

Taxing the Richh is very easy, and everyone knows it.

The problem politicians see is that they will just take their fungible assets and move to a tax haven if you start taxing them. Thus the fear of wealth flight causes country to race to the bottom when it comes to taxing the rich. This is unwarranted, because the assets remain invested in the country, and since they pay so little taxes anyway, nothing is really lost.

What is really going on is that politicians like being wined&dined by the superrich and therefore don't want to piss them off.