October 29, 2021 - 11:49am
In America, millionaires and billionaires aren’t just tolerated, they’re celebrated. But that could be changing.
Thanks to surging stock values and other factors, the rich are now getting richer at truly jaw dropping rate. Earlier this week it was reported that Elon Musk made $36 billion in a single day.
Based on figures from Americans for Tax Fairness, charts like this one are being widely shared on social media:
Of course, these are estimates and they can be disputed. The finances of the ultra-wealthy are typically complex — making it very hard for outsiders to arrive at a definitive figure. But with stock market and other asset values rising, any well-advised billionaire will be getting massively wealthier — and doing so in the midst of a devastating pandemic. Americans for Tax Justice calculate that America’s billionaires have grown $2.1 trillion richer since the March 2020.
The political backlash is now underway. On Wednesday, the Chair of the Senate Finance Committee, Ron Wyden, unveiled his Billionaires Income Tax, that would target billionaire holding of traceable assets like shares. Under the proposals, the tax would be payable immediately instead of being delayed until the assets are cashed-in.
In theory, this could raise hundreds of billions of additional revenue for government. However, it’s not exactly a programme of total expropriation. According to the economist Gabriel Zucman, this is the impact it would have on the wealth of the 400 richest Americans as a percentage of national GDP:
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SubscribeRealize that the proposed tax on unrealized gains is probably unconstitutional and is certainly totally inappropriate. Not only will be billionaires find loopholes and ways to get round the tax, but the downstream consequences may be incalculable. After all, once established for billionaires why not to millionaires, and then ultimately to anybody who holds any stock at all.
But the fundamental problem is that the proposal entail double taxation. Let us say one has to pay 1% tax on unrealized capital gains. First, one would probably have to sell stock every year to be able to pay that which would not only rapidly deplete one’s unrealized capital but more importantly would involve also paying additional capital gains taxes on stocks that one has sold to come up with the cash to pay the “wealth” tax. Second, it fails to take into account that unrealized capital gains are vaporware. The stock market doesn’t remain constant. Yes it goes up, but it also goes down. You can bet that there won’t be rebates if one’s unrealized gains drop by 50% in a year. But they certainly can do so – all one needs to do is look back to 2008 and for that matter to Feb/March 2020. Third, such a tax is simply unamerican. It is completely unreasonable for the Government to make money off the risks made by others – i.e. the government takes all the money but bears none of the risks. The same is also true of capital gains taxes which in the US, in contrast to the UK, are not indexed for inflation. That’s important because stock held for long periods of time and then sold may appear to have made massive gains but in fact when indexed against inflation represent only very meagre gains.
Lastly, the politics of envy which is all that this is, is simply destructive. Sure Elon Musk is unfathomably wealthy. But he deserves every penny, and when it comes to electric vehicles he is light years ahead of all the major car manufacturers. The Tesla is a combination of not only superb engineering (with 0 to 60 mph is less 3 sec) but the hardware/firmware/software controlling the car is astounding. Right now, there is only assisted driving which is very helpful on long freeway (motorway) trips, but it wont be long before driving will be on almost complete auto-pilot. And Musk is leading the way. Similarly he is leading the way in terms of rocket development and ultimately space exploration as NASA and the US Government have clearly failed to live up to their initial promise after the first set of Moon landings and space shuttle trips.
So let Musk keep his billions. He puts it to a lot better use than any Government ever could, and in the process advances mankind (which is certainly more than can be said for the current Biden administration).
There is a great video series on Musk at his spaceX site here.
https://www.youtube.com/watch?v=t705r8ICkRw
i think its very illustrative of the difference between private enterprise and government projects. When Musk talks about the cost of lift/weight to cost ratio, the ambition is to make space travel as cheap as possible, to make it accessible to as many as possible ( not necessarily everyone) was that even an ambition under NASA, they didn’t need to make it cheaper because they had effectively infinite money to accomplish their goals. That isnt to knock NASA’s historical achievements only to say, where are they now? they are effectively going to be a regulator for spaceX or Virgin or Bezo’s one.
“Sure Elon Musk is unfathomably wealthy. But he deserves every penny, and when it comes to electric vehicles he is light years ahead of all the major car manufacturers.”
His money is mostly money given to him by Government and all manner of weird devices like C)2 Credits. He loses money on each car but makes profit on them by the C02 credits….
I think him the least evil of the tech monsters though. Zukerberg, Google, Amazon, Dorsey, Gates, are all totally tied up in creating the global surveillance state which will enslave us all. They are the Dogs the Pigs (Global Elite) use to maintain their total power in Animal Farm…
“If she herself had had any picture of the future, it had been of a society of animals set free from hunger and the whip, all equal, each working according to his capacity, the strong protecting the weak […] Instead – she did not know why – they had come to a time when no one dared speak his mind, when fierce, growling dogs roamed everywhere, and when you had to watch your comrades torn to pieces after confessing to shocking crimes.”
There’s a load of “Debunking Elon Musk” -type videos on YouTube.
In what way does the existence of the ultra rich make the rest of us poorer?
Attempts by governments to extract more money from them inevitably seem to lead to more squeezes on ordinary responsible savers
“In what way does the existence of the ultra rich make the rest of us poorer?”
BECAUSE THEY HAVE DOUBLED THEIR MONEY IN THE LAST 18 MONTHS BY REDISTRIBUTING THE MONEY FROM THE MIDDLE CLASS AND WORKERS AND POOR TO THEMSELVES !!!!!!!!!!
They are stealing your wealth if you are typical Middle Class, and here is how it works:
They get the government, which they own as they are ‘The Donor Class’ and finance all the campaigns, etc, like Zucker gave $450,000,000 YES, half a billion to defeat Trump – that is how they roll, Plus they make sure every politico who does their work becomes filthy rich – think of every one of them, Pelosi worth over two hundred million, Blair, Clintons, Miliband… all of them…
Sooo – The Fed, BoE, ECB, all print TRILLIONS, which can never be paid off – so they must use Inflation to make it melt away. Inflation is a TAX. It eats your savings, pensions, spending power, and pay. The Trillions ended up in the filthy Rich pockets where they keep it by getting VAST loans for no interest that they buy assets with, which inflation will melt the debt away leaving the free assets – appreciating and dividend paying assets!!!!! That is on top of just getting the money handed to them – by QE and all the issuing of $ mostly goes right to them…
Sooo – the Corrupt Government prints $10,000,000,000,000 into existence by creating debt, which 90% goes to the filthy rich – then it is all paid back by the Inflation Tax inflation away the working folks savings and pay and spending power to erase the debt, See????
YOU PAY FOR EVERY CORRUPT 10 TRILLION THEY HAVE STOLEN BY THE COVID RESPONSE – YOU ARE POORER, THEY RICHER!!!!!!!!!!!
You silly economically illiterate sheep watch some good education, or just stay sheep and get eaten…. https://www.youtube.com/watch?v=-WyEPltVWMM
The rich like Bezos are only getting richer to such extremes is because of globalisation. Big companies can get exponentially bigger, and can get so big they can destroy any competition and dictate to governments. It’s the inevitable monopolisation that often occurs, just on a global scale. Crony capitalism, state subsidisation, lobbyists, backhanders, lack of competition. It always happens, whether it’s private or state run, because power corrupts
When you say ‘get richer’ you mean in terms of unrealised valuations. This is not really the same thing, someone like Musk is more of a paper tiger as the cashflow woes of Tesla demonstrate.
“someone like Musk is more of a paper tiger”
OK, that is today’s crazy post. He is one of the worlds most dangerious Tigers – he may be less evil than the other most blood-lusting and powerful Tigers, but he is one of them!
I’m all in on replacing all intra-country wealth transfer taxes with mark-to-market, algorithm-based wealth taxes and the end of central banks.
I look more nostalgically at the French Revolution every day.