6 ms·

> IIRC Bezos sells over $1B in Amazon stock per year to fund other things, but there is no outcry about how un-american it is that he has to "sell off his stake

by bhupy 6y ago

> IIRC Bezos sells over $1B in Amazon stock per year to fund other things, but there is no outcry about how un-american it is that he has to "sell off his stake in his own company" to pay for his hobbies/lifestyle. Sure, but that's voluntary. It's fine for me to sell my house if I have other plans. It's less fine for me to be forced to sell my own house even if I want to continue to own it / live in it.

learc83 6y ago
We already have the equivalent for houses--property tax. Every year you have to pay x% of the value of your house to the government.
- bhupy 6y ago
  The scale of property value and wealth value isn't remotely comparable. For the most part, property values are pretty low, and hence the tax that you might pay on property is also fairly low. The US State with the highest property tax is New Jersey (2.47%), and the median home value is about $330,000. The annual tax on the median home there is around $8,100 — definitely steep, but still well within reach for most families, especially those that are fortunate enough to own homes. In contrast, if you were to take an individual worth $10 billion, whose entire net worth is derived from the ownership of their stock, and were to tax them 2% of their wealth annually, they would have to somehow come up with $200 million every year to pay the tax. This is a different proposition altogether, since none of these billionaires have that much money sitting around in cash (or any other asset for that matter). They're just wealthy on paper. The only way to pay that tax would be to either liquidate their holdings, or for their corporations to pay enough in dividends to cover the tax, which is an odd (IMO bad) incentive to create for corporations in general. Even the owner of a $300 million business who owns (say) 30% of their company at a $100 million net worth would have to come up with $2 million in cash every year. Very few CEOs have that kind of cash coming in on a yearly basis, and you're essentially just creating an incentive for corporations to inflate the compensation to their founder CEOs just so that they can maintain ownership in their own company. A big reason for this disparity between the top 1% value of corporation vs the top 1% value of property is that, unlike land (which is fixed), corporate wealth is NOT zero-sum, it's created. This is a very important distinction, because a lot of the rhetoric around wealth is sometimes based around the idea that there's some fixed amount of wealth in the world, and the rich have just been stealing all of it — no the aggregate wealth has been created at historic levels. Also Federal property taxes are unconstitutional, which is why it's applied entirely at the state / local level.
  - learc83 6y ago
    You're the one who came up with a house analogy. >In contrast, if you were to take an individual worth $10 billion, whose entire net worth is derived from the ownership of their stock, and were to tax them 2% of their wealth annually, they would have to somehow come up with $200 million every year to pay the tax If your $10 billion dollar asset isn't returning you much more than 2% per year, it has a terrible ROI, and you need to divest. >corporate wealth is NOT zero-sum, it's created. Not absolutely, but the power represented by the percentage of the world's wealth one controls is finite. At the limit if I own 99% of a countries current wealth, I think it's perfectly reasonable for the rest of the citizens of that country to decide that I have amassed too much power and to rectify that by taxation and redistribution.
    - bhupy 6y ago
      > If your $10 billion dollar asset isn't returning you much more than 2% per year, it has a terrible ROI, and you need to divest. That's not how corporate ownership works. It's not about the ROI, it's about ownership in the company you founded / are running. If your goal is just ROI, then you will willingly divest from your own company, at which point your wealth is taxed as a capital gain.
      - learc83 6y ago
        For most people they start a company to make money, so ultimately it's about the ROI. They think they'll make more by controlling the company than the alternative When we are talking mutli billionaires like Bezos who may be driven by more grandiose incentives like amassing power, I think it's perfectly reasonable for the rest of us to effectively remove some of their control.
        bhupy 6y ago
        That's a pretty broad generalization, and you've basically taken what's in reality a spectrum, and characterized it by the two extremes. In reality, there are loads of people in between: founders of medium size businesses. The wealth tax is imposed on everyone in this spectrum. The capital gains tax is only imposed on those that amass the most amount of power.
- nrmitchi 6y ago
  Property tax is really funny in the context of this conversation. You are paying a percentage of the _value of the house_, which you (have most likely) taken a loan to pay for. A given average person in the US (excluding high earners) will likely be paying a property tax rate based on a value that is _actually higher than their net worth_, which makes property-tax-as-a-wealth-tax for average American homeowners actually greater than the 1.69% average property tax rate. Imagine if this was applied as a "wealth tax" on a brokerage account, but considered that you could borrow 5x your balance on margin, and then were taxed on your margin holdings.
awb 6y ago
People with $50M won't be selling their primary houses to cover a wealth tax. If they're selling their vacant 3rd vacation homes, then that's all part of the idea to gradually reduce the amount of assets that the extremely wealthy are able to hold. The idea is that wealth concentration actually reduces competition. Of course it's a slippery slope, but most things in life could be categorized that way.
- bhupy 6y ago
  I think there's a fundamental misunderstanding of where this wealth is sitting. For most of the super-rich, the wealth isn't sitting in diverse assets that can simply be liquidated (Elon Musk doesn't have a 3rd home). If you were to impose a wealth tax on Elon Musk, he would have to gradually give up his ownership in SpaceX and Tesla. > The idea is that wealth concentration actually reduces competition. But that's just not been the case. Wealth is not zero-sum. Just because Bezos is a 100 billionaire on paper, doesn't mean that I can't go and raise venture capital for my startup and succeed.
  - triceratops 6y ago
    > he would have to gradually give up his ownership in SpaceX and Tesla. That's sort of the point. Unless he's creating additional value as a CEO such that the board keeps awarding him stock or money so he can maintain his holdings, he's going to lose his ownership stake. Sounds like a tax like this would motivate him to work more not less.
    - bhupy 6y ago
      > Sounds like a tax like this would motivate him to work more not less. You frame this as though this is somehow beneficial to shareholders, but if that's the case, they can work out this arrangement themselves. Also the idea that SpaceX or Tesla would continue to be valued as highly as they are if he continuously relinquishes his ownership stake is also dubious.
      - triceratops 6y ago
HarryHirsch 6y ago
But there is external effects. Wealth translates into political power, how about people ending up disenfranchised by the excessive wealth of a small part of the people? They did not voluntarily give up their right to political participation.
- bhupy 6y ago
  > Wealth translates into political power This is debatable: https://fivethirtyeight.com/features/money-and-elections-a-complicated-love-story/ https://fivethirtyeight.com/features/money-and-elections-a-c... Consider that the representative from Bezos' own district in Washington is a socialist. At the end of the day, the greatest check on wealth's effect on political power is the fact that legislators can only win office if they can win a democratic election.
  - HarryHirsch 6y ago
    There is this paper from Princeton that makes a convincing case for the US being an oligarchy because the superrich control what gets on the ballot: https://scholar.princeton.edu/sites/default/files/mgilens/files/gilens_and_page_2014_-testing_theories_of_american_politics.doc.pdf https://scholar.princeton.edu/sites/default/files/mgilens/fi... At the end of the day, the greatest check on wealth's effect on political power is the fact that legislators can only win office if they can win a democratic election. It doesn't work like that. You donate to both sides of the aisle so you always have someone in your pockets. The famous cartoon from John Herzfeld about the "Millions behind Hitler" (this one: https://en.wikipedia.org/wiki/John_Heartfield#/media/File:Heartfield_Hitler_Salute.jpg https://en.wikipedia.org/wiki/John_Heartfield#/media/File:He...) is bullshit. German industrialists did give substantial support to Hitler, but not for ideological reason, they'd have given to anyone in power. The cash did amplify Hitler's ability to implement his ideology, though, and the non-donors didn't choose that.
wry_discontent 6y ago
There's a difference between personal and private property.

by bhupy 6y ago

learc83 6y ago

We already have the equivalent for houses--property tax. Every year you have to pay x% of the value of your house to the government.

bhupy 6y ago
The scale of property value and wealth value isn't remotely comparable. For the most part, property values are pretty low, and hence the tax that you might pay on property is also fairly low. The US State with the highest property tax is New Jersey (2.47%), and the median home value is about $330,000. The annual tax on the median home there is around $8,100 — definitely steep, but still well within reach for most families, especially those that are fortunate enough to own homes. In contrast, if you were to take an individual worth $10 billion, whose entire net worth is derived from the ownership of their stock, and were to tax them 2% of their wealth annually, they would have to somehow come up with $200 million every year to pay the tax. This is a different proposition altogether, since none of these billionaires have that much money sitting around in cash (or any other asset for that matter). They're just wealthy on paper. The only way to pay that tax would be to either liquidate their holdings, or for their corporations to pay enough in dividends to cover the tax, which is an odd (IMO bad) incentive to create for corporations in general. Even the owner of a $300 million business who owns (say) 30% of their company at a $100 million net worth would have to come up with $2 million in cash every year. Very few CEOs have that kind of cash coming in on a yearly basis, and you're essentially just creating an incentive for corporations to inflate the compensation to their founder CEOs just so that they can maintain ownership in their own company. A big reason for this disparity between the top 1% value of corporation vs the top 1% value of property is that, unlike land (which is fixed), corporate wealth is NOT zero-sum, it's created. This is a very important distinction, because a lot of the rhetoric around wealth is sometimes based around the idea that there's some fixed amount of wealth in the world, and the rich have just been stealing all of it — no the aggregate wealth has been created at historic levels. Also Federal property taxes are unconstitutional, which is why it's applied entirely at the state / local level.
- learc83 6y ago
  You're the one who came up with a house analogy. >In contrast, if you were to take an individual worth $10 billion, whose entire net worth is derived from the ownership of their stock, and were to tax them 2% of their wealth annually, they would have to somehow come up with $200 million every year to pay the tax If your $10 billion dollar asset isn't returning you much more than 2% per year, it has a terrible ROI, and you need to divest. >corporate wealth is NOT zero-sum, it's created. Not absolutely, but the power represented by the percentage of the world's wealth one controls is finite. At the limit if I own 99% of a countries current wealth, I think it's perfectly reasonable for the rest of the citizens of that country to decide that I have amassed too much power and to rectify that by taxation and redistribution.
  - bhupy 6y ago
    > If your $10 billion dollar asset isn't returning you much more than 2% per year, it has a terrible ROI, and you need to divest. That's not how corporate ownership works. It's not about the ROI, it's about ownership in the company you founded / are running. If your goal is just ROI, then you will willingly divest from your own company, at which point your wealth is taxed as a capital gain.
    - learc83 6y ago
      For most people they start a company to make money, so ultimately it's about the ROI. They think they'll make more by controlling the company than the alternative When we are talking mutli billionaires like Bezos who may be driven by more grandiose incentives like amassing power, I think it's perfectly reasonable for the rest of us to effectively remove some of their control.
      - bhupy 6y ago
        That's a pretty broad generalization, and you've basically taken what's in reality a spectrum, and characterized it by the two extremes. In reality, there are loads of people in between: founders of medium size businesses. The wealth tax is imposed on everyone in this spectrum. The capital gains tax is only imposed on those that amass the most amount of power.
nrmitchi 6y ago
Property tax is really funny in the context of this conversation. You are paying a percentage of the _value of the house_, which you (have most likely) taken a loan to pay for. A given average person in the US (excluding high earners) will likely be paying a property tax rate based on a value that is _actually higher than their net worth_, which makes property-tax-as-a-wealth-tax for average American homeowners actually greater than the 1.69% average property tax rate. Imagine if this was applied as a "wealth tax" on a brokerage account, but considered that you could borrow 5x your balance on margin, and then were taxed on your margin holdings.

awb 6y ago

People with $50M won't be selling their primary houses to cover a wealth tax. If they're selling their vacant 3rd vacation homes, then that's all part of the idea to gradually reduce the amount of assets that the extremely wealthy are able to hold. The idea is that wealth concentration actually reduces competition. Of course it's a slippery slope, but most things in life could be categorized that way.

bhupy 6y ago
I think there's a fundamental misunderstanding of where this wealth is sitting. For most of the super-rich, the wealth isn't sitting in diverse assets that can simply be liquidated (Elon Musk doesn't have a 3rd home). If you were to impose a wealth tax on Elon Musk, he would have to gradually give up his ownership in SpaceX and Tesla. > The idea is that wealth concentration actually reduces competition. But that's just not been the case. Wealth is not zero-sum. Just because Bezos is a 100 billionaire on paper, doesn't mean that I can't go and raise venture capital for my startup and succeed.
- triceratops 6y ago
  > he would have to gradually give up his ownership in SpaceX and Tesla. That's sort of the point. Unless he's creating additional value as a CEO such that the board keeps awarding him stock or money so he can maintain his holdings, he's going to lose his ownership stake. Sounds like a tax like this would motivate him to work more not less.
  - bhupy 6y ago
    > Sounds like a tax like this would motivate him to work more not less. You frame this as though this is somehow beneficial to shareholders, but if that's the case, they can work out this arrangement themselves. Also the idea that SpaceX or Tesla would continue to be valued as highly as they are if he continuously relinquishes his ownership stake is also dubious.
    - triceratops 6y ago

HarryHirsch 6y ago

But there is external effects. Wealth translates into political power, how about people ending up disenfranchised by the excessive wealth of a small part of the people? They did not voluntarily give up their right to political participation.

bhupy 6y ago
> Wealth translates into political power This is debatable: https://fivethirtyeight.com/features/money-and-elections-a-complicated-love-story/ https://fivethirtyeight.com/features/money-and-elections-a-c... Consider that the representative from Bezos' own district in Washington is a socialist. At the end of the day, the greatest check on wealth's effect on political power is the fact that legislators can only win office if they can win a democratic election.
- HarryHirsch 6y ago
  There is this paper from Princeton that makes a convincing case for the US being an oligarchy because the superrich control what gets on the ballot: https://scholar.princeton.edu/sites/default/files/mgilens/files/gilens_and_page_2014_-testing_theories_of_american_politics.doc.pdf https://scholar.princeton.edu/sites/default/files/mgilens/fi... At the end of the day, the greatest check on wealth's effect on political power is the fact that legislators can only win office if they can win a democratic election. It doesn't work like that. You donate to both sides of the aisle so you always have someone in your pockets. The famous cartoon from John Herzfeld about the "Millions behind Hitler" (this one: https://en.wikipedia.org/wiki/John_Heartfield#/media/File:Heartfield_Hitler_Salute.jpg https://en.wikipedia.org/wiki/John_Heartfield#/media/File:He...) is bullshit. German industrialists did give substantial support to Hitler, but not for ideological reason, they'd have given to anyone in power. The cash did amplify Hitler's ability to implement his ideology, though, and the non-donors didn't choose that.

wry_discontent 6y ago

There's a difference between personal and private property.