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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 id

by 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
      > You frame this as though this is somehow beneficial to shareholders, but if that's the case, they can work out this arrangement themselves. I was showing how a wealth tax need not necessarily discourage endeavor and industry, as is commonly alleged. > 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. Why? I thought they were valued highly because of Musk's leadership, not ownership. Is that not the case? Even without his ownership stake, he can continue to be the CEO as long as the companies do well.
      - bhupy 6y ago
        > I thought they were valued highly because of Musk's leadership, not ownership. Is that not the case? Even without his ownership stake, he can continue to be the CEO as long as the companies do well. That's not how publicly traded companies work. If a sufficiently motivated activist investor accumulates a large enough ownership, they can decide to fire Elon Musk — and there are enough people that would like to see this happen on account of his crazy tweets. That's the crux of the argument, that no matter how badly activists may want to remove Elon Musk as CEO, he's safe as long as he maintains his stake. A forced divestiture of that threatens his ability to maintain his leadership in those companies, and that's arguably not in the best interests of many existing shareholders today.
        triceratops 6y ago
        > If a sufficiently motivated activist investor accumulates a large enough ownership, they can decide to fire Elon Musk If Musk is a value-add, they'd be tanking the value of their own holdings. If he's not, then why should he keep his job?
        bhupy 6y ago
        Again, at the risk of explaining the basics of how publicly traded companies work...activist investors may disagree with other shareholders as to whether “Musk is a value add”. It’s not some objective truth, it entirely depends on what the majority shareholder thinks. Today, that happens to be Musk himself. Under a wealth tax, that’s no longer true.

by awb 6y ago

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
    > You frame this as though this is somehow beneficial to shareholders, but if that's the case, they can work out this arrangement themselves. I was showing how a wealth tax need not necessarily discourage endeavor and industry, as is commonly alleged. > 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. Why? I thought they were valued highly because of Musk's leadership, not ownership. Is that not the case? Even without his ownership stake, he can continue to be the CEO as long as the companies do well.
    - bhupy 6y ago
      > I thought they were valued highly because of Musk's leadership, not ownership. Is that not the case? Even without his ownership stake, he can continue to be the CEO as long as the companies do well. That's not how publicly traded companies work. If a sufficiently motivated activist investor accumulates a large enough ownership, they can decide to fire Elon Musk — and there are enough people that would like to see this happen on account of his crazy tweets. That's the crux of the argument, that no matter how badly activists may want to remove Elon Musk as CEO, he's safe as long as he maintains his stake. A forced divestiture of that threatens his ability to maintain his leadership in those companies, and that's arguably not in the best interests of many existing shareholders today.
      - triceratops 6y ago
        > If a sufficiently motivated activist investor accumulates a large enough ownership, they can decide to fire Elon Musk If Musk is a value-add, they'd be tanking the value of their own holdings. If he's not, then why should he keep his job?
        bhupy 6y ago
        Again, at the risk of explaining the basics of how publicly traded companies work...activist investors may disagree with other shareholders as to whether “Musk is a value add”. It’s not some objective truth, it entirely depends on what the majority shareholder thinks. Today, that happens to be Musk himself. Under a wealth tax, that’s no longer true.