Wednesday, August 12, 2020

Dem. Senators Introduce A Billionaire's Tax

Senators Bernie Sanders, I-Vt., Ed Markey, D-Mass., and Kirsten Gillibrand, D-N.Y.  have come up with a tax that I think is a first of its kind.  H/T to Legal Insurrection with a link to CNBC.  

Top tech leaders and other billionaires would be forced to hand over billions of dollars in wealth they’ve gained during the coronavirus pandemic under a new bill introduced by Sens. Bernie Sanders, I-Vt., Ed Markey, D-Mass., and Kirsten Gillibrand, D-N.Y.

The “Make Billionaires Pay Act” would impose a one-time 60% tax on wealth gains made by billionaires between March 18, 2020, and Jan. 1, 2021. The funds would be used to pay for out-of-pocket health-care expenses for all Americans for a year. As of Aug. 5, the bill would tax $731 billion in wealth accumulated by 467 billionaires since March 18, according to a press release. If passed, the bill would tax billionaires on wealth accumulated through the end of the year, however.

Ignoring the theater-of-the-absurd, laughable statement that it's a one time tax, I don't think the Senate has the power to do this, but I'll get back to that in a minute.  

To begin with, the whole proposal reeks of the absurdly childish view the Stupid Party voices all the time that billionaires are Scrooge McDuck, swimming and playing in vast piles of gold coins and other material wealth.  Or maybe they think every billionaire is Smaug the Dragon from the Hobbit stories.   One of the Tweets I read while researching said, "If  you can spell hors d'oeuvres without checking, you need to have your taxes raised."  (Almost as dumb as the twit in the first link in this paragraph)  I've done inches of column space on this.  

Far from this idea, the vast majority of the wealth of the handful of American billionaires isn't in a savings, checking or money management account and it certainly isn't in 90 foot deep piles of money.  That wealth quite literally doesn't even actually exist.  It's a notional value on paper of what all their assets add up to.  The article lists examples, saying Jeff Bezos would pay $42.8 billion, Elon Musk would pay $27.5 billion, Mark Zuckerberg would pay $22.8 billion, and the Walton family would pay $12.9 billion.  But that's not based on income; those numbers are based on the projections of what their stocks and other investments would net for this year.  There's an age old saying about investments in the stock market that works when markets are up or down: you only make (or lose) money when you sell. 

First off, I don't believe the Fed.gov has the authority to tax wealth.  That's not part of the 16th Amendment that authorized an income tax.  Second off, and with all due respect to CNBC for their projections, no one can know how much those assets are worth until they're sold.  It doesn't matter if the stock price on January 1st, 2021 (the time at which this bill declares what they're worth) is some number of dollars per share.  What matters is how badly the stock price collapses when those shares go on the market and all the fund managers in the world who know the billionaires have to sell those shares bid them down.  What that means in practice is that if the price collapses badly, their bill may be based on 60% of their assets on 1-1-21, but when they sell for a fraction of that valuation, the payers will end up selling quite a bit more than 60% to pay that 60% tax. 

Wealth taxes are a bad idea.  How about an example where Elizabeth Warren's proposed 6% wealth tax really adds up a 158% tax?  To quote Larry Summers, who worked in the Obama and Clinton administrations, speaking about Senator Warren's planned wealth tax:

"We do need to study pretty carefully why it is that most of the European countries, who usually are more progressive than we are and had wealth taxes, have decided over the last 15 or 20 years to eliminate those wealth taxes and why almost none of them get anything like the kinds of revenue that Sen. Warren is aspiring to get,"

Sanders, Markey, Gillibrand and Warren are overcome with greed.  The people CNBC names in the article are all innovators who have made contributions to society that people willingly support with their own money, so they're infinitely more valuable to the world than any politician.  Politicians can't stand the idea that someone accomplished things on their own, without groveling to them, and are so insulted that they think they can claim that wealth.  Warren was famous for her, "you didn't build that" speech in the Obama years.  It's the same thing. 



5 comments:

  1. The Warren / Markey / Gillibrand probe combines several left-wing motifs:
    -- “Windfall gains should be taxed;”
    -- “Unprecedented needs;”
    -- “Just this once.”

    We’ve seen them all before. They’re employed more often at the state or local level, but their separate appearances at the federal level are not unprecedented. (Remember Jimmy Carter’s “windfall profits tax?”) At this point, we “should” know that:
    -- Governments are always avid for more revenue and power;
    -- The word “need” has no objective meaning;
    -- If they get away with it, they’ll do it again!

    ...but perhaps these things are simply too “obvious” for many.

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    1. Your last three points are among the main things I blog about. Reducing the size of government - AKA deregulation and starving the beast.

      I have a tendency when I see a bill like this to think, "not a snowball's chance in hell that will pass so it's just advertising to the perpetually envious." (Churchill's "Socialism is the gospel of envy") There are far, far too many voters who are insanely jealous of Bezos or Musk or any of the billionaires when the lowest level flunky in their city or county government is far more dangerous to them.

      You'll note I didn't say, "call your senator RFN to oppose this" - which I might do if I think there's a chance it will pass.

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  2. There is a part of me that wants this to pass, not because I think it's right, but because it might finally make the the Big Tech guys realize that backing the socialists won't save them from the gas chambers. But then the German industrialists thought Hitler was a great leader until the Stalingrad debacle..

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  3. jus' cain't fix stoopid/greedy

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  4. Everytime a communist ( there are no democrats) brings up their love of tyranny by gun confiscation, banning private health insurance, taxation of the evil capitalist, open borders, reparations, and free everything for everyone I say its time for revolution

    The communists must be stopped dead in their tracks and elections wont stop them. Russiagate proves this.

    So are you going to surrender your arms when the Senate approves Bidens Executive Order to ban and confiscate your weapons collection ? Or are you going to resist ?

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