Make Billionaires Pay Act

https://www.cnbc.com/2020/08/06/sanders-billionaire-tax-bill-would-cost-bezos-musk-zuckerberg.html

by ToFab123 • 6 years ago

32 81 6 years ago

bleah10002• 6 years ago

This bill on the face of it is pretty dumb. Most billionaires do not have liquid assets that are easily converted into money. In fact, most of the people's wealth increased due to their company stock price increasing. In order to pay these bills, the people would likely have to break sec laws to sell the stock quickly since there are all kinds of rules in this area. And if they get around that and are forced to sell large amounts of their holdings in companies, I imagine the stock market would crash, or have a local crash. And almost assuredly the stock wouldn't be worth nearly as much, so they would be forced to liquidate nearly everything they own to pay this tax bill.

I also imagine these billionaires will find some loophole or simply sue the government and keep this in the courts for years while they figure out a way to nullify it.

Honestly, this whole thing is a publicity stunt because the backers all know it has no chance of ever happening. Then they can pretend they care, and that they tried to do something. While in reality, they are doing nothing and never had any plan to do anything achievable.

sudhirj• 6 years ago

The bill also doesn’t explain what will happen if price of these stocks crashes and the billionaires lose $100B or whatever in a day. Does the government give the money back?

Does Bernie not realise that stocks aren’t liquid assets that have already been sold? If he buys a house and it increases in value, or the government doesn’t demand that he sell the house or take out a mortgage and pay 60% of the increase as tax. The governments waits until he sells the house and then taxes the income. If it’s okay to tax people whose assets increase in value without liquidation then shouldn’t every baby boomer sitting in a million dollar home that they bought for 10k or whatever be forced to pay a tax as well?

iso947• 6 years ago

shouldn’t every baby boomer sitting in a million dollar home that they bought for 10k or whatever be forced to pay a tax as well?

Yes.

Joeri• 6 years ago

Please don’t equate owning a single home to owning millions of shares. The notion that these types of wealth are all the same and should be under similar rules is toxic.

ImaCake• 6 years ago

I don't know. Even if it is ultimately unviable it does something no one in the US has dared to do for a long time. Which is to actually go after the wealth accumulated by the rich. I think the US will see more of this kind of thing over the next few years and it will be incredibly popular with the millions of very poor Americans looking to get back at the rich. The leaders of the US would be wise to handle such things carefully if they want to keep capitalism alive.

mansion7• 6 years ago

Since half of the US pays 95% of the US taxes, with the top 5% paying almost 60% alone, it would appear that the poor need the rich much more than the other way around, and that capitalism is a great boon to them.

It would behoove them not to scare away the tax cows that pay for their schools, medical care, infrastructure, and create the economy that allows even the very poor to enjoy lives that are the envy of much of the rest of the world.

joe-collins2• 6 years ago

Yes, the wealthy will always find loopholes to shield some fraction of their wealth from taxation. I don't recall the exact source (and it's a nightmare to search for), but I read that the maximum effective tax rate, historically, is somewhere in the ballpark of 30% as a result of that behavior. (I would welcome a link if anyone recognizes this argument.)

Seen through that lens, applying higher statutory rates and more complex policies isn't driven by the realistic expectation that those rates will be paid in full. Rather, as some number of the very wealthy will fail to perfectly adjust to the new regime, even small increases in the rate collected are substantial increases in the absolute dollar amount.

Wolfenstein98k4• 6 years ago

Which should be carefully weighed up against the costs of the policy (namely collection costs, think about how you value art and stocks and who is going to do that, and how... and when it's valued... and what incentives that produces for the owner...).

Not to mention the "trust" aspect for those who are wealthy. It will guarantee preemptive shielding and other arrangements which ultimately just add further mud to the US economic system. Not worth a fistful of dollars to be frittered away on general expenditure anyway. IMHO.

sho6• 6 years ago

What a defeatist attitude. Instead of snarkily poking holes, where's your better solution?

Because there has to be a solution. Inequality is reaching levels where it's dangerous. No, it is not good nor stable for 1% of the population to control 99% of the assets, and we'll get there soon enough.

Redistribution will happen either by law or by knife and gun. This is not about who earned what or what was inconvenient for XYZ person. This is about the citizens of the country, supposedly equal under law, having no chance whatsoever of ever owning an equal part. It's about aristocracy, basically. And do we all remember how aristocracies end?

Real life is not some computer model. In real life, if a father of 6 cannot feed or house his children he will not be satisfied by you saying that "well, Jeff Bezos outcompeted you!". There will be a redistribution. Our only choice is how it happens. This is an attempt.

babesh9• 6 years ago

It is not snarky to poke holes. It is snarky to call someone snarky for pointing out issues. You don’t always have to come up with a solution immediately. That would be stupid.

Basic income via the printing of money. What do you think those $600 checks were?

Inheritance tax. Make education at public schools and universities free. Reform government for greater efficiency.

darawk3• 6 years ago

This isn't an attempt to fix that. This isn't an attempt to fix anything at all. The government can just pay people's out of pocket expenses if it wanted to, it doesn't need to tax anyone to do it. This law doesn't even address inequality in any material way - it's a one time tax. It's a vapid political stunt, nothing more.

mnky9800n• 6 years ago

Don't punish people like billionaires. Instead institute policies that are pro worker and pro society. Like no more stock buy backs. Or tax incentives for large cap r&d investment. Or corporate tax incentives for generous pension plans. Basically instead of letting them pay no taxes for dumb reasons let corporations pay no taxes for proworker and pro society reasons.

Darmody6• 6 years ago

This is not an attempt. This is something that wouldn't work. All the big companies would probably die.

Imagine all the NASDAQ founders selling 50% of their shares. Who would buy them? The price would sink and they wouldn't be that wealthy any more and the government wouldn't get any money.

postingawayonhn2• 6 years ago

What a defeatist attitude. Instead of snarkily poking holes, where's your better solution?

Higher interest rates.

nextweek2• 6 years ago

What about all the pension funds invested into these companies. Average people will be hurt by a share price dump.

There are already the tools to deal with billionaire's wealth. How these companies aren't broken up for being monopolies is beyond me.

Imagine a world where there are 5 Amazon's rather than one. Suddenly there's a cap on how much one person can control.

RhysU• 6 years ago

No, it is not ... stable for 1% of the population to control 99% of the assets...

Many ancient cultures had at least this level of inequality and ruling stability. The Ptolemies made something last for longer than the US has existed, e.g..

onetimemanytime• 6 years ago

well, in theory they can hand their share in company stock to the govt, adjusted for any taxes or whatever. Based on the stock price of the days the bill is passed for example, or x days before. The government then sells or holds it, as it sees fit. That is not a problem, whether it should be passed it is.

(I agree that this is a dumb law, taxes should not be a one off thing. If they need to be raised, do it but for all)

gremlinsinc4• 6 years ago

We need to move from income to VAT, and maybe land value tax. Then we'll have a much stronger baseline to pay for UBI and single payer.

VAT would collect sales tax from everybody including immigrants, so nobody can claim they're mooching. Could make VAT more for non-citizens.

jtolmar• 6 years ago

It's not a very well-designed bill. A big one-off tax is always just a political stunt.

But "stock isn't liquid money!" comes up every time anyone mentions wealth taxes, and I think it's worth digging into this a bit. Stock ultimately derives its value from the attached ability to vote on what the company does (a policy of "maximize profits, buybacks+dividends" is so popular that it's usually implied). So when socialists go around talking about spreading control of the means of production around, stock is what that control looks like in our society.

So if we're talking about a mass sale of stock reducing the price, that implies somebody is buying the stock at that new lower price. It's not the billionaires, since they're in the middle of trying to sell all their stock. But no stock is being destroyed either; it has to be going to someone with less net worth, and thus less concentrated ownership of stock. Which is, again, the thing that socialists are trying to do.

(Now, as a market socialist, I can think of better ways to do this than forcing the sale of a bunch of stock and hoping it gets spread around more equitably. I did say start with "It's not a very well designed bill.")

robjan• 6 years ago

Taking control from companies like this wouldn't work. All you have to do is split shares into voting and non-voting shares and only liquidate the latter to pay this hypothetical tax.

bleah10002• 6 years ago

The problem is you've now screwed all of the people who own the stock. So you diversify the ownership of this particular company, but all of the mutual funds, and other people who own the stock just get to suffer a huge loss?

And what prevents another entity from buying up a huge portion of the stock using a different company? This new entity could be controlled by some other billionaire or group and you gained no diversity at all.

DuskStar2• 6 years ago

So if we're talking about a mass sale of stock reducing the price, that implies somebody is buying the stock at that new lower price. It's not the billionaires, since they're in the middle of trying to sell all their stock. But no stock is being destroyed either; it has to be going to someone with less net worth, and thus less concentrated ownership of stock. Which is, again, the thing that socialists are trying to do.

I bet it would be billionaires buying the stock, actually. Just not US ones.

llamaz• 6 years ago

I'm genuinely curious, how do you think this worked?

https://en.wikipedia.org/wiki/Revenue_Act_of_1935

DuskStar2• 6 years ago

It was a progressive tax that took up to 75 percent of the highest incomes (over $1 million per year.).

It wasn't a wealth tax, as understood today.

leoh• 6 years ago

Bill Gates: I’ve paid $10 billion in taxes. I should have paid more.

https://www.vox.com/future-perfect/2019/2/27/18243183/bill-g...

RcouF1uZ4gsC2• 6 years ago

Actually, Bill Gates should not have had the opportunity to amass as much money as he did because the US government should have broken up Microsoft a long time ago for anti-competitive behavior and abusing their monopoly positions dating back to at least the early 90's and maybe the late 80's.

It is much better to aggressively enforce anti-trust than to increase the taxes afterward on the CEO's who benefited from such lax enforcement.

_ph_5• 6 years ago

Yes, over the time of decades during which he became the richest man on the planet, he probably should have paid more taxes. I fully agree that there might be more taxes, that should be collected. However this one-time grasp for a high amount of the actual possession in the form of stocks is just wrong on some many accounts. Stocks are only money (and consequentally taxable) when sold - forcing people to sell of large amount of stocks wouldn't only be detrimental to their companies, but would have the potential to crash the stock market.

gabrielsroka• 6 years ago

From TFA, from 2019 BC (Before Covid):

[Q] ”What do you think the greatest threat to humanity is at this moment?”
Gates: “There are some things that aren’t likely but we should worry about — nuclear bombs and bioterrorism (from nation states or terrorism), or a big pandemic. This is the 100th anniversary of the Spanish flu [which killed 50 million people] and if it came back the amount of travel would make it spread faster than it did last time.

Areading314• 6 years ago

This is a totally legitimate, efficient, and reasonable method of taxation. The persons involved are basically lottery winners, due to random and unjustified gyrations in the stock market, and will remain extremely wealthy after the tax is levied, barely even noticing the effect of this tax. The real question is whether or not the government will use the money for something productive, like infrastructure, or unproductive, like pointless wars.

neilwilson• 6 years ago

It isn't. Taxation is there for essentially one purpose - to free up physical resources to create public goods with.

Billionaires don't have the physical resources required. Which means you either get to tax somebody else as well, or you get inflation.

A nation with its own currency has no need of the money of billionaires. In fact it makes them out to be more important than they are to suggest you do.

Beardsley Ruml explained this decades ago - Taxes for Revenue is an obsolete concept: http://home.hiwaay.net/~becraft/RUMLTAXES.html

Look after the unemployment and the numbers will look after themselves.

DeonPenny• 6 years ago

This actually pretty good concept I never thought it like this.

postingawayonhn2• 6 years ago

This is a totally legitimate, efficient, and reasonable method of taxation.

No it's not. It's a totally arbitrary proposal aimed at a small portion of the population. Why does it target billionaires? Why not all shareholders? Why does having the foresight to invest in quality businesses mean you should be taxed so highly when it pays off? Are they going to pay back 60% of losses to those billionaires who were holding shares that have gone down?

will remain extremely wealthy after the tax is levied

But may loose substantial control of the businesses they're invested in. Musk would need to liquidate over half his Tesla shares.

_ph_5• 6 years ago

Exactly. This law could wipe out the company Tesla. With all jobs attached.

cryptica3• 6 years ago

> But may loose substantial control of the businesses they're invested in. Musk would need to liquidate over half his Tesla shares.

How is that a bad thing? That would decentralize control of these companies. That alone would be a good thing.

_ph_5• 6 years ago

No, they are not "lottery winners". First of all, they didn't "win" anything. Yes, the Tesla stocks that Musk owns are suddenly valued more on the stock market. This isn't money that Musk has at his free disposal, as he cannot just sell large parts of his Tesla stock (both because the question of company control and also because it would greatly harm the company)

And also, it isn't a "lottery". This isn't money invested into random stocks for gains, this is the share of the company owned by the founders which still run the respective companies. This is wealth built by creating those companies not wealth that can be spent.

narrator• 6 years ago

Meanwhile, you can create a billion dollars with a few keystrokes at the Federal Reserve.

It's really about who has power to control the economy of the country: private individuals or the banks and the government. It used to be way over on the private individual side before the fed and the income tax flipped power over to the banks and the government side. Previously, you had Carnegie and Rockefeller running very large portions of the economy and the banks and government were much less powerful.

Today it's govetnment borrowing and the banks that make most of the money. Yes, the banks create money. It's called fractional reserve banking and the money multiplier and it's all legal all totally out in the open. Keynesian economists will tell you that the banks are the most important organizations in the entire economy because they create money to increase aggregate demand.

Meanwhile in China, the government prints money whenever it needs it and tells the banks what to do and who to lend to and they haven't had a credit bust since the 80s, even though The Economist has regularly been predicting one since the early 90s.

HissingMachine• 6 years ago

Much of the stock market rally was created by this "create money out of thin air" scheme, it all usually finds it's way to the stock market since you have to park all the extra money somewhere. And due to interests being at zero or in some cases negative, only safe places to park all that new money is either stocks or metals which again rises their stock markets and the price of commodities, making large stock holders gain even more. The current financial system is just broken.

babesh9• 6 years ago

There is also the realization that money is being devalued. Stocks in profitable and growing companies are more valuable than this money that is being printed. The companies are productive capacity.

Not all companies and stocks are doing well. Just look at airlines, retailers, etc... They are the losers in the new economy.

Wolfenstein98k4• 6 years ago

An obscene and thoroughly unconstitutional (Article I, Section 9) move.

The wealthy pay an incredible amount of tax - Cuomo just said that a single percent of New Yorkers pay half of the entire tax take.

That may be good and just - it may even be right to increase that share - but to slap a retroactive tax on their POST-TAX wealth is heinous.

This is before we get into practicalities... if I recall correctly, nonpartisan modelling of Warren's wealth tax plan would've levied tax rates over 100% on certain people, and been incredibly inefficient (the cost of collecting the money, all said, negated a good portion of the takings... much more than any existing tax targeted at the wealthy does).

Class war greed. It should be opposed. IMHO.

verroq2• 6 years ago

They only got this wealthy because the Fed injected trillions into the stock market, pumping all of their holdings.

Wolfenstein98k4• 6 years ago

The Fed didn't pump that money into stocks, it pumped it into the hands of the citizens, many of whom decided those stocks were the safest place for it.

I am one such person, though in a different country, who has felt these stocks are the safest place for a good chunk of my portfolio.

What alternatives are there? There's no argument for taxing the heck out of people who lead incredibly successful (and safe, for investors) companies, just because they have managed to make that situation so.

RcouF1uZ4gsC2• 6 years ago

Amazon and Walmart, for example, have both seen their stocks grow as Americans increasingly relied on their services during stay-at-home orders during the pandemic.

Jeff Bezos through Amazon and the Walton family through Wal-Mart did more to help me and my family, and I suspect most Americans, get through the coronavirus than Bernie Sanders, Ed Markey, and Kirsten Gillibrand.

Businesses that solve the massive logistics problems of operating in a pandemic and provided needed goods to consumers should be rewarded. I am not any worse off that Bezos' and the Walton's stock value increased because of this. In fact, I am better off.

brabel• 6 years ago

Both Amazon and Walton were not inventors of the technology you're thanking them for, they were just the biggest behemoths that were able to destroy most competition in those respective areas (in the US, at least) and take over the market.

If they had been broken up due to anti-competitive behaviour years ago, you'd be much better off as can be easily verified historically in similar markets where this happened.

babesh9• 6 years ago

Amazon has advanced the efficient distribution of goods more than any company in the last 20 years. One day shipping, easy returns, subscribe and save, photos of the delivery, shipment tracking, etc... The reality is that it is just a lot better run than it’s competition.

kmlx• 6 years ago

i see low grade populism is still rife in the US...

markdown• 6 years ago

Low grade? Trump came to power through populism, so I wouldn't call that low grade.

Darmody6• 6 years ago

Well, this proposal is just as stupid as Trump saying he would cover the wall with solar panels.

Actually if I had to choose, I'd pick the solar panels. At least it would provide some work and it wouldn't turn to ashes most US companies.

bitwize• 6 years ago

Come on, Sanders, don't puss out and stop there. How about: a 100% marginal tax rate on any wealth earned after personal wealth exceeds 1 billion dollars.

gremlinsinc4• 6 years ago

Sounds good to me. This is what we really need. To ban billionaires from even existing.

Darmody6• 6 years ago

He doesn't understand what wealth means or he does but he doesn't care and proposes stuff like this to gain votes.

42droids• 6 years ago

I am sorry to say this but if you want to tax the rich, you don’t have to reinvent the wheel. Look at the German taxation system and learn from it.

082349872349872• 6 years ago

The traditional way to make this project feasible is to give the billionaires (and maybe even a few aspiring multimillionaires; one mustn't be too picky in fundraising) a piece of coloured ribbon in exchange for their donations to their fellow citizens, as well as inviting them and their families (especially marriageable children) to an annual cell-phones-in-the-fishtank no-non-donators-allowed party celebrating their commitment to their nation.

(TIL "Eat the rich" is attributed to Rousseau, not to Wells' Eloi/Morlock dynamic. I am disappoint. "Tax the rich" is apparently a 3rd rail in US politics. "Feast the rich", on the other hand, would use the carrot of exclusive membership — what Capitalist could resist such an incentive?)

Make Billionaires Pay Act

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