Billionaires see wealth double during pandemic as tech bros lead the charge Self-proclaimed visionaries of our times like to explode myths about what can and cannot be done. Inhabiting mars? Let's get on it, electric car maker Elon Musk says. yacht in front of waterfront condos Heavy industry in space? It's on the to-do list, says online shop owner Jeff Bezos. Supersonic underground hyperloop …
It's not just the tax system, it's the whole ultra-capitalist tax, legal and regulatory framework around companies, offshore investments, international trade etc etc that started up in the Reagan - Thatcher years. Fiddling around at the edges with wealth taxes won't change much, because the wealth will just re-accumulate. The issue is with how income is taxed - investment, dividend, capital gains and inheritance income, ie how rich people make money, are (in most if not all capitalist countries) taxed at a far lower level than earned income, ie how not-rich people make money.
Earned income is also subject to social security, which is usually capped so lower-income earners pay a higher %age of their income in social security. At the same time, income tax usually have no-tax and low-tax thresholds, so the really low-income working poor and unemployed pay very little in absolute tax (even though a smal %age of a tiny amount is still a significant hardship factor for people struggling to get to the end of the month). So the middle classes pay the bulk of taxes, who also pay the highest %age of their income as tax.
There are also surely a huge raft of allowable dodges whereby the ultra-rich can use trusts, special investment vehicles etc so that 'their' houses, cars, private islands etc are not directly owned by them so they're not tax liable for any of that. That's why nothing will change until ultimate beneficial ownership of trusts and companies is fully disclosed as part of the G20 tax harmonisation, and countries that allow secrecy are embargoed out as pariahs like apartheid South Africa was.
"So the middle classes pay the bulk of taxes..."
"Middle class"?
You might be surprised by just how many jobs are held by the "lower" class. For every 1 "middle", there's 100+ "lower". So unless that 1 "middle" person makes 100x than the average "lower" person...?
The "middle class pays the bulk" advertising has been repeated over-and-over again by either the "middle" class to satisfy the condition of not being in the "lower" class or, by politicians to lead the mindset of said "middle" class. But everyone forgets that 80-gazillion-trillion * 0% = 0.
If you stop using percentages and take a look around at the integer values, you'll see that EVERYONE above the "lower" class is 99% dependent on the "lower" class to feed the bottom line integer value of any given nation. The future will require collective bargaining.
A rant made with absolutely no knowledge of demographics or facts.
From the Commons Library the figures for 2019/20 for personal income vs UK income tax raised:
Bottom 50%: 9.4%
50th-90th percentile: 30.1%
90th-99th percentile: 31.4%
Top 1%: 29.1%
You've got an extra 9 there.
As reported for a wealth of $1T = $1e12, so losing 99.999% of that leaves a fraction 1e-5, leaving them with $1e7 or $10M; you'd leave them with $1M, i.e. bare millionaires.
(and btw probably the summed wealth of the poorest 3G people, if I recall how these comparisons are usually worked).
I always understood capitalism to be an economic system whereby goods and services come into being through investment and transfer of private capital primarily with a view to the realisation of an eventual increase in or return on that capital for the benefit of those who provided the capital, as opposed to investment and transfer of state owned or acquired funds for the benefit of the state and/or individuals within that state without any necessity for a monetary return. The basic upshot of which is that capitalism tends to reduce the size and influence of the state whereas socialism tends to increase it. The reality is that private capital holders see the state as a means of realising their returns just as much as the individual is, if not more so, and thus the size and reach of the state achieves a dynamic equilibrium; a state of unholy symbiosis.
This nonsense has been put to bed by Tim Worstall (formerly of this parish):
"Oxfam has told us all that 8 people have as much wealth as the bottom 50% of humanity and this is an outrage, Something Must Be Done. OK, so, let us think about what must be done then. The most obvious point being that we should reverse the outrage. Take all the money off the rich people and give it to the poor people. At which point that 50% of humanity would each get $100 or so.
This is not actually a solution to anything at all, is it? Thus the original problem being complained of is not a problem, is not an outrage and does not require that something be done."
https://www.timworstall.com/2017/01/solving-oxfams-problem/
I wonder what % of what ranking gave money to those richest people?
I mean, I can't imagine that the 50% of the poorest on the planet have even HEARD of Amazon, let alone have a mobile phone and a credit card (except Visa) in order to buy something from there... Not that the "problem" lies with anyone, it's just how the money flows about that's fascinating; whilst most of us just sit there like a cat watching the fish in one of those wave machine aquariums.
Not sure that is entirely true. There are quite a few (illegal) slaves in the UK. Reports that immigrants working in nail bars, car valeting operations and other workers are effectively on slave, or no, wages, and of course sex slaves trafficked into the UK for the prostitution 'industry' are arguably well in the 50% worst off people in the world. The film 'Taken' may be fiction, but it is all too real to some.
https://www.theguardian.com/world/2020/jan/21/what-does-your-10-manicure-really-cost-the-unvarnished-truth-about-nail-bars
https://www.humanrightspulse.com/mastercontentblog/taking-a-closer-look-into-the-uks-human-trafficking-crisis
https://www.theguardian.com/world/2018/jul/16/true-human-cost-5-pound-hand-car-wash-modern-slavery
https://www.bbc.co.uk/news/uk-england-cumbria-60043132
"A man has admitted exploiting a vulnerable worker who was kept in a freezing 6ft (2m) shed for 40 years.
Peter Swailes, 56, denied conspiring to facilitate travel of another with a view to exploitation, but changed his plea at Carlisle Crown Court.
The defendant's father, also Peter Swailes, 81, was accused of the same offence but died in September 2021.
The Gangmasters and Labour Abuse Authority (GLAA) said the case in Carlisle had been "traumatic"."
Not sure why this comment is getting downvoted. If you gave $100 dollars to anyone making nothing or very little, it helps. In the US, we're not at the point that it will significantly change anyones life, but in third world countries (ignoring the logistics of actually getting the money there and keeping it in the individuals hands...) it would make a huge difference.
It's all a thought experiment anyway, as everyone knows that it won't and couldn't happen. Increased taxes on someone who makes literally billions of dollars a year? Sure, would be nice, except that no one does - they gain 'value' through investments and companies. Bezos/Musk don't have a money vault that gets filled daily so they can swim in it...
This is all just a way to increase donations from people that can't afford it, by pointing out that people have ludicrous amounts of money so you should... make up for it by giving yours away? I really have never understood that argument.
"Not sure why this comment is getting downvoted. If you gave $100 dollars to anyone making nothing or very little, it helps."
Only if those people already live in a "wealthy" society so that they could actually do something useful with it. But the poorest in the world aren't just cash poor. $100 won't get them a school to get educated in, won't build a water treatment system so they have clean water to drink, won't create a healthcare system so they get treated for malaria, they won't even have a shop to buy a cheap mosquito net from. Just giving cash to people who have no means to use it doesn't help.
But if a village of people getting $100 pooled the money, they could buy tools to help till the land, seeds suitable for their environment that would produce plants that produced seeds for the next year, schooling materials for education - especially for girls, and so on. The lack of a shop in the next village does not preclude the purchase of items.
I'm sure their priest will ensure to get the message across that the priority is to build a new church.
That is, if the local dictator actually let the money reach the village, because buying new weapons and lining up offshore accounts is even more important than saving souls.
A lot of money is already being given that never reach the intended recipients, or doesn't get used as was expected. Taxing the rich is a good idea, but isn't the end of all the problems, only a very limited start.
Everyone seems to have ignored my first comment in the second paragraph - "this won't happen". The idea that we could get x$ from all the billionaires and then give it in the form of the local currency equivalent of $100 to every single person is ludicrous at best.
My initial comment was simply to say that it's easy to claim that $100 wouldn't make a difference when you make more than that a year, as I expect most people on here do. I know some people on public assistance that would love to get 100$ even as a one time payment to fix something or get help with issues.
The whole original idea from the article is something that anyone can look at and immediately see 'well, there is something wrong with that'. However, it says to tax the rich and give to the poor, so it's appealing because realistically speaking 1) the "rich" have a ludicrous amount of money, 2) there are some incredibly poor people out there, 3) no one likes the idea of poor people. So they use that to get donations.
Re: Worstall I always wondered what happened there. Reg used to feel a lot more centre right or at least classical liberal-ish until recently, even the comments section has got a lot more angry and left wing. My fave Andrew Orlowski was a self-described left-winger but v happy with hard economic facts (and indeed happily writes excellent articles for the Telegraph today). It's a mystery to me.
That would be no problem at all. You just take it again and give it back to the poor.
The faster the cycle happens the more useful things end up in poor peoples hands. (and the bigger the billionaires cashflow is)
Therein lie the crux of the problem with billionaires - they are sitting on a large amount of wealth like Smaug, keeping it out of productive circulation.
A separate issue is that much of this wealth may be unrealisable. Can Zuck actually cash out his shares at list price without collapsing the market? Can many of them?
Would forcing them to cash out shares result in more realistic prices that are in line with earnings?
Would companies return to making profits and paying them out as dividends?
Would it make companies like GG pay out the profits as dividends instead of pissing it away on acquisitions they then destroy, to try and pump the share price?
It is the month of August and a resort town next to the shores of a lake looks totally deserted. It is tough times, everybody is in debt, and everybody lives on credit. It is raining, everyone is depressed.
A rich tourist comes to town. He goes into the only hotel, and gives the owner a 100 dollar bill as a security deposit. He then asks the hotel owner if he can go and have a look around the hotel to see which room has the best view and to choose which he wants to stay in. He goes upstairs to inspect the rooms.
The hotel proprietor takes the 100 dollar bill and runs to pay his debt to the butcher who had supplied bacon to cook the breakfasts all the last few months. The butcher takes the 100 dollar bill and runs to pay his debt to the pig farmer. The pig farmer takes the 100 dollar bill and runs to pay his debt to the supplier of his feed and fuel. The supplier of feed and fuel takes the 100 dollar bill and runs to pay his debt to the town's prostitute that, in these hard times, had given her “services” on credit. The hooker runs to the hotel, and gives the hotel owner the 100 dollars to pay off her debt for the rooms that she rented when she brought her clients there.
The rich tourist comes down after inspecting the rooms, and says that he has changed his mind and won't be staying after all. The hotel proprietor hands back the 100 dollars and the tourist leaves town.
No one earned anything. However, the whole town is now without debt, and looks to the future with a lot of optimism.
It would have been good if the article had mentioned that Gates stands alone in the group (I think) as someone who actually trying to use his wealth to benefit humanity with his foundation. The others seem more content on playing with rockets and yachts though...
What happened to the Gates Halo* icon?
*pun unapologetically intended
Yep, The Bill & Melinda Gates foundation helped substantially in the effort to wipe out polio.
Warren Buffet is at No 10 in the list and he's pumped a lot of his money into the foundation, the other 8 on the list appear to be more interested in feathering their own nests, or islands in the case of Larry...
I can't believe people haven't heard of Richard Branston.
Or is it that brown pickle is a cardinal sin on a cheese ploughman's? I know the reg's commentard community holds very strong views on certain comestible conundrums, such as the brown vs red sauce on a bacon butty debate.
They don't honestly believe that money is real do they? Just because something like Tesla was pumped to the $1trillion mark doesn't mean you can actually squeeze that cash out of Musk. It's amazing he's even managed to liquidate a fraction of his holdings so far.
Here's how it is done: borrow money against the value of your assets. See, billionaires aren't dumb, they found a way (or paid creative accountants to find a way) long ago to live off their paper fortune with no difficulty. And since borrowing is not income, no taxes.
https://www.forbes.com/sites/johnhyatt/2021/11/11/how-americas-richest-people-larry-ellison-elon-musk-can-access-billions-without-selling-their-stock/
No, they can't.
Governments can only act within their purview. A billionaires' purview is the entire world.
Whatever one government does, a billionaire can undo by playing in another country. Problem solved.
The only way to bring billionaires to heel is to have a World Government.
The only problem with that is ensuring that billionaires don't buy it out.
Sure a billionaire can always take their cash and disappear to a sympathetic country but I'd be willing to bet that practically all of their income comes from a very small number of countries. If you consider the EU as one then you probably only need 5 or 10 governments to work together and all of a sudden 99.9% of these billionaires' income is under threat unless they start to play ball. Start imposing restrictions and tariffs on Tesla and SpaceX in the US, Canada, UK and EU if Elon disappears to a Caribbean island rather than paying his share of any new wealth tax and he'll change his mind very quickly (and still be left with more money than he could ever spend)
a billionaire can undo by playing in another country
Nitpicking, but all of these people are US citizens, who famously have to pay US income tax even if they live somewhere else. And if they want to stop being US citizens, they have to pay estimated future tax bills on the way out.
Well, I wouldn't go that far, but there is an interesting but probably too-complex point to be made there. The reason all these billionaires 'made a ton of money' is that, as part of COVID economics, lots of governments gave lots of money to a bunch of people who already had quite a lot of money and didn't have any pressing need to spend it on anything essential. Some of them spent it on very non-essential things (hence the bubbles in just about every speculative asset class on earth), and some of them spent it on...Amazon and Tesla stocks. Which drives up the stock price, which makes Musk's and Bezos' net worths higher since they own giant piles of those stocks.
The complex part here is that there aren't any terribly easy lessons to learn from that. You could say maybe this gigantic giveaway of cash was a mistake, but on the other hand, it did sort of do the job of making sure major economies didn't collapse, which was on the whole what most people wanted, by the looks of things. You could say that governments could have done a better job of precisely targeting the money at people who need it, but then there's rather a lot of historical evidence that governments attempting to target benefits precisely often doesn't go terribly well. So...well, yeah, this is the bit where it devolves into a possibly-productive but not-likely-headline grabbing policy debate, and thus wouldn't make a good juicy press release...
That's what *he* said, I'm not expecting to see his past and future tax returns.
And let's be clear: it's exceptional for him, he had no choice but to sell options that were about to expire, if he hadn't done so, he'd have lost them.
So he's just bragging about something he was forced to do, in order to earn lots of money. If he could have avoided it, there's no doubt he'd have.
We've all been duped. I very much doubt their wealth has doubled, only that the numerical dollar value assigned to their wealth has doubled.
Governments and banks are printing and creating money. This just redistributes the existing wealth in society - taking it from people that have to work to pay the bills and giving it to people who's money comes from their (real) assets. Which rather handily defines the only two classes that count in this discussion: Wealthy and working.
Every year since the 1970s governments give everyone a 10% pay cut, recently this has been closer to 20 - 30% (which is why people are beginning to notice).
The trick to stopping people rioting on the streets is to give just enough to just enough people to make them think that every five years the value of their houses are doubling. Really the fact is that every five years the value of the money they earn is halving. The other trick is to publish official inflation figures that are a total fabrication of the truth. Better the voters are focused on house prices than daylight robbery.
Fun fact: In most years the US government's take from inflation is roughly the same as the amount they collect through income tax.
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