This question is always strikes me as a false dichotomy, i.e. "we have to tax them, or else they leave". The issue is in my view is that constructing a system where the existence of such a rich class has become necessary to raise enough tax revenue. Organizing your country with more sustainable growth where income disparities aren't so high means you don't have this problem to this extent.
Who said "we have to tax them, or else they leave"? That doesn't seem to be what anyone is saying. The issue is that this group is threatening to leave if they are taxed.
I agree you should want to avoid having an income disparity like this, but we are where we are. The goal of this tax is to help correct that disparity.
Then the next question is why does wealth, in practically all industrious countries seem to distribute disproportionally and not uniformly?
One argument could be that maybe entrepreneurial personality traits aren't normally distributed, and unless you find a way change people's personalities in mass, the imbalance in wealth attraction will remain inherent.
Then you might ask, if that's true, do you I want to enforce equality, potentially dragging down the economy to mediocracy (for example many stagnating European economies) or maybe accept that current nature does not meet our societal desire for equality.
I think you have the right idea, if poorly worded. The economy is not a zero sum game, but the idea works when you apply it not on wealth but on wealth increase. That's more or less the famous r > g formula of Piketty: when the rate of return of capital is larger than the growth rate of the economy, wealth gets more concentrated. The idea has been disputed but the basic principle certainly applies in many situations.
Economy growing at 3-5% in the US. Rich people's wealth growing at a far higher rate. Which means the middle class wealth is getting siphoned to the rich. The middle class is getting poorer and we can all see that.
There's a finite amount of money. There's not a finite amount of wealth.
Having lots of wealth does not mean other people have less. If that were the case, there'd be as much wealth today as there was 1000 years ago. Making a company and having it valued at whatever value, does not remove that amount of wealth from other people.
Not trying to argue, per se. I'm saying that you gave me a lot to think about.
> There's not a finite amount of wealth.
I think there is a finite amount of wealth, at any given time, same as "money". Money is a transactable medium to measure value, rather than as a type of good on its own. The medium can change region to region and over time.
Wealth is an aggregate of all valuables you possess, including expected gains.
Wealth is also subjective, because of these properties. People agree on some approximations for the purposes of transactions with money.
> Making a company and having it valued at whatever value, does not remove that amount of wealth from other people.
Depends on perspective, I would say. When the value rises in a public company, even when it's just the expectation, you have people dumping their wealth (as money) into the company. So yes, it does for large public companies. While it does grant some rights, in a practical sense it's a hole you dump money into with the expectation that you can reach in and take out some amount in the future. I can understand this is what is envisioned, when people talk about wealth as zero sum. I don't agree, but I get what they are going at.
> If that were the case, there'd be as much wealth today as there was 1000 years ago.
Wealth is partially based on expectation. The growth in population fuels increases in wealth, because that's the part of the equation that is speculative.
But relative wealth is all that matters, when it comes to lifestyle. If I have $100K net worth, and I'm living in a city where the first standard deviation net worth range is $80K to $120K, then I'm living a pretty average lifestyle, can afford my groceries and entertainment, and feel middle class.
If I have a $200K net worth, and I'm living in a city where the range is $1M to $500M, then I'm pretty much living in poverty, even though I have "more wealth" than in scenario 1.
This is also why, although my absolute wealth today is hundreds or thousands of times more than a king in the middle ages, I'm not actually living like a king today.
It's also how gentrification works. You're living somewhere and all of a sudden a bunch of very wealthy people move in, raising the prices of everything. You're no more or less wealthy than before, but everything has become slightly worse.
There is not a finite about of wealth, but the wealthy are currently using their position to reduce the amount of wealth the average person has, by driving up prices of everyday requirements so that they can make more money.
It's not an issue that they are wealthy, it's that they are abusing that position to gain even more wealth at the expense of the rest of the population.
That there is more wealth now than in the past does not even remotely imply that there is infinite wealth.
> Making a company and having it valued at whatever value, does not remove that amount of wealth from other people.
This is a strawman. The ability of people to accumulate wealth is affected by every aspect of the economic system, including the means by which those companies are acquiring wealth.
No, he's rich because (1) he had first mover advantage (credit to him) (2) he has a good sense of how to run a business (3) he exploits a large number of people to his own benefit.
Isn't there also an effect like the second billion dollar being easier to get than the first? I mean all your points are good but the fact that the system allows you to leverage your wealth to increase it is probably the most important factor to get to $250B.
His parents invested about $500,000 in today's money in their 50s. At that age, 10% of Americans have a financial net worth (excluding home equity) of over $2 million. People in America invest that kind of money in small businesses all the time. That’s on the low end of what it costs to open a Dunkin Donuts, and half of what it costs to open a McDonalds. The kids of the Indian guy who owns the Dunkin’ Donuts down the street aren’t exactly scions of wealth.
And Bezos's biological dad was a unicyclist, his mom got pregnant with him at 16 and later dropped out of college, and his stepdad was a Cuban refugee who got an education and became an engineer for Exxon. Going from zero to billionaire in two generations actually says something remarkable about our system.
Think about it another way. If the government doled out $500k to fund business ideas, do you think that investment would be available to kids of refugees? Of course not. There would be gatekeeping behind credentials and connections, and it would be open to a lot less than 10% of the population.
> Going from zero to billionaire in two generations actually says something remarkable about our system.
This data point doesn't distinguish between a system that fairly rewards abilities, and a system that works like a lottery. My guess is that the US is in between: it unfairly rewards abilities, and chance plays a large role.
Taking Jeff Bezos as example: 1) he certainly has remarkable abilities but maybe not 1,000,000 times more than the median American, yet he has about 1,000,000 times the wealth; 2) it's plausible that the US population of 350M includes several people with abilities similar to Bezos yet no notable wealth due to various circumstances. Both points suggest an unfair system.
> Going from zero to billionaire in two generations actually says something remarkable about our system.
It does? I mean, sure, it's better than having only the already rich stay rich, but let's not kid ourselves that this is a life outcome that everybody, or even 10% or 1% of the US can shoot for. The vast majority of people stay closer to zero. Who gives a shit that a few people get to win the right-time-right-place lottery?
This reply has very strong "the average human does not eat 10 spiders a day; the average was thrown off by Spiders Georg who eats 10000 spiders a day" energy.
Amazon does not have an exceedingly high profit margin, and my understanding is that a lot of it comes from stuff like AWS, not Amazon deliveries - correct me if I'm wrong here. So I'm not sure that "three amazon deliveries a day" - if this is even common - is why that man is personally rich. Even if it were a big source of revenue, that would go into Amazon's coffers, not necessarily his directly.
Another way to look at this: Even if Amazon is wildly successful, does that mean Jeff Bezos specifically should become filthy rich as a result, instead of all its employees and investors? How should the gains from successful entrepreneurship be distributed?
> why that man is personally rich. Even if it were a big source of revenue, that would go into Amazon's coffers, not necessarily his directly.
Jeff Bezos owns 9% of Amazon. So 9% of the expected value of the money going "into Amazon's coffers" indefinitely into the future is counted as part of his current "wealth." It's not money under his mattress.
Is your argument that people shouldn't be allowed to own 9% of a company that they started?
People should not be allowed to accumulate capital beyond $X, yes. What natural law means they should? Society created the conditions for that person to be so successful; in fact, the person only had the minor part in that success. Once you reach $X, you get a certificate saying you won at life and society is really grateful, and society gets the rest of the rewards while they dedicate their life to philanthropy or torturing kittens or whatever it is they do as a hobby.
> People should not be allowed to accumulate capital beyond $X, yes.
The term "capital" is an abstraction that's not helpful here. The big "wealth" numbers are all about equity ownership in highly valued companies. Bezos owns 9% of Amazon stock. That's why he's "rich." What should happen to that stock? What happens to his voting control over Amazon?
The problem is people that rich don't own anything. It's all shell corporations and LLCs and money borrowed against those shares (so no need to pay any taxes). But they clearly have access to yacht money. We're not going to write an airtight law in the comments section. We can just ignore paper wealth and ownership stakes for the purposes of wealth redistribution.
The question boils down to a feeling that when the revolution comes, that no one person needs more than, say, $100 million for themselves, or not. Trying to distract the conversation into defining "for themselves" will only prolong your time before the firing squad, comrad.
> Another way to look at this: Even if Amazon is wildly successful, does that mean Jeff Bezos specifically should become filthy rich as a result, instead of all its employees and investors? How should the gains from successful entrepreneurship be distributed?
The answer depends on how should the losses from unsuccessful entrepreneurship be distributed?
Can you be more specific? Suppose I put $1M into developing a business.
For whatever reason, construction hits a snag or revenues are not enough to cover expenses, how would it become “society’s” problem? Do I get made whole by the government giving me $1M, and the government takes posession of the property?
If so, I foresee a lot more opportunities for corruption.
OK that's one thing, but still there are many new billionaires that didn't exist a few decades ago, let alone a few years ago. Why did they become billionaires and the wealth didn't distribute over a much larger group?
And thinking about bubbles, imagine what happens when the GenAI one pops. The wealth some new billionaires had will go up in smoke, their assets will go on sale, and they'll be gobbled up by the old billionaires.
Maybe, I think it definitely happened with millionaires, there are probably many more millionaires these days compared to a few decades ago. Inflation helped too for sure.
But I think still a lot of people would argue the distribution is too unequal.
> One argument could be that maybe entrepreneurial personality traits aren't normally distributed, and unless you find a way change people's personalities in mass, the imbalance in wealth attraction will remain inherent.
Luck always plays the biggest role. Maybe the billionaires would have always been successful in some way, but not be a billionaire or even a millionaire.
Also, your argument sounds like a just-so story designed to support the status quo.
> the imbalance in wealth attraction will remain inherent.
Is is really a good idea to be ruled by the people with the greatest "wealth attraction?"
> Then you might ask, if that's true, do you I want to enforce equality, potentially dragging down the economy to mediocracy (for example many stagnating European economies) or maybe accept that current nature does not meet our societal desire for equality.
Yes, because regardless of anything else, the wealth imbalance has been politically destabilizing. Your comment strikes me as out-of-touch quantitative thinking: making certain easily-measured numbers going up the highest goal, while ignoring other things that are harder to quantify. That's a blind spot shared by a lot of people, especially tech people.
I'm mostly trying to make sense of the world and so far I found out that looking at it as a chaotic thermodynamic-like system makes the most sense.
So in regards to this economic issue, it seems that human personality traits that lead to disproportionate power/influence/money are distributed non-uniformly to an extreme extent.
We can try and moderate it as a system (e.g some forms of democracy, socialism, etc.) to maybe lower the amplitudes, but it would be ignorant to deny that this might be a core part of current human nature. Humans themselves are a specie with disproportionate power & influence compared to other species, so I think it would only make sense if this trait would also apply within the specie.
Now imagine, there'd be some alien government, who'd be like "whoa humans are making way too disproportionate progress compared to the other species, let's tax/prune them so they don't get too much power".
> ... so far I found out that looking at it as a chaotic thermodynamic-like system makes the most sense.
What do you mean, you found that out? And what does that have to do with anything?
> So in regards to this economic issue, it seems that human personality traits that lead to disproportionate power/influence/money are distributed non-uniformly to an extreme extent.
To me, that doesn't sound like an observation, but rather an interpretation. We could apply various epistemological carpet beaters to see what remains. One would be the critique of ideology. A few others can be found in the philosophy of science. It also seems to contradict your reference to thermodynamics. Wouldn't that mean that personality traits don't play a role at all? We don't look at individual particles, and certainly not at their personality traits.
> Humans themselves are a specie with disproportionate power & influence compared to other species, so I think it would only make sense if this trait would also apply within the specie.
I cannot understand this conclusion at all. Why should the structural relationship to other species be reflected within the species itself?
> I cannot understand this conclusion at all. Why should the structural relationship to other species be reflected within the species itself?
It's all an interpretation, never claimed it to be anything beyond a thinking model I like.
> To me, that doesn't sound like an observation, but rather an interpretation. We could apply various epistemological carpet beaters to see what remains. One would be the critique of ideology. A few others can be found in the philosophy of science. It also seems to contradict your reference to thermodynamics. Wouldn't that mean that personality traits don't play a role at all? We don't look at individual particles, and certainly not at their personality traits.
No we don't, but I don't think it's necessarily because we don't want to, but because we often can't. Nevertheless, I think my rationale still applies. For example, if you take a bunch of matter, for example water, you'd find out that the distribution of Deuterium and definitely Tritium is really "unfair". Why only so few particles get to have that extra neutron and others do not?
> I cannot understand this conclusion at all. Why should the structural relationship to other species be reflected within the species itself?
It doesn't necessarily have to but:
1. It seems to have been very favorable trait evolutionally to force your will on other species. I'm no brain nor social expert but it seems to me that in order to stop this trait internally, there would need to be some pretty strong inhibitors to counter that.
2. Regardless of the species claim, you can see the pattern of exceptional individuals with disproportionate influence in many other places in nature: queen bees, pack leaders, and human kings of sorts. in I think practically every culture on earth in recorded history?
I really struggle to think of any mass systems, in human society or nature in which power is not distributed disproportionally to a relatively small portion of individuals.
You know that human civilization exists because of all the people putting in work every day who are not motivated just by by money, right? If everyone was billionaire level money obsessed society would cease to work. There is nothing to indicate billionaires are giving us a disproportionate amount of what makes society work, and without working society to host it there is no progress.
> You know that human civilization exists because of all the people putting in work every day who are not motivated just by by money, right?
Where did I say that?
> If everyone was billionaire level money obsessed society would cease to work. There is nothing to indicate billionaires are giving us a disproportionate amount of what makes society work, and without working society to host it there is no progress.
I think if you wouldn't have the crazy risk takers who want the power/influence/money, either other people would need to take the lead on that, or there'd be a lot less advancement and we'd be closer as a society to our ancestors.
I've yet to see mass systems of groups in which work is being done without the leadership and initiative of a small proportion of people. For example, imagine a movement that is not founded by 1 or few people, but instead a company that is founded Day 1 with thousands of people, instantly. I think that's practically impossible without a hypothetical hivemind, but I'd like to be proven wrong!
> So in regards to this economic issue, it seems that human personality traits that lead to disproportionate power/influence/money are distributed non-uniformly to an extreme extent.
It doesn't seem that way to people who look at ALL factors, not just this one that is chosen to justify a sociopathic ideology.
> Then the next question is why does wealth, in practically all industrious countries seem to distribute disproportionally and not uniformly?
Compound interest, and as (admittedly) an armchair economist I buy into the argument that goes along the lines of:
"when the rate of return on capital (r) is greater than the rate of economic growth (g) over the long term, the result is concentration of wealth".
In my view, r has been greater than g for some time now.
> Then you might ask, if that's true, do you I want to enforce equality, potentially dragging down the economy to mediocracy (for example many stagnating European economies) or maybe accept that current nature does not meet our societal desire for equality.
To me, it is clear that while Europe optimizes for quality of life to a large extent, Americans really drink the coo-laid and enthusiastically optimize for shareholder value. I highly encourage you to give life in Europe a go at some point. I hope you'll return (or stay) also having reached the same perspective.
I'm not American. I did stay for months though in the US (SF, NY) and Europe (Italy, France, Greece, PT, DE, more) at times.
I think for competitive and talented people, US in general offers much more lucrative opportunities as long as you're OK with the US specific drawbacks.
For non-competitive people, living in Europe would probably be a more convenient.
I think the problem though is in the future, both the US and Europe has grave societal and economic issues but from the different angles. Europe lacks economical drive and seems to discourage change on a cultural level. The US on the other hand seems to be an extreme catalyst.
I'm not familiar enough with quantitative data to judge on the compound interest, nevertheless I think in the last few decades we have already been witness on the global level to major changes in wealth: empires like UK have shrank, giants like China have risen. This had been very different a few decades ago and is an anecdote at least that compound interest can only do so much for empires, in the face of major changes.
Not to be too glib but my mom would ask counter questions like this:
Why is it that we have to trim out nails when they grow? Why not leave it natural?
Why do we remove the weed in between the pavers in our backyard? Why not let it be natural?
The fact is the world around us needs constant work. Our capitalism is no different. It needs constant pruning or it becomes gluttonous. There was a book I think which said most people involved in illegal drug trafficking are barely getting by, most of the income is soaked up at the top. I don't remember the point the bio was trying to make but it feels like that way for any enterprise these days.
The richest people in the US have reportedly increased their net worth by over 1.5T over the course of the last year or so.
Isn't this basically Entropy?
Why do stars fuse and spread out their energy? Can't they just keep it all in? They are going to blow up/die out eventually, how is this sustainable?
The notion I'm getting is that these forces that drive change are bigger than all of us, and they are inherently unsustainable in the larger scale of things, pretty similar to how solar systems are not really sustainable in a scale much larger than us, but not that is still pretty small in a universal scale.
So for your perspective it might be unsustainable, but for the bigger system what you describe is smaller than a grain of sand.
Or in the absence of other competing systems which can be shown to be more efficient, we could say OK seems like billionaires are part of this ecosystem. If you'd like, similar to how we don't like mosquitos but they are nevertheless an important part of the current ecosystem, whether we like it or not. Though if we ever find a better alternative, they'd definitely be in a hard spot.
US homeowners have increased their net worth like $15 trillion since the start of the pandemic.
Besides, there's this thing called tax incidence and it's not as simple as "tax the billionaires" because it's not clear how that plays out in terms of people's wages or middle class investments.
On the other hand, land value taxes would actually be incident on landowners.
Therefore devaluing the value of the dollar so that those who had basically steady state income (wage earners) have been completely fucked while the lucky ones had their yachts rise with the tide.
You could have asked the same question when slavery was legal. Why is slavery not evenly distributed. Social injustice has been the default since the beginning of known history. Social justice is something that has to be fought for.
Look for the Sugarscape model research studies. With uniform equally distributed starting point, fairly unbiased rules, and a set of random early wins, large disparities tend to accumulate over time without active policy to counteract it.
I think there's clearly a question of envy which doesn't seem addressed.
I'm not particularly in favour of high taxation, but I think that the argument is a bit more subtle than that. The general point is that "the ultra rich" are able to benefit from a whole host of loopholes which allow them to pay proportionally less than the plebs.
Now, this specific point seems somewhat debatable, judging by the fact that people don't seem to agree; I personally have not looked into the matter to form an opinion.
Maybe our tax code hasn't kept up with the financialization of the economy. In any case, this whole tax increase thing, at least as I see it in France, since to spill over to "regular rich people", as in engineers or similar who "just" have a relatively high salary.
Another issue, which I think is different but is rolled into complaints about rising tax rates is what the state actually does with the money. As in "I'm ok with paying tax, but not to fund this or that thing". In France, specifically, many "public service" offices have closed, having people either travel great distances or fight half-assed computer systems, while, at the same time, the number of public servants (so, cost) has increased.
There's many shades of grey between financial laissez faire and enforced equality. This entire "taxes are theft/unnecessary" (and frankly extremist in the neutral definition of the word) thinking is destroying the US politically and socially right now.
Do you not see this? Probably because you don't feel it in your pocket (yet, let's see what happens when the USD crashes. I will feel it too, no doubt.)
There's the belief that the economy can be a mighty tool to improve our lives, but isn't it going pretty much overboard since some time? Is this materialistic growth-at-all-costs ideology really making average US lives better these days?
From the outside the US feels like a runner that is stretching its arm towards the finish line (total automation) while also falling on their ass.
> One argument could be that maybe entrepreneurial personality traits aren't normally distributed
That's not an argument, it's a completely counterfactual assertion ... or rather, the assertion that this is the cause of uneven distribution of wealth.
> Then you might ask, if that's true, do you I want to enforce equality, potentially dragging down the economy to mediocracy (for example many stagnating European economies) or maybe accept that current nature does not meet our societal desire for equality.
But of course it's not true, it's just an attempt to justify a morally bankrupt sociopathic ideology.
Countries with low inequality tend to have strongly progressive taxation systems — Belgium, Sweden, Finland, etc. The billionaire class isn’t a necessity, it’s a failure of morality to overpower the affordances of hyper-growth capitalism.
>Organizing your country with more sustainable growth where income disparities aren't so high means you don't have this problem to this extent.
Sounds like US vs Europe. Having redistributive policies funded by taxes works well until your most productive people flee for a country that doesn't, and you steadily lose ground to competitors economically.
Americans like to act like they've beaten European nations in some kind of battle, but is the purpose of a state not to provide the highest quality of life, safety and health to its citizens? Not try to make the biggest corporations? In which case, even taking the whole of Europe as an average (which you shouldn't), by every metric beyond GDP its ahead.
>but is the purpose of a state not to provide the highest quality of life, safety and health to its citizens?
It's going to be hard to provide all of that when you don't have the money for it (eg. fiscal crisis in France right now), or if you get invaded by your neighbor (or any other competitor) eclipses you economically and then uses that to subjugate you. The european model of reaping the peace dividend and using it to fund a more generous welfare state worked from 1990s to 2010s, but is breaking down with the rise of china and russia, and is further exacerbated by sluggish growth and the demographic/pension crisis.
This is the actual issue, which we often avoid talking about because it's grim. Like, health care is expensive, old people health care is really expensive, and the proportion of old people in many Western countries is increasing over time (because of a fall in birth rates). I believe the FT had a good article about this recently, where they showed that the vast majority of extra spending from government was on old people.
Now, clearly, society doesn't want to just shoot old people when they get sick, but I'm not sure how taxation is gonna look as the proportion of old people increases. Obviously increasing retirement ages helps here, but that's mostly just a massive tax on blue collar workers, who are much less likely to be able to continue working into their 70s, whereas for many cubicle jockeys, it's a lot more plausible.
Everyone has their own objectives for life, but I actually don't think that the purpose of a state is to provide the instantaneous highest quality of life, safety and health to its citizens. Some might argue that it is to provide those things not at a sampled time but over a duration, but if so which generation should experience that? And if optimized over generations then surely some people must lose so that future others must gain, or the future others must lose to that the present ones may gain.
Personally, I think a higher goal for the state is to provide a substrate of sufficient physical safety, law and order, and infrastructure so that its citizens may have the ability to pursue their aspirations. I think human thriving is very important. And I want the ability to try at a ridiculous thing and achieve commensurate reward. In many ways, I don't even want that for me. I want that for others. When I see someone take a crack at something that most thought impossible and make it happen, I love it.
It isn't that those of us who have this opinion are temporarily embarrassed billionaires. It's that we like that someone took a crack at something absurd and became billionaires for it. People who don't get it always say these things out of misunderstanding: "Why do the poor in the US vote so often against their own interests?". The obvious answer is "because they are principled and not purely self-interested".
The thing is that Europe doesn't have much redistribute policies. Everyone at around lower rank manager or middle developer are landing in the highest tax bracket in most of the countries, and pay as much tax as rich people. And almost every tax raise is usually targeted at these barely middle-class people.
Countries in which the income disparities ARE so high are also the ones where the "poor" are the richest. They just feel poor in comparison not in absolute terms.
70K a year is poor in California, but top 1% rich in almost any country in the world.
Low income disparities are countries like Albania, Afghanistan, Armenia to name the first three with below 30 GINI income.
This is an anomaly and left over from the time when middle class was growing after the 2nd world war. We (Western countries) are dismantling all the back stops and the process will reverse and move all the wealth to the few rich people in the capital class. When this process is complete the poverty levels in the west will equal those of the countries you mentioned, Afghanistan etc.
The USA and UK are leading the process since they started to pursue this goal aggressively during the 80s with Reaganism and Thatcherism.
Taxing billionaires isn't "necessary to raise enough tax revenue." Total personal income in the U.S. is 26 trillion annually: https://tradingeconomics.com/united-states/personal-income. For the most part, that's real money that reflects goods and services in the real economy.
The increase in wealth of billionaires in 2025 was $1.5 trillion: https://americansfortaxfairness.org/billionaires-1-5-trillio... Most of that isn't even real money--it's people betting on AI. (As an aside, is the government going to give huge tax refunds when the AI bubble bursts and all that "wealth" disappears?)
If the U.S. just taxed people the way they do in Germany we could raise trillions in revenue without resorting to tricks like one-time wealth taxes. The focus is on billionaires because Americans want a German-style welfare state without German-style taxes on the middle and upper middle class.
This made me research how much taxes would a wealthy californian pay assuming:
- 2.5M worth of real estate bought recently
- 1M of job income
- 1M selling shares that 10xed (some stock option idk)
- driving a 150k $ car
- spending 150k $ over the years in taxable goods
It came around 840'000 $ or around 40.1 %.
I wouldn't say it's that bad, this even includes sales taxes (probably the fairest of all taxes).
With even basic tax optimization (401k, federal deductions) you get that number down to 780'000 $, with something a bit more sophisticated depending on circumstances you can get it easily lower than 600k or 32% ish.
The biggest problem is that people above that tier end up effectively paying less sometimes even in absolute terms just by borrowing against their equity and not triggering taxable events.
Honestly taxes are complicated to implement, I'm not sure how can you implement a progressive yet fair system without loopholes and without severely degrading services (roads, infrastructure, education, healthcare, military, etc, etc).
And every time you decide to cut on services, you are just moving money elsewhere: more inequality -> more social tensions and criminality, you just end up paying way more to live in a safe place and pay for private and public security and prisons.
> And every time you decide to cut on services, you are just moving money elsewhere: more inequality -> more social tensions and criminality, you just end up paying way more to live in a safe place and pay for private and public security and prisons.
There's no reason to think that the amount of taxpayer-funded services in a political jurisdiction has inversely proportional relationship with amount of crime that that happens there (nor any particular relationship with what kinds of crime, how serious the specific crimes are, and so on). Same thing with social tensions - social tension are caused by a lot of things, many of which aren't particularly related to the raw amount of taxpayer-funded services that exist. Would a more redistributive welfare state have made the partition of India between (mostly) Hindus and (mostly) Muslims less likely, for instance?
I agree with your overall point. But I find it odd that you consider sales taxes to be the "fairest". Similarly, I find it odd that you put "progressive" taxes in some tension with "fair" taxes. Folks in the highest income range arguably benefit the most from govt services (e.g., infrastructure, defense, R&D, rule of law). They also have a much higher ability to pay well beyond basic survival needs. And, they can reduce sales tax burden by saving versus consuming, a choice that is not available to lower-income.
I agree that a regressive tax like sales tax is not "fair" at all.
I had a coworker that argued for a flat tax—considered that fair. I explained that anything less than a progressive tax was going to make the poor pay more and the wealthy pay less. Really, that's fair?
You should be so lucky to have enough that you're in the highest tax bracket.
Yeah, I can't imagine somebody arguing in good faith that a flat tax is fair unless they are completely oblivious to the concept of the diminishing marginal utility of income.
A relatively high 'flat tax' might be palatable to the electorate as long as the first $85,000, give or take, was completely tax-free. People would only have to contribute once their own needs are met and they actually have something left over to contribute.
That’s progressive taxes. Consider that roughly the bottom 60% of Americans have no federal income tax liability, simply because they do not make enough. That 60% cannot meet their basic needs on their incomes, very roughly speaking. Any increase of taxes on them would be regressive.
It’s kind of progressive. Depends on how high the deductible is, it is definitely semi progressive. Tax bands would still be more progressive, it’s why someone making $50k is paying more state income tax in Alabama than they would in California.
Indeed. I should rephrase that I think it would be feasible to use propaganda/marketing to redefine what a "flat tax" is, and make the most popular definition one where the basic living wage is exempt and the "flat tax" only applies to the amount over that.
Through that confusion of language, it might then manage to be popular with both libertarians and progressives.
I believe everybody understands that a percentage means exactly that.
But if you account for minimum living expenses M, if you are under M, 30% of M is "more" than if you are at 10x M for the quality of your life. What scheme is "fair" is harder to figure out, though.
Yes, I object to that type of language too, but let's not ignore the context.
I’m assuming they think that rich people spend more so they pay more. This is a fallacy, because poor people spend a higher portion of their income (over a 100% a lot of the time).
I don't get it - what about "taxing consumption" makes it "fair"? Poor people aren't poor because they spend more money than others. They are poor because they don't have enough money to live a "decent" life (assume a middle-class lifestyle) or to even save it. Right?
Until you get to things like Vimes Theory of Boots. Not all consumption is equal. Not all consumption can be reduced. A burger wrapper might not care about economic status, the bag of beans and rice might.
i thought most economists would agree that consumption should be encouraged and savings should be discouraged. and that'd be how progressive taxes work? people tend to save more and consume less as their incomes increase?
It's funny, because sales tax is considered among the most regressive form of taxation we employ from my understanding, which is supported by my econ friends. But I'm certainly not an economist.
Economists argue that they are the fairest because they tax consumption rather than production.
Also everybody pays them, including people that avoid taxes (including criminal activities and tax evaders).
The argument against this is that lower income households pay more of it as a portion of their income thus the consensus is that to be fairest you need rebates and no taxes on many essentials (which is why often medicines or milk, bread etc have very low or no sales tax/rebates).
IIRC, consumption taxes are more efficient in that, ceteris paribus, they result in the least economic distortion in terms of global wealth and productivity compared to alternatives like income taxes. But they're the least fair in the sense that those lower on the income bracket bear a higher burden in terms of marginal cost due to the higher fraction of necessary living expenses relative to income. Your first $1 of income and consumption has more marginal value to you and society then the second $1; so an X% tax on that first dollar has a higher marginal cost than X% on the second dollar. It's unfair in a very meaningful sense, not just a hand-wavy rhetorical sense; everything in economics is about marginal pricing.
Think of it this way, which has more marginal value, a) $1 spent on food required for a person to live, or b) $1 spent on a fancy fixture for a new yacht? The answer is (a), both from the perspective of the individual and society has a whole; society because $1 spent sustaining a living individual contributes more productive capacity to society than $1 spent toward a yacht fixture, even after accounting for the fact someone was paid to make the fixture.
AFAIU, it follows that efficiency and fairness (in the sense of marginal cost) are fundamentally related. But it gets really complicated from there--complexity that the "ceteris paribus" above is hiding--and drawing concrete policy conclusions much more fraught. Relatedly, consumption taxes can be structured in a progressive manner similar to income taxes, but... it's complicated; it's not so easy to ameliorate the unfairness issue, and once you start graduating rates it becomes difficult to compare schemes directly. For instance, I think just as a practical administrative and accounting matter progressive income taxation is easier to accomplish than progressive consumption taxation.
It is a good point. It depends on how regressive is defined. There are many competing arguments here, but two I am aware of are
1. Regressive deals with % of income spent.
2. Regressive deals with an ideal state where those with more excess income contribute more than those with less.
In both of these, I suppose sales tax is regressive if it applies to all items, but only 2 is regressive with sophisticated rebates and untaxed categories.
"The law, in its majestic equality, forbids the rich and poor alike to sleep under bridges, to beg in the streets, and to steal bread." -Anatole France
I can't say how much such a person should pay in taxes, but it is kinda funny that I'm paying the same amount 39.5-40% with my five digit salary and no property.
I don't know who should pay what amount, but I'm pretty sure that me and that millionaire should have different tax brackets. Let alone people with tens, hundreds of millions or more.
PS: I'm in EU, not USA, but here I'm in a highest tax bracket so the point still stands, my tax rate is the same as for any local millionaire. Maybe even more, since those people are aggressively utilizing tax loopholes, shell corporations and offshore tax havens.
You pay the same proportion, not the same amount. 40% of 1M is 10x more than 40% of 100k.
Disregarding all technicalities about what proportion people actually end up paying after performing clever tax planning.
Why are you sure that someone earning 1M should have higher proportion of their income taken away than someone earning 100k?
At some sufficiently low level of income I think it stops making sense collecting taxes, but beyond that I'm not so sure from a fairness-perspeective.
I could perhaps get on board with a hard cap on wealth, for preserving democracy. It is dangerous to have single individuals and families attain too much power. But up to that cap, I don't see any inherent unfairness or inefficiency in that people of moderate to high wealth pay the same proportional rate.
I agree about wealth cap. I suspect that ultra-rich would rather pay higher taxes than have a hard cap. Or cap will be defined in such way as to become meaningless. This is why I advocate for high tax brackets, as being more realistic in practice.
As for proportionality - taxes are inherently unfair on the individual level. But they are fair on the large society level. All of our niceties are essentially funded from taxes. Current "free market" plus corruption mean that to finance growth more and more money is needed and part of them come from more and more taxes. But a lot of basic goods are fix price or low enough price, so that they make le and less percent of person expenses the more income rises. So to be more fair, it is fairer to increase tax on the ultra-rich class and spare tax increase on poorer classes, making average suffering lower. If we simply increase all taxes, then the lower the income the more tax a person would pay. It in kinda unfair and not productive to do it this way.
What I am trying to disagree with, is the notation that it is unfair if high-earners and very-high-earners hand the same proportion of their wealth and income over to the government.
My take on the wealth-cap is that it isn't about fairness at all. Actually I think it would be mostly unfair, but that it would be good for society anyway. Fairness is an important value, but it is not the only value.
Selecting the precise threshold where a marginal point kicks in is pretty funny, though I'm sure you didn't intend it. Above a million there's also the MHSA tax. Marginal at over a million is 50% or more unless you optimize.
This doesn't seem quite right. Even using SmartAsset's income tax calculator for a city in California, I'm getting around a 45%+ tax rate for someone making one million a year of income.
It's actually pretty easy to pay an 80%+ tax rate in California if you consider taxes that your employer pays, sales tax (11%+ in some areas), local assessments, capital gains tax, etc.
I'm quite sure your calculator is very basic and stops at 401ks and little more, there's stuff like mortgage interest, being married with kids, backdoor roth, etc.
But yeah, wouldn't change the number you said dramatically, maybe it would lower it to 45%ish on a 2M income.
>Taxes paid by your employer aren't taxes you pay.
They have the same effect in that they reduce what employees take home in a given labour market. Employees are effectively paying them in the same way that people who buy alcohol/cigarettes effectively pay more in states with higher taxes on those items (even though the taxes are technically paid by the stores).
If CA eliminated all income taxes and instead had employers remit the same effective rate for all salaried employees, employers would just reduce salaries accordingly.
As another example, France's income tax rates cap out around/below some high tax US states. But France is still a comparatively high tax jurisdiction largely because they also impose massive payroll taxes on employers which effectively reduce employee wages.
> >Taxes paid by your employer aren't taxes you pay.
> They have the same effect in that they reduce what employees take home in a given labour market.
Careful, you're thinking like a Marxist (assigning value based on costs ultimately culminating in labor). Under Capitalism, value is assigned based on the meeting point between what people are willing to pay, and what people are willing to sell it for. Some things, like Pokemon cards, are far more valuable than any costs incurred in their production. Other things, like Aunt Betty's utterly disastrous attempts at baked goods, are worth less than then they cost to produce. Payroll taxes only directly effect the purchaser's willingness to pay. Only if we believe that companies are currently paying 100% of the wages they would be willing to pay if they needed to can we call the payroll tax entirely a tax on the worker.
Taxes paid by your employer are indeed paid by you. If your salary is X and the company is paying Y worth of payroll tax, then they're really paying X+Y for your services, which would all be salary going to you if not for the payroll tax.
As I pointed out elsewhere, "X+Y... would all be salary going to you if not for the payroll tax" makes the assumption that companies are currently paying 100% of what they could possibly be willing to pay for that employee's labor. Given the profitability of California's companies, I suspect there's some surplus there. And a surplus suggests that the value of the labor is being driven moreso by what price will attract sufficient employees, which would only change due to 2nd or 3rd order effects by the elimination of payroll taxes (via competitors willing to pay more for a finite pool of top laborers popping up).
I believe it is a reasonable hypothesis that if payroll taxes were removed, 2nd order effect would be that employers have more money to offer for all positions, and in a market driven job market, prices would increase and thus salaries would converge to X+Y, yet they would be worth the same as X today.
Yes, likely not exactly the same (a bit more kept by employers in overcrowded job markets, a bit less in others), but it would essentially support the interpretation that most of that is really a tax that goes out of employee "budget", or their total comp.
That part is not necessarily (or even probably) true, if payroll tax didn't exist the company might not pay all of that to you unless they had to.
But that's a nitpick... overall, it is true that the fully burdened cost of having that employee is X+Y, so that's the number the company needs to consider when deciding whether they can afford to hire (or keep) this person or not.
But the value Y could also be put towards hiring somebody else to do an additional job, giving somebody else a pay rise, or giving money to the shareholders.
In market dynamics, a worker becoming cheaper means that some employers will fight to hire/keep an employee on that surplus, thus driving the employment cost up for everybody else.
Yes, it probably would depend on positions and available talent, but overall and over a longer period, if applied universally to a market (say state like CA), it will be reasonable to expect salary increases (but not increase of how much is that worth because of increasing purchasing power, and increase in prices due to higher willingness to pay).
Sales tax is one of the most UNFAIR, being a flat tax, it affects people in indirect proportion to their wealth (poorest hit hardest, proportionately).
This is the only counter argument, and in fact the consensus is that they are the fairest (they tax consumption rather than production, we tend to tax producing wealth more than spending it) if you offer rebates or lower them on essentials (bread, milk, eggs, healthcare).
They also have the effect that everybody has to pay them, including tax evaders, tax loophole abusers, criminals with undeclared incomes, etc, everybody has to pay it.
But yes, without offering sales tax rebates or with taxing essentials then your argument is true and they become less fair.
Albeit, the elephant in the room is always the definition of fairness itself.
Even with sales tax being on consumption, rich people and their accountants always look how to reduce the burden: say, that trip to Hawaii was a business trip, and that expensive suit a business cost, and sometimes you can claim some of that is "wholesale" purchase to avoid it.
In jurisdictions using VAT (like most of Europe), there are whole schemes like that to effectively reduce your VAT burden through use of company purchasing.
In my eyes they are not fair, because while they tax consumption, they very disproportionately affect buying power the less wealth you have. For a millionaire, paying let’s say 30% more for new shoes is not going to meaningfully change how much money they’re left with. If I’m poor and I need new shoes (because you can’t just afford a new shoes when you want them so it by necessity implies you’re in desperate need of them), that extra 30% means one less grocery trip. Or heck, even 30% on groceries potentially means one less grocery trip.
Which is to say, being poor is expensive, and sales tax only makes it more expensive, while literally not affecting the bottom line of those in higher income brackets.
But wealthier people tend to consume more. The top 10% of earners account for~50% of consumer spending. It's more like the low income person pays $5 of sales tax on a $50 pair of shoes, and a high income person pays $50 of sales tax on a $500 pair of shoes.
Haven't you read Capital? Marx's core premise which nobody actually working in economics denies is that the nature of wealth is to consolidate in the hands of the few. So while wealthier people may consume more, that does not factor into "fairness" because they are hoarding their wealth, amassing power over others, and using it disproportionately to maximize their pleasure, power, influence, etc at the cost of the suffering of others.
But I take it from your glib comment you'll disagree or deny that.
LOL. Do you actually think that person has read Capital or much of anything economics related? These types of internet arguments don't happen among equally equipped participants. People can just say random shit on the internet it turns out. They do it all the time.
At what point to we have to stop playing pretend with people who never participate in good faith? I get the argument that there are ignorant observers who might learn something. But I've not actually seen any sort of data to support anything like that.
Even Georgism style taxes will face the problem that if the tax is high enough, it will be worth hiring some really smart person to figure out how to work around it.
Of course, you're also going to have to face the problem that representative democracy includes the ability to buy loopholes.
And then, there are unintended consequences because representatives aren't necessarily the most financially savvy. I'm thinking about the 401k program that disproportionately advantages high income people when it was touted as a savings route for middle class people.
The 401k statute didn't actually grant any additional abilities to people: It set limits on a tax dodge you could already do. If I'm a CEO at $MEGABUCKS, and I make vastly more money than I need each year, I'm paying in a high tax bracket. I could instead strike a deal with my employer: cut my pay in half, and then keep paying me after I stop working here (pausing payments if I get another job), until the difference between what I would have made and have made is eliminated. All perfectly legal. But what I've done is taken money that was destined to taxed at a high tax bracket, and deferred it into a lower one (by spreading it across multiple years).
401k identifies this loophole and sets limits. Setting contribution caps, limiting withdrawals until retirement, etc. Then they incentivized offering it to the poors, too, because working out an ad-hoc agreement like that is the sort of shit only really high power people in a company have the opportunity to do.
In short, the primary purpose of 401ks wasn't to benefit the middle class, it was to slightly reign in the rich.
This loophole is very much alive today. I've recently worked at a large public company where the company allowed any percentage of pay to be deferred into the future.
The regular workers couldn't afford to do this of course, but the executives making many millions would defer most of their pay into the far future (presumably after retirement) to pay very little tax today.
I also like the idea of sales taxes over income and especially wealth taxes for a number of reasons.
1. It limits the opportunities for the government to use force on the general population. Today, if you do not file your annual taxes, men with guns come and put you in jail. A sales tax does not require this level of enforcement to be inflicted on the average citizen.
2. It's voluntary to a degree. Today if you don't like what the government is doing and want boycott paying taxes you cannot practically do so because of point 1 above. With a sales tax you can decide to defer unnecessary spending as a form of protest.
3. In theory it's vastly simpler to reason about and plan for. The myriad of tax advantaged accounts that have proliferated over the years in the US is daunting: IRAs, 401k/403b, 529s, FSAs, HSAs, Trump Accounts, Roth variants. We ask citizens to best guess how to allocate investments between these vehicles for goals decades in the future. If you need emergency access you're often looking at paying penalties. Not to mention the poor user experience baked into many of the designs. 401ks put the burden on your employer to restrict your investment options to their curated choices and their chosen plan administrator. You have to leave your job and roll it into an IRA to finally have the freedom to pick your own investments and who you have the account with. FSAs have the annoying use-it-or-lose-it rules. 529s are bizarrely state sponsored but you can choose a plan from any state. Like your state's plan but want to have the account at your broker? Too bad, you have to use the administrator your state chooses.
4. It's widely understood that if want less of something you should tax it. By taxing income and wealth it discourages work and saving. A sales tax discourages consumption instead, which encourages saving and is also pro environmental.
5. Changing asset allocation is free. Today, changing investments in a taxable account, where there are gains, triggers a taxable event. This discourages the movement of that capital to other investments.
6. In theory it's harder to dodge taxes as the simpler system has less loopholes.
7. On average, people with more wealth should have more expensive lifestyles which translates to them paying higher taxes.
I understand the arguments that sales taxes are regressive, let rich people dodge taxes by living frugally, etc. I accept all that may be true and I'm ok with it. Many seem fixated on using the tax code as a mechanism to level inequalities, as if that were its primary function, and a sales tax doesn't advance that goal enough for them. I think I can accept that some people are going to be vastly wealthier than me and are going most likely live a much easier life because of it; much like I can accept that some people are going to much prettier than me, taller than me, less genetically disposed to certain medical conditions, have been born to better families/circumstances and those things can all provide significant advantages in one's life.
I mean Capitalism's solution to labor movement is to create company towns and using scrip to prevent it's workforce from freedom to leave. Maybe we can apply similar Capitalist principles/established solutions in this scenario?
How about instead of taxing them any differently than now, we prevent them from borrowing against their assets? Force them to sell their assets and pay capital gains.
This makes more sense. I hate when people talk about taxing the “net worth” of some rich guy when a good part of that net worth is locked into invested companies who are (hopefully) being taxed already.
The borrow scheme should be the thing being taxed really, because is a shadow realization of profit (they are borrowing against the current value of their assets)
Or better than that, loans backed by assets above some "jumbo" threshold ($10M?) triggers a capital gain on those assets in the collateral.
So if you get a $150M loan off of your amazon shares that on paper are worth $150M, but you paid $100M, you have a cap-gain of $40M, and at 20% tax, $8M fills the IRS's coffers.
This is something I've been in favor of for some time.
Obviously the tax basis in the assets would also be stepped up by this action.
The US should also get rid of the step up in basis at death. The recipient of an illiquid asset such as a family business should have a period of time (perhaps five or ten years from the triggering death depending on the type of asset) to "pay up" the tax basis "to market" at the time of death. Gains in liquid assets (such as publicly traded stock) should be taxed at the market value at the time of death by the estate or trust and passed on to beneficiaries with that adjusted tax basis.
> The US should also get rid of the step up in basis at death.
This would actually fix the issue without my suggestion, but it is a harder pill to swallow for the "soon to be rich" Americans that tend to vote against their current economic interests.
It is a real problem but its presented in a misleading way.
If you inherit a farm worth 1m and you have to pay estate taxes on that of 100k. You do not have to sell the farm, you can instead take out a mortgage to cover that 100k.
When we frame it that we its still very fair to the person inheriting the farm because who wouldnt want a $1m farm for 100k.
You fix it by sidestepping it. Don't do it, even though it is the simplest/easiest to implement, and instead create 5 other laws that surround it and accomplish the same goal. Loop the hole back a them.
Something like HELOCs would certainly be an exception.
The point is to disallow people who make a man's yearly salary every 60 seconds from getting <2% loans against an asset pool that would take hundreds of years for the average American to amass, if ever.
If the OECD decided collectively to tax them there is no where to leave to. They decided on a minimum global cooperate tax, then they can do that same for those 1%.
Of course there are still countries where one could park their money outside the OECD members but many of those are not exactly a "safe" place for such assets.
Hasn't this already been tried numerous times in numerous countries already? Didn't France attempt it multiple times without success and actually lost tax revenue with the creation and enforcement of the tax? Not to mention the wealth flight?
IMHO "this seems to be building up" in the US is a bit of an overstatement.
Mandami, AOC, and Sanders are the laughing stock of much of the electorate in the US. They are fairly popular in progressive population centers but not elsewhere. There have been activists promoting much the same ideas for my entire life (and I'm not young!) and they rarely if ever get national traction.
The "silent majority" in the US is just that - they don't make the news because they, in most cases, don't go out and protest and engage in battles with law enforcement. They have jobs, go to work, go home to their families, and vote - but they rarely are seen in the news any more than the fact the sun came up in the East and set in the West yesterday is "newsworthy" enough to be promoted in the media. "If it bleeds, it leads" is the criteria for being newsworthy.
The silent majority, also know as the banality of the evil, is waking up.
Until masks and Musks we're taken off this year it was possible to pretend that the normal would play into their hands, as long as they stayed silent and played along.
Now pretending that the middle class can survive under the zillionaires Reich is only possible for very delusional minority.
My hunch is that Mamdani and Polanski have struck this nerve. Already before the events in Minneapolis, but now the support for this is dwindling.
I've done some experiments here in the normal and even the well off people are seeing the root cause. And it being the narcissist individuals holding godlike power, instead of the good ole "rule based" or "value based realism" or "systemic change" or even the latest "superorganism".
But remains to be seen, I might be wrong or even worse the power can be so centralized to zillionaire cliques.
Billionaires tend to have multiple properties in multiple states/countries. This is more a residency issue and probably low friction for them to change states personally. The thing holding back would be where their business and employees are located.
That figure is highly misleading to cite by itself because the high tax rate also came with a bunch of loopholes and exemptions. That's why despite the drop in the headline rate of 70-90% or whatever, the actual tax take as % of GDP has remained remarkably steady in the past 7 decades.
This chart shows total tax receipts as a percent of GDP, which doesn't seem to address the poster's contention that historically the rich paid a higher share of those receipts through elevated marginal tax rates.
> That left a roughly $20 billion annual shortfall in California’s health-care budget. … In response, one of the state’s largest health-care-employee unions teamed up with a group of progressive economists and lawyers to come up with a way to make up the difference: impose a one-off 5 percent wealth tax on California’s billionaires.
It’s wild how dominant this proposal is. Not reducing costs. Not cutting benefits. Not a broader tax increase. Not a combination of ideas. Just “f*k these guys in particular.” If this is what passes for governance in California I’d leave too.
They probably won‘t. I recently watched a talk (in german) with Julia Friedrichs, who wrote a book about millionaires and billionaires and did many interviews with them:
In her research she found that many of the ultra-rich people actually have deep/patriotic/nostalgic ties to their home/community and want to invest there. They often use certain tax-evasion measures because everybody else does and she argued that those few ultra-rich people who really just care about minimizing their taxes have already moved everything abroad.
State taxes can be dodged by moving. Federal (US) taxes are supposed to be filed each year no matter where US-ians live. They can work games to not pay the US but that either requires "no formal income" or living where taxes are higher than the US.
Or, I guess, just don't deal with the US and either don't go there, or hope to not get caught.
If you read the article, the author frames the discussion around a retroactive tax in California applying to those resident in California as of January 1, 2026 so that it cannot be dodged by moving. Also, the words “US”, “US-ian”, “American” appear zero times. The word “federal” appears one time.
Those who pay the tax will assume the "one-off" label is false: if it works once, it will be repeated.
On my block alone, are the houses of (at least) two "49-percenters". 183 or a few more days of the year the owners are at their second homes in Arizona or Nevada, and gathering gas station receipts to prove it, while their California houses sit empty -- all just to avoid our state income tax.
How about that as a poster-child for misallocation of physical capital?
All these billionaires are comparing their problem to difficulties Norwegians have managing their finances with the wealth tax there. The difference being that the wealth tax in Norway kicks in after a few hundred thousand dollars of wealth so regular people actually contend with it. Like even the most successful startup founders likely won’t ever pay the wealth tax before reaching a liquidity event.
> Start-ups and venture-capital investment could begin to flow to lower-tax states; the next hub of technological innovation may end up being seeded in Austin or Miami instead of Silicon Valley.
There is another agent (group of agents) in this game and that's other states. Those states are often modeled as passive background places one can move to, but they are often not. They can, and do, react to tax laws in other states. For example, TX could encourage capital flight by offering tax breaks.
I've seen this happen with some companies in Midwest: as the states had to raise taxes some Southern states decide to poach individual companies and offered them to move their HQs there with a bunch of tax rebates and credits and such.
> The tax’s designers, however, think they’ve come up with a clever solution to capital flight: a one-off tax that is retroactive, based on a billionaire’s residency status on January 1, 2026.
That is pretty clever. They could also have an "exit tax" -- "leave but if you've been here for 10 years making your billions, we'll keep some of those billions" kind of a deal.
The greater issue is we allow the richest to basically print money via their stock based compensation, which allows them to turn unrealized gains into loans backed by these stocks. They can spend that all they want to influence politics and wield illegitimate power. If they can spend this wealth, they can be taxed on it.
Make stock buybacks illegal again too. Overturn Citizen's United unless the head of the company can face charges for the actions of their company.
The concentration of wealth into the highest strata is a recipe for societal collapse seen multiple times in history.
This only works if stocks go up, up, and up. Otherwise they will have to realize gains at some point to pay off the loans.
I don't get why we have to jump all the way to a wealth tax, could they not just force asset backed loans to trigger a tax? This seems way more targeted and we won't have people assessing what everyone is worth. I think it would avoid some unnecessary precedent setting. They could put the impetus on the billionaire taking the loan to state what the assets are worth and related gains.
While I think I actually support this, does capitalism not cease to function if you put barriers in place to prevent the growth of capital. Think trying to get that passed would be even harder than a wealth tax.
Also the way QE works is that the rich companies and individuals are the ones who can take out large loans against their previous economic assets as collateral and leverage that money in the market such as the AI bubble. They also are the first to spend the new money so the inflationary effects only kick in after they've taken out then loans.
The wage earners feel the inflation in their wallets.
This hints at a major misunderstanding that, frankly, drives me nuts. If people are getting paid in stock, they pay taxes on the value of the stock they are paid with.
Can they take a loan on existing stock? Yes. You can leverage assets and this, itself, leads to some pretty unfair things. No need to inflate it to the idea that "getting paid in stock means you don't pay taxes."
>The greater issue is we allow the richest to basically print money via their stock based compensation, which allows them to turn unrealized gains into loans backed by these stocks.
How's this different than if CEOs or whatever were paid in cash, and then they immediately bought stocks with the cash?
You owe the same amount in income taxes regardless of whether you're paid in stock or cash.
I think you're confusing this with the case where founders or early employees own large amounts of stock that they received early on in the company. They paid little to no taxes when they received it because it was worth basically nothing at the time. Later, the company has grown and it's worth a lot, so they have a large unrealized gain that they can use as collateral for loans. But that certainly wasn't guaranteed to happen. Most startups fail.
The problem with this question is they never mentioned or specified who is "they".
Especially in UK where The Rich that dont belongs to UK in the first place will of course move and leave. Those who are born and raised are highly unlikely to move.
And perhaps most importantly the question completely ignore the real problem. There isn't a lack of Tax revenue, but the government incompetence to allocate and use it wisely. To raise tax is just saying what we are doing now is absolutely correct and we will continue to do so.
The tax system is made with large incentives for all business owners (from billionaires to small businesses to shareholders like retirees) to invest all profit into expanding their business.
If an owner takes out profit, they are punished with high income taxes. So they reinvest in their business, and this is what the government wants because it creates jobs, innovation, products and services, and tax income.
So they've been doing what they have been forced to do by the government. And as a consequence their companies are worth a lot.
Now the government wants to tax them on the company value?
The double irish, single malt, capital allowances for intangible assets.
If everyone would be able to play these tax avoidance schemes I'm sure society would collapse. For big players these are easy schemes and somewhere this untaxed wealth must be recaptured. Just favoring the rich further accelerates the wealth imbalance.
>If everyone would be able to play these tax avoidance schemes I'm sure society would collapse
Would it? Or would it just shift demand around? I mean the money is still there, and I don't see any reason the entities with money would lock any more of it up in a "static" manner (e.g. gold bars and piles of cash) than they do now.
That of course depends on what you mean by "society".
But everybody is able to reinvest profits into a business they have, whether that's an industry giant, or a tiny one-man shop. There is no government on planet Earth which considers that to be "tax avoidance". Governments want profits to be reinvested and not paid out to owners, even the most socialist governments you can find.
If you're against this, then you shouldn't talk about taxes. You should rather talk about abolishing private property completely.
> That of course depends on what you mean by "society".
Yes, that is the old discrepancy between society in the true sense and society as imagined by libertarians. A few strangers waiting together for the bus do not constitute a community. If the bus is canceled and they organize a carpool, then a community has formed. If you scale this up and replace personal relationships with institutions, you have a useful concept of society.
For libertarians, society is any large gathering of people who interact with each other in some way (or not), even if they rape and devour each other. If you understand society in this way, it cannot collapse (or is constantly collapsing).
If we remove from life everything that people have access to by industrialization and mass production, then many or most people would say that "society" has collapsed.
That would be the consequence of taxing ownership in companies, since there would be no reason to invest to create big companies. And for industrial society you need big companies. You need giant companies, and taxing owners on the size of the company means that people will not invest their money or effort build industrial scale companies.
The other way to have industrialization is to instead have a command economy, where the government mandates what is to be done.
> If we remove from life everything that people have access to by industrialization and mass production, then many or most people would say that "society" has collapsed.
I agree.
But I'm not convinced by the next paragraph. You present it as if it were a matter of 0 or 1. But I don't see any good reason why taxation shouldn't be used to make adjustments without immediately collapsing the entire incentive structure for investment. Less profit is still profit. If this argument were valid, there would be no large industries in countries that tax companies more heavily than the US.
No country which I am aware of taxes companies for reinvesting profit and for growing. On the contrary, some countries instead give tax breaks to industries if they are large enough. And these are socialist countries.
Thinking about how incredibly many factors have to come together right for a giant business or industry of any kind to be able to exist, I understand that governments are very careful to not poke them with too many sticks. Their products and services exports (and imports) are an incredibly valuable bargaining chip in foreign politics. The only other significant bargaining chip which nations usually have are military threats, and that isn't a pleasant road to travel.
Yes, I understand what you're saying, and I agree with you: promoting growth and reinvestment are essential parts of a functioning economic and industrial policy. But that doesn't mean we have to tolerate massive and harmful wealth inequality, or that the only alternative is an aggressive foreign policy. I mean, what is the implication here? “Leave the super-rich alone, otherwise the economy will collapse like a soufflé if we don't go to war instead”? If that is the final conclusion of economic competence, then everything is going down the drain anyway.
Ultimately, an economy is all about the side effects you describe (goods and services for the population). The fact that, while producing these side effects, the machine also leads to massive wealth accumulation among a small number of people is another side effect that basically has nothing to do with the core tasks of the economy. The question now is how to evaluate this additional side effect. If it does not have any negative consequences, it can be ignored. If it does, it should be counteracted.
It's like in a combustion engine. Oil has to be added for the engine to work. But over time, dirt particles, metal abrasion, soot, and combustion residues accumulate in the oil, overwhelming the oil filter and reducing its lubricating ability. If you don't reset it to a “healthy” basic state at regular intervals, it gets so bad that it prevents the engine from operating and ultimately even destroys it.
Does the massive wealth inequality we see today cause problems that lead to the erosion of society itself? I would say yes, definitely. Of course, it is frustrating for these people when the money they have generated is taken away from them. But let's look at it realistically: if someone has $100 billion and $99 billion is taken away from them, they are still in a situation where they lack nothing financially.
At some point, you've played capitalism through to the final level. And then you should put down the controller and go outside to listen to the birds chirping instead of frantically chasing after the growth of a number that, due to its sheer size, no longer has any concrete meaning, apart from the fact that there may be two other people whose numbers are bigger or who are hot on your heels.
> Does the massive wealth inequality we see today cause problems that lead to the erosion of society itself? I would say yes, definitely.
On a side note. Yes, the massive wealth inequality is eroding society. But billionaires aren't the source of this problem. They are outliers, freaks if you so will.
The real problem is the massive wealth inequality is the gigantic prices of real estate and rent, created by the monetary system being based on real estate instead of productivity. That means it is very hard for a person to claw and scratch her way to equality if they're not born with real estate or gets that benefit at an early age. For most, their irredeemable mistake in life was choosing to be born in the wrong decade.
At the same time a huge percentage of the population who has never made any effort in life and generally have no talent or any admirable qualities, get great wealth and comfort by having been born at the right time.
For every billionaire there is a a hundred thousand of the kind of person described above. Most of us have them not far away, and they have a hundred fold bigger impact on our lives than any billionaire. And at least many billionaires have at least accomplished or done - something - in their life.
> At some point, you've played capitalism through to the final level. And then you should put down the controller and go outside to listen to the birds chirping instead of frantically chasing after the growth of a number that, due to its sheer size, no longer has any concrete meaning, apart from the fact that there may be two other people whose numbers are bigger or who are hot on your heels.
Wouldn't building a rocket to go to Mars for example be such an endeavour, which is bigger than chasing the imaginary dollar number? Or the philanthropic endeavours of other famous billionaires? Or even exacting political influence in the shadows, which is probably something all known and unknown billionaires do?
> the gigantic prices of real estate and rent, created by the monetary system being based on real estate instead of productivity
Rents are expensive because real estate is expensive. Real estate is a good store of value. The massive accumulation of surplus wealth among a small portion of society has led to an increased demand for stores of value. Someone looking for a house to live in competes not only with others who want to live in it, but above all with the super-rich who want the property as a store of value. That's why real estate is expensive.
> Wouldn't building a rocket to go to Mars for example be such an endeavour, which is bigger than chasing the imaginary dollar number?
That's conceivable. But I don't see the space science fiction of Le Guine or Asimov being realized in the activities of Musk and Bezos. To me, the whole thing seems more like an awkward dick measuring contest. The awkward situation with Shatner was a good example of how hollow and superficial this whole thing is. These people could go down in history as benefactors and heroes of humanity. But they don't have the guts for that. Either they launch rockets or go to the gym or sit with Joe Rogan or try to undermine democracy and replace it with a neo-feudalist hell.
Edit: I agree with you that we don't necessarily have to focus on the billionaires who are so prominent in the public eye. Below them, there is a larger class of super-rich people who have their fortunes managed for them, never lift a finger in their entire lives, and yet still attract an ever-increasing share of society's overall wealth.
> That's conceivable. But I don't see the space science fiction of Le Guine or Asimov being realized in the activities of Musk and Bezos. To me, the whole thing seems more like an awkward dick measuring contest. The awkward situation with Shatner was a good example of how hollow and superficial this whole thing is. These people could go down in history as benefactors and heroes of humanity. But they don't have the guts for that.
SpaceX has done a huge amount of engineering work in making the cost to get mass into orbit significantly cheaper, more reliable, and more routine. Elon Musk is, on a personal level, because of the sort of company he chose to build after becoming wealthy, absolutely responsible for bringing humanity closer to a future imagined in space science fiction.
Taxes are often used as either incentives or disincentives for certain behaviors. Examples of incentives are the Child and Dependent Care Credit and EV Tax Credits. An example of a disincentive is a Mansion Tax.
When a significant share of the taxes you pay are mishandled or lost to fraud, yes it is a punishment.
That's been happening for a long time in the US. Staggering military industrial complex. Tens of billions lost in COVID relief. Billions lost in Minnesota due to unchecked privatized social welfare fraud (which has been known about for a decade).
Some mistakes will happen. What we have is unacceptable. If the government can't handle the money responsibly, it has no business collecting the money.
Minnesota is only a drop in the ocean compared to Florida and other states. One of the current FL senators was CEO of one of the companies convicted of a much larger fraud.
That's more an indictment of the way you (the US) starve your public services of proper regulatory power with the right level of personnel to handle it.
But your Congress voted last year to defund the IRS and the administration are busy gutting the SEC and other regulators.
Oh and government fraud has nothing on the commercial and rent-seeker frauds extracting wealth for no benefit from their positions of control. But anti-trust prosecutions are basically a dead path for rectification.
Blaming the "government" for what happens from obvious policy failures is the fault of the policies and those that set them, not the "government" as some nameless bureaucracy.
>That's more an indictment of the way you (the US) starve your public services of proper regulatory power with the right level of personnel to handle it.
>Blaming the "government" for what happens from obvious policy failures
Who creates the policy that fails if not the government? If a supplier kept telling you they'd do something and kept screwing it up at what point do you move them to the bottom of your list for who to call to get stuff?
It's really easy to sit there enveloped in pure ignorance and say "those idiots just need to fund an administrative agency to prevent fraudulent daycare" or whatever but nobody in the US wants to do that because everyone's seen with their own two these sorts of endeavors turn into feeding troughs and revolving doors and rackets that the politicians and politically connected use to run businesses that make money by going through motions that provide little (just enough to keep some political support form useful idiots) value at taxpayer expense. How do you solve such a problem? It's immensely hard and complex.
I'm so sick of ideologues who can't think two steps ahead peddling these sorts of "just do this" simple and wrong solutions.
Do you have any sources for either or both of "billions" and "known about for a decade" that aren't a figurehead of the current US administration? Because this all smells a lot like "the immigrants are catching and eating cats and geese" story which also turned out to be a lie.
The fraud in Minnesota is upsetting. Fraud also appears to be nationally prevalent:
“New federal data released by the U.S. Centers for Medicare & Medicaid Services (CMS) shows the overall rate of improper payment in Minnesota’s Medicaid program is far below national averages.
In the review released this week, CMS found an error rate of slightly over 2.1%, compared to a national average of 6.1%. The data for the review was compiled before the Minnesota Department of Human Services began implementing new strategies to minimize the risk of fraud and harden its systems against bad actors.”
What is it if not a punishment? If you’re a high earner (not obscene earner, mind you) you already pay 50+% in taxes, on top of that you now have to pay even more?
Couldn’t it just as easily be equivalent to saying “you grew this year, so contribute some money back to society for enabling you to have the educated hiring base/financial infrastructure/physical infrastructure that enabled you to grow”?
Like, sure, you don’t owe growth taxes for a quarter when you didn’t grow. But why should you be refunded just because prior taxable growth isn’t denominated in money in a bank account?
> you grew this year, so contribute some money back to society for enabling you to have the educated hiring base/financial infrastructure/physical infrastructure that enabled you to grow
Apparently paying for gas, water, electricity, property taxes, taxes on everything you buy isn’t enough, now you have to “contribute for enabling”. What’s next? Pay because they “enable you to breathe”?
The system that exists in Germany has you pay 25% Abgeltungssteuer even on unrealized gains but those taxes can be deducted when you sell. Only in the event you sell at net loss do you not get that back.
States are in dire need of liquidity. Just look at global debt.
> Now the government wants to tax them on the company value?
I’m genuinely baffled at the incredulous tone here. Yes, that is exactly what should happen: laws, subsidies, and incentives enable a company to grow and flourish. Then, as the company grows, other laws incentivize it to give some of its state-sponsored affluence back to benefit the country.
Like, sure, the execution of that process is often dysfunctional, but the fundamental contract there does not seem like it should be surprising to people: we don’t have (many) socialist state-owned businesses, but the point of a functioning country is still to provide good things to the people living in it. Not to benefit businesses or a tiny sliver of the population.
That’s why we have everything from income taxes to interstate highways: to distribute wealth and resources to (a flawed approximation of, but it’s still the goal) everyone in the country. That’s just how non-corrupt governments are supposed to work!
Then why not tax the military? They are surely the most affluent company of them all, if you take a tally of all their inventory.
If you tax companies based on their size rather than their profits, then you're not going to have any big companies. Any investor or entrepreneur would be a fool to invest in making a big company.
But many endeavours need big companies and big investments. For example power plants. That's a whole lot of value to tax, such affluence! Better redistribute this wealth, and instead have a hundred thousand non-affluent hot dog stands.
> That’s just how non-corrupt governments are supposed to work!
In practice, every government in the world does not tax companies reinvesting their profit into growth.
Narrowly: because they're a utility funded by taxes, not an independent entity benefiting from tax-funded infrastructure. Having a military for defense/power projection/whatnot is one of the infrastructural benefits of being part of a state (and one of the things that a company that grows in that state "owes" the state tax money for--whether that's owed on growth or just capital).
Like, do I personally think my country's military should have a vastly different funding profile, incentives, and behavior? Absolutely. But that doesn't change the fundamental dynamic: $state provides $thing (security, clean water, cheap gas, whatever) that makes being in $state good for many people, people who do well financially within $state owe it money back on the basis that their doing well is at least partially a result of $thing being available to them.
> Any investor or entrepreneur would be a fool to invest in making a big company.
Not true. A growth tax need not be a 100% tax, so growth would still be an advantageous thing to do. Many countries have tax brackets today; that doesn't discourage people from getting rich.
Arguably these and billionaires have become a social menace. They undermine democracy, destroy our environment, and prioritize shareholder value over long term well being of the economy they live in.
If they all had unified in one voice against the administration, Trump might be more constrained. They might not be so hated. If they realized, like Henry Ford, that a strong middle class actually is good for THEM too, all this could be avoided. Instead they’re showing up at Melania screenings while average citizens are getting shot in the streets.
I don’t think they realize the fire they’re playing with my stomping on the social contract that made them so wealth.
But the pitchforks are coming for 12 years already. They got accustomed to the sight and even put some measures to redirect the masses so they fight each-other.
I just googled confused what a "Melania screening" (Thought it was like a sort of security screening, maybe all the ICE is messing with my head) is. First time i heard about the Movie. This feels like one more step the Trump fam. took to become some sort of celebrity-king thing.
Bezos gave $40m to make the movie. It was a way to maintain his companies position. It's standard oligarch tribute to the godfather. See Russia or Hungary for further examples.
The movie cost nowhere near that much to make. Melania got the money. It was her very own little grift, while her husband and his children have been extracting literally billions.
>Arguably these and billionaires have become a social menace. They undermine democracy, destroy our environment, and prioritize shareholder value over long term well being of the economy they live in.
Sadly, I'm far more worried about a thousand people who make a million bucks than I am about one guy who makes a billion.
You don't get to the B number by not being pretty darn shrewd and sociopathic so those guys must be pretty evil but man have the "upper middle class" or "professional managerial class" or whatever you wanna call the "comfortable enough to not think about the harsh economic realities of their ideas" class been an unmitigated disaster for western society over the past 20-70yr depending on how you wanna measure.
I did notice that the writer says he was commissioned to cowrite a report that will be the basis for a lawsuit against the tax:
> Four Norwegian entrepreneurs have commissioned yours truly, Dr. Laura Melusine Baudenbacher and Professor Dr. Dr. Mads Andenas to write a comparative law study on the Norwegian wealth tax. This report will be the basis for a class action against the Norwegian state.
I assume the fact it’s submitted to a court will dissuade the authors from making totally unsubstantiated claims, but it still seems like there’s a strong financial incentive for them to reach negative conclusions about the tax.
I do wonder still if the country is better off. Billionaires investing in an area tends to skyrocket rent, housing tax from greedy councils, and skews food and utilities upwards too.
The loss of the richest man in the village might mean the baker now has to kowtow his prices to his less well-to-do neighbours again
Seriously as someone who grew up in the Bay Area. I am here for the weather, family and friends. I don't care if billionaires leave and real estate prices normalize at the cost of a bunch of tech jobs.
That said I wish we would take a look at spending before we just keep raising taxes and then a year later saying "how are we gonna get even more money?". California has an insane amount of wealth per person and one of the highest state tax rates. Can they really not figure out how to operate with their current budget?
Sure this seems to have worked in high-trust homogenous society with similar values and goals. They have a very high baseline of wealth given abundant natural resources that'd need active mismanagement to not have a strong economy.
Extending their taxation or economic system to a larger, more populous, diverse, and economically fractured society would lose most of the reasons they're succeeding.
America in the 1950s had a 90% tax on the top tier. No-one of consequence fled the country.
No matter how you tax, the asset-owning class is almost guaranteed to remain in place, because the vast majority of their assets are physical, and cannot be easily moved except at much greater expense than any tax.
I mean, if offshoring took 75 years to achieve, what makes you think that any member of the Parasite Class will be able to pack up and leave within a decade, much less a half decade?
It costs ridiculously insane amounts of money to move a business down the street, and you’re keeping the same employees, and not re-training an entirely new batch of replacements in the new location.
About the only “asset” that can “leave” with anything approaching sub-decade immediacy are the purely digital ones, with a business that is 100% Internet-based and without any physical assets of any kind, where you can spin up a new offshore server and migrate the services to it with just a few mouse clicks.
And those are vanishingly few in number. Most so-called “Internet companies” still have oodles of physical assets, from offices (where return-to-office mandates force employees back into) to land to physical servers sitting in data centres.
And in the end, we have the most telling question: what is the difference with the wealthy leaving due to a tax, and failing to implement that tax in the first place?
NOTHING.
There are no downsides, only upsides. Either they leave and open up room for another entrepreneur to thrive in that spot, or they stay and pay the tax.
Either way, nothing of value is lost by wealth taxation.
I don’t want to believe for a second anyone would walk away from Silicon Valley because of being taxed. The impact on the calculus of reward simply doesn’t make sense. On the other hand I am always surprised by people and the strange things we do.
People walk when they don’t make money. You don’t look at Silicon Valley for these types of things. You look at a deprived forgotten town that could had survived were they not squeezed so much
Most people, by count, of course would not leave because of the wealth tax currently being proposed in California as it targets just a tiny segment of the population - current estimates are that less than 250 Californians, or less than 0.001%, would pay the currently proposed statewide wealth tax. The other 99.999+% would not (yet) have to pay a wealth tax. However, the <0.001% that (esp. the wealthiest among them) who would pay the wealth tax would be motivated to move.
Unfortunately for California about 40% of the total state income tax collected (which accounts for about 65% of the state general fund) is paid by the top 1% of income earners -- which includes those 0.001% who will be motivated to move by a wealth tax (or even merely the threat of one).
The <0.001% number appears to be based on population _before_ several billionaires moved out before Jan 1, 2026 - likely at least partially motivated by the small, but real, risk of the "billionaire's tax" qualifying for the ballot and passing (and that proposed tax is only "temporary" and is only a total of 5% over three years so isn't nearly as alarming to the wealthy as a "permanent" tax would be). If it looks like this measure will end up on the ballot and have a chance of passing, expect many more to leave. This will, even if it does not ultimately pass, erode the income tax base.
California has rebelled against wealth taxes in the past - most notably by the passage of Prop 13 almost 50 years ago (a property tax is a wealth tax). They are not popular except when the hit "the other guy" -- but "the other guy" is the one most able to avoid the tax.
Wealthy people are typically very flexible as to where they live. They often already own multiple homes and often spend a lot of time out of the state they "live" in. When they move, they are not packing and labeling their own boxes or are likely even present on "moving day". They also are more likely to set up HQ and shop near where they spend a lot of their time. Even if they have family in California, they can still get together with them for Thanksgiving dinner -- either by flying the family to them on their private and chartered jets or by themselves flying to California for the weekend on one of their jets. They can conduct most business very efficiently remotely and often do so now to a significant extent.
It only takes a few to leave to tank the California budget - likely causing the progressive income and wealth taxes to reach deeper and deeper into the upper middle classes as California desperately tries to balance their budget without cutting yet more programs.
Other states are loving this though and will cut tax deals to attract these very billionaires that California are encouraging to leave.
The article asserts that, since this is a one-time tax, billionaires will have no incentive to leave: "The tax’s designers, however, think they’ve come up with a clever solution to capital flight: a one-off tax that is retroactive, based on a billionaire’s residency status on January 1, 2026. In other words, unless they’ve already fled the state, billionaires won’t be able to move to avoid paying the tax. 'At this point, there’s no financial incentive to leave California,' Zucman said. 'You’re going to pay the same amount either way.'"
That misses the point. A one-time wealth tax to plug holes in the state's finances reeks of short-termism and desperation, like Chicago selling off its parking meters. Even if I wasn't affected by the tax, I'd be alarmed at the implication. It would have been much better to implement a well thought out and orderly recurring tax on capital gains or whatever.
There needs to be less concentration of wealth and power for our societies to work. Taxing the ultra wealthy should be a nationwide bipartisan project. At the same time, California isn’t the right place for this experiment because it will not solve the fundamentals problem of their government spending and wastefulness.
Mass. passed a high-income surtax a few years ago, with the result that we raied a lot of funds for schools & infrastructure, and we atill have plenty of rich people. Wealthy people hate paying taxes, but after paying, they're still pretty wealthy. And, some of them like living in a state with decent schools, health care, etc.
Wealth taxes are very, very different from higher income taxes.
People are mad about buy-borrow-die, so they’re proposing extraordinary new measures.
Personally, I’d just make capital gains taxes apply at the “borrow” stage to actually fix the problem. That would have a host of compliance issues but they’d be localized in the finance industry which already has an army of people figuring out compliance.
Years ago I had a client, a European billionaire, who moved to California because the taxes were "so low" compared to his home country. (The difference was only a few percent, and yes he had lived in Vegas with its 0% income tax before moving to California.)
He's still here, and unlike the PAB SV billionaires, he has no plans to leave because he's seen what places with no/low taxes are like. (TLDR: they have low taxes because nobody would want to live there otherwise. )
Here's a better question: do we need them? I'll answer it for you: no. Let them leave. We still have the resources and the productivity. The fact that some asshat that doesn't do fuck all doesn't get to scrape profits for himself is just another advantage, aside from just not having these annoying billionaires around. People need to open their minds to the idea of us just taking their shit for ourselves.
Okay, so aggressive taxation should then have its (proven) benefits weighed against the (dubious) benefits of having 30% of your millionaires change their legal residence to be elsewhere.
I think taxes still handily win with room to spare. Even more: plenty of those rich people are still in NY and participating in its economy (legal residence != where you actually physically live, especially if you have resources to game residence by owning multiple properties).
Not OP, but one example I can think of: Jeff Bezos moved from Washington state to Florida two years after Washington enacted a 7% capital gains tax "on the sale or exchange of long-term capital assets such as stocks, bonds, business interests, or other investments and tangible assets"[1] which "reportedly helped him save $1 billion in taxes."[2]
There's plenty of studies on this. There's unsurprisingly a modest but statistically significant migration of millionaires from high-tax to low-tax jurisdictions.
Let's do a thought experiment and take it to the extreme: why not tax at the maximum?
We have already tried that in human history, it's called communism. No one is allowed to take private profit, everyone contributes to the best of their own ability, and everyone consumes according to their needs. It should be utopia because there is no wealth gap and wealth is maximally redistributed. Which is exactly what taxation is designed to do, only to the most extreme.
And I think everyone will agree with me that communism is a miserable failure. The rich may not leave physically but mentally they are checkout -- not willing to work as hard or take as much risk. So the answer is yes, if you tax them, most certainly they will leave physically for haven with lower tax, all things being equalled. Or leave mentally.
But not all things are equalled, so you can still tax them at a somewhat higher rate provided that you can provide other incentives. But still, too much tax will make it more likely for those who are able to to leave. This is almost an axiom.
Communism has never been tried at a large scale. Soviet Union didn't have it. China doesn't have it.
Just because someone has "communism" on paper doesn't mean the society actually functions according to the communist idea.
Social democracy has been tried in many places and it has produced things such as the Nordic Model and the Nordic states that have been very successful.
After the 2nd World War USA was very close to socialism. High wealth taxes, workers unions etc. As a result your average worker had a lot of purchasing power which of course fuels economic strength.
In fact many if the world's best performing companies are a kind of exercise in socialism since the RSU programs share ownership and results of the company to the workers (even if it's a small share)
Reminder when left to it's ways Capitalism reverts to company towns paying in scrip to make sure workers can't move away, so manipulating financial payout is very much within the Capitalist model and fair game in their ideology (only stopped by Government interference).
Capitalism's final form is a dystopian hellscape of rivers that can be lit on fire, unbreathable air, leaded gasoline, asbestos ceilings, company towns paying scrip, strike break private militias, opioid epidemics (wild this isn't a one time thing for Capitalism, but then the model for Capitalism seems to endpoint with getting people addicted to the product).
Everyone can agree pure Capitalism is a miserable failure that creates an unsafe environment and product landscape based on addictiveness. Time after time when left to their own choice, Capitalists chose making a worse world. The Capitalism model requires tight constraints from society to prevent Capitalists from creating an horrific, awful world like they have every time in the past when left unregulated.
The question is why do we make sure Capitalism can't destroy our rivers anymore, or pay workers in scrip (creating their end goal ideal of an inescapable labor system) but when they economically destroy the civil fabric with unequal wealth distribution we somehow refuse to step in? Capitalists long term will NEVER chose societal benefit, yet somehow we keep hoping they will and under regulating them. I remember when extremely liberal friends started getting their vested options and them excitedly talking about the whole loan model to not have to pay taxes, even though they 'supported' high taxes and knew the societal benefit.
Seems a good investment. ROI is obvious and guranteed. Some might prefer progressing [say] add/fin tech over heathcare but it seems fine to ignore. Its not like they are really suffering.
There is a disrupt joke inthere but i cant think of it right now.
In a healthy economy flow of money is like the flow of blood in the arteries. It is what stimulates the economic activity. You can't earn a dollar without someone spending that dollar. Spending = earning = economic activity.
People are always defending rich people (capital owners) that they invest their wealth. But actually if someone has a billion in the bank the fact that they have that billion is a proof that they didn't invest it. (If they did spend it or invest it the would not have it, now would they?)
A billion that circulates in the economy is much better than a billion that sits in someones bank account. Someone who spends 100% of their income is much better economic citizen than someone who doesn't.
Banks don't just keep your money in a vault when you store it in a bank account - that would be stupid both of both the bank and of you. Money looses value over time due to inflation, so banks reinvest 90% of your stored balance into loans, stocks, bonds, etc. This means that a theoretical 1B account, would allow someone else to take a 100M loan to fund a new venture. This is how banks make money, and they pay you a small portion of their profits as interest on your money (since they're profiting off it).
This is still not a good idea for you, as the interest doesn't make up for inflation. Most people keep a small portion of their wealth in the bank, as easy access for emergencies (this is called dry powder[0]). The rest is typically invested into private equity, which allows new ventures to be created.
It's very rare for anyone to have more than $50m in the bank. The money is usually out in the market doing it's work.
The point of the story really was that most rich people, those who don't work for a living but live off of capital assets are in a position of economic power where their wealth accumulates. When the real economy grows a few percent per year but the wealthy gain 10-20% every year their wealth comes at the expense of everyone else.
This is the trickle up economy where the few people at the top suction all the wealth to themselves. And the rate at which they acquire it exceeds the rate at which they spend it.
A billion in the bank is invested - that's how fractional-reserve banking works. And people that wealthy don't really just put their money "in the bank". They usually invest it in riskier things.
I would hesitate to call consumption "better" than investment.
There are literally two economies - the one most people live in, and the asset owning economy which deals exclusively in land, property, resources, and shares.
The health of an economy is defined by the permeability of the border between those two classes, and the direction of flow.
If the flow is mostly one way, you're getting wealth extraction, not investment.
But assets are not easy to move. So if you tax assets and not income, it doesn't matter where the owners are. It only matters where the assets are.
1) velocity of money matters, some spending creates more economic activity than others due to re-spending.
2) Investment is not the same as having your money sitting idle. Investment makes certain activities possible because of scale, payment made with the expectation of future value, financing capital goods or R&D, etc.
Long term: yes, especially if you combine really high taxes in the 40+% range with consistently rubbish public services
But the real question is not whether people will leave, the question is how many talented hard working people chose not to move to your country in the first place because your taxes were too high. It won't show up in any data, you'll just experience worse economic growth and have to tax everyone else more
The answer is just no. Massachusetts passed a tax on income over a million dollars and despite the ads that were obvious lies, we have more millionaires now than we did a few years ago. Turns out, rich people like to live in places that have well funded infrastructure, good schools, a thriving art scene, etc...
Yep people will pay rates in "high tax" US states where you're still only paying ~40% ish total income tax and they're really nice places to live.
That would still be considered a fair and reasonable level of tax by european standards.
Obviously there is a level though - if you made it 95% then people would leave. I don't think there's any reasonable argument that the level doesn't exist, the question is where is it for a specific place at a specific time
95% on what? Income over a million dollars. Income over 10 million dollars? If you like living in a super liberal state and super liberal city like Boston, you're not going to move to Texas just because you're getting taxed higher. Rich people are still absurdly rich, I feel like that gets lost in these discussions. These taxes don't materially effect them in anyway but have massive benefits for society.
To be brutal about it the question isn't a how many more millionaires. Say Massachusetts has 10 new millionaires. That's great. What if Florida has 1000 new millionaires? Suddenly 10 doesn't sound great.
To my mind it's a revenue maximizing question. Is Massachusetts hitting that metric right? I have no clue. I do suspect that the voters and the people advocating taxes like this in Massachusetts and California are not thinking in those terms. I think they are doing this out of some sense that anyone making that much has to be doing something unfair and that an inefficiency in revenue is just money spent towards fixing that unfairness.
It has dramatically increased revenue, more than expected. Also, if you're the type of person who thinks you shouldn't pay your fair share, feel free to move somewhere else. We have the best schools in the country. We have a strong social safety net. We have a high quality of life. Shit, we live longer than almost any other state. So please, if that's not your thing, take your money and leave immediately.
The correlation between higher state and local taxes (beyond some reasonable baseline) and improved public service is tenuous at best in much of the US.
I'm happy to concede Massachusetts may very well have found the right balance, but there's plenty of studies on this in aggregate.
There's unsurprisingly a modest but statistically significant migration of millionaires from high-tax to low-tax jurisdictions.
I agree you should want to avoid having an income disparity like this, but we are where we are. The goal of this tax is to help correct that disparity.
One argument could be that maybe entrepreneurial personality traits aren't normally distributed, and unless you find a way change people's personalities in mass, the imbalance in wealth attraction will remain inherent.
Then you might ask, if that's true, do you I want to enforce equality, potentially dragging down the economy to mediocracy (for example many stagnating European economies) or maybe accept that current nature does not meet our societal desire for equality.
It's simply because money is compoundable. The more money you have the more you can make, and the more you make means less other people have.
This is a false zero sum view of wealth that is unfortunately all too common.
Having lots of wealth does not mean other people have less. If that were the case, there'd be as much wealth today as there was 1000 years ago. Making a company and having it valued at whatever value, does not remove that amount of wealth from other people.
> There's not a finite amount of wealth.
I think there is a finite amount of wealth, at any given time, same as "money". Money is a transactable medium to measure value, rather than as a type of good on its own. The medium can change region to region and over time.
Wealth is an aggregate of all valuables you possess, including expected gains. Wealth is also subjective, because of these properties. People agree on some approximations for the purposes of transactions with money.
> Making a company and having it valued at whatever value, does not remove that amount of wealth from other people.
Depends on perspective, I would say. When the value rises in a public company, even when it's just the expectation, you have people dumping their wealth (as money) into the company. So yes, it does for large public companies. While it does grant some rights, in a practical sense it's a hole you dump money into with the expectation that you can reach in and take out some amount in the future. I can understand this is what is envisioned, when people talk about wealth as zero sum. I don't agree, but I get what they are going at.
> If that were the case, there'd be as much wealth today as there was 1000 years ago.
Wealth is partially based on expectation. The growth in population fuels increases in wealth, because that's the part of the equation that is speculative.
If I have a $200K net worth, and I'm living in a city where the range is $1M to $500M, then I'm pretty much living in poverty, even though I have "more wealth" than in scenario 1.
This is also why, although my absolute wealth today is hundreds or thousands of times more than a king in the middle ages, I'm not actually living like a king today.
It's also how gentrification works. You're living somewhere and all of a sudden a bunch of very wealthy people move in, raising the prices of everything. You're no more or less wealthy than before, but everything has become slightly worse.
Can everyone be rich enough to not be in the bottom 20%? No, no matter how rich we become.
Can everyone be rich enough to have servants? No, unless you count machines as servants. But if you do, then I'm rich enough to have several.
It's not an issue that they are wealthy, it's that they are abusing that position to gain even more wealth at the expense of the rest of the population.
> Making a company and having it valued at whatever value, does not remove that amount of wealth from other people.
This is a strawman. The ability of people to accumulate wealth is affected by every aspect of the economic system, including the means by which those companies are acquiring wealth.
Lots of people with great ideas, skills, and work ethic don’t have $250,000 lying around to invest.
And Bezos's biological dad was a unicyclist, his mom got pregnant with him at 16 and later dropped out of college, and his stepdad was a Cuban refugee who got an education and became an engineer for Exxon. Going from zero to billionaire in two generations actually says something remarkable about our system.
Think about it another way. If the government doled out $500k to fund business ideas, do you think that investment would be available to kids of refugees? Of course not. There would be gatekeeping behind credentials and connections, and it would be open to a lot less than 10% of the population.
[1] In terms of birth lottery, having top 10% parents is like being born smart enough to get a 1290 on the SAT or having a 120 IQ. Not exactly rarified aid! https://research.collegeboard.org/reports/sat-suite/understa...
This data point doesn't distinguish between a system that fairly rewards abilities, and a system that works like a lottery. My guess is that the US is in between: it unfairly rewards abilities, and chance plays a large role.
Taking Jeff Bezos as example: 1) he certainly has remarkable abilities but maybe not 1,000,000 times more than the median American, yet he has about 1,000,000 times the wealth; 2) it's plausible that the US population of 350M includes several people with abilities similar to Bezos yet no notable wealth due to various circumstances. Both points suggest an unfair system.
It does? I mean, sure, it's better than having only the already rich stay rich, but let's not kid ourselves that this is a life outcome that everybody, or even 10% or 1% of the US can shoot for. The vast majority of people stay closer to zero. Who gives a shit that a few people get to win the right-time-right-place lottery?
Amazon does not have an exceedingly high profit margin, and my understanding is that a lot of it comes from stuff like AWS, not Amazon deliveries - correct me if I'm wrong here. So I'm not sure that "three amazon deliveries a day" - if this is even common - is why that man is personally rich. Even if it were a big source of revenue, that would go into Amazon's coffers, not necessarily his directly.
Another way to look at this: Even if Amazon is wildly successful, does that mean Jeff Bezos specifically should become filthy rich as a result, instead of all its employees and investors? How should the gains from successful entrepreneurship be distributed?
Jeff Bezos owns 9% of Amazon. So 9% of the expected value of the money going "into Amazon's coffers" indefinitely into the future is counted as part of his current "wealth." It's not money under his mattress.
Is your argument that people shouldn't be allowed to own 9% of a company that they started?
The term "capital" is an abstraction that's not helpful here. The big "wealth" numbers are all about equity ownership in highly valued companies. Bezos owns 9% of Amazon stock. That's why he's "rich." What should happen to that stock? What happens to his voting control over Amazon?
The question boils down to a feeling that when the revolution comes, that no one person needs more than, say, $100 million for themselves, or not. Trying to distract the conversation into defining "for themselves" will only prolong your time before the firing squad, comrad.
The answer depends on how should the losses from unsuccessful entrepreneurship be distributed?
For whatever reason, construction hits a snag or revenues are not enough to cover expenses, how would it become “society’s” problem? Do I get made whole by the government giving me $1M, and the government takes posession of the property?
If so, I foresee a lot more opportunities for corruption.
https://fortune.com/2026/01/13/us-workers-smallest-labor-sha...
And thinking about bubbles, imagine what happens when the GenAI one pops. The wealth some new billionaires had will go up in smoke, their assets will go on sale, and they'll be gobbled up by the old billionaires.
But I think still a lot of people would argue the distribution is too unequal.
Luck always plays the biggest role. Maybe the billionaires would have always been successful in some way, but not be a billionaire or even a millionaire.
Also, your argument sounds like a just-so story designed to support the status quo.
> the imbalance in wealth attraction will remain inherent.
Is is really a good idea to be ruled by the people with the greatest "wealth attraction?"
> Then you might ask, if that's true, do you I want to enforce equality, potentially dragging down the economy to mediocracy (for example many stagnating European economies) or maybe accept that current nature does not meet our societal desire for equality.
Yes, because regardless of anything else, the wealth imbalance has been politically destabilizing. Your comment strikes me as out-of-touch quantitative thinking: making certain easily-measured numbers going up the highest goal, while ignoring other things that are harder to quantify. That's a blind spot shared by a lot of people, especially tech people.
So in regards to this economic issue, it seems that human personality traits that lead to disproportionate power/influence/money are distributed non-uniformly to an extreme extent.
We can try and moderate it as a system (e.g some forms of democracy, socialism, etc.) to maybe lower the amplitudes, but it would be ignorant to deny that this might be a core part of current human nature. Humans themselves are a specie with disproportionate power & influence compared to other species, so I think it would only make sense if this trait would also apply within the specie.
Now imagine, there'd be some alien government, who'd be like "whoa humans are making way too disproportionate progress compared to the other species, let's tax/prune them so they don't get too much power".
What do you mean, you found that out? And what does that have to do with anything?
> So in regards to this economic issue, it seems that human personality traits that lead to disproportionate power/influence/money are distributed non-uniformly to an extreme extent.
To me, that doesn't sound like an observation, but rather an interpretation. We could apply various epistemological carpet beaters to see what remains. One would be the critique of ideology. A few others can be found in the philosophy of science. It also seems to contradict your reference to thermodynamics. Wouldn't that mean that personality traits don't play a role at all? We don't look at individual particles, and certainly not at their personality traits.
> Humans themselves are a specie with disproportionate power & influence compared to other species, so I think it would only make sense if this trait would also apply within the specie.
I cannot understand this conclusion at all. Why should the structural relationship to other species be reflected within the species itself?
It's all an interpretation, never claimed it to be anything beyond a thinking model I like.
> To me, that doesn't sound like an observation, but rather an interpretation. We could apply various epistemological carpet beaters to see what remains. One would be the critique of ideology. A few others can be found in the philosophy of science. It also seems to contradict your reference to thermodynamics. Wouldn't that mean that personality traits don't play a role at all? We don't look at individual particles, and certainly not at their personality traits.
No we don't, but I don't think it's necessarily because we don't want to, but because we often can't. Nevertheless, I think my rationale still applies. For example, if you take a bunch of matter, for example water, you'd find out that the distribution of Deuterium and definitely Tritium is really "unfair". Why only so few particles get to have that extra neutron and others do not?
> I cannot understand this conclusion at all. Why should the structural relationship to other species be reflected within the species itself?
It doesn't necessarily have to but: 1. It seems to have been very favorable trait evolutionally to force your will on other species. I'm no brain nor social expert but it seems to me that in order to stop this trait internally, there would need to be some pretty strong inhibitors to counter that. 2. Regardless of the species claim, you can see the pattern of exceptional individuals with disproportionate influence in many other places in nature: queen bees, pack leaders, and human kings of sorts. in I think practically every culture on earth in recorded history?
I really struggle to think of any mass systems, in human society or nature in which power is not distributed disproportionally to a relatively small portion of individuals.
Where did I say that?
> If everyone was billionaire level money obsessed society would cease to work. There is nothing to indicate billionaires are giving us a disproportionate amount of what makes society work, and without working society to host it there is no progress.
I think if you wouldn't have the crazy risk takers who want the power/influence/money, either other people would need to take the lead on that, or there'd be a lot less advancement and we'd be closer as a society to our ancestors.
I've yet to see mass systems of groups in which work is being done without the leadership and initiative of a small proportion of people. For example, imagine a movement that is not founded by 1 or few people, but instead a company that is founded Day 1 with thousands of people, instantly. I think that's practically impossible without a hypothetical hivemind, but I'd like to be proven wrong!
By completely ignoring the facts about it.
> So in regards to this economic issue, it seems that human personality traits that lead to disproportionate power/influence/money are distributed non-uniformly to an extreme extent.
It doesn't seem that way to people who look at ALL factors, not just this one that is chosen to justify a sociopathic ideology.
Compound interest, and as (admittedly) an armchair economist I buy into the argument that goes along the lines of:
"when the rate of return on capital (r) is greater than the rate of economic growth (g) over the long term, the result is concentration of wealth".
In my view, r has been greater than g for some time now.
> Then you might ask, if that's true, do you I want to enforce equality, potentially dragging down the economy to mediocracy (for example many stagnating European economies) or maybe accept that current nature does not meet our societal desire for equality.
To me, it is clear that while Europe optimizes for quality of life to a large extent, Americans really drink the coo-laid and enthusiastically optimize for shareholder value. I highly encourage you to give life in Europe a go at some point. I hope you'll return (or stay) also having reached the same perspective.
I think for competitive and talented people, US in general offers much more lucrative opportunities as long as you're OK with the US specific drawbacks. For non-competitive people, living in Europe would probably be a more convenient.
I think the problem though is in the future, both the US and Europe has grave societal and economic issues but from the different angles. Europe lacks economical drive and seems to discourage change on a cultural level. The US on the other hand seems to be an extreme catalyst.
I'm not familiar enough with quantitative data to judge on the compound interest, nevertheless I think in the last few decades we have already been witness on the global level to major changes in wealth: empires like UK have shrank, giants like China have risen. This had been very different a few decades ago and is an anecdote at least that compound interest can only do so much for empires, in the face of major changes.
Only issue is, when you account for depreciation, you find that r>g applied to housing (so boomer NIMBYs) not billionaires.
This is not a Karl Marx thing, but a Henry George thing.
https://www.brookings.edu/articles/deciphering-the-fall-and-...
Why is it that we have to trim out nails when they grow? Why not leave it natural?
Why do we remove the weed in between the pavers in our backyard? Why not let it be natural?
The fact is the world around us needs constant work. Our capitalism is no different. It needs constant pruning or it becomes gluttonous. There was a book I think which said most people involved in illegal drug trafficking are barely getting by, most of the income is soaked up at the top. I don't remember the point the bio was trying to make but it feels like that way for any enterprise these days.
The richest people in the US have reportedly increased their net worth by over 1.5T over the course of the last year or so.
How is this sustainable?
The notion I'm getting is that these forces that drive change are bigger than all of us, and they are inherently unsustainable in the larger scale of things, pretty similar to how solar systems are not really sustainable in a scale much larger than us, but not that is still pretty small in a universal scale.
So for your perspective it might be unsustainable, but for the bigger system what you describe is smaller than a grain of sand.
Besides, there's this thing called tax incidence and it's not as simple as "tax the billionaires" because it's not clear how that plays out in terms of people's wages or middle class investments.
On the other hand, land value taxes would actually be incident on landowners.
Therefore devaluing the value of the dollar so that those who had basically steady state income (wage earners) have been completely fucked while the lucky ones had their yachts rise with the tide.
I'm not particularly in favour of high taxation, but I think that the argument is a bit more subtle than that. The general point is that "the ultra rich" are able to benefit from a whole host of loopholes which allow them to pay proportionally less than the plebs.
Now, this specific point seems somewhat debatable, judging by the fact that people don't seem to agree; I personally have not looked into the matter to form an opinion.
Maybe our tax code hasn't kept up with the financialization of the economy. In any case, this whole tax increase thing, at least as I see it in France, since to spill over to "regular rich people", as in engineers or similar who "just" have a relatively high salary.
Another issue, which I think is different but is rolled into complaints about rising tax rates is what the state actually does with the money. As in "I'm ok with paying tax, but not to fund this or that thing". In France, specifically, many "public service" offices have closed, having people either travel great distances or fight half-assed computer systems, while, at the same time, the number of public servants (so, cost) has increased.
Do you not see this? Probably because you don't feel it in your pocket (yet, let's see what happens when the USD crashes. I will feel it too, no doubt.)
There's the belief that the economy can be a mighty tool to improve our lives, but isn't it going pretty much overboard since some time? Is this materialistic growth-at-all-costs ideology really making average US lives better these days?
From the outside the US feels like a runner that is stretching its arm towards the finish line (total automation) while also falling on their ass.
That's not an argument, it's a completely counterfactual assertion ... or rather, the assertion that this is the cause of uneven distribution of wealth.
> Then you might ask, if that's true, do you I want to enforce equality, potentially dragging down the economy to mediocracy (for example many stagnating European economies) or maybe accept that current nature does not meet our societal desire for equality.
But of course it's not true, it's just an attempt to justify a morally bankrupt sociopathic ideology.
The actual question is: "If we tax tax them, will they leave? (losing the planned tax revenue/backfiring)"
It is pretty easy to avoid state taxes - just move to a different state.
Sounds like US vs Europe. Having redistributive policies funded by taxes works well until your most productive people flee for a country that doesn't, and you steadily lose ground to competitors economically.
It's going to be hard to provide all of that when you don't have the money for it (eg. fiscal crisis in France right now), or if you get invaded by your neighbor (or any other competitor) eclipses you economically and then uses that to subjugate you. The european model of reaping the peace dividend and using it to fund a more generous welfare state worked from 1990s to 2010s, but is breaking down with the rise of china and russia, and is further exacerbated by sluggish growth and the demographic/pension crisis.
This is the actual issue, which we often avoid talking about because it's grim. Like, health care is expensive, old people health care is really expensive, and the proportion of old people in many Western countries is increasing over time (because of a fall in birth rates). I believe the FT had a good article about this recently, where they showed that the vast majority of extra spending from government was on old people.
Now, clearly, society doesn't want to just shoot old people when they get sick, but I'm not sure how taxation is gonna look as the proportion of old people increases. Obviously increasing retirement ages helps here, but that's mostly just a massive tax on blue collar workers, who are much less likely to be able to continue working into their 70s, whereas for many cubicle jockeys, it's a lot more plausible.
Personally, I think a higher goal for the state is to provide a substrate of sufficient physical safety, law and order, and infrastructure so that its citizens may have the ability to pursue their aspirations. I think human thriving is very important. And I want the ability to try at a ridiculous thing and achieve commensurate reward. In many ways, I don't even want that for me. I want that for others. When I see someone take a crack at something that most thought impossible and make it happen, I love it.
It isn't that those of us who have this opinion are temporarily embarrassed billionaires. It's that we like that someone took a crack at something absurd and became billionaires for it. People who don't get it always say these things out of misunderstanding: "Why do the poor in the US vote so often against their own interests?". The obvious answer is "because they are principled and not purely self-interested".
70K a year is poor in California, but top 1% rich in almost any country in the world.
Low income disparities are countries like Albania, Afghanistan, Armenia to name the first three with below 30 GINI income.
The USA and UK are leading the process since they started to pursue this goal aggressively during the 80s with Reaganism and Thatcherism.
The increase in wealth of billionaires in 2025 was $1.5 trillion: https://americansfortaxfairness.org/billionaires-1-5-trillio... Most of that isn't even real money--it's people betting on AI. (As an aside, is the government going to give huge tax refunds when the AI bubble bursts and all that "wealth" disappears?)
If the U.S. just taxed people the way they do in Germany we could raise trillions in revenue without resorting to tricks like one-time wealth taxes. The focus is on billionaires because Americans want a German-style welfare state without German-style taxes on the middle and upper middle class.
- 2.5M worth of real estate bought recently
- 1M of job income
- 1M selling shares that 10xed (some stock option idk)
- driving a 150k $ car
- spending 150k $ over the years in taxable goods
It came around 840'000 $ or around 40.1 %.
I wouldn't say it's that bad, this even includes sales taxes (probably the fairest of all taxes).
With even basic tax optimization (401k, federal deductions) you get that number down to 780'000 $, with something a bit more sophisticated depending on circumstances you can get it easily lower than 600k or 32% ish.
The biggest problem is that people above that tier end up effectively paying less sometimes even in absolute terms just by borrowing against their equity and not triggering taxable events.
Honestly taxes are complicated to implement, I'm not sure how can you implement a progressive yet fair system without loopholes and without severely degrading services (roads, infrastructure, education, healthcare, military, etc, etc).
And every time you decide to cut on services, you are just moving money elsewhere: more inequality -> more social tensions and criminality, you just end up paying way more to live in a safe place and pay for private and public security and prisons.
It's really difficult.
There's no reason to think that the amount of taxpayer-funded services in a political jurisdiction has inversely proportional relationship with amount of crime that that happens there (nor any particular relationship with what kinds of crime, how serious the specific crimes are, and so on). Same thing with social tensions - social tension are caused by a lot of things, many of which aren't particularly related to the raw amount of taxpayer-funded services that exist. Would a more redistributive welfare state have made the partition of India between (mostly) Hindus and (mostly) Muslims less likely, for instance?
https://ideas.repec.org/p/cge/wacage/548.html
https://www.researchgate.net/publication/263466102_An_analys...
https://www.sciencedirect.com/science/article/abs/pii/S00472...
I had a coworker that argued for a flat tax—considered that fair. I explained that anything less than a progressive tax was going to make the poor pay more and the wealthy pay less. Really, that's fair?
You should be so lucky to have enough that you're in the highest tax bracket.
Through that confusion of language, it might then manage to be popular with both libertarians and progressives.
Here's a formally-verified proof in Lean that with a flat tax, if you have more income, then you pay more tax: https://live.lean-lang.org/#codez=JYWwDg9gTgLgBAWQIYwBYBtgCM...
The theorem uses one important assumption: that the flat tax rate is positive.
But if you account for minimum living expenses M, if you are under M, 30% of M is "more" than if you are at 10x M for the quality of your life. What scheme is "fair" is harder to figure out, though.
Yes, I object to that type of language too, but let's not ignore the context.
It's hard, but possible. However the goal of people who created current tax code is exactly opposite: to create system with loopholes.
US tax code is a mess, there should be less amount of different taxes, more unified taxes.
Georgism, a single tax on the unimproved value of land
Just curious: what makes you come to this conclusion?
i.e. A burger wrapper doesnt care about economic status.
The economists I've read disagree strongly.
Also everybody pays them, including people that avoid taxes (including criminal activities and tax evaders).
The argument against this is that lower income households pay more of it as a portion of their income thus the consensus is that to be fairest you need rebates and no taxes on many essentials (which is why often medicines or milk, bread etc have very low or no sales tax/rebates).
IIRC, consumption taxes are more efficient in that, ceteris paribus, they result in the least economic distortion in terms of global wealth and productivity compared to alternatives like income taxes. But they're the least fair in the sense that those lower on the income bracket bear a higher burden in terms of marginal cost due to the higher fraction of necessary living expenses relative to income. Your first $1 of income and consumption has more marginal value to you and society then the second $1; so an X% tax on that first dollar has a higher marginal cost than X% on the second dollar. It's unfair in a very meaningful sense, not just a hand-wavy rhetorical sense; everything in economics is about marginal pricing.
Think of it this way, which has more marginal value, a) $1 spent on food required for a person to live, or b) $1 spent on a fancy fixture for a new yacht? The answer is (a), both from the perspective of the individual and society has a whole; society because $1 spent sustaining a living individual contributes more productive capacity to society than $1 spent toward a yacht fixture, even after accounting for the fact someone was paid to make the fixture.
AFAIU, it follows that efficiency and fairness (in the sense of marginal cost) are fundamentally related. But it gets really complicated from there--complexity that the "ceteris paribus" above is hiding--and drawing concrete policy conclusions much more fraught. Relatedly, consumption taxes can be structured in a progressive manner similar to income taxes, but... it's complicated; it's not so easy to ameliorate the unfairness issue, and once you start graduating rates it becomes difficult to compare schemes directly. For instance, I think just as a practical administrative and accounting matter progressive income taxation is easier to accomplish than progressive consumption taxation.
1. Regressive deals with % of income spent.
2. Regressive deals with an ideal state where those with more excess income contribute more than those with less.
In both of these, I suppose sales tax is regressive if it applies to all items, but only 2 is regressive with sophisticated rebates and untaxed categories.
You keep saying this, as if it will make this true. Please list these "economists"/"most economists".
I don't know who should pay what amount, but I'm pretty sure that me and that millionaire should have different tax brackets. Let alone people with tens, hundreds of millions or more.
PS: I'm in EU, not USA, but here I'm in a highest tax bracket so the point still stands, my tax rate is the same as for any local millionaire. Maybe even more, since those people are aggressively utilizing tax loopholes, shell corporations and offshore tax havens.
Disregarding all technicalities about what proportion people actually end up paying after performing clever tax planning.
Why are you sure that someone earning 1M should have higher proportion of their income taken away than someone earning 100k?
At some sufficiently low level of income I think it stops making sense collecting taxes, but beyond that I'm not so sure from a fairness-perspeective.
I could perhaps get on board with a hard cap on wealth, for preserving democracy. It is dangerous to have single individuals and families attain too much power. But up to that cap, I don't see any inherent unfairness or inefficiency in that people of moderate to high wealth pay the same proportional rate.
As for proportionality - taxes are inherently unfair on the individual level. But they are fair on the large society level. All of our niceties are essentially funded from taxes. Current "free market" plus corruption mean that to finance growth more and more money is needed and part of them come from more and more taxes. But a lot of basic goods are fix price or low enough price, so that they make le and less percent of person expenses the more income rises. So to be more fair, it is fairer to increase tax on the ultra-rich class and spare tax increase on poorer classes, making average suffering lower. If we simply increase all taxes, then the lower the income the more tax a person would pay. It in kinda unfair and not productive to do it this way.
Well, a progressive (also wealth?) tax should help to accomplish that.
My take on the wealth-cap is that it isn't about fairness at all. Actually I think it would be mostly unfair, but that it would be good for society anyway. Fairness is an important value, but it is not the only value.
It's actually pretty easy to pay an 80%+ tax rate in California if you consider taxes that your employer pays, sales tax (11%+ in some areas), local assessments, capital gains tax, etc.
Taxes paid by your employer aren't taxes you pay.
I'm quite sure your calculator is very basic and stops at 401ks and little more, there's stuff like mortgage interest, being married with kids, backdoor roth, etc.
But yeah, wouldn't change the number you said dramatically, maybe it would lower it to 45%ish on a 2M income.
They have the same effect in that they reduce what employees take home in a given labour market. Employees are effectively paying them in the same way that people who buy alcohol/cigarettes effectively pay more in states with higher taxes on those items (even though the taxes are technically paid by the stores).
If CA eliminated all income taxes and instead had employers remit the same effective rate for all salaried employees, employers would just reduce salaries accordingly.
As another example, France's income tax rates cap out around/below some high tax US states. But France is still a comparatively high tax jurisdiction largely because they also impose massive payroll taxes on employers which effectively reduce employee wages.
> They have the same effect in that they reduce what employees take home in a given labour market.
Careful, you're thinking like a Marxist (assigning value based on costs ultimately culminating in labor). Under Capitalism, value is assigned based on the meeting point between what people are willing to pay, and what people are willing to sell it for. Some things, like Pokemon cards, are far more valuable than any costs incurred in their production. Other things, like Aunt Betty's utterly disastrous attempts at baked goods, are worth less than then they cost to produce. Payroll taxes only directly effect the purchaser's willingness to pay. Only if we believe that companies are currently paying 100% of the wages they would be willing to pay if they needed to can we call the payroll tax entirely a tax on the worker.
Yes, likely not exactly the same (a bit more kept by employers in overcrowded job markets, a bit less in others), but it would essentially support the interpretation that most of that is really a tax that goes out of employee "budget", or their total comp.
That part is not necessarily (or even probably) true, if payroll tax didn't exist the company might not pay all of that to you unless they had to.
But that's a nitpick... overall, it is true that the fully burdened cost of having that employee is X+Y, so that's the number the company needs to consider when deciding whether they can afford to hire (or keep) this person or not.
Yes, it probably would depend on positions and available talent, but overall and over a longer period, if applied universally to a market (say state like CA), it will be reasonable to expect salary increases (but not increase of how much is that worth because of increasing purchasing power, and increase in prices due to higher willingness to pay).
They also have the effect that everybody has to pay them, including tax evaders, tax loophole abusers, criminals with undeclared incomes, etc, everybody has to pay it.
But yes, without offering sales tax rebates or with taxing essentials then your argument is true and they become less fair.
Albeit, the elephant in the room is always the definition of fairness itself.
In jurisdictions using VAT (like most of Europe), there are whole schemes like that to effectively reduce your VAT burden through use of company purchasing.
I've heard at least half a dozen stories of kids' computers being bought by daddy's consultancy business, avoiding both income tax and sales tax.
Same with "business lunches", where you're just hanging out with a buddy who happens to be vaguely involved in a similar industry.
The general feeling seems to be that paying taxes is for losers and you're stealing from yourself if you're not doing minor tax fraud.
This kind of tax avoidance simply isn't available to lower-class salaried workers. They are forced to pay the full bill.
Which is to say, being poor is expensive, and sales tax only makes it more expensive, while literally not affecting the bottom line of those in higher income brackets.
But I take it from your glib comment you'll disagree or deny that.
LOL. Do you actually think that person has read Capital or much of anything economics related? These types of internet arguments don't happen among equally equipped participants. People can just say random shit on the internet it turns out. They do it all the time.
Of course, you're also going to have to face the problem that representative democracy includes the ability to buy loopholes.
And then, there are unintended consequences because representatives aren't necessarily the most financially savvy. I'm thinking about the 401k program that disproportionately advantages high income people when it was touted as a savings route for middle class people.
401k identifies this loophole and sets limits. Setting contribution caps, limiting withdrawals until retirement, etc. Then they incentivized offering it to the poors, too, because working out an ad-hoc agreement like that is the sort of shit only really high power people in a company have the opportunity to do.
In short, the primary purpose of 401ks wasn't to benefit the middle class, it was to slightly reign in the rich.
This loophole is very much alive today. I've recently worked at a large public company where the company allowed any percentage of pay to be deferred into the future.
The regular workers couldn't afford to do this of course, but the executives making many millions would defer most of their pay into the far future (presumably after retirement) to pay very little tax today.
1. It limits the opportunities for the government to use force on the general population. Today, if you do not file your annual taxes, men with guns come and put you in jail. A sales tax does not require this level of enforcement to be inflicted on the average citizen.
2. It's voluntary to a degree. Today if you don't like what the government is doing and want boycott paying taxes you cannot practically do so because of point 1 above. With a sales tax you can decide to defer unnecessary spending as a form of protest.
3. In theory it's vastly simpler to reason about and plan for. The myriad of tax advantaged accounts that have proliferated over the years in the US is daunting: IRAs, 401k/403b, 529s, FSAs, HSAs, Trump Accounts, Roth variants. We ask citizens to best guess how to allocate investments between these vehicles for goals decades in the future. If you need emergency access you're often looking at paying penalties. Not to mention the poor user experience baked into many of the designs. 401ks put the burden on your employer to restrict your investment options to their curated choices and their chosen plan administrator. You have to leave your job and roll it into an IRA to finally have the freedom to pick your own investments and who you have the account with. FSAs have the annoying use-it-or-lose-it rules. 529s are bizarrely state sponsored but you can choose a plan from any state. Like your state's plan but want to have the account at your broker? Too bad, you have to use the administrator your state chooses.
4. It's widely understood that if want less of something you should tax it. By taxing income and wealth it discourages work and saving. A sales tax discourages consumption instead, which encourages saving and is also pro environmental.
5. Changing asset allocation is free. Today, changing investments in a taxable account, where there are gains, triggers a taxable event. This discourages the movement of that capital to other investments.
6. In theory it's harder to dodge taxes as the simpler system has less loopholes.
7. On average, people with more wealth should have more expensive lifestyles which translates to them paying higher taxes.
I understand the arguments that sales taxes are regressive, let rich people dodge taxes by living frugally, etc. I accept all that may be true and I'm ok with it. Many seem fixated on using the tax code as a mechanism to level inequalities, as if that were its primary function, and a sales tax doesn't advance that goal enough for them. I think I can accept that some people are going to be vastly wealthier than me and are going most likely live a much easier life because of it; much like I can accept that some people are going to much prettier than me, taller than me, less genetically disposed to certain medical conditions, have been born to better families/circumstances and those things can all provide significant advantages in one's life.
So if you get a $150M loan off of your amazon shares that on paper are worth $150M, but you paid $100M, you have a cap-gain of $40M, and at 20% tax, $8M fills the IRS's coffers.
Obviously the tax basis in the assets would also be stepped up by this action.
The US should also get rid of the step up in basis at death. The recipient of an illiquid asset such as a family business should have a period of time (perhaps five or ten years from the triggering death depending on the type of asset) to "pay up" the tax basis "to market" at the time of death. Gains in liquid assets (such as publicly traded stock) should be taxed at the market value at the time of death by the estate or trust and passed on to beneficiaries with that adjusted tax basis.
This would actually fix the issue without my suggestion, but it is a harder pill to swallow for the "soon to be rich" Americans that tend to vote against their current economic interests.
Is this a real problem? And how do we fix that?
If you inherit a farm worth 1m and you have to pay estate taxes on that of 100k. You do not have to sell the farm, you can instead take out a mortgage to cover that 100k.
When we frame it that we its still very fair to the person inheriting the farm because who wouldnt want a $1m farm for 100k.
The point is to disallow people who make a man's yearly salary every 60 seconds from getting <2% loans against an asset pool that would take hundreds of years for the average American to amass, if ever.
Of course there are still countries where one could park their money outside the OECD members but many of those are not exactly a "safe" place for such assets.
But universal is what we need as humanity.
The will seems to be building up, even in the UK (Polanski) and US (Mamdani, AOC, Sanders).
I'm betting that the success will be replicated in other countries soon and after that its only a matter of time for this to go global.
But this will be interesting show.
Hasn't this already been tried numerous times in numerous countries already? Didn't France attempt it multiple times without success and actually lost tax revenue with the creation and enforcement of the tax? Not to mention the wealth flight?
[0]: https://www.brusselsreport.eu/2024/09/11/the-failure-of-norw...
Mandami, AOC, and Sanders are the laughing stock of much of the electorate in the US. They are fairly popular in progressive population centers but not elsewhere. There have been activists promoting much the same ideas for my entire life (and I'm not young!) and they rarely if ever get national traction.
The "silent majority" in the US is just that - they don't make the news because they, in most cases, don't go out and protest and engage in battles with law enforcement. They have jobs, go to work, go home to their families, and vote - but they rarely are seen in the news any more than the fact the sun came up in the East and set in the West yesterday is "newsworthy" enough to be promoted in the media. "If it bleeds, it leads" is the criteria for being newsworthy.
Until masks and Musks we're taken off this year it was possible to pretend that the normal would play into their hands, as long as they stayed silent and played along.
Now pretending that the middle class can survive under the zillionaires Reich is only possible for very delusional minority.
My hunch is that Mamdani and Polanski have struck this nerve. Already before the events in Minneapolis, but now the support for this is dwindling.
I've done some experiments here in the normal and even the well off people are seeing the root cause. And it being the narcissist individuals holding godlike power, instead of the good ole "rule based" or "value based realism" or "systemic change" or even the latest "superorganism".
But remains to be seen, I might be wrong or even worse the power can be so centralized to zillionaire cliques.
did the people ever leave ? NO
That figure is highly misleading to cite by itself because the high tax rate also came with a bunch of loopholes and exemptions. That's why despite the drop in the headline rate of 70-90% or whatever, the actual tax take as % of GDP has remained remarkably steady in the past 7 decades.
https://fred.stlouisfed.org/series/FYFRGDA188S
So it's not like it was actually a tax on the wealthiest, more a targeted tool to apply state power.
For example GWB "lived" in texas the whole time he worked in washington.
It’s wild how dominant this proposal is. Not reducing costs. Not cutting benefits. Not a broader tax increase. Not a combination of ideas. Just “f*k these guys in particular.” If this is what passes for governance in California I’d leave too.
https://www.youtube.com/live/4HpJKPywXqY?si=bb-p558jl_otP25I
In her research she found that many of the ultra-rich people actually have deep/patriotic/nostalgic ties to their home/community and want to invest there. They often use certain tax-evasion measures because everybody else does and she argued that those few ultra-rich people who really just care about minimizing their taxes have already moved everything abroad.
Or, I guess, just don't deal with the US and either don't go there, or hope to not get caught.
I think this comment is a little off-topic.
On my block alone, are the houses of (at least) two "49-percenters". 183 or a few more days of the year the owners are at their second homes in Arizona or Nevada, and gathering gas station receipts to prove it, while their California houses sit empty -- all just to avoid our state income tax.
How about that as a poster-child for misallocation of physical capital?
There is another agent (group of agents) in this game and that's other states. Those states are often modeled as passive background places one can move to, but they are often not. They can, and do, react to tax laws in other states. For example, TX could encourage capital flight by offering tax breaks.
I've seen this happen with some companies in Midwest: as the states had to raise taxes some Southern states decide to poach individual companies and offered them to move their HQs there with a bunch of tax rebates and credits and such.
> The tax’s designers, however, think they’ve come up with a clever solution to capital flight: a one-off tax that is retroactive, based on a billionaire’s residency status on January 1, 2026.
That is pretty clever. They could also have an "exit tax" -- "leave but if you've been here for 10 years making your billions, we'll keep some of those billions" kind of a deal.
Furthermore given whats at stake you would divert 1/10th of those funds to making sure that act never passes.
Make stock buybacks illegal again too. Overturn Citizen's United unless the head of the company can face charges for the actions of their company.
The concentration of wealth into the highest strata is a recipe for societal collapse seen multiple times in history.
I don't get why we have to jump all the way to a wealth tax, could they not just force asset backed loans to trigger a tax? This seems way more targeted and we won't have people assessing what everyone is worth. I think it would avoid some unnecessary precedent setting. They could put the impetus on the billionaire taking the loan to state what the assets are worth and related gains.
The wage earners feel the inflation in their wallets.
Can they take a loan on existing stock? Yes. You can leverage assets and this, itself, leads to some pretty unfair things. No need to inflate it to the idea that "getting paid in stock means you don't pay taxes."
How's this different than if CEOs or whatever were paid in cash, and then they immediately bought stocks with the cash?
I think you're confusing this with the case where founders or early employees own large amounts of stock that they received early on in the company. They paid little to no taxes when they received it because it was worth basically nothing at the time. Later, the company has grown and it's worth a lot, so they have a large unrealized gain that they can use as collateral for loans. But that certainly wasn't guaranteed to happen. Most startups fail.
Especially in UK where The Rich that dont belongs to UK in the first place will of course move and leave. Those who are born and raised are highly unlikely to move.
And perhaps most importantly the question completely ignore the real problem. There isn't a lack of Tax revenue, but the government incompetence to allocate and use it wisely. To raise tax is just saying what we are doing now is absolutely correct and we will continue to do so.
If an owner takes out profit, they are punished with high income taxes. So they reinvest in their business, and this is what the government wants because it creates jobs, innovation, products and services, and tax income.
So they've been doing what they have been forced to do by the government. And as a consequence their companies are worth a lot.
Now the government wants to tax them on the company value?
If everyone would be able to play these tax avoidance schemes I'm sure society would collapse. For big players these are easy schemes and somewhere this untaxed wealth must be recaptured. Just favoring the rich further accelerates the wealth imbalance.
Would it? Or would it just shift demand around? I mean the money is still there, and I don't see any reason the entities with money would lock any more of it up in a "static" manner (e.g. gold bars and piles of cash) than they do now.
But everybody is able to reinvest profits into a business they have, whether that's an industry giant, or a tiny one-man shop. There is no government on planet Earth which considers that to be "tax avoidance". Governments want profits to be reinvested and not paid out to owners, even the most socialist governments you can find.
If you're against this, then you shouldn't talk about taxes. You should rather talk about abolishing private property completely.
Yes, that is the old discrepancy between society in the true sense and society as imagined by libertarians. A few strangers waiting together for the bus do not constitute a community. If the bus is canceled and they organize a carpool, then a community has formed. If you scale this up and replace personal relationships with institutions, you have a useful concept of society.
For libertarians, society is any large gathering of people who interact with each other in some way (or not), even if they rape and devour each other. If you understand society in this way, it cannot collapse (or is constantly collapsing).
That would be the consequence of taxing ownership in companies, since there would be no reason to invest to create big companies. And for industrial society you need big companies. You need giant companies, and taxing owners on the size of the company means that people will not invest their money or effort build industrial scale companies.
The other way to have industrialization is to instead have a command economy, where the government mandates what is to be done.
I agree.
But I'm not convinced by the next paragraph. You present it as if it were a matter of 0 or 1. But I don't see any good reason why taxation shouldn't be used to make adjustments without immediately collapsing the entire incentive structure for investment. Less profit is still profit. If this argument were valid, there would be no large industries in countries that tax companies more heavily than the US.
Thinking about how incredibly many factors have to come together right for a giant business or industry of any kind to be able to exist, I understand that governments are very careful to not poke them with too many sticks. Their products and services exports (and imports) are an incredibly valuable bargaining chip in foreign politics. The only other significant bargaining chip which nations usually have are military threats, and that isn't a pleasant road to travel.
It's like in a combustion engine. Oil has to be added for the engine to work. But over time, dirt particles, metal abrasion, soot, and combustion residues accumulate in the oil, overwhelming the oil filter and reducing its lubricating ability. If you don't reset it to a “healthy” basic state at regular intervals, it gets so bad that it prevents the engine from operating and ultimately even destroys it.
Does the massive wealth inequality we see today cause problems that lead to the erosion of society itself? I would say yes, definitely. Of course, it is frustrating for these people when the money they have generated is taken away from them. But let's look at it realistically: if someone has $100 billion and $99 billion is taken away from them, they are still in a situation where they lack nothing financially.
At some point, you've played capitalism through to the final level. And then you should put down the controller and go outside to listen to the birds chirping instead of frantically chasing after the growth of a number that, due to its sheer size, no longer has any concrete meaning, apart from the fact that there may be two other people whose numbers are bigger or who are hot on your heels.
On a side note. Yes, the massive wealth inequality is eroding society. But billionaires aren't the source of this problem. They are outliers, freaks if you so will.
The real problem is the massive wealth inequality is the gigantic prices of real estate and rent, created by the monetary system being based on real estate instead of productivity. That means it is very hard for a person to claw and scratch her way to equality if they're not born with real estate or gets that benefit at an early age. For most, their irredeemable mistake in life was choosing to be born in the wrong decade.
At the same time a huge percentage of the population who has never made any effort in life and generally have no talent or any admirable qualities, get great wealth and comfort by having been born at the right time.
For every billionaire there is a a hundred thousand of the kind of person described above. Most of us have them not far away, and they have a hundred fold bigger impact on our lives than any billionaire. And at least many billionaires have at least accomplished or done - something - in their life.
> At some point, you've played capitalism through to the final level. And then you should put down the controller and go outside to listen to the birds chirping instead of frantically chasing after the growth of a number that, due to its sheer size, no longer has any concrete meaning, apart from the fact that there may be two other people whose numbers are bigger or who are hot on your heels.
Wouldn't building a rocket to go to Mars for example be such an endeavour, which is bigger than chasing the imaginary dollar number? Or the philanthropic endeavours of other famous billionaires? Or even exacting political influence in the shadows, which is probably something all known and unknown billionaires do?
Rents are expensive because real estate is expensive. Real estate is a good store of value. The massive accumulation of surplus wealth among a small portion of society has led to an increased demand for stores of value. Someone looking for a house to live in competes not only with others who want to live in it, but above all with the super-rich who want the property as a store of value. That's why real estate is expensive.
> Wouldn't building a rocket to go to Mars for example be such an endeavour, which is bigger than chasing the imaginary dollar number?
That's conceivable. But I don't see the space science fiction of Le Guine or Asimov being realized in the activities of Musk and Bezos. To me, the whole thing seems more like an awkward dick measuring contest. The awkward situation with Shatner was a good example of how hollow and superficial this whole thing is. These people could go down in history as benefactors and heroes of humanity. But they don't have the guts for that. Either they launch rockets or go to the gym or sit with Joe Rogan or try to undermine democracy and replace it with a neo-feudalist hell.
Edit: I agree with you that we don't necessarily have to focus on the billionaires who are so prominent in the public eye. Below them, there is a larger class of super-rich people who have their fortunes managed for them, never lift a finger in their entire lives, and yet still attract an ever-increasing share of society's overall wealth.
SpaceX has done a huge amount of engineering work in making the cost to get mass into orbit significantly cheaper, more reliable, and more routine. Elon Musk is, on a personal level, because of the sort of company he chose to build after becoming wealthy, absolutely responsible for bringing humanity closer to a future imagined in space science fiction.
That's been happening for a long time in the US. Staggering military industrial complex. Tens of billions lost in COVID relief. Billions lost in Minnesota due to unchecked privatized social welfare fraud (which has been known about for a decade).
Some mistakes will happen. What we have is unacceptable. If the government can't handle the money responsibly, it has no business collecting the money.
That's more an indictment of the way you (the US) starve your public services of proper regulatory power with the right level of personnel to handle it.
But your Congress voted last year to defund the IRS and the administration are busy gutting the SEC and other regulators.
Oh and government fraud has nothing on the commercial and rent-seeker frauds extracting wealth for no benefit from their positions of control. But anti-trust prosecutions are basically a dead path for rectification.
Blaming the "government" for what happens from obvious policy failures is the fault of the policies and those that set them, not the "government" as some nameless bureaucracy.
>Blaming the "government" for what happens from obvious policy failures
Who creates the policy that fails if not the government? If a supplier kept telling you they'd do something and kept screwing it up at what point do you move them to the bottom of your list for who to call to get stuff?
It's really easy to sit there enveloped in pure ignorance and say "those idiots just need to fund an administrative agency to prevent fraudulent daycare" or whatever but nobody in the US wants to do that because everyone's seen with their own two these sorts of endeavors turn into feeding troughs and revolving doors and rackets that the politicians and politically connected use to run businesses that make money by going through motions that provide little (just enough to keep some political support form useful idiots) value at taxpayer expense. How do you solve such a problem? It's immensely hard and complex.
I'm so sick of ideologues who can't think two steps ahead peddling these sorts of "just do this" simple and wrong solutions.
“New federal data released by the U.S. Centers for Medicare & Medicaid Services (CMS) shows the overall rate of improper payment in Minnesota’s Medicaid program is far below national averages.
In the review released this week, CMS found an error rate of slightly over 2.1%, compared to a national average of 6.1%. The data for the review was compiled before the Minnesota Department of Human Services began implementing new strategies to minimize the risk of fraud and harden its systems against bad actors.”
https://mn.gov/dhs/media/news/?id=1053-720779
Like, sure, you don’t owe growth taxes for a quarter when you didn’t grow. But why should you be refunded just because prior taxable growth isn’t denominated in money in a bank account?
Apparently paying for gas, water, electricity, property taxes, taxes on everything you buy isn’t enough, now you have to “contribute for enabling”. What’s next? Pay because they “enable you to breathe”?
I have low opinions about unbalanced one sided arguments.
States are in dire need of liquidity. Just look at global debt.
I’m genuinely baffled at the incredulous tone here. Yes, that is exactly what should happen: laws, subsidies, and incentives enable a company to grow and flourish. Then, as the company grows, other laws incentivize it to give some of its state-sponsored affluence back to benefit the country.
Like, sure, the execution of that process is often dysfunctional, but the fundamental contract there does not seem like it should be surprising to people: we don’t have (many) socialist state-owned businesses, but the point of a functioning country is still to provide good things to the people living in it. Not to benefit businesses or a tiny sliver of the population.
That’s why we have everything from income taxes to interstate highways: to distribute wealth and resources to (a flawed approximation of, but it’s still the goal) everyone in the country. That’s just how non-corrupt governments are supposed to work!
Then why not tax the military? They are surely the most affluent company of them all, if you take a tally of all their inventory.
If you tax companies based on their size rather than their profits, then you're not going to have any big companies. Any investor or entrepreneur would be a fool to invest in making a big company.
But many endeavours need big companies and big investments. For example power plants. That's a whole lot of value to tax, such affluence! Better redistribute this wealth, and instead have a hundred thousand non-affluent hot dog stands.
> That’s just how non-corrupt governments are supposed to work!
In practice, every government in the world does not tax companies reinvesting their profit into growth.
Narrowly: because they're a utility funded by taxes, not an independent entity benefiting from tax-funded infrastructure. Having a military for defense/power projection/whatnot is one of the infrastructural benefits of being part of a state (and one of the things that a company that grows in that state "owes" the state tax money for--whether that's owed on growth or just capital).
Like, do I personally think my country's military should have a vastly different funding profile, incentives, and behavior? Absolutely. But that doesn't change the fundamental dynamic: $state provides $thing (security, clean water, cheap gas, whatever) that makes being in $state good for many people, people who do well financially within $state owe it money back on the basis that their doing well is at least partially a result of $thing being available to them.
> Any investor or entrepreneur would be a fool to invest in making a big company.
Not true. A growth tax need not be a 100% tax, so growth would still be an advantageous thing to do. Many countries have tax brackets today; that doesn't discourage people from getting rich.
If they all had unified in one voice against the administration, Trump might be more constrained. They might not be so hated. If they realized, like Henry Ford, that a strong middle class actually is good for THEM too, all this could be avoided. Instead they’re showing up at Melania screenings while average citizens are getting shot in the streets.
I don’t think they realize the fire they’re playing with my stomping on the social contract that made them so wealth.
Some of them do: https://news.ycombinator.com/item?id=42335797
But the pitchforks are coming for 12 years already. They got accustomed to the sight and even put some measures to redirect the masses so they fight each-other.
Bezos gave $40m to make the movie. It was a way to maintain his companies position. It's standard oligarch tribute to the godfather. See Russia or Hungary for further examples.
The movie cost nowhere near that much to make. Melania got the money. It was her very own little grift, while her husband and his children have been extracting literally billions.
Sadly, I'm far more worried about a thousand people who make a million bucks than I am about one guy who makes a billion.
You don't get to the B number by not being pretty darn shrewd and sociopathic so those guys must be pretty evil but man have the "upper middle class" or "professional managerial class" or whatever you wanna call the "comfortable enough to not think about the harsh economic realities of their ideas" class been an unmitigated disaster for western society over the past 20-70yr depending on how you wanna measure.
> Four Norwegian entrepreneurs have commissioned yours truly, Dr. Laura Melusine Baudenbacher and Professor Dr. Dr. Mads Andenas to write a comparative law study on the Norwegian wealth tax. This report will be the basis for a class action against the Norwegian state.
I assume the fact it’s submitted to a court will dissuade the authors from making totally unsubstantiated claims, but it still seems like there’s a strong financial incentive for them to reach negative conclusions about the tax.
The loss of the richest man in the village might mean the baker now has to kowtow his prices to his less well-to-do neighbours again
That said I wish we would take a look at spending before we just keep raising taxes and then a year later saying "how are we gonna get even more money?". California has an insane amount of wealth per person and one of the highest state tax rates. Can they really not figure out how to operate with their current budget?
https://worldpopulationreview.com/country-rankings/happiest-...
Extending their taxation or economic system to a larger, more populous, diverse, and economically fractured society would lose most of the reasons they're succeeding.
No matter how you tax, the asset-owning class is almost guaranteed to remain in place, because the vast majority of their assets are physical, and cannot be easily moved except at much greater expense than any tax.
I mean, if offshoring took 75 years to achieve, what makes you think that any member of the Parasite Class will be able to pack up and leave within a decade, much less a half decade?
It costs ridiculously insane amounts of money to move a business down the street, and you’re keeping the same employees, and not re-training an entirely new batch of replacements in the new location.
About the only “asset” that can “leave” with anything approaching sub-decade immediacy are the purely digital ones, with a business that is 100% Internet-based and without any physical assets of any kind, where you can spin up a new offshore server and migrate the services to it with just a few mouse clicks.
And those are vanishingly few in number. Most so-called “Internet companies” still have oodles of physical assets, from offices (where return-to-office mandates force employees back into) to land to physical servers sitting in data centres.
And in the end, we have the most telling question: what is the difference with the wealthy leaving due to a tax, and failing to implement that tax in the first place?
NOTHING.
There are no downsides, only upsides. Either they leave and open up room for another entrepreneur to thrive in that spot, or they stay and pay the tax.
Either way, nothing of value is lost by wealth taxation.
Unfortunately for California about 40% of the total state income tax collected (which accounts for about 65% of the state general fund) is paid by the top 1% of income earners -- which includes those 0.001% who will be motivated to move by a wealth tax (or even merely the threat of one).
The <0.001% number appears to be based on population _before_ several billionaires moved out before Jan 1, 2026 - likely at least partially motivated by the small, but real, risk of the "billionaire's tax" qualifying for the ballot and passing (and that proposed tax is only "temporary" and is only a total of 5% over three years so isn't nearly as alarming to the wealthy as a "permanent" tax would be). If it looks like this measure will end up on the ballot and have a chance of passing, expect many more to leave. This will, even if it does not ultimately pass, erode the income tax base.
California has rebelled against wealth taxes in the past - most notably by the passage of Prop 13 almost 50 years ago (a property tax is a wealth tax). They are not popular except when the hit "the other guy" -- but "the other guy" is the one most able to avoid the tax.
Wealthy people are typically very flexible as to where they live. They often already own multiple homes and often spend a lot of time out of the state they "live" in. When they move, they are not packing and labeling their own boxes or are likely even present on "moving day". They also are more likely to set up HQ and shop near where they spend a lot of their time. Even if they have family in California, they can still get together with them for Thanksgiving dinner -- either by flying the family to them on their private and chartered jets or by themselves flying to California for the weekend on one of their jets. They can conduct most business very efficiently remotely and often do so now to a significant extent.
It only takes a few to leave to tank the California budget - likely causing the progressive income and wealth taxes to reach deeper and deeper into the upper middle classes as California desperately tries to balance their budget without cutting yet more programs.
Other states are loving this though and will cut tax deals to attract these very billionaires that California are encouraging to leave.
That misses the point. A one-time wealth tax to plug holes in the state's finances reeks of short-termism and desperation, like Chicago selling off its parking meters. Even if I wasn't affected by the tax, I'd be alarmed at the implication. It would have been much better to implement a well thought out and orderly recurring tax on capital gains or whatever.
https://www.peoplespolicyproject.org/2025/11/17/do-millionai...
People are mad about buy-borrow-die, so they’re proposing extraordinary new measures.
Personally, I’d just make capital gains taxes apply at the “borrow” stage to actually fix the problem. That would have a host of compliance issues but they’d be localized in the finance industry which already has an army of people figuring out compliance.
He's still here, and unlike the PAB SV billionaires, he has no plans to leave because he's seen what places with no/low taxes are like. (TLDR: they have low taxes because nobody would want to live there otherwise. )
But that is usually a fairly large group, and if they feel taxes are too much, they will listen to any politician that promises a solution.
Then it can become pretty nasty...
Case study: New York City, United Kingdom, France, Germany, Denmark…
The list goes on until they choose; Texas, Florida, Singapore and Dubai.
To control for this look at NYC's share of the nation's millionaires, which shrank from 6.5% in 2010 to 4.2% in 2022.
https://cbcny.org/research/hidden-cost-new-yorks-shrinking-m...
I think taxes still handily win with room to spare. Even more: plenty of those rich people are still in NY and participating in its economy (legal residence != where you actually physically live, especially if you have resources to game residence by owning multiple properties).
[1]: https://dor.wa.gov/taxes-rates/other-taxes/capital-gains-tax
[2]: https://finance.yahoo.com/news/jeff-bezos-moved-florida-impa...
https://www.asanet.org/wp-content/uploads/attach/journals/ju...
[0] https://www.forthcapital.com/uk/articles/2025-wealth-migrati...
[1] https://www.henleyglobal.com/publications/henley-private-wea...
We have already tried that in human history, it's called communism. No one is allowed to take private profit, everyone contributes to the best of their own ability, and everyone consumes according to their needs. It should be utopia because there is no wealth gap and wealth is maximally redistributed. Which is exactly what taxation is designed to do, only to the most extreme.
And I think everyone will agree with me that communism is a miserable failure. The rich may not leave physically but mentally they are checkout -- not willing to work as hard or take as much risk. So the answer is yes, if you tax them, most certainly they will leave physically for haven with lower tax, all things being equalled. Or leave mentally.
But not all things are equalled, so you can still tax them at a somewhat higher rate provided that you can provide other incentives. But still, too much tax will make it more likely for those who are able to to leave. This is almost an axiom.
Just because someone has "communism" on paper doesn't mean the society actually functions according to the communist idea.
Social democracy has been tried in many places and it has produced things such as the Nordic Model and the Nordic states that have been very successful.
After the 2nd World War USA was very close to socialism. High wealth taxes, workers unions etc. As a result your average worker had a lot of purchasing power which of course fuels economic strength.
In fact many if the world's best performing companies are a kind of exercise in socialism since the RSU programs share ownership and results of the company to the workers (even if it's a small share)
Capitalism's final form is a dystopian hellscape of rivers that can be lit on fire, unbreathable air, leaded gasoline, asbestos ceilings, company towns paying scrip, strike break private militias, opioid epidemics (wild this isn't a one time thing for Capitalism, but then the model for Capitalism seems to endpoint with getting people addicted to the product).
Everyone can agree pure Capitalism is a miserable failure that creates an unsafe environment and product landscape based on addictiveness. Time after time when left to their own choice, Capitalists chose making a worse world. The Capitalism model requires tight constraints from society to prevent Capitalists from creating an horrific, awful world like they have every time in the past when left unregulated.
The question is why do we make sure Capitalism can't destroy our rivers anymore, or pay workers in scrip (creating their end goal ideal of an inescapable labor system) but when they economically destroy the civil fabric with unequal wealth distribution we somehow refuse to step in? Capitalists long term will NEVER chose societal benefit, yet somehow we keep hoping they will and under regulating them. I remember when extremely liberal friends started getting their vested options and them excitedly talking about the whole loan model to not have to pay taxes, even though they 'supported' high taxes and knew the societal benefit.
There is a disrupt joke inthere but i cant think of it right now.
People are always defending rich people (capital owners) that they invest their wealth. But actually if someone has a billion in the bank the fact that they have that billion is a proof that they didn't invest it. (If they did spend it or invest it the would not have it, now would they?)
A billion that circulates in the economy is much better than a billion that sits in someones bank account. Someone who spends 100% of their income is much better economic citizen than someone who doesn't.
This is still not a good idea for you, as the interest doesn't make up for inflation. Most people keep a small portion of their wealth in the bank, as easy access for emergencies (this is called dry powder[0]). The rest is typically invested into private equity, which allows new ventures to be created.
It's very rare for anyone to have more than $50m in the bank. The money is usually out in the market doing it's work.
[0] - https://www.investopedia.com/terms/d/drypowder.asp
This is the trickle up economy where the few people at the top suction all the wealth to themselves. And the rate at which they acquire it exceeds the rate at which they spend it.
I would hesitate to call consumption "better" than investment.
The health of an economy is defined by the permeability of the border between those two classes, and the direction of flow.
If the flow is mostly one way, you're getting wealth extraction, not investment.
But assets are not easy to move. So if you tax assets and not income, it doesn't matter where the owners are. It only matters where the assets are.
1) velocity of money matters, some spending creates more economic activity than others due to re-spending.
2) Investment is not the same as having your money sitting idle. Investment makes certain activities possible because of scale, payment made with the expectation of future value, financing capital goods or R&D, etc.
Long term: yes, especially if you combine really high taxes in the 40+% range with consistently rubbish public services
But the real question is not whether people will leave, the question is how many talented hard working people chose not to move to your country in the first place because your taxes were too high. It won't show up in any data, you'll just experience worse economic growth and have to tax everyone else more
That would still be considered a fair and reasonable level of tax by european standards.
Obviously there is a level though - if you made it 95% then people would leave. I don't think there's any reasonable argument that the level doesn't exist, the question is where is it for a specific place at a specific time
You could say "well good riddance" but taxing $10mn of income at 20% raises a lot more useful money than taxing $0 of income at 95%
To my mind it's a revenue maximizing question. Is Massachusetts hitting that metric right? I have no clue. I do suspect that the voters and the people advocating taxes like this in Massachusetts and California are not thinking in those terms. I think they are doing this out of some sense that anyone making that much has to be doing something unfair and that an inefficiency in revenue is just money spent towards fixing that unfairness.
I'm happy to concede Massachusetts may very well have found the right balance, but there's plenty of studies on this in aggregate.
There's unsurprisingly a modest but statistically significant migration of millionaires from high-tax to low-tax jurisdictions.
https://www.asanet.org/wp-content/uploads/attach/journals/ju...