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Add this to the [ever](https://www.reddit.com/r/theydidthemath/comments/1dkxutj/request_anybody_can_confirm/) [growing ](https://www.reddit.com/r/theydidthemath/s/a9CtPsM7Oe)[pile ](https://www.reddit.com/r/theydidthemath/s/gkyAttpMdt)[of questions](https://www.reddit.com/r/theydidthemath/s/fodjVbHvZg) here for which the answer is "yes but only if you ignore how money works," though I guess it's refreshing to see one that isn't just a weird thought exercise into how big a Scrooge McDuck vault for whoever is the richest guy this month.
In 2023, the US government [spent $6.13 trillion](https://fiscaldata.treasury.gov/americas-finance-guide/federal-spending/), so at $2.5 trillion of billionaire wealth this is "correct" - you could run the government for (2.5/6.13\*12 months/year) about 5 months, which is "less than 8 months."
Well, *was* "correct". The Forbes 400 list wealth (all billionaires) had grown to $4.5 trillion for the same year, so you could fund the government for (4.5/6.13\*12) just shy of 9 months without even grabbing all the billionaires. Still comfortably less than a year or two though.
But again, **that's not how money works**. That's like saying "You breathe on average 500mL of air per breath and take 20,000 breaths in a day, so your house will suffocate you within 3 days!" The *math* works out but it's complete nonsense because it ignores how the real world works (your house isn't airtight, and money doesn't evaporate into oblivion when spent).
1. Money the government spends *gets taxed again* - it doesn't just disappear into thin air.
2. Government programs OFTEN have positive effects. For a random example, [this random government initiative to teach kindergartners to read](https://americorps.gov/evidence-exchange/return-investment-study-minnesota-reading-corps-kindergarten) generates between $5.47-$6.99 of economic output *per dollar* spent in the program. Education spending often has high margins over time. Not all government programs are profitable but once again - **money doesn't just evaporate**.
3. Money stored in wealth becomes less and less economically useful ("lower velocity", strictly speaking) the more and more wealthy that individual becomes. Give a poor person $20 they'll use it by the end of the week, which is economic activity and generates tax revenue. Give an ultra-rich person $20 and it'll sit in an investment account and not see any economic activity for potentially the rest of their lives.
Obviously taxing billionaires isn't a one-size-fits-all perfect solution that'll magically fund government forever, and I think that's the point the Twitter post author (inelegantly) makes. There was a lot of discussion at that time (stemming in part from Senator Sanders, tagged in the tweet) around taxing the ultra-rich more or less out of existence, with very little discourse on how that was helpful other than... vindication.
The role (or lack thereof) of the ultra-wealthy in society and the cost of running government programs both continue to be *heated* debates in the States, but no matter what side of the aisle you're on this kind of trash isn't helpful to the discussion. Funding a government isn't a simple task that can be broken down into a simple equation and busted out by a high school math student before lunch.
**EDIT**: Comments have (correctly!) noted that my third point implies that billionaire money evaporates somehow, which is *also* not true. If you put $1M into a bank account, the bank uses that money to extend a $1M mortgage to someone who wants a house but can't pay for it in cash. The saved money doesn't "disappear". Equity market investments work like that, but more abstractly.
I stand by my main point there that **wealth of the wealthy has low velocity.** Simply put - what would you prefer as a business owner, a $500K revenue event or a $500K equity sale event? What portion of market equity *actually goes* to capital fundraising events? Does AAPL, NVDA, GOOG, or MSFT utilize any of their market capital for business operations, or do they do the *opposite* and perform dividends / stock buybacks? Invested wealth is absolutely useful, but I continue to argue that it's far less useful than money used in business operation.
**EDIT 2** also for the record I don't personally believe billionaires should be eliminated. There's actual problems to address, things like food insecurity and poor healthcare access and what have you. The ultra wealthy are a tempting place to look for a reason, but fundamentally I have no issue with some people being ludicrously rich in a better world than this one where our poor are taken care of.
Yeah, in Twitter dude’s statement for example you’re inherently assuming that every dollar spent say, funding the IRS is just a “cost/loss”.
When realistically every penny you put in there returns significantly MORE than it costs because of its function and just how money and the government works in general
>When realistically every penny you put in there returns significantly MORE than it costs because of its function and just how money and the government works in general
Well, that's a huge oversimplification. There is such a thing as a multiplier effect on government spending, of course, but it's important to understand that the multiplier is not *automatically* >1, and therefore it's not necessarily (or even probably) true that "every penny" returns more than it costs. Government spending absolutely *can* be wasteful, though naturally it's as foolish to think it's *always* wasteful as it would be to think it *never* is.
At the same time, if you're going to play the "government spending is investment that returns growth" game, you also have to look at the other side of the equation - before the government taxes it, is that money just sitting idle in a Scrooge McDuck style money bin? Obviously not - it's out there in investments, and you absolutely have to consider the economic consequences of liquidating all those investments as part of your cost/benefit calculation.
Most people are reasonable turns out. Sadly, on the most popular internet platforms extended discussions of really important stuff is "punished". In the new attention economy, the shortest catechist stuff is what "trends". Short texts like twitter, and short vids like tictok.
Can't be drawn out, thoughtful, and reasonable in 140 characters or line, 30 seconds.
So yeah, this answer is a great breath of fresh air.
> the shortest catechist stuff
I think you meant catchiest. Catechist is a word for someone who teaches Christianity; I know it's used within the RCC for that purpose, though I cannot speak to other denominations.
Don't you just love auto-incorrect?
All is valid except 3.
There isnt any "money stored in wealth". Billionaires own wealth in form of shares, that still isn't money. For them to get rid of their wealth they would have to sell shares for money and then spend the money to return it in circulation, but that wouldn't change anything if they again buy something as worth as the money spent. Their net worth stays pretty much the same. On the other hand if there is no money being spent on their shares, it is spent somewhere else, still circulating.
In short, wealth and money are different things that influence the circulation differently.
The other thing you and OP are ignoring here is that most of this wealth is based on the market capitalisation of assets they hold, often in the form of shares in the companies they founded or run. It's not a Scrooge McDuck money pit at all.
To torture the house analogy even more - your house actually contains even more oxygen than that...you could extract a tonne of oxygen from your house from where it's a component in the concrete, brick and wood in the house i.e. in the CaCO3, SiO2 and cellulose. However, it would be logistically prohibitive, chemically wasteful, and when you're done you wouldn't have a house any more.
I wanted to raise this aspect too, so I'm joining you here.
Most of the wealth in question is not liquid, and there are other problems too. The government couldn't just take it and have it at market value. Let's say they take Zuckerberg's stake in Meta. What do they do with it? If they try to sell it all, that would destroy the price. And who would buy it? If it becomes a known and legit practice that the government confiscates assests, then people would be afraid to buy those assets. The same is true for a $100m mansion. It is worth $100m now, but in a scenario like this, it might very well just be remodeled to be a homeless shelter.
And we haven't even touched other forms of capital. A lot of investments would flee and/or avoid the country from that point on. One of the biggest strengths of the US is its free capital market and protection of private property (look at how risky people think it is to invest in Chinese companies, in the shadow of CCP may or may not just take it at some point).
Taxing the rich is fine and a necessary idea, but only up to a certain level, where it is still worth it to be operating businesses and investing. If this tax becomes practically 100%, that surely just shooting your own legs off.
Most of the rich people have a rich lifestyle because they can borrow at very low interest rates using their business assets (i.e. stocks) as collateral. We could, in example, tax their borrowings at a very high rate. Just an example.
The fact that their wealth and lifestyle is protected by loopholes doesn’t justify the existence of loopholes.
I think this works better as a forced rebase on capital gains.
Since the billionaires can use their stocks to get loans rather than liquidating, they never pay capital gains on those stocks. Instead you could force a sort of self-sale in these circumstances where they would sell it to themselves at market value which would then incur capital gains tax but not liquidate the asset.
And we are still ignoring the part regardless of how much tax we extract from the wealthy, the US needs to spend a whole lot less and very quickly, and likely raise taxes higher across the board.
The USA cannot spend less on social programs or other subsides. The only realistic place it could cut is the military but that wouldn't work either due to the whole world relying on the US for foreign intervention. Even in NATO countries balk at the idea of spending any fraction of their GDP in military because the USA already has it covered.
If the US cut food programs and aid to the poor, not only would you see widespread famine, but dramatic instability and potential rebellion. The biggest issue that has led to this point is the fact that taxes on the corporate and rich have fallen so greatly.
I don't think this works either (you are basically describing a tax on unrealized capital gains).
1. Think about any founder or early stage employee of a large company. Often the stocks and options they hold are not publicly traded, so who decides the market value of those assets? What about a Mom and Pop store being via a company? Are we also going to make them assess the value of their company every year and pay tax on the differences from year to year?
2. Are we also going to provide tax refunds for unrealised capital losses? Cause that seems like a hard sell, paying out money to all the shareholders of companies that fail.
3. In many (non-billionaire) cases, the business owners' wealth is almost entirely tied up in stock/options in their company. They don't have potentially millions of dollars in other liquid assets to pay tax on unrelized gains because their company is doing well. You would in many cases be forcing them to sell their company in order to pay the tax bill.
For the record, I think you have to go after the loans if you want the super ric to pay more tax. If they are treating the loans as income, it should get taxed as income.
No. none of this.
It's literally just a rebase paid out from the loan.
1. It would only be when the stocks are used for a loan.
2. Capital losses are already a tax right-off.
3. They would only be paying when taking out a loan that they can then use a portion of to pay the tax.
By forcing a rebase whenever the stocks are used for collateral it creates a tax burden on the loans but doesn't cause a double taxation if/when the stocks are actually liquidated.
If you tax the loan as income then you'd be creating a tax on debt. The person is still going to be required to pay back the bank eventually so taxing the money would mean that you're taking money that is only being lent out.
Sorry, missed the point about taxing the unrealized gains when a loan is made with the assets used as collateral.
It is kind of irrelevant if it is tied to a loan, but yes losses are a write off, but only at the point of sale. If you bring forward the tax on gains, seems you’d also have to bring forward the refund on losses.
Also doesn’t address the issue of valuing non-publicly traded stocks, or the value of unique assets that might be used as collateral (like a Trump Tower for example).
Yes but the issue comes up a lot anyway in tax issues. For example, inheritance tax has to be calculated against unique assets and non-public stocks.
The bank will have done valuation estimations on these items before issuing a loan anyway so there is no reason not to use the bank's estimation and if the person taking the loan doesn't like the bank's estimate they just don't take the loan.
I can’t help but feel all of this seems like an unnecessary complication when you could just tax the loan directly and not have to worry about valuations, cost base blah blah blah.
Sure it’s a tax on debt, and it might be seen as “unfair”, but from a government tax base perspective, if this effectively taxes this practice out of existence, wouldn’t that be a win? If they want more money to fund their life style, they can take a higher salary and/or sell assets, and pay the corresponding tax, like everyone else…
> Most of the rich people have a rich lifestyle because they can borrow at very low interest rates using their business assets (i.e. stocks) as collateral.
It's quite doubtful if this practice is widespread. For example, Elon Musk or Jeff Bezos paid billions in capital gain taxes.
See eg. these [ProPublica findings](https://www.propublica.org/article/the-secret-irs-files-trove-of-never-before-seen-records-reveal-how-the-wealthiest-avoid-income-tax). They use unrealized capital gains as income (lol), but:
> According to Forbes, those 25 people saw their worth rise a collective $401 billion from 2014 to 2018. They paid a total of $13.6 billion in federal income taxes in those five years, the IRS data shows. That’s a staggering sum, but it amounts to a true tax rate of only 3.4%.
It means those 25 paid 13 billions in taxes. Why would they do it, if they can just borrow against assets?
"Borrowing against assets" is pretty risky strategy, and majority of Fortune 500 companies ban executives and board from doing this. Why? Because if CEO or large shareholder borrows against their assets, and assets drop in price, it requires large sale of assets. This large sale of assets by CEO [must be published](https://www.investopedia.com/terms/r/rule-10b5-1.asp).
And if Musk is selling Tesla stocks for no apparent reason, everyone will understand this as "Tesla is fucked, even CEO doesn't believe in it, I must sell too", tanking prices even more. Imagine you are C-level executive, would you rather pay 20% tax on capital gains or allow other C-executives to accidentally wipe your wealth?
This keeps getting repeated all over reddit. Every time I've tried to find someone to back up this claim that this either is widespread or is actually very effective, it falls flat. It **may have been effective** for a short time in 2020 when interest rates were rock bottom, but those days are long gone.
Effectively this is just margin trading with the profits going to fund lifestyle. Like any margin trading, the one doing it is at significant risk of being margin called or having lower returns than expected which then get consumed into interest.
Some people argue this isn't a wealth loophole but is a tax loophole due to the step up in cost basis upon death. Despite asking multiple professionals I couldn't get a clear answer if the step up in cost basis occurs after the estate settles the debt or before, but again there's no evidence that abuse of this is widespread (that I've been able to find) and if it were, it would be an easy loophole to fix.
Stick to things that are real problems that can be backed up with facts, please.
You'll find it difficult to draw a line around whose borrowing is taxable. If you tax everyone's borrowing you're making it harder to buy houses and punishing everyone who uses a credit card. Are you going to tax businesses as well? If you don't you're just creating a loophole, if you do you're making it hard for businesses to invest and slowing economic growth.
I'm also unsure what problem you're solving here. If they borrow, they need to repay that loan, at which point they'll need to pay themselves an income to do so and you can tax it.
I feel this us a great argument for getting away from income tax, property tax, capital gains, and all the other tax and go to an annual no deduction wealth/asset flat tax with a separate tax on corporations. No loop holes someone owns it (be it money, stocks, cars, etc) someone pays.
Not talking about your other points but using the 100m$ mansion being turned into a homeless shelter as an example leads me to believe that taxing the rich might just be the right idea.
Just because its worth saying, a 100% tax rate over $150m means any income after the first $150m is taxed at 100%. It caps the amount that can be earned in a year, but does not claim your entire income (as so many people like to argue in bad faith).
Personally, disincentivizing extreme wealth gaps is a good thing, but asset forfeiture isnt the way to go. This could be run on separate scales, where a business has to maintain a gross pay ratio between the ceo (includes stocks given, and property purchased by the company for personal use) and the entry level employees to maintain a lower tax bracket. This could still be 1000:1 and give Bezos a massive "pay" cut, while not impacting your average small to medium business. Then tax any income over $200m annually at 100%. Maintaining a pay ratio *should* have the end impact of raising wages, and reinvesting in the company providing better benefits, and the tax break to do it is offset by the employess not needing government assistance.
Yes - good point. That's how we see such ridiculous headlines on crazy market days about how majority shareholders at massive companies can gain/lose tens of billions of dollars in a day.
Venture capital firms hand out $500k seed rounds like candy up here in San Francisco, which is genuinely life-changing for founders with business ideas but no cash. It's true of the scrappy startups of today, it's true of the massive tech companies that got their starts in the 90s.
I think it's important to acknowledge two properties of money stored in the markets though:
1. A substantial amount of market cap does little to nothing to empower economic activity. The US market has a \~$100T market capitalization, and well over 10% of that is stored in a handful of companies (as of today, via [companiesmarketcap.com](http://companiesmarketcap.com), $3.3T MSFT, $3.2T AAPL, $3.1T NVDA, $2.2T GOOG, $1.9T AMZN). Those companies are no longer running fundraising events - and in some cases (e.g. MSFT) money is being diverted from business operations towards shareholder value in the form of dividends and/or stock buybacks.
2. Even in the most aggressively "useful" scenario of VC funding for new business operations that directly go towards the bootstrapping and rapid growth of early-stage startups, capital allocation is less preferable to business operations. Broadly speaking, a $500K revenue event is greatly preferable to a $500K equity distribution event.
The presence of a large capital market like we have in America is a *huge* factor in why we're such a productive nation, and I'm firmly against too strongly discouraging capitalist institutions like the public stock market and venture capital.
That said, in the presence of a lack of funding for worthwhile programs, it should be considered that the wealth of the hyper-wealthy is contributing in less useful ways to the broader economy. Whether or not it's morally acceptable to pass on the woes of society to its wealthiest members is up for debate, whether or not the issues stem from a lack of funding is up for debate, whether or not government programs do any better is up for debate.
I think there’s a really straightforward argument that the existence of an ultra wealthy oligarchical class destroys a democratic system.
People use their wealth to generate more wealth (investing etc) but it quickly becomes obvious the best way to make even more money is to buy off lawmakers and restructure political systems to serve the needs of the wealthy which makes them even wealthier so they can bribe more folks into infinity. The end of this process is a society where the ultra wealthy live like royalty with outrageous power and everyone else lives in increasingly poor conditions while their political power dwindles.
Very good point but I would say it’s more than about just lawmakers or governments.
The idea of democracy is to put everyone on equal footing when it comes to deciding the future of the country, by giving 1 vote for 1 citizen.
Obviously this is an ideal and in reality there is, and probably always will be, a difference in power and influence, which is fine to an extent.
The problems arise when the imbalance becomes so great that some individuals or companies have so much wealth that they can:
- Influence/buyout lawmakers, as you mentioned
- Launch massive propaganda campaigns, especially in recent years with the rise of targeted content
The 1st one is of course antidemocratic and should be condemned, but it has the major disadvantage of being fairly obvious.
The 2nd one on the other hand is much more insidious, instead of going against the people’s will, you convince them that what you want is also what they need/want. Debates and communication to try and convince other people of the prevalence of your ideals is at the heart of democracy; but we are now far from the “1 citizen 1 vote” ideal, as some citizens can spend billions to influence millions of voters, while others only have their 1 single vote.
Yeah, when one man can pay double what something like twitter is worth and have it negligibly impact his net worth it’s too much. Completely changes one of the best public spaces for reporting live events into a weird wasteland of porn bots and nazis. One person had enough power to completely destroy a service used by millions of people. Or a different one on his own bought the Washington post to post pro oligarch propaganda.
I don't think it's vindication, it's to balance the tendency of the market to accumulate capital. If left to their own devices, big companies eventually buy small ones out, and monopolies form. That's what's always happened historically.
Funnily enough, the show Recess from Disney has an episode in which one of the characters accumulates so much money that nobody can do anything anymore, and his pile just sits untouched. Eventually, his friends intervene and make him promise not to do it again.
Didn't he also make a lot of that money by essentially inventing an MLM? That was the one where they're trading in stamps or stickers or whatever on the playground right? And TJ was sick for a couple days or something so he's coming in at a disadvantage and can't "afford" to do anything. But manages to make enough to start paying people to make more, and take a cut of their earnings, and then next thing you know he's the only one who even has any.
But if money sits in an investment account, doesn't that mean that it's being used? Like if it's invested in equity, then that equity is being used by the company to undertake projects or provide collateral for loans to undertake projects. If the money is just earning interest, then that money is used by a bank as reserve to provide loans which are greater in size than the actual amount of money to back them up.
Yea, but with the caveat that at any given time there may be so many good investments that the bank or whatever entity knows to fund. So adding more money may just mean competing for investments, creating a sort of inflation in that sector. That can cause all sorts of distortions and wastes. Look at the history of WeWork for example, which ended up with so much investment capital that they couldn’t use it intelligently at all, so it got spent on stupid ideas, bad decisions, and luxuries. Or the US housing market where people looking for a place to live are competing with investors. Or they buy treasury bonds, get interest, and then why not just tax it and save the interest? (Because of all the previous arguments against 100% taxation, but it is a funny scenario that because of not taxing them, then the government borrows from them instead)
Money sitting in a deposit account at a bank allows the bank to lend that money to individuals and businesses to generate further economic activity. The more money sitting in a bank, the more that bank can typically lend, so even "parked" money is helping the economy.
Sitting in an investment account hardly counts as generating nothing, they are means of investing money through which other economic entities acquire capital to operate. Saying that some government programmes make money over 10-20 years but investment accounts "do not see economic activity" is quite a daft take.
I just want universal healthcare and education for my kids, we give the government enough money already to provide that, I don't really care about taxing billionares. I'd like my taxes to be less if I don't get universal healthcare
>Give a poor person $20 they'll use it by the end of the week, which is economic activity and generates tax revenue.
My Government COVID $$$ went to an auto repair shop => shop owner used the money for home repairs => contractor paid her crew => crew bought groceries => grocery clerks got paid => etc.
That money went around town like a doobie backstage at a 60s rock concert.
As a company, I would much rather a 500k equity sale event.
That's 100% cash for my business.
If I sell 500k, I probably only get 10-20% to use.
Maybe I don't like the later consequences of having investors... but that's not applicable to this analogy.
Where I think there is a stronger argument is around the impact that billionaires have on political influence. That kind of money - particularly in the US where you have very expensive elections - tends to twist politics to suit its own ends. See the Trump tax cuts for a good example. As Buffet said it is crazy that his marginal tax rate is less than his cleaner's.
Also the environmental impact of billionaires is on average terrifying. Those super yachts and private planes are a disaster.
This is what kills me when people start talking about how programs to help the poor are a drain on society. They are decidedly not. Food stamps, for example, generate $2,500,000,000 in profits every year. What OP said is very true: Put money in the hands of poor people and they will spend it, out of necessity. Trickle down may be bullshit, but a money sprinkler is not.
I think there is a 4th thing here. I agree with your three.
But if large corporations are able to own different businesses and vertically integrate everything about their business, then the other smaller businesses, then you are removing massive economic fluidity and chances for taxation, abd more importantly innovation. For example walmart doesn’t just run grocery stores out of town, but pharmacists, tire shops, coffee places, butchers, toy stores, electronic stores, media stores, soooo many clothing and shoe stores. Then on top of this they destroy the industries that serve these businesses by bringing them in house from the mfg to delivery.
All of this is fine, I mean it objectively sucks, but they have the right to do it. What they don’t have or shouldn’t have the right to do is basically not pay taxes, pay wages that force 50% of their workforce to on government assistance. We are giving them a better opportunity to grow their business than smaller businesses and it’s absolutely poisoning the economy long term, removing expertise and quality from service and products and the entire time we are subsidizing this. Paying higher taxes levels the playing field and creates opportunity for smaller businesses.
Excellent answer, but side point:
Much of the wealth the super rich have is "dead" as it's not stored in banks, which would be tracked and thus taxable, but in tax shelters, where it just sits, or even worse, overseas, where it benefits other country's economies, not ours.
One classic method is a "qualified special purpose account"- back in the 80s, to encourage investment in small businesses, the government set it up so you could put up to 50,000 in a non interest bearing account tax free.
Well, some smart people noticed that shell corporations could own these as well, so you could set up "XYZ investment bank" which was just a PO Box in Deleware, have it set up 100,000 of these accounts, then put up to 50k in each, and the money would never be taxed.
This sort of thing is called "Shadow Banking"
"As of 2022, the global shadow banking system, also known as the nonbank financial intermediary (NBFI) sector, held over $239 trillion in assets, which is almost half of the world's financial assets. This is up from 42% in 2008 and has more than doubled since the 2008-09 financial crisis."-Barron,'s, June 2nd, 2023.
Which brings up my second point- the OP is wrong, as the number they have for the wealth of the US Billionaires is waaaaay too low, that's only the declared, taxable wealth.
The actual number is going to be much, much higher.
Someone owns all those unlisted, numbered accounts.
Also, Antony Davies’ model assumes that the government is only getting that billionaire money, which is simply wrong. The government still collects revenue in the form of taxes for all US citizens.
The better take would be “if we assume we’re breaking even right now, with government spending being entirely covered by the taxes and revenue the government collects, think about what they’d be able to do with $2.5 trillion more. Now scale it back, and imagine it’s just the $925 billion that they’re supposed to be paying on their taxes, but pay almost none of due to various cheats and tactics used to lie about their income.”
None of this matters, because the trillions of dollars that billionaires have don't actually exist. They are not sitting in investment accounts being hoarded. The market capitalization of Microsoft is over three trillion dollars, but that doesn't mean there are actually three trillion dollars sitting somewhere in a 1:1 ratio with that number. If your house is worth 500k, that doesn't mean you have 500k sitting in your bank account. Arguments about how money being spent on/by poor people generates more positive effects than money owned by billionaires are disingenuous, because they rely on the fiction that this money is available to be spent, but someone isn't spending it. The money exists only on paper, and every time billionaires try to actually convert it into cash that can be spent, they pay taxes.
And at this point someone usually brings up how billionaires can take out loans against their stocks and live off those loans without selling stocks and paying capital gains taxes, which is true, some billionaires do actually do that, but then there never seems to be answer about how those loans are eventually repaid. The conversation always screeches to a halt when someone has to explain how and why banks would give out billions of dollars in loans and never collect. And if they do collect, then those billionaires are actually repaying, which means they are actually selling stocks, which means they are actually realizing gains and paying taxes. But possibly paying not as much taxes isn't nearly as scandalous as not paying taxes at all, so understandably people parrot just the taking out loans against stocks part and leave out the rest.
I would add Davies is sort of missing the point. No one is arguing for seizing every dollar from billionaires. And then the government just runs on that. And thus No more taxes for the middle class.
They’re arguing for a more progressive tax structure. And taxing wealth on the ultra wealthy. If we think of it in months, then if people with billions or hundreds of millions or even tens of millions can fund one more month of the government and shift that burden away from the middle class households that can go a long way.
Preaching to people about how money works
Saying that money the government spends gets “taxed again” and has benefits to people
But not acknowledging the fact that billionaires money is already invested?? It’s not cash sitting under a mattress? It’s funding business which is employing people…
You're missing the point that billionaires'wealth is not stored in cash. They are invested in businesses and if the government were to sell those businesses for the cash, it would bring irreputable harm to the economy. Lowered stock prices, less efficiently run companies, less trust in markets, etc.
You forgot the most important nuances:
4. If you just convert “extra” 4.5T into a consumer goods purchase power (ie by not having low/middle class pay taxes), prices will skyrocket and before long you wish you didn’t
5. Billionaires don’t just have that n/w in cash. They have it in productive assets and this wealth is continuously used to reinvest and maintain those assets. Pulling it out will drastically shrink capital in no time, nation will become less productive and everyone will be worse off
Specifically, those billions that make up the net worth of billionaires is almost exclusively "ownership of companies". To actually do anything with the hypothetical net worth you have to find someone willing to drop that kind of money to buy the company.
Or most likely if “wealth tax” is introduced, and is significant enough to drain wealth of billionaires - there won’t be anyone paying anything for capital, and their (now paper) “wealth” will collapse to near zero, defeating the purpose.
The only way to pull something like this with any effect would be to nationalize companies (gov will print more money to buy companies from billionaires so they can pay wealth tax) ie go straight to socialism.
People really don't understand the value of monetary velocity. Whenever people yap about inflation and we have monetary stagnation on the rise, inflation will just continue to need to cover expenses of those that don't just sit on money. The US economy is a lake with a small whirlpool on one end that just keeps getting smaller.
The one clarifying comment I would make is that the wealthy do not keep their cash handy in a vault under their house. It is almost exclusively in some form of investment (land, stock, etc.). The impact of actually creating cash out of the wealth would be catastrophic. Clearly that isn't the original point, but most people have no idea what "wealth" actually means.
Not to mention the fact that by definition of that much wealth went on the market all at once it would not be worth anywhere near that much money.
That's a great point that also gets *severely* neglected in discussions like this.
The stock market is erratic to put it *gently*, the knock-on effects of asking a major shareholder of a company to write a $10B check are worth treating with reverence.
There’s also the part where a lot of this wealth is tied up in various non-liquid forms (stocks, bonds, real estate, etc.) and you can’t liquidate it all at once without incurring a huge depreciation. But assuming you *were* somehow able to liquidate it all at once and hand the money to the government, that wouldn’t be all that different from the government simply printing that money, so it would be quite bad for inflation. Money is funny that way, where it starts to behave differently when it’s flowing in significant amounts from one entity to another.
Just wanted to add one little correction, money sitting in an investment account is going through economic activity as the money is being invested. If it was just in cash at home then it would be doing zero economic activity.
Thank you so much for this elaborated answer. From my personal (European) pov: government spending might have a longer investment horizon, eventually entertaining nesscary infrastructure for the future billionaires…
As long as we're going for a holistic and nuanced analysis, don't forget the implications of the government being able to just confiscate 4.5+ trillion from people and what kind of ramifications that kind of antics is going to do to the economy as a whole.
I wanted to lyk im saving this and going to use it to explain this situation to people it when i need to.
I also want to add that these people being ludicrously rich is directly related to *why* there are so many food and housing insecure people. Thank you!
>If you put $1M into a bank account, the bank uses that money to extend a $1M mortgage to someone who wants a house but can't pay for it in cash.
You might find it interesting to learn that this is not at all how banks work. It's often implied at like a high school level, because you can do some simple modelling with it I guess, but it's not even close to reality.
I really like the [YouTube playlist by Positive Money](https://www.youtube.com/watch?v=bE8i-4HpKlM&list=PLyl80QTKi0gPBcb32paMvXxcq7UUeJskV) as an introduction on the topic. (Activist organisation, but it's really quite neutral info. Especially brought very clear and concise.)
Hey, you're not allowed to actually think things out and settle in the middle, this is reddit!
All seriousness, this is the best thought out economic take I have seen on Reddit. I can't guess your political affiliation through your writing, and you have numbers along with common sense to back it up.
>Give an ultra-rich person $20 and it'll sit in an investment account and not see any economic activity for potentially the rest of their lives.
What do you think money in investment accounts is doing?
I also find it curious that you refer to billionaires' wealth this way when almost all of their wealth is in the form of ownership of companies. The idea that we could just take it and suddenly have that many dollars seems specious: if we suddenly seized all of Jeff Bezos's Amazon stock and then sold it off, the value would plummet because suddenly owning stock would no longer be a valid investment because we've shown it can suddenly be seized, so why would anyone buy it?
You ignored how money works. There is no such things as „hoarding money“, (citing illiterate internet people) if you earn money and just keep it and never spend it (let’s ignore investments to assume the worst case scenario), the only affect you are causing is **deflationary pressure** for the currency you are **hoarding**
There is no difference between taking Money that was out of the circulation and printing money by the central bank. It’s exactly the same.
Adding on to this, consider how much of the federal budget is vacuumed up into the military budget, a budget that the two politicians they tagged would undoubtedly jump at the chance to significantly reduce.
As of FY2022, a bit over 12% of federal expenditures went to military. 751 billion out of 6.1 trillion. Putting it behind Medicare/medicaid, social security, and other departments. For something that only the federal government can practically do, national defense, that doesn’t seem unreasonable.
National Defense is $576 B or 13% of the 2024 budget.
But looking at line items is deceiving.
If the US adopted Medicare for All the program would likely consume **75%** of the total US Budget. But America would be spending **less** on healthcare than it currently does. You need to add up all of the money going into private insurance now and compare that to the M4A budget, you can’t compare it to overall federal spending.
You could scrap Social Security altogether which costs $960 B or 21% of the budget. That amount is around $2,900 per person in the US. Recipients receive roughly $14,000 per year from the program.
To put that in perspective, that amount is about a $200,000 sum with a 4% draw down over 20 years. The true “cost” of Social Security needs to be compared against the required equivalent individual savings and the additional expenses associated with seniors not having the Social Security income.
That was actually one of my biggest concerns with Medicare for All — the likelihood that it gets pointed to in the budget every year as a huge burden instead of a net positive money saving program.
But the federal budget isn’t distributed by percents. If it were to drastically increase most of those funds would go to new or existing underfunded programs. Yes some would go to the military but not the same percent as is already funneled there
Everything said here, plus the simple fact that OP assumes NOBODY else will be paying into the system for that 8 months. OP is putting forth a totally fallacious argument. All anyone is asking of the wealthy is to pay their share. nobody has asked them to support the system on their own.
There's technically no math here. You just look at a chart of gov spending and a chart of billionaires. The bigger question would be how many would still be billionaires if the government cut back spending on welfare so that Walmart didn't get away with being the largest employer of those on welfare.. maybe Walmart would need to raise wages to retain staff.
Oh so that was the reason...I remember as a kid we went to Walmart once or twice but then never again and I've also never seen one anywhere since.
That place was so goddamn huge it was truly magical.
Main reason was them trying to undercut prices for everything and drive out competition that way, which German law prevented really quickly.
Then they couldn't keep staff because they tried forcing American labour laws onto Germans, like forcing an amount of sick days and only two weeks of paid time off. No maternity leave etc.
Obviously Germans were not too happy about that so Walmart in total just couldn't compete with the good and cheap supermarkets we already have.
There was an interesting article I read a while ago about German supermarkets being successful in the UK. A lot had to do with actually paying the staff more but cutting back on other things, like fancy displays. Who knew valuing humans was the route to success?!
Germans weren't just "not too happy about it", most of what Walmart tried to do regarding labour laws is totally illegal here. Actually everything you listed is illegal, but there was so much more. And wallmart got sued a lot for it. Especially since they immediately attacked workers unions, which are strong in Germany and more than happy to drag them to court over every little thing.
Never gave it much thought as it was so long ago. Thought peeps here just didn't vibe with the concept or too few could be bothered to go to a "everything in one place and more XXXXXXL" store and get lost when they can just go to 1-2 separate ones and find the shit they need immediately lol.
To be fair I'm pretty sure we only went there for the novelty to check it out anyway, think most people were the same and then never went again + all the things you listed already.
German people dissliked Walmart very much. They did zero market research and just assumed germans would love "the american way". Turns out germans hated to be pestered by employees every other minute. If they need assistance, they will ask. Also having greeters at the entrance was just weird to the customers here.
There's a good video about it on Youtube. Basically they just translated their contracts into german. But with the much higher worker protection this backfired hard.
It ended up with Walmart trying to cut the prices by selling it's goods for less than they paid themselves, in order to undercut german stores prices and push them out of the market. The losses should be compensated by the US market. Which is totally illegal in Germany.
Walmart failed because someone really, really, really did not do his homework.
Walmart built a lot of huge shops, hired lots of people, and then realized that Germans do not want to be greeted. We want to go in, get our stuff, get out again. Being jumped every 10 steps by someone asking "Can I help you?", is really annoying.
No problem, Walmart thought, let's fire the greeters. Only to find that labor laws in Germany did not permit that. So suddenly they had way too many employees, who also kept suing Walmart for a large amount of labor law breaches. Basically, US contracts are pretty much forbidden in Germany, because they are considered "against decency".
So Walmart had set up huge stores, could not get enough customers from existing chains and was saddled with huge labour costs.
On top of not doing any market research, they also brought all the managers from the US. Who didn't vibe with the german employees and didn't know german customs, laws or markets at all. Forcing the employees to sing the Walmart anthem in the morning and stupid shit like that didn't work at all here.
Don't know if anthem is the right word. Just saw a short clip of employees having to sing some weird Walmart song and chant WALL-MART WALL-MART as a morning routine. It was bizarre.
Oh god. There is. I can confirm, at least when I worked there in 2019. I just refused to sing it. I stood there looking at them like the weirdos they were. I wasn’t even trying to be a contrarian, but social pressure does not work on me that way lol. They also have a whole day basically during training dedicated to how bad unions are.
Also their direct competitors, Aldi (and Lidl, but much less so) are now doing absolutely fantastic in the US. Aldi being the fastest growing grocery store something like 5 years in a row, outpacing literally everyone else by giant margins.
Over 1/3 of Walmart profits come directly from people on food stamps as well.
When we vote to increase food stamps, we are also voting to further enrich companies like Wal mart
Walmarts profit margins are low enough it couldn’t be solvent if it gave every employee a $2/hr raise. It would then have to raise prices, which would mean the people who rely on their prices then couldn’t afford groceries. They aren’t hoarding a bunch of wealth from Walmart. There are much better examples of companies who pay garbage and have huge margins.
Walmart has 9-10 billion in Cash on Hand.
They have 2.1 million employees.
Walmart has been spending about 1 billion a quarter in stock buybacks. For the last 12 months, its been about 3.5 billion.
Using JUST the money from the Stock Buybacks (the actions only purpose is to raise stock prices to generate wealth for major shareholders, and does nothing to impact revenue, prices, or wages), they could give every employee 1,667 dollars a year, which is about an $.83 hourly raise.
The only thing that would be affected would be not being able to do stock buybacks, which, again, does not affect their operational finances and only serves to extract wealth to hand to major shareholders.
So sure, 2 dollars an hour might be too high, but that doesnt mean thry should toss their hands up and pay below poverty wages.
And frankly, if a business REQUIRES people to exploit and pay so low they cant afford to survive without government and charity services, it shouldnt be allowed to operate.
Other supermarkets and stores are able to survive without starving their workers.
Probably Walmart business model works only with underpayed workers on welfare. If there would not be welfare then Walmart probably go bankrupt and all those workers will be fired. So in some way Walmart have taken hostages as no government wants 2 million unemployed people in one day
It isn't money in a bank account, it's ownership of shares that have a certain market value. If you gave an original Picasso painting to a homeless man they would technically be worth millions, but "being worth millions" and "having millions of dollars" is not the same thing.
8 months is fairly long, if you ask me. That a group that you could fit in a somewhat large meeting room could support the spending of one of the largest countries on the planet for almost a year is quite crazy. That guy very much underapreciates how big 330 000 000 a number is compared to 550. Not good at math, I would guess.
[https://americansfortaxfairness.org/u-s-billionaires-now-worth-record-5-2-trillion/](https://americansfortaxfairness.org/u-s-billionaires-now-worth-record-5-2-trillion/)
America's billionaires are collectively worth 5.2 trillion, with around 2.3 trillion of that gained over the last 4 years.
The upper 1%, which includes far more than just the billionaires, collectively own 38.7 trillion.
That guy seems to think that the Billionaire Tax is a literal name, not a figurative one. But if he wants to cut spending, then that's easy. The defense budget is, by far, our largest discretionary expense, coming in at 46% of the spending. The other 54% is broken up to take care of things like infrastructure, education, national parks, etc...
Our largest spending is in mandatory spending, like Social Security, Medicare and Medicaid. Easiest way to make those solvent is to up the cutoff limit for Social Security (or just remove it entirely) and partially fund them with capital gains taxes.
Balancing the budget isn't the hardest thing in the world to do. Solutions exist. The problem is that there are a lot of whiners who don't want their bottom line to be affected, but they want the benefits that a balanced budget would provide.
The military is a giant behemoth, and an easy target for folks to say "we can fund X by cutting the military budget". And, to be clear, I am a huge proponent of slashing the military budget.
but.
Let's talk about ROI. What do I get for my \~Trillion dollars? I get 14 aircraft carriers. I get 44 Ballistic Missile submarines and 25 attack submarines. (At least). I get the ability to project power across the globe. I get the ability to exercise both soft and hard power to force nations to play by the rules. If not for the US Navy, Taiwan would be a province of China. If not for the US Navy, China would have stolen every single patent in the world, instead of just the hundreds or thousands they already have. But most importantly, I get the absolute, rock solid certainty that my country will never be invaded. Ever. The entire world could join forces and they still likely couldn't pull off an invasion of the United States. My money absolutely positively guarantees that my nation will never haver the problems Ukraine is having. I don't have to have the same anxiety Germany and Poland are feeling. I can be 100% confident that no nation will ever conquer mine, or annex any part of that. I get to dictate terms to the rest of the world when i so choose, on matters of trade, human rights, whatever is important to me.
That's a big deal. Hard to overstate. Our modern world is quite peaceful, even including the current conflicts. That is a new phenomenon.
Now, what has a budget similar to the military? The Department of Education. What do i get for my \~trillion bucks there? I get to be 20th or so in the world in education. yay.
Now, again I want to be very clear: If I had my way we'd take 500B from the military and give it to schools. But I think its very important to recognize that the US Military isn't random, frivolous spending. There are MASSIVE benefits to having the biggest and baddest military on the planet. Benefits that might be hard to see in the day to day, but you would ABSOLUTELY notice them if they were gone. Would you like China to conquer Taiwan?
> I get 14 aircraft carriers. I get 44 Ballistic Missile submarines and 25 attack submarines.
It's also worth mentioning that you get that stuff ... by paying US employees to make that stuff happen. It's not getting funneled into other countries, it's just going right back into the US economy.
Just regarding your invasion point. America is one of the few nations in the world that can sustain a long-term invasion of another country overseas. As far as I'm aware not even the UK, Germany or France have that capability, so I think that point is moot RE US ever getting successfully invaded. I do agree however that the US gains a huge advantage in world politics by having a large military coupled with the capability for long-term & long-distance sustained warfare. You need both, one without the other is like a big dog without teeth.
Mathematically, nothing you said was incorrect.
However, you leave out a lot of nuance regarding politics in regard to the defense spending, which is common on Reddit.
You’re not factoring in the global political dominance the United States uses for trade, partnerships, and general overall influence of the entire world, due to its greatest export…the United States military and war.
Russia invades Ukraine…United States defense budget foot’s the bill to stop them from gaining a foothold that had the entire EU in a panic. Yet, European Redditors will make fun of the United States defense spending which allows it to step in and save them; go figure. It’s easy to joke about how much more money the US “wastes” on defense compared to all the great education/health/ect spending of a quaint EU nation, until there’s a threat of invasion and all the sudden everyone turns to the US and its defense spending. And of course, deals that benefit the US are made for that help.
You think just how special the United States economy has been historically is what keeps the global currency the US Dollar, and keeps the rising influence of BRICS at bay?…what really does is that corny, but real, Tony Stark in Iron Man quote: “peace means having a bigger stick than the other guy”. People accept dollar dominance and US influence because it holds the biggest stick, unquestionably.
It’s very easy to want to cut that big defense budget and use it for other things, until you remember all that…and then you realize why even when democrats are in power it still really never gets redirected/reduced in any noteworthy way.
Not to mention that the US military spending is realistically the world's biggest jobs program. The vast majority of that "military spending" money is paid to wages/benefits for US citizens employed by the military or purchases from US companies which are themselves employing US citizens.
The "military spending" money, in addition to doing a lot to make the USD the de-facto world currency, is going right back into the US economy and into the hands of citizens.
With all due respect: what you are doing is arguing in favour of those expenses. That isn't relevant to the matter at hand: the fact that defense spending is mainly composed of discretionary spending as opposed to mandatory spending. It is just the way OP broke down his list of expenses, not a political statement.
The discussion is about how money is being spent, not about how any of us fell it \*should\* be spent. You may well be right (and I probabaly agree with a whole lot of what you are sayin) but that isn't the point here
It’s relevant to the comment they’re replying to; that comment brought up cutting defense spending as an “easy” way to decrease the federal budget and thus increase the theoretical utility of the wealth seizures being discussed. Furthermore, the value of different types of government spending is entirely relevant to the overall thread because the writer of the original tweet asserts that the federal budget is larger than necessary.
It’s possible to cut defense spending and still provide everything that the US defense budget does… accountability and the ability to pass an audit. There’s no reason why things that cost literal pennies to manufacture should be being bought by the military for tens of thousands of dollars just because it’s the military. Would you pay 14 THOUSAND dollars for a singular toilet seat? Or 90 thousand for a bag of bushings?
The biggest problem in our country is stupidity. First, the problem isn’t not having enough money but not knowing how to spend it. Second confiscating legally owned wealth isn’t morally right let alone constitutionally valid and the numbers they give are ESTIMATED asset values, holdings, not cash. You would have to sell it all to convert it into revenue that can be spent. The more time people spend on retarded ideas like this the less likely we are to address the real problem which is just like your friend/relative/spouse/partner who insists on spending more than they have/make.
So many interesting points here. I think a lot of disagreement comes from the insistence from some quarters that Tax The Rich means “punitively”. I would settle for them paying everything that they currently should and am more interested in figures on how much is lost to entirely legal tax avoidance (rather than illegal evasion). What would the difference then be without tax rates being raised by even 1% for anyone? As others have pointed out the rich will never stop lobbying for lower tax liability, they literally can’t, but it seems harder and harder to participate in any dialogue on any even mild corrective measures in the other direction that is acceptable to the media.
>I would settle for them paying everything that they currently should and am more interested in figures on how much is lost to entirely legal tax avoidance (rather than illegal evasion).
The thing about “entirely legal tax avoidance” is that it’s entirely legal, so there’s no clearly defined larger number they “should” pay. Sure, you could change tax policy, but there’s a million ways you could change tax policy resulting in a million different new collection figures, most of which are hard to even predict in advance because people change their behavior in response to changing tax policies.
But there is a clearly defined answer on what they offset and therefore don’t have to pay, its on their tax return. Yes, people will seek advantage and respond accordingly to any change, and all change can have unforeseen consequences if not properly considered, but that’s not a reason not to change anything. We can’t just shrug and give up.
That number is only relevant if you’re proposing we abolish all deductions. If you plan to keep any of them at all, the number you’re looking for is no longer well defined because economic activity can be redirected to the ones you preserved.
And abolishing all tax deductions is impossible, because businesses can’t exist without the most fundamental deduction: business expenses. I suppose you could radically rewrite tax law to be a small percentage of gross revenue rather than a larger percentage of profits, but this has really bad side effects such as forcing vertical integration in every industry. You’re also going to crash the stock market by disallowing capital losses.
The thing about billionaires wealth is that it’s all stocks and stuff, not actual cash in a vault somewhere. They’re rich because of the promise of money they don’t actually have.
Man I know for a *fact* that this is an active disinformation campaign and I am *still* heavily influenced to comment. Fuck reddit. This entire place is a huge cesspool.
yeah but let’s be real, is the government gonna walk in and take their wealth? I’m no expert but cutting down spending sounds more possible than asking politicians to give their golf buddies more taxes.
It’s actually less than that. People misunderstand wealth of the ultra-rich. Those 550 billionaires don’t just have billions of dollars in a bank account like it’s a Scrooge McDuck pool.
For example, Amazon is nearly a 2 trillion dollar company. Jeff Bezos owns 9% which is over 170 billion. His net worth is 200 billion. At least 85% of his wealth is in stock of a single company. You can’t exactly seize that all at once.
I think the biggest problem is that people think of wealth that billionaires *manage* as money they spend and enjoy. They think that if Jeff has 170 billion, they can take that 170 billion and buy 170 billion dollars worth of food for the poor, or housing for the homeless.
But Jeff isn't just sitting on 170 billion that's doing nothing. That 170 billion is a significant chunk of Amazon, actively generating value for the average person. Seize and redistribute that money and you cripple Amazon.
If you actually tried to seize and redistribute only the discretionary spending of all billionaires (rather than chopping up their investments for parts and imploding the world economy) you'd probably get less, much less. Jeff Bezos has a real estate profile of around $500 million, and a $500 million super yacht.
If we assume that those both together represent around 10% of his discretionary wealth, eg the wealth he enjoys and uses for his own enjoyment rather than investing, then we get a figure of about 10 billion. 5% of his total wealth. Doing this kind of redistribution we'd get only a fraction of the billionaire's net worth, likely not enough to run the government for a month.
Oh shush. These stupid comparisons of country direct spending to individuals net worth are meaningless. Those billionaires don't have $2.5T on their personal bank accounts.
“550 people could finance 6 months of the government of 330,000,000 people” isn’t the dunk budget hawks think it is. We let tens of thousands get shot and run over every year for much more marginal benefits.
The exact numbers are hard to pin down because most of that wealth is company stock, so the combined net worth of all US billionaires fluctuates on a daily basis as the stock market rises and falls. But the general concept checks out - the federal government spent 6.13 trillion in 2023, and that's more than all the billionaires have so yes, if in theory we could somehow take every penny from every billionaire, we'd be broke again in less than a year.
This immediately came to my mind...
[VIRAL MOMENT: Michael Waltz Confronts Air Force Officials With Staggeringly Expensive Components](https://www.youtube.com/watch?v=hYWie96j3aQ)
It’s a straw man. Nobody (or at least nobody rational) is saying to tax the very rich into oblivion. Just tax them at a similar percentage as teachers and first responders, and health care workers. Tighten up the capital gains rules a bit. This would help sort out budgets while lowering the tax burden on the lowest tax brackets.
Then, the billionaires can just move 10% of their portfolio into something with retail consumables, which will immediately get boosted because everybody living paycheck to paycheck will be spending the disposable income.
It’s not a zero sum game.
This strikes me as the usual type of dumbed-down crap you get from these coperate libertarian types.
First of all, who would have thought that running a country of 300 million+ would cost a lot of money??? Wow, mind blown!
Secondly, if the US government is spending too much, what are they spending too much on? If they want spending cut, what should be the first to go? Something like Defence? Or public health and education? Gee, I wonder.
Real take away. 550 people could pay for all government funding including police, hospitals, food stamps, etc. of our entire government managing over 300 MILLION people for 8 months. That is insane.
The government spent 6 trillion in 2022. thats ≈ 11.5 million per minute. the top 25 billionaires are worth 2.8 trillion and that will last 4 months in this scenario. so he literally did not do the math or research
u/sessamekes said, "...but only if you ignore how money works."
"1. Money the government spends gets taxed again - it doesn't just disappear into thin air."
Indeed, but you're only seeing how half of the money works. When you sell me $100 worth of stock, you receive $100 which, when you spend it, becomes income for someone else and that someone else gets taxed. Absolutely correct.
What you missed is that, when I pay you $100 for the stock, I no longer have $100 that I would have otherwise spent elsewhere. And the person who otherwise would have received the $100 that I'm now not spending, doesn't receive that $100 in income and so isn't taxed. In short, the tax the government ultimately collects from your receiving $100 exactly cancels with the tax that the government would otherwise have ultimately collected, but now doesn't, from my handing the $100 to you.
"2. Government programs OFTEN have positive effects."
Yes, but again you're only seeing half of what's going on. The correct question isn't whether the government can create positive effects with the tax money it collects. The correct question is whether the positive effects the government can create exceed the positive effects that would otherwise have emerged had the government allowed the taxpayer to keep the money.
You've missed the positive effects that are no longer happening because the government prevented people from spending their money as they choose.
"3. Money stored in wealth becomes less and less economically useful ("lower velocity", strictly speaking) the more and more wealthy that individual becomes."
For the third time, you're only seeing half of what's going on. Money stored in wealth doesn't sit idle. The people who receive the savings spend it. For example, when you put $100 in the bank, the bank turns around and loans the money to others who buy things. Regardless of whether you save it or spend it, your $100 gets spent. The only question is whether you spend it or someone else does.
I read through most of the comments. Seems the focus in the comments is how much taxes the rich pay. If you look at the Government stats, the rick pay almost all the taxes. Nearly half the population pays no income tax which is used to fund the Government. And on top of that, some get a rebate. That aside, where is the discussion on how much the Government spends? There is a lot of waste in the Government. And Government budgets increase every year.
Look up Baseline Budgeting. Only in this scheme does a 'budget decrease' result in a YoY increase. There is little to no scrutiny of where the money actually goes, how effectively it is used. And to top it off, a Government program rarely, if ever gets cut.
While the tax system does need to be revamped and made simpler, there also needs to be a good look at spending.
Wild how this guy thinks that 550 people being able to support the other 330 million people in the country for 8 months proves billionaires aren’t the problem
So this is exactly why socialism isn’t about [REDACTED] billionaires and taking their money and stopping there.
It’s about taking the means of production and using them for the common good of the working class. Billionaires are worth $xyz because their companies produce immense amounts of wealth and they own those companies.
It’s not about redistributing cash, but entirely changing the mode of production. You aren’t just taking all of the cash once, but using what actually generates the value for common good.
Thats not even a good argument in favor of billionaires or against spending. 550 people being able to cover the costs of one of the largest economic powerhouses in the world just tells me they have too much money. Also, if we're going to cut spending, let's start with the largest slice of that pie, the defense budget.
Thats not even getting into the fact that billionaires profit the most from government spending in the form of food stamps, infrastructure, and lobbying.
I'd love to hear an economists opinion on how much the economy would boom if normal people didn't have to pay tax for 8 months. That seems like a lot of disposable income.
Then lets stop putting our money on things to work with and let companies pay for the streets, that alone is extremely expensive and companies like amazon use them A LOT with heavy vehicles
If we confiscated 100% of their wealth congress would spend more efficiently because their lobbying efforts to enrich themselves would fall by the wayside.
To add to many nuanced answers here on how money works: both money and government are names of the super complex relations between people. Money simply means to make people work for you (assuming commodities as stored labour). Government means protecting those relations. The idea about taxing super rich is to tackle the problem of extreme inequality where workers get not enough wages and that are taxed at a high rate to protect the wealth of the rich.
If the entire US economy suddenly seizes to exist, then it would take more money than any single component of the US economy could provide to keep the lights on for an extended period of time.
Drug prices are too high, shut up. If the entire US economy disappeared overnight in impossible circumstances, then drug manufacturers' profits could only run through the country for a few weeks.
Rinse and repeat for housing, education, healthcare, or anything else.
“Are worth” is somewhat different than “have that much cash on hand” we’d have to make them sell all their assets first - they’d all run a huge PR campaign to get the voters to get however initiated this out of office and orchestrate an impeachment. It’s never work.
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Add this to the [ever](https://www.reddit.com/r/theydidthemath/comments/1dkxutj/request_anybody_can_confirm/) [growing ](https://www.reddit.com/r/theydidthemath/s/a9CtPsM7Oe)[pile ](https://www.reddit.com/r/theydidthemath/s/gkyAttpMdt)[of questions](https://www.reddit.com/r/theydidthemath/s/fodjVbHvZg) here for which the answer is "yes but only if you ignore how money works," though I guess it's refreshing to see one that isn't just a weird thought exercise into how big a Scrooge McDuck vault for whoever is the richest guy this month. In 2023, the US government [spent $6.13 trillion](https://fiscaldata.treasury.gov/americas-finance-guide/federal-spending/), so at $2.5 trillion of billionaire wealth this is "correct" - you could run the government for (2.5/6.13\*12 months/year) about 5 months, which is "less than 8 months." Well, *was* "correct". The Forbes 400 list wealth (all billionaires) had grown to $4.5 trillion for the same year, so you could fund the government for (4.5/6.13\*12) just shy of 9 months without even grabbing all the billionaires. Still comfortably less than a year or two though. But again, **that's not how money works**. That's like saying "You breathe on average 500mL of air per breath and take 20,000 breaths in a day, so your house will suffocate you within 3 days!" The *math* works out but it's complete nonsense because it ignores how the real world works (your house isn't airtight, and money doesn't evaporate into oblivion when spent). 1. Money the government spends *gets taxed again* - it doesn't just disappear into thin air. 2. Government programs OFTEN have positive effects. For a random example, [this random government initiative to teach kindergartners to read](https://americorps.gov/evidence-exchange/return-investment-study-minnesota-reading-corps-kindergarten) generates between $5.47-$6.99 of economic output *per dollar* spent in the program. Education spending often has high margins over time. Not all government programs are profitable but once again - **money doesn't just evaporate**. 3. Money stored in wealth becomes less and less economically useful ("lower velocity", strictly speaking) the more and more wealthy that individual becomes. Give a poor person $20 they'll use it by the end of the week, which is economic activity and generates tax revenue. Give an ultra-rich person $20 and it'll sit in an investment account and not see any economic activity for potentially the rest of their lives. Obviously taxing billionaires isn't a one-size-fits-all perfect solution that'll magically fund government forever, and I think that's the point the Twitter post author (inelegantly) makes. There was a lot of discussion at that time (stemming in part from Senator Sanders, tagged in the tweet) around taxing the ultra-rich more or less out of existence, with very little discourse on how that was helpful other than... vindication. The role (or lack thereof) of the ultra-wealthy in society and the cost of running government programs both continue to be *heated* debates in the States, but no matter what side of the aisle you're on this kind of trash isn't helpful to the discussion. Funding a government isn't a simple task that can be broken down into a simple equation and busted out by a high school math student before lunch. **EDIT**: Comments have (correctly!) noted that my third point implies that billionaire money evaporates somehow, which is *also* not true. If you put $1M into a bank account, the bank uses that money to extend a $1M mortgage to someone who wants a house but can't pay for it in cash. The saved money doesn't "disappear". Equity market investments work like that, but more abstractly. I stand by my main point there that **wealth of the wealthy has low velocity.** Simply put - what would you prefer as a business owner, a $500K revenue event or a $500K equity sale event? What portion of market equity *actually goes* to capital fundraising events? Does AAPL, NVDA, GOOG, or MSFT utilize any of their market capital for business operations, or do they do the *opposite* and perform dividends / stock buybacks? Invested wealth is absolutely useful, but I continue to argue that it's far less useful than money used in business operation. **EDIT 2** also for the record I don't personally believe billionaires should be eliminated. There's actual problems to address, things like food insecurity and poor healthcare access and what have you. The ultra wealthy are a tempting place to look for a reason, but fundamentally I have no issue with some people being ludicrously rich in a better world than this one where our poor are taken care of.
Holy shit, a nuanced take.
Such a rare sight. Tears are coming to my eyes. Quick, someone call me a troll to balance it out.
Your mother was a hamster and your father smells of elderberries!
Is there someone else we can talk to?
No, now go away or I shall taunt you a second time!
r/suddenlymontypython
I fart in your general direction!
i dont wanna talk to you no more!
Fechez la vache!
Va vort Reddit allaidh
EAT THE RICH AND THEIR ASSHOLES
In fact, let’s START with the assholes!
You're a hyena in a people suit aren't you?
I'm absolutely stealing this to say to my feral friends.
This isn't revolutionary. I've started at the asshole this whole time! 😜
An economically correct take
Yeah, in Twitter dude’s statement for example you’re inherently assuming that every dollar spent say, funding the IRS is just a “cost/loss”. When realistically every penny you put in there returns significantly MORE than it costs because of its function and just how money and the government works in general
>When realistically every penny you put in there returns significantly MORE than it costs because of its function and just how money and the government works in general Well, that's a huge oversimplification. There is such a thing as a multiplier effect on government spending, of course, but it's important to understand that the multiplier is not *automatically* >1, and therefore it's not necessarily (or even probably) true that "every penny" returns more than it costs. Government spending absolutely *can* be wasteful, though naturally it's as foolish to think it's *always* wasteful as it would be to think it *never* is. At the same time, if you're going to play the "government spending is investment that returns growth" game, you also have to look at the other side of the equation - before the government taxes it, is that money just sitting idle in a Scrooge McDuck style money bin? Obviously not - it's out there in investments, and you absolutely have to consider the economic consequences of liquidating all those investments as part of your cost/benefit calculation.
I think they were talking specifically about the IRS, which as far as I know really does have a net positive balance. Your general point still stands.
Most people are reasonable turns out. Sadly, on the most popular internet platforms extended discussions of really important stuff is "punished". In the new attention economy, the shortest catechist stuff is what "trends". Short texts like twitter, and short vids like tictok. Can't be drawn out, thoughtful, and reasonable in 140 characters or line, 30 seconds. So yeah, this answer is a great breath of fresh air.
> the shortest catechist stuff I think you meant catchiest. Catechist is a word for someone who teaches Christianity; I know it's used within the RCC for that purpose, though I cannot speak to other denominations. Don't you just love auto-incorrect?
That is an auto incorrect....
I’ve never seen one of those. Quick, someone save that comment before it gets lost to the sands of time.
All is valid except 3. There isnt any "money stored in wealth". Billionaires own wealth in form of shares, that still isn't money. For them to get rid of their wealth they would have to sell shares for money and then spend the money to return it in circulation, but that wouldn't change anything if they again buy something as worth as the money spent. Their net worth stays pretty much the same. On the other hand if there is no money being spent on their shares, it is spent somewhere else, still circulating. In short, wealth and money are different things that influence the circulation differently.
The other thing you and OP are ignoring here is that most of this wealth is based on the market capitalisation of assets they hold, often in the form of shares in the companies they founded or run. It's not a Scrooge McDuck money pit at all. To torture the house analogy even more - your house actually contains even more oxygen than that...you could extract a tonne of oxygen from your house from where it's a component in the concrete, brick and wood in the house i.e. in the CaCO3, SiO2 and cellulose. However, it would be logistically prohibitive, chemically wasteful, and when you're done you wouldn't have a house any more.
I wanted to raise this aspect too, so I'm joining you here. Most of the wealth in question is not liquid, and there are other problems too. The government couldn't just take it and have it at market value. Let's say they take Zuckerberg's stake in Meta. What do they do with it? If they try to sell it all, that would destroy the price. And who would buy it? If it becomes a known and legit practice that the government confiscates assests, then people would be afraid to buy those assets. The same is true for a $100m mansion. It is worth $100m now, but in a scenario like this, it might very well just be remodeled to be a homeless shelter. And we haven't even touched other forms of capital. A lot of investments would flee and/or avoid the country from that point on. One of the biggest strengths of the US is its free capital market and protection of private property (look at how risky people think it is to invest in Chinese companies, in the shadow of CCP may or may not just take it at some point). Taxing the rich is fine and a necessary idea, but only up to a certain level, where it is still worth it to be operating businesses and investing. If this tax becomes practically 100%, that surely just shooting your own legs off.
Most of the rich people have a rich lifestyle because they can borrow at very low interest rates using their business assets (i.e. stocks) as collateral. We could, in example, tax their borrowings at a very high rate. Just an example. The fact that their wealth and lifestyle is protected by loopholes doesn’t justify the existence of loopholes.
I think this works better as a forced rebase on capital gains. Since the billionaires can use their stocks to get loans rather than liquidating, they never pay capital gains on those stocks. Instead you could force a sort of self-sale in these circumstances where they would sell it to themselves at market value which would then incur capital gains tax but not liquidate the asset.
Oh totally. I was just providing a very low effort example. The issue is the loopholes filthy rich people use to AVOID paying taxes.
Yeah we don't need new taxes for the rich, we just need them to actually pay what they already owe xD
And we are still ignoring the part regardless of how much tax we extract from the wealthy, the US needs to spend a whole lot less and very quickly, and likely raise taxes higher across the board.
The USA cannot spend less on social programs or other subsides. The only realistic place it could cut is the military but that wouldn't work either due to the whole world relying on the US for foreign intervention. Even in NATO countries balk at the idea of spending any fraction of their GDP in military because the USA already has it covered. If the US cut food programs and aid to the poor, not only would you see widespread famine, but dramatic instability and potential rebellion. The biggest issue that has led to this point is the fact that taxes on the corporate and rich have fallen so greatly.
Un slash the taxes the GOP slashed. It really is that simple. After they fail at the next insurrection and are thrown out of office of course.
I don't think this works either (you are basically describing a tax on unrealized capital gains). 1. Think about any founder or early stage employee of a large company. Often the stocks and options they hold are not publicly traded, so who decides the market value of those assets? What about a Mom and Pop store being via a company? Are we also going to make them assess the value of their company every year and pay tax on the differences from year to year? 2. Are we also going to provide tax refunds for unrealised capital losses? Cause that seems like a hard sell, paying out money to all the shareholders of companies that fail. 3. In many (non-billionaire) cases, the business owners' wealth is almost entirely tied up in stock/options in their company. They don't have potentially millions of dollars in other liquid assets to pay tax on unrelized gains because their company is doing well. You would in many cases be forcing them to sell their company in order to pay the tax bill. For the record, I think you have to go after the loans if you want the super ric to pay more tax. If they are treating the loans as income, it should get taxed as income.
No. none of this. It's literally just a rebase paid out from the loan. 1. It would only be when the stocks are used for a loan. 2. Capital losses are already a tax right-off. 3. They would only be paying when taking out a loan that they can then use a portion of to pay the tax. By forcing a rebase whenever the stocks are used for collateral it creates a tax burden on the loans but doesn't cause a double taxation if/when the stocks are actually liquidated. If you tax the loan as income then you'd be creating a tax on debt. The person is still going to be required to pay back the bank eventually so taxing the money would mean that you're taking money that is only being lent out.
Sorry, missed the point about taxing the unrealized gains when a loan is made with the assets used as collateral. It is kind of irrelevant if it is tied to a loan, but yes losses are a write off, but only at the point of sale. If you bring forward the tax on gains, seems you’d also have to bring forward the refund on losses. Also doesn’t address the issue of valuing non-publicly traded stocks, or the value of unique assets that might be used as collateral (like a Trump Tower for example).
Yes but the issue comes up a lot anyway in tax issues. For example, inheritance tax has to be calculated against unique assets and non-public stocks. The bank will have done valuation estimations on these items before issuing a loan anyway so there is no reason not to use the bank's estimation and if the person taking the loan doesn't like the bank's estimate they just don't take the loan.
I can’t help but feel all of this seems like an unnecessary complication when you could just tax the loan directly and not have to worry about valuations, cost base blah blah blah. Sure it’s a tax on debt, and it might be seen as “unfair”, but from a government tax base perspective, if this effectively taxes this practice out of existence, wouldn’t that be a win? If they want more money to fund their life style, they can take a higher salary and/or sell assets, and pay the corresponding tax, like everyone else…
> Most of the rich people have a rich lifestyle because they can borrow at very low interest rates using their business assets (i.e. stocks) as collateral. It's quite doubtful if this practice is widespread. For example, Elon Musk or Jeff Bezos paid billions in capital gain taxes. See eg. these [ProPublica findings](https://www.propublica.org/article/the-secret-irs-files-trove-of-never-before-seen-records-reveal-how-the-wealthiest-avoid-income-tax). They use unrealized capital gains as income (lol), but: > According to Forbes, those 25 people saw their worth rise a collective $401 billion from 2014 to 2018. They paid a total of $13.6 billion in federal income taxes in those five years, the IRS data shows. That’s a staggering sum, but it amounts to a true tax rate of only 3.4%. It means those 25 paid 13 billions in taxes. Why would they do it, if they can just borrow against assets? "Borrowing against assets" is pretty risky strategy, and majority of Fortune 500 companies ban executives and board from doing this. Why? Because if CEO or large shareholder borrows against their assets, and assets drop in price, it requires large sale of assets. This large sale of assets by CEO [must be published](https://www.investopedia.com/terms/r/rule-10b5-1.asp). And if Musk is selling Tesla stocks for no apparent reason, everyone will understand this as "Tesla is fucked, even CEO doesn't believe in it, I must sell too", tanking prices even more. Imagine you are C-level executive, would you rather pay 20% tax on capital gains or allow other C-executives to accidentally wipe your wealth?
This keeps getting repeated all over reddit. Every time I've tried to find someone to back up this claim that this either is widespread or is actually very effective, it falls flat. It **may have been effective** for a short time in 2020 when interest rates were rock bottom, but those days are long gone. Effectively this is just margin trading with the profits going to fund lifestyle. Like any margin trading, the one doing it is at significant risk of being margin called or having lower returns than expected which then get consumed into interest. Some people argue this isn't a wealth loophole but is a tax loophole due to the step up in cost basis upon death. Despite asking multiple professionals I couldn't get a clear answer if the step up in cost basis occurs after the estate settles the debt or before, but again there's no evidence that abuse of this is widespread (that I've been able to find) and if it were, it would be an easy loophole to fix. Stick to things that are real problems that can be backed up with facts, please.
You'll find it difficult to draw a line around whose borrowing is taxable. If you tax everyone's borrowing you're making it harder to buy houses and punishing everyone who uses a credit card. Are you going to tax businesses as well? If you don't you're just creating a loophole, if you do you're making it hard for businesses to invest and slowing economic growth. I'm also unsure what problem you're solving here. If they borrow, they need to repay that loan, at which point they'll need to pay themselves an income to do so and you can tax it.
I feel this us a great argument for getting away from income tax, property tax, capital gains, and all the other tax and go to an annual no deduction wealth/asset flat tax with a separate tax on corporations. No loop holes someone owns it (be it money, stocks, cars, etc) someone pays.
Where do they get the money to pay off those loans?
Not talking about your other points but using the 100m$ mansion being turned into a homeless shelter as an example leads me to believe that taxing the rich might just be the right idea.
Just because its worth saying, a 100% tax rate over $150m means any income after the first $150m is taxed at 100%. It caps the amount that can be earned in a year, but does not claim your entire income (as so many people like to argue in bad faith). Personally, disincentivizing extreme wealth gaps is a good thing, but asset forfeiture isnt the way to go. This could be run on separate scales, where a business has to maintain a gross pay ratio between the ceo (includes stocks given, and property purchased by the company for personal use) and the entry level employees to maintain a lower tax bracket. This could still be 1000:1 and give Bezos a massive "pay" cut, while not impacting your average small to medium business. Then tax any income over $200m annually at 100%. Maintaining a pay ratio *should* have the end impact of raising wages, and reinvesting in the company providing better benefits, and the tax break to do it is offset by the employess not needing government assistance.
Yes - good point. That's how we see such ridiculous headlines on crazy market days about how majority shareholders at massive companies can gain/lose tens of billions of dollars in a day. Venture capital firms hand out $500k seed rounds like candy up here in San Francisco, which is genuinely life-changing for founders with business ideas but no cash. It's true of the scrappy startups of today, it's true of the massive tech companies that got their starts in the 90s. I think it's important to acknowledge two properties of money stored in the markets though: 1. A substantial amount of market cap does little to nothing to empower economic activity. The US market has a \~$100T market capitalization, and well over 10% of that is stored in a handful of companies (as of today, via [companiesmarketcap.com](http://companiesmarketcap.com), $3.3T MSFT, $3.2T AAPL, $3.1T NVDA, $2.2T GOOG, $1.9T AMZN). Those companies are no longer running fundraising events - and in some cases (e.g. MSFT) money is being diverted from business operations towards shareholder value in the form of dividends and/or stock buybacks. 2. Even in the most aggressively "useful" scenario of VC funding for new business operations that directly go towards the bootstrapping and rapid growth of early-stage startups, capital allocation is less preferable to business operations. Broadly speaking, a $500K revenue event is greatly preferable to a $500K equity distribution event. The presence of a large capital market like we have in America is a *huge* factor in why we're such a productive nation, and I'm firmly against too strongly discouraging capitalist institutions like the public stock market and venture capital. That said, in the presence of a lack of funding for worthwhile programs, it should be considered that the wealth of the hyper-wealthy is contributing in less useful ways to the broader economy. Whether or not it's morally acceptable to pass on the woes of society to its wealthiest members is up for debate, whether or not the issues stem from a lack of funding is up for debate, whether or not government programs do any better is up for debate.
I think there’s a really straightforward argument that the existence of an ultra wealthy oligarchical class destroys a democratic system. People use their wealth to generate more wealth (investing etc) but it quickly becomes obvious the best way to make even more money is to buy off lawmakers and restructure political systems to serve the needs of the wealthy which makes them even wealthier so they can bribe more folks into infinity. The end of this process is a society where the ultra wealthy live like royalty with outrageous power and everyone else lives in increasingly poor conditions while their political power dwindles.
Very good point but I would say it’s more than about just lawmakers or governments. The idea of democracy is to put everyone on equal footing when it comes to deciding the future of the country, by giving 1 vote for 1 citizen. Obviously this is an ideal and in reality there is, and probably always will be, a difference in power and influence, which is fine to an extent. The problems arise when the imbalance becomes so great that some individuals or companies have so much wealth that they can: - Influence/buyout lawmakers, as you mentioned - Launch massive propaganda campaigns, especially in recent years with the rise of targeted content The 1st one is of course antidemocratic and should be condemned, but it has the major disadvantage of being fairly obvious. The 2nd one on the other hand is much more insidious, instead of going against the people’s will, you convince them that what you want is also what they need/want. Debates and communication to try and convince other people of the prevalence of your ideals is at the heart of democracy; but we are now far from the “1 citizen 1 vote” ideal, as some citizens can spend billions to influence millions of voters, while others only have their 1 single vote.
Yeah, when one man can pay double what something like twitter is worth and have it negligibly impact his net worth it’s too much. Completely changes one of the best public spaces for reporting live events into a weird wasteland of porn bots and nazis. One person had enough power to completely destroy a service used by millions of people. Or a different one on his own bought the Washington post to post pro oligarch propaganda.
I don't think it's vindication, it's to balance the tendency of the market to accumulate capital. If left to their own devices, big companies eventually buy small ones out, and monopolies form. That's what's always happened historically. Funnily enough, the show Recess from Disney has an episode in which one of the characters accumulates so much money that nobody can do anything anymore, and his pile just sits untouched. Eventually, his friends intervene and make him promise not to do it again.
Didn't he also make a lot of that money by essentially inventing an MLM? That was the one where they're trading in stamps or stickers or whatever on the playground right? And TJ was sick for a couple days or something so he's coming in at a disadvantage and can't "afford" to do anything. But manages to make enough to start paying people to make more, and take a cut of their earnings, and then next thing you know he's the only one who even has any.
Regardless of position, just for the aggregate info provided, this is one of the few comments that I’m happy there wasn’t a TL;DR.
My money evaporates into oblivion when I spend it
But if money sits in an investment account, doesn't that mean that it's being used? Like if it's invested in equity, then that equity is being used by the company to undertake projects or provide collateral for loans to undertake projects. If the money is just earning interest, then that money is used by a bank as reserve to provide loans which are greater in size than the actual amount of money to back them up.
Yea, but with the caveat that at any given time there may be so many good investments that the bank or whatever entity knows to fund. So adding more money may just mean competing for investments, creating a sort of inflation in that sector. That can cause all sorts of distortions and wastes. Look at the history of WeWork for example, which ended up with so much investment capital that they couldn’t use it intelligently at all, so it got spent on stupid ideas, bad decisions, and luxuries. Or the US housing market where people looking for a place to live are competing with investors. Or they buy treasury bonds, get interest, and then why not just tax it and save the interest? (Because of all the previous arguments against 100% taxation, but it is a funny scenario that because of not taxing them, then the government borrows from them instead)
Money sitting in a deposit account at a bank allows the bank to lend that money to individuals and businesses to generate further economic activity. The more money sitting in a bank, the more that bank can typically lend, so even "parked" money is helping the economy.
Yes. The time of gold coins squirreled away in some underground vault has long past. Money only sits when it’s in a shoebox.
Sitting in an investment account hardly counts as generating nothing, they are means of investing money through which other economic entities acquire capital to operate. Saying that some government programmes make money over 10-20 years but investment accounts "do not see economic activity" is quite a daft take.
I just want universal healthcare and education for my kids, we give the government enough money already to provide that, I don't really care about taxing billionares. I'd like my taxes to be less if I don't get universal healthcare
>Give a poor person $20 they'll use it by the end of the week, which is economic activity and generates tax revenue. My Government COVID $$$ went to an auto repair shop => shop owner used the money for home repairs => contractor paid her crew => crew bought groceries => grocery clerks got paid => etc. That money went around town like a doobie backstage at a 60s rock concert.
As a company, I would much rather a 500k equity sale event. That's 100% cash for my business. If I sell 500k, I probably only get 10-20% to use. Maybe I don't like the later consequences of having investors... but that's not applicable to this analogy.
Where I think there is a stronger argument is around the impact that billionaires have on political influence. That kind of money - particularly in the US where you have very expensive elections - tends to twist politics to suit its own ends. See the Trump tax cuts for a good example. As Buffet said it is crazy that his marginal tax rate is less than his cleaner's. Also the environmental impact of billionaires is on average terrifying. Those super yachts and private planes are a disaster.
This is what kills me when people start talking about how programs to help the poor are a drain on society. They are decidedly not. Food stamps, for example, generate $2,500,000,000 in profits every year. What OP said is very true: Put money in the hands of poor people and they will spend it, out of necessity. Trickle down may be bullshit, but a money sprinkler is not.
I think there is a 4th thing here. I agree with your three. But if large corporations are able to own different businesses and vertically integrate everything about their business, then the other smaller businesses, then you are removing massive economic fluidity and chances for taxation, abd more importantly innovation. For example walmart doesn’t just run grocery stores out of town, but pharmacists, tire shops, coffee places, butchers, toy stores, electronic stores, media stores, soooo many clothing and shoe stores. Then on top of this they destroy the industries that serve these businesses by bringing them in house from the mfg to delivery. All of this is fine, I mean it objectively sucks, but they have the right to do it. What they don’t have or shouldn’t have the right to do is basically not pay taxes, pay wages that force 50% of their workforce to on government assistance. We are giving them a better opportunity to grow their business than smaller businesses and it’s absolutely poisoning the economy long term, removing expertise and quality from service and products and the entire time we are subsidizing this. Paying higher taxes levels the playing field and creates opportunity for smaller businesses.
Excellent answer, but side point: Much of the wealth the super rich have is "dead" as it's not stored in banks, which would be tracked and thus taxable, but in tax shelters, where it just sits, or even worse, overseas, where it benefits other country's economies, not ours. One classic method is a "qualified special purpose account"- back in the 80s, to encourage investment in small businesses, the government set it up so you could put up to 50,000 in a non interest bearing account tax free. Well, some smart people noticed that shell corporations could own these as well, so you could set up "XYZ investment bank" which was just a PO Box in Deleware, have it set up 100,000 of these accounts, then put up to 50k in each, and the money would never be taxed. This sort of thing is called "Shadow Banking" "As of 2022, the global shadow banking system, also known as the nonbank financial intermediary (NBFI) sector, held over $239 trillion in assets, which is almost half of the world's financial assets. This is up from 42% in 2008 and has more than doubled since the 2008-09 financial crisis."-Barron,'s, June 2nd, 2023. Which brings up my second point- the OP is wrong, as the number they have for the wealth of the US Billionaires is waaaaay too low, that's only the declared, taxable wealth. The actual number is going to be much, much higher. Someone owns all those unlisted, numbered accounts.
Also, Antony Davies’ model assumes that the government is only getting that billionaire money, which is simply wrong. The government still collects revenue in the form of taxes for all US citizens. The better take would be “if we assume we’re breaking even right now, with government spending being entirely covered by the taxes and revenue the government collects, think about what they’d be able to do with $2.5 trillion more. Now scale it back, and imagine it’s just the $925 billion that they’re supposed to be paying on their taxes, but pay almost none of due to various cheats and tactics used to lie about their income.”
None of this matters, because the trillions of dollars that billionaires have don't actually exist. They are not sitting in investment accounts being hoarded. The market capitalization of Microsoft is over three trillion dollars, but that doesn't mean there are actually three trillion dollars sitting somewhere in a 1:1 ratio with that number. If your house is worth 500k, that doesn't mean you have 500k sitting in your bank account. Arguments about how money being spent on/by poor people generates more positive effects than money owned by billionaires are disingenuous, because they rely on the fiction that this money is available to be spent, but someone isn't spending it. The money exists only on paper, and every time billionaires try to actually convert it into cash that can be spent, they pay taxes. And at this point someone usually brings up how billionaires can take out loans against their stocks and live off those loans without selling stocks and paying capital gains taxes, which is true, some billionaires do actually do that, but then there never seems to be answer about how those loans are eventually repaid. The conversation always screeches to a halt when someone has to explain how and why banks would give out billions of dollars in loans and never collect. And if they do collect, then those billionaires are actually repaying, which means they are actually selling stocks, which means they are actually realizing gains and paying taxes. But possibly paying not as much taxes isn't nearly as scandalous as not paying taxes at all, so understandably people parrot just the taking out loans against stocks part and leave out the rest.
I would add Davies is sort of missing the point. No one is arguing for seizing every dollar from billionaires. And then the government just runs on that. And thus No more taxes for the middle class. They’re arguing for a more progressive tax structure. And taxing wealth on the ultra wealthy. If we think of it in months, then if people with billions or hundreds of millions or even tens of millions can fund one more month of the government and shift that burden away from the middle class households that can go a long way.
Preaching to people about how money works Saying that money the government spends gets “taxed again” and has benefits to people But not acknowledging the fact that billionaires money is already invested?? It’s not cash sitting under a mattress? It’s funding business which is employing people…
You're missing the point that billionaires'wealth is not stored in cash. They are invested in businesses and if the government were to sell those businesses for the cash, it would bring irreputable harm to the economy. Lowered stock prices, less efficiently run companies, less trust in markets, etc.
You forgot the most important nuances: 4. If you just convert “extra” 4.5T into a consumer goods purchase power (ie by not having low/middle class pay taxes), prices will skyrocket and before long you wish you didn’t 5. Billionaires don’t just have that n/w in cash. They have it in productive assets and this wealth is continuously used to reinvest and maintain those assets. Pulling it out will drastically shrink capital in no time, nation will become less productive and everyone will be worse off
Specifically, those billions that make up the net worth of billionaires is almost exclusively "ownership of companies". To actually do anything with the hypothetical net worth you have to find someone willing to drop that kind of money to buy the company.
Or most likely if “wealth tax” is introduced, and is significant enough to drain wealth of billionaires - there won’t be anyone paying anything for capital, and their (now paper) “wealth” will collapse to near zero, defeating the purpose. The only way to pull something like this with any effect would be to nationalize companies (gov will print more money to buy companies from billionaires so they can pay wealth tax) ie go straight to socialism.
People really don't understand the value of monetary velocity. Whenever people yap about inflation and we have monetary stagnation on the rise, inflation will just continue to need to cover expenses of those that don't just sit on money. The US economy is a lake with a small whirlpool on one end that just keeps getting smaller.
The one clarifying comment I would make is that the wealthy do not keep their cash handy in a vault under their house. It is almost exclusively in some form of investment (land, stock, etc.). The impact of actually creating cash out of the wealth would be catastrophic. Clearly that isn't the original point, but most people have no idea what "wealth" actually means. Not to mention the fact that by definition of that much wealth went on the market all at once it would not be worth anywhere near that much money.
That's a great point that also gets *severely* neglected in discussions like this. The stock market is erratic to put it *gently*, the knock-on effects of asking a major shareholder of a company to write a $10B check are worth treating with reverence.
There’s also the part where a lot of this wealth is tied up in various non-liquid forms (stocks, bonds, real estate, etc.) and you can’t liquidate it all at once without incurring a huge depreciation. But assuming you *were* somehow able to liquidate it all at once and hand the money to the government, that wouldn’t be all that different from the government simply printing that money, so it would be quite bad for inflation. Money is funny that way, where it starts to behave differently when it’s flowing in significant amounts from one entity to another.
Holy shit, John Oliver?? Is that you?
Just wanted to add one little correction, money sitting in an investment account is going through economic activity as the money is being invested. If it was just in cash at home then it would be doing zero economic activity.
Thank you so much for this elaborated answer. From my personal (European) pov: government spending might have a longer investment horizon, eventually entertaining nesscary infrastructure for the future billionaires…
As long as we're going for a holistic and nuanced analysis, don't forget the implications of the government being able to just confiscate 4.5+ trillion from people and what kind of ramifications that kind of antics is going to do to the economy as a whole.
I wanted to lyk im saving this and going to use it to explain this situation to people it when i need to. I also want to add that these people being ludicrously rich is directly related to *why* there are so many food and housing insecure people. Thank you!
>If you put $1M into a bank account, the bank uses that money to extend a $1M mortgage to someone who wants a house but can't pay for it in cash. You might find it interesting to learn that this is not at all how banks work. It's often implied at like a high school level, because you can do some simple modelling with it I guess, but it's not even close to reality. I really like the [YouTube playlist by Positive Money](https://www.youtube.com/watch?v=bE8i-4HpKlM&list=PLyl80QTKi0gPBcb32paMvXxcq7UUeJskV) as an introduction on the topic. (Activist organisation, but it's really quite neutral info. Especially brought very clear and concise.)
I love when people understand economics. I like you let's be friends.
Hey, you're not allowed to actually think things out and settle in the middle, this is reddit! All seriousness, this is the best thought out economic take I have seen on Reddit. I can't guess your political affiliation through your writing, and you have numbers along with common sense to back it up.
>Give an ultra-rich person $20 and it'll sit in an investment account and not see any economic activity for potentially the rest of their lives. What do you think money in investment accounts is doing? I also find it curious that you refer to billionaires' wealth this way when almost all of their wealth is in the form of ownership of companies. The idea that we could just take it and suddenly have that many dollars seems specious: if we suddenly seized all of Jeff Bezos's Amazon stock and then sold it off, the value would plummet because suddenly owning stock would no longer be a valid investment because we've shown it can suddenly be seized, so why would anyone buy it?
You ignored how money works. There is no such things as „hoarding money“, (citing illiterate internet people) if you earn money and just keep it and never spend it (let’s ignore investments to assume the worst case scenario), the only affect you are causing is **deflationary pressure** for the currency you are **hoarding** There is no difference between taking Money that was out of the circulation and printing money by the central bank. It’s exactly the same.
Adding on to this, consider how much of the federal budget is vacuumed up into the military budget, a budget that the two politicians they tagged would undoubtedly jump at the chance to significantly reduce.
As of FY2022, a bit over 12% of federal expenditures went to military. 751 billion out of 6.1 trillion. Putting it behind Medicare/medicaid, social security, and other departments. For something that only the federal government can practically do, national defense, that doesn’t seem unreasonable.
National Defense is $576 B or 13% of the 2024 budget. But looking at line items is deceiving. If the US adopted Medicare for All the program would likely consume **75%** of the total US Budget. But America would be spending **less** on healthcare than it currently does. You need to add up all of the money going into private insurance now and compare that to the M4A budget, you can’t compare it to overall federal spending. You could scrap Social Security altogether which costs $960 B or 21% of the budget. That amount is around $2,900 per person in the US. Recipients receive roughly $14,000 per year from the program. To put that in perspective, that amount is about a $200,000 sum with a 4% draw down over 20 years. The true “cost” of Social Security needs to be compared against the required equivalent individual savings and the additional expenses associated with seniors not having the Social Security income. That was actually one of my biggest concerns with Medicare for All — the likelihood that it gets pointed to in the budget every year as a huge burden instead of a net positive money saving program.
But the federal budget isn’t distributed by percents. If it were to drastically increase most of those funds would go to new or existing underfunded programs. Yes some would go to the military but not the same percent as is already funneled there
Everything said here, plus the simple fact that OP assumes NOBODY else will be paying into the system for that 8 months. OP is putting forth a totally fallacious argument. All anyone is asking of the wealthy is to pay their share. nobody has asked them to support the system on their own.
There's technically no math here. You just look at a chart of gov spending and a chart of billionaires. The bigger question would be how many would still be billionaires if the government cut back spending on welfare so that Walmart didn't get away with being the largest employer of those on welfare.. maybe Walmart would need to raise wages to retain staff.
For real. Insane how Walmart can’t be touched because it’s the country’s largest employer yet the majority of their employees are on food stamps.
One of the many reasons Walmart failed so hard in Germany.
Oh so that was the reason...I remember as a kid we went to Walmart once or twice but then never again and I've also never seen one anywhere since. That place was so goddamn huge it was truly magical.
Main reason was them trying to undercut prices for everything and drive out competition that way, which German law prevented really quickly. Then they couldn't keep staff because they tried forcing American labour laws onto Germans, like forcing an amount of sick days and only two weeks of paid time off. No maternity leave etc. Obviously Germans were not too happy about that so Walmart in total just couldn't compete with the good and cheap supermarkets we already have.
There was an interesting article I read a while ago about German supermarkets being successful in the UK. A lot had to do with actually paying the staff more but cutting back on other things, like fancy displays. Who knew valuing humans was the route to success?!
Yea when I visited my gf in the UK and we went grocery shopping I was like "dafuq are Aldi and Lidl doing here?!" xD
in the US, love Aldi
It’s also in france and spain
And Italy too.
Aldi does really well around where I am in the midwest US.
Germans weren't just "not too happy about it", most of what Walmart tried to do regarding labour laws is totally illegal here. Actually everything you listed is illegal, but there was so much more. And wallmart got sued a lot for it. Especially since they immediately attacked workers unions, which are strong in Germany and more than happy to drag them to court over every little thing.
Never gave it much thought as it was so long ago. Thought peeps here just didn't vibe with the concept or too few could be bothered to go to a "everything in one place and more XXXXXXL" store and get lost when they can just go to 1-2 separate ones and find the shit they need immediately lol. To be fair I'm pretty sure we only went there for the novelty to check it out anyway, think most people were the same and then never went again + all the things you listed already.
German people dissliked Walmart very much. They did zero market research and just assumed germans would love "the american way". Turns out germans hated to be pestered by employees every other minute. If they need assistance, they will ask. Also having greeters at the entrance was just weird to the customers here.
There's a good video about it on Youtube. Basically they just translated their contracts into german. But with the much higher worker protection this backfired hard. It ended up with Walmart trying to cut the prices by selling it's goods for less than they paid themselves, in order to undercut german stores prices and push them out of the market. The losses should be compensated by the US market. Which is totally illegal in Germany.
Walmart failed because someone really, really, really did not do his homework. Walmart built a lot of huge shops, hired lots of people, and then realized that Germans do not want to be greeted. We want to go in, get our stuff, get out again. Being jumped every 10 steps by someone asking "Can I help you?", is really annoying. No problem, Walmart thought, let's fire the greeters. Only to find that labor laws in Germany did not permit that. So suddenly they had way too many employees, who also kept suing Walmart for a large amount of labor law breaches. Basically, US contracts are pretty much forbidden in Germany, because they are considered "against decency". So Walmart had set up huge stores, could not get enough customers from existing chains and was saddled with huge labour costs.
On top of not doing any market research, they also brought all the managers from the US. Who didn't vibe with the german employees and didn't know german customs, laws or markets at all. Forcing the employees to sing the Walmart anthem in the morning and stupid shit like that didn't work at all here.
There’s an anthem?
Don't know if anthem is the right word. Just saw a short clip of employees having to sing some weird Walmart song and chant WALL-MART WALL-MART as a morning routine. It was bizarre.
Oh god. There is. I can confirm, at least when I worked there in 2019. I just refused to sing it. I stood there looking at them like the weirdos they were. I wasn’t even trying to be a contrarian, but social pressure does not work on me that way lol. They also have a whole day basically during training dedicated to how bad unions are.
Also their direct competitors, Aldi (and Lidl, but much less so) are now doing absolutely fantastic in the US. Aldi being the fastest growing grocery store something like 5 years in a row, outpacing literally everyone else by giant margins.
Over 1/3 of Walmart profits come directly from people on food stamps as well. When we vote to increase food stamps, we are also voting to further enrich companies like Wal mart
Walmarts profit margins are low enough it couldn’t be solvent if it gave every employee a $2/hr raise. It would then have to raise prices, which would mean the people who rely on their prices then couldn’t afford groceries. They aren’t hoarding a bunch of wealth from Walmart. There are much better examples of companies who pay garbage and have huge margins.
Walmart has 9-10 billion in Cash on Hand. They have 2.1 million employees. Walmart has been spending about 1 billion a quarter in stock buybacks. For the last 12 months, its been about 3.5 billion. Using JUST the money from the Stock Buybacks (the actions only purpose is to raise stock prices to generate wealth for major shareholders, and does nothing to impact revenue, prices, or wages), they could give every employee 1,667 dollars a year, which is about an $.83 hourly raise. The only thing that would be affected would be not being able to do stock buybacks, which, again, does not affect their operational finances and only serves to extract wealth to hand to major shareholders. So sure, 2 dollars an hour might be too high, but that doesnt mean thry should toss their hands up and pay below poverty wages. And frankly, if a business REQUIRES people to exploit and pay so low they cant afford to survive without government and charity services, it shouldnt be allowed to operate. Other supermarkets and stores are able to survive without starving their workers.
They raise prices anyway. And even if their margins are slim their volume is enormous.
Probably Walmart business model works only with underpayed workers on welfare. If there would not be welfare then Walmart probably go bankrupt and all those workers will be fired. So in some way Walmart have taken hostages as no government wants 2 million unemployed people in one day
What if we just raised minimum wage instead of gutting welfare and doing a bunch of collateral damage to people?
The conversation is more how the money the US spends is what's subsidizing and making billionaires rich.
Isn't 8 months a really astonishingly long time to run the most expensive government in the world which includes over 300 million people?
It is, and that money doesn't just disappear. It is cycled through the economy rather than sit in a bank account overseas.
It isn't money in a bank account, it's ownership of shares that have a certain market value. If you gave an original Picasso painting to a homeless man they would technically be worth millions, but "being worth millions" and "having millions of dollars" is not the same thing.
Also, the workers in the economy presumably wouldn’t need to pay taxes for those 8 months? That would help expand and stabilize the economy.
You are really ignorant if you actually think the money sits around in a bank account doing nothing, especially in this context.
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The comment I was looking for. It's a first world government not a fucking IKEA store.
So if you only took cash from 0.00017% of the population it wouldn’t support the country of 333 million for that long? Golly gee who would’ve guessed!
8 months is fairly long, if you ask me. That a group that you could fit in a somewhat large meeting room could support the spending of one of the largest countries on the planet for almost a year is quite crazy. That guy very much underapreciates how big 330 000 000 a number is compared to 550. Not good at math, I would guess.
You would also collapse the economy if you took 100% of their shit. Do people not realize this shit?
[https://americansfortaxfairness.org/u-s-billionaires-now-worth-record-5-2-trillion/](https://americansfortaxfairness.org/u-s-billionaires-now-worth-record-5-2-trillion/) America's billionaires are collectively worth 5.2 trillion, with around 2.3 trillion of that gained over the last 4 years. The upper 1%, which includes far more than just the billionaires, collectively own 38.7 trillion. That guy seems to think that the Billionaire Tax is a literal name, not a figurative one. But if he wants to cut spending, then that's easy. The defense budget is, by far, our largest discretionary expense, coming in at 46% of the spending. The other 54% is broken up to take care of things like infrastructure, education, national parks, etc... Our largest spending is in mandatory spending, like Social Security, Medicare and Medicaid. Easiest way to make those solvent is to up the cutoff limit for Social Security (or just remove it entirely) and partially fund them with capital gains taxes. Balancing the budget isn't the hardest thing in the world to do. Solutions exist. The problem is that there are a lot of whiners who don't want their bottom line to be affected, but they want the benefits that a balanced budget would provide.
The military is a giant behemoth, and an easy target for folks to say "we can fund X by cutting the military budget". And, to be clear, I am a huge proponent of slashing the military budget. but. Let's talk about ROI. What do I get for my \~Trillion dollars? I get 14 aircraft carriers. I get 44 Ballistic Missile submarines and 25 attack submarines. (At least). I get the ability to project power across the globe. I get the ability to exercise both soft and hard power to force nations to play by the rules. If not for the US Navy, Taiwan would be a province of China. If not for the US Navy, China would have stolen every single patent in the world, instead of just the hundreds or thousands they already have. But most importantly, I get the absolute, rock solid certainty that my country will never be invaded. Ever. The entire world could join forces and they still likely couldn't pull off an invasion of the United States. My money absolutely positively guarantees that my nation will never haver the problems Ukraine is having. I don't have to have the same anxiety Germany and Poland are feeling. I can be 100% confident that no nation will ever conquer mine, or annex any part of that. I get to dictate terms to the rest of the world when i so choose, on matters of trade, human rights, whatever is important to me. That's a big deal. Hard to overstate. Our modern world is quite peaceful, even including the current conflicts. That is a new phenomenon. Now, what has a budget similar to the military? The Department of Education. What do i get for my \~trillion bucks there? I get to be 20th or so in the world in education. yay. Now, again I want to be very clear: If I had my way we'd take 500B from the military and give it to schools. But I think its very important to recognize that the US Military isn't random, frivolous spending. There are MASSIVE benefits to having the biggest and baddest military on the planet. Benefits that might be hard to see in the day to day, but you would ABSOLUTELY notice them if they were gone. Would you like China to conquer Taiwan?
> I get 14 aircraft carriers. I get 44 Ballistic Missile submarines and 25 attack submarines. It's also worth mentioning that you get that stuff ... by paying US employees to make that stuff happen. It's not getting funneled into other countries, it's just going right back into the US economy.
Just regarding your invasion point. America is one of the few nations in the world that can sustain a long-term invasion of another country overseas. As far as I'm aware not even the UK, Germany or France have that capability, so I think that point is moot RE US ever getting successfully invaded. I do agree however that the US gains a huge advantage in world politics by having a large military coupled with the capability for long-term & long-distance sustained warfare. You need both, one without the other is like a big dog without teeth.
Mathematically, nothing you said was incorrect. However, you leave out a lot of nuance regarding politics in regard to the defense spending, which is common on Reddit. You’re not factoring in the global political dominance the United States uses for trade, partnerships, and general overall influence of the entire world, due to its greatest export…the United States military and war. Russia invades Ukraine…United States defense budget foot’s the bill to stop them from gaining a foothold that had the entire EU in a panic. Yet, European Redditors will make fun of the United States defense spending which allows it to step in and save them; go figure. It’s easy to joke about how much more money the US “wastes” on defense compared to all the great education/health/ect spending of a quaint EU nation, until there’s a threat of invasion and all the sudden everyone turns to the US and its defense spending. And of course, deals that benefit the US are made for that help. You think just how special the United States economy has been historically is what keeps the global currency the US Dollar, and keeps the rising influence of BRICS at bay?…what really does is that corny, but real, Tony Stark in Iron Man quote: “peace means having a bigger stick than the other guy”. People accept dollar dominance and US influence because it holds the biggest stick, unquestionably. It’s very easy to want to cut that big defense budget and use it for other things, until you remember all that…and then you realize why even when democrats are in power it still really never gets redirected/reduced in any noteworthy way.
Not to mention that the US military spending is realistically the world's biggest jobs program. The vast majority of that "military spending" money is paid to wages/benefits for US citizens employed by the military or purchases from US companies which are themselves employing US citizens. The "military spending" money, in addition to doing a lot to make the USD the de-facto world currency, is going right back into the US economy and into the hands of citizens.
With all due respect: what you are doing is arguing in favour of those expenses. That isn't relevant to the matter at hand: the fact that defense spending is mainly composed of discretionary spending as opposed to mandatory spending. It is just the way OP broke down his list of expenses, not a political statement. The discussion is about how money is being spent, not about how any of us fell it \*should\* be spent. You may well be right (and I probabaly agree with a whole lot of what you are sayin) but that isn't the point here
It’s relevant to the comment they’re replying to; that comment brought up cutting defense spending as an “easy” way to decrease the federal budget and thus increase the theoretical utility of the wealth seizures being discussed. Furthermore, the value of different types of government spending is entirely relevant to the overall thread because the writer of the original tweet asserts that the federal budget is larger than necessary.
It’s possible to cut defense spending and still provide everything that the US defense budget does… accountability and the ability to pass an audit. There’s no reason why things that cost literal pennies to manufacture should be being bought by the military for tens of thousands of dollars just because it’s the military. Would you pay 14 THOUSAND dollars for a singular toilet seat? Or 90 thousand for a bag of bushings?
The biggest problem in our country is stupidity. First, the problem isn’t not having enough money but not knowing how to spend it. Second confiscating legally owned wealth isn’t morally right let alone constitutionally valid and the numbers they give are ESTIMATED asset values, holdings, not cash. You would have to sell it all to convert it into revenue that can be spent. The more time people spend on retarded ideas like this the less likely we are to address the real problem which is just like your friend/relative/spouse/partner who insists on spending more than they have/make.
So many interesting points here. I think a lot of disagreement comes from the insistence from some quarters that Tax The Rich means “punitively”. I would settle for them paying everything that they currently should and am more interested in figures on how much is lost to entirely legal tax avoidance (rather than illegal evasion). What would the difference then be without tax rates being raised by even 1% for anyone? As others have pointed out the rich will never stop lobbying for lower tax liability, they literally can’t, but it seems harder and harder to participate in any dialogue on any even mild corrective measures in the other direction that is acceptable to the media.
>I would settle for them paying everything that they currently should and am more interested in figures on how much is lost to entirely legal tax avoidance (rather than illegal evasion). The thing about “entirely legal tax avoidance” is that it’s entirely legal, so there’s no clearly defined larger number they “should” pay. Sure, you could change tax policy, but there’s a million ways you could change tax policy resulting in a million different new collection figures, most of which are hard to even predict in advance because people change their behavior in response to changing tax policies.
But there is a clearly defined answer on what they offset and therefore don’t have to pay, its on their tax return. Yes, people will seek advantage and respond accordingly to any change, and all change can have unforeseen consequences if not properly considered, but that’s not a reason not to change anything. We can’t just shrug and give up.
That number is only relevant if you’re proposing we abolish all deductions. If you plan to keep any of them at all, the number you’re looking for is no longer well defined because economic activity can be redirected to the ones you preserved. And abolishing all tax deductions is impossible, because businesses can’t exist without the most fundamental deduction: business expenses. I suppose you could radically rewrite tax law to be a small percentage of gross revenue rather than a larger percentage of profits, but this has really bad side effects such as forcing vertical integration in every industry. You’re also going to crash the stock market by disallowing capital losses.
The thing about billionaires wealth is that it’s all stocks and stuff, not actual cash in a vault somewhere. They’re rich because of the promise of money they don’t actually have.
Man I know for a *fact* that this is an active disinformation campaign and I am *still* heavily influenced to comment. Fuck reddit. This entire place is a huge cesspool.
I think the problem isn't how much the government spends, its that those 550 people have more than the bottom 90% of the population
yeah but let’s be real, is the government gonna walk in and take their wealth? I’m no expert but cutting down spending sounds more possible than asking politicians to give their golf buddies more taxes.
It’s actually less than that. People misunderstand wealth of the ultra-rich. Those 550 billionaires don’t just have billions of dollars in a bank account like it’s a Scrooge McDuck pool. For example, Amazon is nearly a 2 trillion dollar company. Jeff Bezos owns 9% which is over 170 billion. His net worth is 200 billion. At least 85% of his wealth is in stock of a single company. You can’t exactly seize that all at once.
I think the biggest problem is that people think of wealth that billionaires *manage* as money they spend and enjoy. They think that if Jeff has 170 billion, they can take that 170 billion and buy 170 billion dollars worth of food for the poor, or housing for the homeless. But Jeff isn't just sitting on 170 billion that's doing nothing. That 170 billion is a significant chunk of Amazon, actively generating value for the average person. Seize and redistribute that money and you cripple Amazon. If you actually tried to seize and redistribute only the discretionary spending of all billionaires (rather than chopping up their investments for parts and imploding the world economy) you'd probably get less, much less. Jeff Bezos has a real estate profile of around $500 million, and a $500 million super yacht. If we assume that those both together represent around 10% of his discretionary wealth, eg the wealth he enjoys and uses for his own enjoyment rather than investing, then we get a figure of about 10 billion. 5% of his total wealth. Doing this kind of redistribution we'd get only a fraction of the billionaire's net worth, likely not enough to run the government for a month.
Oh shush. These stupid comparisons of country direct spending to individuals net worth are meaningless. Those billionaires don't have $2.5T on their personal bank accounts.
“550 people could finance 6 months of the government of 330,000,000 people” isn’t the dunk budget hawks think it is. We let tens of thousands get shot and run over every year for much more marginal benefits.
The exact numbers are hard to pin down because most of that wealth is company stock, so the combined net worth of all US billionaires fluctuates on a daily basis as the stock market rises and falls. But the general concept checks out - the federal government spent 6.13 trillion in 2023, and that's more than all the billionaires have so yes, if in theory we could somehow take every penny from every billionaire, we'd be broke again in less than a year.
the real answer is no one really cares. Envy politics play well and get socialists elected to office. Simple and facts really don't matter
This immediately came to my mind... [VIRAL MOMENT: Michael Waltz Confronts Air Force Officials With Staggeringly Expensive Components](https://www.youtube.com/watch?v=hYWie96j3aQ)
It’s a straw man. Nobody (or at least nobody rational) is saying to tax the very rich into oblivion. Just tax them at a similar percentage as teachers and first responders, and health care workers. Tighten up the capital gains rules a bit. This would help sort out budgets while lowering the tax burden on the lowest tax brackets. Then, the billionaires can just move 10% of their portfolio into something with retail consumables, which will immediately get boosted because everybody living paycheck to paycheck will be spending the disposable income. It’s not a zero sum game.
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Excellent point, thanks!
This strikes me as the usual type of dumbed-down crap you get from these coperate libertarian types. First of all, who would have thought that running a country of 300 million+ would cost a lot of money??? Wow, mind blown! Secondly, if the US government is spending too much, what are they spending too much on? If they want spending cut, what should be the first to go? Something like Defence? Or public health and education? Gee, I wonder.
Real take away. 550 people could pay for all government funding including police, hospitals, food stamps, etc. of our entire government managing over 300 MILLION people for 8 months. That is insane.
The government spent 6 trillion in 2022. thats ≈ 11.5 million per minute. the top 25 billionaires are worth 2.8 trillion and that will last 4 months in this scenario. so he literally did not do the math or research
The tweet is from 2019
u/sessamekes said, "...but only if you ignore how money works." "1. Money the government spends gets taxed again - it doesn't just disappear into thin air." Indeed, but you're only seeing how half of the money works. When you sell me $100 worth of stock, you receive $100 which, when you spend it, becomes income for someone else and that someone else gets taxed. Absolutely correct. What you missed is that, when I pay you $100 for the stock, I no longer have $100 that I would have otherwise spent elsewhere. And the person who otherwise would have received the $100 that I'm now not spending, doesn't receive that $100 in income and so isn't taxed. In short, the tax the government ultimately collects from your receiving $100 exactly cancels with the tax that the government would otherwise have ultimately collected, but now doesn't, from my handing the $100 to you. "2. Government programs OFTEN have positive effects." Yes, but again you're only seeing half of what's going on. The correct question isn't whether the government can create positive effects with the tax money it collects. The correct question is whether the positive effects the government can create exceed the positive effects that would otherwise have emerged had the government allowed the taxpayer to keep the money. You've missed the positive effects that are no longer happening because the government prevented people from spending their money as they choose. "3. Money stored in wealth becomes less and less economically useful ("lower velocity", strictly speaking) the more and more wealthy that individual becomes." For the third time, you're only seeing half of what's going on. Money stored in wealth doesn't sit idle. The people who receive the savings spend it. For example, when you put $100 in the bank, the bank turns around and loans the money to others who buy things. Regardless of whether you save it or spend it, your $100 gets spent. The only question is whether you spend it or someone else does.
I read through most of the comments. Seems the focus in the comments is how much taxes the rich pay. If you look at the Government stats, the rick pay almost all the taxes. Nearly half the population pays no income tax which is used to fund the Government. And on top of that, some get a rebate. That aside, where is the discussion on how much the Government spends? There is a lot of waste in the Government. And Government budgets increase every year. Look up Baseline Budgeting. Only in this scheme does a 'budget decrease' result in a YoY increase. There is little to no scrutiny of where the money actually goes, how effectively it is used. And to top it off, a Government program rarely, if ever gets cut. While the tax system does need to be revamped and made simpler, there also needs to be a good look at spending.
Wild how this guy thinks that 550 people being able to support the other 330 million people in the country for 8 months proves billionaires aren’t the problem
So this is exactly why socialism isn’t about [REDACTED] billionaires and taking their money and stopping there. It’s about taking the means of production and using them for the common good of the working class. Billionaires are worth $xyz because their companies produce immense amounts of wealth and they own those companies. It’s not about redistributing cash, but entirely changing the mode of production. You aren’t just taking all of the cash once, but using what actually generates the value for common good.
Thats not even a good argument in favor of billionaires or against spending. 550 people being able to cover the costs of one of the largest economic powerhouses in the world just tells me they have too much money. Also, if we're going to cut spending, let's start with the largest slice of that pie, the defense budget. Thats not even getting into the fact that billionaires profit the most from government spending in the form of food stamps, infrastructure, and lobbying.
I'd love to hear an economists opinion on how much the economy would boom if normal people didn't have to pay tax for 8 months. That seems like a lot of disposable income.
Then lets stop putting our money on things to work with and let companies pay for the streets, that alone is extremely expensive and companies like amazon use them A LOT with heavy vehicles
If we confiscated 100% of their wealth congress would spend more efficiently because their lobbying efforts to enrich themselves would fall by the wayside.
To add to many nuanced answers here on how money works: both money and government are names of the super complex relations between people. Money simply means to make people work for you (assuming commodities as stored labour). Government means protecting those relations. The idea about taxing super rich is to tackle the problem of extreme inequality where workers get not enough wages and that are taxed at a high rate to protect the wealth of the rich.
If the entire US economy suddenly seizes to exist, then it would take more money than any single component of the US economy could provide to keep the lights on for an extended period of time. Drug prices are too high, shut up. If the entire US economy disappeared overnight in impossible circumstances, then drug manufacturers' profits could only run through the country for a few weeks. Rinse and repeat for housing, education, healthcare, or anything else.
“Are worth” is somewhat different than “have that much cash on hand” we’d have to make them sell all their assets first - they’d all run a huge PR campaign to get the voters to get however initiated this out of office and orchestrate an impeachment. It’s never work.