
The Billionaires Are Getting Nervous - doener
https://www.nytimes.com/2019/11/08/opinion/bill-gates-warren-tax.html
======
bluedevil2k
Warren's wealth tax makes me feel like she doesn't really understand how most
wealth is held by billionaires. It's extremely illiquid, held in company
stock, private business, wealth funds, private equity, and other things that
don't allow someone to easily pay her 6% wealth tax ever year. It also would
fundamentally change how businesses are owned in America. Imagine Bezos having
to sell off 6% of his Amazon stake every year...eventually he wouldn't be the
major shareholder any more. Mutual funds would become the large shareholders
of every business since they would get to avoid this tax. The stock market
would tumble (in my opinion), as there would always be a constant "sell"
pressure on the market.

Now, she's an incredibly smart woman and I'm sure she does know exactly how
it's held and its problems, which just makes me think she's trying to grab
headlines with her platform without any real plans on how to do it. (Which
seems to fit with her pattern on her platform anyway).

~~~
lucozade
She's sufficiently smart to know that a wealth tax won't have the impact you
describe. In the same way that X% corporation taxes don't pull in anything
like the revenue that you'd naively expect.

Your argument is, essentially, an "everything else being equal" one. But it
won't be. Company structures, trusts etc will be restructured to best deal
with whatever the new laws state. As they do with the current laws.

Of course, the corollary is that she's also well aware that it won't raise
anything like the money that's suggested but, from her perspective, that's not
a problem either. In fact, the opposite. Bringing in a wealth tax that the
wealthy avoid is probably close to ideal: deliver on your promise and still
have the bogeyman. Result.

What I think is genuinely interesting is that the whole idea of a wealth tax
is now considered to be electorally sensible. That's a huge change from a
decade or so ago and, potentially, makes way for much more radical policies to
be touted without the usual faux-shocked response.

~~~
ngcc_hk
It can be changed otherwise the poor will do something. Just too extreme these
days.

Btw it takes about 8 years to reduce the wealth to 60%. That will do the
balance and you can have another president by then. It is not forever.

------
randogogogo
"Yet he is now the latest affluent American to warn that Senator Elizabeth
Warren’s plan for much higher taxes on the rich would be bad not just for the
wealthy but for the rest of America, too."

I've watched the clip several times now and this is horrible characterization
by this journalist. The title of this piece even seems to be click bait-y.
We're starting to have a national conversation about more heavily taxing
billionaires again but so much of the media is pumping this up into a "the
Populists are going to eat the rich" kind of hysteria.

IMO.

~~~
aaomidi
I find it interesting that individual journalists are also terrified of this.
Like, do we really think the current system is a sustainable system 50 years
into the future?

------
coldcode
Seems like a lot of billionaires on hacker news given the comments. The past
two Republican presidents have pushed for and gotten massive tax "reforms"
that reward these same people and cost the treasury massive amounts of new
debt. Seems like just reversing all of the "reforms" would be fairly simple to
implement and return the lost revenue without even needed to do anything new.

~~~
RickJWagner
Non-billionaire here.

I'll almost certainly never be a billionaire. But I will probably do well
enough, because I've learned how to live below my means and how to invest.
Doing this properly will make anyone relatively wealthy after a reasonable
working career.

The system works. These days, we have low unemployment, rising wages and a
great market for retirees. It's not a good idea to mess with it.

~~~
redblacktree
You would likely never be affected by the wealth tax. Do you think your
prudent lifestyle will lead to > $50 million in assets?

------
bhupy
Most of these billionaires' net worth are not liquid cash, they're in shares
of the companies they founded/own. Jeff Bezos' $111B net worth, for eg, is
mostly in $AMZN stock. The way a 6% wealth tax accrues, if he does nothing
productive with his money, he would have to pay $6.67B the first year...and
then a similar amount every year after that. After 20 years, $111B would turn
into $32B — a ~71% tax rate over that time period.

And because most of his wealth is tied up in his stock, he would have to
liquidate large portions of $AMZN to pay the yearly wealth tax bill. That kind
of sustained mass influx of supply of $AMZN shares on the stock market would
wreak havoc on its stock price, which would reverberate through
retirement/pension funds. Few would gain from it.

If you took all of Bill Gates' wealth, you could fund the US Federal
government for about 8 days. Not 8 days every year, 8 days total, one time. If
you took all of the Forbes 400 wealth, you could fund the federal government
for about 8 months. The upside is 8 months of runway, and the downside is that
you would destroy decades of _created_ wealth (wealth is not zero-sum), a tide
which has lifted a lot of other boats, particularly those of the upper-middle
class.

~~~
notacoward
> he would have to liquidate large portions of $AMZN

Not at all. He'd just have to sell that stock to someone else, with no
operational effect whatsoever.

------
nullc
I thought Gate's commentary was on Warren's proposal for a 2%/yr tax on all
assets (not income) in excess of $50m.

The article instead seems to be entirely about marginal tax rates.

A wealth tax has a lot more implications than changes to the marginal tax
rates on income and capital gains-- it has different economic effects and
requires far more invasive interactions from the government.

E.g. the content of Gates' home is largely his own private business, but under
a wealth tax will he have to account for all his possessions and report them
to the government? If not, then why wouldn't the tax be avoidable by buying
expensive art?

In the past, including recently, Gates has been pretty consistent about
supporting higher tax rates for the wealthy, in particular citing estate taxes
and capital gains as areas that deserved focus.
([https://www.cnbc.com/2019/02/13/bill-gates-suggests-
higher-t...](https://www.cnbc.com/2019/02/13/bill-gates-suggests-higher-taxes-
on-those-with-great-wealth.html)).

To me this suggests that NYT is just trying to create a bad guy opponent to
make a boring policy discussion sound like something that requires pitchforks.

~~~
aaomidi
The problem is that hoarding wealth in various assets like the real estate
market is also part of the problem.

Gates barely has a normal income. What he does have is a ton of wealth that a
lot of us see as something broken in the system.

You could cure cancer and you still shouldn't have THAT much wealth.

~~~
nullc
> real estate market

Real estate is already taxed in the US (at the state/local level). I doubt
Bill Gates would have an enormous problem with adjustments to that either.

------
keiferski
There are currently three New York Times articles on the front page of HN.
None of them are particularly interesting or well-written. I really don’t see
why this is necessary.

~~~
lackbeard
I would be happy if the New York Times was banned from this site. An awful lot
of low quality and off topic content from there seems to constantly make it to
the front page here.

~~~
gerbilly
> An awful lot of low quality and off topic content from there seems to
> constantly make it to the front page here.

It makes it to the front page because people vote it up. This makes it de
facto on-topic.

~~~
nullc
HN moderation frequently removes things that people upvote-- including some of
the most upvoted subjects (they're upvoted a lot because they're divisive
political stuff).

I think this is good, FWIW. I just don't think it's useful to argue that it
shouldn't be removed just because it's upvoted because that's clearly not how
HN is run.

~~~
hombre_fatal
That's a separate issue than what's happening in this thread: someone accusing
upvoted content of being off-topic.

afaict, HN mods generally remove submissions because their comments are a
dumpster fire. Though I haven't witnessed it in a while. The last dumpster
fire comment section I saw, dang just stickied his comment to try to encourage
people to get back on the topic of the article and avoid the obvious knee-jerk
response to it.

------
chadash
I think there are plenty of billionaires who would agree that taxes need to be
higher, but they disagree specifically with the taxing _mechanisms_ being
proposed by Warren and Sanders, namely the wealth tax.

Take everyone's favorite startup founder, Adam Neumann, of WeWork. Under
Warren's plan, he would have been worth around 14 billion last year, based on
a 30% stake in a $47 billion "valuation". So he'd owe close to a billion in
taxes, when in fact, he was worth far less. And even if $47B was the correct
valuation, there's not a great mechanism for him to actually get the liquidity
to pay taxes.

So higher taxes on billionaires? I'm all for it. But we need realistic
proposals to make it happen.

~~~
aaomidi
Then the taxes would've property shown the valuation of that company.

You're taking a whole system and applying it to a single variable and saying
it doesn't make sense. WeWork should've never been worth that much and an
inability to pay taxes would've shown that.

------
Tepix
The fact that the tax rate for the very rich has been reduced that much over
the decades (not just in the US) shows how much they have corrupted the
political process.

~~~
bluedevil2k
Yes, the tax rate has been reduced, but since Reagan became President, the US
has been on an unprecedented 40 year economic growth. The same can't be said
for Europe, England, or any other country with giant top bracket marginal
rates.

~~~
irrational
I don't understand this reasoning. Shouldn't unprecedented economic growth
mean that the vast majority of US citizens are better off than they were 40
years ago? But this isn't the case at all. Back then the vast majority of
families could afford to own a home, have a bunch of kids, etc. and do it all
on a single income. That is laughable today. What is the point of a country
experiencing unprecedented economic growth if the citizens of that country are
by and large worse off? I assume that growth came at the expense of the
citizens and not to their benefit. But if not to their benefit, wouldn't it
have been better to not have the growth at all?

~~~
bluedevil2k
Americans _are_ better off than they were 40 years ago.

[https://www.google.com/amp/s/amp.economist.com/finance-
and-e...](https://www.google.com/amp/s/amp.economist.com/finance-and-
economics/2018/03/31/the-average-american-is-much-better-off-now-than-four-
decades-ago)

~~~
aaomidi
This type of measurement of being better off is inherently flawed.

Insurance costs going up and employers paying more for that doesn't mean
people have been getting a better and better deal.

Also why is it that the standard of life is higher and has grown to be much
higher in many European countries with the so called "slow growth" vs America?

------
sinatra
The reason wealthy don’t need to pay their fair share of taxes is due to all
the tax loopholes. The solution to that is not adding more complexity in our
taxes. The solution is to remove loopholes and make taxes as simple as
possible. For a certain well known income, there should be a certain well
known tax rate. And, after a certain minimum, there should be almost no ways
to get deductions from that tax rate.

~~~
sfg
Define income.

~~~
sinatra
Define wealth.

However we tax, we’ll have to define terms. The goal should be to remove
loopholes in those definitions. Not add loopholes. By adding the concept of
wealth, we’ll just encourage behavior like undervaluing assets (like art,
private stocks, etc). And we’ll be back to square one.

~~~
sfg
Why would I define wealth? I am not proposing anybody does anything with, for,
of, or in any way related to wealth.

"The goal should be to remove loopholes in those definitions"

So, define income, without loopholes. Your plan depends on this.

~~~
sinatra
My plan? I’m not defining any plan. I’m suggesting that people who define
plans should focus on removing loopholes that wealthy use today. Rather than
giving them more chances to find loopholes. Income is something that we
already use in taxes. If its definition has loopholes too, then “those people”
should try to remove those loopholes in the definition.

p.s., There’s a difference in reducing loopholes and having absolutely zero
loopholes (something that may be impossible)

~~~
sfg
Yes, your plan, _the solution_ as you called it.

If _the solution_ is that _those people_ should _try to remove those
loopholes_ from the definition of _income_ and there is nothing beyond that to
explain how _those people_ should do that then it is a vacuous solution.

 _p.s, There’s a difference in reducing loopholes and having absolutely zero
loopholes (something that may be impossible)_

Obviosuly.

~~~
sinatra
It’s impressive how you’ve taken issue with my simple statement about “don’t
add more complexity to taxes; simplify taxes.”

You’re basically arguing that I shouldn’t make this statement unless I have
specific details about how to simplify taxes? I can’t make a general
directional statement if I haven’t taken the time to learn about all the
nuances? Do you always learn about all the nuances and define all the terms
before starting a discussion?

~~~
sfg
It's impressive how you've taken a simple two word response to your start of
discussion that aimed to succinctly demonstrate problems with your general
directional statement with so much worthless blather. Do you always fail so
magnificently to just accept the point when challenged in some pathetic need
to 'win' the conversation?

~~~
sinatra
Good point. We both are being pathetic in trying to win the conversation.
Conversation that’s not even that stimulating. Okay, I’ll stop.

------
bfieidhbrjr
Marginal tax was 70%....

Yeah and what was inflation? And what was Reagan doing to fix it? It wasn’t
all economic unicorns and rainbows in the 70s to 80s transition.

------
formercoder
A tax on assets would be absolutely impossible to implement and would lead
primarily to increase fees to accountants and lawyers.

~~~
chishaku
Are you aware that taxes on assets already exist?

[https://www.irs.gov/businesses/small-businesses-self-
employe...](https://www.irs.gov/businesses/small-businesses-self-
employed/estate-tax)

The Estate Tax is a tax on your right to transfer property at your death. It
consists of an accounting of everything you own or have certain interests in
at the date of death (Refer to Form 706 (PDF)). The fair market value of these
items is used, not necessarily what you paid for them or what their values
were when you acquired them. The total of all of these items is your "Gross
Estate." The includible property may consist of cash and securities, real
estate, insurance, trusts, annuities, business interests and other assets.

~~~
formercoder
How do they calculate the fair market value of closely held private
businesses?

------
RickJWagner
We've got low unemployment (record low for African Americans and Hispanics),
rising wages, and a strong stock market.

Why mess with things now? I'd understand it if someone wanted to monkey with
things when the economy was awful. But why mess with it when things are good?

------
onion2k
They'll cope.

~~~
dudul
Dude, don't be so casual about it! Some of them may end up leaving the
3-commas club!

------
kauffj
Avoid giving clicks to companies like the NYT that are working to kill the
open web.

[http://archive.is/i60kZ](http://archive.is/i60kZ)

~~~
owlninja
Or trying to fund their operation? This article seems free anyways

~~~
buboard
Free the first time or sth. Everybody's trying to fund their operations, i
don't see why paywalls aren't considered the spam (that they are)

~~~
reaperducer
Because there are people who believe in supporting journalism and understand
that real journalism isn't cheap?

Like a lot of things in life, you get what you pay for.

~~~
buboard
There are people who support kayaking, that doesn't mean that Gmail should
allow kayak fan spam in my inbox.

~~~
acdha
How is that relevant to the NYT charging for their work? You always have the
option of not reading it if you don’t want to.

~~~
buboard
Google considers all kinds of hidden or caged content as spam, and will delist
those sites, but they make an exception for paywalls.

~~~
hombre_fatal
If your issue is that NYT can get its entire article indexed even though
people will hit a paywall when they go to view it, I can see what you're
saying.

But you have to balance these concerns with what's practical. After all, a
search engine is supposed to help people find things.

If an NYT article actually answers your search query, I don't think the
greater good is for Google to not show you that result. I don't think that's
what most people would want, either.

I feel the same way about Google hypothetically only indexing the part of the
article that is shown above the paywall fold. What if the rest of the article
can answer your search query? I don't think you're better off not knowing such
an article exists.

There are only trade-offs.

The other things that Google bans are more obviously deceptive with few
upsides to be found for the end-user, like cloaking a malicious website. I
don't think you could enumerate the other sorts of things that Google blocks
and compare them honestly to NYT's paywall, but I'd be curious to hear you
build that case.

~~~
dangerface
The article is just an opinion piece on Bill Gates opinion, it really adds
nothing of value, no investigative journalism, no fact checking.

I argue that the only reason people are interested in this article is because
of Bill Gates opinion not the ny times.

I think search results for the original opinion would be much more relevant
than a random persons opinion of the opinion. The opinion of some one else's
opinion is not worth money, if ny times considers that as quality journalism I
think it says a lot about the quality of their journalism.

~~~
acdha
So you're upset that the NYT ran an opinion piece in the opinion section?

------
paulddraper
This is thoroughly shoddy journalism.

> The available evidence strongly suggests that taxation exerts a minor
> influence on innovation.

No citation given.

> Congress has slashed taxation three times in the past four decades, each
> time for the stated purpose of spurring innovation and investment and
> growth. Each time, the purported benefits failed to materialize.

No citation given.

> President Trump initiated the most recent experiment in 2017. The
> International Monetary Fund concluded in a recent report that it had not
> worked.

This NYT piece is about _individual income tax_ , whereas the IMF article
exclusively analyzed _corporate tax_ cuts.

> Decades of episodic tax cuts have left the government deeply in debt

Yes, though nobody in the article (or in the broader political arena) is all
that interested in paying them off.

> The wealthiest Americans are paying a much smaller share of income in taxes
> than they did a half-century ago. In 1961, Americans with the highest
> incomes paid an average of 51.5 percent of that income in federal, state and
> local taxes. Half a century later, in 2011, Americans with the highest
> incomes paid just 33.2 percent of their income in taxes, according to a
> study by Thomas Piketty, Emmanuel Saez and Gabriel Zucman

There is no source for the 1961 number. That study says that the tax rate on
the top 0.001% increased 185% from 1946-1980 and decreased 3% from 1980-2014.
[1]

\---

Aside from the typically bad NYT coverage, a point seldom brought up in many
articles is the current income tax burden of the wealth relative the rest of
the country.

More than 90% of individual income taxes come from the top 1% of taxpayers.
[2]

I can't find that number for billionaires specifically, but some quick
searching and math estimates that $9T from billionaires taxed at 23% accounts
for $2T of $10T individual income tax.

So < 0.001% of individuals pay 20% of the income tax.

Makes me wonder what the opt-referred to "fair share" actually is.

[1]
[https://www.nber.org/papers/w22945.pdf](https://www.nber.org/papers/w22945.pdf)
Table 2

[2] [https://taxfoundation.org/summary-latest-federal-income-
tax-...](https://taxfoundation.org/summary-latest-federal-income-tax-
data-2018-update/)

------
thrower123
Let's tax the people who pay all the taxes even more...

The worst problem with these tax proposals is that they won't even raise half
as much revenue as they need for the programs they are supposed to fund.

~~~
acdha
Do you have a citation for the claim that only billionaires pay taxes? I mean,
why do Americans popularly fear April 15th if only a few thousand pay?

~~~
thrower123
Honestly, no fucking idea. Most Americans get a refund because they have
overpaid their taxes throughout the year.

------
seibelj
> _The specific proposals by Ms. Warren and one of her rivals, Senator Bernie
> Sanders, to impose a new federal tax on wealth are innovations that require
> careful consideration._

The NYT and myself have a very different definition of “innovation”.

~~~
fastball
Even if "innovative" was just a synonym of "original", it's not even an
original idea, as many European countries have already tried a wealth tax --
and I'm fairly certain every country that has tried it has repealed it not
long after.

~~~
tomelders
A clever twist in Warren's proposal is that the Government has the right to
buy your property for whatever you've listed it for.

Now I'm sure any attempt to actually do that would end in a court case, but
it's not really worth the risk to the owner of said wealth to offer the
government all your Rembrants at bargain basement prices.

~~~
joncrocks
What value goes down on paper? The value that something has to you? The price
that someone else would pay?

Let say you have Warren Buffett's shoes.

Warren Buffett paid $X for those shoes.

A pair of new shoes would cost him $Y.

Someone might pay $Z as they are Warren Buffett's shoes.

Someone might pay $V just to inconvenience Warren (so he would have to go to
the shoe store).

Maybe they have some sentimental value to Warren, so he would pay $T not to
lose them.

What are the shoes worth?

~~~
mcphage
> What value goes down on paper? The value that something has to you? The
> price that someone else would pay?

I mean, I don't know anything beyond what the person you're responding to
said, but they made it pretty clear:

> the Government has the right to buy your property for whatever you've listed
> it for

------
cs702
A while ago, I was curious about the relationship between income taxes and
growth in the US, so I looked up the data... and I was unable to find _any_
clear relationship!!!

As one of many possible examples I could give, below is a table I compiled
showing the highest marginal federal income tax rate and year-over-year real
GDP growth in the US since 1950. Can you find a relationship?

My conclusion, so far: There's a tremendous amount of theory, and rhetoric,
and posturing, and straw-man arguments... but _very little or ZERO actual
evidence_ that national economic growth is impacted one way or another. (In
fact, in many cases the data shows higher economic growth during periods of
higher taxation at the top of the income distribution.)

    
    
             Highest  Real GDP
      Year  Tax Rate    Change
      1950:    84.4%      8.7%
      1951:    91.0%      8.0%
      1952:    92.0%      4.1%
      1953:    92.0%      4.7%
      1954:    91.0%     -0.6%
      1955:    91.0%      7.1%
      1956:    91.0%      2.1%
      1957:    91.0%      2.1%
      1958:    91.0%     -0.7%
      1959:    91.0%      6.9%
      1960:    91.0%      2.6%
      1961:    91.0%      2.6%
      1962:    91.0%      6.1%
      1963:    91.0%      4.4%
      1964:    77.0%      5.8%
      1965:    70.0%      6.5%
      1966:    70.0%      6.6%
      1967:    70.0%      2.7%
      1968:    75.3%      4.9%
      1969:    77.0%      3.1%
      1970:    71.8%      0.2%
      1971:    70.0%      3.3%
      1972:    70.0%      5.3%
      1973:    70.0%      5.6%
      1974:    70.0%     -0.5%
      1975:    70.0%     -0.2%
      1976:    70.0%      5.4%
      1977:    70.0%      4.6%
      1978:    70.0%      5.5%
      1979:    70.0%      3.2%
      1980:    70.0%     -0.3%
      1981:    69.1%      2.5%
      1982:    50.0%     -1.8%
      1983:    50.0%      4.6%
      1984:    50.0%      7.2%
      1985:    50.0%      4.2%
      1986:    50.0%      3.5%
      1987:    38.5%      3.5%
      1988:    28.0%      4.2%
      1989:    28.0%      3.7%
      1990:    28.0%      1.9%
      1991:    31.0%     -0.1%
      1992:    31.0%      3.5%
      1993:    39.6%      2.8%
      1994:    39.6%      4.0%
      1995:    39.6%      2.7%
      1996:    39.6%      3.8%
      1997:    39.6%      4.4%
      1998:    39.6%      4.5%
      1999:    39.6%      4.8%
      2000:    39.6%      4.1%
      2001:    39.1%      1.0%
      2002:    38.6%      1.7%
      2003:    35.0%      2.9%
      2004:    35.0%      3.8%
      2005:    35.0%      3.5%
      2006:    35.0%      2.9%
      2007:    35.0%      1.9%
      2008:    35.0%     -0.1%
      2009:    35.0%     -2.5%
      2010:    35.0%      2.6%
      2011:    35.0%      1.6%
      2012:    35.0%      2.2%
      2013:    39.6%      1.8%
      2014:    39.6%      2.5%
      2015:    39.6%      2.9%
      2016:    39.6%      1.6%
      2017:    39.6%      2.4%
      2018:    37.0%      2.9%
    

Sources:

Year-over-year real GDP growth:
[https://fred.stlouisfed.org/graph/?g=pssP](https://fred.stlouisfed.org/graph/?g=pssP)

Tax rates: [https://www.taxpolicycenter.org/statistics/historical-
highes...](https://www.taxpolicycenter.org/statistics/historical-highest-
marginal-income-tax-rates)

------
TheOperator
The increasing lack of a mass market consumer base for capitalist goods &
services also threatens economic growth. In other words it does society more
economic good for everybody to be able to afford a dishwasher than for a few
people to be able to afford luxury goods. We've had decades of rather low tax
rates and decades of rather low growth and no solutions given other than to
double down on the low-tax investment-first strategy.

Low taxes sure bolster economic growth in the short term and bolster
investment but they also lead to forms of societal decay like income
inequality which leads to crime which leads the more demand for order which
leads to cementing the accumulation of power. Left unchecked the powerful will
accumulate resources out of line with their actual merit to society through
the leverage of their existing capital. We're in a situation now where it's
increasingly obvious how the rich are overcompensated relative to their
productive output but countries race to the bottom to compete for their
capital. If this race to the bottom were not happening every country would be
better off taxing the wealthy more fairly but we're in a tragedy of the
commons situation.

------
crb002
Tax on wealth (earnings which were already taxed once) will lead most
shareholders to do the math and skip over to Canada or Europe if profitable.
Especially companies ran in a remote/asynchronous manner.

~~~
criddell
You think they will give up their US citizenship? That's about the only way to
get out of filing taxes.

------
pmlnr
This is the same bs* as trickle down economy.

~~~
calmworm
Care to explain?

~~~
foogazi
What is the government going to do with the billions collected from wealth
taxes?

------
macinjosh
If 'the billionaires' are as powerful as those like Warren and Sanders say no
one has to worry about them ever being elected.

Additionally, I hear a lot from the left about modern monetary theory which
essentially claims government can just print more money when it is needed and
therefore collecting taxes is not necessary.

Which is it then? Perhaps they are attacking the wealthy out of political
hatred and vitriol not out of a desire to help the poor or build roads.

