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PaperclipPerfector  2d ago (text post)   7302 thread views

Culture War Roundup for the week of June 15, 2026

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The spacex IPO has happened and made Elon Musk a Trillionaire.

There are probably hundreds of potential topics from this story, feel free to go off on your own tangents.

What I am interested in is that this is a company that is building real world things, and not fake internet shit. It feels like a lot of new wealth and investment in America comes from and is directed to the internet. I think one of the main reasons has been that large investors are generally play-it-safe followers. They see which companies are newly striking it rich: Facebook, Amazon, Netflix, Google, Apple, etc. And they are happy to invest in copy-cats.

I'm hoping the spacex IPO has a similar effect. That investors start chasing new copy cats. But this time copy-cats of spacex rather than copy cats of facebook or google.

Elon Musk is on a one-man crusade to prove the EMH wrong. The valuations of his firms are so clearly delusional, and yet it persists. At this point, it seems a great deal like if you're betting on Musk you're betting that he's going to achieve financial escape velocity and katamari the economy before his political and legal liabilities catch up with him. (I'm being hyperbolic, but the valuations seem extraordinarily hard to justify).

Not that his companies should be worthless, but SpaceX currently outvalues the rest of the aerospace sector. TSLA has vastly higher market cap than auto manufacturers with an order of magnitude more revenue, income, and assets despite repeatedly failing to generate the breakthrough innovations that would justify high future expected performance. All this at a point where Musk has significantly stepped back from hands-on management of his company in favor of drugs, politics, and posting, so even if you still think Musk is a wizard (he's not), it seems questionable to base your investment decisions on that.

Both Tesla and SpaceX bulls are entirely upfront about the fact that you cannot make a bull case for the core businesses of Tesla and SpaceX justify the market cap. The bull case is explicitly that Musk will pivot to a business that doesn't exist yet and make the pivot work because he's Musk.

Stories that have run for Tesla in the past include:

  • Tesla are so far ahead in the learning curve for large Li-ion batteries that they can pivot to being an energy company (while maintaining the profit margins of a tech company)
  • Tesla are so far ahead in self-driving tech that they will be a near-monopoly supplier of self-driving software to the rest of the automotive sector
  • Tesla will pivot to robotics.
  • Tesla will merge with xAI and pivot to AI.

The current story for SpaceX is orbital datacentres, which at least has something to do with the existing assets, but is a lot further from actually existing than Autopilot or Tesla Robotics.

The current story for SpaceX is orbital datacentres, which at least has something to do with the existing assets, but is a lot further from actually existing than Autopilot or Tesla Robotics.

Even with the best case price per KG to orbit for Starship, orbital datacenters still really don't make any sense financially. Even when compared to more exotic options like underwater datacenters in the ocean. The only thing orbital datacenters would make sense for is escaping regulation, but even that would require significant changes to all of our current treaties for how satellites and other stuff in space are regulated.

Reusable rockets and an LEO communications satellite constellation also didn't make any sense when they were originally proposed, and look at them now. At this point I'm willing to trust that whatever harebrained scheme SpaceX is pushing this time, their engineers have done the math and figured out that it's doable.

As far as I can tell, the actual obstacle that's pushing SpaceX and others to put their compute up into orbit is really just good old fashioned zoning laws. If you want to move as fast as Elon does, putting your compute on a rocket and blasting off probably sounds a lot better than navigating the increasing political opposition to data centers here on Earth.

As far as I can tell, the actual obstacle that's pushing SpaceX and others to put their compute up into orbit is really just good old fashioned zoning laws.

Which, as I mentioned, would be cheaper to accomplish (and far easier to maintenance on) somewhere in the ocean as opposed to in orbit.

Space datacenters are probably inevitable if we keep increasing the compute power available in space as satellites get cheaper. The question probably is whether it will make anything efficient outside of orbit.

Can you radiate that much heat?

https://youtube.com/watch?v=FlQYU3m1e80

You can, but it's another one of the big increases in cost compared to a terrestrial datacenter.

Warning: The "?si=", "?pp=", and similar portions that YouTube has started adding to any URL created with the "share" button allegedly can be used to reveal the YouTube username of the user who created that URL. For that reason, those portions of the URL should be deleted before copying and pasting.

Thanks, forgot they added that bullshit

I am confused by the narrative or popular opinion surrounding Elon Musk today. Every time I get on X he has retweeted some inflammatory race baiting thing that gets millions of views (which I generally agree with for context) and yet outside of a handful of "I bought this tesla before he was a nazi" bumper stickers which apparently exist I see little to no pushback on him or what he has done with X. Maybe I'm in a filter bubble and have really managed to mute leftist views in my life but a lot of his views are to me essentially white supremacist by the standards of the overton window of the west and yet he seems to suffer nearly no consequences for it. And at the same time he seems not to be doing anything outside of having too many white kids to raise with sufficient attention and retweeting about how bad things are in the UK or how the west is all going to be South Africa in a few years. Am I wrong? Is he doing anything to try to reverse the great replacement of whites? Has he suffered any major consequences for his beliefs?

On most subreddits, he's literally the devil. They're reposting that "Hitler salute" photo from last year, and there are quite a few posts wishing death on him.

Whenever anyone around me, IRL or online outside of the Motte, mentions Elon Musk, it's universally either as polite free shot against a socially acceptable outgroup target, or outright Musk Derangement Syndrome. I cannot recall any nonmottizen voicing a positive view of him.

I for one think he's pretty much Great Man theory in action. It doesn't matter how weird or disagreeable or even how wrong he is, he's making history and the haters are not. He's building rockets and they are not.

Too many confounding factors (elimination of US tax credits, competition from BYD, etc.) but Tesla worldwide car sales are not the growth story that they were shortly before he endorsed Trump for 2024. Growth of car sales has completely stalled in the past couple years, and many are eager to link it to his political extracurriculars.

? I'd say Elon Musk has flipped from like universal adoration (He had a Simpsons episode) amongst the Center-left Redditor sphere to strong condemnation over the course of the last decade or two. You can argue about how much he's actually accomplished for conservative beliefs despite clearly harboring them, though keeping Twitter reasonably uncensored has been solid. He's just largely too big to cancel.

I have a pet theory that defecting from the blue tribe is seen as a worse sin than never joining, and that's why Trump and Musk, both former darlings of the blue tribe, inspire derangement from the left in ways that arguably worse people don't.

I wonder how rich Musk actually is compared to rich men of the past. His company is valued at a trillion dollars yes, but only for as long as there exists buyers for the shares at their current prices. If he attempted to liquidate everything, I highly doubt he would actually end up with a trillion dollars in his bank account. He could borrow against his shares, but good luck borrowing anywhere near a trillion dollars. In other words, I would argue that his ability to convert his valuation into actual goods and services is more limited than what one would expect upon hearing the headlines.

In terms of the resources he owns and controls, he is surely far wealthier than most, but I wonder how he actually stacks up. Does he own land? Private islands? Buildings?

He does own spacex of course. Multiple rockets, Twitter, Grok, and Starlink. Notably, these companies do not contain assets that are anywhere near being worth a trillion. That is what the IPO is for in the first place. To gather the capital necessary in order to expand and grow to the point where the valuation is justified. Besides, to what extent does he actually control the assets of these companies? He is subject to government regulation. He can't just launch satellites whenever he pleases. He changes Grok based on public backlash.

Certainly, the man is obscenely rich and powerful compared to the average person, but I don't believe that the trillionaire title matters as much as what people make it out to.

the headlines.

The headlines in German newspapers very all very clear about this - "About to become a trillionaire ON PAPER".

Yeah but that's just a symptom of the modern economy. Your Rockefeller or Vanderbilt likely had a lot more direct ability to make physical change on the world than a Musk or a Page, but that's due to a surfeit of reasons. Their wealth is more arbitrary, the swamp has gotten a lot better at deleting cash that enters its orbit and property/construction/compliance is a lot more expensive.

Also, as one person alluded to, a change in military tech/power. Vanderbilt was able to at least offer to donate a warship to the Union government during the Civil War.

Vanderbilt was able to at least offer to donate a warship to the Union government during the Civil War.

Seems pretty analygous to starlink in ukraine.

A lot of the SpaceX fortune is hype for the cult of Elon or his other companies but I think SpaceX creates immense economic value:

  • Space underwrites American military dominance ie underpins the entire economic global order and SpaceX leads in space
  • SpaceX has a monopoly on re-usable rockets which will lower the economic cost of doing all business in space and make new industries possible
  • SpaceX has immense data-processing and data-storage capabilities at the exact moment that compute is bottlenecked by the growth of AI
  • SpaceX is partnered with Tesla and xAI on applications that will be at the forefront of other monumental technical bottlenecks

It’s like Elon discovered a new continent and has a monopoly on trade with it. At a minimum huge portions of American security run through satellites that Elon has the most efficient and best ways of servicing. An even more bullish case is that huge sectors of information and data-processing will move to space as we hit economies of scale. (What does the airline industry look like if everyone has an in-flight internet connection? How many useful private applications of live satellite feed are waiting to be invented?) And the more advanced SpaceX becomes the larger the moat for other countries — if Europe can’t join space they become a branch plant economy of America.

It’s possible that SpaceX will privatize a generation of American hegemony. In which case they are undervalued.

No man is wealthy who cannot raise his own army.

Who in this world is truly wealthy?

A lot less. And it’s not entirely a liquidity thing. Google was able to replace CEO’s. I think meta could probably replace Zuckerberg and people wouldn’t assume it changes company trajectory. Tesla/SpaceX value is like 75% Musks is smarter than everyone else and knows how to do innovation. It think based on the quality of Starlink as a platform that SpaceX is probably worth 500b without Musks. Tesla has a similar premium.

If an 80% holder of Pepsi stock decided to sell it would be a liquidity issue. And Pepsi stock isn’t going to crash if they change the CEO. SpaceX stock would crash 75% if he died but all his stock was in trust for all his kids that were banned from selling for 20 years.

All of the richest guys year “X” have similar issues evaluating as Musks. Pompey could just lose in battle and the new Emperor takes his assets etc.

I sometimes wonder how much the valuation of those companies (and hell, the entire stock market) is impacted by the pure actuarial odds of Musk getting into a fatal accident or straight dropping dead.

The valuation of Berkshire Hathaway continuing to rise even as Warren Buffett reaches ancient age is a hint that maybe it is less than we think. But that's a very different industry.

Buffett stepped down

What I am interested in is that this is a company that is building real world things, and not fake internet shit.

Having looked over the S-1, I need to respectfully disagree here. Even SpaceX itself is justifying its valuation with fake Internet shit. They position themselves as a frontier AI center. Almost their entire TAM is predicated on Grok being a fully generalizable software technology.

I have a hard time squaring this dual narrative. Are they a space company, or an AI company? Right now it seems it's whichever one will convince an investor to give them money.

I have a hard time squaring this dual narrative. Are they a space company, or an AI company?

Both. AI datacenters in space give an investor thesis to why they deserve the valuation. Because right now, AI sells. That being said, I think the S-1 dramatically oversells AI TAM, as will all AI-related IPOs in the near-term future, but dramatically undersells the space side of the business. My prediction is that in another 20 years, SpaceX will be a space-services conglomerate that happens to have an AI division, rather than the flipped version given in the S-1.

It was always weird to stitch xAI and the SpaceX together. The latter is a solid, well executed company that is in a dominant position with innovative technology and a clear market, with its only downside being that its market offers (relatively) limited upside. The other is a gesture towards almost infinite upside, but in practice seems to be a data center REIT.

Combine them, sprinkle in some Elon reality distortion field, and you end up with wild 13 digit speculative TAMs of orbital data centers.

its only downside being that its market offers (relatively) limited upside.

On the contrary, the upside for space stuff is functionaly infinite. Its just been handicapped by extreme launch costs for 50 years. Every financial analysis writing on SpaceX gets this very wrong- the market for launch services grows in a highly non-linear fashion, inverse to launch costs. SpaceX is legitimately poised to chop two orders of magnitude off $/kg-to-orbit, but this gets priced in as like "10-20% annual growth". Its like pricing in a similar number for the internet in 1992, because data connectivity is still a fairly expensive thing.

Take it up with SpaceX's S-1.

We believe we have identified the largest actionable total addressable market (“TAM”) in human history. We estimate that our quantifiable TAM is $28.5 trillion, consisting of $370 billion in Space from space-enabled solutions; $1.6 trillion in Connectivity across $870 billion in Starlink Broadband and $740 billion in Starlink Mobile as well as additional opportunities in enterprise and government; $26.5 trillion in AI across $2.4 trillion in AI infrastructure, $760 billion in consumer subscriptions, $600 billion in digital advertising, and $22.7 trillion in enterprise applications.

Yes, the S-1 is a marketing document disguised as a regulatory filing. If it was 5 years ago, it would be full of crypto and NFT bullshit. As it stands, those AI valuation numbers are ludicrously overvalued, as they will be for any of the other upcoming AI IPOs. (I do not hold SPCX for this reason, when it drops to reasonable levels I will buy).

Conversely, what is ludicrously undervalued is the TAM for space services. $370 billion is a third of the annual aerospace market, and not that far off of what is actually spent on space services today (roughly $250 billion). Its downright prude compared to the AI hype machine, and given SpaceX's rather large lead in that sector is the area I would focus on most as an investor.

Yeah, I would love to be able to make a speculative bet on space services. Unfortunately it's heavily polluted with an implausible AI speculation (which I'm generally fine with, but if I'm going to be gambling on AI, SpaceX is not the bet I'm going to make). When it drops, I'll reconsider.

The best description I've heard is that SpaceX is a datacenter REIT bolted onto an AI company bolted onto a social media company bolted onto a launch business bolted onto a niche ISP.

From what I can gather, the consensus on the left side of the political spectrum in the USA is that it's a great injustice that there exists a trillionaire in a world where there exists poverty. Now, there are a lot of implicit beliefs and values mixed up in such a judgment, such as the false notion that it would be possible to fix world poverty or even USA "poverty" with a trillion dollars in cash and that it would be possible for Musk to convert his net worth into a trillion dollars in cash (at its limit, people literally seem to believe that Musk has a bank account somewhere with 13 digits on its balance, claiming that he's "hoarding" the wealth, as if that wealth isn't actually in the form of various companies that are functioning to produce and sell things right now). It seems like it's mostly driven by a hatred of inequality and a desire to collect one's pound of flesh.

Which I think is perfectly reasonable. One of the many reasons Musk is able to have such a high net worth is the fairly dependable capitalist system that we all uphold and partake in, and demanding that he pay the government a fee for the sole reason to appease our envy, even at the cost to overall prosperity and wellbeing of humanity might not be ideal, but it's not unreasonable.

But, as many people have pointed out, Musk - and any billionaire - has most of his assets in productive companies, and the productive nature of those companies is what makes them so valuable, and so liquidating them to put more money in the government coffers would both be logistically very difficult and also likely destroy a lot of value. If the government were to take shares away from Musk to take partial ownership of his companies, that would also likely destroy a lot of value, both because some of the value is tied to Musk being the owner and because the government is likely to have lower ownership skills than the typical private owner. Furthermore, since Musk's - and, again, almost any billionaire's - net worth is defined mostly by the market price of shares of his companies, which are volatile, it's difficult to even figure out the correct value of his net worth to use for any sort of wealth tax.

So I'm left wondering what sort of wealth tax could be implemented, in a way that doesn't destroy too much value while still being meaningful enough to appease the envious (though some may argue that the limit does not exist for that one). It would probably have to take some sort of rolling average of net worth over a period of time, the tax would have to be something like in the form of non-voting shares, and perhaps we'd need to create a ton of new government bureaucracy jobs to manage the logistics of all of that. In effect making almost any company above a certain value automatically partially nationalized. It would have to be progressive without some sharp cutoff point so that there's no single value that any company owner is motivated to keep under. We'd also likely need to have laws around giving shares to family members in order to skirt around the wealth tax - either that or just accept the creation of essentially an aristocracy where successful company owners keep sharing their wealth with more and more family members while still being de facto owners in order to minimize their wealth tax burden. Along with a bunch more government jobs to enforce this.

Of course, I heavily doubt that any of the collected money would have meaningful impact on solving poverty. On net, with the additional government costs and the reduced income tax collections from the employees of these companies, it might actually leave less money to fight poverty than just the current system as-is. But that's not the point, the point is to take money away from really rich people.

I'm not an economist, so I'm probably missing a lot of things. Does anyone have any good ideas for how the USA could implement this without causing too much economic harm? Would be especially good if it could stand up to Constitutional scrutiny as well (of course, the Constitution can always be changed or ignored, but both tend to create a lot more friction and pain than otherwise).

I think for most people who hate Musk his billionaire status is like far third place. First and second place would be his political alignment and his cringe factor.

Well, Musk is certainly a unique case, but I wanted to engage with the underlying principles rather than just who/whom (which, to be fair, it might be all the way down). Second and third places really are just downstream from the first place reason anyway, as his awkward autistic tendencies really weren't harped upon much in the 2010s by the exact same people. And neither was his then-billionaire-status - in fact, he was often seen as almost heroic for his success in making EVs mainstream in the US, with positively depicted cameos in shows like The Big Bang Theory or Rick and Morty and even a nerdy scientist in a (terrible) Hollywood (attempted) blockbuster Moonfall asking himself, "What would Elon do?" when trying to solve some tough problem.

I find this unreasonable. Yes, Musk benefited from a capitalist system. But so did literally everyone else. Nothing stopped you or your neighbor from doing what Musk did. The difference is he did it and you didn’t. And because of that, you want to punish him? Why are you envious?

Moreover, this “you didn’t build it” theory collapses of its own weight. The argument seems to be society enabled this collection of wealth and therefore society has an unconditional claim to the entirety of the wealth. But of course, society “didn’t build that” either. So now we have to split ownership and figure out how much society is owed.

And society is owed very little because Elon has already made society massively better off than simply 1.3 trillion. Besides the large taxes he has already paid, he has brought along a ton of American workers paying them handsomely and making thousands of millionaires and giving a comfortable life to many not millionaires. Also he makes a really cool car that millions love. There is consumer surplus there.

The whole concept behind a market economy is the belief that businesses make the world on net better for all. Sure the business leader may reap individually the most rewards from a business but that doesn’t mean they reap the most rewards in the aggregate.

This tall poppy syndrome is death.

Yes, Musk benefited from a capitalist system. But so did literally everyone else. Nothing stopped you or your neighbor from doing what Musk did. The difference is he did it and you didn’t. And because of that, you want to punish him? Why are you envious?

He benefited way more though. He's using way more road capacity, he's drawing on the skills of people who've come through publicly funded education way more, he's causing way more waste to have be cleaned up by others, etc etc. How to calculate this I don't know but it seems like a reasonable part of an argument for progressive taxation based on just deserts.

I personally wouldn't make the argument this way, nor would envy be a part of my framing. I'd just say progressive taxation or a wealth tax is good when it maximises current and future wellbeing and leave it at that.

If the argument is “he used more and therefore he should pay more for his use,” then that leads not to progressive tax but to benefits based tax. Take road capacity. Charge tolls for road usage. That’s almost certainly less than Elon’s taxes.

Re public education, the whole concept is to build skills. People have gotten compensated for those skills. Those laborers pay taxes (as does Elon). Why would you think Elon has taken out more from the system of tax dollars directed to higher education as opposed to given more back? Indeed, isn’t it the opposite? The person who uses that education and becomes a Redditor owes society a lot of money. Someone who richly employs a bunch of college graduates doesn’t owe society anything.

Re waste — we can do sinking funds.

He's using way more road capacity, he's drawing on the skills of people who've come through publicly funded education way more, he's causing way more waste to have be cleaned up by others, etc etc.

As best as I can tell, we already have systems in place to tax people for their use of road capacity (gas taxes, tolls), skills of people who've come through publicly funded education (salary, and income tax thereof), waste cleanup (local taxes, as well as fees paid to private cleanup companies), etc. If these taxes are improperly set and there are negative externalities that he's imposing, those ought to be fixed to be properly set. Or if he's evading these taxes, then he ought to be sued to pay his fair share and also punished accordingly. Same goes for anyone, rich or poor. I don't know that these are the case for him.

This is why I believe that the sorts of wealth tax that I'm talking about must be supported by a basis of envy. Just deserts based on treating him like any other individual who participates in society isn't enough to get us there.

Like I say, I wouldn't base my own argument for a wealth tax on just deserts. I don't think you can do a good accounting of the benefits and externalities and opportunity costs of the different parts of government, over the course of decades, such that we can say: gas taxes and tolls cover roads, income tax covers education, etc. It's all interconnected, historical and hard to put numbers on. Tax levels are set by politics and pragmatism, not an accounting of fairness. (To be clear I think this cuts both ways, I don't know if we can really math that Elon Musk gets exactly what he deserves, or if he gets too much either.)

This is why I believe that the sorts of wealth tax that I'm talking about must be supported by a basis of envy. Just deserts based on treating him like any other individual who participates in society isn't enough to get us there.

Are these really the only options? What about wealth taxes as a good way to increase the wellbeing and opportunities of more people? Taking money from those who can easily afford it and using it to improve the lot of others in order to maximise utils or hedons or human flourishing, or whatever? It's not envy if someone actually believes wealth taxes are better for the wider populace, and it's uncharitable to believe all wealth tax supporters are privately just in it for the satisfaction of seeing the rich taken down a peg.

Are these really the only options? What about wealth taxes as a good way to increase the wellbeing and opportunities of more people? Taking money from those who can easily afford it and using it to improve the lot of others in order to maximise utils or hedons or human flourishing, or whatever? It's not envy if someone actually believes wealth taxes are better for the wider populace, and it's uncharitable to believe all wealth tax supporters are privately just in it for the satisfaction of seeing the rich taken down a peg.

I'm skeptical that it's possible to credibly make such an argument, at least for wealth taxes of the level we're talking about. Perhaps it's possible to correctly make such an argument, but given empirical reality, it's hard to see how someone would have the credibility to judge it as correct. It's not a matter of private beliefs, it's a matter of motivated reasoning.

I find this unreasonable. Yes, Musk benefited from a capitalist system. But so did literally everyone else. Nothing stopped you or your neighbor from doing what Musk did. The difference is he did it and you didn’t. And because of that, you want to punish him? Why are you envious?

The lack of ingenuity, grit, and risk tolerance stopped anyone who's not Musk from doing what Musk did. That's why so many are envious of him, as best as I can tell; he did what he did and others didn't, because he had these qualities that others don't. It's reasonable to argue that one ought not be punished for having greater ingenuity, grit risk tolerance, etc. but I also think it's reasonable to argue that the envy of a substantial part of the population ought to be addressed by punishing such a person. We already do some of the latter with the progressive income tax.

That’s literally punishing success.

AlwaysHasBeen.jpg

Humans are a jealous species. It's not right or wrong, it simply is.

You get less of what you punish

Feature, not a bug.

So I'm left wondering what sort of wealth tax could be implemented, in a way that doesn't destroy too much value while still being meaningful enough to appease the envious

It's an interesting problem, and I'm convinced this is going to be one of the largest issues facing society in the years to come, but at least I cannot think of any easy solution.

On the first hand, I broadly believe that wealth inequality is not a problem in and of itself - it makes no particular difference that someone else has much more than I do, as long as I have what I want and need myself. To an extent where it is a problem, in that wealth allows for the concentration of power, I've always thought that it was merely a symptom of the immutable fact that increasing technological progress allows for the increased centralization of power. If there was someone capable of expropriating the wealth of the billionaires, it merely means that that someone else has expropriated their power - the government can exert much more control than any private capitalist ever could.

On the second hand, empirically the median person really does not like experiencing wealth inequality, especially in the modern social-media driven age of envy. It's easy enough to say that if everyone was an enlightened buddha, then wealth inequality would not be a problem, but it's much like saying that resource allocation would be easy if everyone simply got along - simply impossible in practice. If it were possible to burn value in order to satisfy people's lizard hindbrains and improve social cohesion, I'm becoming more convinced that this would be a good thing, even if it were not optimal in terms of resource allocation.

On the third hand, it really does not seem like there's any level of reduced inequality that would actually satisfy the median person without ruinous consequences. Complaining about billionaires and trillionaires is a useful Schelling point, but in practice I do not see that "mere" centimillionaires worth 999 million are any less targets of jealousy - in practice most people are just envious of anyone with more than them, while believing that they're all fully deserving of what they themselves have. As others write below, there are many countries which already implement wealth taxes and/or have lower Gini indices than the US, but it doesn't seem to have meaningfully reduced the inherent envy that people feel towards those with more than them at all.

If it were possible to burn value in order to satisfy people's lizard hindbrains and improve social cohesion, I'm becoming more convinced that this would be a good thing, even if it were not optimal in terms of resource allocation.

I feel like there's an empathy gap going both directions left-and-right with this kind of thing. In terms of economic value, the left is fine with doing just that (though arguably the left isn't fine with being fine with just that - hence why a lot of the beliefs are dressed up and obfuscated as not being fundamentally about envy), destroying value for the purpose of increasing equality. And in terms of criminal punishments, the right seems to be fine with slaking the bloodthirst of those who want to impose suffering on violent criminals, even possibly at the price of more suffering than necessary to innocents, as well as less optimal resource allocation. I don't think we know exactly why, but irrationally or pre-rationally, people really really commonly really really hate inequality and really really love imposing suffering on violent criminals. It seems reasonable that society be structured to satisfy these preferences to some extent, as one of many competing priorities that any functioning society must balance. Of course, the devil's in the details in how much we prioritize these preferences over others.

You write this as if the concept of a wealth tax is completely unexplored territory, but in reality many countries already have a wealth tax, including most European countries. They simply assess your net worth for tax purposes on the basis of the assets you own: bank balance, stocks, bonds, property, etc. For private companies it's based on the book value of the company according to the latest financial statement. For shares of a publicly traded company it's simply the stock price at December 31 multiplied by the number of shares you owned.

So if the US wanted to create a wealth tax, it's not that hard to figure out. You can just copy the tax law from e.g. Switzerland.

If the government were to take shares away from Musk to take partial ownership of his companies

Ah, I see there's a misunderstanding here on what it means to tax a person's wealth. The government does not want to be paid in shares. They want to be paid in cash, where the amount is a percentage of your net worth. How you raise the money to pay your tax bill is entirely up to you. You can use other sources of income, borrow against your shares, sell stock, whatever.

In theory this can be tricky for people who are cash poor, own a lot of stock, but are restricted from selling it (e.g. immediately after an IPO) but in practice this is not a problem. All billionaires in America have figured out how to buy mansions, yachts and private jets while avoiding anything that resembles a taxable event. I'm sure they can figure out how to raise cash to pay their tax bill, too.

"Worst" case companies will start paying dividends and real CEO salaries again. They only stopped doing that because it allows shareholders and CEOs to dodge taxes under the American tax regime (since dividend and salary payments are taxed as income, while capital gains are only taxed when they are realized, which can be deferred indefinitely). If that trend is reversed nothing of value is lost.

You write this as if the concept of a wealth tax is completely unexplored territory, but in reality many countries already have a wealth tax, including most European countries. They simply assess your net worth for tax purposes on the basis of the assets you own: bank balance, stocks, bonds, property, etc. For private companies it's based on the book value of the company according to the latest financial statement. For shares of a publicly traded company it's simply the stock price at December 31 multiplied by the number of shares you owned.

To aid in this process and so people don't have to dilute their ownership stake how about we mandate that all companies pay out a dividend based on something semi-reliably related to their value, like their net profits so that the shareholders can then just forward that onto the government. Actually how about we save some steps and just have that dividend go straight to the government coffers so the investor doesn't have to do anything at all. Because this impacts corporations and brings income to the government I recommend we call this a corporate income tax.

All billionaires in America have figured out how to buy mansions, yachts and private jets while avoiding anything that resembles a taxable event. I'm sure they can figure out how to raise cash to pay their tax bill, too.

Ironically Musk doesn't have any of those things.

First, many Europeans abandoned wealth taxes because they had a bunch of practical issues with less money raised than expected.

Second, as a shareholder would you prefer the Musk path where he basically doesn’t get paid unless he hits crazy milestones or he gets paid a much smaller amount regardless of milestones?

Third, a wealth tax as described is likely unconstitutional.

a wealth tax as described is likely unconstitutional

Wasn't an income tax also originally unconstitutional?

Yes and they passed an amendment to make it constitutional. Good luck getting the wealth tax amendment passed.

So if the US wanted to create a wealth tax, it's not that hard to figure out. You can just copy the tax law from e.g. Switzerland.

I wasn't familiar with wealth taxes in Europe, so thanks for informing me! My very basic research showed that Switzerland has different rates based on "canton," which seems to be the equivalent of US states, and the highest rate seems to be in Geneva, at 0.38% for the top bracket. Perhaps Switzerland is an outlier, but I doubt that anything on the order of 0.38% would be meaningful enough to register for the people who call for a wealth tax in the USA based on their envy for billionaires+. Perhaps 38% would be enough, though I was thinking >50% as a symbolic gesture that it takes a majority above a certain point. If the notion is that simply existing as a billionaire - and certainly as a trillionaire - is intrinsically unethical in a world with poverty (i.e. our world), then the tax certainly must be big enough to actually turn real billionaires into merely hectomillionaires. And 0.38% ain't gonna cut it for that.

That said, perhaps it could start at 0.38% and then through a ratcheting process go up to 99.999% over the years through small individual changes, no single one of which is all that extreme? It'd take a lot of sessions of Congress to do that, though, and in the long run we're all dead, so probably not a great idea, though, given that the Sanderses and Warrens of the world likely want to see it before they die.

Ah, I see there's a misunderstanding here on what it means to tax a person's wealth. The government does not want to be paid in shares. They want to be paid in cash, where the amount is a percentage of your net worth. How you raise the money to pay your tax bill is entirely up to you. You can use other sources of income, borrow against your shares, sell stock, whatever.

In theory this can be tricky for people who are cash poor, own a lot of stock, but are restricted from selling it (e.g. immediately after an IPO) but in practice this is not a problem. All billionaires in America have figured out how to buy mansions, yachts and private jets while avoiding anything that resembles a taxable event. I'm sure they can figure out how to raise cash to pay their tax bill, too.

No, there was no misunderstanding on my part. Of course, the default way to pay a tax is via cash, but I had already pointed out the value-destruction nature of having to sell stock made it an unattractive option. Again, the amount of tax we're talking about is significantly more than the amount these guys spend on mansions, yachts, and private jets. I don't think there are many billionaires out there right now who would no longer be billionaires if you took away their luxury goods; most of them - certainly most of the richest of them - have their money tied in, again, productive assets. E.g. right now, Musk is worth something like $1.4 trillion, I think. If he had to pay a $400 billion tax bill, he would likely have to sell a heck of a lot of his stock in a way that also destroys a lot of value for a lot of people. If he had to pay a $1.399 trillion tax bill, I don't think that would actually be possible for him, mathematically, due to how his actions of starting to sell his stock would destroy the value of the remaining stock that he needs to sell to get that much cash.

the highest rate seems to be in Geneva, at 0.38% for the top bracket

It's a bit more complicated than just 0.38% because the tax rate is progressive, plus there is a municipal tax that is a percentage of the cantonal tax added on top (typically around 50%). I think you can get up to around 1% in the worst case, but it's mostly theoretical because in practice rich people move to a place where they get taxed less, unless they are either extremely principled or they really want to live in one of the major cities no matter the cost.

Perhaps 38% would be enough, though I was thinking >50% as a symbolic gesture that it takes a majority above a certain point.

The point is that these taxes are charged every year. 38% would be insanely high: in just 10 years you'd have lost >99% of your wealth. That's not reasonable.

By comparison, at a 0.5% rate you pay e.g. $5000 per million dollars in savings. Over 70 years, you'd lose 30%. If you have a top rate of 1%, then you lose 9,5% in 10 years, or 50% in 70 years. This strikes me as reasonable, especially since you can usually generate some return on your wealth too (the US stock market has yielded >10% on average in the past decade even compensating for inflation).

If the notion is that simply existing as a billionaire - and certainly as a trillionaire - is intrinsically unethical in a world with poverty (i.e. our world), then the tax certainly must be big enough to actually turn real billionaires into merely hectomillionaires.

I understand that there are some people who want that, but I don't think those are realistic proposals, in that you wouldn't be able to pass them into law even at the state level, and if you could, the main effect would be driving out billionaires and businesses, rather than generating a huge amount of tax revenue.

I'm rather more interested in proposals that:

  1. Have more than a snowball's chance in hell of being implemented.
  2. Wouldn't completely destroy the US economy.
  3. Increase government revenue by a significant amount.

If he had to pay a $400 billion tax bill, he would likely have to sell a heck of a lot of his stock in a way that also destroys a lot of value for a lot of people.

Right, it's impossible for Musk to raise $400 billion all at once, that's why the wealth tax should be a small annual percentage instead. Selling 1% of his shares each year wouldn't tank the stock price the way that selling 30% would. But you're still getting 10 billion a year out of him alone.

I don't buy the concern about Musk losing control of the company. Musk already uses his class B shares with 10x voting power to maintain >80% control with <50% of the shares. He can sell 75% of those shares and maintain majority control. Or use tricks like equity swaps to raise money without losing his shares. Or just make the company pay 1% dividend per year (though that requires it to become actually profitable). Plenty of ways to pay taxes while remaining both CEO and majority shareholder.

So given that Musk can stay in control and pay a hypothetical wealth tax, it's not clear to me what value you think is being destroyed by taxing wealthy people somewhat. Unless you say it's always better for billionaire to have a dollar than the government, on the basis that billionaire's investments are more beneficial to society than whatever the government wastes it's money on (healthcare, pensions, education, foodstamps, the military), but that's highly debatable.

I understand that there are some people who want that, but I don't think those are realistic proposals, in that you wouldn't be able to pass them into law even at the state level, and if you could, the main effect would be driving out billionaires and businesses, rather than generating a huge amount of tax revenue.

Okay, but you do understand that the entire point of my comment was to explore possible policies that would be in line with what those "some people" want, right? What you want seems reasonable enough, but what you want isn't the topic of discussion.

But that's not the point, the point is to take money away from really rich people.

Cynically, I think you're thinking about this all completely wrong, in that you are taking the words of the envious as you call them at face value. Ultimately, for these people, the point is not to take money from really rich people (ostensibly to help the poor), no, that is incidental; the point is to hurt really rich people. They are Marxists, and these are their eternal class enemies. As always, "to help the poor" is the cover story, many couldn't actually care less about the well being of those they claim to fight for beyond what they offer as a political tool in the realm of realpolitik. This is how democrats in Minnesota can get millions of dollars for "educating underprivileged children", clearly without giving a rat's ass whether it was actually used for this purpose.

There is no say-when point in $ where they will be appeased; a well reasoned new tax, a number of 0's off Elon's net worth, where they'll say "oh yeah that's actually fair, we're good". That point is not a dollar value or a percentage, it's the point where their social media fueled class bloodlust against the capitalist feels quenched; Elon can't just be a bit less wealthy on paper and that's it, Elon must suffer in some way. Be brought down a peg; humiliated, if need be. Any amount of money taken that still allows Elon his ability to exist as an influential public figure will not be enough. You're trying to apply a rational, economic solution to a religious problem. They aren't "too rich", they are infidels to Marxism, and must repent or be crushed.

Honestly, Elon and the rest's best bet would probably be to employ some kind of Br'er Rabbit strategy. I think the amount of humility required to allow the Twitter Marxists to even think they won is beyond them though.

You saw this in its purest form in Russia in 1918-20, when people rejoiced at seeing former industrialists starving, in pauper's rags. This was during Ayn Rand's teenage years and did a lot to form her world-outlook!

Elon and the rest's best bet would probably be to employ some kind of Br'er Rabbit strategy.

I kind of half wonder if that's what happened with the Twitter/X purchase... if I recall, The Internet (tm) was dead set against it until he tried backing out, and then there was gleeful rubbing of hands at him being "forced" to go through with the deal.

I agree that there is no such thing as appeasement for the each the rich types. There are enough marxists that I've met in real life that seem to want CEOs and the wealthy lined up against a wall and shot. Their idea of "compromise" is to simply confiscate all their wealth and imprison them for the rest of their lives in some Siberian equivalent work encampment. These people were joyous to hear about the United Health Care CEO being gunned down in the street. They were also joyous to hear that it had made other CEOs worried for their lives.

The only people like this that I have seen mellow out got married, had kids, and held down a good solid career for a decade. Which obviously has nothing to do with the policies they espoused, but it was never about policies in the first place. Its gripes about their life situation disguised as a policy gripe. And just like you can't reason someone out of position they didn't reason themselves into, you can't appease a life situation gripe with their claimed policy solution.

This jives with my personal experiences. Most of the serious marxists I know were overachieving students who underperformed in their early careers after school. The downwardly mobile upper middle class children of doctors and academics who somehow got stuck working respectable but unfulfilling jobs they think are beneath them. It's an incel-like frustration that the rules for life they internalized as children seem actively detrimental to their success in adulthood.

It seems like it's mostly driven by a hatred of inequality and a desire to collect one's pound of flesh.

More by a seething envy. It's really something watching people worth 10's of millions tantrum about Musk theoretically hitting a trillion.

A tax that could be implemented without actually destroying much value is requiring sufficiently large companies to employ worthies in well-paying sinecures. That is, presumably, the actual demand when you boil it down; much of the left side of the spectrum's representation is about how unfair it is that their degrees in fan fiction from a communist's ass don't automatically result in a high standard of living. Of course, that doesn't mean the median leftist believes this; most presumably are not the twitterati socialists who believe they should have a comfortably above median standard of living without doing any actual work, on the strength of their ideological purity(mostly expressed through degree-having). But the twitterati socialists are the representation to the public, and their enoblement would calm the rest of the leftists because they would no longer have an amplifier to their concerns.

Yeah but affirmative action and its beneficiaries indicate that the mindset of a lot of sinecure-receivers is more 'Why am I stuck at the lowly senior Vice President of Diversity role when I should be CEO. I'm great since the company rocket-boosted my ascent to where I have landed now' rather than 'Gee I wouldn't have been hired if I didn't have the diversity points, I should be grateful for getting a 500k/yr sinecure'.

Hm, arguably that's a function that certain employment laws and HR departments are already filling. I can't say I like the idea of companies being required to financially support one specific partisan ideology. But this does remind me of something I saw on Twitter the other day - which I don't know how true it is - that it was strange that modern billionaires didn't found universities like their equivalents from prior generations. I don't really see a workable way for the government to force them to do such a thing which wouldn't be far too corrupt to be worth it, though, since the idea that schools ought not be ideological indoctrination centers is, in itself, a politically controversial position. Same issues would exist for scholarships.

It isn't true. The most recent private secular accredited non-profit university is Minerva University, founded by the former CEO of Snapfish. There's also the University of Austin, co-founded by Palantir co-founder Joe Lonsdale, which is not accredited but is a candidate for accreditation; while the people who complain that billionaires don't found universities jeer at that one, jeering doesn't actually make it go away.

And of course there's a lot of schools, programs, buildings, etc at existing universities endowed by tech billionaires.

I suspect it's much more difficult, both because of regulation and because of market saturation, to found a worthwhile new university today than it was when Leland Stanford founded his.

I suspect it's much more difficult, both because of regulation and because of market saturation, to found a worthwhile new university today than it was when Leland Stanford founded his.

Yeah. You've got to plug into the already-rotten university system of peer review in order to get any significant research done, any sort of a major metro will likely absolutely mug you when it comes time to try and build a campus. Meanwhile in most Western countries the vast majority of 'new universities' are blatant visa mills.

Even before that, Monaghan cashed out to found Ave Maria. Plenty of billionaires embark on intellectual patronage.

I didn't say I liked it. I said it's the actual demand.

The ringleaders, though, are doing just fine -- Bernie has several houses and a net worth of about $3M, whereas Warren's net worth is estimated at $12M.

Bernie has several houses and a net worth of about $3M

He's also 84. Shockingly a lifetime of working and saving does eventually cause you to have substantial amounts of wealth. I think my 65 year old parents probably have about the same levels of net worth from a lifetime of dual-income working.

Average net worth is much less than $2M for any age. Median is even lower. Bernie is doing well, and Warren even better.

Bernie's money mostly comes not from his salary but from selling books to other commies. Warren's comes from book sales and also her and her husband's legal consulting fees.

Bernie never really worked—just was a gadfly in the senate

I mean if you want to make linguistic judgements on the "definition" of "work" its a free country. He collected a paycheck from being a senator, senatorial aid, whatever. And has done so for awhile. Assuming normal middle class habits around saving and spending, then at 84 I would expect a low 7 figure net worth. It probably also helps that he hasn't retired like most of his peers at 65 meaning he probably still has neutral-ish spending.

This is a level of pedantry that borders on obnoxious.

Which is upper-middle-class wealth in a country as rich as America. I don't think there is anything surprising about, or wrong with a successful politician being upper-middle-class.

Taking Warren's $12 million net worth estimate at face value, this website calculates her wealth as being in the 98.5th American percentile. I guess she can still reasonably claim to be fighting against "the 1%"

Donald Trump was (probably - it is hard to be sure given how much he lies about his financial status) a billionaire when he announced he was going to fight against elites on behalf of the common man. I find his claim about as plausible as Warren's, but the target audience eat it up in both cases.

FWIW, the anti-super-rich lefties I see have stopped talking about "the 1%" and now talk about "the billionaires" which is a much smaller group. Too many upper-middle-class lefties are worried about the leopards eating their faces, I suppose.

$12M is close to top 1% in wealth. $3M is 94th percentile. This is not the upper middle class.

Does this include her congressional pension?

"Close to, but not in, the top 1%" is precisely what upper middle class means.

Also, wealth tends to accumulate over time. So "upper middle class wealth" for a 76-year-old like Warren is a higher dollar amount than it would be for us.

With that kind of money you can draw $400K a year indefinitely. If you can make that kind of money passively, you're outright rich.

The only people who think that the upper class starts at 99% are people between 90%-99% who don't want to face the reality that they aren't middle class. "No officer, you don't understand, I'm only at 98.5%ile."

British usage assumes a pyramidal society, so there are more working class people than middle-class people and more lower middle than upper middle. To be considered upper class you traditionally needed to have a social network that includes hereditary peers, so upper-middle class stretches a long way up the income scale. A big 4/MBB/Magic Circle partner would definitely be considered upper-middle class, not upper (unless they were upper for family reasons).

In America, everyone except the underclass and the super-rich considers themselves middle-class. Americans don't generally use the term upper-middle class, but the term middle-class is used by both the people themselves and politicians appealing them to cover everyone from a plumber to a HENRY, and upper-middle class refers to the top echelon of that huge group. Paul Fussell's Class (published 1982 so somewhat out of date, but I am not aware of any book since which attempted to define upper-middle class in the US context) gives doctors, lawyers, small town real estate developers and middle-to-VP level managers at large companies as paradigmatically upper-middle class. Warren's $12 million accumulated over a successful career would be well within the achievable range for those professions, though probably above average.

The only time I have seen the words upper-middle class used seriously in an American political context was to describe the people on incomes of $250k-400k who might or might not benefit from Obama's partial extension of the Bush tax cuts, which is also close to but not in the top 1% and given the rising stock market since the Obama era seems consistent with a net worth reaching $3-12 million today.

The algorithm I use that works in any rich country:

  • If you consider doctors the help, you are upper class
  • If you consider doctors peers, you are upper-middle class
  • If you consider doctors to be social superiors, you are middle-middle or below.
More comments

I think a major component of this is borrowing against the shares. Musk doesn't have a liquid net worth of a trillion dollars. But he is borrowing against his shares in order to get liquid capital. Somebody correct me if I am wrong, but I believe this isn't taxed. I think the simple answer is that if you borrow against unrealized capital you should be taxed at some value of that capital. You are using that capital with a loophole to get cash. This is probably the cleaner solution to the stupid tax on unrealized gains that the Dems proposed last election season as it really only hits people with large capital assets and limited liquidity, not the average homeowner or stock bro when their shares/homes appreciate. Whether or not this is a fair policy is probably open to interpretation and not something I have made my mind up on. I'm sure people in the comments can tell me why this is a bad policy economically...

What if you borrow against your home to finance an improvement?

To me, make capital gains tax rate at 10% and you eliminate these silly games whilst probably raising revenue.

This isn't a loophole. There is a loophole here, but it's not that loans aren't taxed; loans aren't income. Under your proposal, the same money is taxed twice, as @The_Nybbler says: once when a loan is taken out against it and a second time when the shares are sold to pay back the loan. Loans just defer the tax burden -- defer and increase it, since you have to pay taxes on the shares you sell to pay back the interest too. And while the rates on these loans are better than you or I could get, they're much more than what the government pays out on treasuries; they should be happy to wait, given the rate is higher than their own discount rate.

... But there is a reason rich people do this: cost basis resets on inheritance. This is the actual loophole; just defer capital gains until you die, then your heirs can sell your shares with no capital gains to pay off your creditors and start the cycle over again. (They do have to pay estate tax, at least for the ultra-wealthy class we're talking about, but it's better to dodge one of the two than to dodge neither.)

At one point there was a credible argument that the heirs might not be able to figure out the true cost basis, but I doubt that's very often the case today. I don't think there's any other serious defense of the practice. If you want to remove loopholes, this is the very first place to look.

(That said, I don't think your proposal is a terrible compromise, so long as the tax paid on the borrowed money can be used as a credit against future capital gains. I'd be for it if I thought it would actually satisfy the eat-the-rich crowd, which I doubt.)

since you have to pay taxes on the shares you sell to pay back the interest too.

My understanding is that yes technically, but no basically. As long as your shares increase in value it reduces the loan-to-value ratio, and at some point you use the difference to take out a new loan to pay off the old one with some interest grace period. This very much requires the stock assets to keep going up, which doesn't always happen. But it has happened to enough rich folks that its noticeable.

It's as you pointed out probably not a real loophole, but I think to many people it feels like a loophole. I think the deferring part of it feels like a way to avoid paying taxes while still living large. I would interested in seeing how much of a given UHNW-individuals income comes from this sort of personal loan mechanism before really making a judgement.

I'd be for it if I thought it would actually satisfy the eat-the-rich crowd, which I doubt.

I also doubt because it's envy driven tax policy. It is however I think a fig leaf towards the less unstable set of eat-the-rich crowd. I think even a set of moderates/center-lefts/center-rights are being persuaded by the eat-the-rich-rhetoric around the growing wealth inequality in the US. Doing something to cut down on it is probably going to be a requirement at some point soon.

My understanding is that yes technically, but no basically. As long as your shares increase in value it reduces the loan-to-value ratio, and at some point you use the difference to take out a new loan to pay off the old one with some interest grace period. This very much requires the stock assets to keep going up, which doesn't always happen. But it has happened to enough rich folks that its noticeable.

Yeah, so two separate things going on here: first, yes, the stock might appreciate faster than the interest... but it also might not. (You already understand this, clearly, but just to make it explicit.) Putting aside the loophole, this is really equivalent to taking out a loan to buy stock in a single company which is also your employer, which no sane financial advisor will tell you to do. From low to high (hopefully): there's a theoretical guaranteed safe rate of return (which is not literally the rate on treasury bonds, but it's close enough), then there's the rate the bank will offer you a loan at (since if they were only getting treasury returns, they'd just buy treasuries), then there's return from a well-diversified stock portfolio, and then there's the return from your controlling interest in a single company which:

  1. Is the source of all of your wealth
  2. Might tank in value if you screw up, contract a serious disease, have a public scandal, decide to quit or just sell a lot of stock, etc. (which in turn might cause a death spiral when your creditors force a sale)
  3. Is the only reason people take you seriously in the business world (e.g. if you screw it up, no one's hiring you at anything remotely like your previous compensation)

The last has a substantial risk premium because it's a very substantial risk. But of course the people for whom this doesn't work out aren't on any lists of the world's richest people, so we don't talk about them.

Second: the government can borrow at the treasury rate. If they can (effectively) loan you money at the higher bank rate (which is how the math works out), they'll do so happily, issue more treasuries to cover the temporary shortfall, and pocket the difference in rates. They're not impatiently waiting for you to finally stop deferring your tax burden and pay the whole bill, they're coming out ahead every day this state of affairs continues (until you die and the principal vanishes due to the cost basis step-up).

(The point about deferred interest is more potentially problematic, but it still would eventually get paid if not for the step-up.)

It's as you pointed out probably not a real loophole, but I think to many people it feels like a loophole. I think the deferring part of it feels like a way to avoid paying taxes while still living large. I would interested in seeing how much of a given UHNW-individuals income comes from this sort of personal loan mechanism before really making a judgement.

Well, it might or might not be a large portion of their income, but I don't think that's really the relevant factor here. The real problem (in terms of satisfying populists) is that:

  1. The nominal net worth of these people is vastly exaggerated: there is no set of actions Elon Musk could take in the near future that would result in a bank account balance with thirteen digits. The market price of a share is the most any buyer is willing to pay, and they only want to buy so many shares at that price. Dump a huge quantity on the market and you're not getting anything like that in total. Worse, if the owner and founder tries to divest, everyone's going to wonder what he knows that we don't.
  2. UHNW people just don't spend the vast majority of their wealth on consumption. You can spend a million dollars, easy. You can spend a hundred million. A billion is a serious challenge and a hundred billion is flatly impossible. You can live as large as you like, pack your private jet fleet with all the hookers and blow it can fit and fly it to a different tropical island everyday and never put a dent in that kind of money. But actually, most of these people don't even do that much. They're mostly workaholics -- that's how they found wildly successful businesses. They leave the vast, vast majority of their wealth right where it is, in the business that created it. Which is exactly where we want it to be, serving a productive purpose. This is the real reason consumption taxes are 'regressive': relative to wealth, rich people consume a tiny fraction as much.

But then populists compare the bullshit (high) net worth figures to the bullshit (low) tax figures and get mad about it. Taxing savings is a terrible idea -- if you tax something, you get less of it, and capital is the main driver of economic growth -- but taxing consumption will never give a satisfactory number.

I also doubt because it's envy driven tax policy. It is however I think a fig leaf towards the less unstable set of eat-the-rich crowd. I think even a set of moderates/center-lefts/center-rights are being persuaded by the eat-the-rich-rhetoric around the growing wealth inequality in the US. Doing something to cut down on it is probably going to be a requirement at some point soon.

Yeah, possibly. I don't have a good answer for this problem. I do think we should fix the cost basis step-up issue, but that's probably too complicated to satisfy the (large and growing number of) people who get very angry about this subject.

That seems really reasonable to me, but also, being ignorant of the actual reality, I have to wonder just how much the Musks of the world are borrowing against their assets, and if that's enough to make a difference. Surely they're not borrowing anywhere near their total net worth, but rather some amount much less than the total expected appreciation of their assets (so that they can actually pay back the debts while also having more left over to actually grow wealthier)?

Consumption taxes are generally considered the best taxes, but they are pretty damn regressive. This sounds... really good from an efficiency standpoint, is appropriately targeted on the wealthy (though we need some way to exclude middle class HELOCs) and seems much harder to game than a consumption tax too. Go run for office.

though we need some way to exclude middle class HELOCs

Only apply it above a given net worth that even very lucky and geographically well situated middle class people will not reach.

Go run for office.

I would consider it- I'd make a good crank candidate- but I suspect the background checking would result in this very forum shutting down, and besides, it's incredibly expensive.

I would consider it

Stolen valor! Get your own presidential run-viable topic!

  • Our society doesn't have a viable alternative to alcohol, so whiskey appreciation classes must be required to graduate from high school
  • Issue multiple currencies and let the market decide whether they want the gold backed money, the fiat money, the commodity basket backed money, the crypto...
  • Politicians(this includes senators or higher) can fire any bureaucrat they want- but it will be replaced by prison labor, randomly selected from federal inmates.
  • Racism is caused by angry confederate ghosts and placating the war dead through gifts of tobacco, sweet tea, and barbecue can bring Americans together across racial lines.
  • Soccer isn't popular enough in America. We're introducing tackling, and erecting goalposts above the goal to try to get a header through for double points.
  • Every town holds an election for a single individual who has the power to forcibly remove tattoos on sight.
  • States have the option of opting out entirely from federal income taxes- on the condition that they make up the lost revenue in whole.
  • Cabinet selected randomly by the selective service system.

Politicians(this includes senators or higher) can fire any bureaucrat they want- but it will be replaced by prison labor, randomly selected from federal inmates.

I like this one solely for the interesting incentive structure it could create where prospective political operatives deliberately risk sending themselves to prison and then bribe during the selection.

Cabinet selected randomly by the selective service system.

Only if we survey everyone who would want to as a Top Secret poll and then exclude them from the selection process. I'd rig an election for this idea.

yes HELOCs seem to be the corner-case that presents a problem, and unfortunately any carve out there is just likely to be repealed later down the line. The government loves another way to get free money. I think the easy answer is to tie to just capital gains based collateral, not property.

Go run for office

Ewww. Probably says something about me that I find the idea of being a politician relegated to the narcissistic and sociopathic.

HELOCs are a bullet I am willing to swallow. Tax-free consumption out of unrealised capital gains on primary residences is the same mischief as tax-free consumption out of unrealised capital gains on founders' stock, and causes the same social problems in a more distributed way. Protect the middle class with a $100,000 lifetime exemption.

Tax-free consumption out of unrealised capital gains on primary residences is the same mischief as tax-free consumption out of unrealised capital gains on founders' stock, and causes the same social problems in a more distributed way.

I'm not sure how you distinguish a concentrated zero from a distributed one.

Somebody correct me if I am wrong, but I believe this isn't taxed.

Such loans involve interest payments and eventually result in consumption, which is usually taxed. Paging @DuplexFields to shill the Fairtax which might be a better approach to consumption taxation.

Right "eventually" but this is more like taxing capital gains. Its a loophole designed to get around realizing the assets and thus needing to pay the capital gains taxes, but still getting liquidity. We do tax capital gains even if that "eventually" also results in consumption. This is just fixing a current loophole. And believe me if Fairtax or LVT was on the board, I'm in agreement. However, unlike other libertarian-adjacent folks though, I live in reality...

So you borrow money, you're taxed on the money borrowed, and then when you make money to pay it back, that gets taxed too? Maybe banks should be taxed on the value of their deposits too.

Uhhh... I had to look this up but you are not taxed on a personal loan, the IRS treats it as debt not income. So saying that you are taxed on the money borrowed is incorrect.

Not now. But that's what your proposal is.

My proposal is a tax on a collateralized personal loan as a means to avoid paying taxes on realized capital gains. I think thats a bit different than taxing a personal loan. Philosophically its about using your high net worth to unfairly secure taxation solutions that allow you to still appreciate your wealth without being required to pay for it. This tactic is not available for the vast majority of people on account of not having 100s of millions in unrealized capital gains.

then when you make money to pay it back

The neat part is actually the stock can appreciate and reduce the leveraged burden allowing you to take additional lines of credit to pay your existing lines of credit. If I understand the process somewhat, you are never really called to pay the loan back unless the stock depreciates greatly in value and the bank views you as unreliable enough to call the loan in.

Maybe banks should be taxed on the value of their deposits too.

Feels like a strawman.

It’s called a margin loan. If you aren’t super poor, you can mortgage against your stocks.

This tactic is not available for the vast majority of people on account of not having 100s of millions in unrealized capital gains.

Have you never heard of a reverse mortgage?

A HELOC is the more comparable financial equivalence. Reverse Mortgages are only available to 62+ year olds, and operate differently than a HELOC or SBLOC. While we are definitely approaching gerontocracy with a large number of boomers and X-ers with large home values, I don't think many have homes valued at 100s of millions of dollars.

Designing a working country is engineering, not philosophy. What is important for the policies is to work, not be coherent, make sense or be derived from deep ideological principles.

If a blue collar worker pays effective tax rate of x percent, then it is ok to make the upper echelons of society pay at least x.

Designing a working country is engineering, not philosophy.

No, this thread started by talking about how it was a 'great injustice' that a trillionaire existed. That's already out of the realm of engineering; you don't get to switch now and ignore 'philosophical' objections.

If a blue collar worker pays effective tax rate of x percent, then it is ok to make the upper echelons of society pay at least x.

This, too, is outside the realm of engineering. It might be "engineering" to determine what Musk's effective tax rate IS, but in practice it will be entirely dependent on assumptions made which are outside that realm.

No, this thread started by talking about how it was a 'great injustice' that a trillionaire existed. That's already out of the realm of engineering; you don't get to switch now and ignore 'philosophical' objections.

Identifying the problem is philosophy; figuring out how to fix it is engineering.

Yes, but we don't agree on the identification, and thus we're firmly in the realm of philosphy.

Internet = platform moat. Physical world largely = no moat so profits are temporary. Good investors do not invest in Elon style businesses they want to find firms that will develop effectively toll road monopolies that have safe profits.

Elon himself is a moat. You need to maintain a huge tech capability edge to maintain profits in the physical world.

Sure except there are a lot of companies in the most valuable in the world that are real world makers. Wal mart is worth about a trillion.

Sure. Exceptions that prove the rule on what works. Wal-Mart was essentially founded in 1969. Apple is 4x+ the value and it’s modern phone company business was essentially founded in Nov ‘2001 with the IPod(computer business was basically bankrupt).

I don’t think the computer business was bankrupt. The iMac saved it.

It honestly doesn't seem like internet companies have good moat options anymore. A platform moat exists for all the current platforms. Creating a new platform moat usually means you need to take space from some of the existing platform. Alphabet seems to attempt to make a new platform every time they get a chance. They suck at it and abandon the ones that fail pretty quickly, but it is guaranteed minimum competition. Anything social media related is likely to be bought up by facebook. Anything shopping related is likely to be bought up by amazon (or at least have them move in on your space). Chat and video platforms both had to compete with microsoft. AIs have zero moat, with people happy to switch between them and use whichever is cheapest or best. They almost have an anti-moat, because quite a few AIs degrade in quality as the context window increases. Since the business model is tokens, consumers are better off spreading their token usage as far and wide as possible.

If AI gets better at helping programming projects, then the cost to copy other successful software platforms goes down. Which further decreases the moat software related incumbents.

And don't forget real world things can have moats too! North America has at least two moats that aren't going away anytime soon, the Atlantic and Pacific. There have been lots of court battles over Trump's tariffs, but they might become part of the republican platform in the future. That might only stop foreign competitors, but there is a real difficulty in spinning up brand new manufacturing areas. A much higher difficulty then spinning up a new internet business company.

Unfortunately, most of SpaceX's valuation is from their investments in datacenters (renting compute to Anthropic and others) rather than in their rocket and satellite internet business. It would have been a no-brainer buy for me if the bulk of their valuation was still coming from rockets and Starlink.

If this is going to inspire copycats, it will sadly inspire a bunch of datacenter REIT copycats as opposed to space and satellite copycats.

most of SpaceX's valuation is from its investments in datacenters (renting compute to Anthropic and others) rather than from its rocket and satellite internet business

Source? Numbers from the prospectus:

SegmentRevenue (G$/a)
Space (SpaceX proper)4.1
Connectivity (Starlink)11.4
AI (xAI)3.2
Total18.7
Item of property, plant, and equipmentValue (G$)
Servers and networking equipment22.7
Satellites11.9
Machinery and equipment6.3
Data-center infrastructure3.0
Launch sites2.4
Land, buildings, and improvements1.9
Flight-vehicle hardware1.7
Leasehold improvements0.8
Construction in progress4.6
Subtotal55.3
Depreciation−12.7
Total42.6

@MartianNight

SpaceX's IPO was based on their claim of a $28.5 trillion total addressable market (TAM). They claim that $26.5 trillion of that TAM is AI, or about 93%.

https://fortune.com/2026/05/20/spacex-ipo-filing-s1-total-addressable-market-make-life-multiplanetary/

Based on a market cap of 2.5 trillion and 18.7 billion/year revenue, SpaceX has an EV/R of around 135. (For reference, an EV/R of 3.57 is typical for aerospace companies according to the first source I could find.)

Clearly the valuation is almost entirely speculative rather than based on current fundamentals. Of the three segments, it seems like the AI branch has the highest growth potential.

Here's another random article: Top analyst: 71% of SpaceX’s $2 trillion value rests on AI.. Of course, that's also just an (expert) opinion, but the fundamental argument seems sound.

Why would you pay >100x revenue for the space company when they already cornered half the market? Starlink already has over 10 million users; how much bigger can that number realistically get when most people will only use satellite internet as a last resort, when fixed and mobile networks aren't available? The only part that doesn't have an obvious ceiling like that is xAI.

I think you aren’t being imaginative enough re Starlink.

  1. First you have airlines, remote worksites, cruises, and other uses. Those prices can increase over time once customers get used to and thus demand the good.

  2. You have areas without broadbrand. In the U.S., this is rural areas. But worldwide, it is a lot larger. Sure this market may not be the most lucrative but with a large enough vol becoming the ISP for the entire third world could be valuable.

I'm not sure what your definition of fake internet shit is, but obviously a large (majority?) share of the SpaceX valuation is xAI; it's not all about rockets and space. And xAI is essentially a copy-cat of OpenAI/Anthropic/the other tech companies chasing AI.

As for the space operations of SpaceX, it's not really clear to me what kind of innovation you expect here. In 2025, SpaceX already launched more rockets than the rest of the world combined. They've established a reputation as being cost effective and very reliable, which is great but also means it's hard to drive costs down further or become even more reliable. From that perspective, it seems like it's practically impossible to significantly grow their core operations.

The whole point of starship is to radically reduce the cost per ton of putting things into space. You are acting like the Falcon Heavy is the end result.

As for the space operations of SpaceX, it's not really clear to me what kind of innovation you expect here. In 2025, SpaceX already launched more rockets than the rest of the world combined. They've established a reputation as being cost effective and very reliable, which is great but also means it's hard to drive costs down further or become even more reliable.

They've achieved the cost reductions through partial reuse of rockets, the next step is full reuse via the Starship program, which (although estimates differ) is expected to driver cost down another order of magnitude. Starship has seen lots of R&D investment and appears to be close to deployment.

Eh... SpaceX has launched more rockets than the rest of the world in no small part by making the justification to do it, in addition to the ability -- SpaceX without StarLink gets into a really weird place that's at minimum a much smaller company. And now that they can do it, there's a lot of other potential: space-related buildouts have historically been a place clever ideas go to die because availability and reliability didn't exist, and now they're present.

A lot of the ideas won't be economically viable (ICB-concorde) or won't work for decades (asteroid mining). But it's a little strange that there's no more potential. I admit I don't know the expectation rules and timelines that the filing here would need to use, though, which may explain that.

Even their satellites are mostly just used for fake internet shit!

Leaving aside the fairness of "fake internet shit" as a concept, communications infrastructure is extremely real.

Well Ukraine is worth at least a couple of trillion dollars and spacex is one of the main reason it exists as a country today.

Is it? Ukraine is as poor as India, with far worse demographics, and it's also a bombed out wreck at the moment.

The Ukrainian drone industry is producing roughly the same amount of usable military power as the c. 80 billion dollars a year Russian defence budget. That is worth a trillion dollars or so on standard DCF assumptions.

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