This weekly roundup thread is intended for all culture war posts. 'Culture war' is vaguely defined, but it basically means controversial issues that fall along set tribal lines. Arguments over culture war issues generate a lot of heat and little light, and few deeply entrenched people ever change their minds. This thread is for voicing opinions and analyzing the state of the discussion while trying to optimize for light over heat.
Optimistically, we think that engaging with people you disagree with is worth your time, and so is being nice! Pessimistically, there are many dynamics that can lead discussions on Culture War topics to become unproductive. There's a human tendency to divide along tribal lines, praising your ingroup and vilifying your outgroup - and if you think you find it easy to criticize your ingroup, then it may be that your outgroup is not who you think it is. Extremists with opposing positions can feed off each other, highlighting each other's worst points to justify their own angry rhetoric, which becomes in turn a new example of bad behavior for the other side to highlight.
We would like to avoid these negative dynamics. Accordingly, we ask that you do not use this thread for waging the Culture War. Examples of waging the Culture War:
-
Shaming.
-
Attempting to 'build consensus' or enforce ideological conformity.
-
Making sweeping generalizations to vilify a group you dislike.
-
Recruiting for a cause.
-
Posting links that could be summarized as 'Boo outgroup!' Basically, if your content is 'Can you believe what Those People did this week?' then you should either refrain from posting, or do some very patient work to contextualize and/or steel-man the relevant viewpoint.
In general, you should argue to understand, not to win. This thread is not territory to be claimed by one group or another; indeed, the aim is to have many different viewpoints represented here. Thus, we also ask that you follow some guidelines:
-
Speak plainly. Avoid sarcasm and mockery. When disagreeing with someone, state your objections explicitly.
-
Be as precise and charitable as you can. Don't paraphrase unflatteringly.
-
Don't imply that someone said something they did not say, even if you think it follows from what they said.
-
Write like everyone is reading and you want them to be included in the discussion.
On an ad hoc basis, the mods will try to compile a list of the best posts/comments from the previous week, posted in Quality Contribution threads and archived at /r/TheThread. You may nominate a comment for this list by clicking on 'report' at the bottom of the post and typing 'Actually a quality contribution' as the report reason.
Jump in the discussion.
No email address required.
Notes -
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.
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).
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.
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.
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.
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.
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.
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).
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:
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.
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.
More options
Context Copy link
More options
Context Copy link
More options
Context Copy link
More options
Context Copy link
More options
Context Copy link
More options
Context Copy link