At this moment, some of world’s wealthiest people are gathering at a resort in Davos, Switzerland where they decide how best to rule the world because it is an established fact that having a lot of money makes you incredibly smart about pretty much everything. I am a bit surprised why they do not also solve the problems of dark matter, the origins of life, and human consciousness while they are at it. A few panel discussions among corporate CEOs should be sufficient. Many political leaders from around the world also attend this obscene spectacle because they like to pretend that they have some role in running the world and are not just puppets of the oligarchy.
It is a measure of how much these people fear a genuine populist revolt (not the reactionary populism of Trump in the US or Bolsonaro in Brazil or Duterte in the Philippines) that Alexandria Ocasio-Cortez’s proposal for making the marginal tax rate 70% for incomes over $10 million was a major topic of discussion.
When billionaire chief executive Michael Dell was asked on Wednesday whether he would support a proposal put forth by Rep. Alexandria Ocasio-Cortez (D-N.Y.) to tax millionaires at a 70 percent tax rate on income exceeding $10 million, the audience for a Davos panel about tech and global inequality burst into laughter before he could answer.
Dell, founder and head of Dell Technologies, first responded by saying he’s more comfortable allocating significant resources through his private foundation than handing over that money to the government. But then he answered more directly.
“No, I am not supportive of that, and I don’t think it would help the growth of the U.S. economy,” he said in response to questions from The Washington Post.
When Dell was asked to explain why he thinks that, he said, “Name a country where that’s worked — ever.”
Co-panelist and MIT professor Erik Brynjolfsson jumped in to offer an answer: “the United States.”
“I don’t have a strong opinion on that proposal. The devil is in the details,” Brynjolfsson, the director of the Massachusetts Institute of Technology’s Initiative on the Digital Economy, said. “But there is actually a lot of economics that suggests that it’s not necessarily going to hurt growth, and I think we have to examine it more closely.”
Among several business leaders at the World Economic Forum, the debate about higher taxes for the super-rich seems already closed.
Ocasio-Cortez has said that America’s highest earners need to pay their fair share, but members of the elite group in Davos expressed alarm over her proposal, arguing that her plan is misguided and would harm investment and innovation.
“Seventy percent taxes definitely bothers me,” said Scott Minerd, chief investment officer of Guggenheim Partners. “It affects the people that have the most money, and they will start allocating capital in a way that is less efficient and will bring down productivity.”
Ah yes, making the wealthy pay higher taxes will “bring down productivity” and would “harm investment and innovation”. How exactly will that happen? That is never spelled out. What lower taxes have larger resulted in is not increased investment in companies but in corporate stock buybacks that have increased the wealth of stockholders who have then salted it away in tax havens or spent it on ostentation. Is that supposed to be productive?
But I am encouraged that the ideas of a 29-year old congresswoman are making the oligarchy nervous. My only quibble with her proposal is that the income level at which the 70% kicks in is too high. She should lower it from $10 million to (say) $1 million or less.
Shocker: wealthy people do not understand wealth.
As Epicurus pointed out; some people want to collect money (or power) so that they can insulate themselves from the vicissitudes of life. What they don’t understand is that other people will also want their money (or power) and now protecting their money (or power) becomes another of the vicissitudes of life. Checkmate!
The premise is that some entrepreneur sitting in their garage says, “I have a great idea! This is going to be bigger than Amazon.com! We’ll all get rich!” Then they pause, “But, wait. If I get rich, I’ll have to share my success with my workers, and pay higher taxes to the civilization that nurtures my success.” They sit back down and open a beer, “No way I’m gonna do THAT I’d rather remain a poor wanna-be in a garage than have to be wildly successful and share it.”
Next up: if we raise taxes on the rich, a lot of kids born of rich parents are going to start shooting themselves because they’d rather die than have to pay taxes.
Minerd from Guggenheim said taxes would cause capital to be spent less efficiently. But efficiency in economics is often taken as related to the velocity of money. And it is well-established that the velocity and impact of money are increased by sending funds to the non-rich, because the rich won’t immedately spend it on necessities. So Minerd is just spinning BS.
$10 million is too high, and 70% is too low. But it’s a damn good start that can be built off of in the future.
It may not help the growth of the US economy, but it sure as hell could help some of the have-nots if the money is allocated to (gasp!) social programs, and that would help their economic situation.
Minerd from Guggenheim said taxes would cause capital to be spent less efficiently
I heard an interesting point on a podcast yesterday (an economist on The Intercept) -- that was that govenment’s don’t actually collect money. When you pay your taxes, the money doesn’t go into some bank account with a great big number, somewhere. It’s effectively vanished. There’s debt-balance that the government keeps but the money doesn’t get accumulated. If you think about it that way, when the government prints more money it’s expending its debt and it’s also making the economy bigger and when you pay your taxes you are shrinking it a tiny amount. When you understand it that way, the problem with ultra-rich companies and people is that they hoard the expanded government debt, keeping it expanded by keeping the money out of circulation (where eventually it would disappear back into the government).
Rich people and capitalists claim that they are creating jobs and innovating, but that would only happen if their money was being spent. So another option would be to force them to put their money back into circulation in some socially useful way. I actually like that better than raising taxes: make rich people adopt a certain number of immigrants, or help the underprivileged.
Ha ha ha ha, I crack myself up. The real issue is that the rich don’t give a shit about helping anyone or anything; they just want to make the digits in that number get bigger. They won’t spend it, they just hoard it. It’s weird.
@6 Marcus
Interesting. I mean, if you think about it, what’s any fiat currency but a tiny share in the effectiveness/productivity of the government/country that issued it? You could even argue that an American dollar is effectively one share of the American government.
@6
I don’t think it’s about hoarding money for hoarding money’s sake. It’s about the power the wield by depriving other people money to the point of desperation so that they control the masses. If their servers could make a decent living without them, they wouldn’t tremble at their every word. It’s a very different mind set from decent people, which why I view the wealthy as morally depraved.
It is far easier for a rich man to buy a Rolls Royce that doesn’t feel the potholes than it is to pay towards the removal of potholes for everyone.
Apparently they’re concerned about the rise in nationalism that rising income inequality is bringing about, but don’t want to actually do anything about it that will stop them from being multi-billionaires.
They want to avoid the solution that France came up with 200 years ago:
The guillotine.
I heard it was remarkably effective, albeit with some rather large unforeseen negative consequences in other areas.
@ 10 Tabby Lavalamp
I was reading something the other day that pointed out that the KGB saw the coming collapse of the Soviet Union and warned the Politburo. The Politburo gerontocracy were too comfortable and set in their ways to do anything about it.
Possibly the most of the Davros set are similar?
abbeycadabra @7 says,
Shades of Milo Minderbinder, I really need to read that book again.
jrkrideau @12:
OMG, the rich and powerful aren’t lizards after all. They’re Daleks! That does explain a lot.
One minor observation: “not the reactionary populism of Trump in the US or Bolsonaro in Mexico or Duterte in the Philippines”. Bolsonaro is not the president of Mexico. He is the president of Brazil.
It would be nice to pin the rate at which marginal increase kicks in to the minimum wage. Say [minimum wage] * 1,000,000 That way, the rich are conflicted between wanting to increase wages and wanting to decrease their own taxes.
joestutter@#15,
Thanks for pointing out that glaring error! I cannot imagine how I mistyped that. I have corrected it.