Spain and Brazil push global action to tax the super-rich and curb inequality

I hope this works. The only way to save the economy and the society is by taxing the rich.

Think about it for a minute. The rich people hoard all the resources, financial assets, means of production and in the competition for resources they will (and are doing so) displace everyone else in the economy (and really from society also).

This means that those who are displaced have no means to participate in the economy. And not only that but also they will be pushed to the fringes of the society and exists in slum conditions. This will stiff the economy and hollow it out.

Let's say for arguments sake that the government taxes X hundred of millions of $ from the bezos/musks/gates/etc. and put that into the economy by

  - indirectly or directly hiring people
  - building infrastructure
  - providing services for the citizens (education, health care etc)
  - providing benefits to those who need. 

All that money will immediately go back into the economy stimulating all kinds of economic activity. And essentially two weeks later that same X hundred million is back in the bank account of bezos/musk/gates and it can be taxed again!

By letting the uber rich hoard the wealth that wealth is essentially away from the economy providing very little economic activity.

In economy this is known as the "high propensity to spend". The "poor" (i.e. working/middle class people) have high propensity to spend, the rich have low propensity to spend.

Tax the wealth, not the work!

This has been done before and it can be done again!

https://en.wikipedia.org/wiki/New_Deal

In modern societies: top 1% of earners pay roughly 30% of taxes top 5% pay 65% of taxes top 10% pay 80% of taxes while bottom 50% usually barely make 2% of taxes.

Heavy redistribution of wealth is already in place and it's not making things better.

"Heavy redistribution of wealth is already in place and it's not making things better."

You're right, because the distribution is removing large groups of people from the economy.

Just for reference, this has been done before and it produced possibly one of the best economies (at the time) and it was very social democrat. This was the United States after the so called "New Deal".

https://en.wikipedia.org/wiki/New_Deal

And just to make it crystal clear, we're not talking about taxing working people. We're talking about taxing the obscenely wealthy people who just sit on massive amounts of wealth, whether it's stocks or property or yachts or mansions or gold and jewelry. You know the > 10-1000x millionairs

I’m not sure how your second statement follows your first? It’s implying that your numbers are “heavy” but not backing it up.

> Heavy redistribution of wealth is already in place and it's not making things better.

Really? Universal education and healthcare don't make things better?

But the top 1% still pays proportionally less of their wealth in taxes than the bottom 50%. Yes, they may pay a large fraction of the total taxes, but with what they own they should pay even more.

I think another big problem is that this extremely uneven distribution of wealth is a basic democratic problem. The reason we have states is, among other things, to put the allocation of our finite resources under democratic control. If the majority of those resources are on private hands, then states get less control and our votes have less power.

A lot of people survive and tolerate a lifestyle that comes from these redistributions of things to people who no longer have direct access to means of survival like water and land. You really have to qualify what you mean in better.

Many rich people with heads should consider that the current situation is making things better than the next version of the French Revolution.

>Many rich people with heads should consider that the current situation is making things better than the next version of the French Revolution.

The French Revolution was a revolution against the French government, and its high tax policies.

> I hope this works.

It won't. Richest people in the world are exceedingly wealth, but they're not that wealthy. I'm not suggesting that they shouldn't be taxed, they should, and much harder than is currently the case. We should move to remove the loop holes used and abused to make people like Bezos appear poor, in the eyes of the tax authorities, but it won't move much in terms of monetary value, because they're not that wealthy.

Let's tax Zuckerberg half of his wealth, that's roughly 2% of the US budget. That's a lot, but you can only do that once, maybe twice. You can certainly tax the wealthiest enough to fund quite a bit and if you pick the right things you can do a lot of good. It's just not enough to reshape society, which seems to be what most think would happen.

What I see as the biggest issue is the amount of societal damage these people are willing to do to amass their fortunes. I don't even care that Bezos is worth $250 billon, if he didn't exploit workers and deliberately destroys other business to accumulate that wealth. Same with Zuckerberg, he can be as rich as he likes, but he can't build that wealth of spying on users and generally being a dick. Musk... He can build all the cars and rockets he like, but stop undermining democracy through financial means.

Taxing billionaires hard won't stop their bad behaviour.

Sure, but how "heavy" is that redistribution though?

Top 1% paying 30% of taxes sounds like a really rough deal for them at first, but if those 1%ers already own over 30% of your country in the first place (which is the case in the US), then thats barely their "fair share", and you are not really achieveing any redistribution at all.

How can you be certain that the problem is "progressive taxation is not working" instead of "taxation does not help against wealth inequality because it is actually barely progressive"?

If the US government is 30 trillion dollars in debt someone is 30 trillion dollars in credit.

The money doesn't disappear. Now the problem is (in the context of United States) that the number #1 and #2 creditors are People's Republic of China and Japan. So the US cannot tax those entities.

But they can tax domestic creditors and wealthy individuals.

"Let's tax Zuckerberg half of his wealth, that's roughly 2% of the US budget. That's a lot, but you can only do that once, maybe twice. You can certainly tax the wealthiest enough to fund quite a bit and if you pick the right things you can do a lot of good. It's just not enough to reshape society, which seems to be what most think would happen."

No, the point is that you can do it over and over again.

Once you put that money into the economy it will flow all around it and most of the money will end up in the same place again. I.e in the bank account of Zuckerberg and it can be taxed again.

Also the top 1% covers everything from the very affluent middle class to billionaires - the distance from the least rich part of the 1% to the richest part spans billions, much greater than the rest of the distribution's 99%.

Spending money doesn't grow the economy; the economy grows by saving and investment. Punishing people who successfully save and invest by giving money to people who prefer to spend everything they earn leads to less savings and investment, and lower economic growth, as the poor economic conditions of Brazil and Spain demonstrate.

Rich people don't "hoard" the means of production, they create it. Confiscatory policies lead to less business creation; if Gates, Musk, Bezos, Zuckerberg and Page had not had the wealth to create the businesses that made them billionaires, those businesses wouldn't exist, the jobs and products they create wouldn't exist. Europe demonstrates this empirically with its complete lack of any big tech companies, a result of its hostile policies and cultural attitudes to entrepreneurship.

>Once you put that money into the economy it will flow all around it and most of the money will end up in the same place again. I.e in the bank account of Zuckerberg and it can be taxed again.

Money is not value, it's a proxy for value. By taxing capital and using it on handouts, you're essentially burning that value; it's like a farmer eating all their seeds rather than saving some for the next year's crop.

Investing in passive assets such as property that already exists does not create new economy.

"Rich people don't "hoard" the means of production, they create it."

Actually they do. Look at the GDP growth rates across western countries. 1-2%.

The wealthy people (since pandemic) have grown their wealth 10-20%. Where did that come from if the GDP didn't grow.

The only way they were able to do this was by literally hoarding wealth and by buying assets that already exist and by doing so displacing other people with less assets.

I think the GP comment has some issues, but this is not the right way to address them.

If someone owns all the houses but does not rent them out at a reasonable cost, so people have to sleep on the street while the house stays empty, then I will call that hoarding. You don't really address that core problem.

If we stick to Zuckerberg or Musk, a lot of their money isn't real, you can't really tax it directly. They'd have to offload a crazy amount of assets, including stocks. They'd lose a lot of their value if you had to sell it all of at once.

It's only real in the sense that they can use it as securities for loans or purchasing other assets. I'm not an economist, but it sounds like that would slow down the wealth generation of the riches people, and that would mean less taxable wealth next year.

You may be right. I still think address the increasingly egotistic and damaging behaviour would be better.

"By taxing capital and using it on handouts, you're essentially burning that value; "

If you tax the money from Zuckerber and give it out as "handouts" as you say, what do you think happens to the money?

You think it just disappears?

What happens that every $ that is given out to people who need it will use the money to buy things they need, their food, energy, their utilities etc. This consumption and the flow of money is exactly what lubricates the economic machinery and creates new growth.

When people have money to spend there are new things and services to build and sell!

If you deprive people from money, how do you create business when nobody can afford to buy whatever it is that you're making?

Henry Ford already knew this that if people don't have money to buy his cars he has no business!

Europe has plenty of startups. The real issue is scale-ups, where the main cause is lack of risk capital.

Do you have a source for this?

top 1% net worth is around 10 million says google. That's enough to live off and not need to work at any age. It's clearly not middle class.

Really rich people don't have a lot of money, they have a lot of assets that are considered to be worth a lot of money, typically companies. Companies are work. If you make the big owners ask for higher dividends, you tax the work indirectly.

You could of course tax the non-work wealth. Most of that is home ownership, few home owners consider themselves rich.

No. It was a revolution against a regime where the rich paid NO taxes.

Article 9 of the august decree – Fiscal privileges in the payment of taxes were abolished forever. Taxes were to be collected from all the citizens, in exactly the same manner, and plans were to be considered to set up a new method of tax collection. [0]

[0] https://en.wikipedia.org/wiki/Abolition_of_feudalism_in_Fran...

The modesty of the landlord knows no bounds

Yeah, well. The richest person in the city where I live is rich because many thousand well-paid jobs are counted as part of her wealth. I've heard that she's not a nice person, but that hardly matters: If you want to extract money from that fortune, the money has to be squeezed from the many thousand jobs, because most of it is those jobs. (It's also the buildings it happens in, and the machines they use, but the largest part if the workforce.)

Indeed. There's a whole street in London (The Bishop's Avenue) that's essentially unoccupied - every house on it is owned by foreign billionaires. Every now and then one of them knocks down the house and builds a new, more garish one in its place. It used to be stunning, now it's grotesque.

It depends on where you are. There are parts of the USA where a 10 million net worth does not mean you are "yacht rich" (but certainly very comfortable).

> I still think address the increasingly egotistic and damaging behaviour would be better.

If not by taxes, then how? Social pressure doesn't seem like it's working anymore, because individuals could just ignore that and still proceed like everything is normal. Genuinely curious about alternative solutions that doesn't involve taxation, since everyone seems to be so tax-avoidant.

Regulations and extremely high fines for breaking those regulation. In worst case, lose the right run a business in the future. The EU is getting closer to real fines, in terms of how large they need to be. The idea of using X% of turnover is good, but 4% isn't high enough.

In the case of companies like Amazon, force them to negotiate with unions.

How many Meta or Amazon size companies do you think the US government would need to shutdown for the industry to take notice? My guess is about two. Just close it down and let the shareholders take the lose. That way shareholders of other companies will insist that rules are followed. The government can sell of the assets and make some money that way.

Respectfully, I don't buy the power-not-actual-wealth argument.

If someone has wealth in non-liquid forms, they still have wealth.

Addressing inequality is going to mean governments and tax authorities take a broader view of wealth and methods to tax it.

There needs to be a new consensus that if wealth exceeds a certain level, it will be aggressively traced and progressively taxed.

Whether that wealth is in the form of currency, equity, corporate ownership, political power, or any of the other forms.

Because of the pyramidal distribution, it'd absolutely be feasible to say "If you have a net worth about USD$1b, you have a dedicated tax authority team who combs over your assets and calculate the minimum you should owe, using generally accepted accounting standards. Your choice how you choose to pay that."

And if they don't want to -- fine, your ability to travel in the first world is recinced. Have fun being rich, but you're not going to do it in Monaco.

> if Gates, Musk, Bezos, Zuckerberg and Page had not had the wealth to create the businesses that made them billionaires, those businesses wouldn't exist

Bullshit. They would have all created those businesses as long as their personal financial situation improved through them.

Arguing that it takes 0.1% wealth payoffs to incentivize business creation is false.

Someone would do it for anything greater than average, if there were global minimums, and a tax structure that allowed corporations to retain capital was used.

If this was true there would not be millions/billions constantly spent on pushing for tax cuts and lobbying and hollowing out IRS enforcement.

The wealth isn't particularly illiquid. That's not the problem I raise.

The problem I raise is that it largely is someone's jobs. If you want to tax the companies' overall value, part of the income from the work the companies do is going to go to the taxman. That money isn't gathering in a pile, unspent, today. So some employees are going to get fired or a pay cut, as a compensating cost-cutting measure. Which is fine so long as you understand that that's where the money is coming from. But you don't, right?

> Regulations and extremely high fines for breaking those regulation

So say Musk gets convicted of "egotistic behavior", however that works, and he's hit with an extremely high fine. How is he supposed to be able to pay that fine without having to "offload a crazy amount of assets, including stocks", which according to you would be the problem?

Seems while the approaches are different, you'd still be in the same boat as if it was just taxed from the beginning, except you don't involve the judicial.

I'd argue you're looking at it incompletely. If wealth is accreting in individuals, then those individuals need to be taxed more than they currently are.

Society shouldn't care if Bezos' wealth is increasing because the value of Amazon is increasing or because he struck gold on his property: the issue is that he and others own an outsized share of global wealth.

The answer is increasing how progressive tax rates are, especially at the ultra high-end.

If Bezos or other post-unicorn founders have to decrease their ownership stakes in "their" companies to pay their tax bills, that doesn't decrease the competitiveness of the businesses.

It just decreases their ownership.

Pretending that decreasing the wealth of the rich is incompatible with efficient business is a red herring used to justify individual control. Businesses can still run and people can be employed: individuals just won't have as much exclusive control over them.

And before the 'Think of small founders!' fig leave gets trotted out to cover obscene wealth, we're talking about T500-scale companies that are well past that size, and whose market distortion arguably threatens small founders much more. (Remember 'Be the next ____' instead of 'Be bought by the current ____'?)

Transfer assets to the tax authority at current market value minus discount, to satisfy his tax bill, then have those assets required to be sold to the public market over time?

Or he's welcome to borrow against his own assets and pay in cash.

No one has a right to live anywhere specific. That seems like an individual's problem rather than a government's.

The landlord can raise the price because the supply of new apartments is low. With limited supply, the supply/demand equilibrium is going to a higher point.

Why is there a limited supply if people need places to rent? Governmental regulation, financial regulation (e.g. Freddie Mac & Fanny Mae), zoning laws, overregulation on building that eats the margins and the with low supply the most profitable market is for "luxury" apartments with wider margins.

So if you want cheaper rent it's not that the landlord is greedy, it's that his greed can thrive because the market forces aren't working.

As Adam smith in 1776 wrote: "It is not from the benevolence of the butcher, the brewer, or the baker, that we expect our dinner, but from their regard to their own interest."

e.g. it's not from the benevolence of the landlord that we expect low prices, but from their regard of their own interest to rent the property that competes with many other properties available to rent.

Collusion is a thing.

I wish these kind of comments were backed by some numbers. European welfare states are paid for by taxes on the middle class. The wealthy already pay taxes disproportionately and taxing the wealth itself has an obvious problem, it's stock not flow, so given government spending it will last you a few years at best. Then what? The way to fix the economy is to bring one metric back to what it was when the economy supposed ly worked in the past - per capital government spending

Spain is actually one of the few countries in EU that is growing a lot, actually.

> How is he supposed to be able to pay that fine without having to "offload a crazy amount of assets, including stocks", which according to you would be the problem?

That's only a taxation issue, we where no longer talking about that. We where on regulation poor behaviour, which I suggested we do via punishment. In that case I do not care if his business is ruined, in fact that might be my explicit goal. For taxing I would want to be able to tax him year after year.

But you still haven't come up with any alternative approach for addressing "the increasingly egotistic and damaging behaviour" that doesn't involve taxation in some form, which is explicitly the thing you think could be done better.

What kind of punishment? Are you suggesting jail time for "egoistic and damaging behaviour", or what the is the concrete alternative you're actually suggesting?

If wealth is accreting is individuals… but is it really?

When you have a nice job in a company, then as a matter of accounting, the shareholders have wealth. As I see it, that's just a matter of accounting. The first sentence of this paragraph says "you have a nice job" and IMO that description is closer to reality. The wealth actually is your skills and their integration into an organisation.

It follows from this view that "some shareholders accrete too much wealth" is more a complaint about accounting practices than about how goods are distributed in society. You do have that nice job, right? A few million nice jobs may be accounted for as one person's wealth, but the millions do have the jobs.

And indirectly that if you shape taxation based on accounting rather than reality, its effect on reality will be haphazard.

No I suggested that in the worst case you remove their rights to run a business ever again. Force close their companies and sell of the assets. If you consider a fine a tax, then sure it's taxation.

For "normal" taxes I would like to avoid undermining peoples business, but for fines I don't care. If you need to take a massive lose on your assets to pay the fine, I don't care, you should have thought of that.

Nobody in the tax brackets we're talking about has wealth because of a job they. They have it because of ownership stakes.

The only way to value ownership stakes is via accounting.

Otherwise, we'll have the current system, where it's trivial for the ultra wealthy to both (a) have exclusive control over things and (b) not own them in a tax incurring sense.

Ergo, the solution is to flow tax liability along the same thing they want -- control.

I think you're saying that people would only lobby for tax cuts if their tax bill has one set of reasons, and not if their tax bill has another set of reasons. Right?

I understood it as "If 'Really rich people don't have a lot of money' is true, then how come there is so much money being spent on lobbying?" which sounds like a fair point. Where does that money come from if all this wealth is illiquid?