“Biden isn’t calling his proposal a wealth tax, of course. It’s the “Billionaire Minimum Income Tax,” and it imposes a minimum 20 percent tax on the income of households with more than—oddly—$100 million in wealth. Biden’s proposal is smaller and more pragmatic than the earlier variants from Sens. Bernie Sanders (I–Vt.) and Elizabeth Warren (D–Mass.)—par for the course with Biden. Most notable is that even with implausibly optimistic estimates of the federal government’s ability to collect, the whole mess is supposed to raise an average of a mere $36 billion per year over the next 10 years.
The University of California, Berkeley, economist and Warren adviser Gabriel Zucman estimated what several billionaires would pay under the plan’s 20 percent tax on unrealized gains in illiquid assets, pinning Jeff Bezos’ bill at $35 billion, Warren Buffett’s at $26 billion, and Jim Walton’s at $7 billion.
Anyone who has been paying the slightest bit of attention to federal spending over the last several years knows that figures that begin with b instead of t are now considered rounding errors. The point of this wealth tax is not to raise revenue. It has two rather different aims.
The first is pure political calculus. A floundering, unpopular president seeks to demonstrate a willingness to punish a small, unpopular class of people. A Reuters/Ipsos poll last year found that nearly two-thirds of respondents agree that the very rich should pay more taxes: 64 percent either strongly or somewhat agreed that “the very rich should contribute an extra share of their total wealth each year to support public programs.””
“The second aim, which has more far-reaching consequences, is to establish the principle that the U.S. government can tax based on wealth at all. If such a tax were to be put into law—and found constitutional by the Supreme Court, which would be no mean feat—it would be the thin end of a very large wedge. Biden’s proposal will spin up the huge bureaucratic, legal, and accounting support systems, public and private, necessary to support the formal tracking of wealth alongside income.
The utility of permitting individuals to accumulate large amounts of money varies from person to person, of course. There are many billionaires whose fortunes are extractive or confiscatory—that is, they have seized a larger slice of an unchanged pie. But in the U.S. in particular, we specialize in billionaires whose fortunes are clearly related to value creation—that is, they have taken a healthy slice of a pie that they also made much larger.
Sanders and others seem determined to conflate these two groups, applying the term oligarchs to, among others, people whose houses have an excessive number of bathrooms, people who build rockets, and people who own Major League Baseball teams.
People do not need to have been wholly self-made to somehow deserve to keep their money. No billionaire is an island, even if many of them own one. In fact, vanishingly few of us have fates that are wholly self-determined.
As a moral matter, if not a legal one, we might ask what the very rich do with their money as a way of evaluating whether they should keep it. As famously rich person Elon Musk recently tweeted: “Working hard to make useful products & services for your fellow humans is deeply morally good.” Many who support wealth taxes seem to hold the belief that the government would use the resources that the very wealthy command toward more valuable ends. Of course, most of the fortunes of billionaires such as the Waltons, or Musk, or Bezos are tied up in the large and extremely productive firms that made them rich in the first place.”
“We do not have oligarchs in the U.S. the way countries like Russia do. Our millionaires and billionaires are prevented from pulling political puppet strings both by custom and by campaign finance laws which cap their financial contributions to some degree and require disclosures. Though companies do sometimes successfully lobby for government contracts and subsidies—Musk’s hypocrisy has been widely documented on this front—we don’t have widespread, unchecked corporatism where the government always serves to further companies’ bottom lines, or where companies become exempt from government scrutiny for having curried favor with the right people. And free marketeers tend to believe that the existing patchwork of subsidies and handouts ought to be stopped since they serve as market distortions, artificially propping up companies that wouldn’t succeed or be competitive on their own merits.
If Sanders’ point is not merely that wealthy people exercise undue influence on the political process (as oligarch implies) but rather that wealth accumulation always and everywhere ought to be prevented, as he insinuates when he mentions their superyachts, that’s an even weaker critique. People accumulate extreme wealth in this country most often through inventing a product or founding a company that millions or billions of people end up valuing highly. Consider Jeff Bezos, worth $177 billion, per 2021 numbers; Elon Musk, $151 billion; Bill Gates, $124 billion; Mark Zuckerberg, $97 billion; Warren Buffett, $96 billion; Larry Ellison, $93 billion; Larry Page, $91.5 billion; Sergey Brin, $89 billion. More often than not, that process is iterative, with tons of failures before striking gold. When a company is successful, those who were involved in its founding often scatter, taking their earnings and intellect and founding new companies, starting the whole iterative process over again.”
“Financial planning firm Ramsey Solutions’ 2021 millionaire study found that 79 percent of the 10,000 U.S. millionaires surveyed did not receive any inheritance from their families. Of those who did receive inheritances, who are in the top 1 percent, Federal Reserve data show those inheritances were to the tune of $719,000 on average. More than half of America’s billion-dollar companies have at least one immigrant founder who came to the U.S. as a kid. Extreme wealth, by and large, isn’t generated by investing inherited money, but by starting companies that bring value to millions of customers.”
“The ’08 financial crisis almost brought Tesla crashing down, and disastrous Falcon 1 launches around that same time almost left SpaceX in pieces. “That historic fourth flight on September 28, 2008 made the Falcon 1 the first privately built liquid-fueled booster to reach orbit,” writes Pethokoukis. “It saved the company. But would that launch have happened if Musk had left PayPal with $60 million less? Would Tesla have muddled into 2009 and beyond? Kaplan doesn’t think so.”
Nor does Musk, in fact.
Central planners like Biden and Sanders don’t appreciate how fragile many of today’s biggest and boldest companies—SpaceX, Tesla, and Amazon—once were. Serial entrepreneurs, who exit one venture and quickly invest their earnings in another, are oftentimes wealthy enough at exit that they would be hit with wealth taxes if the Biden plan or any of its evil twins become law. But two things must be kept in mind: Their wealth is rarely liquid, and that money often gets quickly invested into other ventures that we would lose out on if it had been taxed away.”
“Medicare-for-all could potentially save money, if provider payment rates are kept low and there isn’t an explosion in medical demand. It should save lives, based on what we know about what happens with mortality rates once people get insurance.
But it would be wise not to take the numbers too literally. There is a lot of guesswork in projecting what Medicare-for-all would cost and the effect it would have”
“an analysis using data from the States of Change project, sponsored by, among others, the Brookings Institution and the Center for American Progress, indicates that, even if black turnout in the 2016 election had matched that of 2012 (it dropped from 62 to 57 percent), Clinton would have still lost. On the other hand, if she had managed to reduce her losses among white noncollege voters by a mere one-quarter, she’d be president today. That’s an issue of persuasion, not turnout.”
“In 2016, the age cohort that really killed Democrats was voters ages 45 to 64, who had split evenly in 2012 but leaned Republican by six percentage points four years later.”
“it’s a mistake to assume that Democrats would benefit disproportionately from high turnout. Trump is particularly strong among white noncollege voters, who dominate the pool of nonvoters in many areas of the country, including in key Rust Belt states. If the 2020 election indeed has historically high turnout, as many analysts expect, that spike could include many of these white noncollege voters in addition to Democratic-leaning constituencies such as nonwhites and young voters. The result could be an increase in Democrats’ popular-vote total — and another loss in the electoral college.”
“Stanford political scientists Andrew Hall and Daniel Thompson, for example, studied House races between 2006 and 2014 and found that highly ideological candidates who beat moderates for a party nomination indeed increased turnout in their own party in the general election — but they increased the opposition turnout even more. (The difference was between three and eight percentage points.) Apparently, their extreme political stances did more to turn out the other side to vote against them than to turn out their own side to vote for them.”
“nervous Democrats should take two things away from this. One is that Sanders does in fact know how the American legislative process works. He has participated in it extensively for decades, knows how you can get things done and also knows how painfully difficult it is to get things done. It’s true that this is at odds with some of his “political revolution” talk, but the point is he’s been around. This is a veteran and reasonably successful member of congress, not some random guy who joined Democratic Socialists of America 18 months ago.
The other, and in some ways more important, thing is simply that he knows how to do the whole normal politics “pivot to the center” thing. Happy talk about bipartisanship isn’t just for Joe Biden. Bernie Sanders can do it too! He has Republican friends. He knows there are good Republicans out there. He’s worked with them in the past and looks forward to doing so again.
It’s 100 percent true that if Buttigieg or Amy Klobuchar started talking like this, they’d get roasted by Sanders’s Twitter fandom. The hypocrisy is very real. But the fact that Bernie’s fans let Sanders get away with this kind of thing is a strength of his. He is smart and trusted, so he has the running room to reach out the center, and — when appropriate — he does it.
There are no guarantees in politics, and it’s unquestionably true that Sanders would bring some obvious vulnerabilities to the table. But his track record over the years suggests real skill at navigating these problems, and if you watch his first performance as a real frontrunner in the race you can see those skills in action.”
“Energy analysts, however, caution that Sanders’s 2030 plan would require a federal infrastructure investment not seen since the construction of the interstate highway system. To get close to Sanders’ 100 percent clean energy goal by 2030, researchers estimate the U.S. would need to add about 800 GW of wind and solar resources — about 25 times the amount the federal government expects to be built this year — along with ample amounts of battery storage and transmission. The Sanders camp forecasts that would cost about $2 trillion.
“Our best year for solar and wind — we’d have to multiply that by three and then sustain it for the next decade,” said Sonia Aggarwal, vice president at the analysis firm Energy Innovation, which advises world governments on their climate targets.
While turning the power grid over to 100 percent renewables presents significant technical difficulties, the clean energy deployment is “not out of the question,” Aggarwal said. However, Sanders’ plan to shut down nuclear power plants will make it “much more difficult.” The nation’s 60 nuclear plants generated more than half of U.S. carbon-free energy last year, but the Sanders campaign says it will phase them out by denying extensions of their operating licenses when they expire.
Many of those nuclear plants have licenses that expire after 2030, but Sanders expects the cheaper solar and wind power to drive most them into retirement. The stability those reactors provide to the power grid would be hard to replace with the variable output of the renewables, said Leah Stokes, assistant professor of political science at the University of California Santa Barbara.”