The signatories wants to disrupt a disrupted Davos — and the tax status quo. Davos is where business and political leaders go to mingle, ski and discuss how to build a better world. But “if you’re paying attention, you’ll find that you’re part of the problem,” the letter reads. “Rich people are killing the goose that lays the golden egg,” Pearl said.
Wage earners pay proportionately more tax than those with passive income. Pearl said that most wealthy people he meets “tend to agree” that the system is unfair, but come up with excuses for not changing it, including that the government doesn’t spend money well. The Biden administration gave up on a proposed wealth tax last year after facing resistance. Such a tax could lift billions out of poverty, according to estimates by Pearl’s group and others.
“To put it simply, restoring trust requires taxing the rich,” the letter to Davos attendees reads. Noting that they have mostly grown wealthier during the pandemic, while many suffered, the signatories foresee an unhappy ending if changes aren’t made: “It’s taxes or pitchforks. Let’s listen to history and choose wisely.”
Of the 100+ or so names on that list, I think I recognized 2 or maybe 3. I’m sorry, but I just see those folks as “heavy hitters” in the global economy - but I may be wrong. If you ask me, Davos will be more of the same.
Of the 100+ or so names on that list, I think I recognized 2 or maybe 3.
I recognized several of the surnames, but none of the full names. The surname recognition may be coincidental. (One definitely is, as it’s MY surname. That person on the list is not related to me by any route I’m aware of.)
There are 2755 billionaires and 56 million millionaires in the world. The letter, signed by 100 millionaires, states “restoring trust requires taxing the rich”. I might be in favor of “restoring trust” or “taxing the rich”, depending on the details, but the connection is not obvious.
What people want, I think, is the freedom to live their lives, and a sense that their lives are improving with an even better future for their children. Our winner-take-all system guarantees that most will not see enough improvement, and a few will prosper beyond their grandest dreams. Taxes could take some of this windfall and invest in improved childcare or basic research that would benefit general society. Reducing economic inequality can increase trust. Economic inequality can leave some desperate, and this can lead to increased violence which reduces trust. Increased trust can increase GDP, as most business transactions require some level of trust.
“trust in the government in the US is at historically low levels… Virtually every commercial transaction has within itself an element of trust… What is the relationship between trust and GDP? … As it can be seen, there is a very strong positive relationship… economic inequality is negatively related to trust.” https://ourworldindata.org/trust
When HALF the folks in the USA don’t pay (IRS) taxes, our “system” is already broken.
This is a red herring argument. From the letter:
As millionaires, we know that the current tax system is not fair. Most of us can say that, while the world has gone through an immense amount of suffering in the last two years, we have actually seen our wealth rise during the pandemic - yet few if any of us can honestly say that we pay our fair share in taxes...
...To put it simply, restoring trust requires taxing the rich. The world - every country in it - must demand the rich pay their fair share. Tax us, the rich, and tax us now.
Are they wrong? Do the wealthy need their tax burden lightened? I’d like to see an examination of why the ideas in the letter are wrong.
I think people focus too much on equality sometimes and not enough on equity.
Yeah, someone who makes 400k per year pays a much greater % of their income so in that sense they pay their fair share. However, a much smaller % of their income is eaten by cost of living compared to someone who makes 40k Someone who pays 20% tax and makes 40K per year is most likely living close to pay check to paycheck(or worse) in most of the USA. Someone who makes 400k and pays 50%+ most likely will not be.
Not sure what the solution is but something needs to be done about the extreme wealth hording that happens the closer you get to the top. If they aren’t going to pay tax then they should do something significant to give back to the rest of the world. It’ll always be weird to me how anyone can have so much wealth that they and any person they care about will have enough money to never worry about money for countless generations and still want even more.
Wish you could edit posts if it’s within a small window…
Not to say that there is anything wrong with having a 400k salary, problem is that many of the richest people like corporate executives don’t have a wage so there is no income tax. Many get paid with assets like stocks that have no tax unless there are realized capital gains. Which opens up a lot of options for not having to pay tax like borrowing against them, usually at extremely low rates compared to personal loans rather than creating a tax event.
Not sure what the solution is but something needs to be done about the extreme wealth hording that happens the closer you get to the top.
There is essentially none. Because sitting on what you have isn’t how you get to the top - and the people who get to the top tend to keep on doing what got them there.
Instead, they invest in enterprises that help enrich the world - and keep a usually-small percentage of that enrichment, which they then turn around and invest more.
Now you can argue about specific industries if you like… the level of protection given to various industries in the US has an unfortunate tendency to track how much the affected businesses contribute to political campaigns, rather than how much they enrich the world…
If they aren’t going to pay tax then they should do something significant to give back to the rest of the world.
Yeah, those guys created a trillion dollars of new wealth in the world - how DARE they keep a couple billion of it for themselves… They’re TAKING so much (a small fraction of wealth they create that goes to other people… they should be made to give some of it back!
(Maybe they could invest it in enterprises that help enrich the world… and keep a small percentage of that enrichment for themselves.
They didn’t create all of that wealth on their own though. They need the hundreds or thousands of employees that sustain their business(es). I don’t think it makes much sense for anyone to make hundreds of times or more what their average employee does. Many have more wealth in this very moment than most of their company will collectively generate in their lifetimes.
It’s great if they invest in something that will benefit the human race but they should also do something that helps in the near term. Wages have not been keeping up with the rising cost of living. Just look at the federal minimum wage. It hasn’t gone up since 2009 yet the cost of everything else sure has significantly. No job should be paying so little that you are struggling to meet basic needs or worse, need a second job to do so.
We’re already seeing the effects of people refusing to work ‘low skill’ jobs for terrible pay and terrible working conditions. Even something like work from home which employers and corporations swore was impossible just turned out to be another thing they just didn’t want to give but was forced out of them my COVID. Letters or articles like these are just part of the growing debate about wealth inequality that was accelerated by COVID.
They didn’t create all of that wealth on their own though. They need the hundreds or thousands of employees that sustain their business(es). I don’t think it makes much sense for anyone to make hundreds of times or more what their average employee does.
If the boss gives most of the wealth an employee produces to the employee, but keeps 1% of that wealth for himself, is that unreasonable?
And how does the number of employees logically change how unreasonable it is?
Because if the boss has 25,000 employees directly creating wealth, and keeps 1% of the wealth each one creates, he’s gonna pocket 250 times as much as an employee.
And suppose the boss has one factory which delivers him an income of (whatever multiple you consider acceptable) times what the average employee makes. And from that he saves up a bunch of money, and goes to the bank to get a loan, and opens a second identical factory paying the same average wages. Is he allowed to profit AT ALL from the risk he’s taking in opening that second factory? Because if not… in most cases, he won’t bother opening it, and the workers he would employ there will be left at their old presumably-inferior jobs (or unemployed), and the customers won’t be able to buy the production from that factory which means that prices on whatever it would produce will typically be slightly higher than if it had been opened…
Now you can ASSUME that someone else will open the factory instead… except that this boss has saved up the money, and demonstrated the ability to manage that sort of factory…
In economic fiscal policies taxing the wealth more so will tamp down inflation and create build out opportunities for the major economies. In particular the US can benefit a great deal from higher taxes on the wealthy.