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It's possible, but usually harder because what makes the uber wealthy uber wealthy is that they own assets rather than have huge income.
So when they say Bill Gates, Elon Musk, Bezos or whoever has "X" billions, they're talking about the value of assets they own (usually large stakes in successful companies) which has more of a parallel with how the middle class talk about their house (an asset) now being worth (whatever). It's not liquid cash.
Taxes on assets are typically realised when those assets are sold or transferred because their value goes up and down and all over the place. And the uber wealthy do pay tax whenever they sell stock because they're buying this mansion or that yacht. It's just usually comparatively small to their full fortune which remains in stock.
So the difficult thing about taxing stock while it's owned is, like I said, the value goes up and down quite dramatically at times. Should the government collect taxes on the buoyant times but then refund them during market downturns? That would be a nightmare. No government wants to be on the hook for refunds during a downturn.
And it can't (I don't think) just collect taxes when super valuable stocks are on the way up because that's not actually cash. It's just the market value if that stock were to be sold. So the most a government could do would be either to receive some of the stock as a tax payment (not much use to a government that wants to spend it) or force the owners of companies to sell stock and make a cash payment just because they're successful.
Which sounds fine on the surface, but this messes up how ownership of companies works. Let's say some good guy CEO (they do exist) has managed the growth of a multi billion business and to do so has brought in investors which now own 49% of the company, and he - the founder - owns 51%. If the company's value on the market rose 20% you'd get news articles about how the founder now has "XX billion" since last year and that they "earn" so many hundreds of thousands a day compared to your average working class person. If the government forced the owner to part with 3% of their ownership of the company in order to pay this "growth tax" then the founder no longer has overall control of the company. It would be 48% founder owner, 49% investors and 3% whoever the government sell the taxed stock to in order to realise a cash value.
So it erodes ownership. Again I'm sure there are plenty reading this who think "so what?". But I can tell you that much of the market value of stock, the reason it has the value it does, is in many cases because the market trusts the management of the ownership of the companies to continue to make profit. If you force the erosion of that just because the company did well then you destroy the way the market trusts and ascribes value to things. Which is why the way governments tax company is via profits and stock sales, where the value is already realised or where the decision to sell is not forced in the same way.
So what to do about this?
Well you can just increase the taxes on stock sale, or on dividend income. But what happens there is you snare the wealthy middle class with the same rope you were aiming at the uber wealthy. Again some might not think that a bad thing, but it's unlikely to be as effective as people would like it to be. You'd generally be raising dividend tax by a percentage point or two on people receiving low six figure sums. Which would get some extra from the Elon Musks, but also would get the same amount from, say, a consultant surgeon, or a recent tech startup founder etc. My point being, there are not huge numbers of these people, compared to the rest of the population that government spending is spread over. The amount you end up raising is not huge compared to what seemed to be on offer when you look at Meta's total net worth or something like that.
The ultimate answer is about ownership. But it has to be organic (personal opinion) so that it doesn't cause disruption to the markets that end up hurting the most vulnerable (via job losses).
And the best way this is done is to simply suck it up and pay a little more for a non mega corp solution to something. Want Bezos to have less of the pie? Stop buying through Amazon just because it's cheaper. Want Gates fortune to be more wide spread? Save yourself a ton of cash by using Linux instead of windows + office licences. Don't like Elon musk? Stop using twitter, don't buy a Tesla.
If you've done all these things I personally think it's as much as you can do. You should put your efforts into making these boycots as easy for others to follow as possible (support your favourite FOSS project) etc. Pay for the online services you like so they don't feel the need to resort to Google ads and on. Unfortunately in a free market such as the ones many of us live in (thinking Western world) the uber wealthy are mainly that because of the millions and millions of micro choices by consumers who are free to go elsewhere but just often don't choose to.
There’s also the very important concept of a capital gains tax. Why does their income from stock sales get to be taxed at a special low rate, as if it weren’t income? That’s ridiculous
We’d go a long way toward evening it out just by deciding
- income is income. No special categories of income for the wealthy
- when your company or trust spends money on your personal life, that’s also income
- tax brackets keep going. They don’t even have to be specially high, but why does it top out so early?
While the ultra wealthy don't have billions on hand, they do take loans against their assets, which we could tax more.
Why? Are any loans ever taxed?
There were tax evasion schemes in the UK where wealthy people could take loans from an offshore entity they contributed to and never pay the loans back. But this was shutdown fairly quickly by HMRC (British IRS) and a bunch of people were fined / went to jail. Don't know if the same is true in America?
If a loan is acting as income (like it does for the ultra wealthy) then it should be treated like income and taxed accordingly.
And what exactly is the difference between a loan and a loan acting as income?
Those loans are often several times more than the yearly income and done more frequently.
How do you establish that a loan is or isn't "acting as income"?
Those loans are often several times more than the yearly income and done more frequently.
My mortgage was many times my yearly income.
So then you just have frequency, which is easily gamed by getting fewer larger loans. Maybe one every three to five years? At that point it really is just a mortgage with stock as collateral rather than a house.
Like, you're not wrong in your intuition that the system is problematic. Mine (and others) point is that the devil is in the details, and they're not trivial.
But then the value goes WAAY up. Let's assume you live in a very good house, and mortgage it you're able to get 5 million out of it. Do you think someone like Jeff Bezos could live for 5 years with that?. You can do it fairly straightforward, everytime you take a loan, the full amount of that loan gets added, after a period of 5 years that value disappears, if at any point that value goes above 10 million, you start paying taxes on it. And the higher it goes the more tax you pay on it, just like how income tax has brackets, and just like how up to certain values are exempt.
For you or me if we were ever loan 10 million over 5 years we wouldn't have a way to pay it back. For an Uber wealthy they do that fairly quickly, Bezos mention costs 600k a month, so he'll get into the first bracket from just that in a year and a half.
People need to realize just how big the gap is, there are plenty of ways to tax extremely rich people without affecting the middle class by just putting the bracket so high up that it's impossible for a middle class to reach it.
Should. They should be taxed extremely heavily to try and stop that loop hole and abuse of power.
What about loans against assets like houses? I wouldn't consider simple house owners necessarily rich and they should be able to get a mortgage without penalty.
You know, you can just do things. Like, laws don't need to be applied unilaterally. You can, at the same time, tax a 100,000,000 dollar loan, and not tax a 1,000,000 dollar loan.
Kind of like how generally, low income people do not pay much or any income taxes, or how certain products are subject to additional sales taxes.
so, going back to your analogy of thinking of stock like homes, we pay property tax on our homes if we own them. Not much, comparatively, but we pay tax on it nonetheless. If stocks are an asset like a home, they should be taxed based on the value of those stocks.
Companies do pay other taxes roughly comparable to their size, I was just simplifying for the sake of explanation. Employee tax is one example. Don't know how it works in the US but in the UK all businesses will pay a "national insurance" tax contribution for every employee they have. This is a level that can be turned by the treasury. But increasing any tax burden discourages the activity that leads to it. Taxes on employees, although paid by companies, are seen as "anti job" taxes. Taxes on profits are seen as "punishment" for honestly raising a profit in the home country (rather than various offshore licensing schemes). The raw market value of a company could be taxed, but that sort of perversely encourages a company to downplay its value.
Ultimately we want companies to be successful, the only issue with it is when the ownership is concentrated in the hands of the very few. Unfortunately that appears to be what drives success in many cases. Small ownership = focussed quick decision making. Sometimes that really is what's led to an American company seeing the success it does rather than some Chinese competitor gaining the edge.
That's why I throw a lot of this back on consumers. We're the democratic force in all this, and we have a lot of power when we act en masse. Why is there one Amazon instead of two? Because people also choose cheapest and they fail to properly value the fact they can have all sorts next day (even same day) when that service never existed ten plus years ago. If they valued that properly then they'd be more able to see competitor B at $10 is still providing them good value service even if Amazon is selling the same at $7.
I'm not sure that's it's healthy to stop people having free choice of where to shop. People being able to vote with their money is what makes capitalist countries the innovation experts of the world.
The issue is what happens when that capital concentrated into a small number of hands starts to wield anti-choice power and / or political power. So I think people building successful companies and being wildly rich (on paper) is fine, but legislation should stop them hoovering up smaller competitors (anti trust laws). And money should certainly be capped and prevented from undue influence in political processes.
The US and UK are quite different in that regard. Our anti trust laws could be better, but at least our political processes are relatively short and the use of money in them held to a reasonably high level of disclosure. Both could be improved.
And I think they will when the population elects a social-good minded government that's pro business. Typically in the past I'd personally say this mostly lines up with what used to be called New Labour. They certainly did some social good but they made some appalling mistakes trying to partner with business.
I don't know that the equivalent hope in the US is. I see the democrats gets criticised a lot of not being well connected to working class people and too cosy with big business. But campaign finance laws would need to change before the way in which money and politics interacts could ever reasonably change.
Which all feels a bit far off, which is why I come back to what small actions individuals can do... Buy local, from small businesses, be prepared to spend more to spread wealth a little more evenly, buy domestic, not foreign, avoid the services of megacorps wherever you can, enable others to do the same. Who knows? Can you imagine a community run Amazon that cost a bit more but funneled profits back into the local community? Things like this can be tackled by a relatively small band of motivated individuals regardless of what's going on in the halls of power.
If we disallowed margin loans from brokerage accounts then the uber wealthy would be forced to pay more taxes. We can easily avoid impacting the middle class with marginal tax brackets.