How To Tax Wealth — Your Feedback July 31, 2021August 2, 2021 Before I get to your feedback (“silly, impractical, illegal, picayune”) . . . 1. You likely already agree with what Fareed Zakaria has to say. But he says it so well: . . . Despite having ample supplies of the vaccine, America is stuck with roughly 60 percent of the adult population fully vaccinated, ensuring that the pandemic will linger perhaps forever. Given the tools to end this tragedy, we are choosing to live with it. As “The Economist” points out, the anti-vax movement in America today is unprecedented. There have always been people who objected to vaccinations, but they were on the fringe, a smattering a naysayers. The price of these rejectionists was usually small, a few outbreaks of measles every now and then. This time it’s different. In the midst of a raging pandemic that has killed 600,000 Americans, we have seen the rise of a vast right-wing conspiracy theory about the vaccines. It has been stoked by influential figures in the conservative media and tolerated even encouraged by powerful Republican politicians. The results are damning. As of June, 86 percent of Democrats have received at least one dose compared with just 52 percent of Republicans. All the states with the lowest levels of vaccination — Mississippi, Alabama, Arkansas, Wyoming and Louisiana — voted heavily for Donald Trump. Barely half of Republican House members report being vaccinated. . . . [France’s] new vaccine passport has drawn out protests but millions of French people have signed up for the vaccine since Macron announced these rules. Although France’s opposition leaders opposed the policy as heavy handed, they are not spreading misinformation. President Biden needs to get tough. He should explain that while we cherish freedom in America, you do not have the right to do anything and everything when it endangers the lives of others or places burdens on them. Here are some things that you are forced to do even in America: Go to school. Pay taxes. Register for the draft if you are male. Serve on a jury. There are also many things that you are not allowed to do that might be mistakenly seen as involving no one else. You may not buy or sell controlled substances, litter on public streets, make loud noise after certain hours, and so on. If you drive a car, you are required to get a license, buy insurance, wear a seat belt, obey street signs and speed limits, have the car inspected and not drink alcohol before driving. If you want your children to go to a public school in America, they must be vaccinated. These are all mandates because seemingly private actions actually impose public costs. You should not have the right to spread disease and occupy a precious hospital bed. Some Republican politicians and conservative media figures are finally urging people to get vaccinated, but they may be too late. As they did with the rise of Donald Trump, the allegations of voter fraud and the accusations of a stolen election, the Republican Party has indulged its crazies for too long, fanning the flames of falsehood and creating a miasma of misinformation. Even now, leading Republican governors like Ron DeSantis are pandering to their base by making it illegal to require proof of vaccination in Florida. Republicans say that they are for economic growth and against lockdowns, but it is the Republican Party and the conservative media, by their actions and negligence, that are endangering America’s economy, and far more importantly, the lives of its people. 2. Sam Altman is a Truly Amazing Person. Years ago, I got to pitch him WheelTug. He was too busy to look into it. Really? Who could be too busy for WheelTug?! (I trust you realize I am laughing as I type.) Now I guess I understand why. This Sam Altman interview with Ezra Klein is an eye-opener. With artificial intelligence becoming more capable at a rate of 10X per year (!!!!), the world is about to change. Much of it, I only barely understand, so — being viciously competitive — I trust you’ll barely understand it, too. But it’s fascinating. Even going as far afield as to worry not only about whether our artificially intelligent creations will wind up enslaving or eating us (an old concern I can readily understand), but whether we will wind up torturing them (a concept he concedes some people will find ridiculous, but that apparently quite a few people at his level are thinking about). Most importantly: how do you structure a society that broadly benefits from A.I., rather than one that puts dramatically more wealth and power in the hands of just a few? Yes, he thinks Universal Basic Income is coming; but he thinks there’s more we can do to give everyone a stake in the future, and dignity. The interview even touches on taxing wealth, so I excerpt a bit of that here as a lead-in to your feedback: EZRA KLEIN: I wouldn’t say that the people who run major technology companies are heavily anti-tax. . . . But there is a pretty heavy strain of the venture capitalists and others who . . . get real angry at the idea of taxes as a moral phenomenon. . . . Get real angry at the idea that being taxed might imply they don’t deserve what they have. There was a vote a couple of years ago where folks were comparing this to Naziism. . . . SAM ALTMAN: I actually think that most people in the industry are pretty happy to pay taxes. Sure they may advocate for less. There’s two comments that you hear a lot, one I agree with and one that I don’t. One is that I’m happy to pay taxes, I just wish they were better spent. And because they’re so badly spent, I don’t want to pay any. . . . I don’t agree with that. You hear it a lot. I do understand where people are coming from. . . . The one that I do agree with is I think there’s a lot of people in the tech industry — founders, venture capitalists, whatever — that really object to messaging like billionaires should not exist. Which is very different from saying billionaires shouldn’t be taxed. I would love to have trillionaires in the world if they were paying a lot of tax. And I think everybody else should want that, too. . . . But on the whole, as long as people are paying taxes and creating economic value, I want more of that. And I think most members of society should want more of that, too, if we can figure out how to make sure that we have fair access to power and voice and governance. . . . EZRA KLEIN: . . . Is it such an accident that Jeff Bezos and Bill Gates live in Seattle, a state with no income tax? It’s all fine to be for taxes in some conceptual way. . . . Or that Elon Musk just re-domiciled himself in Texas to pay, at least in part, lower taxes. I mean, power speaks. . . . I don’t think there should be a trillionaire. Not because I don’t want somebody to invent the thing that would have made them a trillion dollars — I do. But one, the marginal utility of having a trillion dollars is crazy low for one person. That should just be distributed to people who then won’t die from malaria because they have some money. But two, that’s a lot of power for one person to have. And I think if I have one critique of your approach to politics on this stuff it’s that I think you take policy seriously and power less seriously. But one of my observations from covering policy for a long time is policy reflects power. It doesn’t precede it. SAM ALTMAN: I can totally believe that. Again, I think if there is a big bug in my thinking, this is likely it. I’m very sympathetic to the idea of being wrong here. I doubt that it’s an accident that those people all live in no income tax states. But I also think — I haven’t talked to Elon about this, but I know him well enough that I would bet that his bigger reason was just an increasing unfriendliness in California towards his businesses and a real disagreement with how they were handling his company’s ability to be successful. And that is, I think, a real shame for all of us. No one, as California residents, none of us benefit from having fantastic companies move out of the state. That is a real shame. And that was power that the California legislature had that I think they badly misused that preceded the politics. And I wish that didn’t happen. On the trillionaire question — we were talking earlier about health care. Let’s say someone invents — some scientist invents something that gives everybody on Earth 20 years of extra great health span. And they want to make it phenomenally expensive. But they create $100 trillion of value and become a one trillionaire in the process. I would cheer them on. . . . I think technology can make the world unimaginably great, but it needs a policy and power tweak to have that be distributed in a way where it can happen at all and in a way where it can happen justly. . . . I also agree that the heads of the biggest technology companies have too much power. In the Industrial Revolution, when the joint stock corporation was created as this second order sovereign entity, everyone was OK with that, because it was second order and the real sovereign had more power. But I think you can certainly make a case now that the giant tech companies are more powerful than many countries, certainly not the U.S. yet. But they don’t have any kind of democratically governed system. So yeah, I mean, that causes me deep discomfort. . . . There’s so much more to this interview — you may want to treat yourself to the whole thing. And now . . . Thanks to those of you who responded to my idea for how to tax wealth. Some of you offered kind words. (I have extended their subscriptions two years at no charge.) One called it “genius.” (She now has a lifetime subscription.) One of you, a gay not-rich Princeton grad turning 80 next year who voted to re-elect Trump (right? it takes all kinds!) wrote: “I am coming to agree with you, especially after reading an accounting that connects a lot of dots for me. This is an outrage! The rich are NOT, as the Dems say, paying ‘their fair share.’ Your floor of $100 million for a wealth tax is way too high. Lots of yachts would escape. Something like your idea probably should start at around $20-25 million. Time for a revolt of the masses! But of course the rich elite will fight and, as usual, likely win.” An eleven-figure friend I sent it to (to my knowledge, I have no regular readers with eleven-figure net worths) replied: “I think it’s not a great idea.” But didn’t say why. “I am leaving all my money to my foundation,” he continued, “so I am not personally concerned about any rise in taxes.” The only person who seemed really to hate it, and detailed his reasons, is a brilliant friend of long standing with merely a low-ten-figure net worth (low, but remember: this is before the decimal point). He’s no fan of either party, but considers Trump “an abomination.” He said my proposal was “silly, impractical, illegal, picayune, and it won’t work for various reasons,” the first of which is that it is unconstitutional. We had a good email back and forth, snippets of which include: HE: You cannot ‘take’ anything from a US citizen without just compensation. That was the basis of the Magna Carta, when the King regularly took lands from their vassals. It has been a bedrock of Anglo-Saxon Law for one thousand years, and is enshrined in our Constitution in the Takings Clause. So, your idea is null. “For your edification,” he added, “this is the Fifth Amendment” — which he duly cut and pasted. ME: What do you make of this from the American Bar Association? A Wealth Tax Is Constitutional. I’m by no means certain their view would prevail; but is it ‘silly’ even to imagine that it might? HE: The ABA article, which I read some time ago, is weak and stretched. No one serious pays any attention to the ABA, which was hijacked by Progressives years ago. A ‘taking’ is a ‘taking.’ It is possible that a packed Court could agree to this interpretation, but the current Court will respect the Constitution. It also violates the apportionment concept. See: Here’s Why Elizabeth Warren’s Wealth Tax Is Completely Unconstitutional. If we ever enacted a wealth tax and the Takings Clause were ‘repealed,’ the USA would decline in a straight line down. It would mean no assets are safe, and we would be a banana republic. Anyone with assets would immediately move to another country. Then you would really have a problem with tax collections. ME: Is an income tax confiscation? [He had previously called my wealth tax “confiscation.”] Is property tax confiscation? Is the estate tax confiscation? HE: Income tax and property tax are well settled law under the Constitution. Estate tax is still an outlier. There was a lot more. I naturally said I hoped that if the estate tax had somehow managed to be an outlier for more than a century, maybe my wealth tax idea could last 10 years before it sunset. He kept coming back to the “revenge” motivation behind any wealth tax ideas, and how those of us in favor were vilifying rich people. I asked him to re-read my post — in which I had called Jeff Bezos “an American hero” whose success should be “celebrated (and taxed)” — — a major theme of which was that any discussion of the wealth tax should be “non-pejorative.” He didn’t want to hear it. HE: History tells me that the Nazi’s were very good at taking assets from people they didn’t like. Perhaps you can study their methods? ME: I don’t think Eisenhower was a Nazi when he raised the top rate (too high) to 91% — he was actually using it to fight the Nazis. And I like my billionaire friends. I was a little surprised my friend was as annoyed by all this as he clearly was. He’s every bit as concerned about poverty, climate, infrastructure, and the rest as I am. (His good idea on infrastructure I will save for a future column.) And there of course lots of billionaires and aspiring billionaires who would be willing to chip in more if everybody else among the ultra-high-net-worth cohort had to, also. I certainly think “my” way of doing it would be a lot less disruptive and easier to administer than the wealth tax currently proposed. But maybe we should call this an “income tax surcharge” or “an estate tax down payment” and give people a choice — pay either in cash, the traditional way, or as a transfer of assets, as I have suggested. Listen: I may have invented the Forever Stamp, and definitely am the guy who got Tipper Gore to close the Millennium March concert at RFK Stadium when she came out at the end, as a total surprise, to play the drums. So maybe this idea will catch on, too. HAVE A GREAT WEEKEND!