Thought provoking interview with Dan Riffle by Dylan Matthews for Vox: AOC’s policy adviser makes the case for abolishing billionaires.
Some interesting passages:
There’s some level of rhetorical flourish happening here. When I hear “every billionaire is a policy failure,” how literally should I be interpreting that? Should I be thinking, “We can’t rest until every single person has a net worth of $999 million or less?” Or do you mean it more as a general attitude we should have toward extreme wealth?
I don’t know where exactly we can draw the line. We can have all 300 and some-odd million Americans vote on it and come up with an average that everybody thinks is a reasonable amount of money. But at some point there has to be an upper bound, right? If you have $5 million, you can live off the interest of that and be a one percenter. There’s nothing in this world that anybody wants or needs to do that you can’t do with, let’s say, $10-15 million. And so at some point there has to be a line. To me, $1 billion is way, way, way, way past the line.
Later in the interview Riffle talks about how the larger the size of the “pie” is for Jeff Bezos and Bill Gates, the smaller it is for the rest of us. He also says that in a discussion about the argument that economic resources isn’t a zero sum game - as the economy grows, so does the “pie”. Riffle points out that at any given time that metaphorical pie is a finite size, ergo at any reasonable measure of time it is a zero sum game. That is an important distinction.
I also thought that it would be a very interesting idea to allow a direct democratic vote of all Americans to determine its own graduated tax brackets. How much monarchy is America willing to allow to grow in its own population?
The line about if someone has $5 million dollars, they can do no addition work and live off of the income is also an interesting metric to think about. Is that true? I own a few shares of Vanguard’s Vanguard Mega Cap Growth ETF (MGK). If I owned five million dollars worth of that, could I live off of it?
Last month (06/27/2019) MGK paid $0.417 per share in dividends when the price of the share was $128.97. If I owned five million dollars worth, I’d have 38768 whole shares. And if I had had that many shares on that date, I would have been paid $16,166.25 in dividends. If I were to receive that exact amount of money in dividends for all all four quarters, I’d have an annual income of $64,665, which would allow me to live a comfortable, but probably not lavish lifestyle requiring zero work on my part.
The math on that isn’t perfect, because $0.417 is actually nearly the highest amount of money that MGK has paid out. I went back to the last four pay outs and saw that the previous payout was actually the lowest in the six years I could easily find data on at $0.089 per share. So, ran the math five million shares at the closing price on the days that dividends were paid and then calculated for how much I would have received in dividends, then added that up for the last four quarters. The grand total came to a pre-tax dollar amount of: $41,070.38. Again, that amount of income would require no additional work other than someone to have five million American dollars and invest them in a single stock that I picked for this exercise.
In my corner of Virginia, the claim that someone could live off of $5,000,000 without working is, in my opinion, a bit of a stretch. Back in the homeland of Appalachian Ohio? Yep, you 100% can, based on the rough math that I did.
One of the things that I’m intrigued by is what we can do about stock ownership and shareholders. Most of the galactic billionaires that we’re talking about here — it’s not like they have a checking account or a savings account with $100 billion in it. It’s valuation of stock that they have. For Jeff Bezos, it’s ownership of Amazon. For Bill Gates, it’s ownership of Microsoft. So employee-owned companies are something that we’re talking about.
There’s other ways that you can force the divestiture of an owner of a company once we hit a certain threshold. If you want to start a company, if you want to be an entrepreneur and start a business and that business succeeds, then you should be successful and you should be wealthy and you should be able to travel the globe and retire in your 30s and live in a big house with a big yard.
But the idea that you still need to hold onto all of that stock when it hits $10 million or $50 million or $100 million or $500 million or $1 billion dollars, just isn’t the case. Having more democratic control over society’s resources would be helpful, and having more democratic control over a company’s resources would be beneficial for that company as well. Nobody cares more about the wellbeing of the company than the employees of that company.
There’s other proposals that have been put out there. Matt Bruenig had an interesting article — back in his Medium days before he started the People’s Policy Project — where he talked about “nickel and dime socialism,” and the idea that companies can pay their taxes in stock and thus contribute to this sovereign wealth fund, which would finance the parts of the welfare state that are not being financed now.
He mentions the investigation of employee owned companies. I’m also very interested in finding out more about how those are structured. I’ve been reading about employee owned companies, ESOPs, and B Corporations. All of which result in better compensation and stability for employees and the communities in which the companies operate.
The final part Matt Bruenig’s idea to allow companies to pay their taxes with stock. Under heading “2.2. Mandatory Share Issuances” of the link to Bruening’s article on “Nickel-and-Dime socialism” he lays out these ideas and it makes perfect sense to me. If a corporation is to pay taxes, allow it to pay them in its publicly traded shares. Dividends are paid to public funds that will be used for public good. As private wealth is created, it is then used for for increasing the social safety nets, such as public education, that will produce more intelligent and productive Americans to create more private wealth, which then feeds the social programs, etc. I had never heard of this idea before and I find it very thought provoking.
In his piece, he does list an idea about how instead of annual taxes being paid in shares, it is a mandatory one time grant. If the corporate tax rate is 20%, the company must hand over 20% of it’s shares, then the government immediately is able to collect on its taxes every time dividends are paid. Right now it seems like whether or not corporations are paying their fair taxes is a opaque box.
- Felix Salmon’s op-ed for Reuters going back to 2013: Why public companies should have public tax returns
- PublicIntegrity.org’s You paid taxes. These corporations didn’t.
- CBS News’s 60 of America’s biggest companies paid no federal income tax in 2018
The articles about the richest organizations in our species’ history paying no taxes are analysis’s, also known as, pretty good guesses. The public has no idea if that is factually true, because it’s a black box. If corporations had shares transferred to the states that they are obligated to pay taxes too, their would be no guesswork about how much was paid and when.
As a post script to this article, not only do I think that elected American officials should have their tax returns public, I think everyone should.
- Anna Bernasek for NYTimes: Should Tax Bills Be Public Information?
- Patrick Collinson for The Guardian: Norway, the country where you can see everyone’s tax returns