Billionaires Blast off

[DBT]

Nothing of the sort. Are you suggesting that the highly profitable companies are unable to pay their workers more? The reason that they don't is not that they are unable to, but that they are unwilling.

Their business practice is to pay a little as possible in order to maximize profits. They pay what they need to, and an imbalance of negotiating power prevents workers from securing better pay. Collective bargaining goes some way in addressing this imbalance of power.

You're trying to keep people from accumulating large sums of money.

SpaceX was the result of one of those guys who had already accumulated large sums of money putting part of it into an idea. Likewise Virgin Galactic (which probably won't amount to more than tourism and we don't really need) and Blue Origin (which is aiming to be a competitor to SpaceX.)

I am pointing out that excessive accumulation of wealth in the hands of a small percentage of the population is not good for society or the economy, and I have given the reasons why.....which you just ignore or brush aside.

 

[Swammerdami]

Non-investment income is generally spent soon after being made--inflation is not a meaningful factor.

Essentially all income is either spent immediately or invested.

To keep the numbers simple, assume 33% tax bracket, 9% nominal annual return on investment and 3% inflation. The tax on the real return of 6% "should be" 2% but because there's no inflation adjustment you pay 3%. The extra 1% is, in effect, an annual wealth tax.

Considering only 1st-order effects (and assuming equal income treatment), I think the same is true whether the investment pays interest, dividends or eventual capital gains.

 

[Derec]

But I prefer democracy over aristocracy.

But we have a democracy. An idiot freshman congresswoman from Queens is far more politically powerful than the founder of Amazon. And she only had to convince fewer than 17k people (out of a population of 700k) to vote for her in the primary because NY14 is so lopsidedly Democratic in the general. For the record, I do not find district-based representation a particularly good system but that is an issue for another thread.

A handful of people making the big decisions about the direction and future of human endeavour, selected almost entirely by their wealth, is a shit way to run a society.

On the contrary, having the government be the only entity capable of doing big and important things is the way of the Soviet Union.
There is a place for government and NASA, but it should not be the only way to go into space. The more players trying different things, the better!
And yes, it takes a lot of money to go into space, and billionaires can self-fund their space-related companies like Blue Origin.
But a similar thing happened with Tesla. It takes a lot of capital to start a car company and Elon Musk was already a billionaire from PayPal.
Would the world be better off if Tesla was never created? You may say other companies are making EVs these days but they were largely pushed by competition from Tesla to do so.

Even if it occasionally results in something you personally want to see happen, that might have not happened in a more democratic system.

Why does a "democratic system" preclude the role of the private sector in space? Do you somehow think that "democracy" means that government should have a monopoly over things like access to space?

It's astonishing to me that Americans, of all people, are so deadset keen on restoring an aristocratic system of governance.

I do not see how entrepreneurs starting companies is a harbinger of an aristocratic system. No more than Henry Ford or Karl Benz starting car companies did. I guess we should have left the auto industry (and all other important decisions) to the politicians like they did in DDR or USSR.

I guess at least Musk will make the hyperloop run on time.

I'd trust him more to do that than Newsom, that's for sure.

 

[laughing dog]

Non-investment income is generally spent soon after being made--inflation is not a meaningful factor.

Essentially all income is either spent immediately or invested.

To keep the numbers simple, assume 33% tax bracket, 9% nominal annual return on investment and 3% inflation. The tax on the real return of 6% "should be" 2% but because there's no inflation adjustment you pay 3%. The extra 1% is, in effect, an annual wealth tax.

Considering only 1st-order effects (and assuming equal income treatment), I think the same is true whether the investment pays interest, dividends or eventual capital gains.

Or if one is looking at a 9% increase in labor income: real income increases by 6% which should result in a 2% increase in tax liability but there is a 3% increase.

 

[Swammerdami]

Or if one is looking at a 9% increase in labor income: real income increases by 6% which should result in a 2% increase in tax liability but there is a 3% increase.

No. Earn $30,000 in nominal dollars and pay $10,000 nominal dollars in tax. If this were nominally $60,000 due to prior years' inflation, your $20,000 nominal tax would be the same (as in the $30k/$10k case) in REAL terms.

Inflation is irrelevant when income and outgo occur at the same time, or almost the same time. Inflation only matters when the beginning and end of a (compound-) transaction are separated by many months or years. (Never mind HYPER-inflation .)

Nitpick: For spent income, taxpayers may get a tiny ADVANTAGE due to inflation. Earn $30,000 in January and the $10,000 tax paid in March (assume quarterly tax payments) may be worth LESS than $10,000 in January money if there's been inflation during the 2 months.

 

[Derec]

With the 80-km definition, Richard Branson made it up into outer space, and with both the 80-km and 100-km definitions, Jeff Bezos made it up into outer space.

The main reason for the Kármán line being at 100 km is that it is a nice round number.

About Branson and Bezos' flights, the Biden administration is being incredibly petty, moving the goalposts on astronaut wings.

FAA changes policy on who qualifies for commercial astronaut wings on same day as Blue Origin spaceflight

 

[laughing dog]

Or if one is looking at a 9% increase in labor income: real income increases by 6% which should result in a 2% increase in tax liability but there is a 3% increase.

No. Earn $30,000 in nominal dollars and pay $10,000 nominal dollars in tax. If this were nominally $60,000 due to prior years' inflation, your $20,000 nominal tax would be the same (as in the $30k/$10k case) in REAL terms.

Inflation is irrelevant when income and outgo occur at the same time, or almost the same time. Inflation only matters when the beginning and end of a (compound-) transaction are separated by many months or years. (Never mind HYPER-inflation .)

Nitpick: For spent income, taxpayers may get a tiny ADVANTAGE due to inflation. Earn $30,000 in January and the $10,000 tax paid in March (assume quarterly tax payments) may be worth LESS than $10,000 in January money if there's been inflation during the 2 months.

The logic is identical in case of labor income or interest income. So either it matters in both cases or it doesn’t.

 

[Derec]

It is disingenuous to write about tax burdens without including payroll taxes. (The employer-paid portion should be included also, since it is in lieu of higher pay.) When a graph or article ignores that giant tax burden, it may be a tip-off just to ignore the presenter.

The so-called payroll taxes are not proper taxes - they are really premiums for mandatory insurance products. That's why they are cut off after a certain income - the benefits are too. As such I do not see a problem in considering them separately from the federal income taxes, which go into the general fund.

Dollars paid for SocSec and Medicare funding are real dollars too! The right-wing Babble Machine certainly has no problem including SocSec and Medicare when they want to babble about high government spending.

Of course they are real dollars. But they pay for benefits, rather than paying for the general upkeep of the federal government.

It's also very cute how some want to describe $280,000,000,000.00 annually as a small amount of money. Turn the subject to spending a fraction of that sum on improving the lives of poor Americans and the same folk will be shrieking about the huge price-tag.

It's a small amount of money relative to the total federal spending - it would not even pay for the Dems Only non-infrastructure bill ($3.5T over 10 years) that is being pushed currently. It is not that much money relative to how big a change to the tax system an introduction of a 6% wealth tax would be.
And the way Warren et al speak of the wealth tax, you'd think it was some sort of panacea, when it can not even pay for a single bill on the Congressional Democrats' wish list.

 

[laughing dog]

The so-called payroll taxes are not proper taxes - they are really premiums for mandatory insurance products. That's why they are cut off after a certain income - the benefits are too. As such I do not see a problem in considering them separately from the federal income taxes, which go into the general fund.

Payroll taxes are taxes. They are used to fund current gov't transfer payments and expenditures, just like other federal taxes. Payroll taxes are a current burden on current taxpayers.

Of course, you can ignore them, but most people will consider any tax burden analysis that ignores them to be ignorant or disingenuous.

 

[DBT]

Tax Evasion and Inequality.

Abstract
Drawing on a unique dataset of leaked customer lists from offshore financial institutions matched to administrative wealth records in Scandinavia, we show that offshore tax evasion is highly concentrated among the rich. The skewed distribution of offshore wealth implies high rates of tax evasion at the top: we find that the 0.01% richest households evade about 25% of their taxes. By contrast, tax evasion detected in stratified random tax audits is less than 5% throughout the distribution. Top wealth shares increase substantially when accounting for unreported assets, highlighting the importance of factoring in tax evasion to properly measure inequality.


In the United States for instance, the top 0.1% owns about 22% of recorded household wealth, as much as the bottom 90% (Saez and Zucman, 2016).

We also contribute to the literature on top-end inequality. Over the last fifteen years, a number of studies have used tax data to construct top income and wealth shares for many countries.4 The literature discusses the problem raised by tax evasion (e.g., Atkinson, Piketty, Saez, 2011, pp. 36–40), but until recently there was little data that would allow to systematically quantify it. Zucman (2013) estimates that 8% of the world’s financial wealth is held in tax havens globally; a similar estimate is obtained by Pellegrini et al. (2016).

Absent micro data on who owns the wealth hidden offshore, however, these studies could not assess the implications of tax havens for the measurement of inequality. Our contribution here is to study micro data that provide the first direct evidence on how hidden wealth is distributed.

 

[fromderinside]

The so-called payroll taxes are not proper taxes - they are really premiums for mandatory insurance products. That's why they are cut off after a certain income - the benefits are too.

Of course, you can ignore them, but most people will consider any tax burden analysis that ignores them to be ignorant or disingenuous.

No-ah. You didn't write that laughing dog. Oh my. Remember what happened to the commercial viewer in Max Headroom? Well Derec's life is in your hands.

 

[Swammerdami]

The so-called payroll taxes are not proper taxes - they are really premiums for mandatory insurance products. That's why they are cut off after a certain income - the benefits are too. As such I do not see a problem in considering them separately from the federal income taxes, which go into the general fund.

Your point is not entirely incorrect. There are two ways to present the book-keeping, and either has merits.

BUT, the reason you're wrong is that
Every.Single.One of the right-wing babblers WILL include SocSec payouts when they want to make government spending (or the "welfare state") appear large and will NOT include SocSec taxes when they want to make the taxes paid by workers appear small. There is a technical term for this: Inconsistency.

Then again, consistency is not a virtue coveted by right-wing babblers.

 

[Swammerdami]

On the topic of "a quarter of a trillion dollars is only a little bit of money, but one trillion is a lot" let me call attention to this article:
https://slate.com/business/2021/07/republicans-taxes-irs-bipartisan-infrastructure.html

Instead of collecting a quarter-trillion with a special new tax, why not just collect money that's already owed?

A new estimate shows One Trillion Dollars — Yes, that's Trillion with a T — as the amount of money the IRS loses annually due to tax frauds and other underpayments. $1,000,000,000,000Ⳬ

Right-wingers like to babble about government wasting money. Spend a million dollars on red-tape officials and all you get is "red tape."

BUT the IRS is (or could be) a major PROFIT center. IRS auditors are worth their weight in gold. Spend a million on hiring more auditors, and ten millions of tax avoidance will be caught. BUT, as shown at the above link, the GOP consistently opposes any such improvements to the IRS. They do NOT want tax frauds to be detected.

Your views on this, Derec?

 

[Bomb#20]

The customers, the workers and society (that would benefit if they payed significantly higher taxes), being the Milking Cows that support their lavish lifestyles.

Shameful really.

Always the zero-sum-game rhetoric with you. Production is a synergistic process; the owners' contribution is as indispensable as the workers' contribution, and the wages and profit both come from the whole being greater than the sum of its parts. Capitalists are equally the Milking Cows that support employees' and customers' middle-class lifestyles.

 

[Bomb#20]

Here you are banging on about <expletive deleted>, when you just don't want to cop to the FACTS that:

If I have a billion dollars in a thousand shares
I can take a million dollar loan out on one share, any day of the week
I can thumb my nose at the bank
And they get a share.

Not sure what planet you live on. On this one if a bank lends you $420,000, and you put up one share of Berkshire-Hathaway as collateral, and when the loan comes due the stock has gone down to $320,000, so you say "Hah, hah, here's your collateral!", you'll still owe them $100,000. If the bank was willing to bet on Buffett, and take a loss if Buffett botches his job, then why the devil would they do it by lending you the money so you can buy the stock and you can get the upside if Buffett performs? They'd take that $420,000 and buy their own share of Berkshire-Hathaway. Earth banks aren't charities, even for rich people.

 

[Elixir]

Here you are banging on about <expletive deleted>, when you just don't want to cop to the FACTS that:

If I have a billion dollars in a thousand shares
I can take a million dollar loan out on one share, any day of the week
I can thumb my nose at the bank
And they get a share.

Not sure what planet you live on. On this one if a bank lends you $420,000, and you put up one share of Berkshire-Hathaway as collateral, and when the loan comes due the stock has gone down to $320,000, so you say "Hah, hah, here's your collateral!", you'll still owe them $100,000. If the bank was willing to bet on Buffett, and take a loss if Buffett botches his job, then why the devil would they do it by lending you the money so you can buy the stock and you can get the upside if Buffett performs? They'd take that $420,000 and buy their own share of Berkshire-Hathaway. Earth banks aren't charities, even for rich people.

Oh, but if you own say, $187,000,000,000.00 worth of a Company that has never gone down in value in any year of its 25+ years of existence and you need a billion or so to pay for your new yacht and its helipad-bearing tender, banks will be happy to lend it to you with maybe 1% of those holdings as collateral.
You need to stop projecting YOUR situation on mega billionaires.

 

[Bomb#20]

Well, yes. But that’s not how Bezos and the other billionaires do it. They never sell their stock. They simply borrow against them and accumulate debt. Bezos new $500 million yacht will be 100% financed by a bank that is eager to lend him the money. When the note is due though, he won’t sell stock to pay it off, or even give them stock. That would create a substantial tax issue for him. Instead he just borrows again from eager lenders, often the same ones. On paper they’re getting rich off these loans.

How are they getting rich off them? But, but, that would imply Bezos is [gasp] paying them interest! The eager lenders pay tax on that, just as the yacht-builders pay tax on what they're paid. Whatever of Bezos' hypothetical wealth that he turns into real wealth he can consume and enjoy, the government gets its cut.

Bezos and Musk pay little if any tax, because on paper they do not make any money. But their net worth is soaring. They never realize the gains they’ve made this way. Their true tax rate is less than 4%.

What the heck makes that their "true" tax rate? What you call their "net worth" is just another way to say "what other people are willing to give Bezos and Musk in exchange for Bezos and Musk doing something for those other people that Bezos and Musk do not, in point of fact, do for them".

Hey, I've got an awesome idea for a new business! I'm going to create a website, hosted in Russia where this sort of thing isn't actionable, where visitors can bid on one night of sex with all the hottest Hollywood actresses. It's a link-up site -- when the going rate for Emma Stone is a thousand dollars a night, Emma Stone is welcome to click "Accept", my website will process the buyer's credit card and pay Ms. Stone $900, and I'll pocket a 10% finder's fee. (Of course it's an entertainment site -- none of the actresses ever actually accept -- and I make all my money on obnoxious pop-up ads just like every other website on the net.)

So I'm guessing you figure the IRS should tax Emma Stone 39.6% on her unrealized extra $356,000 of net worth, the value of a year of her prostitution services, even though she elected not to sell them?

Ordinary workers are paying 15% just for social security tax!

But they get most of that back in SS benefits when they retire. According to an actuarial analysis I read, Social Security is 15% a welfare program for poor old people and 85% an individual pension plan. If that's correct, the actual component of SS that's a regressive tax is about 1.9%. Worth fixing, sure, but nowhere near big enough to make the overall tax system regressive.

One way to stop this merry go round is to tax estates at very, very high rates.

I would think simply taxing estates as ordinary income would do the job. The government gets its cut of what other people are willing to give Bezos for his stuff when other people get his stuff, same as if he were a perfectly respectable sex worker.

https://www.seattletimes.com/busine...d-musk-pay-relatively-little-in-income-taxes/

The capital gains rate hasn't been 20% for years -- it went up to 24% back during the Obama administration.

 

[Elixir]

Apologies in advance for the thread drift. In fact this is probably off-topic entirely, since Brian Binnie wasn't (afaik) a billionaire. But maybe Burt Rutan was/is?

But while the "B" team accept congratulations for their flights, they were NOT the first private "space" flights.
Back in 2004, a guy named Brian Binnie flew this little rocket-powered beauty, basically built in Burt Rutan’s garage, into space. No computer controls, not even hydraulics…the control surfaces were connected to the joystick by cables and pulleys, like a WWI biplane. THIS was the first privately built aircraft to fly to space, twice within two weeks in fact. Brian Binnie piloted the private rocket SpaceShipOne to an altitude of 69.6 miles, won the $10 million Ansari X Prize.

I just thought a little reminder was in order.

 

[untermensche]

 

[DBT]

The customers, the workers and society (that would benefit if they payed significantly higher taxes), being the Milking Cows that support their lavish lifestyles.

Shameful really.

Always the zero-sum-game rhetoric with you. Production is a synergistic process; the owners' contribution is as indispensable as the workers' contribution, and the wages and profit both come from the whole being greater than the sum of its parts. Capitalists are equally the Milking Cows that support employees' and customers' middle-class lifestyles.

It's not rhetoric. The wealth and power gulf between the very rich and the rest of the population is verifiably real. The problems this divide causes is not rhetoric, they are real problems, both for the economy and society.

The problems have been described. To dismiss the issue as being rhetoric is a rationale in defense of the indefensible.