As betting markets currently put the odds of California voters approving a “one-time” tax on the assets of billionaires at about 30 percent, the downstream risk of proposals like this is that they will eventually make their way into federal legislation.
Your far-right, libertarian, public policy think tanks multibillionaire-funding (like the Kochs) made it certain which "side" you'd go with. After all, free markets generated our record high wealth inequality and worst-ever opportunity (measured by mobility intra or inter generationally). But Adam Smith warned us against rigged markets (via collusion or monopoly), just as much as he warned against even a well-intentioned government. But the massive inefficiencies and inequities from an unjustified government intrusion OR rigged markets can be minimized by laws and regulatory agencies such as our Sherman and Clayton Acts and a Constitution which protects corporations, private property, and rights. Also, Smith economics didn't know yet about market failure, externalities, information asymmetries, macro instabilities, or public goods; his was still a world of primogeniture, prior to formal labor and land markets, and a permanent income tax 66 yrs in the future! He'd certainly have considered a tax of wealth (but end to tax on corporation profits) in a world where most all accumulated wealth has easily avoid tax as "unrealized" and later bequeathed via Trust Funds (or just off-shored). Removing the U.S. as a prime depository of wealth would significantly deplete global opportunities for wealth havens. Sure, the U.S. economy thrives by serving as a leading hideout for crime syndicates, kidnappers, smugglers, embezzlers and dictators' ill-got gains, but we must use that as an "argument" for finally taxing wealth at all.
While i agree that a wealth tax is not a good thing, your numbers might be off as it applies to returns of many billionaires who most likely have returns on their investments far in excess of the average market return you cite.
I was assuming all assets invested in equities, which gives a generously large return of about 8.2%. Yes, very high worth individuals have slightly better returns, but overall their average and median returns are not as large as you might think. This NBER paper looked at this very question: https://conference.nber.org/conf_papers/f155140.pdf. An investor with a net worth of $3-10 million has an average return of about 5.6%, versus 6.4% for an investor with over $100 million in net worth. The return I used was larger than both of these, and my main point was not that it hurts the investments of billionaires, but hurts the investments and livelihoods of everyone.
Ok, get the hurt to others, but if you look at the top 15 billionaires in the U.S. or any number of them beyond the 15 you will find the returns over time at least 2X of the number you cite to do your calculations. And again not high net worth types of $3-10MM but the extremes of wealth holdings.
Contrary to the belief that the ultrawealthy have some unique investment skills that enable them to regularly beat the stock market, even they, on average, don’t beat the stock market.
One can pick and choose data as they like, but to think that Musk, Bezos, Zuckerberg and a host of other billionaires have not generated returns on their investment in these businesses is to fool oneself. Perhaps a broader class have not, and the comparative timeframe matters but far too many including any number of hedge fund super wealthy types have outperformed over a very long time period generating extremely high returns from their investments in their biz. Oh, and you could add the Google founders to the mix. Having said that i do agree with your overall premise of the negative aspects of a wealth tax; i just take issue with the example of underperformance or sub par or only returns on investment earned by a great many billionaires. Just a view and no need to go further back and forth about this issue. Thanks for your responses.
Your far-right, libertarian, public policy think tanks multibillionaire-funding (like the Kochs) made it certain which "side" you'd go with. After all, free markets generated our record high wealth inequality and worst-ever opportunity (measured by mobility intra or inter generationally). But Adam Smith warned us against rigged markets (via collusion or monopoly), just as much as he warned against even a well-intentioned government. But the massive inefficiencies and inequities from an unjustified government intrusion OR rigged markets can be minimized by laws and regulatory agencies such as our Sherman and Clayton Acts and a Constitution which protects corporations, private property, and rights. Also, Smith economics didn't know yet about market failure, externalities, information asymmetries, macro instabilities, or public goods; his was still a world of primogeniture, prior to formal labor and land markets, and a permanent income tax 66 yrs in the future! He'd certainly have considered a tax of wealth (but end to tax on corporation profits) in a world where most all accumulated wealth has easily avoid tax as "unrealized" and later bequeathed via Trust Funds (or just off-shored). Removing the U.S. as a prime depository of wealth would significantly deplete global opportunities for wealth havens. Sure, the U.S. economy thrives by serving as a leading hideout for crime syndicates, kidnappers, smugglers, embezzlers and dictators' ill-got gains, but we must use that as an "argument" for finally taxing wealth at all.
While i agree that a wealth tax is not a good thing, your numbers might be off as it applies to returns of many billionaires who most likely have returns on their investments far in excess of the average market return you cite.
I was assuming all assets invested in equities, which gives a generously large return of about 8.2%. Yes, very high worth individuals have slightly better returns, but overall their average and median returns are not as large as you might think. This NBER paper looked at this very question: https://conference.nber.org/conf_papers/f155140.pdf. An investor with a net worth of $3-10 million has an average return of about 5.6%, versus 6.4% for an investor with over $100 million in net worth. The return I used was larger than both of these, and my main point was not that it hurts the investments of billionaires, but hurts the investments and livelihoods of everyone.
Ok, get the hurt to others, but if you look at the top 15 billionaires in the U.S. or any number of them beyond the 15 you will find the returns over time at least 2X of the number you cite to do your calculations. And again not high net worth types of $3-10MM but the extremes of wealth holdings.
Contrary to the belief that the ultrawealthy have some unique investment skills that enable them to regularly beat the stock market, even they, on average, don’t beat the stock market.
Using data from the Forbes 400 list, the average return of the ultra wealthy over the past decade actually slightly underperformed the broad market. https://www.marketwatch.com/story/even-the-very-rich-should-invest-in-broad-market-index-funds-heres-why-38afd5b4
One can pick and choose data as they like, but to think that Musk, Bezos, Zuckerberg and a host of other billionaires have not generated returns on their investment in these businesses is to fool oneself. Perhaps a broader class have not, and the comparative timeframe matters but far too many including any number of hedge fund super wealthy types have outperformed over a very long time period generating extremely high returns from their investments in their biz. Oh, and you could add the Google founders to the mix. Having said that i do agree with your overall premise of the negative aspects of a wealth tax; i just take issue with the example of underperformance or sub par or only returns on investment earned by a great many billionaires. Just a view and no need to go further back and forth about this issue. Thanks for your responses.