There’s been a lot of chatter recently about the wealth being accumulated by the likes of Jeff Bezos, Elon Musk, Bill Gates, Mark Zuckerberg, Richard Branson, Warren Buffet and others.
“Tax the billionaires!” “Share their wealth!” The cries are crescendo-ing.
The refrain is not surprising. It seems grossly unfair that so few should make so much, while many of us support the economy through taxing away our hard-earned dollars and the poor suffer in some level of squalor even in our rich Western countries.
If only it were that easy. There are so many complications to consider:
- Much of the wealth is paper wealth only, based on stock valuations. If they were to cash in those stocks, en masse, the stock prices would plummet and, along with that, their net worths (as would those of other holders of their stocks, including pension plans). They might not even realize enough cash to pay the taxes on the stock values prior to the dive. In other words, wealth, as measured by valuations, is hypothetical, not real.
In short, you cannot tax hypothetical money (wealth); you can only tax real money (income).
- Much of the wealth was accumulated due to innovations that provide much sought-after products. Many of these innovations were incentivized by the tax breaks that made it worthwhile for entrepreneurs to take on the high risk of developing these new initiatives. Without the tax breaks, many innovations wouldn’t have happened, and we wouldn’t have the benefits that the public finds worthwhile—at least according to their shopping habits.
Even without the tax breaks, these people are savvy enough, and have good advisors, to set up their corporations in such a way as to maximize their earnings and reduce their taxes. Closing some loopholes only invites more inventive schemes to circumvent taxes, and eliminating all tax breaks would radically impair innovation. So, governments have a tough balancing act to navigate.
(It should be noted, though, that many of these people give away a lot of their wealth to charity; Bill Gates and Warren Buffet have pledged to give away half of their wealth, a far greater percentage than any proposed minimum tax rates.)
So what can we do to level the playing field? There are two clear solutions.
- Join them.
Create competition for these guys so that consumers will spread their buying power around, not giving it all to a few, but some of it to many more people. Take a risk. Be an entrepreneur. Be one of those that consumers spend their dollars on.
OK, you say, that’s a ridiculous stretch! I could never start a big company. But, remember, each one of them started from the same place as most of us are at, with no money but an urge to tinker with something. Bill Gates played around software as a hobby in high school. Larry Page and Sergey Brin started Google from their dorm rooms at Stanford University. So did Mark Zuckerberg, at Harvard.
I personally know someone in my town who tinkered with something on the internet, created a silly little thing, and, as a result, the company he was working for is now being pursued for billions of dollars.
Not everything is internet based, though. Warren Buffet made his wealth long before the internet came along, as did Pattison and the Weston family in Canada. So, it can be done, if you’re visionary and committed.
To do that, of course, you need to learn a little bit about money, too, and how it works. “Money is a game. Know the rules and win,” is the opening line of one of my books. It’s just a starter but, at least, it’s that.
- Stop making the select few wealthy.
These billionaires became that only because we, the consumers, made them wealthy by buying their products. We, collectively, have the power, to change that.
When I hear bleating voices screaming “Tax the billionaires,” I say, “I’ll listen to you when you meet the following conditions:”
- you stop shopping at Walmart;
- you boycott Amazon;
- you boycott Tesla;
- you stop using Facebook, Google, Microsoft, and Apple products
- you stop investing on the stock market;
- you stop flying Virgin Air and listening to Virgin radio.
- you stop buying from Safeway/FreshCo/Superstore (Weston), and Save-On/PriceSmart (Pattison)
- you don’t get vaxed by drugs from a pharmaceutical that is owned by and funded by billionaires. Take your chances and pray for deliverance from the covid.
At least, that’s how I see it . . .
