Every engineer at Meta is using Claude (and in some cases Codex) to do their work. Willing to bet that Muse itself was ~100% written by Claude/Codex. Pride goes out of the window when business is involved.
This entire conversation around Jev seems weird to me. Like... we started from neural nets that could do basic decision making and classifications pretty well, then trained larger and larger language models to get to where we are now. Now suddenly everyone is going crazy because someone trained a smaller model that is adequate at making decisions? We already went through the "look this AI can play pokemon terribly" phase like a decade ago.
A pre-trained universal classifier that can replace specifically-trained ones would have been considered just as much science fiction in the 2010's as the capabilities of modern LLMs. I'm not sure Jev is actually there yet, but at least it sounds theoretically doable today.
That being said, one thing having been unrealistic 10 years ago and just about possible today doesn't mean that it's going to change the world the same way another technically related, previously-impossible thing did. The Jev hype gives me a bit of the "you're still early to crypto" vibes of some later altcoins. I really like the idea, I think it's going to open up possibilities for using classifiers where we wouldn't or couldn't have trained one before. I'm crossing my fingers for an open weights version to drop. But it's still just a classifier, people have built similar things before Jev, the one thing that really stands out about it is their ability to generate hype.
> A pre-trained universal classifier that can replace specifically-trained ones would have been considered just as much science fiction in the 2010's as the capabilities of modern LLMs. I'm not sure Jev is actually there yet, but at least it sounds theoretically doable today.
That's the point. It can't. And it's not even close.
We have a bad universal classifier now (via Jev). 0->1, one might say.
A bad universal classifier does suggest a good one later. And that is exactly what I would call "theoretically doable"
That said, I don't think that Jev is a magic breakthrough or anything. I think it is just a particularly good narrative with an easy way to try it out.
Jev is interesting in that it's much cheaper and faster than a frontier LLM.
But I've seen nothing to indicate that the upper bound on classification tasks of a Jev-like model can exceed a frontier LLM with reasoning tokens. That seems nearly impossible even in principle (since Jev-style models are still based on LLM pretraining).
So while they're definitely on the Pareto frontier, which is valuable, they're at the "cheap" end of the spectrum more than the "good" end and I don't expect that to change.
LLMs are like lossy compression of ~all of written text ever produced, with useful recall. To the extent that the corpus contains labelled examples of the given classification task, it's not unreasonable to think that we'll be able to build a decoder for that, just like we already have a useful decoder for next-token prediction. Extend to image classification the same way we already have multimodal LLMs.
The difference is that you don't need training here;
The decision graphs can be built on the fly by an LLM and contain instructions in plain language.
The magic moment for me from the Jev release was not that there was some system playing doom: Rather it was the moment, they just changed a part of the prompt to "don't shoot, just dodge" and the behavior changed immediately.
This means you can have a system with fast decision-making but still interact with it via language.
The cheap, fast and smart-enough LLM space has been wildly neglected. Jev is one of the few players truly targeting that space. And for a lot of people it is the first time they are asking "what could I build if llms were interaction-speed fast?". The answers are cool, the problem is that Jev is not, I think, smart-enough yet to have that many applications, but it's smart enough that you can start to see what they will look like.
It is impressive, but all the hype and fake demos are selling it as a model that is as smart as frontier reasoning LLMs in the decisions it makes yet much cheaper and much faster, which is not true.
Yeah, there's a lot hard-coded into the typescript files that make this much less impressive than the other "AI plays" versions that have come and gone that play with less help. A Claude one that only used screenshots would always get stuck in the rocket hideout...
I think that misses the point of Jev being ridiculously efficient while maintaining adequate intelligence for automation tasks. We have to train our minds to filter out branding and marketing.
This happens all the time in tech. A few years ago everybody got excited about static websites and server-side rendering as if we hadn't been doing that with PHP long ago.
For what it does, it classifies, orchestrates, operates and delegates tasks exceedingly well for its size and weight. It's ridiculously cheap and efficient, but if you can only see progress in terms of raw cognitive power then you'll surely miss how interesting this is.
Performance and efficiency have been neglected as everyone threw every available GPU and trillions of dollars trying (and failing) to create AGI. Though the results have been impressive.
But good enough for pennies in an instant is very useful.
Depends on the size of the deal. OpenAI would have to disclose it in their S-1 if it crossed the threshold of being material information for investors.
I think they were asking, "If this is a model produced by Meta with an API designed to be compatible with OpenAI models, but it's not actually an OpenAI model, why is Meta hosting it on Azure?"
I guess at peak times they might need more to the extent they offload to azure and still sell excess off peak, or some announced partners required all data stay on azure?
Prop 13 should only cover primary residences. No vacation homes, no investment homes, no apartment complexes, no Airbnbs, no commercial properties, no offices. This single change would fix the majority of the state's tax shortfall. Going on about billionaires and not fixing this obvious loophole should tell you that people in charge aren't actually interested in solving the problem, just using populism to get votes.
Then it would be taxed under inheritance tax (at the full value of the property - not just the gains).
Edit - I’m wrong, I am uk based - just read up on US, wild that you can inherit a house that’s gone up in value massively then sell it and experience no gains or inheritance tax.
Wealth taxes are a symptom of a broken tax system. If you let someone get to hundreds of billions in net worth and then realize they haven’t been appropriately paying back into the system, it’s already too late. Like the article says they can simply say “no” in a variety of ways, from fighting in court to simply leaving.
> If you let someone get to hundreds of billions in net worth and then realize they haven’t been appropriately paying back into the system
This is to once again mistake net worth for money. Net worth is not real. It is not a good measure of the money someone may be able to realise. They do not have hundreds of billions. There is nothing to tax until they sell some shares.
It's strange that people always make this argument for wealth taxes, but you rarely hear it about property taxes. If "net worth is not real" neither is equity in real estate.
People absolutely make that argument about property taxes. That's where deferrals or abatements for e.g. elderly or low-income homeowners, or caps on property tax increases come from. Someone may own a home that property taxes price them out of, forcing them to leave their community because they can't actually conjure money from a higher priced home.
I think a lot of tax authorities also don't really aggressively reassess that regularly without a sale, so it also kind of ends up baked in that if you didn't pay that much for the property, it's only theoretically worth that much.
This is all conceding the argument already. Many of us would happily accept these sorts of limitations on a wealth tax if it means there is a wealth tax.
The only reason it works with real estate is because they can put a lien on the house and block the sale of it. They don't have any useful mechanism to stop the sale of a share of stock, but since the government is involved in the transfer (due to the registering of the new house deed) of a house, they can stop that one.
> They don't have any useful mechanism to stop the sale of a share of stock
The SEC exists. As do many other mechanisms by which the government regulates direct and brokered securities trades and sales. You can make the case that some of those controls are poorly/ineffectively implemented, but you can’t claim that it’s not something the government routinely regulates, intervenes in, and sometimes prohibits outright.
Society has deemed it "ok" for a real estate transaction to take days or weeks to process and mountains of paperwork, probably because it is done so rarely in an average person's life. But stock trades are expected to be done quickly in minutes or even milliseconds with high frequency trading. It just isn't feasible to inject government paperwork in the middle of a transaction. Wall Street would revolt if they even tried.
Why can't govt block the sale of stocks? It's not like you would be selling non digitalized assets, govts often freeze and reverse stock sales/trades when they find it to be illegal already.
It's harder for private companies sure, but who will stand in the way of govts if they said we will sanction your if you buy X or Y company?
The main reason real estate taxes work so well is that tax evasion is very difficult.
Because the building is standing right where it is, in the open, lit by the sun every day. If you don't pay your tax, the government can just take it.
This compensates for the several philosophical and moral problems with it, and I've seen several economists declare it the best form of taxation there is.
It's the opposite. You've been drip-fed "billionaires cause all the problems" for a few years, and now, as you say, you feel all sorts of things about them, which can rationalise all sorts of bad ideas.
Wealth inequality is worse than any other time in human history. What the wealthy and powerful are funding is division, fascism, the far-right and immigrant hate, so that they don't have to pay more taxes. It's the same divide and rule playbook since forever.
I disagree with you on what is being drip-fed. It's factual that deranged levels of wealth inequality are causing problems, even the billionaire wannabes on HN are starting to see that.
> Wealth inequality is worse than any other time in human history
This is circular. Wealth inequality:
1. Isn't real. It's a paper value that would not survive contact with reality.
2. Doesn't matter. What matters is the absolute level of poverty and whether that's getting better. Someone in poverty in the UK today will still get healthcare, eyecare and dental care beyond the dreams of Henry VIII.
3. Is genuinely a stupid measure. You could "fix" it by burning everyone's possessions until everyone has the same: nothing. Zero inequality, and yet somehow doesn't sound great.
> What the wealthy and powerful are funding is division, fascism, the far-right and immigrant hate, so that they don't have to pay more taxes. It's the same divide and rule playbook since forever.
Absolutely real when Musk can tilt elections in America and fund far right parties in other countries. Your whole “paper wealth” argument holds no weight.
He didn't have to tilt anything in America. The Democrats ran the worst platform in living memory for the 2024 election, and the sooner they stop blaming billionaires for everything and start looking at themselves to improve the sooner they will get back the popular vote.
So did many other people. Any popular podcast will do that. Any media organisation has editorial bias, either in story presentation or even in selection. I don't see why Elon Musk would be singled out there, other than he's an ex-Democrat, and thus like all the ex-Democrats is a target of constant negative mentioning in a lot of one side's media.
> Wealth inequality is worse than any other time in human history
And humans are wealthier than any time in history. They have access to robot slaves that can wash dishes and clothes for them. They can access fruits grown over 1000 miles away for 69c. They have potions that can cure cancer. They have the database of all human intelligence in their pocket, accessible from anywhere on the globe. They have individualized transportation that can travel over 2 miles a minute. They have super intelligent thinking machines for cents.
A big proportion of Americans are struggling to make ends meet on a fulltime wage. No amount of luxuries make up for a lack of necessities. Your argument might have had a smidge of credibility 15 years ago.
That's just the consequence of various other policies that a lot of them probably voted for (or didn't vote against hard enough). If you transform a country a certain way, promising more and more from the government for some people, then everyone else has to pay more. If you pay for it with ZIRP, then you're going to need to pay it back.
The last thing you should do at that point is vote for more policies that will destroy economic activity in the name of "fairness". That's how you got here.
It's interesting to see the level of discourse change across time as these same points are brought up again and again.
It seems there are many many more people heavily invested in preventing land tax all of a sudden and are very informed whereas when that guy made a land tax visualizer a few months ago... crickets.
Narrative control and algorithm driven propaganda is evident - Most people scrolling any kind of algorithmic feed would be shocked at the intimate detail the algorithm knows their mind, proclivities, aversions.
Another evident thing is that people will start retreating from the internet as this gets worse (With LLMs accelerating the trend).
> It's strange that people always make this argument for wealth taxes, but you rarely hear it about property taxes.
I don't like property taxes either, and at minimum would rather they were called something else, and preferably replaced with per-service charges where possible.
But either way they exist to pay for things, and not to just degrade the value of your property simply because you worked to own it.
If I sell my house, there's a reasonable expected range of money I can expect for it.
If a majority stock holder in a company sells all of their stock, the price first the first share sold is likely going to be completely different (and substantially less!) than the last share sold.
"It's difficult to accurately value" isn't an argument against taxing net worth. It's like the old (likely apocryphal) Winston Churchill joke, "We already established what type of woman you are, now we are just haggling over price". Just take whatever the proposal is, cut in half, quarter, or whatever fraction you want and you no longer have an argument against it.
Personally my favorite idea for this stuff that I have heard thrown around is to allow people to self value everything. However, that self valuation then becomes a price tag. Let a billionaire's accountants put their own evaluation on their equity in a business. But that becomes a binding offer and some other billionaire could come along and buy them out at that valuation. That creates pricing pressure in both directions, the person is prevented from underpricing their assets due to the threat of another buyer coming in and a person is prevented from overpricing because it increases their taxes. And suddenly all the problems regarding how the government appraises these things disappears.
Forcing people to write a call option on their property without an offsetting risk premium only sounds like a good idea if you neither understand the implications nor the math. Asset values would collapse because risk would go to the moon.
And that ignores that it trivially enables large-scale exploitation and looting by construction.
The market determines the risk, not the asset owner. The owner has no special knowledge of what the risk actually is separate from the market pricing it. You explicitly want them to accurately price it outside of a market, which is effectively impossible, ignoring that the price is highly fluid and dynamic.
If the owner is required to invent a fake risk premium then it virtually guarantees that the risk will be mis-priced. Forced rampant mis-pricing is an exploitable arbitrage opportunity of epic proportions. Every quant worth a damn will make a fortune looting this. No serious policy can ignore this defect. It has the additional political downside that no one can ever own anything anymore in a meaningful way, which won’t be popular.
No one takes this idea seriously because anyone with a modicum of finance math background can see that the math doesn’t math. Political ideology doesn’t even figure into it.
I'm getting the impression you didn't get my "haggling over price" reference. This conversation is in the context of a wealth tax which typically only applies to a very select group of incredibly wealthy people. However, your complaints are all about the scale of the economic problems this would create. That means we can continue to add restrictions to this proposal until eventually all the issues you raised disappear.
For example, imagine we only apply this to people with a net worth over $500B. That's literally only Elon Musk. He has plenty of money to hire his own team of quants to price his assets. We can even be generous with this law and make the purchase price double the valuation. Hell, we can even restrict it to only apply to stock of publicly traded companies so the wealth valuations are highly informed by market pricing. We can just keep adding rules like this until you're out of economic reasons for why a wealth tax and/or this form of valuation can't work. At that point the debate is lost and "we're just haggling over price" because once we apply it to Musk, how can you argue against applying it to Bezos...
Society has already decided that we can compel people to sell their private property for fair compensation via eminent domain. Plus getting the assets in the hands of people who value them more certainly creates utility and presumably increases the tax base via further development.
This type of forced sale happens all the time with public companies. For example, only like 60% of Twitter shareholders approved the sale to Musk, but the other 40% were forced to go along with it regardless of their preference. If Musk can do that to other people, why should some hypothetically richer person not be able to do it to Musk?
And to repeat myself for a third time, we don't need to haggle over price. If we only want this to apply to billionaires, assets worth $50 million, or whatever, that's fine. If one of the people impacted truly doesn't want to sell, let them set the price as high as makes them feel safe. I'm not going to lose any sleep over taxing the emotional desires of billionaires.
> For example, only like 60% of Twitter shareholders approved the sale to Musk, but the other 40% were forced to go along with it regardless of their preference
They signed up to that, though. Tagalonpg/dragalong rights are priced into the share price. That's not the same thing.
I always enjoy when someone takes a quote out of context to refute something I said when the context it was said in completely answers them. Like why didn't you include the sentence before that bit you quoted? Is it because me saying "this type of sale" shows that I was saying they are similar rather than identical? Or why didn't you include my first paragraph? Is it because eminent domain is also priced into everything a billionaire owns?
The actual mistake is pretending like they can't leverage those shares to access fiat, for example securities-backed loans. The proceeds aren't taxable income, the bank gets its interest, and the latter is typically substantially cheaper than realizing the shares and paying capital gains tax. Meanwhile, they keep the assets, which on average continue appreciating.
Which currently require interest payments of ~6-8% APR. Meaning that you need to be able to invest that money that is being borrowed back into the economy to hopefully get a return more than that. And if your investment fails you will have to realize a different investment. The interest being paid doesn't get hoarded either and is used to make other investments, pay employees, build products, etc.
The idea that a bunch of people are just hoarding their money and not reinvesting it back into the system is flawed. Taxes actually have the opposite effect to contributing to the system. Taxes are like if someone was to come and start hoarding money under their mattress for himself and not contribute back to society.
It's funny that their case study ignores how much wealth you lose from the interest on the loans. If you pay $140k of interest you can avoid $62k of taxes.
I don't know what point you were trying to get across with your link, so I gave my general thoughts on the article.
They play a clever little game where they borrow against those shares to live on. Since there’s no realized gain, there’s no income (and the interest is deductible against any incidental gains that might happen along the line). Then when they die, the sale of shares to pay off the loan is a non-taxable event and the estate value is reduced so the heirs won’t pay as much (or any) estate tax.
> They play a clever little game where they borrow against those shares to live on
Yes, everyone in the US can play the same clever little game by taking out a loan against a property and deducting the interest against their income.
> and the estate value is reduced so the heirs won’t pay as much (or any) estate tax
This is just madness. The estate value is reduced so their heirs won't get as much. You still pay inheritance tax on what you get. Anyone can avoid inheritance tax by just not passing anything on.
That’s just a decision we made about what is taxable.
Purely an accounting artifact. We can pass a wealth tax tomorrow and it’ll suddenly be taxable.
Net worth is real money, and is usually a very accurate measure of what people can realize. There are a few outliers who own so much that they’d move the market if they sold it all. Selling 2% to cover taxes? Not going to move the market very much.
Article I, Section 9, Clause 4 of the U.S. Constitution would like a word (assuming you’re contemplating a federal wealth tax; states could do it, at the risk expressed in the headline of the article we’re discussing).
That is what makes the timeline GGP laid out impossible:
> We can pass a wealth tax tomorrow and it’ll suddenly be taxable.
Unless we don’t share a common definition of “tomorrow” or “suddenly”. (For reference, the 16th Amendment process took about 3 years and 7½ months from Senator Norris Brown’s initial formal proposal to ratification by the then-necessary 36th state. [You would need 38 states today.])
Maybe. If my complaint was "tomorrow is Saturday, you can't pass it on a Saturday, duh...", then yeah, I'd absolutely be reading "tomorrow" and "suddenly" too literally.
When you meant "shortly before Memorial Day of 2030", it's not clear that 51% of the misunderstanding is on the reader.
Try this - go to a bank and say “I’d like to borrow money using my 401k/Roth IRA as collateral. If I fall behind in payments you can liquidate the entire thing, including penalties, and make yourself whole.”
You’d think they’d jump over each other to lend money against such a stable, secure asset right?
Except they’ll say “sorry, this isn’t allowed. IRS treats borrowing against an untaxed retirement account as an early withdrawal, even if the asset itself stays untouched.”
Turns out the government fully understands the concepts of stocks, gains, unrealized net worth and more, and has laws on the books to make sure you are being taxed appropriately for them.
Meanwhile billionaires have convinced you – through their machinery of media, influencers, politicians and more – that this exact same reasoning absolutely cannot be applied to their own wealth. Because it’s “paper money”. It doesn’t exist. There’s nothing to tax. Just cannot be done, or it’ll bend the laws of spacetime.
Your 401k/Roth IRA (subtracting early withdrawal penalty) amortized over the loan period literally do count when considering qualifying income for a conventional mortgage. This is not a taxable event. You do not actually have to make distributions. It's just standard procedure that it counts when determining whether you can pay the loan.
> Meanwhile billionaires have convinced you – through their machinery of media, influencers, politicians and more – that this exact same reasoning absolutely cannot be applied to their own wealth.
Quite the opposite: Socialist politicans and their media lapdogs have dishonestly convinced you that wealthy people are escaping taxes en-masse by taking out loans and that this can only be stopped by eye watering wealth taxes. They frequently use a motte and bailey confusing unrealized gains (which certainly exist in huge amounts but are also significantly fiction) with tax escape via loans collateralized by securities.
But it's not true: were there meaningful tax escape that way it could be addressed by establishing rules with conditions where taking a loan against securities can be treated as realizing gains (and adjusting cost basis accordingly). Doing so would be minimally disruptive and distorting and have relatively little legal complication (at least compared to wealth taxes!).
But the reality is that the claimed tax escape isn't happening (at least not at any significant scale) particularly in the current interest rate environment, so a reasonable policy change to address it would be a no-op.
... and to grow and maintain their political standing they specifically need to push a NON-SOLUTION because they can't campaign on something that was simply done and solved, and to retain your (highly monetizable) attention they need to rile you up against an Enemy, and certainly never address the state's addiction to wasteful spending and buying votes with tax dollars as one half of the revenue vs expenses equation.
I can't tell if you're accusing the state of waste and bribes no matter who is at the helm. You did specifically call out socialists, but the anti-socialists aren't improving that situation either.
> buying votes with tax dollars
This was more convincing of an attack on "Socialist politicians" before Sept. 9, when Trump did it more openly than they ever have. I guess you could believe his claims it won't come from tax dollars. But if the government has $1 trillion lying around for this and chooses not to unconditionally lower taxes for everybody, is it any different?
The head of the anti-socialist, anti-wasteful-spending party is spending billions on a more impressive Air Force One, golf days, family vacations, vanity renovations, DHS ads starring a POTUS wannabe, DOGE effectively paying people not to work, etc.
Everyone is guilty of it, just generally in their own form-- partisan nonsense is largely a distraction to get people mad at the other team and not notice their allies also picking your pocket. Though sure there are some particular ways different parties divide us and pilfer, bad in their own way.
wealth taxes solve the problem that the ultra-wealthy will find a way to make their income untaxable, and focusing on these loans is a red herring. its how theyre doing it now, but not how theyll do it an hour after you add this tax. That the ultra-wealthy propose this as the solution means theyve already planned the next work around.
they dislike wealth taxes, which are an old roman concept predating socialism, because the wealth tax covers all the work arounds they can think of.
it is a proper solution to the overall problem which is extreme wealth concentration.
the obvious alternative is nationalization of all assets worth more than 100M.
DOGE has pretty conclusively proved that the government has been incredibly efficient with spending and doesnt have an addiction to wasteful spending. instead the problem is wasteful monopolization and wealth concentration. society writ large has an addiction to giving a small cadre too much power and control, and they arent the government
Incredibly terrible example because you are allowed to borrow money against a 401k, up to $50000 with no penalties as long as you pay yourself back at whatever schedule you have determined for yourself
No but he’s also not borrowing against his 401k? You and I can also go and borrow against stocks held in regular accounts? https://us.etrade.com/bank/line-of-credit
Well then why are people able to borrow against it and then also deduct taxes on the interest on that borrowed amount?
Also I pay property taxes. Somehow the worth of the property goes up every year and gets gets taxed accordingly. Then why can’t wealth get the same treatment?
> Well then why are people able to borrow against it and then also deduct taxes on the interest on that borrowed amount?
I doubt they can borrow against the full amount of it, because that changes. They'll be borrowing against a much smaller value, so the lender has a safety margin. Same as if you have a mortgage you pay less interest the less you borrow vs the value of your house, except I imagine it will be far more conservative.
> Also I pay property taxes. Somehow the worth of the property goes up every year and gets gets taxed accordingly. Then why can’t wealth get the same treatment?
Well, three things.
Firstly, as an aside, it's incredible that you would want this. That is a bad system. You should get taxed according to the services you consume, along with a flat rate for common services, rather than punished with taxes for daring to spend money on improving your house.
Secondly, "wealth" is far less tangible than property prices. Property prices are very well understood. A share price can fluctuate wildly, and saying "well your net worth for today is the number of shares you have times the last share sale price" is just a terrible measure.
Thirdly, what will those shares be worth to sell when they are taxed? Investing is a gamble. Housing is different: we need housing to live, and we want a nice house. No one wants shares. They want a return, and for it they'll stump up a giant amount of money, that will fund many jobs for years, and generate lots of taxes, and who will want to do that when their share will be eroded year on year? There's no benefit to shares except the return. Decreasing the return will have a direct impact on innovation and jobs.
You are ignoring the most common approach, borrow against the asset. In that case the sufficient assets turn into essentially unlimited untaxed cashflow. Especially with how the market has been lately, the gains erase any burden of the loan. Sounds like a broken tax system to me.
That may be a perfectly viable solution. Seems like an easier path to me, at least. But the point is that these assets are a lot more fungible than you imply.
> It is not a good measure of the money someone may be able to realise.
And as such, when you get into the higher ranges, net worth is quite a good indicator.
I think it’s exactly at the higher ranges that you are more likely to run into concentrated positions where valuations are not simply a total value multiplied by a percentage ownership.
What is Cargill “worth”? Suppose the families announced they were selling 90% of it on Monday. Would they get that figure?
What is Jensen Huang’s share of nVidia worth? If he announced he was selling all of in October, why would he not end up with that figure?
It’s quite different for a bank to lend Jensen (or Larry Ellison or Elon) 5% of that notional figure. They don’t need to care whether the true value is 30% or 50% of the notional to make that loan.
In theory, maybe, but in practice that is not what happened over the past decade(s). Instead our retirement funds are paying it back.
When the market grows it makes the collateral worth more, which lets the borrower keep refinancing the debt instead of selling assets and realizing taxable gains. As long as the assets appreciate faster than the debt grows, the borrowing can effectively roll forward for decades. Eventually the estate pays the debt out of the assets themselves, but this is not necessarily out of taxable income earned during the person's lifetime. The US markets has seen exceptional genuine growth, but the trillions of 401(k), IRA, etc money flowing in to them over the last 40 years is no small consideration.
And even so, you could say it all settles out in the end, but that ignores the fact that there have constant constant efforts (and successes) in eroding away the e̶s̶t̶a̶t̶e̶ ̶t̶a̶x̶ "death tax" during this same period.
However, the bank is happy to extend the loan infinitely for people with enough assets. It's questionable that whether such loans are cash flow neutral.
What evidence do you have that people borrow against assets as some tax avoidance strategy? What are the details of this brilliant, often repeated plan? In particular, where do you get interest rates that are low enough to make it worth it to avoid capital gains even with an asset that's grown 100x over its cost basis (and are you accounting for reinvestment of income like dividends that can't indefinitely defer taxes, creating regular tax lots with higher basis that you could sell first)? e.g. are they getting better interest than SOFR somewhere?
The framing was slightly glib, and you're correct that current rates impacts the equation, but there has been real damage caused by how extremely attractive this strategy has been over the past decade. We sitting on an unprecedented peace time deficit due to a failure to properly tax an economy that has been massively prosperous during this same period. This strategy is small part of it, but it is a real part.
It wasn't extremely attractive if you actually think it through. e.g. if rates are lower and you're willing to carry investments with leverage (that's the idea, right? Your investments will grow faster than interest?), why aren't you already leveraged up to your risk tolerance? I don't think there's actually a world where this plan works. It seems like this is a reddit meme for people who have never actually considered a securities loan.
Yeah, it's all illiquid illusory non-wealth when they have to pay taxes, but when they want to buy a newspaper or social network they suddenly have 40 billion in hand.
Forced liquidation hurts more than the sticker price, but with billionaire taxes, that's a feature, not a bug. They make the most sense as a check on concentrated power rather than a revenue driver.
> Yeah, it's all illiquid illusory non-wealth when they have to pay taxes, but when they want to buy a newspaper or social network they suddenly have 40 billion in hand.
Yes, businesses are allowed to buy and sell things without being taxed on the sales. If you want to change that rule, you are going to change a giant number of things purely to get at the billionaires you've spent the last few years being trained to hate.
> Forced liquidation hurts more than the sticker price, but with billionaire taxes, that's a feature, not a bug. They make the most sense as a check on concentrated power rather than a revenue driver.
It's missing the planetwide jungle for the trees if you think giving politicians the ability to reach into ownership percentages of businesses and deciding how much they want to charge you for owning a business is a check on power.
Why? What are they going to do with the money instead? If you charge, say, 5% on unrealised gains, possibly discountable against CGT on sale, say, then do you think rich people are really going to go "well, now I'm only getting 9.5% return instead of 10% return, so I'm going to sell all my shares and build a Scrooge McDuck style swimming pool full of money, instead"?
There are cases where taxes can hurt investment, but you're really talking about quite high rates. For instance, the US peak rate of income tax used to be 94%. That almost certainly _did_ hurt investment.
> There is nothing to tax until they sell some shares.
Why can't they pay tax in shares?* If net worth isn't real it shouldn't really matter...right?
*Please no pedantry about how the IRS doesn't currently accept shares as payment for taxes. If laws can be written to add wealth taxes on stocks and bonds, they can easily have a clause to allow payment in kind. Address the question I'm actually asking.
> There is nothing to tax until they sell some shares.
That's tautological. I mean, it's true under current federal tax law. It's obviously not true under new California law, which is what the article is about.
Clearly the government can tax non-cash assets, and they do all the time. People act like "wealth taxes" are some moral horror or logical impossibility, while tossing their mortgage statement into a big file and pretending to ignore the property tax line on the escrow account.
Are there practical problems like "wealth has feet"? Sure. Taxation is hard and all systems can be gamed. But let's not pretend that there's a greater principle at work here.
Did you have to liquidate your house to pay the property tax on it?
Edit to point out a subtlety: this is an argument at cross purposes. If the economic impact of all this personal wealth growth is so high that liquidating it would move whole markets, then very clearly it represents significant missed tax revenue.
that net worth is still power, which is even more valuable than money.
if you are claiming the high net worth, almost certainly you have raised significant actual money on things you own. a wealth tax means that if you dont actually think your business is worth a billion, you cant raise money as if it was.
thays a net good thing.
if peter theil is lying about being rich and he only has a couple hundred thousand bucks to his name, the publiv overall deserves to know, and it should cost him quite a lot to raise or borrow money.
these people are commiting fraud and should be forced into texas prisons without AC because theyre lying to banks about the value of their assets, and the bankers too beed to go to those same prisons because theyre defrauding their depositors.
this is only a good thing for routing how whos lying about their worth
Another thing with taxing unrealized gains is that no one in the government is willing to return any money if the unrealized losses happened. Somehow it's all hunky-dory when someone loses 1M in stock value, but as soon as someone's stock went up 1M they all want to tax it right away.
You can do it today. Start a company, issue ten billion and one shares to yourself and convince someone to buy one of them for a dollar. Now enjoy your net worth-based tax bill.
There is no way to take anything like that. Net worth is quite similar with me saying you are worth 1 billion dollars, but you have zero money in the bank. What do you take, super-rich billionaire person?
The net worth is simply the sum of assets minus the sum of liabilities. Take away the assets and you take away the net worth. I can't think of an asset category that you can't transfer if you are willing to sacrifice its value (which presumably doesn't matter, because it's not real anyways)
In the rare cases where contract law makes the transfer impossible legally the government could trivially step in to make it possible
Why not? Net worth is the estimated sell value of a list of assets. It is entirely possible to take those assets, or charge a tax based on that estimated sell value. Why would it even be a little difficult, let alone impossible?
And certainly ceejayoz was being a bit glib by suggesting we take all of it, but it would not be remotely insurmountable to tax billionaire wealth.
Net worth is the estimated value, not sell value. For example, Tesla shares owned by Elon don't have the same value if Elon is leaving, they are less worthy.
Because that would involve seizing assets? The parent meant it's not "real" in the simple-minded sense that people think it is: the average person imagines Elon Musk and other billionaires have a checking account that keeps increasing by tens of thousands of dollars per second because that's the only frame of reference they have. The reality is the wealth is mostly tied up in assets that ain't exactly liquid. Yes yes, they apparently have access to this supposed infinite money glitch where banks will endlessly loan them money without requiring interest payments (which would require liquidating assets for payment and therefore triggering a taxable event, the very thing people think never happens for billionaires). But the fact of the matter is the wealth isn't money in a bank, and therefore not "real" in the sense the parent was referring to. But it is at the same time something they would miss if it was just "taken away", much the same way you'd miss the numbers in your 401k if voters decided you had a few too many millions saved up for retirement.
the government seizes dollars in the form of taxes, which are still assets, no?
these other assets like musk's stocks are still quite divisible, and theyre as liquid as the government wants them to be. just because musk hasnt written the liquidity into his government sponsored contracts doesnt mean the government cant say yes, 10% of your private spaceX stock is liquid and belongs to donald trump now
Assets are real, but not the valuation of them. This sort of basic error, which seems to only appear on the "tax net worth" side, is good evidence that this is not a reasoned position, and thus you will not be reasoned out of it.
A painting can be valued. A vintage car can be valued. A movie script can be valued. My house's value changed a bunch during COVID; I'm still taxed on it! Each is an asset; none of these examples can be perfectly valuated; each may see its value change dramatically over time, but you can still estimate its worth pretty well.
Hell, I can put my house address on Zillow and get an estimate in real time.
I dont know why it's so complicated to just say "Money is Money when it's Liquid, tax it then". Any loans on wealth should be taxed..nationwide.
But even in California's case this doesn't feel like anything anybody would object to. Given how much California Billionaires liquidate using loans on their wealth, I bet, they could do a middle class tax cut too to offset it a little bit too.
I am little baffled as to why the politicos haven't latched on to this whole-heartedly. You can still proudly say you're taxing Billionaire wealth. Because you are! Just more sensibly.
You will find that the centi-billionaires will find a different way to turn their illiquid wealth into personal power and value in a way that avoids that tax.
Well one thing is, they'd sell shares to pay the taxes. Then dilute their own ownership of the thing (Tesla, Amazon) and it would serve as another form of wealth distribution.
Charitably speaking: I suspect the commenter above you was indicating that the government should have a stock portfolio you can transfer stocks to to pay taxes in a non-taxable event type scenerio.
If you're taxing wealth (and not income) then switching stocks into cash doesn't change the wealth. Then use the cash to pay the taxes which reduces the wealth.
I believe the argument was that for some people, switching stocks into cash actually do change the wealth, because they own such a large % they are meaningfully moving the market by selling (the "paper money" argument).
And the answer to that was "if you're so afraid that selling will tank the value of the stock, then we [the government] will happily take your taxes as stocks directly, and we take on the risk that selling it will reduce its value".
> And the answer to that was "if you're so afraid that selling will tank the value of the stock, then we [the government] will happily take your taxes as stocks directly, and we take on the risk that selling it will reduce its value".
Yes indeed. It's basically saying "don't bother starting everything because the government will gradually just own it all anyway".
Absolutely ridiculous statement, it's not an accurate measure but it's definitely a good measure of money.
If you have 100B to your name even if it's post IPO stock in a possibly ponzi company that's your current wealth and you can easily convert a staggering portion of it into material realized wealth depending on several factors.
If I use cash to buy 1B dollars in Microsoft shares today, am I not worth a Billion dollars...?
The value may not be exactly convertible agreed so let's just force everyone to book all gains every year, and force sell a net percent of your share.
Not 100B$ of share, but 2% of 100 Million units of stock that you own. Why does this not work?
If I take 2% of your shares why can't it work the same way? I can then pick and sell it over the next year or two however I see fit, in case of govt they can slowly sell back this share to not affect the prices too much.
I am baffled by the fact that we have a tractible quantity and people call it hard to use to measure money.
Paintings, Jewels, etc. are what's truly the hard part of the wealth equation not the stocks, which is over 99% of what a wealthy billionaire owns.
I am not even considering pro or against taxes on billions people make but it's ridiculous to say stocks aren't money? Then what is money really... Currency is also traded, it's value can also go up or down....
> If I use cash to buy 1B dollars in Microsoft shares today, am I not worth a Billion dollars...?
Who says that the price you paid per share was the actual market value of the shares? For example, let's say that you inherited 10 million options to purchase Microsoft stock at $1/share, and in so exercising the options (by writing a check for, say, $10 million to Microsoft), you then end up with 10 million shares, which on paper, with the current stock price close to $500/share, would be worth close to $5 billion. But could you actually get that much money from selling 10 million shares? Definitely not overnight - so many shares getting dumped on the market at once would materially affect the stock price. The $5 billion number is a hypothetical that depends on other people backing up the hypothetical numbers with their own money (i.e. buying at the hypothetical price) - it is not the same as "I have $5 billion in a bank account and could use that to go buy a yacht and buy political ads etc. with it"
But you don't need to be taxed in actual dollar value you can be taxed in percentage of your share ownership.
It might not work with real estate but with stock this is trivial
On the contrary - it's trivial for controlling shareholders to direct the company to issue more stock to them and thus dilute the shares that were taxed. What do you propose, that companies can no longer issue stock after some of the stock has been taxed?
And what about non-divisible assets like real estate? There's nothing that prevents the government from forcing real estate to be held by LLCs instead of individuals, then shares in the LLC could slowly be taxed by the government. So what happens in 20 years when the government owns 50.1% of all the LLC shares that comprise the ownership of the $100 million Hollywood mansion? You're going to let a bureaucrat kick out the A-lister who lives there and put it up for auction? Attempt to sell it to someone who knows full well the same would happen to him?
It's very, very hard to design a wealth tax that doesn't end up being an assault on private ownership in all forms.
even still, the government can propose a value, and if the owner thinks its worth less than that, the government can immediately confiscate the asset and pay that price as compensation.
if the owner thinks its worth more than what the government proposes, they can pay tax on the higher amount.
> even still, the government can propose a value, and if the owner thinks its worth less than that, the government can immediately confiscate the asset and pay that price as compensation.
This is utter madness. What will happen is businesses will move en masse to places with economic systems not overrun by those driven clinically insane by years of listening to their favourite pundit blame billionaires for everything.
> If I use cash to buy 1B dollars in Microsoft shares today, am I not worth a Billion dollars...?
No. It will be higher. Say you spend your money on shares advertised at different prices, buying the cheapest first, like this:
800000 shares at $500 $400,000,000
300000 shares at $750 $225,000,000
200000 shares at $1000 $200,000,000
100000 shares at $1250 $125,000,000
33333 shares at $1500 $ 50,000,000
Total number of shares: 1433333
Net worth (1433333 * $1500): $2,149,999,500
Your "net worth" is over double the money you just spent.
If you have $2bn worth of the same listed stock and go sell half of those, now you have a net worth of $1400m because your gargantuan order drained the order depth, tanked the stock value and triggered a panicked selloff at the stock market which further drove down that stock's price.
You can't take net worth away because it's just an estimate of what someone is worth. It may eventually be possible to turned into dollars and cents without losing too much in the process, but almost universally it can't immediately be exchanged in such a fashion.
Even more so when we're talking shares in a company that is not yet public, e.g. a founder's shares. At that point the valuation is complete speculation, based on what the company may be worth in some hypothetical future IPO. There's no actual price discovery since there's no public trading of such shares.
as I said, if it were unreal you wouldn't mind losing it.
if it is illiquid, you clearly do.
economic illiteracy is not the best foundation for arguing against taxing the wealthy. by pretending the wealth "doesnt really exist" and "isnt there" to tax it highlights the underlying greed motivating the argument.
if you dont agree, perhaps elucidate on a more legitimate reason you might have had for confusing unreal with illiquid?
The lack of reality is mostly from how much net wealth is a guessestimate. The actual realizable wealth is largely unknowable. There isn't enough price information to give a certain answer.
But sure, how do you propose to pay taxes with assets that can't be liquidated and may not even be possible to valuate?
Even if you somehow pay taxes in assets that can't be liquidated, now the government has the same problem instead. What is the government gonna do, pay its employees in unlisted stocks, yachts and famous paintings? How will it even know how much taxes it's gathered?
If the tax isn't isn't just satisfying some sense of petty envy, and the tax is intended to cover some budget deficit, I don't see how this would help.
there is no lack of reality. you confused liquidity and wealth. a third time.
there are plenty of ways to handle the problem of taxing illiquid wealth but I dont think there is much value in discussing it with somebody pretending that means it is "not real".
it would be like discussing the science behind vaccines with somebody who persisted in calling them "poisons".
Net worth is usually not fully realizable unless it is in the form of cash. The larger the net worth, the smaller the realizable fraction usually is. In some cases, including some highly visible billionaires, the realizable fraction is likely tiny.
most people have very little illiquid wealth, and its generally in the form of a house.
billionaires are a tiny propertion of people, and their situation is as atypical as it comes. theres no reason to make super special accomodations for them, when theyre responsible for making their own dumb situation where they have too many assets to make them liquid on a hurry
There is a lot of literature on this. In the US, 2/3 of wealth is non-liquid so any attempt to price it is fiction. Of the 1/3 that is liquid, most is not realizable. Tax policy is effectively restricted to the liquid, realizable fraction, which is such a small percentage of the total that even modest-sounding percentages are a large percentage of what is practically taxable. Governments know this.
An overlooked issue in popular discourse is that notional asset values are tightly coupled to who owns them — it isn’t transferable. Concepts like “dead equity” have been in the finance literature for a very long time. Elon Musk’s equity only has the value it does because he owns it. He couldn’t convert it into cash even if he wanted to.
>Tax policy is effectively restricted to the liquid, realizable fraction
no it isnt. illiquid doesnt mean unpriceable and illiquid doesnt mean can't be liquidated. people liquidate their illiquid assets all the time to pay their tax bills.
it being "complex to collect" is a criticism of many taxes which are already being paid. sales tax and VAT are horrendously complicated (far more so than a wealth tax) to collect but we still do it.
>An overlooked issue in popular discourse is that notional asset values are tightly coupled to who owns them — it isn’t transferable. Concepts like “dead equity” have been in the finance literature for a very long time. Elon Musk’s equity only has the value it does because he owns it
even if it were true, it's not a good reason not to tax him.
in fact, it might even help bring some sanity to the capital markets if he and every other billionaire were forced to price their illiquid assets for tax purposes.
theres no efficiency or impossibility argument that prevents this. the only argument boils down to stamping one's feet declaring that it's not fair (that I would have to value my illiquid assets and might be forced to sell them if I underpriced them).
> He couldn’t convert it into cash even if he wanted to.
Elon musk has been converting his assets into cash recently and he has had no problem doing it.
Bill Gates similarly liquidated his assets to fund his charity and didnt have a problem doing that.
Why is liquidating their shareholdings suddenly a problem only when they need to pay taxes?
> Why is liquidating their shareholdings suddenly a problem only when they need to pay taxes?
It's not, and I don't think anyone said it was.
The problem is in the calculation of "net worth". And, more importantly, the difference is that people choosing to put their money into something is not the same as enabling it to be taken by force.
Yeah you did. You wrote "he couldnt turn it [his illiquid assets] into cash even if he wanted to".
>The problem is in the calculation of "net worth".
That is not a problem.
Let them value their own assets. If they value their ming vase at $10k then the government reserves the right to buy it for...$10k. They might get away with avoiding paying taxes. Or the government might get a bargain. The incentive, though, is to be scrupulously honest and accurate.
Some people obviously wouldn't like being put in such a position.
> And, more importantly, the difference is that people choosing to put their money into something is not the same as enabling it to be taken by force.
Im not 100% sure but I think this falls under the category of just saying "wealth taxes not fair!"
I would care more about the broken tax system if the politicians didn't waste our tax money. Stop the fraud and the corruption and the incompetence and then let's talk about increasing taxes.
$24 B unaccounted for and lost that was supposed to be for homelessness.
$12 B already spent on high speed rail and they want $120 B more.
$50 B in EDD unemployment fraud during the pandemic.
This is just in California in the last year or two.
How much more fraud and corruption and incompetence is there that we just don't know about?
There is no way I will agree to any increase in taxes just to see it wasted and going to corruption and political buddies on every side of the aisle.
>Stop the fraud and the corruption and the incompetence and then let's talk about increasing taxes.
Zero taxes is the only right answer. Any talk of taxation means that you have already given in to being exploited, because it's a slippery slope. Let's be realistic - corruption will never end. The only way to reduce it is to starve the beast.
Larry Page owns about 5% of Alphabet, which is worth $4T, so he has $200B give or take. Which part of that do you think reflects a "broken tax system"? Companies should get kneecapped if their market cap gets too high? Founders shouldn't be allowed to keep even a single digit percent of the company?
The broken part is that there is third world-level poverty on the streets outside Google’s offices, working class people cannot afford to live in the Bay Area, and a fifth of California lives in poverty.
I agree that that's the major problem; the poverty is inexcusable. But that's not caused by the $300B (or whatever) of equity. It's caused because the homeowners of the Bay Area decided that once they got a house, nobody else should, and that they should get to exclude others from the opportunities they had.
This same thing was observed during the Gold Rush in California in the 1800s; extreme wealth also resulted in extreme poverty. And there's a great way to solve this: tax the land and redistribute it equally to everyone. Land can't be moved, it's something that belongs to all of us, and you can't make more of it.
You sort of can make more land -- by building tall buildings. Unfortunately the Bay Area has mostly outlawed that, too. And we can't blame that just on homeowners. SF "tenant advocates" are just as violently allergic to developers building new structures as homeowners are. But the worst offenders are definitely Peninsula and South Bay homeowners.
That distinction between tall buildings and shorter buildings on the same plot of land is exactly why the land should be taxed.
Economic land is any capital that has a fixed amount, that you can't make more of. When the local governments in the Bay Area started capping the amount of buildable square feet, they greatly accelerated inequality by converting regular living space and working space into economic land, just like the real land it sits upon.
This is why economic inequality skyrocketed so much. Rentierism resulted in so much being stolen from anybody who doesn't own the land, and blocks out so many people from even having access to the economic system.
Tenant advocates recognize that eviction is an existential threat to their way of life and so understandably they are fighting for their short term future. I disagree with their efforts in the long term, but I understand why they'd do what they're doing.
In contrast when you have enormously wealthy people like Marc Andreessen fighting against higher density zoning there is no such excuse and it's pure greed. Nothing could actually be an existential disruption to the wealthy in the same way. There is no reason to listen to the rich like Andreessen at all.
The equitable thing would be to focus on redeveloping wealthy homeowner areas and limit redevelopment in areas occupied by poor renters, but somehow that option never seems to be on the table. Only the reverse.
I tend to keep quiet on the following critiques, because it can be counterproductive to larger goals to speak the truth sometimes, but something in this comment got to me and I need to share my truth. You're too kind on the "tenant" advocacy groups here. They are nearly 100% funded by wealth foundations that have exactly the same motivations as Marc Andreesen, and the people carrying out the wishes of the wealthy foundations are merely woke-washing really bad behavior. These "tenant" groups fight the types of change that would redevelop wealthy areas, precisely because of their funding sources, and they do it just as hard if not harder than stopping housing going up in other areas.
If anything, these "tenant" groups only advocate for the interests of a small subset of tenants, those who have their forever home, and do so at the expense of tenants in general. It's "pure greed" too, at the expense of others in their same general social, economic, and political class!
I say this as someone who continues to advocate alongside tenant groups on policy for better protections, for rent registries, etc. And as someone who spent many years giving small donations to local tenant advocacy groups. At least Andreesen is transparent in his greed, and not hiding it. I regret all those years of donations to the groups that hurt people, but when it comes to the few good things they do I'll be there with them still. Marc Andreesen and the wealthy funders of "tenant" groups are not harmed at all by better tenant protection policy, but boy are they harmed if real power were handed back to tenants in the form of having enough housing, and therefore ultimate power over the landlords.
Well I'm speaking from first hand experience knowing working people who live in such situations. Their existence is so precarious that a change in housing situation is indeed existential. So even if there are some disingenuous tenancy orgs out there, it doesn't change the reality that this is a real problem.
> They are nearly 100% funded by wealth foundations that have exactly the same motivations as Marc Andreesen, and the people carrying out the wishes of the wealthy foundations are merely woke-washing really bad behavior.These "tenant" groups fight the types of change that would redevelop wealthy areas, precisely because of their funding sources, and they do it just as hard if not harder than stopping housing going up in other areas.
Certainly not the case in my jurisdiction of Vancouver, where such political groups (eg. COPE) have explicitly advocated for apartment development in the wealthiest areas of the city. Maybe this is the case somewhere but a big [citation needed] here. If there are somewhere tenant advocacy orgs that aren't in favour of turning low density detached homes into apartments for workers that's certainly not one I recognize.
> If anything, these "tenant" groups only advocate for the interests of a small subset of tenants, those who have their forever home, and do so at the expense of tenants in general. It's "pure greed" too, at the expense of others in their same general social, economic, and political class!
Yes this is the point of my last comment. The solution is to increase the amount of people who have their forever home. The most equitable way to do that is to "destroy" the forever homes of the very rich for whom that is really no big disruptive deal, not to destroy the forever homes of the poor for whom it would be incredibly existentially disruptive. It is not "greedy" for people to want to keep their toehold on their long term home. To be clear the stakes here are not simply moving somewhere else but being priced out of the city entirely.
This is almost completely traceable to Californians' failure to allow sufficiently dense housing to be built on their doorsteps. The only thing Larry did was bring prosperity to the region.
Read somewhere that SF spends roughly 50k$-80k$ per homeless person per year.
Taxing more doesn't solve a massively inefficient system at it's core. Just like US education, we spend more than any country on earth, why is it still bad?
Answering that question with a "if only we had more money" is a really poor argument. The CA tax fundamentals are bad, pooring more cash onto the fire will not fix that.
And, many people who are poor have persistent mental/physical disabilities, so part of that spending is because many of these people have it the hardest.
With that said, we could likely fix all of these things and significantly unequal wealth distribution would still result in a lot of poverty.
96k$?! Those are rookie numbers. I propose a mclaren for every homeless person. We will weath tax all stocks in the fortune 500 to pay for it, crash the stocks and solve inequality.
You can't solve a shortage with demand subsidies. You need to expand supply. SF has too little housing relative to its population, and has perennially tried throwing money at the nonprofit industrial complex which has (obviously) perennially failed to solve the problem because it doesn't generate new housing units, it just bids up and reshuffles the existing ones (and steals a lot of money in the process).
This has basically nothing to do with with market cap of Google or Larry Page's percentage ownership of it; and the state government taxing it more will not make this situation any better.
Landlords could have collectively agreed to keep rents at $1K/month and not lobby against building more housing complexes, but they decided to be greedy instead.
that has ZERO to do with the tax system... You can't be serious? Have you looked at the data at all? have you seen how much money is spent "combatting" homelessness in San Francisco?
just not his problem. not a single motherfucker on this website lives their life as if wealth disparities are a genuine problem anyways. you are motivated by resentment
Why does it matter how much the shares of his company are worth? They just represent ownership of a company. It's not like their existence is somehow holding back wealth from the market or from other people. And if he wants to sell the shares to make some cash, then he's going to have to pay taxes on that, which is good for everyone else. And he wouldn't do that unless he planned to spend or invest the cash receives, which is also good for everyone else. I fail to see the harm.
I think one could argue that taxation should be higher, and harder to dodge, and I would agree with that.
But once you start saying that some people shouldn't have more than others to some degree, that's a very slippery slope. Where do you draw the line? Why is it okay for middle class Americans to buy nicer clothes and move into bigger apartments when people are out there starving? If it's not okay for someone to have the net worth of Qatar, why would it be okay for someone to live in an apartment that's worth more than a poor township in South Africa?
At some point we have to accept that inequality exists, and that although almost everyone could do something to minimize it, there's an ethical and practical line that needs to also respect individuality to a large degree, if we want people to feel incentivized to do things, to feel ownership, to maintain autonomy. And where to draw that line is tough to say exactly, but it probably shouldn't be a line, it should probably be smooth, or at least smooth-ish. So I feel like we're just coming back around to progressive taxation. Which we already have.
That, exactly, is the problem. It's not even about money and tax evasion but power. Why should one person have more say over the company they work for than 10,000 other employees? Or even worse they don't even work there anymore and just control it from outside?
Even if they are a perfectly good and business smart person who never makes bad decisions or abuses their workers. They will eventually die or sell their share, and in either case it will end up with people who care less about the company's long term health than the founder did. Profit maximizers with no ethics and no feeling of responsibility.
I think the concept of shareholders is the problem. Layoffs, cartels and price inflation happen when the people who make decisions get all the benefits but none of the downsides. If it was up to me I would ban stocks and replace them with time limited shares that give you a right to part of the profits for 1 or 5 or 10 years, but zero control over the company. Leave power to workers and returns to investors but never bind the two together.
If you taxed him half of that wealth he'd still have single digit percentage of the company.
The broken tax system is that I get taxed about 50% on my marginal income dollar --- the system doesn't wait for me to spend it first --- but when his stock portfolio appreciates by a dollar, he's not taxed! Not until he sells in order to spend. Why are we taxing labor so much more than capital?
And no, I don't think that inventing pagerank really entitles two people to $200B. Although in their case I don't think they've done as much harm with it as some other billionaires.
When your job pays you a dollar, you get an actual dollar. Your job never claws that money back. Unrealized capital gains are not money, and they routinely get clawed back. Unrealized capital gains just means someone in New York traded GOOG/GOOGL at a higher price than they did yesterday.
And, sure, super-rich people can in theory use the appreciated stock as collateral for loans and not pay taxes, but in practice Larry and most other centi-billionaires actually sell loads of stock and pay a lot in capital gains taxes because having your status as super rich dude who owns a huge yacht be totally dependent on Google's stock price is a dumb risk to take on, and it's worth paying some taxes to eliminate that risk.
> When your job pays you a dollar, you get an actual dollar.
No.. many cents of it are withheld, by law.
Elon uses his vast wealth to influence, intimidate, and generally get away with lawlessness. He effectively took huge loans from banks to buy a giant bullhorn in Twitter. Those loans are collaterized by unrealized capital gains. And more generally, billionaires have the ear of politicians because of what they could do with their money. So you don't need to realize gains (gains which are taxed at a more or less flat rate!) to make use of your wealth.
Though like I said, Larry is not really a bad guy in the world of billionaires. I would only support taxing him more than I would support levying additional taxes on w2 income assuming CA actually had a provable need for more money. (Right now I think they waste most of the budget.)
He has single digit percentage of the company but double digits percentage of voting stock. My understanding is that he and Brin are holding together barely above 50% of the latter and understandably do not want to lose the control.
The part where he has access to essentially unlimited untaxed cashflow by borrowing against that asset. Especially with how the market has been lately, the gains erase any burden of the loan. Something has be done about this, at least. Otherwise broken sounds about right.
Larry has sold tons of Alphabet stock and paid lots of capital gains taxes. This is easily available public information. The whole buy-borrow-die thing is sort of a stupid myth. Actual centibillionaires diversify because the risk of having a huge concentrated position is much greater than the liability of having to pay some capital gains taxes.
Well, why does something have to be done about this, exactly? Who is getting hurt here? It's not like borrowing is increasing his net worth. Just like anyone else, he has to pay back what he borrows, he immediately owes an equal debt. And that requires actual income, which gets taxed.
> Just like anyone else, he has to pay back what he borrows, he immediately owes an equal debt. And that requires actual income, which gets taxed.
In theory, maybe, but in practice that is not what happened over the past decade(s). Instead our retirement funds are paying it back.
When the market grows it makes the collateral worth more, which lets the holder keep refinancing the debt instead of selling assets and realizing taxable gains. As long as the assets appreciate faster than the debt grows, the borrowing can effectively roll forward for decades. Eventually the estate pays the debt out of the assets themselves, but this is not necessarily out of taxable income earned during the person's lifetime. The US markets has seen exceptional genuine growth, but the trillions of 401(k), IRA, etc money flowing in to them over the last 40 years is no small consideration.
> Well, why does something have to be done about this, exactly?
The something here is what's required to have a functional tax system. Without addressing this situation I do see an argument that we have one. How important that is to one is another question.
the people getting hurt is anyone who would have bought something but was outbit by larry page's free money glitch.
he doesnt necessarily have to pay it back either. he could just take out another loan against his same now higher valued assets to pay off the old loan
like, if a company's market cap gets too big, the law should stop applying to them? they should be allowed to start their own militaries and enforce martial law a la east india company?
how does a founder keep a single digit of their company after theyve been dead for a thousand years?
These arent nearly as absolute as you are making them to be.
a founder can keep their percent by paying their taxes with other money they have, or by decreasing the worth of their company. theyre a founder, they have control. Maybe founders wont be so keen to enshittify their products if theres a downside to continued growth forever. considering google dropped "dont be evil" in exchange for making larry page's 1% grow for the sake of growing, how's society at large benefiting from continuing to subsidize it?
> Companies should get kneecapped if their market cap gets too high?
Yes. They should be broken up because competition is good for consumers and society. If we had functional anti-trust enforcement Google would not have a near-monopoly on search ads where they own both the ad inventory and the marketplace where you have to buy those placements.
Yes perhaps there should be wealth caps. Did Larry Page really do 5% of all that labor that made google as big as it is? And should a single company get so big and have so much power? Yes, I get that they took risks and invested early, and we shouldn't take away that type of incentive, but perhaps it should have caps, or an S curve tax schedule.
Google doesn't have much power. It can't arrest you or pass laws or vote. It just happens to produce a lot of profits for its shareholders (who are, overwhelmingly, average people with 401Ks) and a lot of profits means a big market cap.
If we need revenue to fund useful government programs, great, let's tax Larry. But I don't understand what problem is solved by expropriation qua expropriation.
it does have monopoly power and anticompetitive power all over the place though.
google bans are quite intrusive, but google could pretty easily with their graph knowledge apply secondary or tertiary sanctions, at which point you would not be able to do much of anything, same as if the US government sanctioned you
> If you let someone get to hundreds of billions in net worth
"Let someone"? I guess the right to pursue one's happiness is not all that self-evident after all. One should first ask permission, and, if we are in a good mood, we might "let them" pursue their happiness.
Norway, Spain, and Switzerland have wealth (net worth) taxes. Why don't we see the same outrage from rich people living there? Also, most billionaires get rich with equity in a business that they built. How else can we tax that net worth?
Not only that but they are actively moving into these countries, because, like everybody, they like a functioning government that provides infrastructure, housing and health care for their citizens. This makes for much more livable cities and a happy society.
Actually, in Norway there is some outrage. Many people with (a lot of) money move to Switzerland. There is also the issue that startups are being taxed on "paper money" — the value of the firm on paper based on expected future income — even though they have not yet started earning money.
From what I can find, the top wealth tax rate in Norway is about 1.1%. That seems pretty dumb to leave your home country to avoid paying 1.1% tax per year. For entrepreneurs that now have enormous equity (100s of millions of Euros), my sympathy is low. They can easy sell a tiny fraction of their equity to investors to pay the wealth tax.
We're in a situation where it's already "too late". We can't go back 100 years. How do you propose we fix it, assuming time machines won't get invented soon?
Additionally, the state gets to tax you on what they say you’re worth based on the markets. That’s a pretty weird way to assign dollar value to someone instead of, say, looking at how many dollars they have.
While stock markets provide useful liquidity for investors entering and exiting positions, they are also rampant with finbro kids doing nothing more than jumped-up gambling. We don’t know which market trades fall into the serious wheels-of-capitalism bucket, and which are gambling, because we don’t have to know. The real world works in dollars so, to date, the state taxes people on the realized capital gain in dollars.
If a bunch of kids are selling handfuls of leaves to each other for a nickel each is the state now valuing my unkempt forest at $99bn? The state is welcome to pull up a chair and watch me try to sell 5 kilotons of leaves to every kindergarten playground in the country. If I succeed then it will take its cut of the capital gain. If I fail, it will not.
When the state starts looking inside the market black box and guesses, based on little Johnny and Becky’s recent playground trades, that I might be able to get at least $300 a tonne for my damp, rotting leaves, then the state is doing something at best weird and at worst unfair, and states doing unfair things is really bad.
Fix the system properly: when you inherit stock, you inherit the cost basis as well. Rinsing off capital gains liabilities through “buy/borrow/die” is the real villain here.
If the $100B+ was created through ownership of a company and is unrealized wealth, how would you have taxed it if not through a wealth tax? Nobody is getting to $100B by way of income.
If you let someone get to hundreds of billions in net worth and then realize they haven’t been appropriately paying back into the system, it’s already too late. Like the article says they can simply say “no” in a variety of ways, from fighting in court to simply leaving.
And care about the rule of law. You cannot pass retroactive laws, you cannot pass laws that target individual people. If you pass a general law (which could very well have reasonable objections), people have to have a chance to leave.
"I'm passing this law that is effective the exact millisecond I sign it, tough shit if you don't like it" is tyranny and despotism. But based on your comment I think you know that.
> And care about the rule of law. You cannot pass retroactive laws, you cannot pass laws that target individual people. If you pass a general law...
A wealth tax is not a retroactive law, nor something that targets an individual person. It's a "general law" in your parlance. Think about it.
> If you pass a general law (which could very well have reasonable objections), people have to have a chance to leave.
I don't think so. By what legal authority is that required?
> "I'm passing this law that is effective the exact millisecond I sign it, tough shit if you don't like it" is tyranny and despotism. But based on your comment I think you know that.
No, it's not, and don't be ridiculous. When they passed laws against date-rape, would you have judged it "tyranny and despotism" unless the law was delayed to give the date-rapers time to finish up the date-rapes they'd planned?
There's no justice in giving the wealthy the maximum opportunity to pick and choose the laws that apply to them.
ah yes, all the tech billionaires of this era, had they been given the heads up that there success would have led to a level of concentration of wealth and power previously unknown to humanity, and that the populace would likely call for some changes to tax law to address the largely unforeseeable structural economic effects of this level of change they brought, would certainly have opted out, leaving the US, and moving to another less tyrannical part of the world, where, by the unique magnitude of their genius, they would have brought all their great works to the glory of other nations and not to America with its overly entitled peasants and social media sharecroppers; clearly the rule of law in Europe and China would have allowed them to fully manifest their unparalleled vision of technological greatness without any concern of a rug-pull by authorities challenging their well-deserved hegemony
What hyperbolic nonsense, just because something doesn't affect me doesn't mean it can't be bad policy. Wealth taxes are a fool's errand and serve only to damage and slow the economy.
The level of legal understanding among technical experts is equally low. The cybersecurity laws as currently written require intent. No OpenAI employee can be held liable since it’s pretty easy to prove they weren’t intending to hack anyone – they didn’t even know about it till much later.
Not a lawyer, but I just posted a link about former FTC chair Lina Khan saying earlier this month that the AI companies can be held responsible under current law.
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