There are more and more people saying that billionaires should not exist. I've been saying it since 2012. I call it my No Billionaires, Debillionairize the Planet Crusade.
One question that I get is HOW? How do we make it so billionaires don't exist? This article provides details.
I was on a conservative podcast this week, Slightly Sophisticated, with Kyle Ramos, discussing my belief that we should be debillionairizing the planet-- an idea that tends to make conservatives' heads explode. He asked me how I would propose to do it. Should we take away their money? I was vague in my reply. But I do have answers.
I want to be clear that I am not opposed to people becoming wealthy. But there should be limits to wealth. People are considered "Ultra-wealthy" if they are worth more than $35 million. I'd say, that for starters, we don't want to see people worth more than ten times that-- $350 million. And keep in mind that the wealthy have ways to mask their wealth, like having properties assessed at extremely low values. Trump has done this. So, let's use a wealth limit even more than that-- half a billion dollars.
There are several ways to make it so no billionaires exist:
1-prevent billionaires from passing on their billions when they die
The first item is the easiest. Simply institute inheritance taxes (I call them Dynasty taxes) and regulations that prevent billionaires from transferring their wealth to their relatives. This will have to include checking offshore accounts and creation of third party organizations, like foundations. Sorry, but transferring your money to a foundation that you still control directly or indirectly doesn't cut it. Trump raise the limit so most inheritance, or estate taxes (called Death Taxes by Republican framing master Frank Luntz.) only apply to a few thousand people. Wikipedia says,
If an asset is left to a spouse or a federally recognized charity, the tax usually does not apply. In addition, a maximum amount, varying year by year, can be given by an individual, before and/or upon their death, without incurring federal gift or estate taxes: $5,340,000 for estates of persons dying in 2014 and 2015, $5,450,000 (effectively $10.90 million per married couple, assuming the deceased spouse did not leave assets to the surviving spouse) for estates of persons dying in 2016. Because of these exemptions, it is estimated that only the largest 0.2% of estates in the U.S. will pay the tax. For 2017, the exemption increased to $5.5 million. In 2018, the exemption doubled to $11.18 million per taxpayer due to the Tax Cuts and Jobs Act of 2017. As a result, only about 2,000 estates per year in the US are currently liable for estate tax.
After a certain amount, estates should be taxed at 100%.
2-prevent people from becoming billionaires
This is a bit easier, since you are not taking away money or assets that someone already has. But the main argument people make against this is that not allowing people to become billionaires will discourage business people and investors from investing money or time.
First, let's talk about how to prevent people from becoming billionaires.
Bernie Sanders is on the right track. So was Dwight Eisenhower, under whom the tax rate on earnings over a certain level was over ninety percent. People argue that back in Eisenhower's day people easily evaded the highest taxes. They use that as an excuse for not even trying. And they are right that tax evasion was and still is rampant. We have to be much smarter about this.
We start by setting the limit-- again, I'd go with $500 million. That will include all ways of measuring assets-- cash, savings, securities, real estate and all forms of equity in companies. So, if a company founder takes a company public and only 10% of the equity in the company's stock is offered, then his 90% share in the company would be nine times the value of the shares offered. We have to be smart and not allow loopholes.
Will entrepreneurs be motivated to innovate if they can only make $500 million. I think they will, even if getting there they are exposed to graduated taxes, so the last 10% is taxed at 90% and all of the assets over $500 million are taxed.
But the assets do not necessarily have to be taxed. The entrepreneur can share money, stock and equity with employees, turning the company into a worker cooperative. The entrepreneur can share resources an stock ownership with all the stakeholders, not just employees. That would include the local community-- local government, local non-profits, churches, and also funding for the local environment. The money and assets can go to supporting local infrastructure repairs and improvements.