More Billionaires Crying

““You’re not victims; you’re the richest people in the world,” Novogratz said Friday in an interview with Bloomberg. “How in God’s name do you feel like a victim?””

HuffPost, “Billionaire Tells Wealthy to ‘Lighten Up’ About Elizabeth Warren: ‘You’re Not Victims’ “, Mary Papenfuss, October 19, 2019

A lot of billionaires really don’t like Elizabeth Warren, especially the financial types who had already encountered Elizabeth Warren after the Great Recession, and the liberals are just eating up the billionaires’ unease about her. First there was Jamie Dimon, which on the one hand was kind of disappointing because I had hoped he had learned from the Katie Porter grilling, but on the other, his reaction is understandable since he is part of the financial types and thus would know the danger Elizabeth Warren poses for them. Next, I saw quite a few references to “Leon Cooperman crying” (see below) and I at first ignored those. Then I saw something about Bill Gates, and he’s usually one of those “good” billionaires because I believe he is earnestly trying to do good, talking about how if he was taxed $100 billion, then he would have to rethink about the wealth tax. And the latest was the article where “Elizabeth Warren leans into her billionaire fight” by Vox where I saw some more billionaire Names: Lloyd Blankfein (former CEO of Goldman Sachs, TD Ameritrade founder John Ricketts, and Peter Thiel. Four out of six of these guys are from the financial world.

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That $100 billion figure stopped me. Bill Gates said something like “I have paid $10 billion in taxes. If I have to pay $20 billion, I’m okay with that. But if I have to pay $100 billion, I would have to do the math to see how much I would have left.” (paraphrased) The author writing that particular article did the math and said $7 billion and he didn’t sound too sad. Schadenfreude!

I see different wealth figures quoted for Bill Gates (97 billion, 101 billion, 107 billion) but 100 billion is significant whether he’s at 101 or 107 billion. He’d be either left with 1 billion or 7 billion. That’s not all in one year though; that is over a period of time, but I can see why he’d squawk. For Elizabeth Warren’s purpose that decline is the intent: the wealth should decline over time so that so such money doesn’t get passed on as huge family inheritances. The whole point per Gabriel Zucman, Emmanuel Saez and Elizabeth Warren is to have wealth circulate instead of captured in the hands of the few families.(New York Times, “Elizabeth Warren Would Take Billionaires Down a Few Billion Pegs”, Patricia Cohen, November 10, 2019)

Still, that $100 billion figure does make me gasp. And yet at the same time, I do question if those billionaires are really worth billions. Some of them have started businesses that have produced a lot of values but I feel that a lot of them did not produce value – like hedge fund managers or certain tech founders or oil owners. If we have a lot of people who can barely make it on a day to day basis, then most billionaires haven’t added value to society. They’ve hurt society instead. (But at the present time, I’m not counting Bill Gates as one of them.)

There are, though, some who do get the reason why people are asking for the wealthy to pay more and thus support the wealth tax, maybe reluctantly, but they get it. Nick Hanauer is one of them and George Soros is another.

“Forbes counts 607 American billionaires. A handful have stated that they support a moderate wealth tax. George Soros, Liesel Pritzker Simmons, Ian Simmons, Chris Hughes, Nick Hanauer and 13 other wealthy individuals signed a letter over the summer in support of such a tax.

“I definitely understand how that would make lots and lots of extremely rich people uncomfortable,” said Mr. Hanauer, co-founder of a Seattle-based venture capital firm and an early investor in Amazon. “But I’m more worried about our democracy.”

“Don’t get me wrong,” he added. “I would prefer 3 percent.” But even at 6 percent, he said, “we would all survive and continue to be rich and fly around in our planes.”

He pointed out that most Americans had been living with meager income growth for decades, while the silk-thin layer at the top shoveled in enormous gains, cumulatively more than 400 percent since 1980.

“All you’re doing is saying to the richest percent of Americans that the rate of growth of your assets and wealth will now match what has happened to other Americans over the last 40 years,” Mr. Hanauer said.

New York Times, “Warren Would Take Billionaires Down a Few Billion Pegs”, Patricia Cohen, November 10, 2019.

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I tried to do some calculations to see how the numbers flow from the wealth tax. There were 3 attempts to understand the math. The third attempt plays around with some rough figures of Bill Gates’ wealth. Now I don’t get the same numbers as Zucman and Saez, the tax experts, but at least I understand the magnitude of the effect over time.

Here’s the Excel file you can download.