Eating Jeff Bezos
Senator Elizabeth Warren proposes a wealth tax on "ultra-millionaires." Note that in 1913, the federal income tax was sold as a tax on the richest of the rich in America.
Senator Elizabeth Warren (D-MA) is sponsoring a wealth tax that she calls an “Ultra-Millionaire Tax.” It’s designed to collect $3.75 trillion over ten years. Naturally, her write-up quickly veers into ruminations on race and fractional ethnicity. (“The 400 richest Americans currently own more wealth than all Black households and a quarter of Latino households combined.”).
The federal income tax requires Americans to pay portions of their annual earnings to the IRS. But unlike the income tax, which is a one-time assessment, Warren would effectively impose a year-after-year-after-year-after-year tax on some portion of some Americans’ incomes. Right now, earn some money this year and you’ll pay the income tax on your 2026 return. But with this proposed tax, you’ll pay that income tax on your 2026 return, and then in 2027, you’ll pay more tax on those same 2026 earnings—and more in 2028, 2029, 2030, 2031, etc. etc.
Warren claims the tax would fall only on “ultra-millionaires.” For these individuals, the tax would fall on:
“[a]ll household assets held anywhere in the world will be included in the net worth measurement, including residences, closely held businesses, assets held in trust, retirement assets, assets held by minor children, and personal property with a value of $50,000 or more.”
The bill would also increase the assessed valuation of some assets and increase the IRS’s enforcement budget. Those individuals wishing to renounce their citizenship and move abroad would be assessed an amount equivalent to 40% of the wealth. Wealth taxes have long been a Holy Grail of populists (mostly on the Left).
In classic Alinskyite fashion, Warren picks her target, freezes it, personalizes it, and polarizes—in the following post by singling out Amazon’s Jeff Bezos:
Here are a few thoughts on Warren’s idea—including Internet personality, Iowahawk’s magnificent 2011 takedown of tax-the-rich schemes.
[1] Senator Warren says the tax will only fall on ultra-millionaires. Keep in mind that similar assurances were given regarding the federal income tax in 1913. From the National Archives:
“in 1913, due to generous exemptions and deductions, less than 1 percent of the population paid income taxes at the rate of only 1 percent of net income.”
And from the Foundation for Economic Education (FEE), in 1913:
“Congress first set the top rate at a mere 7 percent—and married couples were only taxed on income over $4,000 (equivalent to $80,000 today). During the tax debate, William Shelton, a Georgian, supported the income tax ‘because none of us here have $4,000 incomes, and somebody else will have to pay the tax.’”
As the FEE article noted, Supreme Court Justice Stephen Field predicted in 1894 that a small income tax on the rich was:
“but the stepping stone to other [taxes], larger and more sweeping.”
It’s Jeff Bezos today. Maybe it’s you tomorrow.
[2] Some estimate that Jeff Bezos paid around $2.7 billion in federal taxes last year. Warren’s bill would nearly triple his tax bill. Every potential innovator will keep that in mind. Given point [1] above, you should, too.
[3] Warren’s bill would assess billions in taxes on unrealized paper profits. Thus, if the taxpayer’s investments go sour in the future, he will already have paid taxes on profits that he will never see. It all depends how the turbo-charged IRS values your paper assets.
[4] It’s unclear whether Senator Warren’s proposed tax is constitutional. So it would almost certainly be contingent upon a favorable Supreme Court ruling or a constitutional amendment—the former being unlikely and the latter being as close to impossible as politics allows. (Warren says that “legal experts”—whoever they might be—consider the idea constitutional.)
[5] Keep in mind that close-to-impossible isn’t the same as impossible. In 1913, the imposition of the federal income tax required ratification of the Sixteenth Amendment. Opponents thought that could never happen. Remember that as you slog through your stack of income tax forms this year.
[6] If you feel that Senator Warren and her friends would spend an extra $3.75 trillion wisely, it’s likely that you would NOT trust President Trump and his friends to act with equivalent wisdom. As many have noted previously, one should hesitate to hand the government powers that you would not trust in the hands of your political adversaries.
[7] The acerbic and astute X/Twitter humorist and commentator David Burge (“Iowahawk”) nailed the folly of soak-the-rich taxes in his reductio ad absurdum 2011 essay, “How to Feed Your Family on $10 Billion Per Day.” His example hypothesized wealth taxes designed to collect $3.7 billion per year (as opposed to Warren’s proposed $3.75 trillion per decade). But the logic is illustrative of the problems inherent in wealth taxes. From Iowahawk:
“Seems like these days I hear a lot of whiney whiners whining about ‘out of control government spending’ and ‘insane deficits’ and such, trying to make hay out of a bunch of pointy-head boring finance hooey. Sure, $3.7 trillion of spending sounds like a big number. ‘Oh, boo-hoo, how are we going to get $3.7 trillion dollars? We’re broke, boo-hoo-hoo,’ whine the whiners. What these skinflint crybabies fail to realize is that $3.7 trillion is for an entire year—which translates into only a measly $10 billion per day! … … Mister, I call that a bargain. … … So let’s all sit down together as an American family with a calendar and make a yearly budget. First, let’s lock in the $3.7 trillion of critical family spending priorities; now let’s get to work on collecting the pay-as-we-go $10 billion daily cash flow we need.”
In his piece, Iowahawk begins as the ball drops in Times Square on January 1 and goes through the calendar, imposing one confiscatory wealth tax after another until he reaches the budgeted $3.7 trillion dollars as the ball descends on the following New Year’s Eve. Iowahawk’s prose is more entertaining, but here are some hints as to how his essay goes:
At 12:01 AM, January 1, seize the entire previous year’s profits from Exxon, Mobil, and Walmart.
That money runs out at 9:52 AM, January 4, so grab 100% of the previous year’s profits from the other 498 corporations in the Fortune 5.
That gets the government through 2:00 AM February 9. So then, seize all the money spent on the previous 45 Super Bowls, giving the government an extra 12 hours of revenue—running out at 2:00 PM February 9.
After that, Iowahawk seizes all the salaries paid to professional athletes in the NFL, MLB, NBA, and NHL and every penny earned by every household making over $250,000—getting him through 6:00 PM, July 2.
Then, he stops funding the wars then underway in Afghanistan and Iraq and seizes all the revenue from every Star Wars movie ever made (plus related books, toys, action figures, etc.). Then, all the homes in Beverly Hills, all the wealth of Warren Buffett and Bill Gates, all the wealth of America’s 398 other billionaires, and 100 or so near-billionaires. That gets the government through 4:00 PM on Christmas Day.
Finally, he kills all foreign aid and collects $40 from every single man, woman, and child in America.
By Iowahawk’s math, that gets the government through Year 1 of its 10-year plan to spend an additional $37 trillion. But, in obtaining those revenues, he has obliterated the wealth of the entire upper-tier of American society—so they’re no longer available for taxation going forward. Thinking about how to obtain the remaining nine years of revenue, Iowahawk asks, plaintively:
“Do you know where we can get some more plutocrats?”
Again, Iowahawk was waxing lyrical over much larger sums. But the difference between his speculative world and Elizabeth Warren’s lies in the magnitude of the impact, not in the logic.
[8] Finally, after reading the above sections, a friend and colleague wrote to say that what bothers him most about Warren’s proposal and about her rhetoric is the “absolutely toxic belief” that Bezos being rich is the reason people lack insulin and school lunches. As he wrote to me:
“Ask yourself—would you be better off if a bunch of rich people moved into your neighborhood, or if everyone else in your neighborhood lost their job at the same time? It’s fine for you to want to be richer, even richer relative to others, but it’s stupid to want other people to have less. … [A] school district with a Bezos in it is much more likely to be able to provide free lunches for its students than a district with no Bezos. Warren and her ilk just don’t grasp that.”
Thanks for this. My fear is that there are not many who understand what you lay out, or who want to understand, or who have the K-12 background that would allow them to understand. We live in a "Tinkerbelle" world where 2+2=5, or whatever you want it to be.
It’s the billionaires who are destroying the country and making us little guys miserable. Or maybe the ultra millionaires. Or the boomers. Or the Asians. Or the Jews. Or the patriarchy. Or white people. Or Republicans. Go get us, Liz. I mean them. Go get them.