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Jeff Bezos lost $50bn and change this year on the fall in Amazon shares. That means, at that 20% rate, a $10bn tax refund. The point here is not to just point out the silliness of this specific proposed law. It’s to point out that politics — as opposed to good economic thinking — leads to proposals of the most ineffable stupidity.

Here the proposal is that we should send a $10bn tax refund cheque to the world’s second richest man. All in the name of taxing the rich more. Oh, and another $10bn cheque to the world’s richest man, Elon Musk. In order to tax the rich more.

12 thoughts on “Elsewhere”

  1. What on earth makes you think they’d give a refund when the value of the wealth goes down? They can write the tax law as they want, and you can bet your bottom dollar it would be ‘tax the increase in wealth only, no refunds for previous taxes paid’.

  2. This is a trader’s view of value. Which is what you really need to discus this.
    Value is a fantasy. It’s based on price & price is a historic transitory phenomenon. A price only exists for the instant of a transaction between a buyer & a seller. By definition it is no longer in existence because buyer & seller were satisfied by the transaction & are no longer in the game. Why I tell people that the listings of estate agents are not valuations of their property. They are, by definition, houses that have not sold at those prices.
    If value works at all, it can only be for small numbers where individual transactions can’t move the market by much. So take Musk’s billions & apply an unrealised wealth tax. To pay the tax, some of those assets have to be sold. Is there a market for that sort of quantity of assets?. The selling price would be whatever the market would offer under those circumstances. So that could then reset the total value & alter the tax liability. He gets an automatic tax rebate if you want to play fair.
    Whatever, if you introduce an unrealised wealth tax, a lot of the unrealised wealth is going to evaporate on market anticipation.

  3. Although Jim’s possibly right, bearing in mind the people who want to introduce it. They’d set the values at the pre- tax announcement levels. In which case it would be a one time money grab. Next time round you probably couldn’t realise the assets to harvest the tax. Everything would tend towards zero.

  4. Refunds? On the grounds that the guy who wrote the bill said so, in the printed document explaining the bill?

  5. Bruh, refunds were never on the table. When you bring that up they just look at you weird.

    In fact, under these proposals, after these losses, when his value increases again he would be taxed on *that*.

    It’s about, and has always been about, how to quietly and with as little resistance as possible transfer power and money from there to meet.

  6. @Agammamon
    If one thinks the thing through, to collect actual real money from the tax it’s necessary to interact with the markets. The assets have to be sold to pay the tax. The net result would the hyper wealthy get a bit poorer & the more moderately wealthy get to be richer by picking up some cheap assets. The amount of wealth being transferred by that route would likely be more than the tax gained. The lower the wealth level the tax starts at, the greater the transfer. Eventually it bottoms out when there aren’t sufficient people with sufficient capital to buy the assets. Like I said, everything tends to zero.

  7. The worth of a large shareholder’s holdings is likely less than the December 31st closing stock price times the number of shares, because it would be difficult or even impossible to sell such a large position at that price. So, you’d likely need some sort of torturous appraisal methodology to derive a discount to “fairly” assess a tax. Good make work for accountants and appraisers and lobbyists.

  8. I suppose one way of avoiding the tax would be to put enough shares on the market to pay the bill. The resultant drop in share price might cancel out the bill. Could even put you in line for a refund!

    If so, remove the shares from the market once the refund cheque has been cashed, watch the share price rise again, and repeat the process ad infinitum.

  9. I don’t think they’d even want the cash, or rather while they’d accept it, very few would be able to pay it in cash for the reasons mentioned above. My bet is they’d take the shares at the nominal market value in lieu of tax. That way they basically steal the entire business off the owner, one bit at a time.

  10. ‘My bet is they’d take the shares at the nominal market value in lieu of tax. That way they basically steal the entire business off the owner, one bit at a time.’

    As a former bureaucrat Jim, that’s the way I’d do it.

  11. The problem with this sort of tax is that just when the government need the money, in a downturn, would be when it wasn’t available.

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