405 Comments

We have a wealth tax! It is called property tax on real estate and almost all states use it.

Often the excuse I read in the financial press is that implementing a wealth tax on securities and other financial instruments would be "too difficult." Really? How do we do it then for real estate?

And how has a country like Switzerland done it for decades? https://taxsummaries.pwc.com/switzerland/individual/other-taxes#:~:text=All%20cantons%20levy%20a%20net,shares%2C%20funds%20and%20other%20equities.

Yes, it's time for a wealth tax with some carve outs for the middle class!

Expand full comment
Aug 10, 2023·edited Aug 10, 2023

Real estate and property taxes hit the middle class much more than it does the rich, so that really isn't a wealth tax, per se. by that I mean that a sum of money that makes a difference to a middle class family won't even be noticed by the super rich. Taxing luxuries like boats and multiple residences, private airplanes, super costly jewelry, now THOSE might be wealth taxes...especially if those multiple residences are only used for a small fraction of the year, each year...

Expand full comment

For most Americans, a home is their primary asset or "wealth".

My point is directed at the inevitable push back that will come from the financial press that taxing the wealth on assets is "just too difficult". The wide use of real estate property taxes shows that there are robust mechanisms to administer a wealth tax.

Expand full comment

In addition, some will try to craft an argument that going after amassed wealth, year after year, is abusive and amounts to taxing the same thing over and over….

… which, of course, we do to ordinary people’s houses alla time. And we do it with other “excise” taxes, as well, just not to the massively amassed stock portfolios and wealth of the Gilded Members of our Gilded Age! They get to skate tax free on the enormous bulk of their estates.

I think they should pony up to keep the country running, and pony up every year, if they think hanging on to crazy-giant estates is something they care to keep on doing.

The rest of us are basically renting our houses from our towns, and paying our share to keep things going. Rich guys should, too.

Tax the Rich!

Expand full comment

David Nadel, who started the dance community called Ashkenaz in Berkeley California, had a sign on the outside wall for years. TAX THE RICH UNTIL THERE AIN'T NO MORE RICH.

Expand full comment
Aug 10, 2023·edited Aug 10, 2023

Being a billionaire should be against the law! And ILLEGAL! And expensive!

Expand full comment

Tax the wealthy up to 90%,, if they go over a certain limit. It WORKED in the 1960's to early 1970's.

Expand full comment

Laurie: I agree! The law is what decrees that they are legal, and the law COULD decree they are illegal. There is no guarantee to them that they can manipulate politics with their money. Their existence contaminates every democratic impulse in our country. To them, politics is just another market where the rich get to buy any laws or politics that suits them and everyone else is excluded. No wonder they love markets so much!

Expand full comment

If it's all relative, if the term "rich" is relative, and if you want to tax the rich until there are no more rich, then everyone here is going to be in the class "the rich."

Expand full comment
Aug 10, 2023·edited Aug 10, 2023

Martha Ture: OK, so maybe we specifically target the obscenely richer!' ! Have a ratio of some kind to show the Inequality. Like, if the bosses get 300 percent more compensation than the lowest paid worker.

Expand full comment

I once opened a can of worms by suggesting a flat tax, I still think its better than what we currently have. The argument that this form of taxation disproportionally does more damage to the poor then to the wealthy is understandable on the surface but upon further inspection a treasure trove of funding to agencies and programs benefiting the poor will become available where today they do not exist. It is just a thought by which to get the wealthy to pay their fair share. The monies derived from the upper class's tax dollars would more than offset the burden put upon the lower income's population. I live in a glass house, please no stones. It's just an idea.

Expand full comment
Aug 10, 2023·edited Aug 10, 2023

Yes, and the 2008 banker lead housing crisis of appraisal fraud and liar's loans with the "application process" stole much of that wealth from the middle class.

In the nordic countries, they did the correct action. There was no application process. They wrote down people's mortgages and put the bankers in jail.

Easy! ;)

Watch The Con & Bill Black - How to Rob a Bank is to Own One.

Expand full comment

I remember that and was disappointed when Obama bailed out wallstreet and even more so when no one went to jail.

Expand full comment

If we go through an economic breakdown again, Biden will bail out Wall Street and no one will go to jail, just like with Obama. The Democrats love billionaires and CEO's as much as the Republicans; they just feel a need to pretend otherwise and throw a bone to common people. I read today that Biden increased social security payments by 8.7%. Why should he have the say over whether or not that is done? If the Dems want to support Social Security as they claim, let them index it to inflation. But they won't.

Expand full comment

The Dems often bend to corporations' wishes. But the Republican Party is a wholly owned subsidiary.

One way to level inequality a bit would be to make social security taxes apply to all levels of income ..

Another would be a tiny transaction tax on stock trades

Expand full comment

Respectfully suggest that SS IS indexed to inflation, and that the 8.7% figure represented inflation rate consensus for the prior year-

indexing done by law, back when there were reasonable actors interested in governing in Washington.

Expand full comment

Shush you’re making sense. It’s over their heads

Expand full comment
Aug 10, 2023·edited Aug 10, 2023

Bill Black sent referrals to the DOJ and got almost 300 bankers in jail from the 1990s. He could have referred more but there weren't enough lawyers to handle all of it. It's all over YouTube. He has given talks everywhere - Harvard etc. How to Rob a Bank is to Own One.

Maybe Robert could interview him :)))

I am discouraged by the Dems too. That's why Tumpie and DeSantisie could take the nomination.

Ugh.

Expand full comment

We get a COLA but it does not cover real inflation by far. It does not include food and energy in the COLA. It includes price of computers which you cannot eat. The whole system is a racket.

Expand full comment
Aug 10, 2023·edited Aug 10, 2023

Janet Adam's: I was shocked ten years ago when my husband and I looked at the paperwork on our new mortgage and saw that even with a.very low interest rate , we would pay more than the actual price of the home in interest; basically paying for it twice!

Expand full comment

And, it's much worse with student loans. It's compound interest. It's debt slavery. For my loan for grad school in just 4 years was increasing by 50% of the original tuition amount.

Expand full comment

yes student loans are a huge problem now. I went to public universities in the 70s and 80s and paid very low tuition, 1k/year. I covered this by part time jobs. In 2012 my son graduated from a public university and his tuition was 15x as much, over 15k/year and his part time jobs didnt even cover his rent..

Expand full comment

With a house loan you have a real asset. With education you have something of value but not a real asset. I have lots of education which is worth nada in the real world.

Expand full comment

That’s sad

Expand full comment

It is not a tragedy but is a reality. A college degree that does not translate into money is just paper to put on the wall.

Expand full comment

when we bought our 1st house in 1994 the interest on our 30 year mortgage seemed low but after a few weeks I asked the mortgage company for a printout of the payments -30 years worth it came to exactly double the cost of the house. I was amazed. So I paid it off as quick as I could. We also dropped the hazard insurance after a few years because it costs alot over time and it was full of exclusions -essentially its only for people who have fire or flood or tree fall on it and have to replace the house.

Expand full comment

If you have a fixed rate mortgage the amount is supposed to become a smaller and smaller portion of your income over time. That is the theory.

Expand full comment

no its doesnt become smaller necessarily. Just call your bank and get a print out of all your payments over the life of the mortgage.

Expand full comment
Aug 10, 2023·edited Aug 10, 2023

Oh, yes. Perhaps even more. When I looked at the details - it could be even 3x more than the original price. So, how is real estate and asset?

I do know about the 5 house rule. If you can buy property cheap enough and build it (some work yourself), and roll the cash into the next property. After 4 houses, you'll pay cash for the last one. If you manage it properly. You need to keep each house about 3 to 5 years because of tax laws.

Expand full comment

Owning your own home is not an asset. It is a liability. Read Rich Dad, Poor Dad. Don't like his politics (he's quite a Trump lover) but he makes a lot of sense from a financial standpoint. Buying income property is an asset. That's why so many billionaires have tons of real estate. Since I am not in the 1% class, not even close, I just have bought two houses (different times) that were foreclosed and got a sweet deal and paid cash so I have had no mortgage. Since I retired, it's been a real lifesaver.

Expand full comment

To be fair, it IS "just too difficult" because billionaires and even millionaires are ABLE to hide their true fortune thanks to rafts of lawyers! A regular AMERICAN that PAYS their taxes are too busy WORKING to hide their assets.

Expand full comment

And many of us have no assets to hide.

Expand full comment

If you own stocks, bonds and real estate you don't even have to hide assets. The government does it for you. Due entirely to luck I own some stocks and bonds. I only pay tax on dividends and capital gains (when I sell stocks for a profit). I pay much more on my pension and SSA than on my stocks and bonds. I know it ain't right, but the system makes it so easy on people with money. The trick is to accumulate one million bucks and invest it. That is not easy.

Expand full comment
Aug 10, 2023·edited Aug 10, 2023

Bet'che the Яepubлиkans would characterize it as a "success tax" that punishes the nation's incentive to innovate, or some similar bull$#!7 hustle! Communism, they'd cry - as if anyone who buys into that dog-whistle has one single clue what it means!

Expand full comment

Dr. Doug, I find it interesting that when it comes to taxing the rich "it's too hard" but they have no trouble warping tax law, manipulating stocks, and doing a variety of other complicated acts that favor them and that isn't too hard. In other words, the claims of being too hard are just nonsense and need to be treated that way.

Expand full comment

Exactly! It's a product of rich "entitled" thinking to be sure. I completed the wealth tax returns in Switzerland for years. If you have trouble doing it you probably have bad record keeping. It was not that hard.

Expand full comment

I see your point. On th eother hand, I think that it isn't a great way to look at a personal home as being a primary asset, or "wealth" proposition. A personal home is simply where one lives. A big mistake people have made in the past, and maybe now, too, is that they bank on their homes increasing in value and then get leveraged to the max, sometimes to thier eventual woe, as, for example, in 2008, when the housing market crashed and many people found their mortgages "under water", and they couldn't sustain their level of debt.

Expand full comment

A personal home is a lot more that just where someone lives. It’s absolutely the foundation of MOST middle class individuals’ “estate,” which is their personal wealth {and often what they fall back on, finally, in retirement}. Having access to build that estate is one of the privileges that were denied POC in this country for generations and generations. Don’t diss the idea of it. It’s definitely wealth.

That 2008 crash was a ‘crisis’ manufactured by investment bankers and money guys who thought they had hold of easy money forever — bundling mortgages and selling ‘em as products, and generating more and more mortgages to bundle ‘em, and talking people into taking out mortgages who never should have, so they could bundle them …. !!! — and even though the financial industry was warned the real estate bubble they created was going to burst, they couldn’t bring themselves to stop raking in the bucks….Because no more Glass-Steagall, thank you very much Bill Clinton.

That is not the same as owning a home and counting it as one’s estate, and seeing it as current or future wealth, even at times making use of some equity, being careful not to over-leverage … Homes ARE people’s estate {say “wealth,” if you will}. That is real, though it can rise and fall in value, from time to time, but so do other investments.

Expand full comment

Ok, I concede. Elegantly and passionately put.

Expand full comment

IMO to see a home as a major investment/asset you have to turn it into cash by borrowing against it or selling it. So where are you going to live then? I see my old house as a place I live now rent free. I don't expect to get rich if the wife and I ever sell it.

Expand full comment

That just side-steps the issue of how we gauge personal wealth. For a home to be part of one’s “estate,” to be counted toward one’s net worth, one need not sell it or do anything to it or with it. It’s value IS just part of one’s personal wealth. It’s available if it’s ever needed, isn’t it, and if you don’t own a house, you have fewer options if you are ever in need of liquidating what you have …

Defining your “wealth” as only what you’re willing to spend at the moment is disingenuous.

Over the years, one was expected — within I think it was two years after selling one’s home — to reinvest any capital gain realized on the home into a new place of residence, to avoid paying taxes on any increase in the value of the home while you owned it. If a person or couple did not buy another home, they’d have to pay those taxes. WELL, now a person or couple is exempt from paying taxes on those capital gains one time during their lifetime. So, as an older person or couple, you can sell a house you’ve owned for a lot of years, and the gain in value goes into your bank account. You can use it, or your heirs can inherit it.

You may not think much of that, but people in our society who were shut out of real estate markets for hundreds of years know that such foundational “wealth” is a real factor regarding the distribution of wealth in our country.

Just saying.

Expand full comment

My one time neighbor lost her house in 2008. She did not want to pay a mortgage on a house that had lost 50% of its value. I told her just to hang in there because as long as she could afford the payments she was OK. She did not do it. You don't get rich owning a house. If your house increases in value then all the other ones do as well.

Expand full comment

Yup. The value of home ownership is that one is putting money back into one's own pocket rather than someone else's pocket, and by that I mean the mortgage payments go towards increasing the equity one has rahter than increasing the equity someone else has. Either way, most of us have to pay to live somewhere.

Expand full comment
Aug 10, 2023·edited Aug 10, 2023

They don't know what this thing is you talk about. What, are, these, taxes.. you speak of? And what do they do? < (The rich are baffled by taxes).

Expand full comment

Difficult, yes. What is the problem? Businesses should be profitable for the jobs they offer. Unemployment is a disaster for workers. That is how the discussion is manipulated in Europe.

Expand full comment

Businesses should function well within an economy that functions well.

Business exists to facilitate an economy in the service of the society.

People are not here to provide business with a market. Economies do not exist in vacuums for their own sake.

If business wants our society and laws to protect and support IT, then business must be run to the benefit of society, as well.

The economy belongs to us. We can regulate it to our benefit {if we can know how to do it, that is — knowing what’s going to work out good for us is not always so easy.}

That’s how I see it.

Expand full comment

Of course, totally agreed. But the problem remains: what are the limits of the political debate?

Expand full comment

Weeeeelllll, I think I was trying to address some of that question in my comments above .... let's talk about business and taxes and what's right and fair and what's done NOW {how and to whom} and what we need to have done for a better world and a better society ...

Hey, what do YOU want to talk about?

Expand full comment

And don’t forget the BIG push by corporations to buy up all the real estate. Young people will be paying high rents while the corporate mob gets the tax break. This isn’t new!!!! Why do we always blather instead of lather.... wash the bastards off our country. Soap and water... if there is any water left!

Expand full comment

The top one percent gets the majority of their income, and their asset wealth from private equity. Not from real estate. Those who manage private equity funds and charge fees for that service should have that income taxed at normal income rates, not at capital gains rates, which are much lower. Kirsten Synema voted against doing this; she got a carve out for wealthy managers of private equity funds so this fee-generated income (the work they do daily, just like a nurse or teacher) is taxed at a far lower rate. That’s just bullshit. we need to consider increasing the tax rates on capital gains, and regard private equity mgmt fees as normal income.

Expand full comment

We need to increase taxes on private equity gains!!! That’s where the 0.1% gain an ever increasing share of the nation’s wealth. One reason Kyrsten Sinema is so despicable-- she voted against taxing this source of income in the same manner we tax r nurses and firefighters and plumbers. She was bought off 100%. Truly detestable

Expand full comment

I'm all in for a wealth tax.

It's not just CEOs who are overpaid, but capitalists in general (and if you doubt this, I give you Exhibit A, Mark Zuckerberg). Adam Smith recognized this problem when he devised capitalism as an economic system, i.e., he realized that his system would over-reward the entrepreneur. He therefore promoted progressive taxation, i.e., a system where the wealthy pay not only more taxes than the less wealthy, but a higher percentage of their income. [Some say that he advocated a flat tax, but they're incorrect].

The purpose of progressive taxation is twofold:

1) It prevents the wealthy from becoming too rich, because then they would be encouraged to buy the government and use their influence to distort the market in their favor and against the public interest (sound familiar, Mr. Rubin?)

2) The second purpose is to recycle money into activities of general public interest, such as schools, bridges, roads, etc., that the capitalist would have little interest in. Today, we would call this infrastructure spending. [Note that we are today surrounded by potholed roads, crumbling bridges and failing schools.] Infrastructure spending also stimulates the economy, because it engenders knock-on investment, whereas a billionaire's yacht just sits there.

The problem, since Reagan, is that Adam Smith has been turned on his head, CEOs and billionaires are out of control, building rockets and weighing in on the First Amendment with Twitter tirades. Furthermore, the economy is suboptimal, with huge disparities of wealth and a dysfunctional society.

Bill Clinton merely accelerated this trend, and now income at the top is mainly in the form of untaxed assets rather than salary or cash, which is why the world's richest individuals pay less taxes than my office manager. Even Smith never imagined this.

The only solution is a wealth tax. Simple. This MUST become a central part of the DNC platform if Democrats are ever going to break away from the stagnation of current politics and lead the way to a brighter future for all Americans.

Expand full comment

No need for special, potentially contentious carve-outs -- the simple solution is to make the wealth tax progressive, and on an accelerating curve.

Expand full comment

Real Estate is a great taxable target. Cannot be moved, cannot be hidden. Unique that way. I actually like the "fair tax" the Republicans are variously floating which is a very high national sales tax with a rebate. In essence, if you spend less than 25K a year, you pay NO TAX. Much easier to administer than an "income" tax or a "wealth" tax. Those two are nightmares of logistics, especially "wealth."

Add a Big Ass luxury real estate tax (adjusted by Zip Code ofcourse) and you are getting pretty darn close to tax equity.

National Sales Tax, no tax on "groceries" (which many states already have) is my go-to idea. Kill the income tax, tax consumption, and be green to boot!!!! (Yes, consumption is bad, investment and savings are good).

OK, thanks for letting me post.

Expand full comment

If we think of rational tax systems, Estonia probably has one of the more sensible approaches. A mix of VAT, flat rate income tax, and social contributions. An interesting aspect of Estonia's corporate income tax is that it is a dividend tax levied on withdrawal of funds from the company. VAT has carve outs for goods such as food and high rates for luxury goods. Many Nordics are using a VAT waiver for green goods like EVs.

A corporate tax return there takes about 30 minutes to complete. VAT returns are also super quick, as long as you have an accounting system. All electronic.

Expand full comment

Dear BBB:

Only problem with your "fair tax" is that it's a Republican wet-dream tax.

Look, in case you don't know it, there are about 300 American families that control America. Taxing them a "fair tax" is like you tipping a waiter.

The only "fair tax" is a wealth tax.

Expand full comment

Property tax in Florida is a bitch.

Expand full comment

The problem is that in states like mine, NH, real estate taxes are regressive and confiscatory, products of the colonial era when real estate correlated more closely to income. All wealth, not just easily assessed buildings and land must be taxed if we are to approach a fair system, from which we are grievously far in the US.

Expand full comment

Interesting historical fact for the former colonies. But they are not alone. Many Midwestern states also have very high property taxes.

Introducing a wealth tax as a part of an overall system of fair taxation balancing income, consumption and high net wealth would be a great idea.

Expand full comment

Ever hear of the graduated income tax? Dah. Are there enough tax loop holes to be closed? Come on - it's not brain surgery/rocket science - it is all rooted in the money in politics. See a problem? It is more likely than not to be money!!!!

Expand full comment

One of the very low hanging fruits in this debate is to treat carried interest as ordinary gain rather than capital gains. It was proposed and nearly passed but one "incentivized" senator was able to block it.

Expand full comment

Was that senator support by funding from a Wall Streeter? Problem? Money!!!

Expand full comment

The incredibly wealthy will always find an excuse not to pay. If they can't find one, they'll create one.

Expand full comment

I prefer taxing all income as earned instead of a wealth tax.

Expand full comment

How about income tax?

The top tax bracket was 70% 50 years ago.

That could be set at $20,000,000.00 today.

Expand full comment

Yes but -- inheritance regs and lax capital gains taxes give a huge advantage to the wealthy. Additionally, it is only those that pay high mortgages that can take advantage of the mortgage interest tax breaks.

Expand full comment

What should the carve out be for a retired guy who saved and invested for 40 years and now has a few million in stocks and bonds? What level of income should we have to implement a wealth tax? If I know Republicans they will make in on the middle class to poison the whole idea. I have a higher tax rate than most billionaires now. If you get most if not all your income from sale of assets you can offset the capital gains with loses and pay no tax.

Expand full comment

Switzerland as an example:

* Exemptions from the tax below a certain wealth. Varies by Canton but is often something like 200,000.

* Retirement accounts have exemptions.

* No capital gains taxes on assets taxed under the wealth tax. Include all gains from the sale of personal real estate.

* Maximum liability for taxes depending on wealth and income.

Expand full comment

I have been to Switzerland. Working people do have a good shot at decent retirement. Waitress and busboys discuss their pensions. If you try and cheat on your tax or break laws they will crush you. They treat their "guest workers" like shit if I remember. Their guest workers do the nasty work. I think most are from N. Africa or Turkey. The Swill cops are something else. They will strip search you on the street if they suspect drugs. I have seen it done. If you have money it is nice just like here if you have the jack.

Expand full comment

We all pay property tax, relative to the value of the home we choose.

Expand full comment

Everyone pays that no matter how rich or poor they are.

Expand full comment
founding
Aug 10, 2023·edited Aug 10, 2023

Every time these executives are interviewed, the politicians stop just short of the big question: if, as they claim, it is simply impossible for them to share their massive wealth...to give predictable hours....to pay a wage such that employees no longer have to depend on government support....then does it not follow that their "success" and wealth and entire business model actually DEPENDS on the exploitation of workers?

Expand full comment

The UAW has collective bargaining rights. https://www.nlrb.gov/about-nlrb/rights-we-protect/the-law/bargaining-in-good-faith-with-employees-union-representative

Three categories of subjects under the National Labor Relations Act. They are: mandatory; permissive or voluntary; and, illegal subjects. Mandatory subjects are those that directly impact – wages, hours or working conditions (or terms and conditions of employment).

Permissive subjects include, for example, unit scope, selection of a bargaining representative, internal union affairs, and settlement of unfair labor practice.

These days most others don't. In fact most workers aren't "employees," rather are gig workers. Think free agents.

I agree that Robert was right that companies shouldn’t be able to deduct CEO pay exceeding $1 million from their taxable earnings, the ratio was 100-to-one. That means they can pay whatever they want, but they wouldn't be able to write off the whole salary, making it less desirable to ownership and to management. In many companies owners pressure managers (as well as all employees) to excel. Managers are often intimidated. Conversely, owners are sometimes misled by management.

I suggest also eliminate the Trump tax cuts, reinstate inheritance taxes and enforce the alternative minimum tax (AMT), a separate tax system that requires some taxpayers to calculate their tax liability twice—first, under ordinary income tax rules, then under the AMT—and pay whichever amount is highest. The AMT has fewer preferences and different exemptions and rates than the ordinary system. https://www.irs.gov/taxtopics/tc556

At the same time, I'd address fully funding the Social Security and Medicare Trust Funds. I support Medicare for all, which IMHO would benefit corporate employers.

Expand full comment

The reason people go into business for themselves is to make a living without spending their lives kowtowing to someone else. Risk takers sink or swim according to their ability to compete in the business world. The personal expenses are daunting, throw in the mental strain and it isn't hard to understand why so few succeed. Over the years growth and expansion follow the path of success. Now enters the bind, being finically independent and having a secure future a nurturing mind would turn its attention to the well-being of the employees. Realistically speaking, how many instances can you sight where that scenario played out? When is enough wealth enough? How does a society regulate personal income? Capitalism creates the haves and the have-nots, how do we rewrite the rules to the point where everyone feels life is fair? Too much for this old man, I once told a millionaire relative that I would make a terrible rich person because I would give it all away. If money isn't being used to help others it's being wasted.

Expand full comment

If only ten percent of billionaires thought like you, the world would be a much better place.

Expand full comment

Veronica--Tell that to my X-Wife. LOL But thanks for the thought.

Expand full comment

I would be happy telling anyone. Unfortunately, most people do not even know the meaning of altruism, let alone practice it.

Expand full comment

Veronica--Its a tough place to turn a profit.

Expand full comment

Veronica and Donald: Altruism is not the answer you think it is. The hidden tripwire in altruism is that the giver gets to choose where his money goes. No one elected the rich or the CEO's. Bill Gates has no remit for deciding whether fortunes should be placed into malaria fighting, artificial intelligence or space satellites. That is something we should be deciding through democratic practices. We have agencies for making those decisions. No, the rich have no right to their money, even if they spend it on nominally good fights. That is their propaganda. Don't buy it.

Expand full comment

Paul--The rich do have a right to the money they've earned. To deny wealth to the people who earned it would be undercutting the essence of our Democracy. Capitalism drives our way of life, the inhibiting of its foundation would lead to the crippling of our economy.

Expand full comment

Except risk takers on Wall Street (in the entire financial system) don’t sink or swim. When they take risks that fail, Fed bails them out and then they pay themselves ginormous bonuses. Have a look. All true.

Expand full comment

It’s capitalism for the lower classes and socialism for the rich. That’s in the constitution somewhere isn’t it?

Expand full comment

Eve--I was speaking of business not professions.

Expand full comment

OK, I gotcha. But I’m talking about businesses, too. Here’s a list of just the biggest government bailouts of big business (ignoring for the moment, the cantillon Effect of the Fed’s $8 trillion in quantitative easing which drives income inequality and impoverishes the bottom 40%)

1980 Chrysler $1.5 B bailout. Then another bailout in 2008.

1989 savings & loans -- about 1/3 of all S&Ls were bailed out. costing us $125 B

2001 major airlines $15 B bailout

2007-08 $205 B bailout of such a long list of banks-- here’s the list: https://money.cnn.com/news/specials/storysupplement/bankbailout/

I own a business, am self-employed. I won’t get bailed out if I take stupid risks. Why do they?

Expand full comment

Oh how could I forget the $400 B “repo” bailout in 2019? Benefited small group of hedge funds that’d cornered the repo market w really risky bets.

Expand full comment

Eve--Look at it this way, if you got a sever infection in your left foot. You are aware that if left untreated you could lose that appendage. Naturally you seek the necessary medical attention in order to save your foot. The move was for the good of the body. Bailouts are the results of society and business coming together to save a necessary entity. You didn't want to lose your foot and for the good of the whole we didn't want to lose a core institution. A bailout is basically a social shot in the arm.

Expand full comment

Wrong. A good in theory but so very wrong in reality mentality as evidenced by the fact that you don't even realize the average person doesn't have health insurance to get said foot taken care of so we should ask your ex-wife exactly what your net worth is if she's that wealthy and you should live for one year on minimum wage with no stocks, no bonds, and work at a plant that Trump bailed out but never did because frankly you sound like the rich bougie crowd we're talking about. Your lecturing is becoming exhausting. Greed is not good in any capacity and it sounds like you need to step back and look at real life and the average person again because you appear to be so far removed from The Middle and lower class so if we were to ask your ex-wife exactly what your net worth was and where you're invested what would it be? What's your stock portfolio? Are you a doctor who gets to see what drugs are coming up for trial so you're able to invest in big pharma? Are you a lobbyist who lied so that people died with takata airbags? Again I say your luxuring is nothing more than mental gymnastics and extremely off the Mark kind of like Enron screwing all the little guys way back when and Bears Stern just closing up shop, we don't need a lecture from someone who just assumes we don't know what we're talking about. We need you to live on minimum wage for a year and then get back to us. Because yes, sadly, people will lose a foot and people will die because that's cheaper than having it taken care of. You need an education on the system or you're a Dino who has no problem with minimum wage remaining stagnant for over 20 years in so many states but for the love of God, keep your lectures to yourself and try living a real life because I get the feeling you don't even know what the cost of a gallon of milk is unless your housekeeper gives you a receipt ijs. Why don't you get on the public servants AKA politicians but you know what? in the end it doesn't matter because you can't take it with you so is it really worth selling your soul to the devil for mega millions? You need an attitude adjustment and to stop, listen and learn. Your superiority is working my last nerve. We are not stupid and we don't need someone treating us that way.

Expand full comment

Donald: Metaphors and analogies are always faulty. A large corporation is not a human body. The rules are entirely different.

Expand full comment

But that’s not capitalism; it’s socialism. Agreed?

Expand full comment

SADLY, the bailout only went to banks and financial entities and there was no provision made to save homes of SO MANY people who lost theirs through -- seriously -- no fault of their own. But the idea of the bailout was to save the whole. Unfortunately, more of the foot {and leg} got amputated anyway .... the rank and file of us whose wealth went bye-bye.

Expand full comment

Eve--bailouts are done in an attempt to stabilize a bad situation that if left to their own devices would lead to economic and social catastrophes. Yes the system aids another part of the same system all for the common good.

Expand full comment

Donald, you have drunk the Koolaid. The system never works for the common good. That is Capitalism's iron rule no. 2. Someone is always pulling the strings for HIS personal gain. (see rule no. 1 in my book Parasites Lost at gettingtozerowaste.com). If common good were the goal, there would not be a bailout, but a buyout. Why didn't the government buy the controlling stock in GM and all those banks and hedge funds, turn it over to a government agency and run those corporations in the future. I'm sure Elizabeth Warren and associates could run those companies better than any CEO and they would probably never fail again. Instead they will be failing over and over because failure and instability are one of their prime money making schemes and to hell with little guys that lose their lives or their homes.

Expand full comment

Paul--The common good may not be the primary goal but it is the end result.

Expand full comment

A buyout might have been nice, but who'd let a socialist thing like THAT happen?

Yeah, we do have a lot of work to do in this country. {I did NOT support the manner in which the bailout was handled, FYI}.

Expand full comment

In other words, banks and corporations are rewarded for the risk taking. That is not capitalism. But the same executives who get bailed out are all up in arms when you talk about universal healthcare. They scream “Socialism.”

Expand full comment

Eve--Over time our society has incorporated elements from other political systems besides capitalism. We already have elements of socialism embedded in our culture. The Republicans have given that system a dirty name for no other reason than just to pick a fight. If Jesus popped in and looked around at the world of today what political system do you feel he would gravitate to? You might not like it but Jesus would find favor some where in between communism and socialism. Our system of capitalism would turn his stomach, he frowned upon the accusation of personal wealth, yet with all our worldly virtue we relish what he detested.

Expand full comment

Every time we have a bail out, it just reminds me that we need more regulation so we don’t have situations in which companies are permitted to make really really really really bad business decisions, and when they go south, the government bails them out. If a company is too big to fail, then it needs to be regulated and split up to foster competition and prevent the need for a government bail out… Ever. The government meaning the taxpayer, by the way. It’s you and I on our modest incomes who bail out the guys earning 40, 80, $200 million a year, or at least are working for companies where they earn those salaries. It’s the companies that get bailed out and they get to pay themselves very handsome bonuses for absolutely fuc&ing up. It’ll stop when there’s an economic Armageddon, a Civil War, or revolution. Wait for it.....

Expand full comment

It’s really not for the “common good.” The poor and the middle class get a few crumbs and the rich go from enjoying 16% of the nation’s income to 32% in just a few years. I’m not OK with that. The Fed’s actions--increasing money supply by printing trillions of dollars, keeping interest rates at zero or below--those actions disproportionately and dramatically aid the rich (and financial institutions, and corporations) over the middle class and poor. They Fed chases tiny little gains in the labor market in exchange for flooding the top 1% with abnormally large returns on their investment.

Expand full comment

Eve--You can see that there is a problem, I can see there is a problem, what needs to be done to make the others see as well.

Expand full comment

I have no problem with socialist policies. I just think that the government should not favor the wealthy over the other 99% of us. Why do banks continue to get bailed out? If they’re too big to fail, then break them up and allow them to reap the consequence of risky bets. Same for all big corporations. One thing that is fueling income inequality is the Fed printing money, racking up huge deficits. That printed money goes straight into the accounts at 24 primary dealers (banks and hedge funds favored by the Fed) who then get to profit from asset inflation (notice the Dow and NASDAQ getting ever higher, plus all the amazing returns in private equity?). Most of us aren’t invested (substantially, or not at all) in the stock market, let alone private equity. We just got some crumbs thrown at us in the form of “relief checks” money which we give back when consumer prices rise (inevitable after the govt drops trillions into the economy) and our currency is debased. Right now, everything in our economy rewards big banks and big corporations and the top 1% and their risky bets, not the worker who saves. That’s messed up.

Expand full comment

Eve--The Republicans are in bed with big money. The powers that be will continue to give support to institutions that feed the system. That's where the other side of the aisle gets their leverage.

Expand full comment

I wonder how we write laws and regs that say business cannot unfairly exploit workers. I mean how to do we justify encroaching on a business’s right to structure itself, if it is not a corporation?

In a privately held business, where special public and legal protections and benefits don’t accrue as they do to corporations … how would the rules get written? Would people claim the government is unfairly confiscating their profits and distributing them to employees?

I can definitely see how we write the laws for corporations, requiring them to fairly and generously compensate laborers, who are the real “makers” in our economy. Corporations gain ENORMOUS benefits from our culture and under our laws. The economic privileges and legal protections afforded people who run corporations should be contingent on LOTS of fair labor practices written into LAW. I like the idea of regulating the ratio of executive pay to employee pay, for instance. I think the amount labeled “profit” that is portioned out to investors should be regulated, too. Employees who generate the profits should get a generous share.

Actually, if corporations WERE required to treat employees better, that would mitigate for privately held businesses to do better, too, I’d guess, or they wouldn’t be able to hire competent labor, so there is that …

Expand full comment

Pat--All good questions, most of which I share as well. How does a society decide.

Expand full comment

I worked at Prentice-Hall, Inc., in the early 1970s, and the company had a profit-sharing plan for employees that kicked in after three years, if memory serves. It was based on salary and some variable related to the company’s profitability, year to year,

I only worked there for a years and a half, so I didn’t vest in the program, but I knew people who spent their careers there and left with a hefty sum. One neighbor, after twenty-plus years at the company, retired with nearly $100,000 — a hefty sum in those days.

Are such situations still out there these days?

Expand full comment

My thoughts EXACTLY! I have been wasting $2-$4 a week lately praying to win the "Mega Millions." My plan for the money? Live off of $1,000,000 in my savings and the same in my checkings, then give the REST to friends, family, neighbors and the needy!

THAT is why it likely will STAY a dream.

Expand full comment

Daniel--Putting your needs before that of others is a worthy endeavor.

Expand full comment

Have you tried doing that lately? Again I say you're comment about your ex-wife makes me think you're a pontificating fake. Stop feeling the need to answer every single comment when you are so far off the mark and I would love to talk to your ex-wife and exactly what your net worth is and what's your portfolio is.

Expand full comment

Fire--You answer me I'll answer you back. In the 12 years I had a wife she had 8 affairs, I have no idea if my children are of my making. She walked out and left me to raise our 3 children ages 12, 10, and 2 by myself because she fell in love with another man's bank account.

Expand full comment

Also do you ever stop pontificating?

Expand full comment

Fire--I had to look that one up, how would classify personal opinions.

Expand full comment

Two sides to every story and then the truth

Expand full comment

Fire--Hopefully that doesn't make 3.

Expand full comment

Oftentimes when one is called out they can say whatever they want because the ones who push back harder are usually the guilty ones , now if that's the case? I feel for you man, I genuinely do, but I don't think that's the case and maybe you should do some self-reflection if it is the case and find out why.

Expand full comment

Fire--I've been called a bigot when I treat everyone with equal dignity and respect. Self reflection will change nothing because I'm as down to earth as one can be prior to the 6 feet under thing. I had 5 millionaires in my family and I wanted nothing to do with their smug arrogant attitude. Life hold more value than money can express.

Expand full comment

Or as Reagan liked to formulate it: GREED IS GOOD!

Expand full comment

Paul--Consider the source, he was a Republican with a failing mind.

Expand full comment

Companies owned by their workers solves so many problems. Don't throw out the baby with the bath water, however. Capitalism has created untold advances in every field. So let the worker owned companies compete with each other in an open market? Why are we not discussing this possibility?

Expand full comment

Alden: As you well state in the PAST TENSE: "Capitalism has created untold advances in every field". Yes, and we can see the cost. Capitalism is a creed of ignoring all the externalities, all the long term costs and just slashing and burning for personal advancement. We can no longer afford to maintain that philosophy. Its time is over. Now we must transition to an economic model that is cooperative in its essence. Capitalism is fostering profitable oil companies to ultimately destroy our climate for their personal greed. We can no longer afford the Capitalistic mode. It is passe. It is over now, because the last externality has become our planet. I think I am agreeing with you, am I not?

Expand full comment

Yes! An economy based on worker-owned industries would alleviate if not totally eliminate the greed factor that is destroying both our planet and our democracy. In Northern Spain (Basque country) there are many such worker owned firms, all under the management of a 600 million dollar holding company called Mondragon. I need to find out more about this since MSM will never talk about it.

Expand full comment

Alden: What is MSM? Microsoft something? Richard Wolff (see Youtube or listen to kpfa.org every Friday at 10AM Pacific Time) talks often about Mondragon. And you can learn about them on the internet.

Expand full comment

MSM=Main Stream Media. Thanks for the tip about kpfa.org and Richard Wolff !!

Expand full comment

Alden--We just did. Now make it happen.

Expand full comment

Make copies & distribute….the increasingly sociopathic worldview of the rich is actually quite disturbing as they basically make the laws favoring themselves yet have disdain for the poor they create. USA has highest income inequality in industrialized world according to UN Report of 2016(17?).

Expand full comment

I've never heard it described like this, "They basically make the laws favoring themselves yet have disdained for the poor they create."

I agree very disturbing.

Expand full comment

Not very clear. I am not getting your point.

Expand full comment

The plutocrats would elevate themselves and create family dynasties!

Expand full comment

Unfortunately, the government isn’t helping that situation out.

Expand full comment

Share the wealth and it improves the economy. Simple science.

Expand full comment

Rafael...According to Lord Reagan you mean 'trickle down wealth' improves the economy. Right.

Expand full comment

No what l mean if working people make more money they spend more.

Expand full comment

Rafael...I'm sorry, I was being facetious. I agree with you...I was being a smart as*s extolling the failed policy of reagan's plan to make rich people richer so their money would trickle down to the poor. My bad...you are correct, working people would spend more if they were only allowed to make more and the economy would be more stable from the ground up. Much like Biden is trying to do right now. My apologies.

Expand full comment

She means the exact opposite! SHARING the wealth means EVERYONE prospers, not just dementia-addled, B-list movie stars that ruined America. (Can you tell I despise Ronny?)

Expand full comment

See my comment above.

Expand full comment

This country would be in much better shape than it is if Clinton had listened to you, Dr. Reich, rather than Wall Street mobster Robert Rudin, who also (and very unfortunately) captured Obama's ear; the wolf guarding the henhouse.

Go, UAW!

Expand full comment
founding

CEO pay compared to that of the workers (300 to 1) is just what you would expect in a Feudal System. And that is aided and abetted by the government (also what you would expect in a Feudal System).

Yes! We need a wealth tax (worldwide wealth) as well as a very progressive income tax (bastilleamendment.org) unless we like the idea of living under a Feudal System.

Expand full comment

Feudalism is pretty much the same as slavery. I think we are a notch above, but for many it feels like slavery as they are unable to get ahead of their debts. The cost of medical insurance and care does not help.

Expand full comment

That's why America 🇺🇸 is such a screwed up mess now because the rich people and corporations haven't paid their fair share % wise compared to average people since Reagan's trickle down voodoo economics tax cuts 42 years ago estimated $50 trillion in lost tax revenues while today's GOP is trying to cut social security, Medicare, and school lunches for kids over a $32 trillion dollar deficit.

That's the GOP's untouchable sacred cow patty that ensures they'll always have rich donors putting money 💰 🤑 in their "campaign" funds.

That's why I'm riding with Biden and Kamala cuz they actually care about all Americans rights and freedoms and well-being plus Bidenomics work building America's 🇺🇸 economy from the bottom up and the middle out for the sake of all Americans. No more 3% income taxes for million and billionaires.

Expand full comment

Hear, Hear!

Expand full comment

Wealth tax I believe would be found unconstitutional. Income tax was hotly debated once upon a time.

Corporate taxes are the real loophole that need to be readjusted to pre-Reagan, pre-Clinton and stop offshore loopholes was a good start.

But those are layman observations and I will defer to tax experts in this audience.

Expand full comment

And stop giving these corporations like the oil/gas, government subsidies when they are making disgusting record profits and buying back their own stocks !

Expand full comment

Maybe not if we did not have corruption in the Supreme Court. The majority of Trump voters have a very low level of education. Education is one problem.

Also, SOME so called "Foundations" ( tax loopholes for billionaires), dedicate money and effort to recruit college students to indoctrinate them and groom them to become their mouth piece at Universities, influencing vulnerable minds.(Dark Money by Jane Mayer.)

Expand full comment

David Nelson — Mmmm, I figure people would try to make that argument about wealth taxes — but we tax houses, year after year after year after year … and they get confiscated, if we don’t pay…

You may be wrong. There might be a way …

Expand full comment

Property taxes are set to provide services and are a "fee for services" model.

Wealth taxes I think would be contested like personal income tax was once upon a time.

Also when wealth is spent everything it touches is taxed.

We certainly need to role back the tax cuts that Reagan TO Yrump used to buy favor but a eat the rich tax I don't see as viable and will just force creative tax havens more so then already exists.

The Oligarchy Era 2000 is similar to 1900 and our only salvation is the Fourth Arm of our Government and that is the Federal Reserve.

One good distinction of our Capitalist-Socialist Republic is the incentive to become a Billionaire by coming up with the next new thing.

But I am no expert. So...just floating opinion

Expand full comment

ALL taxes are a fee for service, sir.

Even in days of old, when taxes were often called “tribute,” they were paid “in return” for all sorts of things the aristocracy held in place that formed the structures of various communities and societies.

Our local taxes keep municipalities functioning for our benefit, and our national taxes keep our nation functioning, which should also be for our benefit — Of, By, and FOR the people.

Wealth taxes already exist, just not for everybody.

Also, when income is spent, everything is taxed, too. I don’t see a point there …

I think, much the way monopolies are toxic, so is the amassing of so much wealth that it becomes a monopoly on power. If someone wants to gain control over that much wealth, they should pay for the privilege, just as we pay for the privilege of living safely in our homes.

You are stating a distinction without a difference.

Expand full comment

….and, seriously, coming up with the next new thing can allow one to become enormously successful and financially remunerated without having to reach billionaire status. I do not think people will stop trying new things if they are told they can only profit by a few hundred thousands or millions of dollars. Mmmm, I think they’ll still try …

Expand full comment

Example: Mega million lottery makes you a Billionaire, you pay all the lottery taxes and walk away with 750M. Simple smart investment pushes you above 1B in wealth.

Do you get re-taxed for being successful?

I say no. This is a Capitalist-Socialist American Economy. Taxing said lottery winner a third or fourth time is 1) regressive 2) I believe unconstitutional.

Redistribution of Wealth by some magic number "penalty" pushes the American Economy in the wrong direction.

Close those loopholes that YYrump and Reagan created with their piss-ant trickle down ponzi scheme.

But don't retax my success!

Expand full comment

I know there’s a lot of push-back against a wealth tax {one that is not levied on houses, anyway}. I would counter the NEED for that by creating an economy that requires including stakeholders in the distribution of “profits” from business. AND, among those stakeholders we count labor, which should NOT receive as little as the employer can get away with, but should get a hefty share of the returns!! AND, when lots of money is circulating and causing inflationary pressure {which happens when supply is low, but also happens when businesses see a lot of money floating around and they gouge for it, like now!}, to avoid price-controls, we could institute “windfall taxes.” That might discourage gouging, to a degree, and hold inflation down. AT the least, it would put money in the public purse that the public should then put to good use. [That’s another discussion.}

We used to consider benefit to stakeholders — labor, the economy, the municipalities and communities that provide locations, laws, protections, and infrastructure for business to be done — as necessary areas to benefit from business enterprise, in addition to owners. Especially regarding corporate stakeholders, But we left that in the dust back in Saint Reagan’s trickle-down era.

People started claiming that a corporation OWED it to its shareholders to MAXIMIZE their return, regardless of collateral effects on people and society. Bullsh*t. There’s no such rule. They made it up to buttress their desire. We lost companies to places where labor is cheaper; we lost unions; we watched wages stagnate while dividends soared — Oh, don’t get me started.

You don’t want someone going after your “success” — then spread the wealth around where it belongs - to those who contributed to that success, including thosewhose labor was part of it, and the society that set up the conditions for that success to be possible in the first place.

Expand full comment

40% ? Really? That won’t begin to cover the cuts autoworkers took during the recession, and subsequent bailouts!

If I were to un-retire, my (union) steam fitter’s wages would be between $50.00, and $65.00 per hour, plus as much as $30.00 in fringes, location dependent…that money buys 60% of what a steam fitter could buy, during 70’s!

Expand full comment

CEOs of publicly owned companies are also ripping off their shareholders who include pensioners when they pay themselves excessive amounts that don't reflect any additional returns on capital employed.There is a self selecting cabal of so called independent executive remuneration committees that tend to rubber stamp board level remuneration in return for holding their sinecures.Shareholder resolutions indeed rarely result in the moderation of executive remuneration and company legislation should tgerefore require that remuneration resolutions are legally binding on a simple majority.Pension companies who hold sway in such votes with large stakes in such companies should also be held accountable for maintaining the link between performance and board level remuneration.Manipulation of equity valuations by buybacks need to be stripped out of any assessment of how well a CEO or board member is doing to achieve returns.There should also be a requirement to align employee pay to overall performance with binding arbitration by independent bodies.

Expand full comment

As a small business owner myself, (actually a micro mini) I have a good perspective on this comment. No, CEOs do not deserve 300 to 1 ratio. Mr. Starbucks, you can't serve millions of coffees every day to make your salary. There is a physical finite limit to everyone's day. You're not going to be successful at business as a solo. You do have to expand the work just to make enough for yourself. That said. :) I did all of my start up work as my own free labor : I and I have risked my own capital and credit cards to get it going. (Mr. Chief Justice - NO banker is going to give a lawn service a loan) Do I deserve compensation for my unpaid efforts ? Yes. Do I deserve some reward for my risk? Yes. But I do not deserve 300 to 1 ratio.

What is fair? I think at least 3 to 1 is fair. Founders always work much longer hours and there is much more stress. Is 6 to 1 fair. Probably. I think a number between these two can work for both employees and business founders. I want my employees to be happy and have a public health option. It makes great business sense for me.

I don't appreciate the bankers not going to jail for fraud loans and then ditching my communities with over priced houses. I want a good cop on the beat to keep the level playing field.

Just a few thoughts :)

Expand full comment

Thanks for your work !

Unless these facts make headline news it doesn’t get the light of day - mainstream media needs to do a better job and also stop profiteering on wall to wall Trump clickbait .

Expand full comment

First, we need to go back to the Eisenhower-era marginal tax rates. This was the time that the U.S. experienced the largest growth in the middle class which is the engine of a strong economy and growth. Second, we need to tax wealth (especially that held overseas by U.S. citizens) also and at a high marginal rate. Third, take into government coffers at least half of every deceased person's estate. Fourth, establish a fderal sales tax for sales (including structures, but not land) over $1 million.

Expand full comment

Why would you want to take 50% of EVERY deceased person's estate, without a cap on the amount? A man has two children and four grand children, dies. He has his house and $100K in the bank, and you want 50% to go to

the government? I would like to read your reasoning on this idea.

Expand full comment

Veronica: No one has ever put forward your scenario. Estates used to be free of all tax up to six million, now it is way higher. Your hypothetical father with $100,000 in the bank would not be touched.

Expand full comment

You said "EVERY deceased

person".....

Expand full comment

I think-hope-they meant solely those estates worth millions of dollars . . . right?

Expand full comment

Professor,

Thank you for this, and more importantly, for your work on behalf of my chosen family all your life.

I am from Detroit, I knew people who worked in the factories that made cars. I knew UAW members and and organizers.

I am 68 years old, a little younger than you and much less successful.

I am not sure that the UAW is asking the right question. Although it is an important question.

I think even if all UAW workers got a raise of 40%, Detroit still would not be able to provide services to every neighborhood.

The factories these days, as I think you have taught me, do not use many people. Nor do the factories that make the parts that go in cars.

The important question is "why in the USA, are so many people poor?" and more importantly, "what can be done about it?"

I am in favor of wealth tax, and enforcing tax laws against the rich and powerful.

As I said, I am old and almost completely powerless. I am a stranger in a strange land. I think the rich and powerful have always hurt the poor and powerless. I think they always will.

However, you told me, not to be cynical. To act as though what I did, and thought made a difference. So what do you suggest I do?

Much love

Fred

Expand full comment