61
votes
‘Morally, nobody’s against it’: Brazil’s radical plan to tax global super-rich to tackle climate crisis
Link information
This data is scraped automatically and may be incorrect.
- Authors
- Fiona Harvey
- Published
- Jul 28 2024
- Word count
- 856 words
If your yearly income goes from $2 billion to $1 billion, what's the difference?
You could give more away or invest more, but as far as personal spending, there isn't a difference.
People earning obscene amounts of money should be taxed at 50%, or greater.
After certain point, it should be at 99% or higher. Even 99% of 1 billion is 10 million extra in income. Nobody should have that kind of monetary power. That people do is a symptom that we have not properly ended the aristocratic feudalism that capitalism grew out of.
I think the threshold is somewhere on the order of $500,000 in income.
That feels like a decent threshold. Even in the highest cost of living areas, $500k is enough to live comfortably and have plenty left over to save for retirement, stash some away for a rainy day, and still have some discretionary to play with.
I first heard about this idea in relation to Thomas Piketty's Capital in the Twenty-First Century. In it, he offers several solutions to economic inequality, emphasizing the need for aggressively progressive taxation. But Piketty also proposed a global wealth tax to address tax evasion.
Since then, I haven't really seen anything further about it. Though I think there was some doomed proposals in the US Congress (probably from Elizabeth Warren or Bernie Sanders, but I can't remember) for a wealth tax. But that would absolutely never fly here.
Honestly I feel like people say to tax the rich like that tax money won't go into a black hole right into the pockets of the people and friends of the people allocating the tax funds. So what if it goes into a contract, my friend will run a company of 1 who will get awarded that contract amd then sub contracts that out for someone to do the work. Budget will funnel into large programs that have just as much idiotic spending that the original billionaire would have used it for.
I do think it's a good first step, it's just that I know smart people will just find another way to control and hoard it all regardless of where you put it.
Yeah, of course. Checks and balances against embezzlement or other ways of unethically redirecting funds will always be needed. It doesn't stop taxation from being a good idea, but proper financial management controls are a must.
This is my biggest problem with it.
I think a more effective approach or addition would be to get more money to the average person directly via wage/gains caps and minimum living wage (whatever they want to call it these days to try to get around it).
Basically the difference between the highest compensated (pay, stock, etc) person and the lowest compensated person (including contractors) can't be more than X multiplier (ex: 50x).
You'd also need an enforcement committee as well with harsh penalties in multiples of what might be gained by doing so.
To be clear: I think this should be done in addition to increased taxation of the obscenely wealthy, as this is also important.
Also I'm in no way an expert and could be very wrong. I'd love to hear any thoughts on this (why it would/wouldn't work, other considerations, building on it, etc.).
The challenge of the "50x compensation" model is defining compensation in ways that doesn't leave a bunch of wiggle room, though the same thing is true of income taxes. If the CEO only gets paid $1, but owns 95% of the company and borrows against the equity they have in order to fund a lavish lifestyle, they aren't being compensated in a way we currently think of as taxable. There's lots of BS like that, but fundamentally, those sorts of salary cap ideas have huge loopholes.
I agree. It's a significant hurdle to that solution. I think there's a similar need to tighten up the tax loopholes as well.
Appreciate your input on that. I'm both hopeful for some sort of solution to balance things and curious as to what it'll be.
We're fortunate to have some really creative and intelligent people around the world. I just hope their voices are heard.
This is a wonderful proposal
2% is something they can make back easily and passively. And if even some of the worst climate fallout can be mitigated, everyone wins and especially the ultra rich. No one came out publicly against it is a big step forward as well.
Who's going to actually enforce it though? It's a great idea but when each family here has billions in wealth, they have plenty of money which can be thrown at evading paying 2% in taxes and plenty of countries who would let them become citizens just because that'll mean they will spend some of their money in their country.
World's pretty interconnected. That's why this can only happen with the big players on board.
Say G20 back this, and you're a tiny country. Are you gonna shelter dark money for a rich guy, or are you gonna keep those trade deals + tourism + borrowing + defence pact with G20 going?
I can't imagine a world in which the US backs this
I'm tempted to share your pessimism: the rich control, or at least extremely strongly influence, the US govt. May you and I both be wrong.
But just to be somewhat contrarian:
Ireland closed the Double Irish in 2020. I didn't think that was going to happen.
"about 11.5 percent of world G.D.P. is held offshore by households" -- (How corporations and the wealthy avoid taxes (and how to stop then) - NYTimes 2017 Gabrial Zucman). According to Google the world's GDP is now over a 100 TRILLION USD, of which the US contributes about a quarter. The US spent $5tr this fiscal year of which 13% is national defense.
If you were a board game player who has $5tr expenses every turn and you're running a long deficit, you'd be pretty motivated to recover income stolen every turn by cheaters. These cheaters use the stolen money to fund terrorists and make it so you have to spend even more on defense etc, and make competition on the open market less fair for your rule abiding gaming strategies.
But even say big corp and the ultra wealthy owns the government: each man is probably thinking the other is a worse and bigger cheater and that each of them can be earning more when other cheaters are caught. If they're told that they can either cheer on recovering dark money ("don't worry, it's for the biggest cheaters, but you're not a big cheater right? I think we have proof those other guys are way worse cheaters") OR we will have to raise corporate/wealth taxes, many of them might actually go for it. And who's going to publicly go on record to say they're against closing loop holes and stopping cheaters?
"The government" isn't just one monolithic entity, and neither are "the rich". Even at their most selfish, even a briebed politician can be motivated to take action that will stop his $5 payments if he could be convinced it'll stop his opponent from getting $10. Each corporation can choose to stop taking $5 tax loop hole money if it'll stop each of its many competitors from taking $10. Each rich [explitive] can also choose to stop taking $5 with the right threat of exposure/illegitimacy/less influence, access and fame alongside promise that the other rich [explitive]s will also be hit with losing $10.
I can imagine a world in which those who have everything still relish in others having less.
To be clear just because I can't imagine it doesn't mean I don't think we shouldn't work tirelessly towards making it not only a reality but an expectation of the role of government.
Well said, may it be so :)
So there are a few monthly dividend ETFs that basically return 1-2% per month (JEPQ, JEPI, FEPI). You give up increases in share price in exchange for monthly income basically, and risk NAV erosion.....but basically if you're a billionaire you could literally throw enough cash into these to cover a 2% yearly tax without ever having to think about it again (besides dividend taxes, but pretty sure at that level you pay someone to worry about that for you anyway).
There are definitely better ways to do it, but the fact that it's so easy to cover 2% per year makes this seem to me like it'd be a non-issue for billionaires, unless they are so broken they can't stand to not see their personal value increase as efficiently as possible.
I uhhhh, might have some bad news for you.
Oh I know :[
Since when does giving a government more money equal a certain outcome? The US budget is six trillion this year, and apparently that's not enough. So how much is? Ten? Twenty? Fifty? We just give them infinity money and the world is saved?
"Morally, nobody's against it." Pragmatism be damned.
Three questions for you:
*Do you want governments to do things?
*Do you think that it costs money for governments to do things?
*Do you think that deficit spending is bad?
If the answers to these questions are yes, can you see why increasing taxes might help the government do things? If you disagree with one of these points, I'd be interested in hearing your perspective.
At a very surface level, my answers to these questions are "yes", "yes", and "no", but as you know, there are a multiplicity of nuances for actual answers on these questions.
My issue, generally speaking (keeping nuance in mind), is proposed solutions for new government initiatives are almost always increased taxation/spend. Proposals almost never begin with suggestions such as reallocation of funds or "let's make cuts on this program to pay for this other action over here"; it's always a net increase in government budget.
I'm sure we could go down a ton of rabbit trails with this subject matter, but without getting too into the weeds, this is the gist of my issue with legislation like this, among other things.
I appreciate a more nuanced explanation of your perspective.
I disagree on a couple of points, though. First, a matter of terminology. An increase in revenue that is entirely offset by additional taxation isn't a net increase; it's a revenue neutral increase. A net increase would be one where the government had extra unallocated resources at the end of the year.
I also disagree with your claim that there's always increased taxation rather than a replacement of one sort of spending with another, but even if we assumed that increased spending is always paired with additional taxation I'm not sure I see the problem with it? Unless the government just handed all the cash over to an even smaller group of people than the billionaires they're taxing, the money will be used to support endeavors that make things better for everyone.
I don't have an issue with the way you've described this.
I have a few issues with it. One issue I have is the targeting of the group. And no, I'm not saying "why won't someone think of the poor billionaires." Unless I'm mistaken, this would be a flat tax applied to individuals over $X income (assets? net worth?). Notwithstanding the constant cat-and-mouse game of wealthy folks structuring their funds to avoid paying taxes like this (overseas etc.), there are questions of legal equality.
Ex. Billionaire 1 annually gives tens of millions of dollars annually to towards climate solutions and actually made a large part of their fortune fighting for that cause. Should they be subjected to this tax the same way another billionaire is that doesn't give any $$ to charity etc.? I'm strictly looking at the principle of equality before the law. I don't think principles should change just because of scale. Furthermore, if there are breaks given so folks don't have to pay this tax if they do X, Y, or Z, who's going to provide the oversight? Are we going to have a global IRS? Again, back to pragmatism.
My 2nd issue has to do with this statement:
Governments worldwide have a large statistical track record of not being financially prudent. I'm not saying a solution can't ever come from a government entity, but there are significantly more examples of governments trying to implement policies that fail financially than succeed. I think it's especially problematic when the scale of the solution encompasses the globe. Back to pragmatism.
Setting aside concerns about charities getting funded based on how much they sound good to billionaires, under current tax law the billionare who's giving tens of millions away already gets to write that off on their taxes. As such, they already aren't treated the same way as the one who gives nothing to charity. I believe that resolves your concern regarding equality?
While there's always steps that can be taken to encourage governments to be more prudent with their money, governments are more likely to spend in ways that support the quality of life of their citizens than most other organizations in their territory, and have the legitimacy and infrastructure to distribute the funds in ways that can be expected to be broadly helpful. More than private industry or wealthy individuals, to be sure. So is it ideal? No. Is it better than the status quo? Yes.
Technically the US is the only country that actually does this. There are maybe 2-3 others that do something similar (but not quite as all encompassing). The majority of countries don't tax income earned abroad, the US does.
Sure, why not? They give that money voluntarily, it shouldn't make a difference as far as equality under the law. They're both billionaires, so it won't impact their quality of life either way.
You may say then, that this discourages the charitable giving, as then they would have to lose money twice for the same cause. I'm actually fine with that. Not even mentioning things like corruption and "awareness raising" that doesn't actually benefit a cause, I prefer these resources to be allocated based on their impact for society as a whole, rather than based on a billionaire's pet preference. Assuming that the alternative to philanthropy is programs administered by a democratically elected government, I'd be happy with most philanthropy being replaced with government programs. There are plenty of examples of government programs succeeding, as well as charitable programs that fail, but the more important issue with charitable programs as far as I'm concerned is who gets to decide what causes receive the resources.
Ill offer an argument against "Do you want governments to do things?"
When Obama became President of the US and passed the Affordable Care Act, it became all the Republican party could talk about for years. Theyd talk about how their number 1 priority was to "repeal and replace Obamacare" and they held performative votes even when they didnt have the numbers to reinforce in everybodys minds that they were committed to this as their political goal.
And then Donald Trump got elected and won control of Congress. They could do whatever they wanted, really. And they sat on their hands and did nothing. It was wat easier to talk shit about how Hillary Clinton and the Democrats were the ones ruining the country than to actually do something better. If they repealled Obamacare, theyd have to replace it with something better. And they just couldnt agree on what that was going to be.
Point being, its way easier to be the opposition party than to actually hold the majority. Picking holes in someone elses ideas is easy. Coming up with an idea beyond reproach is borderline impossible. It would have been way easier for a lot of politicians if Trump had lost and they could just spend 4 years calling Hillary Clinton shrill.
And maybe someone is reading this thinking "well Republicans are all corrupt pieces if shit, that doesnt mean anything", so Ill give a second example. When Bernie Sanders ran for President in 2016 he put forward a climate plan that was drafted by Professor Mark Jacobson, which asserted that the whole US could be run off pure renewables with no backup needed, not even batteries. As it turned out, there were some significant issues with the model he was using at the time, which he has since updated. Sanders put forward a plan that wouldnt have worked out if carried out as written, and he didnt realize it.
I dont really blame Sanders for that, he had some general outline of what he wanted his climate policy to be, and he found a professor who offered to deliver just that, and so he ran with it without having his staff run the numbers or getting a second opinion. Which is understandable. Even if he won the election, he probably wasnt expecting he would get to enact his platform exactly as written. Hed have to workshop things and take advisement from other politicians, and hed never actually be expected to follow up on all his campaign promises. Thats just politics, even if youre a principled outsider like Sanders.
Politics is filled with people promising they can solve all kinds of big problems if they just had a bit more power than they already have. But also trying very had to assert that someone or something else is responsible for them not doing it when they have the chance. So when they inevitably dont do it, its not their fault. They just need more power, and then theyll do it.
Doesnt mean politicians dont DO stuff. Its just not necessarily the stuff you would have them be doing
But the same is true of corporations, while they exist without any responsibility to the nation as a whole. Chunks of Texas were without power for days after the most recent storm because the power company found it more profitable to not upgrade things and run a skeleton repair crew. Tesla made questionable choices regarding the manufacturing of the CyberTruck due to ignorance at the top and they can't safely go through a carwash.
Everyone who is in charge does stuff. The people who are in charge have varying levels of responsiveness to the input of the population and cultural expectation that they should have everyone's interests at heart. In a democracy, the government is at least expected to look out for people, and corporations are not. So what's your alternative?