What’s Wrong With a Billionaires Tax? Here Are Seven Reasons
Author: Greg Valliere
October 25, 2021
Why Are We Leery Of a Billionaires’ Tax?
Here Are Seven Reasons
October 25, 2021
WE HAVE NO SPECIAL AFFINITY for billionaires; the ultra-rich probably need to pay higher tax rates. A clear majority of Americans want higher taxes on billionaires, who are a juicy political target for members of Congress, who need revenues to pay for a spending blowout.
CONGRESS IS RACING TOWARD APPROVAL of a billionaires tax, plus a tax on stock buybacks and a 15% minimum corporate tax, in a radical new package that has not been approved by the House Ways and Means Committee. Its exasperated chairman, Richard Neal, has only a matter of days to write a new tax bill.
SWEEPING NEW TAXES, in response to Sen. Kyrsten’s Sinema’s apparent refusal to accept higher rates on corporate, individual and capital gains taxes, raises all sorts of issues — starting with the law of unintended consequences. Here are seven reasons why we are leery of a mad dash toward a billionaire’s tax:
1. It’s really a wealth tax, which has not been vetted (or successfully implemented) anywhere.
2. It’s enthusiastically backed by Sen. Elizabeth Warren, which makes us nervous.
3. If enacted, it almost certainly would face a Constitutional challenge.
4. Billionaires finance a wide range of investments such as tech start-ups, which create jobs. And a majority of billionaires are heavily involved with philanthropy.
5. Tax avoidance could actually increase as the ultra-rich shelter assets or move overseas.
6. Enforcement of a wealth tax would be a nightmare; what if a billionaire has a Monet painting? Or a huge coin collection? How to value rising assets like that would be a legal quagmire. Or, what if assets decline in value?
7. A billionaires tax is not a revenue panacea. It would raise between $200 and $250 billion over ten years, not small change but hardly enough to pay for $2 trillion in new social spending.
WE ACKNOWLEDGE THAT WEALTH DISPARITY is a serious issue, but it can’t be resolved in one week of frenzied negotiations designed to give Joe Biden something to bring to next week’s Glasgow summit.
BIDEN SURELY WILL NEED POLITICAL COVER in Scotland, as the U.S. and other major powers face an enormous irony: they all need more coal, natural gas and oil as a supply-starved winter looms.
DEADLINES ARE APPROACHING: Highway funding has to be re-authorized by the end of this month, the government is set to stay open only until Dec. 3, and the debt ceiling has to be re-authorized in early December.
A MAD DASH TOWARD AN UN-VETTED TAX PLAN now joins these deadlines to create an impression that Washington is flailing, apparently on the verge of passing a tax plan that Elizabeth Warren loves.
The views expressed in this blog are provided as a general source of information based on information available as of the date of publication and should not be considered as personal investment advice or an offer or solicitation to buy and/or sell securities. Speculation or stated believes about future events, such as market or economic conditions, company or security performance, or other projections represent the beliefs of the author and do not necessarily represent the view of AGF, its subsidiaries or any of its affiliated companies, funds or investment strategies. Every effort has been made to ensure accuracy in these commentaries at the time of publication; however, accuracy cannot be guaranteed. Market conditions may change and AGF accepts no responsibility for individual investment decisions arising from the use of or reliance on the information contained herein. Any financial projections are based on the opinions of the author and should not be considered as a forecast. The forward looking statements and opinions may be affected by changing economic circumstances and are subject to a number of uncertainties that may cause actual results to differ materially from those contemplated in the forward looking statements. The information contained in this commentary is designed to provide you with general information related to the political and economic environment in the United States. It is not intended to be comprehensive investment advice applicable to the circumstances of the individual.
AGF Investments is a group of wholly owned subsidiaries of AGF Management Limited, a Canadian reporting issuer. The subsidiaries included in AGF Investments are AGF Investments Inc. (AGFI), AGF Investments America Inc. (AGFA), AGF Investments LLC (AGFUS) and AGF International Advisors Company Limited (AGFIA). AGFA and AGFUS are registered advisors in the U.S. AGFI is a registered as a portfolio manager across Canadian securities commissions. AGFIA is regulated by the Central Bank of Ireland and registered with the Australian Securities & Investments Commission. The subsidiaries that form AGF Investments manage a variety of mandates comprised of equity, fixed income and balanced assets.
About AGF Management Limited
Founded in 1957, AGF Management Limited (AGF) is an independent and globally diverse asset management firm. AGF brings a disciplined approach to delivering excellence in investment management through its fundamental, quantitative, alternative and high-net-worth businesses focused on providing an exceptional client experience. AGF’s suite of investment solutions extends globally to a wide range of clients, from financial advisors and individual investors to institutional investors including pension plans, corporate plans, sovereign wealth funds and endowments and foundations.
For further information, please visit AGF.com.
©2023 AGF Management Limited. All rights reserved.