if their net worth is 84b. then their company owuld just need to yield 840m. if the company generates 7b. they can afford to pass along 1b to shareholders. 840m of which will go to the kochs. the koch company will still have 6b to reinvest to their business. koch bros would still be bale to pay their 840m wealth tax. and no one is in need of borrowing or ipoin!
Nerdy, have you ever run a business? Do you really think that just because a business makes $1m per year, that the owners have $1m per year in a safe that they can just take out any time?
It sounds like you believe that. And since you believe that, we don’t have anything left to discuss. We have no common ground.
fcf does not always equal ni. but if you knew had a wealth tax due. you’d make sure ud have enough! anyways i find it comical that you thin ka company with 10b in op profit is not going to have 1b in cash to pay out. thats just silly.i can prolly fitler out all the comanies with a market cap greater than 100b, and im willing to bet that all of them will have 1b in cash on hand.
OK - let’s use Coca-Cola as a proxy. (And I only have 2018 figures on hand. Don’t do a lot of corporate finance or corporate accounting anymore, so I’m sure you guys have much better information than I do.)
In 2018, Coca-Cola had a market cap of about $200b. It had sales of $32b, and profit (before tax) of $8.1b. That means it had an “after-tax” profit of $6.5b.
It had cash and short-term investments of $11b (1.7 years worth of net profit). Both current assets (including cash and short-term investments) and current liabilities were about $30b.
If Coke were Koch, and it had to pay $2b in cash immediately to satisfy a wealth tax, it would wipe Coke/Koch out. Somebody (a vendor, an employee, a creditor) would not get paid. And any of those three can bankrupt a company. If Coke doesn’t pay its sugar supplier, then that sugar supplier will stop supplying sugar, and Coke is f*cked.
Not to mention, Coke’s “total comprehensive income attributable to shareowners of the Coca-Cola Company” was $4.3b. Once it distributes that to its owners, $4.3b becomes $3.3b (after a 23.8% dividend tax). You think Coke/Koch can afford to pay 60% of their corporate profits to a wealth tax?
(Not asking about whether it’s morally right–just whether or not they can literally afford it.) Remember - they’ve already paid $1.6b in corporate tax and $1.0b in tax on dividends. Now they need to pony up another $2.0 billion for the privilege of being successful.
so 200b has awealth tax of 2b. ko paid out 6.6b in dividends for 2019. gg. wealth tax isnt paid by coke. its paid by shareholder. the dividend easily covers the wealth tax for them. so this is the rich person’s problem that is easily paid for by coke.
tje key thing hjere is you shouldnt have a liquidity issue over a 1% wealth tax. that would literally be the most terrible ceo.
NOW I’ll ask the moral question. Is it moral (or “right” or “fair”) that the owner of Coke/Koch should pay another $2 billion (on top of the $2.6 billion they’ve already paid)?
Is it “fair” to transfer money from a successful, hard-working, intelligent enterprise to somebody who is less successful, hard-working, or intelligent?
Is it “right” that the owners of Coke should get to keep $3.5b of the $8.1b that they made? Did they not “add value” to society? I mean, I drink a Coke and a Simply Orange every single day. They add value to me. (Not to mention Dasani, SmartWater, Vitamin Water, Minute Maid, and Gold Peak Tea.)
(I realize that Coke is publicly traded, so it’s a different set of circumstances than Koch is. This is just meant to be an illustration.)
thats how income tax works too. this is just another form of progressive tax that we need to pay off govt debt.
in addition, if the total return for stocks was 10%, and you are only paying 1%, then you only have a 10% marginal tax off your wealth’s income.
thats still far lower than an income tax that can go as high as 52%. just look at it as a asset management fee.
the gap between wealth and income needs to be met. there are too many old and sick people that need to be coddled. and it shouldnt be future billionaires paying for it. these are the sins of current billionaires not future ones so stop racking up more debt and pay for your sins and help your own generation.
I mean, the Koch brothers were far more lucky than hardworking or intelligent. If they were born in a village in Africa they are not making it to where they are today. They are the sons of Fred Koch, who:
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Although from Texas, initially worked for the Soviet Union building refineries. He stopped though when Stalin started purging his colleagues.
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Literally built refineries for the Third Reich and had projects personally approved by Hitler. It was key to the Nazi war effort, as it was the only refinery capable of producing fighter plane fuel.
This made him a fortune and he returned to Texas. So, should we tax the Koch brothers and all of this money that they “earned?”
I still don’t think you understand. A 1% wealth tax would be devastating to our economy. It’s not like the 15 aforementioned folks have a savings account with billions of dollars in it. They would have to get the money from selling assets (which would then most likely be in the hands of less qualified people who will provide less value to society) or they have to pull it out of the company, which would have the same effect.
And no, you wouldn’t have a marginal tax on your wealth’s income. A wealth tax is NOT an income tax. And a wealth tax would not necessarily be lower than an income tax.
If I have $100 million dollars of raw land which produces zero income, then 1% of zero is zero. My income tax is zero. My wealth tax is a million bucks.
A 1% AUM fee is completely different. The funds inside a brokerage account are liquid and easily divisible. A commercial building is neither of those things. Neither is a company like Koch Industries.
IMHO, if you really want to eliminate the wealth disparity, the best thing would be to eliminate the basis step-up upon death. Heirs may be less likely to sell their family’s legacy (and low basis) assets, but when they do, they’ll get hit with a ton of capital gains tax that we KNOW they’ll be able to afford.
how nice would a tax cut for the rich and 1% be for the economy? asking for a comrade
@frankybarnes - you make some good points about their father’s character and whether people get rich through their own merit. But nothing you said makes a good case for a wealth tax.
A 1 percent wealth tax is not prohibitive and your argument is a very poor one. Most people can compound their money much faster than 5 percent. So they could easily come up with the cash. They prolly Just don’t want to pay which is natural. But the idea that they can’t is comical at best. Most people live off 4 percent of their assets. So let’s cut the bull.
Also I’m not saying to replace the income tax with a wealth tax, it would be an additional new tax. Most people can avoid capital gains tax, this will force them to pay no matter what. We are trying to raise taxes to overcome the deficit. Hell is even support a revenue tax, much like a royalty fee. New taxes is want we need.
If you have 100m of undeveloped land. Then you need to pay taxes on it. I’m a firm believer that if you don’t use it, then you should lose it. Be productive or get wiped out and let others add more value.
The lack of liquidity is not an issue. Figure out a way to make it more productive if you don’t have the cash to pay the tax. And cannot iPo or get a loan. Raise your prices, cut your costs, but pay your dues. Or liquidate your assets at a significant discount and make room for your competitors.
Lastly, wealth disparity is a much bigger issue nowadays but in general I think it’s ok, because we aren’t all created equal. I am a firm believer that some are more skilled than others and their lifestyles and privileges should reflect that. With that said we need to be mindful of the scale of the differences. But my argument is mostly that we shouldn’t incur more debt that future billionaires will have to pay. Have them be paid here and now by the current billionaires. This is more of a generational divide. Income taxes go after the younger generation, when it makes more sense to go for old wealthy people via wealth taxes to take care of their own generation.
Also, Adding more deficit to the 20 trillion debt is basically kicking the bucket further down the line for future billionaires which isn’t fair. The us debt load has gotten big enough where this practice needs to stop. Debt is essentially far greater than gdp now. The key is we need taxes, much higher taxes, or you need to increase the death rate and cut life expectancy so that the losses and liabilities stop. Which do you prefer greenie. Death or taxes?
Personally I don’t support social security or Medicare, because I believe in productivity. but I know that both have widespread support. So higher taxes is the only path to make it fair. And I prefer a more diversified approach of taxation as oppose to only focusing on income. Maybe a carbon tax, a drinking tax, a weed tax. We just need taxes and rich people who are the minority should be an easy target with the best bang per buck. So wealth tax