THE ISSUES Billionaires


Calls to consign billionaires to the dustbin of history are getting louder. Should they be heeded?

By Edwin Smith T

he word ‘billion’ is commonplace. We all encounter it regularly – in news stories on everything from tech unicorns to govern- ment spending. But many people are still shocked when they realise what it means. In 2018, Humphrey Yang went viral when he made a TikTok video that put the number – and the wealth of billionaires – into context. Using one grain of uncooked rice to represent 100,000 dollars, he gathered a small pile of 10 grains to represent a million dollars. It was less than a forkful. Next, he showed what a billion dollars – 10,000 grains – looked like. It was perhaps three servings – certainly more than any one person would eat in a sitting. In a second video, Yang used the same scale to illustrate the then $122 billion net worth of Jeff Bezos. It took 58lbs of rice; a truly colossal quantity, especially when you consider that the net worth of the median American fami- ly is $97,300, less than a single grain. For many, this kind of inequality feels unacceptable. How, one might ask, can it be right for a developed Western society to allow some people to have so much while others struggle to afford basic things like food or healthcare? And a sense that something radical should be done has begun to take root. More than three quarters of comments about billionaires on social media now carry negative sen- timent, according to analysis by Crimson Hexagon, a consumer in- sight firm (as recently as 2015, the balance of negative and positive comments was roughly 50:50). Meanwhile, media outlets from Vice to the Washington Post publish pieces that speak in a matter-of-fact way about ‘hate’ for rich people and billionaires in general. In the United States, an annual tax targeting billionaires was a central pillar of the presidential bids of Elizabeth Warren and Bernie Sanders (supporters of the latter can buy a bumper sticker that reads: ‘Billionaires Should Not Exist’). Alexandria Ocasio-Cortez, the 31-year-old Democrat tipped by many to be a future candidate for president, believes that ‘every billionaire is a policy failure’. In the UK, a group of academics, researchers, lawyers and policy wonks have banded together to form a self-styled ‘Wealth Tax Com- mission’. The group’s efforts to map out a what a wealth tax would look like and how it would work have received widespread media attention. The idea has been supported by MPs, and even received a

sympathetic hearing from the Conservative chair of the Commons Treasury Committee, Mel Stride. Indeed, certain polling indicates public support for such policies in the UK. When asked which kind of tax rise they’d prefer if the government raised taxes to fund public service, 41 per cent of Britons questioned by Ipsos Mori said their first choice would be for the in- troduction of a new wealth tax. In the same poll, three-quarters of respondents expressed some degree of support for that type of tax. But would measures to trim billionaire and multi-millionaire wealth really change society in the ways proponents believe? There are several different proposals on the table. Alexandria Oc-

asio-Cortez’s adviser Dan Riffle, who first coined the ‘every billion- aire is a policy failure’ line, tells me via Twitter that he would like to see a cap on the amount of wealth it was possible to accrue. He sug- gests $40 million as a sensible figure, because ‘it’s enough to do any- thing anyone should reasonably hope to do in life’ and because it is 100 times $400,000; the mean net worth of an American house- hold. But, for Riffle, the amount is not as important as the fact there would be ‘some upper bound’ that would ‘prevent abusive and coun- terproductive runaway accumulation’. Not everyone on Riffle’s side of the debate advocates a cap, howev-

er. ‘A progressive wealth tax with high tax rates for billionaires (such as 5 per cent or even 10 per cent each year) is the needed tool to softly ‘ban’ billionaires,’ Emmanuel Saez, co-author of The Triumph of Injustice: How the Rich Dodge Taxes and How to Make Them Pay, tells me by email. This would not amount to an outright ban, says Saez, who is a professor of economics at Berkeley, because entrepre- neurs with ‘exploding wealth’ such as Jeff Bezos or Elon Musk would likely be able to increase their wealth more quickly than it was erod- ed by the tax. But, he adds: ‘billionaires would face headwinds and would not be able to stay billionaires for as long.’ Billionaires would be forced to sell-off of stock in order the pay the tax, which would ‘reduce the stakes that Bezos and Musk own so that they would cede control sooner (or eventually work as hired CEOs instead of owners)’. But how would it work in practice? Arun Advani, a University of

Warwick academic and member of the Wealth Tax Commission, sug- gests that a one-off wealth tax might be considered in the UK, to

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