Wealth Tax Weirdness

I’m confused. Which won’t surprise anyone who knows me very well.

Elizabeth ‘Has a Plan For That’ Warren is reviving her wealth tax proposal.

“Ms. Warren’s wealth tax would apply a 2 percent tax to individual net worth — including the value of stocks, houses, boats and anything else a person owns, after subtracting out any debts — above $50 million. It would add an additional 1 percent surcharge for net worth above $1 billion.”

Three in five Americans support the proposal. Cue my confusion. Why does 99.9% of the 40% oppose the proposal when the tax will never come close to applying to them.

“Ms. Warren estimated her initial proposal during the 2020 campaign would raise $2.75 trillion over a decade, which she proposed spending on education and child care, based on estimates from the University of California, Berkeley economists Emmanuel Saez and Gabriel Zucman.”

Maybe the answer to my question lies within that dastardly sentence. Maybe the “anti-wealth tax forty percenters” have the backs of the ultra-wealthy because they know how just how bad things could turn out if people of modest means are able to provide their children improved childcare and schooling.

Personally, just to be safe, I’m going to do everything possible to keep my net worth under $50m.

I Will Never Ever Be A Landlord

Even if a Major League Baseball team offers me 14 years and $340m.

Renting out apartments or homes has always been a favorite wealth-building strategy of some financial planners.

Here’s the problem. No financial planner will ever ask you to imagine having to replace a washer and dryer for a tenant who’s not paying rent.

If this financial and legal horror story doesn’t demystify being a landlord, I don’t know what will.

Wednesday Required Reading

1. You try to give people the benefit of the doubt. Deep down, there’s goodness. Then this. Criminals are selling fake Covid test results as they look to profit from travel restrictions.

2. What the next generation of editors need to tell their political reporters. A complete rethinking of journalism.

3. Aswath Damodaran makes sense of GameStop.

“The difference, I think, between our views is that many of you seem to believe that hedge funds (and other Wall Streeters) have been winning the investment sweepstakes, at your expense, and I believe that they are much too incompetent to do so. In my view, many hedge funds are run by people who bring little to the investment table, other than bluster, and charge their investors obscene amounts as fees, while delivering sub-standard results, and it is the fees that make hedge fund managers rich, not their performance.”

4. Betraying Your Church—And Your Party. How Representative Adam Kinzinger, an evangelical Republican, decided to vote for impeachment—and start calling out his church. My headline would’ve been, “Don’t Lump All Republicans Together Y’all”. His nickname has to be “Zinger”.

Suck It, Wall Street

The title of the best GameStop crowd-squeeze story I’ve read thus far. By Matt Taibbi. Taibbi skewers the monied class for their blatant hypocrisy, describing the week’s events as. . .

“. . . an updated and superior version of Occupy Wall Street.”

On the hypocrisy:

“The only thing ‘dangerous’ about a gang of Reddit investors blowing up hedge funds is that some of us reading about it might die of laughter. That bit about investigating this as a ‘pump and dump scheme’ to push prices away from their ‘fundamental value’ is particularly hilarious. What does the Washington Post think the entire stock market is, in the bailout age?”

Taibbi’s short and sweet tutorial on the week’s events:

“Furthermore, everybody ‘understands’ what happened with GameStop. Unlike some other Wall Street stories, this one isn’t complicated. The entire tale, in a nutshell, goes like this. One group of gamblers announced, ‘Fuck you!’ Another group announced back: ‘No, fuck YOU!’

That’s it. Or, as one market analyst put it to me this morning, ‘A bunch of guys made a bet, got killed, then doubled and tripled down and got killed even more.'”

On why Taibbi’s siding with the Redditors:

“They’ve seen first that our markets are basically fake, set up to artificially accelerate the wealth divide, and not in their favor. Secondly they see that the stock market, like the ballot box, remains one of the only places where sheer numbers still matter more than capital or connections. And they’re piling on, and it’s delicious, not so much because they’re right, but because the people running for cover are so wrong, and still can’t admit it.

Buy the ticket, take the ride, nitwits. If you earned anything, it’s this.”

Tuesday Required Reading and Viewing

1. Bet you can’t guess the top global health story of 2020.

2. Bet you can’t guess the ‘secret’ to longevity.

3. Bluetits and Bluebells: Essex’s open water swimmers – a photo essay. Remember, I don’t write the headlines, I just share them.

4. It’s not that hard to buy nothing. After reading the top comments, a suggestion. Dear wealthy people, advertise your minimalism at your own risk. The non-wealthy are (still) not having it.

5. The future of electric cars. This really good ‘free’ advice proves you don’t always get what you pay for.

Let The Ultra-Rich And Influential Skip The Line For Covid-19 Vaccines

“Donations would come from five tiers. For each tier, the mechanism is the same. People (or businesses on behalf of their people), donate money to get to the front of the Covid-19 vaccine line. There are limited available slots and getting the vaccine must be publicly documented so others can be motivated by these influential figures.

In the first tier, 100 of the wealthiest Americans each donate $100 million to be first in line for a vaccine, getting it within the first weeks of availability. This raises $10 billion.

In the second tier, 1,000 people each donate $10 million to get vaccinated within the first month. This raises another $10 billion.

You can see where this is going: The third tier requires a $1 million contribution for up to 10,000 people. The fourth, $100,000 for up to 100,000 people. The fifth and final tier requires a $25,000 donation from up to 400,000 people. Everyone participating in the program is vaccinated within the first two months of vaccine availability. The bigger the donation, the further toward the front one goes.

All told, this raises $50 billion for the cause by vaccinating just 511,000 people.”

Levine goes on to say he doesn’t “pretend to know the optimal ways to spend this money,” but knows there are a lot of places it can help, ultimately arguing “it can help get past the multitude of barriers to vaccine access, big and small, that exist in the U.S.”

Levine is a bold, clear-headed thinker, but damn, are we really ready to throw the towel in on the (dis)United States being a tax payer funded democracy that aspires to greater equality? Is social mobility so anemic we’re ready to officially acknowledge we’re more of an aristocracy than a democracy?  Are people ready to drive on the Jeff Bezos Highway and live in Apple Incorporated affordable housing?

I’m definitely not ready to throw in the towel on our longstanding democratic ideals, but I can’t disagree with Levine about this:

“My proposal is neither conservative or liberal — or it can be portrayed as both. For conservatives, it is a free-market solution: People and businesses are making a choice on how they use their money. Liberals can view it as a wealth tax: People who can afford it pay for early access to a vaccine and, in doing so, pay for others to get vaccinated. I believe that the concept is inherently nonpolitical. Instead it is a solutions-oriented approach to concerns that have been raised about U.S. vaccination programs.”

How To Stay Together

My amazing playwriting aside, the Jeff Bezos/MacKenzie Scott divorce is an illuminating tale for people committing to one another for the long haul.

The conventional wisdom is that a lack of money and related money fights explain why so many relationships fail. That’s certainly true, but not the whole story. Even people with money can have devastating money disagreements because everyone has a unique money history and no two people will ever think about it the same way.

The bottom line. Couples don’t explore their “money compatibility” nearly carefully enough in the early stages of their relationships. The key is to figure out whether you and your partner are more similar in your thinking about saving, spending, gifting, and investing than not. No, that’s not particularly sexy, but do you want to measure your relationship by decades or not?

One little complication, by which I mean, huge complication. People change over time. Maybe MacKenzie didn’t know Jeff wanted to be the richest person in the world because he may not have wanted to be until his first or one hundredth billion.

What to do about the unknown? Anticipate that your thinking about money will change over time, not radically, but moderately. Similarly, anticipate that your partner’s thinking will change too. Meaning “money compatibility” is always a work-in-progress. Talk about saving, spending, gifting, and investing with some regularity or run the risk of serious differences creating dangerous cracks in the foundation of your relationship.