I think it\u2019s a common sentiment in our day and age that arguing on the internet \u2013 while incredibly fun \u2013 is quite pointless. The most one can achieve is to have more imaginary internet points than the person who intentionally started the argument so they could receive imaginary internet points. Alas, arguing on the internet remains as one of my prized pastimes regardless. <\/p>\n\n\n\n
I recently came across an article in Forbes that I found so utterly idiotic that I needed to place my critique into a public forum. Now, my arguing isn\u2019t just for fun \u2013 it\u2019s educational!<\/p>\n\n\n\n
So the article is about a policy suggested by the Harris presidential campaign platform called Unrealized Capital Gains Tax. Basically, Harris is proposing a 25% minimum tax on Americans with a total income of $100 million or more. This tax would apply not just to physical properties and financial assets, but also to unrealized capital gains, meaning unsold assets that appreciate in value over time. This is a radical change to the way that millionaires are taxed in the United States that aims to combat the federal deficit and reduce the predatory financial behavior of the 0.1%.<\/p>\n\n\n\n
In my reading about the policy, I came across the article I want to critique, which is an opinion piece by someone against the tax. While I recognize my own bias in this scenario, being that I despise the existence of millionaires on a fundamental level, I still think the article is just poorly argued regardless of what side you\u2019re on. So let\u2019s get into it, shall we?<\/p>\n\n\n\n
The article is written by Dave Birnbaum, who proclaims in his bio that he is \u201cshaping the future with Bitcoin,\u201d so you know we\u2019re off to a good start. Birnbaum follows up with this amazing opening by starting the article with the sentence, \u201cas someone who works in tech startups, I get to see firsthand how capital investment fuels innovation.\u201d <\/p>\n\n\n\n
This is perhaps the first tipoff that Birnbaum doesn\u2019t see anything firsthand.<\/p>\n\n\n\n
This is a sentence that might seem innocuous to someone indoctrinated by capitalist rhetoric, so I want to be clear: capitalism does not always breed innovation. Capitalism breeds innovation so long as it is profitable, and it is often not profitable. And, in most cases, innovation will only ever take the form of new methods of making money. I realize this is asserted, but I think that it\u2019s self-evident that a profit-oriented company will only innovate so long as it can make money with it. There\u2019s examples of this all over the place in the tech industry that Dave seems to love so much.<\/p>\n\n\n\n
Apple keeps making new iPhones, but they\u2019re pretty much identical to the last model. Cars are becoming more reliant on software and touchscreen interfaces, which might seem futuristic at first glance, but it\u2019s actually just cheaper to manufacture than analog hardware. This change is proposed even though digital systems are often faultier and less reliable. Artificial intelligence is being put into every piece of software under the sun, but it\u2019s completely useless 90% of the time and is only implemented so companies can lay off more of their employees.<\/p>\n\n\n\n
So sure, maybe there\u2019s some tech startups that have broken through the market with some new innovation, but they\u2019re probably going to either be bought up by a giant conglomerate, or their idea will be stolen and made worse. When you crowd out the space for any other option, you don\u2019t have to innovate.<\/p>\n\n\n\n
We\u2019re only one sentence into the article and Birnbaum\u2019s already introduced a shaky argument without any evidence or examples to back it up. Birnbaum then continues to say that he\u2019s open to any Harris supporters to give him \u201can economically literate, detailed rebuttal of the points below.\u201d While I wouldn\u2019t really consider myself a Harris supporter, I am a staunch supporter of taxing the rich, and people with bad arguments getting comeuppance, so I guess I\u2019m the target audience for Dave.<\/p>\n\n\n\n
Birnbaum splits this article into seven distinct-ish points, so I\u2019m going to structure this article in seven sections, taking down each of these points. Before I start, I would like to elucidate the fact that Dave has no sources or citations for anything he says, but I will take him at his word for the most part. Conversely, I will try to put sources for my arguments and evidence at the bottom of this article because I guess a high-schooler has more journalistic integrity than Forbes Magazine<\/em>.<\/p>\n\n\n\n \u201cSlippery Slope\u201d<\/strong><\/p>\n\n\n\n The first argument is on the slippery slope of the policy. Birnbaum argues that, even though the tax would only apply to centi-millionaires, it will inevitably spread to the middle class and further because of federal greed. He cites the 1913 federal income tax that applied to only 4% of Americans upon introduction, and then over 70% forty years later, as evidence.<\/p>\n\n\n\n Immediately, alarm bells should be going off in your head when you hear the phrase \u201cslippery slope.\u201d This is one of the first logical fallacies any rational person learns. The reason it\u2019s a fallacy is that it\u2019s entirely hypothetical. You can say anything is a slippery slope (and people do) and be correct because all you\u2019re saying is that something could<\/em> happen. I could argue with just as much validity that a tax on the ultra rich not <\/em>being implemented could lead to multi-million dollar companies amassing enough capital to have immense control over politics through lobbying and never having to pay another cent in taxes again. Except the difference there is that what I said actually happened, meaning it\u2019s not a slippery slope fallacy.<\/p>\n\n\n\n But wait, Brinbaum does give an example! Granted, it\u2019s from over a century ago, but maybe it\u2019s related! <\/p>\n\n\n\n I\u2019m sorry to break it to you, but this example sucks.<\/p>\n\n\n\n First of all, the income brackets that the tax covered never actually changed like Dave is trying to suggest. The reason why more people paid taxes in the 1950s is because the median household income was higher. Granted, rates of taxation did increase as well, but they have since declined, making more of a slippery hilled area rather than a slope. While I was unable to find data going back to the early 1900s (so I don\u2019t know how Dave did), household median income has consistently increased, even when adjusted for inflation, for most of the country\u2019s existence. So this slippery slope that Birnbaum suggested has not actually happened; people have simply gotten wealthier. But even if Birnbaum was correct and the government was maliciously lowering the barrier for entry into these tax brackets, that\u2019s not exactly a bad thing. The taxes you pay go towards government programs in healthcare, social security, transportation development, and countless more valuable commodities. It\u2019s not like the government is just taking your money and throwing it into a black hole \u2013 that\u2019s what millionaires do.<\/p>\n\n\n\n \u201cValuation\u201d<\/strong><\/p>\n\n\n\n The basic crux of this argument is that since unrealized capital gains are by definition, unrealized<\/em>, they have no set value. This would require the government to apply a value to them, and the government has an incentive to inflate the value to collect more revenue.<\/p>\n\n\n\n Now, I am by no means an economist \u2013 I\u2019m a high-schooler, so I think it would be alarming if I was \u2013 but I\u2019m pretty sure the value of everything is a social construct. Sure, I get that there\u2019s a difference between a physical property and just stocks in a company, but the way the stock market functions is that there are tangible systems in place to evaluate the price of stocks. It\u2019s what enables millionaires to buy up a bunch of stocks to artificially inflate the price and then hold on to them indefinitely. Maybe Tesla stock fluctuates in value, but it does have a definite value because when you liquidate it, you get a certain amount of money. I think it would make sense that the government would save themselves the legwork of creating an entire new branch of bureaucratics to evaluate unrealized capital and just stick to values assigned by the professionals within the stock market. Even if there was not a single check or balance in the government, it would still take a ridiculous amount of human resources to artificially evaluate stocks, to the extent that it wouldn\u2019t necessarily be worthwhile any more.<\/p>\n\n\n\n There\u2019s a consistent theme in Dave\u2019s arguments of the government being inherently malicious, and trying to take your money. And I agree with him here somewhat \u2013 I am very distrustful of the government. But I also acknowledge that there\u2019s enough checks and balances in the way of the government for them to do this, or they would already have done so. And furthermore, the periods where the US has been most economically successful are the periods where the rich were taxed the most and much of federal taxes went to socialist policies. The \u201cGolden Age of American Capitalism\u201d in the 50s-70s had some of the highest tax rates in American history. It\u2019s only since then that taxes have been significantly lowered, particularly among the upper class. Contrary to what Birnbaum posits, the US government has been resistant to high taxation in modern history.<\/p>\n\n\n\n \u201cLiquidity\u201d<\/strong><\/p>\n\n\n\n In this argument Birnbaum says that basically people will be forced to liquidate assets to avoid taxes, disrupting the market. He gives an example of a house gaining value and forcing the homeowner to sell it or take on debt.<\/p>\n\n\n\n I completely acknowledge that this policy would make a lot of millionaires liquidate their assets \u2013 that\u2019s part of why I support it. The idea that a middle class homeowner would have to sell their home is frankly ridiculous. Even if the house was worth $1 million, the owner wouldn\u2019t come close to being in the $100 million cutoff. If they were at that level of wealth, they\u2019d be able to pay the tax \u2013 funny how that works.<\/p>\n\n\n\n \u201cBut that\u2019s not all,\u201d Dave says. What if Elon Musk sold a bunch of his Tesla stocks and the price went down!? First of all, Dave concedes in this argument that stocks have definite prices, undermining his previous argument. Secondly, if supply goes up and there\u2019s more Tesla stock around that middle class Americans are able to buy now because buying higher amounts of shares is not as expensive, I think that\u2019s a good thing. Maybe in the short term, some non-millionaires who have stocks in companies will lose the value of their stocks, but that\u2019s just how the stock market works sometimes, and the price is likely to go up again as other people buy out those stocks.<\/p>\n\n\n\n \u201cAsset Inflation\u201d<\/strong><\/p>\n\n\n\n The thesis of this argument is pretty simple: \u201cThe government is able to increase inflation by printing money, so they will increase inflation to artificially appreciate the value of assets and tax them.\u201d<\/p>\n\n\n\n I don\u2019t know about you, but I think the US government isn\u2019t a fan of hyperinflation. Some inflation is generally considered good, but on the scale that BirnBaum suggests, it would be hyperinflation. Hyperinflation is bad for any country\u2019s economy because it stifles growth. The last thing the US would do is artificially generate hyperinflation. Especially since the actual extra revenue they would collect in taxes would be worth less due to that very same inflation.<\/p>\n\n\n\n \u201cCapital Flight\u201d<\/strong><\/p>\n\n\n\n In this point, Birnbaum explains how, when faced with higher taxes, the 0.1% will often leave a country and flee to locations with lower taxes. Dave argues that this damages the economy of a country and will have bad ramifications for the United States. He says that when France implemented a wealth tax in 1982, an estimated 42,000 millionaires left the country in the next two decades. Birnbaum also points out that the UK is as poor as Mississippi as an example of capital flight.<\/p>\n\n\n\n Alright, so first of all, Dave is completely correct that millionaires leave countries or use tax havens as a method to evade taxes. But our opinions differ on the idea of millionaires being good for a country. I see thousands of millionaires leaving a country as a good thing. They stifle economic equality and hoard wealth, not to mention their undermining of political institutions. I think it\u2019s particularly telling that nowhere in his argument does Dave make a direct link to economic failure and the ultra-wealthy fleeing a country. He mentions France at the start and then gives no analysis of France\u2019s economic circumstances after the evacuation of millionaires. He also brings up the UK, but fails to provide a single link between the country\u2019s apparently low wealth and a lack of millionaires there. If anything, the presence of billionaires makes it worse. There are a number of Russian oligarchs with hundreds of millions of pounds of assets and property held in the UK, suggesting the opposite correlation. Dave\u2019s just throwing out data and hoping you\u2019ll connect the dots yourself without thinking about it for two seconds.<\/p>\n\n\n\n \u201c\u2018Capital Punishment\u2019\u201d<\/strong><\/p>\n\n\n\n This argument says that it\u2019s principally wrong to punish people for accumulating capital, and the behavior it incentivizes is anti-investment. Birnbaum evokes the Ancient Roman quote \u201cbread and circuses,\u201d saying that people will spend more and more money on hedonistic pursuits, neglecting their civil service. <\/p>\n\n\n\n Hey, Dave. Yeah, I\u2019m talking directly to you now, not the reader.<\/p>\n\n\n\n THAT’S NOT WHAT BREAD AND CIRCUSES MEANS.<\/strong><\/p>\n\n\n\n When the poet Juvenal said the quote, what he was referencing was the generation of public approval and goodwill from constituents by distracting them rather than actual good policy. \u201dBread and circuses\u201d refers to the only things the government needs to keep people satiated and happy.<\/p>\n\n\n\n Okay, terrible quote analysis aside, this argument is also just bad. As I\u2019ve said time and time again, the accumulation and hoarding of capital is bad for the growth of an economy \u2013 especially the middle and lower class \u2013 while reinvesting money into the economy and spending it is generally good. I hate to sound like a broken record, but in the 1950s-1970s, which are generally agreed to be the most economically successful years in the United States, Paul Getty, the richest person alive at the time, had $32.1 billion in modern currency at his richest. Compare that to Elon Musk at $228 billion today. The 0.1% had substantially less wealth than now during the years of greatest economic growth in the US, so something tells me such drastic wealth inequality maybe isn\u2019t instrumental to a healthy economy.<\/p>\n\n\n\n \u201cUnspoken Motivation\u201d<\/strong><\/p>\n\n\n\n Alright, we\u2019re at the final argument now. Dave estimates that this tax would yield about $25 billion in revenue yearly for the government, which does not meet the estimated $2 trillion annual deficit. He then extrapolates that this must mean there\u2019s an ulterior motive for the government to implement this tax. The motive? Dave says it\u2019s \u201cto foment hostility among taxpayers and turn them against each other for political gain.\u201d He says it casts the blame for the economic hardships of the middle class onto the poor, so-often marginalized 0.1%. (Okay, maybe I paraphrased that bit slightly).<\/p>\n\n\n\n This argument\u2019s a doozy, so let\u2019s break it down to two levels. The first being the idea of \u201c$25 billion \u2260 $2 trillion, so the government must be evil.\u201d By the amazing logic that Dave is using here, any method of collecting revenue that the government does that does not generate $2 trillion yearly must be done for an ulterior motive. I think Dave just doesn\u2019t understand how addition works. Sure, $25 billion is not close to $2 trillion at all, but you\u2019ve got to start somewhere. The government makes up for its deficit with a variety of programs. It\u2019s not going to solve it with just one.<\/p>\n\n\n\n The second level of this argument is this ulterior motive that Birnbaum gives us. Setting aside the fact that I agree with the fact that much of the middle class\u2019 struggles and income inequality in general is the fault of the uber-wealthy, I think there\u2019s a much simpler motive for the government to implement this tax: billionaires accumulating and then hoarding capital harms the economy of a country and the government doesn\u2019t want that. This whole idea of stoking a class struggle is ridiculous when the majority of prominent politicians are very wealthy themselves.<\/p>\n\n\n\n Conclusion<\/strong><\/p>\n\n\n\n So that\u2019s all of Dave Birnbaum\u2019s arguments, each just as faulty and terrible as the last. I hope this was as fun for you as it was for me. I also hope it was enlightening and shows some of the tactics that people who are bad at arguing use.<\/p>\n\n\n\n Sources Used:<\/em><\/p>\n\n\n\n Birnbaum, Dave. \u201cUnrealized Capital Gains Tax Is \u2018Capital Punishment.\u2019\u201d Forbes<\/em>, Forbes Magazine, 16 Sept. 2024, www.forbes.com\/sites\/davidbirnbaum\/2024\/08\/30\/unrealized-gains-tax-is-capital-punishment\/. <\/p>\n\n\n\n \u201cList of Economic Expansions in the United States.\u201d Wikipedia<\/em>, Wikimedia Foundation, 3 Oct. 2024, en.wikipedia.org\/wiki\/List_of_economic_expansions_in_the_United_States. <\/p>\n\n\n\n \u201cA Timeline of the Richest Person on the Planet since 1900.\u201d Madison Trust Company<\/em>, 26 Feb. 2024, www.madisontrust.com\/information-center\/visualizations\/a-timeline-of-the-richest-person-on-the-planet-since-1900\/. <\/p>\n\n\n\n \u201cFrom Trump to Johnson, Nationalists Are on the Rise \u2013 Backed by Billionaire Oligarchs | George Monbiot.\u201d The Guardian<\/em>, Guardian News and Media, 26 July 2019, www.theguardian.com\/commentisfree\/2019\/jul\/26\/trump-johnson-nationalists-billionaire-oligarchs. <\/p>\n\n\n\n \u201cWhy Is Inflation Bad? 3 Effects of Inflation.\u201d Forbes, Forbes Magazine, 24 June 2024, www.forbes.com\/advisor\/personal-finance\/why-is-inflation-bad\/. <\/p>\n\n\n\n staff, Published By\u202f: BER. \u201cBack When America Was Socialist.\u201d Berkeley Economic Review, 30 Oct. 2020, econreview.studentorg.berkeley.edu\/back-when-america-was-socialist\/. <\/p>\n\n\n\n Bureau, US Census. \u201cHistorical Income Tables: Households.\u201d Census.Gov, 30 Aug. 2024, www.census.gov\/data\/tables\/time-series\/demo\/income-poverty\/historical-income-households.html. <\/p>\n\n\n\n \u201cThe Economic Consequences of Major Tax Cuts for the Rich.\u201d ePrints, International Inequalities Institute, Dec. 2020, eprints.lse.ac.uk\/107919\/1\/Hope_economic_consequences_of_major_tax_cuts_published.pdf. <\/p>\n\n\n\n Swann, Steve, et al. \u201cSanctioned Russian Oligarchs Linked to \u00a3800m Worth of UK Property.\u201d BBC News<\/em>, BBC, 16 Apr. 2022, www.bbc.com\/news\/world-europe-61080536. <\/p>\n","protected":false},"excerpt":{"rendered":" I think it\u2019s a common sentiment in our day and age that arguing on the internet \u2013 while incredibly fun \u2013 is quite…<\/p>\n","protected":false},"author":44,"featured_media":1548,"comment_status":"open","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[16,7,1],"tags":[],"class_list":["post-1547","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-opinion-pieces","category-politics","category-uncategorized"],"_links":{"self":[{"href":"https:\/\/blueandread.asbarcelona.com\/index.php?rest_route=\/wp\/v2\/posts\/1547","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/blueandread.asbarcelona.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/blueandread.asbarcelona.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/blueandread.asbarcelona.com\/index.php?rest_route=\/wp\/v2\/users\/44"}],"replies":[{"embeddable":true,"href":"https:\/\/blueandread.asbarcelona.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=1547"}],"version-history":[{"count":2,"href":"https:\/\/blueandread.asbarcelona.com\/index.php?rest_route=\/wp\/v2\/posts\/1547\/revisions"}],"predecessor-version":[{"id":1575,"href":"https:\/\/blueandread.asbarcelona.com\/index.php?rest_route=\/wp\/v2\/posts\/1547\/revisions\/1575"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/blueandread.asbarcelona.com\/index.php?rest_route=\/wp\/v2\/media\/1548"}],"wp:attachment":[{"href":"https:\/\/blueandread.asbarcelona.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=1547"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/blueandread.asbarcelona.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=1547"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/blueandread.asbarcelona.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=1547"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}