ChickenEnthusiast OP t1_j2cno8s wrote
Reply to comment by KoastPhire in ELI5: Tech billionaires lost $400 billion this year. Where does it go? Does anyone gain? by ChickenEnthusiast
Thanks. But speaking a bit more philosophically, do we non-millionaires and -billionaires gain anything when the super rich lose great deals of "on paper" money?
azuth89 t1_j2cp7n8 wrote
If anything we tend to lose more. They shuffle around on the "richest person" charts while regular folks take a big hit to their 401k. It's all pretend money UNTIL you're an average Joe trying to cash out some stocks to live through retirement. Then that shit gets REAL.
Not-your-lawyer- t1_j2ctget wrote
Not directly, no. Anyone invested in the stock market will lose alongside them, too.
As for whether we "gain" anything indirectly from having less-wealthy wealthy people, that's arguable. And even on the bits that are arguable, it's going to depend on why their wealth decreased and what, if anything, the government does in response.
But again, we don't directly gain anything from having less-wealthy wealthy people. And the hold the wealthy have on political action—"influence," whatever—means the sort of policies that would allow the general population to benefit from their loss are mostly nonstarters.
In the ideal version of capitalist competition, their losses would spur them to redouble their efforts to make their companies competitive, lowering prices, raising quality, hiring workers to improve overall production... etc... But that lowers the dividends their stocks will pay out, and in our current reality, that's also a nonstarter. The goal is to raise the value of the stock, not to build a stable company. (See, e.g., comparisons between Tesla's market cap and the combined market cap of Ford, GM, Toyota, Honda, and the next five largest automakers.)
21_MushroomCupcakes t1_j2dbe16 wrote
They keep the gains, we share the losses.
They'll squeal when tax season comes, you and I will pick up the tab on whatever losses they feel entitled to.
When they get rich we get poorer, and when they don't we still get poorer.
Even philosophically, we gain nothing.
kittenbomber t1_j2dnvg8 wrote
All that’s going on is they own something (often a company they created) that has an estimated selling price, but they aren’t selling it so it doesn’t really matter. Their situation doesn’t change much because they weren’t selling it anyway. The comparison to houses was apt.
sudoku7 t1_j2e1o2f wrote
Not really. Those gains and loses haven't been actualized.
In a practical sense for the rich it means that they are less able to take out loans using that 'paper-value' as collateral.
KoastPhire t1_j2cnsei wrote
No, if anything we lose more. Usually this comes with a recession and job cuts which we are seeing now.
ChickenEnthusiast OP t1_j2cnxuf wrote
So do we really want to have billionaires get richer, on paper? Sounds crummy.
KoastPhire t1_j2co4ue wrote
No we want the mass populace to be richer and billionaires to pay their fair share of taxes.
valeyard89 t1_j2fuyw7 wrote
Taxes are only calculated when you sell the stock (realized gains). You don't get taxed on your net worth. So Melon Usk could have 200 billion in net worth but only sell 1 billion of stock... the taxes would be on the 1 billion.
DrewsBag t1_j2duydg wrote
Don’t listen to the commies on here. Yes, we do. The billionaires wealth is tied up in stock ownership. Usually, when their wealth goes up, it’s because the general stock market is gaining value. Those is us who have our retirements tied up in the same stock market, want the stock value to go up. Also, a growing market also indicates a good economy, which pushes wages and work opportunities. The bullshit about ‘fair share of taxes’ is a red herring.
KoastPhire t1_j2eeimp wrote
I'll take you up on this, comrade.
If the only options are "We want Billionaires rich so we can eat the crumbs" or "We want Billionaires poor so we can all suffer" then there is merit in choosing to eat crumbs. We're proposing a third option for Billionaires to still be rich and pay their fair shares of taxes. Why is this a red herring?
DrewsBag t1_j2ezpn1 wrote
The red herring is the % that billionaires pay in taxes. As almost all of their wealth is held in stock, it’s not income. It can all go away tomorrow because it isn’t real until someone gives you cold hard cash for it. They still pay capital gains taxes on what they sell, sales tax on what they buy, and property taxes on their possessions. The us tax system is progressive and the wealthy already pay the vast majority of taxes.
KoastPhire t1_j2f4fss wrote
Say I have a start up. Series C funding is valued at 3 billion dollars and I own 1/3. I use my stock to secure a credit line worth $250M at the prime rate, and I go and buy 10 houses, a yatch and a plane. I haven't sold anything, but I have $200 million in assets without paying a single dollar in taxes. Why am I able to access it and spend as if I paid taxes on that? Cherry on top is that the stock is still in my name, if Series D makes my stock value 5x, not only did I spend the money, but I'm worth more.
Explain where is the "fair share" here?
I have more scenarios on how the rich avoid taxes, if you like to engage more.
Crepuscular_Oreo t1_j2f9igv wrote
You also have $200 million in liabilities, so at this point your net worth has not increased.
The good news is that a lot of construction workers, boat builders, and airplane builders have jobs.
KoastPhire t1_j2f9vs6 wrote
>You also have $200 million in liabilities, so at this point your net worth has not increased.
It's not about the networth if you read what I typed. It's about having these assets without paying taxes first.
>The good news is that a lot of construction workers, boat builders, and airplane builders have jobs.
So your logic is that they get a pass because $20M of the $200M goes to the worker? Or did you assume the workers get $200M of the spending? Did you factor that the workers for yatchs and planes aren't in the US?
hh26 t1_j2cqdgr wrote
Billionaires mostly get richer by creating value. If they lead a company that creates $100 billion of goods (ie, the value of their product is worth $100 billion more than the value of the raw materials), and they scrape $1 billion off the top and use the remaining $99 billion to pay employees and taxes, then they are $1 billion richer. And everyone else is $99 billion richer (divided among all of the employees and customers and government, so each only sees a tiny fraction of the created value). But yeah, the billionaire got richer and you should be mostly happy about it because you're richer too. If you've ever bought a smartphone, you gained something of value (the difference between how much you like the smartphone minus the amount you paid for it), and you enriched a billionaire who owns the company that made it simultaneously. Oops oh well, at least smartphones exist and you get to buy one if you like them. Sometimes capitalism works and nobody loses (only sometimes, there are like a million caveats, but billionaires existing in theory is not one of them)
KamikaziAvalanche t1_j2dwn0o wrote
To quote Luke Skywalker, "Amazing. Every word of what you just said is wrong."
TheJeeronian t1_j2cqe1k wrote
The value of these persons' imaginary money doesn't really matter to you. It really doesn't matter for most people.
Do we want rich people to get richer? Generally no. Does it mean you're losing money as they gain your (former) money? Also no.
alternatex0 t1_j2dcmgm wrote
It matters for pensions doesn't it?
tsiike t1_j2cws4k wrote
wouldn’t we (retail investors) gain by getting cheaper (stock prices) tickets to the show?
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