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PAX, LUX ET VERITAS SINCE 1965
Post Ric Mauricio on the Billionaire Tax, CRT
Created by John Eipper on 11/11/21 3:39 AM

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Ric Mauricio on the Billionaire Tax, CRT (John Eipper, USA, 11/11/21 3:39 am)

Ric Mauricio writes:

After doing a deep dive on what the Billionaire Tax would appear to be, it appears that the discussion is "off the table."

Stepping back in the discussion for a moment, the tax is on the gain in valuation of assets, again, a mark-to-market type calculation. In simple terms, if one's portfolio valuation (includes stocks, precious metals, collectibles, and real estate) was $5 billion on 12/31/20 and the valuation increased to $6 billion by 12/31/21, you will have a $1 billion capital gain subject to anywhere from a 10% to 20% tax, so a tax of at least $100 million. It's easy enough to figure out these valuations on publicly traded stocks, but next to impossible to apply to private companies, real estate, collectibles or even precious metals held in a private vault. Real estate comps might be available but, as in Trump's case as posted by Michael Frank, it may be a bit tricky. How does one get comps for 98% of Lanai, in Larry Ellison's (Oracle) case?

By the way, did you know that Hawaii has the lowest property tax rate of all the states, at .28% of appraised value? New Jersey has the highest tax rate. California has a 1.1% tax rate but in comparing apples to apples, it really is .81% because the average appraised value is 27% less than its market value. But before you purchase that home in paradise, keep in mind that if your net worth is over $5.5 million, there is an estate tax. There is no estate tax in many states, including California.

I often get my best ideas at 2 AM in the morning. Yes, I am asleep, but wake up with these ideas. Let's say the Billionaire Tax was implemented. And using the illustration above, my valuation increased by $1 billion as I close in on the year end. Well, gee, all I have to do is donate $1 billion worth of stock to the Gates Foundation or create the RIC Foundation. Aha, not only do I get a tax deduction against my regular income, I reduce my portfolio valuation gain to zero. Sweet, no Billionaire Tax. So simple. Caveat, the tax deduction is not the full value of a stock donation; donating appreciated stock and having the Foundation not sell it will have the effect of not depressing the price of the stock.

Switching gears, since it appears that Francisco Wong-Díaz is well versed in Karl Marx's Das Kapital, I need to ask him if he agrees or disagrees with this statement: "The reason why the capitalists are able to make a profit is that they only need to pay workers their value (how much it takes to keep them functional), but the workers produce more than that amount in a day. Thus, the workers are exploited."

As for Critical Race Theory, I ask, how do they come up with these labels? I would guess that most people, if they just read the words "Critical Race Theory," would stare blankly at you. What does it mean? Is there any other way to label what you're describing here? But OK, it's a discussion on historical integrity. We know very well that history from time immemorial is written and disseminated from the perspective of people with particular biases. US History, yes, absolutely. World history, you bet. Religious history, no doubt. What is questionable is the providence of these writings.

I get into trouble with my Christian fellowships when I asked who wrote Genesis, most will answer Moses. Ah, so Moses was there in the beginning when Adam, Eve and the serpent did their thing? Ah no, but he was told the story by God. Hmmm, so if I wrote a story based on true events where I wasn't even there, could I say that God told me the story and I wrote it down and you would take it as truth? Then I asked, why did it take Moses 40 days on Mt. Sinai to receive the Ten Commandments? I mean, couldn't God have just created some tablets and wham! bam! here's your Ten Commandments?

Should I just take the advice of people and forget about the past, move forward, take what is written in history books (including the Bible) as truth and move forward with notions that what has been recorded and disseminated is all you need to know?

JE comments:  The RIC Foundation factor is so obvious that I'm surprised we haven't addressed it before.  The Billionaire Tax as described above would be a boon to charity, but not so lucrative to Uncle Sam.

Billionaires, WAIS is a beautiful 501 (c) (3) non-profit, resplendent with Peace, Light, and Truth.  Need to get rid of some excess securities?


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  • On Marxian Value, Biblical Truth (Francisco Wong-Diaz, USA 11/12/21 2:25 AM)
    In reply to Ric Mauricio, my knee-jerk response is No, I do not agree with the Marxist hypothesis he cites, concerning what constitutes "value," since the data points vary. It is a serious and much-debated topic so I will shortcut a lot:


    Today a proletarian's time and human effort at handling the operation of a team of robots in a Japanese car factory is not as valuable as the robots themselves, but if you compared this worker, let's say, to a master sculptor of the Renaissance he would individually be more productive and his products much more monetarily valuable. Yet if that sculptor is named Leonardo da Vinci or Michelangelo, the measure of value immediately changes. So how and who establishes "value"? Is it extrinsic or intrinsic? And so on.


    Value is not just in the eyes of the beholder. How valuable is the water "boy"? In the Sahara a camel driver carrying "botas" full of water is richer and more valuable in his work than a thirsty Elon Musk stuck in a dune inside a broken Tesla. And so on... about value.


    I found quite interesting the quips from Ric about Biblical sourcing. The heart of the issue is called Divine Revelation. Some of us believe and accept the historical accounts that God has chosen to reveal himself throughout human history. As finite beings, we cannot fully comprehend the Infinite, so in his mercy and love God has revealed his existence to us. In the Old Testament he states, "when asked tell them that 'I am' sent you." GOD IS! In the Christian tradition an insulting individual once asked Jesus that if he knew God he should describe Him. Jesus, described as being somewhat upset, replied that God is spirit.


    So Biblical stories that are initially mostly oral history must be understood as a combination of human recollections and Divine Revelations. The human aspect is the troublesome part, however. I am reminded of the difference between the God of the Old Testament (Jewish Bible) and God in the New Testament (Christian). According to Jewish comedian Lewis Black, he appreciated the Christians' God because the Old Testament God was "a prick who kept the Israelítes walking in circles for forty years in the desert!"


    JE comments:  If you don't produce more value than what you get paid, then nobody will hire you, ever.  In this sense, the Marx statement is incontrovertible.  But I'll agree here with Francisco Wong-Díaz:  how do you define value?  An army is nothing but a drain on a nation's economy (consumption with no production), but if the threat is existential, the value becomes infinite. 


    And what about that ubiquitous part of every organization in human history--"deadwood"?

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    • Who Creates Value in Society? The Entrepreneurs (Jordi Molins, -Spain 11/12/21 10:04 AM)
      Ric Mauricio quoted Karl Marx's Das Kapital: "The reason why the capitalists are able to make a profit is that they only need to pay workers their value (how much it takes to keep them functional), but the workers produce more than that amount in a day. Thus, the workers are exploited."

      Companies do not pay workers their "value." In fact, "value" as defined above is unmeasurable in almost any conceivable circumstance. Companies pay workers the amount where supply and demand for workers match. But workers do not have a "value" in themselves. The company is what creates "value." And a company needs workers to realize that "value." So companies are forced to pay a market wage to their workers in order to be able to realize in practice their "value."


      But a worker doing the same activity (e.g. using a screwdriver to build a car) in the middle of the street has no "value" whatsoever. So, it is not that the work of workers is worth more than their wage; it is that in order to realize the value of the company, the company needs to pay a market wage to its workers, as a business cost (like electricity bills, etc.).


      On the contrary, companies are in fact exploited by their workers, since there are labor laws that always give "rights" to the workers at the expense of the companies (and their owners). And companies do not have the right to choose, since they need workers, by definition. So, it is really exploitation.


      Finally, the Marxist ideology is also completely wrong in dividing the world between workers and capitalists. For sure there are workers and capitalists, but there are also executives/entrepreneurs running the businesses (which may be capitalists themselves, but often they are not). In my opinion, executives/entrepreneurs are the really essential part of value creation in society, with workers and capitalists being also necessary, but only as "basic support" for the entrepreneurs.


      JE comments:  The Dismal Science does give us a (dismal) definition of what workers cost--the market rate.  This explains why at present, almost no job exists at the federal minimum wage of $7.25 per hour.


      Yet it's hard to see how Jeff Bezos, say, is exploited by his armies of worker bees.  In the absence of labor unions or aggressive pro-labor laws, what power does one bee have?  Especially when the queen can pack up her hive and move it anywhere with cheaper bees.


      Jordi, is the European situation different than in the US?  One explanation for Spain's age-old unemployment problem is that the laws protecting workers prevent employers from hiring them.  Make it easier to fire, the thinking goes, and you're less hesitant to hire.  Is this accurate?


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      • Italian Socializzazione: No More Class Conflict (Eugenio Battaglia, Italy 11/14/21 3:17 AM)
        I highly appreciated the post of Jordì Molins, 13 November. However, I would say that his point of view is Capitalism's point of view, the polar opposite of the Marxist point of view.

        Both systems create conflicts between the entrepreneurs and the workers (producers), the disastrous class warfare.


        Jordi is correct about executives/entrepreneurs, but they are usually are on the side of capitalism. In Italy, extreme capitalism has created a situation by which the capitalists try to screw the workers (producers), the workers try to screw the capitalists, and both try to screw the state, resulting in great harm to the nation.


        In my opinion, there is a third solution: Socialization.


        The Fascist Socialization was the logical and rational solution, that on the one hand avoids bureaucratization through the totalitarianism of the state, and on the other hand overcomes the individualism/egotism of the liberal economy.


        In the Italian Constitution 1948 there is article 46, never applied, that remains open to Socializzazione.


        Historically, Socializzazione was applied in early 1944 when, finally free from the compromises with the Monarchy, Republican Fascism could finally enact its social revolution. In spite of the fact that the war was going badly, Socializzazione could have remained as the safety net for the Italian nation. The first thing done by Communist partisans on 25 April 1945 was abolish it.


        Socialization was initially welcomed, but the communist terrorists started a ferocious slaughter of the pro-Socializzazione workers, and in accord with most of the great Italian double-dealing capitalists they started a denigrating campaign, as it was claimed to be nothing more than a trick to continue the war.


        Socializzazione (the "humanism of work" according to the philosopher Giovanni Gentile) allowed private property but within the interests of the nation. The worker (producer) became part of the management, and shared the property and of the economic results of production.


        No longer were there two classes fighting each other, as both had the same goals and the motivation for screwing each other became void and null. Only one class existed, cooperating for the common good of the nation.


        JE comments:  Mainstream history sees the Salò Republic as nothing more than a corrupt and ephemeral Nazi puppet.  Few beyond our own Eugenio Battaglia have come to its defense, but the scenario described above did survive for a time in Perón's Argentina (the "Third Path").  And it worked well for the first five or so years, but then, alas, the economy collapsed and the army moved in.


        Eugenio, one detail I didn't know is that Italy's 1948 constitution still has an allowance for Socializzazione.  Can you give us more details?  In particular, I'm intrigued that any remnant of the Mussolini regime could sneak into the "lay, anti-fascist" document.

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        • Italy's 1947 Constitution and "Socializzazione" (Eugenio Battaglia, Italy 11/17/21 2:30 AM)
          Commenting on my post of 14 November, our esteemed moderator asked: "I am intrigued that any remnant of the Mussolini regime could sneak into the "lay, antifascist" Italian constitution of 1947."

          Well, all the specific social legislation remained alive, even if now it has been badly weakened.


          Anyway, Article 46 of the Italian Constitution (never applied, as both the communist-dominated unions and their capitalist antagonist enjoy "class warfare") states:


          "In order to achieve the economic and social elevation of work and in harmony with the necessities of production, the Republic recognizes the right of the workers to cooperate, within the manners and the limits established by law, with the management of enterprises."


          Even if it is far away from the Socializzazione of the RSI period, it still leaves a little opening: Evidently in 1947 when the Constitution was drafted there were still some wise men among the "Founding Fathers."


          JE comments:  Here is the original text of Article 46:



          Ai fini della elevazione economica e sociale del lavoro e in armonia con le
          esigenze della produzione, la Repubblica riconosce il diritto dei lavoratori a collaborare, nei modi e nei limiti stabiliti dalle leggi, alla gestione
          delle aziende.



          One's interpretation hinges on collaborare:  Does it mean work in harmony?  Or does it legally give workers a spot at the management table?  It also could be a recognition of the right to unionize.  Or, as so often happens with legal documents, it means all these things and none of them.


          Here's the full text of the constitution, all 70 pages of it:


          https://www.cortecostituzionale.it/documenti/download/pdf/Costituzione_della_Repubblica_italiana.pdf


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