Why are Gen-Z socialists obsessed with taxing billionaires? | The Economist

The left has always supported progressive taxation. They've always supported higher taxes on the wealthy, but nowadays it's no or fewer tax than everyone else, often campaigning for tax cuts, particularly on we're in an energy crisis right now. And a lot of this around kind of tax cuts on fuel and so on. And um if you look at the kind of broader sort of status in America for instance, you're reaching a stage where even the center-left Democrats are saying that basically everyone up to and beyond the average tax file in America should pay no federal income tax. And that sort of message is completely at odds with their sort of prior leftwing idea.

idea. — Do you understand I mean even my generation the millennials um was still more in support of broad attacks. It's really striking that Gen Z is obsessed with billionaires. Do you understand why in one generation that jump happened? Is it concentration of wealth? Is it billionaires got more in the news? Like what is it? — It's a really good question. I mean wealth inequality is is high but hasn't got dramatically higher in the past few years. Potentially it's more visible. You look at the AI tech bars and so that that's part of it. I think there might be a disillusionment with kind of prior waves of letters and haven't seemed to deliver that and the kind of inflationary environment has made everyone I think just a bit more attuned to their the cost of living crisis. people talk about getting by dayto-day and so anything that people feel like they can do just quickly to help has that urgency that might have been different.

— So, uh, okay, I'm going to play controversial here. I actually don't think that all of these, uh, taxation ideas are necessarily that bad. Um, so let's hear from Zoran Mani and his plan for a PA tax. — I'm thrilled to announce we've secured a PAR tax, the first in New York's history. This is an annual fee on luxury properties worth more than $5 million whose owners do not live full-time in the city. Like for this penthouse, which hedge fund CEO Ken Griffin bought for $238 million. This peer-to-peer tax is specifically designed for the richest of the rich. Those who store their wealth in New York City real estate, but who don't actually live here. But even so, they're able to reap the huge financial rewards of owning property in, dare I say, the greatest city in the world. Now, doxing Ken Griffin, I think, is a something that should absolutely not be. No, I think that is I think it's a cheap shot and a rather dangerous shot, although I can see that it makes for effective Tik Tok. But I do think the question of property taxation is a perfectly legitimate one.

— I mean, we as the economists, I think, have been in favor of property taxation for quite a long time. And for exactly the reason of if you think about sources of wealth that are quite straightforward to tax, property famously can't move. there are good reasons to think that actually a lot of the particularly really supern normal property tax property returns in price terms at somewhere like New York where you have constrained supply are happening that's the sort of thing you do want to tax I spent some time talking to sort of New York City fiscal geeks about this they say correctly that actually high-end real estate in New York is probably under tax relative to the rest of the property sector so in that sense I think Zoran has a point this I think is something that um may be politically effective not that economically damaging and maybe marginally positive even — and in the UK too. I mean, we have a completely we have higher property taxation, but of a particularly distortive nature. So, presumably having uh you know, if wealth taxes means actually council tax reform, it's probably no bad thing. Sasha, — I was um scrolling through the Greens manifesto trying to find something nice to say and I I must admit like we would disagree with almost everything, but some of their stuff in property is not crazy like including um council tax revaluation. It's insane right now that someone with a mansion in London will sometimes pay less council tax than someone with a with a house in a much poorer part of the country because it's still based on the prices of the '90s. So looking at the storage of wealth in property I think is completely the right thing to do in in all of these countries actually. But — I wonder if the reason that the Greens haven't really latched on to that is because it's such a kind of social medialed political movement. Britain doesn't have that many billionaires, but it it gets the views and it's obviously a huge issue in America and that's been kind of imported wholesale, whereas they're not very good at kind of adapting to our moment here in Britain.

— Is there a possibility of and I think when you look at the Tik Tok Gen Z scenario, it's oh it's all going to be very easy. We just tax the billionaires. Do you think that we are going to see a more for one of a better word kind of serious conversation about better ways to tax the very wealthy or do you think that we've now reached peak billionaire tax discussion? — If the AI gains are anything like what they look like and we're about to have a series of IPOs are going to mint a lot of new if not billionaires certainly cent or deca millionaires. It feels like in the political sense the urgency of this conversation is only going to grow. And then the question is exactly what you do about it. Generally hasn't worked terribly well. There are new proposals floating around. There's a supposedly one-time wealth tax on billionaires in California that's being discussed. And so my sense is we'll see some experimentation. My sense is also that actually even in the kind of most recent bit of the economic literature that the consensus has firmed up a bit that alongside billionaires just leaving which obviously is makes it difficult. There are genuinely it seems quite real cost to innovation. And so you look at your quintessential American billionaires, your Bizart, your Elon Musk and so on, who have maybe unlike your Russian oligarchs, let's say, created products that really are incredibly valuable for everyone and most of those gains haven't been captured by them and probably in a society where you did have quite hefty wealth tax because remember those 1 or 2% applies every year and so adds up to quite a lot over time, you would start losing out on the innovation. That would be a real issue — to your question of like have we sort of reached peak billionaire conversation. I mean, if it's going to be interesting anywhere, I imagine in America. As Owen pointed out, Britain's got, I think, fewer than 100 billionaires, I think the intelligent conversation will be about the wealth under that. So, wealth taxes would — Well, that's also I mean, that's what's so weird about it's probably for the Tik Tok era that billionaire is a nice sounding category. You know, you it doesn't make any sense to start only at that cutoff. You should start much lower and have a much more sensible inheritance tax and property tax system.