Jeff Bezos is Now Worth 200 Billion

[Mark Leavy]

Could this be the same "Mark"? Or, just a kindred spirit with the same first name???!!

https://www.marksdailyapple.com/

Vinny

Not me, but he is a very sane, balanced and likeable guy. Hard to go wrong doing anything he recommends. He finally gave up on California and moved to Florida a year or two ago.

[doodle]

Or a net negative....there are many towns and small businesses that have suffered as a result of current oligopolies. Do you find it fair that small businesses pay taxes while multi billion dollar ones dont? Trump hates what Amazon and "Jeff Bozo" 'are getting away with'. Are you disagreeing with Trump?

Words like "fair" are for children and fools.

I think Bezos is a net positive to the world. I'll take as much of that as I can get. From anyone.
Trump's lifetime contributions are also net positive.
As are mine, and I suspect, yours. I don't understand the ankle-biting. Let's have more people that produce and make the world better. On whatever scale. And if they/you are able to stash some gold in the process, more power to them and you.

Mark

Funny...."fair" happens to be one of Trump's favorite words when he doesnt think he isn't being treated in that manner. If a tax system is written so that middle class workers pay more taxes than someone worth 200 billion dollars, what word should one use to classify that state of affairs? I guess I'm expressing my frustration with a social system that magnifies the contributions of one individual with an idea and downplays the role that our society at large plays at assisting that idea to become reality. We always focus on the person scoring the goal without giving very much credit or reward to those contributing to the assist. Great quarterbacks rely heavily of a great offensive line. There is a social collective comprised of rules, educated workforce, infrasfrustructure, political stability that all contribute to success. Bezos currently operates in a system that taxes him nothing for the "assist".

[Xan]

Doodle, do you have a citation for your "no taxes" statement? Just looking to get some more precision on what we're talking about.

[doodle]

At the end of the day it's all an experiment...I guess we will see how our heavy individualistic focus and highly wealth stratified society works in the long run for human well being and happiness versus a more community oriented and socialistic setup. By socialism I'm not talking full blown north Korea either...there seems to be an inability for Americans to understand gradations with regards to this topic. Somehow universal health care (which the rest of the industrialized west benefits from) becomes the qualifying marker between freedom and Castro's Cuba...

[Mark Leavy]

Funny...."fair" happens to be one of Trump's favorite words when he doesnt think he isn't being treated in that manner. If a tax system is written so that middle class workers pay more taxes than someone worth 200 billion dollars, what word should one use to classify that state of affairs? I guess I'm expressing my frustration with a social system that magnifies the contributions of one individual with an idea and downplays the role that our society at large plays at assisting that idea to become reality. We always focus on the person scoring the goal without giving very much credit or reward to those contributing to the assist. Great quarterbacks rely heavily of a great offensive line. There is a social collective comprised of rules, educated workforce, infrasfrustructure, political stability that all contribute to success. Bezos currently operates in a system that taxes him nothing for the "assist".

Doodle, I know this is an investment forum, but it really sounds like you don't understand the difference between income taxes and capital gains. You do know that Bezos doesn't get most of his money from wages, correct? And you do understand that his investment of capital provides a plethora of jobs, prosperity and corporate tax money that directly flows into the community, don't you? Honestly, trying to use wage taxes as a comparison is incredibly small minded and shows zero knowledge of how wealth and capital work. Thus, my initial snark.

Also, to be even more blunt, I am deeply in favor of the army of people that keep the world's infrastructure working. My absolute favorite people to be with. But you have to be honest, they keep the world humming, but it is the outliers that move it forward. And those outliers are rare throughout history. We all benefit when they show up.

And why do you keep bringing up Trump? That is weird.

Mark

[doodle]

Doodle, do you have a citation for your "no taxes" statement? Just looking to get some more precision on what we're talking about.

https://www.google.com/amp/s/www.cnbc.c ... -year.html

[Mark Leavy]

At the end of the day it's all an experiment...I guess we will see how our heavy individualistic focus and highly wealth stratified society works in the long run for human well being and happiness versus a more community oriented and socialistic setup. By socialism I'm not talking full blown north Korea either...there seems to be an inability for Americans to understand gradations with regards to this topic. Somehow universal health care (which the rest of the industrialized west benefits from) becomes the qualifying marker between freedom and Castro's Cuba...

Solid comment.

[doodle]

Funny...."fair" happens to be one of Trump's favorite words when he doesnt think he isn't being treated in that manner. If a tax system is written so that middle class workers pay more taxes than someone worth 200 billion dollars, what word should one use to classify that state of affairs? I guess I'm expressing my frustration with a social system that magnifies the contributions of one individual with an idea and downplays the role that our society at large plays at assisting that idea to become reality. We always focus on the person scoring the goal without giving very much credit or reward to those contributing to the assist. Great quarterbacks rely heavily of a great offensive line. There is a social collective comprised of rules, educated workforce, infrasfrustructure, political stability that all contribute to success. Bezos currently operates in a system that taxes him nothing for the "assist".

Doodle, I know this is an investment forum, but it really sounds like you don't understand the difference between income taxes and capital gains. You do know that Bezos doesn't get most of his money from wages, correct? And you do understand that his investment of capital provides a plethora of jobs, prosperity and corporate tax money that directly flows into the community, don't you? Honestly, trying to use wage taxes as a comparison is incredibly small minded and shows zero knowledge of how wealth and capital work. Thus, my initial snark.

Jobs...ones that pay low enough to qualify families that have them to get government food stamp assistance? Walmart is quite famous for this as well...corporate fortunes built on taxpayer subsidies.

Is Amazon really a net benefit to communities? Do you have data supporting that Amazon's huge warehouses and centralized business model supports small community economic health?

I understand difference between wages and capital gains, I'm sure Warren Buffet does too who constantly draws attention to the backwardness of a system where he pays less taxes than his secretary.



Also, to be even more blunt, I am deeply in favor of the army of people that keep the world's infrastructure working. My absolute favorite people to be with. But you have to be honest, they keep the world humming, but it is the outliers that move it forward. And those outliers are rare throughout history. We all benefit when they show up.

And why do you keep bringing up Trump? That is weird.


I brought up Trump because he gets a lot of support on this forum and in this particular case he has an issue with Bezos and Amazon because of taxes....and secondly because you said "fair" was a word for children and fools...Trump consistently complains about how things are so "unfair" for him...does that criticism apply to him as well?



Mark

[doodle]

Doodle, do you have a citation for your "no taxes" statement? Just looking to get some more precision on what we're talking about.

https://www.google.com/amp/s/www.cnbc.c ... -year.html

This Trump Twitter quote taken from article...agree or disagree with president?


"I have stated my concerns with Amazon long before the Election. Unlike others, they pay little or no taxes to state & local governments, use our Postal System as their Delivery Boy (causing tremendous loss to the U.S.), and are putting many thousands of retailers out of business!"

[glennds]

FWIW that's $200,000,000,000.00...

https://www.cnbc.com/2020/08/26/amazon- ... llion.html

On the one hand.... good for him. He has proven to be a remarkable combination of a visionary with ability to execute. And the market has rewarded him with what it has determined the value of his enterprise to be. He didn't set the price.

On the other hand.... when we reach a point where three individuals can possess the equivalent wealth of the entire lower 50% of the country, roughly 165 million people, then there is a wealth imbalance so extreme that it ought to be a societal stability red flag. looking back in history I'm not sure how many democracies have survived past a certain point of disparity between haves/have nots. We might not be there yet, but we're on the way IMO.
Perhaps I'm echoing doodle's comment above.

[doodle]

FWIW that's $200,000,000,000.00...

https://www.cnbc.com/2020/08/26/amazon- ... llion.html

On the one hand.... good for him. He has proven to be a remarkable combination of a visionary with ability to execute. And the market has rewarded him with what it has determined the value of his enterprise to be. He didn't set the price.

On the other hand.... when we reach a point where three individuals can possess the equivalent wealth of the entire lower 50% of the country, roughly 165 million people, then there is a wealth imbalance so extreme that it ought to be a societal stability red flag. looking back in history I'm not sure how many democracies have survived past a certain point of disparity between haves/have nots. We might not be there yet, but we're on the way IMO.
Perhaps I'm echoing doodle's comment above.

Especially in a 'democracy' where the Supreme Court has ruled that money is speech. I'd classify the United States today as an oligarchy.

[doodle]

At the end of the day we have devised a world system where 1% of the population has the same amount of wealth as the lower 99%....at what point does this need to be perhaps reconsidered? Is there any point where we sit down and think that maybe the rules we have devised for our game perhaps don't lead to the best outcomes?

[glennds]

At the end of the day we have devised a world system where 1% of the population has the same amount of wealth as the lower 99%....at what point does this need to be perhaps reconsidered? Is there any point where we sit down and think that maybe the rules we have devised for our game perhaps don't lead to the best outcomes?

I'd say it's the immutable law that every good idea can be taken to the point of absurdity.
The corollary being that anything, and I mean anything becomes bad when taken out of moderation.
Another corollary that I used to hear a lot in the health insurance industry; even the best ideas only work temporarily.

But like you say, any suggestion of even the smallest ratcheting in the other direction is met with howling, terrifying visions of a totalitarian, Marxist, communist, bolshevik wild ride straight into the ninth circle of Dante's Inferno.

[doodle]

At the end of the day we have devised a world system where 1% of the population has the same amount of wealth as the lower 99%....at what point does this need to be perhaps reconsidered? Is there any point where we sit down and think that maybe the rules we have devised for our game perhaps don't lead to the best outcomes?

I'd say it's the immutable law that every good idea can be taken to the point of absurdity.
The corollary being that anything, and I mean anything becomes bad when taken out of moderation.
Another corollary that I used to hear a lot in the health insurance industry; even the best ideas only work temporarily.

But like you say, any suggestion of even the smallest ratcheting in the other direction is met with howling, terrifying visions of a totalitarian, Marxist, communist, bolshevik wild ride straight into the ninth circle of Dante's Inferno.

Exactly, which is odd given how many healthy functioning Western democratic socialist examples exist...even in the United States social security and Medicare are quite popular programs...ironically Republicans frequently tout their defense of these systems which is a total mind Fu** for me.....how much more of a leap would some basic form of universal health insurance be?

[Ad Orientem]

FWIW that's $200,000,000,000.00...

https://www.cnbc.com/2020/08/26/amazon- ... llion.html

On the one hand.... good for him. He has proven to be a remarkable combination of a visionary with ability to execute. And the market has rewarded him with what it has determined the value of his enterprise to be. He didn't set the price.

On the other hand.... when we reach a point where three individuals can possess the equivalent wealth of the entire lower 50% of the country, roughly 165 million people, then there is a wealth imbalance so extreme that it ought to be a societal stability red flag. looking back in history I'm not sure how many democracies have survived past a certain point of disparity between haves/have nots. We might not be there yet, but we're on the way IMO.
Perhaps I'm echoing doodle's comment above.

Especially in a 'democracy' where the Supreme Court has ruled that money is speech. I'd classify the United States today as an oligarchy.

I think that's a fair statement. And I say that as someone whose views are probably well to the right of most on this forum. But I am also a historian by academic training. And I would caution those who heap scorn on words like "fairness." I am no egalitarian but extreme disparities in wealth have historically lead to social destabilization. The guillotine and the gulags did not emerge from a vacuum. They were the end result of that kind of shallow contempt for basic standards of decency by the ruling class.

[glennds]

At the end of the day we have devised a world system where 1% of the population has the same amount of wealth as the lower 99%....at what point does this need to be perhaps reconsidered? Is there any point where we sit down and think that maybe the rules we have devised for our game perhaps don't lead to the best outcomes?

I'd say it's the immutable law that every good idea can be taken to the point of absurdity.
The corollary being that anything, and I mean anything becomes bad when taken out of moderation.
Another corollary that I used to hear a lot in the health insurance industry; even the best ideas only work temporarily.

But like you say, any suggestion of even the smallest ratcheting in the other direction is met with howling, terrifying visions of a totalitarian, Marxist, communist, bolshevik wild ride straight into the ninth circle of Dante's Inferno.

Exactly, which is odd given how many healthy functioning Western democratic socialist examples exist...even in the United States social security and Medicare are quite popular programs...ironically Republicans frequently tout their defense of these systems which is a total mind Fu** for me.....how much more of a leap would some basic form of universal health insurance be?

The other mind bender is if you look at the publicly available info on the highest bracket tax rates in the countries that might be considered democratic socialist. Among the ones with universal health care (Canada, Germany, France, even Scandanavian countries), the tax rates are not really that much higher than ours, especially if you live in a state with comparatively moderate state income tax. I hear people talking about how health care will take our taxes up to 80% or some such ridiculous number. But we already have Medicare and Medicaid now, so we'd be adding the large missing increment, but an increment nonetheless. I would estimate it would move our tax rates less than most assume, and surely there would be offsetting savings to employers who would otherwise be paying premiums. And we know from actuarial science that the larger the group, the more efficient the risk pool, and the more efficiency due to elimination of redundant administration.

The best thing about universal healthcare, there will finally be a mechanism for a focus on prevention and wellness. Right now the emphasis on prevention is a joke. I have had two commercial insurers (United Healthcare and Cigna) tell me that the reason is because no private insurer wants to provide benefits to an insured that will take years to show results and most likely accrue to their competitor when the insured eventually switches carriers. Only you care about your long term wellness, or a payor who is invested in you for life.

The best way to reduce health care cost is to reduce utilization. The best way to reduce utilization is to emphasize wellness and prevention, the earlier the better. Right now there's no incentive to do so except for some insureds. And the insured has no say in anything.

[Kriegsspiel]

I don't like the idea of taxing away someone's net worth or income. I think some kind of general VAT/sales/excise tax it isn't a bad idea.

[Maddy]

Would it be so hard for the 99 percent, if they really cared, to stop buying from Amazon? Problem solved.

[drumminj]

Would it be so hard for the 99 percent, if they really cared, to stop buying from Amazon? Problem solved.

Exactly.

IMO it's consumers who killed all the small-town, mom-and-pop stores, as they chose to stop spending money there. The market "spoke". Jeff Bezos and Sam Walton didn't do that.

Whether the current mega-companies are good for society is a different discussion, but I don't see how one can blame Bezos for building a successful company that people want and choose to do business with instead of their local merchants.

[doodle]

Would it be so hard for the 99 percent, if they really cared, to stop buying from Amazon? Problem solved.

It's another example of a well known economic concept called tragedy of the commons. This particular issue stemming from the negative cumulative effects of rational individual choices needs to be addressed in our capitalist system through policy. Extreme adherence to the principle of individual choice when we know for a fact that this has unintended negative outcomes isn't much of a realistic policy prescription unless one favors long term negative outcomes for the whole of society.

[doodle]

I don't like the idea of taxing away someone's net worth or income. I think some kind of general VAT/sales/excise tax it isn't a bad idea.

I agree, wealth tax has been shown to be largely ineffective. Taxing income...well that is pretty common. I'm not sure of the mechanism by which one goes about bring our economic system back into balance between labor and capital and address the extreme disparity. I think it would help if workers representatives had seats on corporate boards as they are mandated in Germany for all larger corporations...perhaps it would result in some moderation of the extreme disparity between CEOs and labor.

https://en.m.wikipedia.org/wiki/Codet ... n_Germany

I don't think it's a radical idea that workers should have a place at the table concerning decisions for how the companies they spend their lives at are run...how stock is issued, and to whom. Right now these decisions are all incestually concentrated amongst a small class of people which seems pretty undemocratic to me.

[Xan]

Doodle, do you have a citation for your "no taxes" statement? Just looking to get some more precision on what we're talking about.

https://www.google.com/amp/s/www.cnbc.c ... -year.html

I thought it might be something like this. The article is about Amazon, not Jeff Bezos. And its questionable validity aside, it has zero to do with Jeff Bezos's personal taxes. This is an even deeper misunderstanding (earned income vs capital gains) than Mark thought you were making.

Bezos definitely pays taxes whenever he wants to exchange his valuable Amazon shares for cash. Probably more in a year than any of us will in a lifetime. It's completely disingenuous to claim Bezos pays no taxes.

That's not to say that you don't have some good points, or that concentration of wealth isn't an issue.

[shekels]

Doodle, do you have a citation for your "no taxes" statement? Just looking to get some more precision on what we're talking about.

https://www.google.com/amp/s/www.cnbc.c ... -year.html

I thought it might be something like this. The article is about Amazon, not Jeff Bezos. And its questionable validity aside, it has zero to do with Jeff Bezos's personal taxes. This is an even deeper misunderstanding (earned income vs capital gains) than Mark thought you were making.

Bezos definitely pays taxes whenever he wants to exchange his valuable Amazon shares for cash. Probably more in a year than any of us will in a lifetime. It's completely disingenuous to claim Bezos pays no taxes.

That's not to say that you don't have some good points, or that concentration of wealth isn't an issue.

Concentration of wealth is not as big of an issue when Individuals can feed and house ourselves, and living the Good Life.

As AD points out " I am no egalitarian but extreme disparities in wealth have historically lead to social destabilization."

In a System that does not Enforce it's own Laws, and given the Continuing Theft and Class Warfare the system breaks down.

It becomes a fight for Power/Control .

[D1984]

Doodle, do you have a citation for your "no taxes" statement? Just looking to get some more precision on what we're talking about.

https://www.google.com/amp/s/www.cnbc.c ... -year.html

I thought it might be something like this. The article is about Amazon, not Jeff Bezos. And its questionable validity aside, it has zero to do with Jeff Bezos's personal taxes. This is an even deeper misunderstanding (earned income vs capital gains) than Mark thought you were making.

Bezos definitely pays taxes whenever he wants to exchange his valuable Amazon shares for cash. Probably more in a year than any of us will in a lifetime. It's completely disingenuous to claim Bezos pays no taxes.

That's not to say that you don't have some good points, or that concentration of wealth isn't an issue.

That would depend on whether he has good smart tax advisers or not; I presume someone with his level of wealth (or even one one-thousandth his level of wealth) isn't just using whatever accountant is available at the local H&R Block. The fact of the matter is that once you get to several tens of millions of dollars of assets or more, there are plenty of ways to monetize appreciated assets (or at least do a transaction that would accomplish most/all of what a sale would without actually incurring any immediate capital gains taxes) and not pay current capital gains taxes. Some of these include:

1. Long/short transactions, option collars, put call/spreads, other techniques that use various options or derivatives or hedged market neutral positions to essentially sell a stock without actually selling it (and thus without actually incurring capital gains taxes); Congress and/or the IRS put the kibosh on certain types of these transactions (like long-term "short-against-the-box" transactions, long-term ultra-deep ITM call options that were by all rights a sale in substance even if not de facto, and option collars that literally left almost no upside gain nor downside risk and thus violated the spirit of the whole "not really a sale" thing even though they were technically not a violation of the letter of the law) in the late 90s and early 2000s but transactions that aren't quite as flagrantly a constructive sale in substance are still legal; IIRC a Mr. Robert Gordon at Twenty First Century Securities (a firm that specializes in transactions like this; Mr. Gordon is its principal and main shareholder) has stated that as long as at least 15% to 20% of the "benefit and burden" is left for the owner of the stock (i.e. at least that much potential price upside---and downside) then even for long-dated option transactions and long/short spreads the owner of the stock would still likely prevail if he/she gets audited and/or the matter ends up in Tax Court.

2. CRTs (aka CRUTs and CRATs); the owner of the stock contributes it to an irrevocable charitable remainder trust and not only does the trust not incur capital gains taxes wen it sells the asset but the owner also gets an upfront tax deduction. The trust will then take the proceeds of the sale, invest it in a diversified portfolio of assets, and use this to pay the former owner/s of the appreciated an income for the rest of his/her life (and the rest of another person's life as well if it's a joint trust) and whatever is left at his/her/their passing goes on to charity. The income from the trust IS taxable to the person receiving it but the major upfront hit--having to pay cap gains taxes on hugely appreciated assets with a basis of almost zero--is avoided, plus the donor gets an upfront tax deduction; plus, if the owner had sold the appreciated asset/s and then invested it to produce income he still would've had to pay taxes on that investment income stream every year anyway. The trick is to structure the trust so that the bare minimum of assets is left to charity and almost all of it instead is paid out to the trust's income beneficiaries; the IRS obviously has rules (based on interest rates, life expectancy, etc...in other words, it is likely impossible to set up a CRT that over time gives you everything back as income and leaves nothing or almost nothing for the charity) governing how much can be paid out but as long as you stay within those rules there is nothing they can do to stop you.

3. Simply borrowing against the stock/other appreciated asset and capitalizing the interest (i.e. letting the interest accrue each year rather than paying it off); as long as the asset appreciates at a faster rate than the loan interest (and the loan interest will be barely over the T-bill rate plus maybe a half or a third percent or so) and/or so long as the borrowed amount in question is a tiny amount to begin with versus the total value of the assets (for instance, say Jeff Bezos borrows $1 billion against his $200 billion of Amazon stock; the chance of the accrued loan interest EVER being more than the value of Amazon stock--even if Amazon stock falls 80 or 90%--is somewhere between "almost never" and "when Hell freezes over" ) then no assets ever need be sold to pay off the loan. When the borrower finally passes away the assets get "stepped up" in basis to whatever they were worth the minute he/she drew their last breath and the heirs thus get an asset with no capital gains taxes due upon sale even if the original (now deceased) owner's basis was only one billionth of what the stock is now worth. This "borrow against your assets instead of selling" is used by many UHNWIs; probably the most famous example is Mark Zuckerberg.

4. If the owner of a massively appreciated low-basis asset wants to sell it but only to diversify his/her holdings (rather than to immediately realize cash to fund his/her current lifestyle) then there is a financial instrument called a "swap fund" or an "exchange fund" that in practice lets the owner of said appreciated assets do something like a 1031 exchange but for stocks/bonds/gold/privately held or closely held companies/etc rather than only for land or real estate. If the owner holds the shares of the exchange fund that he received in return for his appreciated asset for a given time period (IIRC it is seven years) then no capital gains taxes are due until/if he actually sells the underlying assets in the partnership share of the exchange fund that he received.

There are several more advanced tactics but these are just some of the more common and less sophisticated ones

With all of the above said, I admit I have no idea if Mr. Bezos uses any of these tactics/strategies (or similar ones) or not.....I just wanted to point out that it is something of a myth that centimillionaire, billionaire, and multibillionaire owners of highly appreciated assets always have to pay capital gains taxes just like the rest of us; when you get rich enough there are sophisticated strategies that can and do (quite legally under current law) minimize the amount of taxes you have to pay.

[glennds]

It becomes a fight for Power/Control .

Or in some historical cases, survival.