Why it’s so hard to tax the uber rich

Transcript

NIALA BOODHOO: Good morning! Welcome to Axios Today!

It’s Friday November 5th. I’m Niala Boodhoo.

Here’s how we’re making you smarter today: behind the scenes of the UN Climate Conference. Plus, more reasons working moms feel like throwing in the towel.

But first, today’s One Big Thing: why it’s so hard to tax the uber rich.

We talked yesterday on the podcast about President Biden's plans on prescription drug prices and what that could mean for all of us. Another key platform the president campaigned on was taxing the rich, but that's complicated. Here to explain whether taxing the uber wealthy will ever happen is Felix Salmon Axios’ chief financial correspondent. Hi Felix.

FELIX: Hi, Niala.

NIALA: First, where are we at with the idea of taxing - and I'm just going to go with the uber rich at this point?

FELIX: It's a great question. And the answer is we've managed to get basically nowhere. If you have a huge amount of income, then we're quite good at taxing that income and the latest tax plans have big tax hikes for people making $10 million a year or $50 million a year. That kind of thing. But if you look at the really, really, really rich. Warren Buffet or Elon Musk or Bill Gates or Jeff Bezos, they generally don't have much, if any income.

What they have is shares in companies and those shares go up in value and that doesn't count as income. And there was this proposal last week to say, well, maybe we should tax that as capital gains because the value of their shares has gone up and that's a gain, but that died. It was alive for about six hours before it was killed by Joe Manchin. And it turns out to be incredibly difficult to come up with a way of taxing those incredibly rich individuals.

NIALA: Given the fact that the Biden administration has really focused on this as a way to fund the rest of the spending package that they want to achieve. Will this happen?

FELIX: No. It won't happen this Congress. It will continue to be something that Democrats campaign on and there'll be like “tax billionaires” and everyone would be like, “yeah, the tax billionaires.” And we saw in this go round that it turns out that there were just other, there always seemed to be other ways of raising money that are politically more feasible.

NIALA: I mean, why isn't taxing the wealthiest Americans politically feasible?

FELIX: There are basically three reasons why texting the billionaires is hard. The first is that there's a bunch of people who will say that it's unconstitutional for reasons which we can go into if you really want to know about article one, section nine of the constitution. There is also the fact that billionaires are incredibly influential and they can effectively buy politicians. But also there's just this American feeling that everyone kind of secretly wants to be a billionaire and they don't want to pay taxes on that hypothetical future wealth that they're probably never going to have.

NIALA: How does the U.S. compare our tax rates for the richest compared to other very wealthy countries?

FELIX: The fact is that when it comes to texting the very, very rich, only America can do that. And if every other country in the world, if you're a billionaire and if your country decides that they want to tax you at some enormous rate, you just leave, you move to Monaco or Switzerland or something, and then you don't pay any tax at all. And so, because they can just leave and they just leave, countries don't try and implement wealth taxes. America is different because it taxes all of its citizens where wherever they live in the world, it's kind of the only country in the world that does that. And so America can actually do this if it wants to, but it doesn't seem to have the political ability to do it.

NIALA: Felix Salmon is Axios’ chief financial correspondent and author of the Axios capital newsletter. Thank you, Felix.

FELIX: Thanks Niala.

NIALA: We’ll be back in 15 seconds with Dave Lawler, who’s been talking to island nations at the UN Climate Conference in Glasgow.

[ad break]

NIALA: Welcome back to Axios Today. I'm Niala. More than 40 countries have committed to shift away from coal power in the next few decades in pledges made this week at the UN climate conference. This includes some major coal-burning countries like Poland, Vietnam, and Chile, but does not include China or the U.S. These are important negotiations that happen among world leaders, but how do they happen? We wanted to check in with Axios’ world editor, Dave Lawler who's at COP26 this week to get a behind the scenes look at how these summits work. Hey Dave, how's Glasgow?

DAVE: Hi, Niala. I've seen a whole lot of Glasgow. I've seen basically the route in between our Airbnb and this conference center every day, but it's been exciting. And, uh, yeah, so far so good.

NIALA: Dave, one of the big headlines this week has been tension between China, the U.S. and the E.U. as negotiations have started. Can you set the table for us? What's happening?

DAVE: So I just spoke to the head negotiator for the EU and asked if they expected tensions with China. There's this question of ambition, right? What are these targets that countries are going to set to cut emissions over the next 10 years, and then over longer periods of time, and they really do want to see more ambition from China. China in turn, wants to see the US, the EU contribute more to help developing countries and basically get off their back because they've been emitting carbon for a whole long time. So, uh, we can certainly expect some tensions between the US and the EU on one side and China on the other side, as the negotiations heat up?

NIALA: And what does that look like Dave negotiations, is it literally tons of people in a room talking to each other? And I guess you don't get to be in that room?

DAVE: It's not all happening in one room, but you have to consider that this is not just the big powers. This is not just the US, the EU, China. So I actually spent a lot of my day today talking to the leaders of small island countries that are on the front lines of the climate crisis. I spoke to the prime minister of Antigua and Barbuda. I spoke to the UN representative from Fiji and I spoke to the president of Palau. They want to all get together and be negotiating with one voice because they're 40 some countries together, but they're one small country alone. They're very worried that we're not going to have ambitious enough action in the coming years, they basically think that if there isn't stronger action here and now their countries won't exist, at least in their current state by 2060, 2070. So they're really calling for more ambitious action.

NIALA: Dave, this is not your first global conference. What are your observations of Glasgow and how this is going so far?

DAVE: It's not my first global conference, but it is my first COP. And I have to say, I came in a bit skeptical but I have realized being here that if this wasn't happening here, a lot of it wouldn't be happening. There is some kind of naming and shaming that's going on. Everybody feels a certain amount of pressure to come up with something that they can put on the table. Uh, and so I will say I'm slightly more of a COP believer after being here this week than I was previously

NIALA: Axios’ world editor Dave Lawler from Glasgow. Thanks Dave!

DAVE: Thanks, Niala.

NIALA: It’s no secret how hard the pandemic has been on working mothers. About 1 million have left their jobs during the pandemic, and more could follow -- but as Axios business reporter Erica Pandey reports, it’s not just because of being overworked on the home front.

ERICA PANDEY: So a recent McKinsey survey shows that 23% of women with kids under the age of 10 are considering leaving their jobs compared with 13% of men. And a lot of that is due to the trends that we've talked about before, on Axios Today, women are taking on more of the childcare, more of the at-home responsibilities, and sometimes they find it easier to just leave their jobs but there are also dynamics at play in the workplace, not just the home, that are pushing women out. So for example, women tend to take on more administrative tasks, things like setting up meetings or getting notes together, and those kinds of things can have more time-sensitive or urgent deadlines.

So oftentimes women are stuck in tasks that need to be done within a certain time frame instead of men who tend to maybe be more tasks that you can do at your own pace or at your own time. And since women are juggling work and childcare, those time-sensitive tasks can lead to burnout. So one thing companies can do to support mothers right now is be very flexible and clear about their policies on flexibility and communicate that anyone can ask for that time, ask for that space when they need it. ‘Cause we're all going through something really rough right now.

NIALA: Erica Pandey is a business reporter for Axios.

Axios Today is brought to you by Axios and Pushkin Industries.

We’re produced by Alexandra Botti, Nuria Marquez Martinez, Sabeena Singhani, Lydia McMullen-Laird and David Toledo. Our sound engineer is Alex Sugiura. Julia Redpath is our Executive Producer. Sara Kehaulani Goo is our Editor In Chief. And special thanks to Axios co-founder Mike Allen.

I’m on vacation next week - Erica Pandey is sitting in for me, so please tune in!

I’m Niala Boodhoo - thanks for listening - and have the best weekend.