The prevailing view among Silicon Valley’s elite enunciated by Gregory Ferenstein at City Journal:
As far as the future of innovation and its impact on ordinary people, the most common answer I received in Silicon Valley was this: over the (very) long run, an increasingly greater share of economic wealth will be generated by a smaller slice of very talented or original people. Everyone else will increasingly subsist on some combination of part-time entrepreneurial “gig work†and government aid. The way the Valley elite see it, everyone can try to be an entrepreneur; some small percentage will achieve wild success and create enough wealth that others can live comfortably. Many tech leaders appear optimistic that this type of economy will provide the vast majority of people with unprecedented prosperity and leisure, though no one quite knows when.
seems to me remarkably naive. I guess I attribute that to how young they are. Even Bill Gates, a relative greybeard among the technological elite, probably has no clear memories of very high marginal personal income tax rates and his dad in all likelihood was not affected by it.
High marginal tax rates don’t prevent people from being rich; they prevent people who aren’t already rich from becoming rich. The rich will do what they always do: avoid, evade, and, when all else fails, flee.
These elites’ preferred outcome works in diametric opposition to their business model, embedding the status quo in amber rather than allowing the highest achievers to rise to the top.
Besides, they’re remarkably innumerate for people in tech. You could tax Bill Gates, Mark Zuckerberg, and Jeff Bezos at 100% and it still wouldn’t realize enough revenue to pay for their vision. For that you need to have high marginal tax rates right down to the top 10% of income earners. Basically, no one in Silicon Valley could afford to live there under those circumstances.
The rich will do what they always do: avoid, evade, and, when all else fails, flee.
The rich are smarteer than that: they simply stop earning taxable income, preferring instead to borrow for the rest of their lives on the wealth they have either inherited or accumulated. When they die, their heirs can start all over again with the tax-free inherited wealth with bumped-up basis.
Not only are your comments correct, but these people seem to have forgotten the rail, steel, shipping, oil, auto, banking, textile………Barron’s of yesteryear. This stuff isn’t new.
I also don’t think they realize what a tiny proportion of the economy their world actually is.