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How The Rich Dodge Taxes | Lemonade Stand🍋 — Transcript

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0:00Elon Musk, Jeff Bezos, Atriarch, three
0:04people who refuse to pay taxes.
0:08>> And that's a good thing.
0:09>> It's not a It's not a good thing.
0:10>> We're heroes for this.
0:11>> It's a good thing. We just had a We just
0:12had a 90-minute conversation with with
0:14with who did we interview, Doug?
0:16>> Ray Matto, the wonderful tax expert and
0:19professor at Boston College University,
0:21who has been writing and talking about
0:22all the various ways that ultra wealthy
0:24people in America are hiding their taxes
0:26and not actually paying any taxes. She
0:28seems to think America's tax code lets
0:30the wealthiest opt out. We're going to
0:31find out whether that's a bad thing.
0:34>> It's about 80 minutes of it being good
0:36and a little bit at the end of talk
0:39about the US tax code system, how the
0:41ultra wealthy are hiding it, and a whole
0:42bunch of possible solutions. It's super
0:43interesting.
0:44>> It's really fascinating
0:45>> and we hope you enjoy.
0:45>> Check it out. Please keep in mind this
0:47interview was recorded one month before
0:49the midterms.
0:50>> We are joined this week by Ray Matto and
0:54I'm I'm excited uh to have you on. We're
0:56going to talk to you about a bunch of
0:58different issues with taxation in the
1:00US. But I figured a good place to start
1:02is just having you introduce your
1:04background. You know, why are we talking
1:06to you on this show about taxes?
1:09>> Well, thank you so much. It's wonderful
1:11to be here. So, my name is Ray Matto. I
1:13am a law professor and actually a tax
1:17law professor, uh, which I've been doing
1:19for many, many years at Boston College
1:21Law School. and I'm the author of uh of
1:24a new book called The Second Estate: How
1:26the Tax Code Made an American
1:28Aristocracy, which I happen to have
1:31right here. Oh, yeah. And
1:33>> what the book uh is about is it's a
1:36story about how it is that we began
1:39being a country that created a system to
1:42tax rich people and how we've evolved to
1:44a system in which we have essentially
1:46given the wealthiest Americans a free
1:49pass. How is it that they have gotten
1:51written out of the tax system? And it's
1:53a kind of a surprising story and it's a
1:57really important one I think for for
1:58everyone to know about.
2:00>> Well, I I think uh the best place to
2:03start is from your perspective what the
2:05biggest gaps in the current US tax code
2:09are. like what are the the loopholes or
2:11the ways that the richest people are
2:14taking advantage of the system right now
2:16in order to get these breaks that I
2:19think a lot of people aren't familiar
2:20with to begin with.
2:21>> Yeah. And I think that and even the way
2:24we describe it, I think it's really
2:26important that we understand that the
2:29system is so much both simpler and worse
2:34than we might think. Right? We might
2:36think we have a very fair system, one
2:39that really taxes the rich heavily
2:41because we have progressive income tax
2:44system, meaning those who have higher
2:46income pay more taxes and we have an
2:49additional estate tax which taxes all
2:52transfers by very rich people. And that
2:55seems to be a very richoriented taxes.
2:58And people think, well, the problem is
3:00loopholes and tricky workarounds that we
3:02can never close. But it's actually much
3:05simpler than that. The problem is that
3:08our tax system is really two systems. It
3:12is a system that taxes really heavily
3:16wages, salaries, anybody that does
3:19anything for work, whether they are an
3:21Uber driver or a uh programmer or no
3:26matter what type of work they do, we
3:28really tax that type of income really
3:31heavily. and it's really hard to avoid
3:33those taxes. On the other hand, for
3:36people who live off of investments or
3:40inheritances or gifts, things like that,
3:44we essentially have created a tax-free
3:46system. And so, we have this kind of
3:48tale of two systems, and it's confusing
3:51to the public because anybody who works,
3:54they're like, "Wow, I'm being hit with a
3:56lot of taxes." And people who have high
3:58incomes are being hit with even more
4:00taxes. So they don't realize that
4:03there's that the richest Americans are
4:06operating under separate rules because
4:08their types of income. They avoid the
4:10regular income that most Americans have
4:13and they live off of their investments
4:15and inheritances and that is a tax-free
4:18glide path. So, are you saying that even
4:21bigger than the concept of loopholes
4:24being a problem, it's that the system
4:25itself just like perfectly legally
4:28without doing anything unourred just
4:30allows them to evade taxes through the
4:32way they make money?
4:34>> Exactly. Perfect. A+.
4:36>> Okay. Well, I mean, there we go. That's
4:39big for this podcast. One point. I I
4:42actually one place I wanted to start was
4:44uh I think our audience is pretty
4:45familiar with this already is this idea
4:47of the ultra rich leveraging their
4:50assets in order to take out loans that
4:52are then tax-free and then only paying
4:56the interest on those loans. And it
4:59essentially allows you to have all of
5:00the spending money you want without any
5:02of the tax consequences. Um, and one
5:06thing I wanted to break down with that
5:09that I I think is hard for like a normal
5:11person to understand, including me, is
5:13that you, okay, I have a billion
5:16dollars. I leverage my stock portfolio
5:20or this real estate I have in order to
5:22receive a loan from a bank. I get all of
5:25that. I I get this billion dollar loan
5:28and I to to you know buy my supercars or
5:33or or a fun house or or whatever. I
5:36don't have to pay taxes on that loan.
5:37I'm going to owe interest on it.
5:39>> Yeah. But I think in the basic way that
5:42we think about loans, there is this idea
5:45that doesn't that person have to pay it
5:48back eventually and understanding why
5:52like these richest Americans don't
5:55really have to do that. The cuz I think
5:57we had this conversation, me and Doug,
5:59it's like don't they have to sell the
6:00underlying asset eventually to pay that
6:02loan back? Could you explain how that
6:05works and why that isn't the case?
6:08>> Yes, exactly. So, uh, here's the thing
6:11you have to realize. Somebody who is,
6:14um, borrowing a billion dollars, it's
6:17not someone with $1 billion who borrows
6:20$1 billion, right? We have people with
6:23$50 billion, a hundred billion, $2
6:26billion who might borrow $1 billion
6:28because $1 billion gets you a lot of
6:31things, right? It gets you a lot of a
6:33lot of the stuff that you need in terms
6:35of le to lead a very luxurious life. Um,
6:40and and the other thing is is that the
6:43loans that most Americans get are loans
6:47for a set term. They're called term
6:49loans. And so you get a student loan,
6:52you have to pay it back after a certain
6:53time. You get a house, a loan, a
6:56mortgage to buy your house, you have to
6:58pay it back 15 or 30 years. Loans have
7:01terms, but when you're very rich, you
7:04don't take out those types of loans. you
7:06take out what are called demand loans
7:08and demand loans are don't have a term.
7:12The lender can call the loan whenever
7:15they want and then you have to pay them
7:17back but they don't have some set time
7:20when the lender expects to be paid back.
7:23And the thing that that uh if you're
7:26just a regular person, you don't really
7:27realize is that people are in the
7:30business of lending money. And people
7:33who are in the business of lending the
7:34money don't want to get the money back
7:36because they're going to have to find
7:38somebody else for them to lend it to.
7:40Sure.
7:40>> Right. You're a lender. You want to
7:43lend. And who more do you want to lend
7:46to than Larry Ellison who's got tons and
7:49tons of Oracle stock or any of these
7:52other people who have very wellsecured
7:54loans, right? the amount that they
7:57they're not providing every last penny
7:59in loans because they can't possibly
8:02consume that much. This is mass. They
8:04have massive amounts of money and
8:06they're borrowing a small portion of
8:08their money to support their very lavish
8:10lifestyles and those loans can just stay
8:13outstanding frankly for as long as the
8:16borrower wants because the borrower only
8:19has to pay the interest on that loan.
8:22And the
8:23>> So just to make sure my understanding is
8:25is correct here. So, as the bank, you're
8:28happy because the loan sits on like your
8:30your books as an asset, like the the
8:32base value of the loan, and then the
8:34interest is just the profit you keep
8:37making on the loan over time. So, it's
8:38like you have the asset is listed on the
8:40books and you keep getting the interest
8:42payment. I want Larry Ellison, Elon
8:44Musk, Atriok to keep making that
8:47interest payment.
8:48>> I do this into you do this. You've been
8:51hiding this we hear about a lot.
8:54Ellison, Musk, and Atri.
8:55>> Yeah, the big three.
8:58Uh, are they getting remarkably low
9:00interest rates? Like even in my simple
9:02brain? I'm thinking,
9:04>> you know, if I take out this big loan,
9:05it at current interest rates, you think
9:07that's like a pretty I mean, for them,
9:09it's not, but it's still a significant
9:10payment that's coming in all the time.
9:12>> They're probably paying a little bit
9:13more in interest than they were paying
9:15three years ago. Certainly, right?
9:16interest rates. There is a certain but
9:19you know so it's hard to get an interest
9:21rate below you know below market rates
9:25but you can get the lowest market rates
9:27because this is the most wellsecured
9:29loan and what's interesting also if you
9:32think about who you'd rather borrow
9:33money from we always think that the
9:35federal government the US federal
9:37government is like that's the safest
9:40>> person to uh you know to lend to
9:43>> doesn't seem so lately but yeah I see
9:44what you're saying
9:45>> yeah exactly But lately with our
9:47enormous deficit, you know, in our and
9:51owing a trillion dollars a year, you
9:53know, maybe we're not looking so good.
9:55Maybe Elon Musk or Larry Ellison is
9:57looking like a little better better
9:59guess to uh make sure you get your money
10:01back.
10:01>> I'm so I'm curious with this because
10:03there are so many different aspects I'm
10:04sure we'll dive into, but this is one of
10:06the let's say loopholes maybe we'll call
10:08it that I hear most often what we're
10:10talking about right now. This sort of
10:12you pull out a loan on your assets
10:13without ever needing to sell them. So if
10:16you were to try to tackle this problem,
10:18if somebody gave you a blank executive
10:21order or you know congressional bill,
10:23what are the obvious fixes to do
10:25something here?
10:26>> Right? So the the obvious fix, so like a
10:30lot of things in life, there seems to be
10:32an obvious fix, but the obvious fix is
10:35not often the right fix, right? So one
10:39obvious fix is that you sometimes hear
10:41people saying is, well, we should just
10:43tax the borrowing, right? If they're
10:45borrowing that money and then they're
10:46living off of it, we should treat them
10:48as if they sold the property,
10:50>> right?
10:50>> The problem is the mechanics of that are
10:53very complicated in a tax system because
10:55if you think about it, they borrow money
10:57and then they decide to pay it back for
10:59one reason or another. Now, how are we
11:02going to what are we going to do? We've
11:03tax them on receiving it. Are we going
11:04to give them a credit for paying it
11:06back? You're going to have to create a
11:08very complex system for that. So I don't
11:11think we can treat the borrowing as the
11:14problem. The other reason I don't think
11:17we should treat borrowing as the problem
11:20is that the borrowing is just the tip of
11:23the iceberg of the problem. The bigger
11:26problem is that the wealthiest Americans
11:29have acquired trillions and trillions of
11:32dollars of wealth and much of it has
11:36gone untaxed because of what we have
11:39this rule that's called the realization
11:40rule that basically says that when
11:43somebody has an asset let's say it's
11:44meta stock or Nvidia stock or any of
11:47these things right that has gone up
11:49hugely in value creating you know centi
11:52billionaires there is no tax on that
11:55gain unless the person sells it. And so
11:59what people do is they don't sell and
12:03then it's never taxed. And this is
12:05different from the rule in Canada. The
12:07rule in Canada is it is that these gains
12:11are taxed not just when they're sold,
12:14but whenever the property is
12:16distributed. Whether it's distributed by
12:18gift, which happens a lot for other tax
12:20planning reasons, or whether it's passed
12:23at death, which will come for everybody,
12:25right? That's when you tally the gains
12:28for the person who earned them. And
12:29that's the first change I think that we
12:32should make to the tax system to bring
12:35this untaxed wealth into our tax system.
12:38Now there's there's another big fish
12:41looming out there which is the wealth
12:42tax which we can talk about as well
12:45which would be another potential
12:47approach to the problem but that has a
12:49separate range of problems.
12:51>> Oh my god so many questions question.
12:54Well like digging on this thread a
12:56little bit more. Is this the this is
12:57like the the concept of buy borrow die
12:59people are talking about right? This is
13:00like the or is this not that?
13:02>> It's close. It's buy borrow. It's buy,
13:04borrow, and you don't need to die. But
13:07for some people, dying gives an extra
13:09benefit. That's we hear it as buy,
13:11borrow, die. It's very popular.
13:13>> You die for the tax
13:14>> because my understanding is right uh
13:16when you die and it's passed on to
13:18somebody. It's it's not tax on that pass
13:20on. And there's like a step up basis. So
13:22whatever you acquired it at is now set
13:24to the new. That's my Am I
13:26>> Look at you tax. I'm trying I'm trying
13:29>> and I'll go the next level further. If I
13:31recall correctly, you don't think step
13:32up basis is that big of a deal. So
13:35wondering is great. Yeah, I would love
13:36to know. Give me Yeah, this is like my
13:38simple understanding.
13:39>> I have a question, too.
13:42>> All right, so let's start with just a
13:44regular investor with like Nvidia stock
13:49who invested early like I'm sure you
13:52guys all did, right? You put in a few
13:54pennies and now it's worth $10 million.
13:58Okay. So,
13:59>> which by the way, sorry to interrupt.
14:01Atro did work at Nvidia.
14:03>> Five years.
14:03>> Above or below the number you landed on,
14:05Atro?
14:06>> Nice.
14:07>> Oh, there were five years and you know,
14:09a little under 10 million, but like in
14:11that range. So, like what am I doing?
14:12What how do I cheat the system? Tell me.
14:14>> Okay. So, basically now, and of course,
14:17when you earned it, there's going to be
14:18a little bit of more comp complexity
14:20because when they gave you the stock,
14:21you had to pay some taxes on it, which
14:22you probably did, right? Okay. But now
14:24let's say that all that 10 million of
14:26gain has happened since you earned it.
14:28Okay? Since you were since you paid
14:30taxes. So I don't want to it's g now
14:33just trigger warning. We're going to
14:35have to knock you off in order to
14:37explain the story.
14:38>> I'm going to die. We're fine. We're
14:39okay. They're going to be so happy.
14:41That's fine. That's fine. I actually I
14:43wanted to warn you that this was coming,
14:45you know. Um so
14:48>> Okay.
14:48>> All right. So So you you bought the
14:50stock. It's gone up $10 million in it
14:53and uh and u say you wanted to pass it
14:57on to these guys obviously your favorite
14:59people in the whole world
15:01>> right
15:01>> I don't know we had a comedian on
15:06>> okay
15:08when you pass it on to them right if you
15:11were to sell it you'd have to pay taxes
15:14on that $10 million would be like you
15:16know 20 uh it would be like you know two
15:19and a half million dollars you'd have to
15:22pay in taxes on that um on when you sell
15:25the Nvidia stock.
15:26>> I don't want that.
15:27>> No. But if they're lucky enough for you
15:31to die and give them the stock,
15:34they are treated as if they purchase the
15:38stock for its fair market value. They
15:40get a basis of $10 million and they can
15:43turn around and sell it the next day and
15:45not pay a penny in tax.
15:47>> Yeah, that's insane.
15:47>> That is buy, borrow, die. But what so
15:49why do you say that's not a big issue?
15:51>> I guess I don't I I
15:52>> Yeah, let's start with by bar die
15:54understanding by bar die and then I'll
15:56tell you why it's less of an issue than
15:58>> Okay. So does everyone understand by
16:00borrow?
16:00>> Yes.
16:01>> Excellent. Okay. So by bar die it seems
16:03like okay this is crazy, right? This is
16:06some fantastic deal and this is why
16:08wealthy people aren't paying taxes.
16:10However,
16:12in order to get that step up in basis,
16:17the property has to be included in your
16:20estate and subject to tax on your estate
16:22tax return. Now, you only had 10 million
16:24bucks, so you didn't pay any estate
16:27taxes. Let me just introduce estate
16:30taxes. Okay? Don't want to lose any. So
16:33estate taxes is an additional tax that
16:35we impose on all transfers at a 40% rate
16:39that are with a bunch of exceptions. And
16:42the biggest exception is each person can
16:44transfer $15 million tax-free.
16:48So as long as you're in that $15 million
16:51range, you get to wipe out all the gains
16:54and you don't have any taxes associated.
16:57You have no estate taxes. You get this
17:00massive income tax benefit. And those
17:02are the people who most benefit from
17:04buy, borrow, die. People who have no
17:06estate taxes and they have this growth
17:09in value of their assets because the
17:11gains are wiped out.
17:13>> And that's under a $15 million cap. So
17:15it's and that's that's $15 million or
17:18less. So we're not talking about like
17:19ultra wealthy at this point. It's kind
17:21of medium wealthy. Okay.
17:22>> Okay. Is that why you think it's not a
17:23big problem? Is that because it's it's
17:25mostly impacting these like
17:26>> So now let's talk about somebody who has
17:29let's say you didn't have 15 million.
17:31Let's say you had 15 billion of stock.
17:35>> Okay. Which you maybe you do
17:36>> close to a real number.
17:37>> Yeah.
17:38>> And I'm not leaving it to Aiden.
17:41>> Okay. So now in order for them to get
17:44this stock with a $15 billion basis,
17:49you're going to have to have that $15
17:52billion reported on your estate tax
17:54return, which means it's going to be
17:57subject to a 40% estate tax.
18:01So that tax is like $6 billion.
18:06So for people who have a lot of money,
18:08this isn't doesn't seem like such a big
18:10giveaway. The fact that they get a $15
18:13billion basis,
18:16so the fact that they don't have income
18:18taxes, let me take out the word basis,
18:19right? Isn't such a big deal because you
18:22your estate paid $6 billion. They only
18:24got nine billion, right,
18:26>> after if that was the only thing you
18:27owned. So a significant tax was paid.
18:31So that is why did I lose you or do I
18:33still have you here?
18:34>> No, you didn't lose. They were following
18:35you.
18:36>> Okay. So that's why people all a lot of
18:39people have heard this phrase by borrow
18:42die. And uh and by buy borrow die works
18:46really well for people who don't have
18:47estate taxes. But for people who would
18:50be subject to estate taxes when we're
18:52talking about this really big much
18:54bigger money than 15 million, they're
18:56going to have to pay that 40% estate tax
18:58if it passes because it has to pass at
19:01death. It can't pass by gift. So here's
19:05the next lesson of estate and gift
19:07taxes. And by the time you're through,
19:08you guys will like have law degrees. I'm
19:10going to hand them out. Okay. Well, cuz
19:12my my I imagine you're like my next
19:14natural question is my the estate tax is
19:18something that doesn't have a lot of
19:19teeth right now and I feel like that's
19:21the direction you're going in.
19:23>> That's the direction. Absolutely. So,
19:27the estate tax is actually called the
19:28estate and gift tax. It's designed to
19:30apply to all transfers whether you do
19:33them during life or at death. And it
19:36even has this cool provision new called
19:40the generation skipping transfer tax
19:42that if you skip its generation it's
19:44going to be subject to an additional
19:46tax. Right? It used to be a very
19:48wellmaintained
19:50tax that that had real rules that did
19:53real stuff. Okay.
19:56Um and the what has happened to the tax
20:01is that it has become essentially
20:04meaningless because it no longer imposes
20:06any real burdens. But in order to take
20:10advantage in order to avoid the estate
20:12tax, the most important thing is that
20:16you not hold on to the property until
20:18death and pass it at death because then
20:20you can't take advantage of any of the
20:22ways of reducing your liability. The
20:25only way to reduce your liability is to
20:28do these various lifetime transactions
20:32where you do the grats. You might have
20:34heard the phrase gratz
20:38dots or cupertz or Q-tips or there's a
20:40million of them. And these are all ways
20:43that people take their property that's
20:45worth a whole lot of money. They scrunch
20:47it down so it looks like it's worth
20:48nothing and then it pops up in the other
20:51person's side being worth all that
20:52money. But the only way you can do it is
20:55if you do it during life through gifts
20:57and through trusts and things like that.
20:59And so, but when you pass property
21:01during life, you don't get step up in
21:03basis. Like, if you were to give your
21:05$15 million of stock to your fellow
21:08podcasters here, like you're probably
21:10really tempted to do while you're alive.
21:12Why wait till wait? Why wait?
21:15>> I'm sure that's what you're thinking. uh
21:17you know they might they would have the
21:19same basis you did so that when they
21:21sold it they would have to pay the same
21:24gains that you did. We call that
21:25carryover basis. So people and the
21:28reason it's important to understand that
21:31step up in basis isn't really the reason
21:34rich people are saving taxes is because
21:37I'm worried that people are going to
21:40misunderstand and they're going to say
21:42we're going to solve the problem by
21:43getting rid of step up in basis. But
21:46that's not the problem. The problem is
21:49the failure to tax those gains um at
21:53all. And it's because people because we
21:57don't we only tax gains when the
22:00property is sold, right? And not and not
22:05at other times. And so we should expand
22:08that rule and subject the income tax on
22:11those gains whenever the property is
22:14transferred just like they do in Canada.
22:16And this rule of taxing taxing the gain.
22:20So basically, you know, if uh Adri you
22:23were going to transfer the property
22:25during life, you would rec if you sold
22:27it, you'd recognize the gains, but also
22:29if you gave it to these guys, you would
22:32have to tell
22:32>> You recognize it right then when I gave
22:33it to them.
22:34>> Yeah.
22:35>> Yeah. That'd be Yeah.
22:36>> Okay. I want to make sure this
22:38understanding is is correct because my
22:40my initial question from earlier is like
22:43Jeff Bezos is a guy who is alive for a
22:46long time. like he's experienced so much
22:48of the gain in his wealth over a long
22:50period and presumably he'll be alive for
22:52like quite a bit longer
22:53>> and probably
22:54>> he uh during that whole time right he in
22:58my head he you're saying like t tax
23:04in my head he was going to get taxed
23:06when he died which is a long period of
23:08time for those gains to not be taxed but
23:11you're saying
23:12>> because the estate tax does still exist
23:15in this 40% capac capacity. People
23:18actually give out things through their
23:20entire life and we need to close those
23:23loopholes which would tax those like
23:26choosing to pass on any any of my assets
23:29at any point during my life. That is
23:31when the tax needs to be realized and
23:33that is more important than finding a
23:36way to tax the loans that these people
23:38take out. Finding a way to update the
23:40estate tax and try to like tax people at
23:42their death again. uh trying to worry
23:45about step up basis. We need to focus on
23:47the way that people actually pass assets
23:50to like the rest of their family or
23:52friends.
23:52>> Yes. And as the first step of something.
23:55Okay.
23:55>> And um there was something you just said
23:58that I wanted to
23:59>> well the I think I mean because I think
24:01the part two right seems to be that the
24:02estate tax also has to have more teeth
24:04again. It has to like literally it
24:07>> well there's a second thing about the
24:08estate but I want to go back to this
24:09point of taxing gains. Okay. So
24:12basically what we're saying is that
24:14these gains should be taxed to Jeff
24:17Bezos when he earns them. And one of the
24:19reasons that the borrowing also doesn't
24:21do very much is because here's a man
24:24with it's very hard to keep track of how
24:26much wealth he has, but it's at least
24:28200 billion, right? And even with the
24:31fancy wedding, you know, I mean, how
24:33much is he going to spend? Like five
24:35billion, right? And if we focus
24:37crazyion,
24:40it's going to be nothing compared to the
24:43actual wealth that he has. There has to
24:45be a way that we tax those gains because
24:48otherwise when he passes it on to the
24:50next generation, they're not going to
24:52sell it either, right? Because they too
24:55will be able to borrow against those
24:58property. That's why carryover basis is
25:01a sucker's ploy and isn't going to do
25:03anything. So yes,
25:05>> there's somebody at home right now
25:07screaming and and shaking their monitor
25:09and saying wealth tax, wealth tax,
25:11wealth tax, which I think I generally
25:14like as well. And I but you have pointed
25:18out like flaws in the way that would
25:20work or be applied. So I think a lot of
25:22people would look to what you're saying
25:23right now and be like, why not a wealth
25:25tax?
25:26>> You know what? I'm so glad you asked
25:28that because that is another really
25:31obvious answer to this problem. Right.
25:34So, so far, let's just remind us where
25:37we are. We've said for people who take
25:39salaries, you're already heavily taxed.
25:41Low salaries, high salaries, you're
25:43paying loads of taxes. But for people
25:45who have growing wealth, they're not
25:48really being subject to tax in our tax
25:50system. So, why not tax the wealth? That
25:54seems and there's another advantage of
25:56taxing the wealth which is that we don't
25:58have to wait for these guys to give away
26:01the property or die. We can start
26:03chipping away at their wealth now
26:05because who doesn't feel like they have
26:07too much wealth? I mean these guys have
26:08they are throwing around their wealth in
26:10ways that are making all of us feel like
26:13you know what maybe we'd all be better
26:14if they had a little less wealth. Maybe
26:16a lot maybe not everyone feels that way
26:18but you know there are plenty of people
26:19that do. They've got plenty of money. So
26:22it wouldn't it be better if they chipped
26:24in money now every year based on a
26:27percentage of the wealth and the answer
26:29is
26:31if it worked that would be better but
26:35there's many reasons why I don't think
26:39it would work. So again, remember we
26:41talked about like easy, seemingly easy
26:43solutions to hard problems are not
26:45always the right solution. And I think
26:48that's the case with the wealth tax. And
26:50let me just break it down a little bit
26:52and talk about the situation. First of
26:54all, the biggest problem with a federal
26:56wealth tax. So a federal wealth tax is
26:58being proposed by Warren and Sanders and
27:01others. I love Senator Warren. She's my
27:04senator. I vote for her every time she's
27:05up. But this wealth tax, I think, is a
27:11uh it it is I believe it is a false
27:14promise because the Supreme Court would
27:17quite likely find it to be
27:19unconstitutional, a federal wealth tax.
27:23And the reason we know that is because
27:26they heard a case, there was a case that
27:28was like run up the flag pole that was
27:30designed to test whether the Supreme
27:33Court would okay a wealth tax. and the
27:35Supreme Court said, "We're not going to
27:38rule on that now." And they left it open
27:40for another day. And you know, you don't
27:43have to be uh that close a follower of
27:46the Supreme Court to know which way
27:48they're heading. And if they hinted that
27:50they would find it unconstitutional,
27:52chances are they will find it
27:54unconstitutional. Okay? And so we'll
27:57have spent a lot of efforts to elect
27:59politicians to get through Congress all
28:01of that stuff a wealth tax, a federal
28:03wealth tax and then we'll um you know
28:06and then it will be found
28:08unconstitutional and we'll have to start
28:09again. So that's one problem with it. A
28:12second problem with it is that we think
28:15of the wealth tax and it's really clear
28:17when we can think of these people that
28:19we can easily name who are owners of
28:22publicly traded companies because we
28:25know what their wealth is worth
28:28uh because we know how many shares they
28:31have and we know what the shares trade
28:32at, right? Super easy to know. However,
28:36most many many people's wealth is not
28:39held in publicly traded stock. It is
28:42held in cryptocurrency. It is held in
28:45complex assets, things like partnership
28:48interests that have that are like 70
28:52layers deep and the person owns
28:54partnership interests all up and down
28:56the line. very difficult to value assets
29:00and it's one thing to value those assets
29:03one time at a person's life and it's
29:06another to value them every single year
29:09and you would need to have a taxing
29:10authority that would be able to
29:13effectively do that or everybody is
29:15going to pull their money out of the
29:17stock market by the way something which
29:20many people are dependent on for their
29:22retirement and other savings and put it
29:25into these difficult to value assets. So
29:28I think that's another concern that I
29:31have for for the wealth tax on the
29:34federal level. Now the states are a
29:36different set of problems and you guys
29:38are in California and we can talk about
29:40California and about that but that's a
29:42those are a different but from a federal
29:43point of view wealth taxes are something
29:45that seem like they should be great but
29:48I think they are problematic and and I
29:51have one more concern about uh about the
29:53wealth tax as we describe it which is
29:55it's often described as attacks on
29:57billionaires
29:58and I think that when we say that the
30:02problem is billionaires people are
30:06they're being misrepres the the pro the
30:08conversation gets moved over to like
30:11well are there good billionaires and bad
30:13billionaires and all of this stuff
30:15because people think that we are
30:16punishing billionaires somehow and what
30:19I want is for the public to understand
30:21that this isn't about punishing anybody
30:23this is about bringing everybody into
30:25fiscal citizenship
30:27>> right now like a we know this from like
30:30leaked tax tax returns of people like
30:32Warren Buffett or Jeff Bezos
30:34uh they are functionally paying a tax
30:36rate that is like sometimes below 1%.
30:41And the average person who engages with
30:43the economy in like the normal way
30:45through their job is paying you know
30:47like somewhere between like 20 and 40
30:4945% if they're like earning earning a
30:52normal wage, right? Is that kind of what
30:54you're getting at?
30:57>> Um well these are these are two separate
31:00things. I guess what I'm saying is like
31:01are you're talking about like let's
31:03create a system that doesn't allow these
31:06people that are very wealthy to be
31:08paying it's not punishing them it's
31:11bringing them in step with like the rest
31:13of society.
31:14>> Exactly. And the way I would put it is
31:16first of all that that report that was
31:18done by ProPublica was absolutely
31:20brilliant and it was uh and uh they uh
31:24there was uh they were based on leaked
31:25tax returns and uh the guy that leaked
31:28the tax returns I don't know if you know
31:30his name
31:32Charles Charles Little John.
31:35>> Okay.
31:35>> Charles and uh so do you ever guys ever
31:38hear this thing about how kids named
31:40dentists are likely to grow up to be
31:42dentists?
31:43No,
31:46>> there's a whole study about nominated.
31:48>> He was watching He was watching the
31:49animated Robin Hood movie as a kid and
31:51he was just like, I got one job. What
31:54did I do?
31:56Uh anyway, um so uh the point is that
32:01guy leaked tax returns and ProPublica,
32:04they got a lot of uh push back about the
32:08fact that they published that
32:10information. But that information was
32:12transformative in terms of people's
32:15understanding about the wealthy not
32:17paying taxes. Because years ago, people
32:20like me and others would say, "Well, you
32:22know, the wealthy don't have to pay
32:24taxes because they don't have to take
32:26salaries." And they don't. That's a
32:28separate conversation about how Jeff
32:30Bezos took a salary so low that he was
32:33able to claim the child tax credit,
32:36never more than $82,000.
32:38>> We want his children to be taken care
32:39of.
32:39>> Oh, yeah. I mean, poor Jeff's children,
32:41you know, they need it. Yeah.
32:43>> They're not even going to get those
32:44hundreds of billions until he dies.
32:46>> Wait. Yeah. Um, you know, so we could
32:50say that like, you know, theoretically,
32:51look, they don't take salaries, they
32:53don't have to sell their assets, and
32:55they're not taxed on their inheritances.
32:57But, you know, everyone go, well, that's
32:59just theoretical. Surely they're paying
33:01taxes because we're paying, right? But,
33:03but what this by publishing this
33:04information, they made clear that many
33:06of the wealthiest Americans are not
33:08paying taxes at all. So, it's not just a
33:10theoretical problem. It's a real
33:12problem.
33:13>> Support for the show comes from Shopify.
33:16So, uh, the other week, uh, Atrich, you
33:19remember we were we were in New York,
33:21uh, we went to this cool market.
33:23Actually, there was like a bunch of
33:24different vendors. They were selling
33:26like jewelry, clothes, bunch of bespoke
33:28stuff. Uh, and I went up to a jewelry
33:30vendor and I saw they had this card
33:33reader for Shopify directly integrated
33:35into their online store. I thought was
33:37super sick because I've always known
33:38Shopify for their online tool, which is
33:40excellent. You can track your inventory
33:41through it. You sell whatever products
33:43you want online. uh great checkout
33:45system, but also they offer physical
33:47tools if you happen to like set up at,
33:49you know, like a local market or
33:51something like that. Uh I mean, I
33:53thought it was great. Did you think it
33:54was What did you think of it? Atrio.
33:57Okay. I mean, uh just kind of leaving it
34:00all on me today. All right. Uh well, if
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34:19today to hear your first cha-ching.
34:23Dude, you are
34:25you're just leaving me out to dry today.
34:26This is [ __ ] insane.
34:28>> We talked about like a federal wealth
34:30tax. So then going over to California
34:32where on the ballot this upcoming
34:34November, there is a wealth tax proposal
34:36that is going to be a one-time 5% wealth
34:38tax on people with a net worth of a
34:41billion dollars or more.
34:43>> Uh it is being opposed by the people you
34:46would expect, but also by various unions
34:48and Governor Nuomo and all these folks.
34:50And then one of the key biggest issues
34:52is if you do this in California, people
34:54will just leave. And so I think the most
34:56common criticism to it is just this
34:58won't work unless it is at a federal
35:00level. So I was kind of surprised that
35:02you've maybe indicated that states is
35:05where a wealth tax might work whereas it
35:07wouldn't federally. Is that what you're
35:08feeling? What do you think about the
35:09California one?
35:10>> Yeah. Okay. And I'm interested to hear
35:12what you guys feel about the California
35:14wealth tax because you're living it and
35:16seeing it. Um so uh
35:19>> I'm we don't have that much Patreon
35:21money. I don't know. I feel like feel
35:23like it feels a little distant actually.
35:25Uh, and maybe you can speak to this as
35:27well. I I I'm pro like wealth tax. I
35:31think uh or or pro this proposition.
35:35>> Uh I think the effectiveness of it in
35:38this case is is kind of weird where
35:41>> I think I would make the argument that
35:43it being one time
35:45uh makes it easier to implement but also
35:49lacks the long-term effectiveness of
35:51what you would want out of a wealth tax
35:53to begin with. Uh, and I feel like
35:57culturally like we need to do something.
36:01There needs to be something like this.
36:03And I rather start with saying yes to
36:06this than say no to an option that isn't
36:09perfect,
36:10>> right? Yeah. What do you guys think? I
36:13>> I mean the the other piece I this is
36:16maybe two years ago I would have given
36:17you a confident take and now I realize I
36:19don't know. I don't know. But the one
36:22thing I hear very often from you know
36:24let's say tech Twitter like certainly
36:26the narrative is a wealth tax like this
36:28would harm innovation because somebody
36:30who wants to go it's exactly what you
36:31said Jeff Bezos who has Amazon stock
36:34it's easier to say you have this much
36:35money or Sergey Brenn from Google right
36:38but for the person who makes a startup
36:40and builds a startup that's successful
36:41and they have a high percentage of net
36:43worth in that startup but then this
36:45wealth tax comes in and says hey you are
36:48worth $10 billion you need to sell and
36:50somehow produce a million but he hasn't
36:52no actual cash. This is just stock in a
36:55company that's theoretically worth that
36:57much could kind of ruin that person's
36:58ability to have control over the
37:00company. They would need to suddenly
37:02turn this thing that could be private
37:03for a long time. You force it it to be
37:06sold basically. And so there's this
37:08sense of uh you're being punished if you
37:11make something that is successful before
37:12you take it public. And I'm curious what
37:14your counters to that would be as well.
37:16>> Yeah. Oh, you want my thoughts? I guess.
37:18Okay. For the California one, I did hear
37:21that there is a
37:23um a minimum date which what they're
37:26going to start counting like if if it
37:28goes through there's a date through
37:29which if you're a resident of of
37:30California, your wealth will be counted
37:32to be taxed and like six billionaires
37:35have already left California before that
37:38date trying to avoid it. So, I I I just
37:42find it hard to believe that if you do
37:44it only in one state with how easy it is
37:46to move assets and money around that the
37:49people we're most trying to target won't
37:51easily avoid this. I I just don't see
37:53how it's going to pin them down. That's
37:54that's
37:55>> like a federal one makes more sense to
37:56me. I I heard your criticisms earlier
37:57and that I I get them, but the
38:00California one seems to be like it's
38:01just going to hurt California more than
38:02it's going to help it in my mind. But I
38:03I I'm Yeah, I'd love to hear more of
38:05your thoughts because I'm not an expert.
38:07>> Yeah. So, I think that so my thoughts
38:10are um evolving on this. I'd say my
38:14general view is that states have an even
38:17harder time than the federal government.
38:19They don't have the constitutional
38:21problem that the federal government has,
38:23but they have the problem that you guys
38:24are talking about. One is it's really
38:26easy to leave a state. The other is the
38:30valuation problems. If you think about
38:32our tax systems, the most state systems
38:36piggyback on the federal system, right?
38:38They say, "What's your federal adjusted
38:40gross income?" And now we'll work at
38:42from here. But any state that adopts a
38:44wealth tax is going to have to come up
38:46with its own mechanisms for valuing
38:49property, which is really hard. So you
38:51have the risk of people leaving. You
38:53have these valuation problems. You might
38:55have some issues of, you know, fairness
38:58or innovators or something like that. So
39:01um I think some of the technical
39:03problems of stock that where the person
39:05doesn't have value sometimes those can
39:08be addressed when someone has illlquid
39:10assets the government can make a
39:12lowterest loan right just as people will
39:14borrow against those loans to support
39:16their lifestyle borrow against their
39:17assets they can borrow against their
39:19assets to pay a you know 5% tax and I
39:23think it's now it was like a 1% tax a
39:26year for five years right so is how they
39:29They're calling it a It's called a 5%
39:31tax, but it's paid 1% a year for five
39:34years. Okay. So,
39:36>> so I think generally speaking, states
39:40are uh it's a problem for them to raise
39:44wealth taxes for all the reasons that
39:46you guys talked about. On the other
39:48hand, I think that California is a
39:51little bit of a different situation that
39:54makes California in 2026
39:58a time where it's possible to have a
40:01one-time tax because uh first of all, I
40:05think that 75% of the wealth of
40:08billionaires is held in publicly traded
40:10stock. So California is very different
40:13from every other state because so much
40:16money is in publicly traded stock which
40:18is easy to value.
40:20>> Okay, makes
40:21>> sense.
40:22>> The other thing is that with everything
40:24going on in 2026 in California right
40:27now, it's very difficult for people to
40:29leave, right? Even Sergey Brin who was
40:32like, I'm out of California. He's then
40:34I'm back at Google. You know, he's back
40:37because he wants to work on AI and AI is
40:41happening in California. So, it's harder
40:44for people to leave California in 2026
40:47than probably any other state or even
40:50California in any other year because
40:52there's a lot that's pulling it in
40:54there. On the other hand, this isn't
40:56going to be a long-term solution to
40:57anything. And so what you might end up
41:00doing is so it's you're not going to be
41:02able to solve the problem with a
41:04one-time wealth tax. Um I am of mixed
41:09minds about whether it is an overall net
41:13positive or not because part of me
41:15shares um shares this view that you know
41:20maybe um we when we have seen tax reform
41:24occur over the course of the history of
41:26the country. It has happened when there
41:29has been real threats from the left. And
41:32I think that the likelihood of getting
41:35good changes come about when people feel
41:37there are real threats from the left.
41:38And in this way, I actually think the
41:40rise of Democratic socialists and the
41:42rise of this California wealth tax, the
41:44threat of it will actually help and
41:47increase the likelihood of a good
41:49federal response because the problem has
41:52become made more aware to more people
41:55and because there are more threatening
41:58solutions. And so it these things are
42:00all making me feel more positive about
42:03federal changes. Cal I don't it's a
42:05tough decision about California because
42:07I do think that states I live in
42:09Massachusetts a high tax state and we
42:11have a high millionaires tax that was
42:14put in place and though they say it
42:17didn't in we know we didn't lose people
42:19I mean we're losing people and New
42:21Hampshire we're not like California big
42:23state we're like a tiny state we're like
42:25three inches away from us as New
42:27Hampshire or or Maine or Rhode Island or
42:31any number of other states and so It's
42:34um I think it's hard
42:36um to for states to impose meaningful
42:39taxes the way the federal government
42:41should.
42:41>> I I guess it in the world where I could
42:44like wave my magic wand on the Supreme
42:47Court problem you outlined earlier and I
42:51I'm thinking about the the second point
42:54you made where it's difficult to value
42:56these assets on like a yearly basis in
42:58order to tax them. Um I feel my my
43:03initial reaction to that is like is that
43:05not just like a lack of like political
43:07will though like you look at something
43:08like a land value tax in a place like
43:10Singapore it's like you know valuing
43:13land on like a frequent basis uh could
43:17also be you could make the argument that
43:19that could be difficult over a long
43:21period of time to be constantly valuing
43:23land when it hasn't actually sold and
43:25but but you know places do that. Is this
43:27just a next level of like complexity
43:30that you think is like politically
43:31unachievable?
43:32>> Yeah. Like in my lizard brain, it's just
43:35hire more people like you know why why
43:37can't we just hire a thousand IRS staff
43:40in order to do or 10,000 or whatever it
43:42takes because presumably the ROI on that
43:44will be positive, you know.
43:46>> Absolutely. So I think the problem is we
43:49have a history of taxing real estate and
43:52if you think about how we tax real
43:54estate you know we have a whole system
43:56local governments they come around they
43:58everybody has assessments on their
44:00houses they public the they they
44:02publicize the value of that asset so I
44:05think it's hard to extrapolate from real
44:08estate and say we do it with real estate
44:10why can't we do it with every single
44:11thing that a person owns because people
44:14can own all different types of things
44:16they can own intangibles they can own
44:19and if it's going to be in their
44:20financial interest to own things with
44:23hidden value they're going very wealthy
44:25people are going to move their money
44:26into those assets I think so yes and but
44:30the other problem with the IRS isn't
44:31even effectively taxing the income that
44:34we have so I mean I guess what I say is
44:37I agree with you with all of you in that
44:41in in a fantasy world where we had a
44:45well-funded government and a wellfunded
44:49and you know people were really punished
44:51for hiding their wealth. You know maybe
44:53a wealth tax would work. I do still
44:55think that there are risks first of all
44:57that people would pull their money out
44:59of the easiest to value asset which is
45:01the stock market which I do think could
45:03have an impact on the regular public.
45:06But I think there's another problem too
45:09which is that culturally
45:12we are we understand that when you
45:15acquire income from any form you are
45:19supposed to report it to the federal
45:20government. I do not think that
45:23culturally we feel that the government
45:26should be able to come into our home and
45:28see everything that we own and determine
45:31the value of it. And it's funny they
45:32have a Did you see this ad? You guys are
45:35in California, so maybe you've seen it.
45:36The Trojan pig aden
45:41you should definitely watch it. It is
45:44something by the anti put forth by the
45:45anti-ax people and it's a classic. It's
45:47a Trojan pig coming down like a little
45:49suburban street and it's filled with
45:51like Bernie Sanders and you know sort of
45:54evil Bernie Sanders and uh anyway and
45:57basically they go running down the
45:59street grabbing the tricycles from the
46:01kids and this and the that and the
46:03person says you said you were just going
46:05after rich people and it's like you
46:07should have read the fine print
46:11like read the fine print this is we're
46:12coming
46:12>> I think there's a long tradition of this
46:14right like with the estate tax which is
46:16over 15 million being called a death tax
46:19and with uh
46:20>> what else?
46:20>> Yeah,
46:21>> I don't know. It's like it's like the
46:22[ __ ] consultant,
46:24if I may, the consultant class like
46:26rebranding things. So, they have
46:28negative connotations. It's like it's
46:30like let's not call it global warming,
46:31let's call it climate change. So, it
46:32goes over the same
46:35tax guy is the same guy that gave us
46:37climate change as opposed to global on.
46:41>> Yeah, he is. But, you know, he has a new
46:43one. He has a new one for the wealth tax
46:46that I think is really kind of lame. I
46:48can't remember what it was, but he lost
46:50his touch.
46:50>> It's kind of like Trump with his new
46:51nicknames. They They're not the same.
46:52>> They're not as good as they used to be.
46:54>> I like
46:55>> Yeah, it was a It was not It was not
46:58effective. I didn't think
47:00>> we talked about this a while ago. I
47:01think you read a book that was basically
47:04describing how the wealthy class now is
47:09like comparatively
47:12greedier than the wealthy classes of
47:14previous times. And because in in the
47:18olden days, you know, hundreds of years
47:20ago, if you were a a really wealthy
47:23person, ultimately you still needed to
47:25exist within like a local community
47:29space because travel wasn't as easy. And
47:32then recently I spoke to this guy who
47:35works at like a a think tank for like
47:38legislation around pursuing corporate
47:40taxes and he was explaining all the ways
47:43in like the past decades that the
47:45internet has allowed people to move
47:48money around in new ways. So you combine
47:51like the billionaire class's ability to
47:53like fly around on a private jet kind of
47:55at their will and the advent of this
47:58technology that allows you to circumvent
48:00and send money around in unprecedented
48:03ways that the world like the wealthy
48:05class has never even had access to prior
48:07to this. With all of that in mind, do
48:10you think there's like a practical way
48:13forward to like effectively tax these
48:16people? it. When I think about the
48:18problem, I'm like scared because I can't
48:20even really imagine what creating the
48:23solutions looks like.
48:25>> I actually think that we can't solve the
48:27problem because I think that what people
48:29don't realize are these gaping problems
48:33that we have in our tax system. So, one
48:36of them we talked about, right? So we
48:37have all these guys walking around with
48:40hundred billion dollars or maybe only
48:43hund00 million but still with hund00
48:45million they're able to not pay taxes
48:48because they don't have to sell they can
48:50borrow against them you know they can
48:51people can live well off of a hundred
48:53million or $500 million right so it's
48:56not just a billionaire or mega
48:58billionaire problem so one problem is
49:00not taxing gains and so I we already
49:02talked about how to address that problem
49:05but the other huge huge problem is that
49:08we don't tax inheritances.
49:11So if
49:14we were to uh if you were to walk down
49:16the street in LA and find 100 bucks on
49:20the street because you're in LA, people
49:22are carrying around 100 bucks and you
49:24know uh and you find you are supposed to
49:27report it to the IRS. Okay, that's the
49:30rules. Or if you engage in a barter
49:32exchange, you're supposed to report it.
49:34If you have gambling winnings, you're
49:36supposed to report it. You get a scratch
49:38card, you win. All these things are all
49:40taxable income. However, if I were to
49:44give you
49:45$10 million or remember Atriarch was
49:48going to give you his $15 million of uh
49:51of uh the stock, right, the Nvidia
49:54stock, you don't have to tell anybody.
49:57It's nobody's business. It is excluded
50:00from your from the definition of income.
50:03So we have this huge comprehensive
50:05definition of income but it excludes any
50:08money received by gifts, inheritances or
50:12life insurance. And life insurance is
50:14the big ploy that the wealthy use to
50:17pass massive amounts of wealth. So these
50:20are not like hard problems to solve. We
50:24could actually make those things taxable
50:27and that would bring a lot of tax
50:30revenue into the federal government and
50:33so we could bring those into the income
50:35tax and they would be subject to tax.
50:40What's that?
50:40>> Can you clarify the gifts because isn't
50:42there isn't there like a cap of like
50:44$19,000 or something like
50:45>> Oh my god, you're making my day. You are
50:47making me so happy. Okay. I love I Thank
50:52you. You made my year.
50:54>> Wow.
50:57>> So,
50:58there is massive confusion amongst the
51:01public about income taxes of gifts. And
51:05the most common thing that people will
51:06say to me, but yes, isn't there a
51:09$19,000 cap on the amount that you can
51:12give tax-free and after that there's
51:15taxes? So,
51:19that's not the case. the $19,000.
51:22What it said, what the rule is, this is
51:24in the estate tax world, is that you can
51:27give up to $19,000 to as many people as
51:30you want tax-free. And it is not treated
51:34as a taxable gift for the estate and
51:36gift tax system. And once you give more
51:39than that, you start to eat away at your
51:43$15 million exclusion.
51:46Okay? So that's how it works in real
51:48life. Does that make sense what I'm
51:50saying everyone? So 19,000 is just your
51:52own private business. More than that,
51:54you're eating away at that 15 million
51:57which you can pass either during life or
51:59at death or a combination of the two.
52:01>> Okay.
52:02>> Okay.
52:03But the public doesn't know that because
52:06who knows who even knew that there was a
52:08separate state. I mean lots of people
52:10don't know these these things. And so in
52:13the public, in the world where people
52:16are making gifts of $90,000 more to help
52:19their kids or whatever, there's a
52:22massive confusion and people think that
52:24there's an income tax on all of that
52:26money received in excess of $19,000. But
52:29there is no income tax on even $19
52:32billion or $19 trillion. There is an
52:36unlimited exclusion. And the reason is
52:40because we assume that the estate and
52:42gift tax is doing its job with its 40%
52:45tax. And so we don't bother to look at
52:48the recipients. We say we leave it to
52:51the estate and gift tax system. But the
52:53estate and gift tax system is totally
52:56totally destroyed. Does nothing. And and
52:59can I give you exhibit A in case any of
53:01you are doubting about this?
53:03>> Absolutely.
53:03>> Yeah.
53:04>> So um actually two too little fact. Oh,
53:08and I also have a quiz for you guys.
53:10>> Perfect.
53:10>> Okay, great.
53:11>> Right now, I think Aiden has an A. I say
53:13maybe I have a B. You probably a C plus.
53:16That's our redemption. Yeah.
53:18>> Okay. So, um first let's talk about the
53:211%. Okay. Um and because that that's the
53:27group that's supposed to be subject to
53:29the estate tax, but also that's a group
53:32that's gotten a lot of press in the
53:34past, right? And you might have seen,
53:36have you guys ever seen the um people
53:39say it doesn't matter if the rich pay
53:41taxes, they simply don't have enough to
53:43make a difference. You're going to have
53:44to tax the middle class.
53:47>> Yeah. We've Yeah,
53:48>> you won't tell.
53:49>> That's a favorite thing to say, right?
53:51Okay. So, let's talk about some numbers.
53:55In 2020, I'm going to give you some
53:56numbers to get us going. All right. So
53:59in 2025, the federal government raised
54:02from all sources, so income taxes,
54:06corporate taxes, payroll taxes, estate
54:08and gift taxes, every type of tax,
54:11tariffs, fees at the national parks,
54:14everything.
54:16$5 trillion,
54:184.9, but I'll call it five trillion.
54:21Okay, we took in five trillion. We spent
54:25$7 trillion.
54:27So, we had to
54:29>> borrow
54:30>> borrow that $2 trillion. We had to
54:33borrow.
54:35Guess how much the richest 1% owned in
54:402025.
54:43>> I know the answer. So,
54:44>> okay. So, you'll have to you'll have to
54:46recuse yourself.
54:46>> Is it It's 55 trillion, right?
54:49>> 55 trillion today.
54:52>> Is it fair?
54:53>> He's got a note card.
54:54>> He's already taken his class.
54:56>> Oh, I know. Don't you hate that though?
54:59It's not bad.
55:00>> We're gra on a curve. It's a curve.
55:02>> You're supposed to let the other
55:03students have a chance to answer and
55:06then you could come in and humiliate
55:07them. Uh you missed your chance. So,
55:11>> uh the but the thing is most people
55:12don't most people think I don't know two
55:15I asked this all around. Nobody knows.
55:17What's weird is even really
55:20uh sophisticated people don't know how
55:23much rich how much wealth the richest 1%
55:26had. I actually I have this chart in my
55:28book and I actually was talking to a
55:31Baron's reporter and she said, "You got
55:33to do billboards, but instead I put it
55:34on a mug."
55:35>> Oh my god.
55:37>> I'll send it to you. Give me your
55:38address. I'll send you guys the mug.
55:40>> Okay, for sure. We'll be at our desk.
55:42>> So, uh, but because it's absurd, right?
55:46the richest 1% have we had a deficit
55:48of$2 trillion dollars and it like for
55:51them to say that it doesn't matter if
55:52people that now have 55 trillion
55:55actually now it's closer you know it's
55:56probably like 58 trillion now I mean
55:58this wealth just keeps growing growing
55:59growing at it's very hard to keep up
56:01with it was 47 trillion when I wrote my
56:04book in 2020 uh uh in 2025
56:09was our last update of it right the 2024
56:12wealth was 47 50 55 and even higher So,
56:17okay, but the point is the estate tax,
56:19which is supposed to apply a 40% tax on
56:24all transfers of wealth of this group
56:26that had $50 trillion.
56:29Um, any idea how much it raised? Not
56:33>> I I actually don't know the answer to
56:35this.
56:35>> So, in theory, it should be like what?
56:372.2
56:39trillion or sorry, 22 trillion.
56:41>> 20 trillion. If it was all subject to
56:43tax, right?
56:44They were all died if it wasn't. But
56:47okay.
56:48>> Uh,
56:49>> it should be in the trillions at least,
56:50but I assume it's it's
56:52>> 2 trillion. 10% of what it should be.
56:54Two trillion.
56:55>> It's like, isn't it like less than 50
56:57billion or something?
56:59>> There you go again. 28 billion. 28.
57:02You're ruining the show.
57:04>> He used AI and hacked into the answers
57:06and he's looking at them right here.
57:08>> Yeah.
57:09Uh, 28 28 billion. Okay. Ridiculous.
57:14It's ridiculous. It's ridiculous that we
57:16have an elaborate and this code that we
57:18have for it, by the way, I mean, I have
57:20it right here. The code that we have for
57:21it is huge for this system that produces
57:24nothing. And but here is the ultimate
57:26reason that we know it does nothing. So,
57:29the Republicans since 1990 have had as
57:32their like number one issue to get rid
57:35of the death tax, right? The immoral
57:37death tax that hurts family, farms, and
57:39businesses. And that that has been so
57:42many of the Republicans, you know, it's
57:44been in their basic platform, including
57:47Trump. We got to get rid of the death
57:49tax,
57:49>> right? They didn't do it, right? That
57:51was the whole point.
57:52>> 2025, right? 2025, the year that the
57:55that they entire the bill is an entirely
57:58Republican bill. They don't have a
58:00single They don't need a Democratic
58:01vote. They don't have a Democratic vote.
58:03What do they forget to include?
58:05Repealing the immoral death tax. They
58:09left it in the books and after they had
58:11claimed for 36 years that this was their
58:14number one issue. And the reason is that
58:18the estate tax provides a cover for the
58:21rich making it seem like they are paying
58:23taxes rather than actually imposing a
58:26burden.
58:28>> Yeah. I I saw a stat that you said 36
58:31years because you know in 1997 because
58:34like they haven't repealed it but it's
58:35changed dramatically, right? So, like
58:37when I'm a kid, the wealth tax is
58:39estates over 600,000 and it's 55%. And
58:43it had some teeth to it. And now it's 15
58:45million and it's what 40% or is, you
58:47know, it's less. So,
58:48>> exactly. But again, that's why you'll
58:50sometimes hear people say we got to go
58:53back to the tax rates of
58:55>> Yeah, I said that a lot. So, why is that
58:56wrong?
58:57>> Right. That is such a wrong answer. And
59:00that is why by the way the Bufforn I
59:02would a genuine question because it
59:04seems like our tax system
59:06>> was more functional in you know even pre
59:09Reagan I would say but like at least
59:11decades ago.
59:12>> Yeah.
59:12>> And and so I'm trying to understand why
59:14going back to that isn't a good first
59:15step but I I would love to know. Okay.
59:17>> And I'm going to tell you why. Okay.
59:19Because when people talk about tax rates
59:22they misunderstand the nature of the
59:24problem. The problem is not that the
59:27rates are too high. The problem is that
59:30too much wealth is not treated as
59:32taxable income. It's the fact that our
59:34wealthy people avoid taxable income by
59:37following what I call the three steps of
59:39the tax avoidance playbook. First thing,
59:42they avoid salaries because salaries are
59:45for suckers. They're you're heavily
59:46taxed if you get a salary. The second
59:49thing is they avoid sales, right? Like
59:51we talked about, they don't sell their
59:52stock, they just borrow. And the third
59:54thing is they inherit wealth. and
59:56inheriting wealth is has become
59:58essentially tax-free for those in the no
1:00:01who use the many tools that are
1:00:03available to them. And so you can raise
1:00:06your tax rates all you want and all
1:00:08you're going to do is hurt your highs
1:00:10salaried, you know, bankers, lawyers,
1:00:14business people, but you're not going to
1:00:15be hurting Bezos Musk or Warren Buffett
1:00:18because it's not a matter of tax rates.
1:00:22It's a matter of what is subject to tax.
1:00:26>> Could some of this be fixed? You know, I
1:00:28hear you talking about um rule changes.
1:00:32And it seems to me that right now, no
1:00:35matter what the rules are, there's so
1:00:37little enforcement for high netw worth
1:00:39individuals. I heard a stat that if you
1:00:42spend $200,000 on an IRS auditor's
1:00:45salary, they earn an average of they
1:00:47bring in an average of 20 million in
1:00:49terms of the audits they do. So by that
1:00:51logic, you'd want to hire as many
1:00:53auditors as possible, but we don't. We
1:00:54in fact fire them and have been reducing
1:00:56the size of the IRS. So I guess I'm
1:00:58wondering like even if we get the
1:00:59political world to change rules, does it
1:01:01even matter if our current ones can't be
1:01:02enforced? Is that like is step one?
1:01:05>> I would flip it around. Okay. I would
1:01:07say there's a big problem that even our
1:01:10current rules aren't being enforced. And
1:01:12you're totally right. We need a much
1:01:14stronger IRS. That's something that
1:01:16Biden tried to do. Yeah. And it is
1:01:18ludicrous. Anybody who says that we
1:01:20don't need a stronger IRS is a is is
1:01:22just wrong because we need that revenue
1:01:26and we shouldn't be letting all that
1:01:28letting tax avoidance flourish. It's bad
1:01:30for the country. So, um yes about that.
1:01:33But what I'm saying is that you can put
1:01:36in all the IRS agents you want and
1:01:38you're not going to get any more tax
1:01:40dollars from Jeff Bezos or people with
1:01:42lots of money who are able to follow the
1:01:44tax avoidance playbook because it's all
1:01:47totally allowed. We have to reform our
1:01:50rules so that our rules make sense and
1:01:54do the things we need to do. And the
1:01:56biggest problem with our rules is that
1:01:58they don't tax investment gains and
1:02:01inheritances. So, we talked about how to
1:02:04bring in investment gains, right? The
1:02:05way we'll bring in investment gains, at
1:02:07least the way I think we should, is to
1:02:09say whenever you transfer the property,
1:02:11you, the person who enjoyed the gains,
1:02:14should be subject to tax on those gains.
1:02:16And we could have an exemption of one
1:02:18or$2 million that says people can, you
1:02:21know, they can if they want to pass on
1:02:22their house or something like that, they
1:02:24can. But in excess of a certain amount,
1:02:27those gains should be subject to tax to
1:02:29the person who earned them whenever they
1:02:31transfer the property. But the other
1:02:34problem is this problem of inheritances
1:02:37that we currently count on the estate
1:02:39tax to handle. And as we talked about,
1:02:42the estate tax has become nothing. Has
1:02:45become like Swiss cheese with basically
1:02:47no cheese left in it. That's right.
1:02:49Little tiny strands of cheese, big
1:02:51gaping holes. and uh but the and so you
1:02:56could say let's just fix the estate tax.
1:02:59The problem is you have to look at why
1:03:02the estate tax was how the public let
1:03:06the estate tax fall into this type of uh
1:03:10decay that it did. And it was because I
1:03:14think the the reason was that the estate
1:03:16tax has an Achilles heel to it. And the
1:03:19Achilles heel is that the tax is imposed
1:03:22on the dead person. And there's nothing
1:03:26about the rich heir collecting the
1:03:28money. It is all on a person. And for
1:03:31some people uh who paid a lot of taxes
1:03:35during their life, right? Imagine
1:03:36somebody who actually earned that money
1:03:38in a job. And so they paid taxes every
1:03:41year, 45% on that money. and now we're
1:03:44saying now you're dead and we're going
1:03:47to give an additional tax because you
1:03:50died even though you've paid taxes your
1:03:53whole life. Like that feels unfair even
1:03:56to me. And you know, I had to uh testify
1:04:00and I used to write a lot in favor of
1:04:02the estate tax and you'd have to
1:04:04explain, yeah, but lots of people never
1:04:06paid gains on it, you know, because they
1:04:09had like stock that went up in value,
1:04:11they never taxed. Now we have to capture
1:04:13it this way. That's not a very
1:04:15satisfying answer to say that well it's
1:04:18okay for this person to pay double tax
1:04:20because somebody else isn't paying
1:04:21single tax. I think the problem is that
1:04:23the taxes imposed on the dead person and
1:04:26that feels bad to people and people are
1:04:29confused about the income tax side as we
1:04:33saw. Even some of our esteemed
1:04:34podcasters thought that
1:04:37>> and if we don't know nobody knows
1:04:38because this is the best and brightest
1:04:40of the sphere.
1:04:43thought that gifts in excess of $19,000
1:04:45were subject to the income tax. Massive
1:04:47confusion on that side. And so that's
1:04:50why what we need to do is get rid of the
1:04:52estate tax and decide how much of a
1:04:56preference do we want to allow for
1:04:58inherited wealth, money received by
1:05:00gifts, inheritance, and life insurance.
1:05:03How much do we think people should get
1:05:05tax-free? noting that it's a preference
1:05:07that doesn't apply to unemployment
1:05:10benefits or lottery winnings or any
1:05:12other forms of money. But, you know,
1:05:14people want to have some preference for
1:05:16inheritances. Maybe it's $2 million. But
1:05:19then in excess of that, people should
1:05:21pay income taxes on that money that they
1:05:24receive just the same as they would as
1:05:26found money on the street or anything
1:05:28else. And I think the advantage of that
1:05:31system is that it makes sense to the
1:05:34public. people understand like, well,
1:05:36why is it the case that I'm killing
1:05:38myself at a job to make $60,000 and I
1:05:42have to pay $13,000,
1:05:44but somebody else is handed a million
1:05:47dollar or $10 million and they don't
1:05:49have to pay a penny of taxes. That
1:05:51doesn't make sense to people.
1:05:54>> But in theory, people, myself included,
1:05:56think that that is happening. you hear
1:05:58there's an estate tax, but it's just
1:06:00these loopholes have just allowed all of
1:06:02the cheese has been eaten by Jeff Bezos,
1:06:05I think.
1:06:05>> Yes.
1:06:07>> Yeah. So, I guess what
1:06:09>> Yeah.
1:06:10>> I I am both um depressed by how complex
1:06:14this all is and optimistic that to No,
1:06:16no. And optimistic. I appreciate your
1:06:17optimism a lot of like, hey, here's some
1:06:19really like high value things that we
1:06:21can target that would make a huge
1:06:22difference. So, what do you think is the
1:06:24biggest hurdle between right now and us
1:06:27getting even just one or two of these
1:06:29major things you've said that make
1:06:31complete sense to me and I think the
1:06:32average person, what are the hurdles? Is
1:06:34it just Republicans or rich people are
1:06:37going to exercise a lot of free speech
1:06:39against it? Is it is it just you're
1:06:41never going to get motion as long as
1:06:43Congress is this deadlocked? Like, is
1:06:45there a path forward to doing these
1:06:47relatively simple changes? It seems like
1:06:49>> Yes, I think there is. I think the
1:06:51biggest impediment is that the American
1:06:54public has been told that taxes are too
1:06:57complicated for you to understand. Don't
1:07:00don't bother your pretty heads on taxes.
1:07:03They're told a they're too complicated
1:07:05to understand and b you don't need to
1:07:09understand them because in I call this
1:07:11the statistic that saves the rich from
1:07:13taxes. You'll often hear and this I have
1:07:16seen this now first I only saw it in the
1:07:17Wall Street Journal. the Wall Street
1:07:19Journal would publish it at least
1:07:21annually in its in its pages. Uh and um
1:07:25but now they've been joined by the
1:07:27Washington Post and even The Economist,
1:07:31which is this is the favorite statistic.
1:07:34The top 1% pay 40% of income taxes and
1:07:4040% of Americans pay no income taxes at
1:07:43all. The top 1% pay 40% of
1:07:45>> I've seen that a million times. You hear
1:07:47that a million times, right? And it
1:07:49makes people think, well, what are you
1:07:50complaining about? Why am I complaining
1:07:52if the top 1%?
1:07:54>> But the thing is, and I think you guys
1:07:56probably know where I'm going when they
1:07:58say that word top 1% is very confusing
1:08:02because you're thinking Bezos, Musk,
1:08:04those guys. But the top 1% is the top 1%
1:08:08of income earners. That is measured
1:08:11based on taxable income,
1:08:12>> right? It's like doctors and bankers and
1:08:14>> doctors, bankers, finance people.
1:08:16Exactly.
1:08:17>> But these people have no taxable income
1:08:20because they follow the tax avoidance
1:08:22playbook, right? They avoid salaries,
1:08:24they avoid sales, they inherit money
1:08:25taxfree. And so they have no taxable
1:08:28income. They're just as likely to be in
1:08:30the 40% of non-payers
1:08:33as they are in the top 1% of payers. And
1:08:37I think that it is this type of um lack
1:08:42of sophistication by the public about
1:08:44this way that the wealth owners are
1:08:46hiding behind the income earners. That's
1:08:48our biggest impediment to change. Which
1:08:51is why I am so happy that you guys had
1:08:53me on your show and that you guys are
1:08:55talking about these issues because
1:08:56literally it's about educating the
1:08:59public so that everybody can hear when
1:09:02someone says to them, "Hey, the top 1%
1:09:04are already paying." They can say, "Hey,
1:09:07you're not talking about Bezos Musk.
1:09:09Anybody a wealth owner? You're talking
1:09:11about highinccome people."
1:09:13>> Support for the show comes from Firefox.
1:09:16And uh I know I've been using uh I
1:09:19switched to Firefox like four weeks ago
1:09:21before we started doing these ad re
1:09:23which is a crazy crazy timing. But I've
1:09:25been super happy. Uh I know Atriog
1:09:27you're a huge defender of just uh
1:09:30letting you love ads like all over the
1:09:32articles you read. uh you don't have a
1:09:34credit card, you've been putting on a a
1:09:37few, you know, that's not really related
1:09:38to Firefox, I guess. Uh but it does, it
1:09:41has built-in protection, uh support for
1:09:42powerful ad blockers, uh you have a
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1:10:24Visit firefox.com to try it yourself
1:10:28like me and not like Atriarch.
1:10:33I wanted to know if you've thought about
1:10:35this as well because I I agree with what
1:10:37you're saying. Uh but these campaigns of
1:10:41misinformation that have occurred over,
1:10:43you know, the you know, the past hundred
1:10:45years about various aspects of taxing
1:10:47the rich are funded by these rich
1:10:51parties that are benefactors of these uh
1:10:55stories being perpetuated about how
1:10:58taxes work. And I think I would make the
1:11:01argument that uh like from what I've
1:11:03seen of your your other interviews,
1:11:05you're often contextualizing
1:11:08uh the raising of tax revenue through
1:11:09these things in the context of like well
1:11:12we should be filling like the uh the
1:11:14budget deficit or we should be paying
1:11:16like down our our national debt as like
1:11:19part of the the reason that these
1:11:22revenues should be raised. Uh, but I
1:11:25think I would also make the argument
1:11:26that taking like kind of taking money
1:11:29away or taxing money from rich people is
1:11:32about more than just raising tax
1:11:34revenue. It's about limiting their
1:11:36ability to damage the game of society
1:11:40that we all participate in. And even if
1:11:43you can like wave the magic wand and tax
1:11:4640% of that 55 trillion right now and
1:11:50bring in all that tax revenue, I think
1:11:52that still leaves a very like empowered
1:11:57class of people to continue to fund that
1:12:00campaign of misinformation
1:12:02and inevitably arriving back at a point
1:12:05very similar to this. And I guess I
1:12:08don't really know how to like dismantle
1:12:10that part. Do you do you know what I
1:12:12mean? And I don't even know if you
1:12:13agree. What are you saying?
1:12:14>> Okay.
1:12:15>> So, first of all, the reason I focus on
1:12:18things like the national debt, right, is
1:12:21because I think that as someone who's
1:12:24written about taxes a lot, I get plenty
1:12:27of emails that say, "You just want more
1:12:30money to go to the government, and the
1:12:32government wastes money, and I'd rather
1:12:34Jeff Bezos have right." It gets confused
1:12:36about how much money the government
1:12:38should raise. And I think that that um
1:12:42misses the point which is that even if
1:12:44you want a teenytiny government because
1:12:46you don't want the government to be a
1:12:48big you want you know politically you
1:12:50want to have a small government which
1:12:51some of your viewers might feel what
1:12:54matters is how we fairly aortion that
1:12:57burden no matter what the size of the
1:12:59burden is. And I'm sick of people
1:13:01telling me you just want the government
1:13:02to be bigger. It's like no I want us to
1:13:04have a fair aortionment no matter what
1:13:07the size is. And I assume, sorry,
1:13:09>> what's that?
1:13:10>> I was going to say and I assume that you
1:13:11want whatever size it to be to be not be
1:13:13funded with borrowing from the future.
1:13:15You want it to be balanced.
1:13:17>> Exactly. And I think that and I think
1:13:18that this idea so like when we talked
1:13:21about this that we have $7 trillion in
1:13:25expenses in 2020 uh 2025. Yeah.
1:13:28>> A full trillion dollar this year is
1:13:31going to go to just paying the national
1:13:34debt. Yeah. just just not even right.
1:13:36Yeah. As big as the milary of it.
1:13:39>> I mean this is we are we are screwing
1:13:42future generations and it and limiting
1:13:45their ability to have government
1:13:46spending for things that we need
1:13:48government to do. And so I think it is a
1:13:51big problem and I think it's kind of the
1:13:53easiest lowhanging fruit. I totally
1:13:55agree with you that the um unequal power
1:14:00in this country is hugely problematic.
1:14:03And one of the things that I write about
1:14:05in my book is how through charitable
1:14:08giving people are able to throw their
1:14:10weight around in ways that I we should
1:14:13all find concerning. these these like
1:14:16don't tax us um you know don't tax the
1:14:19rich campaigns are often funded by these
1:14:23so-called nonprofits so that it's not
1:14:26just the rich people that are funding
1:14:28them they are funding them with our tax
1:14:30dollars when you make a charitable
1:14:32donation the richest Americans can get
1:14:34tax benefits that are worth up to 74% of
1:14:38the value of the donation so it's like a
1:14:40it's like a nightmare right they're
1:14:42using our money against getting their
1:14:46money,
1:14:46>> a donated money that they don't have to
1:14:48pay taxes on to spread an anti-ax
1:14:50message through the charity.
1:14:52>> Exactly. Exactly. So, it's a huge
1:14:54problem.
1:14:54>> You hear all this and I assume a lot of
1:14:56people listening and myself included, we
1:14:58get angry. It's a thing that makes you
1:15:00angry. And the title of your book is the
1:15:02second estate, which I believe is a
1:15:04reference to uh a class of people in
1:15:07France right before a revolution.
1:15:10like that is the group who didn't have
1:15:12to pay tax the nobility who didn't have
1:15:13to pay taxes, right? And so, uh, are you
1:15:16worried at all that the the pressure
1:15:18keg, powder keg here is building up to
1:15:21to crazy political outcomes unless
1:15:24something is done? I am uh I am
1:15:30happy that we're getting political
1:15:32pressure because the only time the
1:15:35government has the only time we have
1:15:37adopted so so my book goes over the
1:15:39history of when we've actually had these
1:15:41changes and they have always been at
1:15:43times when there's been real threat uh
1:15:45originally from socialism like so if you
1:15:48think about what it was like when we
1:15:49enacted these 1913 you know McKinley was
1:15:51assassinated by an anarchist socialism
1:15:54was huge at the turn of the century.
1:15:56Lots of worry about that. And the reason
1:15:59they imposed so the original taxes
1:16:01adopted in 1913 and 1916, the income tax
1:16:05and the estate tax, which is that's when
1:16:07they were adopted, they only applied to
1:16:09the richest Americans because people
1:16:11worried that capitalism itself was under
1:16:14threat. And so taxes is a way that the
1:16:18government could show that capitalism
1:16:20was a legitimate system. And similarly
1:16:23in the time of the great depression, it
1:16:25was a time capitalism was under threat
1:16:27from communism and we had massive
1:16:30increases in taxes on the wealthiest
1:16:32Americans because of a concern that
1:16:36people worried about the future of
1:16:38capitalism. One of the problems is that
1:16:41since 19, you know, the mid1 1980s,
1:16:45there's no longer a threat of communism
1:16:48and socialism and in the way that it was
1:16:51once perceived, right, that with the
1:16:53break up of the Soviet Union and things
1:16:55like that. And so some have said that
1:16:57that is why the country has empowered
1:17:00the wealthy more and more because
1:17:02there's no real alternative to
1:17:04capitalism. But now I think what we're
1:17:07seeing is a lot of agitation from the
1:17:09left that is that is scaring people and
1:17:14I think that is the only way that we are
1:17:17going to get good reform. So you know am
1:17:19I worried that we're going to ultimately
1:17:21get to the pitchfork era? I think that
1:17:23along the way we're going to get to the
1:17:25tax reform era. But I mean I have to
1:17:27warn you I'm kind of an encourageable
1:17:28optimist. So I have to I have to see
1:17:32things that way or I just won't be able
1:17:33to function. Oh, that's incredibly
1:17:35interesting. Yeah, the history of not
1:17:37having the pressure of a external
1:17:39socialist country putting that onto
1:17:41America that moves the Overton window.
1:17:43That's Yeah, that's fascinating. I
1:17:45hadn't thought about that.
1:17:46>> Uh well, I I guess if if I could cap it
1:17:50off with like one last maybe quick
1:17:52question. Uh I uh think it's I I wanted
1:17:58to know you seem very focused on uh the
1:18:02assets of like individuals and families
1:18:05and the way they are escaping their fair
1:18:08burden of tax uh which is super super
1:18:10important uh but aren't as focused on
1:18:13something like corporate taxes. And I
1:18:16was just curious why that's the case. I
1:18:18I I don't know much about like corporate
1:18:20taxes to be honest. So, I was I just
1:18:22wanted to to hear your opinion.
1:18:24>> Yeah. So, uh corporate taxes the problem
1:18:27with corporate taxes from my perspective
1:18:29are that um theoretically they're a
1:18:32little bit of a problem. And I'll I'll
1:18:33tell you two reasons why. Uh first of
1:18:35all, you're absolutely right in that in
1:18:39thinking that um you know, corporations
1:18:42have massive amounts of wealth and
1:18:44they're not paying taxes and this is a
1:18:45problem. Agreed. So, let me just start
1:18:48there. I agree with you on that. There's
1:18:50two problems that I see and the reason
1:18:52that I don't have a strong answer to the
1:18:55corporate tax problem. One problem is
1:18:58that um when a corporation pays a tax,
1:19:03it's not really clear who pays who
1:19:06carries the burden because uh whenever
1:19:09you talk about raising corporate taxes,
1:19:12the people who say you shouldn't raise
1:19:14corporate taxes says it's just going to
1:19:16be passed on to consumers in terms of
1:19:18higher prices or to employees in lower
1:19:22salaries. Right? employees and consumers
1:19:24are going to be bearing the cost of this
1:19:26increased tax on corporations. But
1:19:29meanwhile, whenever you talk about rich
1:19:33people not paying taxes, they're always
1:19:35like, "Hey, we're paying all the
1:19:36corporate taxes because it falls on the
1:19:38shareholders, right?" So, there's like a
1:19:40shell game that goes on about who bears
1:19:43the tax of the corporate taxes, making
1:19:45it hard to talk about because there is
1:19:48no objective answer to who pays who
1:19:51really is carrying the burden, right? Is
1:19:52it lower salaries? Is it higher cost to
1:19:55consumers? Is it lower returns to
1:19:57shareholders? It could be any or all of
1:20:00them. The second problem I see with
1:20:02corporate taxes is that there's all
1:20:04these other forms of businesses that
1:20:07don't have an entity level tax like
1:20:09partnerships and S corporations. And so
1:20:13we have no tax, no separate level of tax
1:20:16on those people and a separate level of
1:20:18tax on corporations. So, it's just, you
1:20:21know, I'm just I don't have a good
1:20:23answer to the corporate tax problem,
1:20:26which is why I stay away from it. If I
1:20:28had one, I'd give it.
1:20:30>> Totally makes sense. Well, thank you
1:20:32very much for joining us,
1:20:33>> Ray Matto. The book is The Second
1:20:35Estate: How the Tax Code Made an
1:20:36American Aristocracy. I'm very much
1:20:38looking forward to reading it. Uh, send
1:20:40us those mugs. We'll put them on our
1:20:41desk.
1:20:42>> Oh, who was top student? If you if you
1:20:44had to give a golden star to one student
1:20:46today noting that Aiden cheated and
1:20:48looked up all the answers in advance.
1:20:50>> Yes, definitely you. Absolutely.
1:20:53>> Wait, wait, hold on. You were looking at
1:20:55at me.
1:20:57>> Yes, I dude. Congratulations.
1:21:02>> Uh, yeah. Thank you. Thank you so much
1:21:04for joining us and uh hopefully we get
1:21:06to meet in person in the future.
1:21:08>> I'd love to. Wonderful meeting you guys.
1:21:10Thanks so much. Thank you so much. Bye.
1:21:12Bye. Bye.
1:21:14We're back. Uh, that was a very
1:21:15fascinating interview with Ray Matto. I
1:21:17actually genuinely enjoyed that. Uh, we
1:21:19have a lot to talk about of our own
1:21:20personal thoughts on it. Yeah.
1:21:21>> But one thing we're trying to clarify
1:21:23literally off pot, we're just like
1:21:24talking to each other is like there's
1:21:26death tax, estate tax, and
1:21:28>> inheritance tax.
1:21:30>> And so the death tax and the estate tax
1:21:31are the same thing.
1:21:32>> Yeah. The death tax is like the rebrand
1:21:34or nickname to make people feel bad
1:21:37about the estate tax. And the estate tax
1:21:40is something that does exist and it's
1:21:43when if you have assets over $15 million
1:21:47and you die, you your assets are taxed
1:21:51at 40% in the US.
1:21:53>> Yeah. However, the estate tax or death
1:21:57tax as it's been nicknamed is very
1:21:59ineffective at actually creating revenue
1:22:02through that tax because most people
1:22:04find ways to pass on their assets dur
1:22:08through the duration of their life
1:22:10before they have actually died avoiding
1:22:13the estate tax entirely.
1:22:15>> That's okay. All right. So, that's the
1:22:16importance of both making sure the
1:22:17estate tax is enforced as well as not
1:22:20allowing you to just gift things before
1:22:22you die. Yeah. And then in most cases,
1:22:25an inheritance tax is different. It's
1:22:28taxing the person who has received the
1:22:30assets of the dead person after after
1:22:33they have received them. And in most
1:22:35cases in the US, we do not have an
1:22:38inheritance tax from my understanding.
1:22:40>> There's no federal inheritance tax. It
1:22:41only happens in five US states. So, it's
1:22:43not it's not really a big issue, but
1:22:44they were all using the same different
1:22:45names.
1:22:46>> Yeah. But broad level, very interesting
1:22:49>> and does make it, you know, you you said
1:22:51this at the end, Doug,
1:22:52>> like she's optimistic, but it does make
1:22:54it seem as complicated and scary and
1:22:57hard as you kind of imagine.
1:22:58>> What I thought was most interesting is
1:22:59most of the solutions that I most that I
1:23:02hear the most frequently, which is like,
1:23:03oh, stop the borrowing loophole. That
1:23:05she just was like, that's not going to
1:23:07be as effective as you think. And then
1:23:08same with even with wealth tax where it
1:23:10was not necessarily about effectiveness
1:23:12but more just the practicality of doing
1:23:13it and instead identifying these two
1:23:15other areas like the giving during your
1:23:17lifetime that I just didn't realized was
1:23:19maybe the bigger problem. So
1:23:20>> that's why I appreciated the like
1:23:22dynamic way she analyzed something like
1:23:25the wealth tax where like in California
1:23:28she was like okay well this one time tax
1:23:30where such a large portion of the assets
1:23:33are stock which is easy to value
1:23:36>> is a decent application of a wealth tax
1:23:39but if you apply it across the board
1:23:41here's these like functional things that
1:23:44impede it even if you want to disagree
1:23:47with that. And I I I feel like this sort
1:23:48of like layered analysis of taxes, the
1:23:52way people like circumvent them and try
1:23:54to like pay different taxes instead is
1:23:56like so rare to find anywhere in the
1:23:59like common discussion forums around
1:24:01these things.
1:24:02>> Yeah. The the two takeaways that I
1:24:03personally had was number one, someone
1:24:06like her needs to be listened to by
1:24:09those in power. like someone who really
1:24:11understands it needs to be at the table
1:24:14when policy is made because most of us
1:24:16[ __ ] cannot reliably weigh in and
1:24:19are I guess easily swayed by narratives
1:24:21that like explain certain problems like
1:24:23I've been saying buy borrow die for
1:24:25[ __ ] ever and like that's not it's
1:24:27it's not nuanced enough and her answers
1:24:30were. So, I think that's part of it. And
1:24:32the second thing is that like on a grand
1:24:33scale, you know, I looked it up and our
1:24:35tax code is 7,000 pages long. And that
1:24:39benefits a certain class of people. That
1:24:41just does. The regular person cannot
1:24:43reliably uh understand that or make any
1:24:46sense of that or know the [ __ ]
1:24:48nuances and loopholes. And I would
1:24:50really love a more simplified tax code.
1:24:51Even if it raises like in theory less
1:24:54taxes, I think it'll raise more in
1:24:56practice. like just making sure everyone
1:24:58understands and is is enforcing the
1:25:00rules sounds awesome, you know, rather
1:25:02than
1:25:03>> Yeah.
1:25:04>> feel like you're falling behind because
1:25:05you didn't um know this trick or this
1:25:07loophole or this person that I think
1:25:08that's uh so corrosive. I've been trying
1:25:12to think about what the most effective
1:25:15messaging or like way of combating these
1:25:18problems are because I I through the
1:25:22questions I asked I think my my fears
1:25:25are pretty apparent that it is difficult
1:25:27to combat the like engine of
1:25:30misinformation and resources that rich
1:25:34people who have a vested interest in not
1:25:36being taxed are are fueling all the
1:25:38time. So you need to like counteract it
1:25:41with a really a message that is really
1:25:45accessible, easy to understand and and
1:25:48easy to spread but engages with the real
1:25:51problems that she is like listening.
1:25:53>> Catchy jingle or rap that you write
1:25:54right now.
1:25:57>> My like
1:26:00>> my equivalent of like the Flintstones
1:26:02theme song but about like equating
1:26:04taxation across the board. Bro,
1:26:06>> you need a snappy Trump nickname. You
1:26:09need
1:26:09>> Yeah. Yeah.
1:26:10>> We need a snappy slogan. We need
1:26:12something to like get people on board
1:26:14with these tactics.
1:26:14>> He's just I don't have the talent like
1:26:16him.
1:26:16>> He doesn't have it anymore.
1:26:17>> He doesn't even have it anymore.
1:26:18>> It was a moment in time. It was a spark.
1:26:20But I I I think the the message that she
1:26:23is really trying to sell is let us like
1:26:27before we deal with the broader
1:26:30implications of problems, let's just
1:26:34make rich people functionally pay the
1:26:36same percent as wage earners below them
1:26:40because right now they pay a way lower
1:26:43percent than the people that earn money
1:26:46normally underneath them. So, even I'll
1:26:49I'll use myself as an example. I'm like
1:26:51I'm a wage earner. I make money through
1:26:53the podcast and like the working at
1:26:55Lewig's company, right? All of my like
1:26:57the money I make is pretty much through
1:27:00uh like normal normal income. Even
1:27:03though I have like a not normal job, I'm
1:27:04doing really well, right? But I pay like
1:27:07I'm at the top end of that tax bracket.
1:27:09I'm paying a lot in taxes. And she's
1:27:11saying it's like there's a rich, you
1:27:13know, even at the high end of that, the
1:27:15doctors, the lawyers, etc., They pay a
1:27:17big chunk in tax money, but for all the
1:27:20people above them, it's like they don't
1:27:22play this normal game that the rest of
1:27:24society engages with. They have assets
1:27:27>> and it's two-tiered system
1:27:28>> and they need to pay the same that the
1:27:31earners below them pay on those assets
1:27:34somehow and we need to close the
1:27:36loopholes to do it.
1:27:36>> Yeah. One thing I wanted to ask her,
1:27:37I've always thought it's so [ __ ]
1:27:38weird that I found out in my 20s when I
1:27:41got some stock is like if you hold a
1:27:44stock for a year and then sell it. They
1:27:46just call it capital gains tax and it's
1:27:48really low. It's just way lower. It's
1:27:50like 15%. And I just instead of paying
1:27:52what I would normally pay on income,
1:27:54this is just income to me. I just held
1:27:56it for a year and now it's like, well,
1:27:57you're an investor and that's a
1:27:58long-term capital gain. And it's like
1:28:00that that just seems like a rule that
1:28:02helps rich people. doesn't like when I
1:28:04think about it, I can't intuit it why
1:28:05that makes any [ __ ] sense. There's no
1:28:07functional difference. It was basically
1:28:08salary. I got paid in the stock and I
1:28:10just waited a year to sell it and it's
1:28:12like very obvious that it
1:28:14>> why why it was created and why it
1:28:15benefits. So her I mean even her
1:28:18argument against that from what I saw in
1:28:20another interview and she's like I agree
1:28:22basically I agree with that premise but
1:28:25for the wealthiest people that this is
1:28:27mainly about they aren't even paying the
1:28:29capital gain tax because they're never
1:28:31selling the asset. It's like even in
1:28:34these weird
1:28:34>> I would I would push back on that
1:28:35slightly. I guess she's right in a grand
1:28:37scale, but like Jeff Bezos has sold
1:28:40>> lots of $9 billion of Amazon like 50
1:28:43times in the like he's done it
1:28:44consistently and that tax that he should
1:28:47be paying is like 40% of that, but
1:28:49instead he's paying 15 because it's a
1:28:50long-term capital gain. So he's still
1:28:52paying way less,
1:28:54>> you know, it's like
1:28:55>> lever should be turned off even. So when
1:28:58his tax return got leaked, if I remember
1:29:00correctly, it the the rates of like the
1:29:04people that got leaked, like Warren
1:29:05Buffett was like below 1%. Um
1:29:08>> and I think Bezos was like another
1:29:11person was below 1% and then Bezos was
1:29:13like three or four presumably because
1:29:16he's paying a larger portion of capital
1:29:18gains.
1:29:19>> Uh but I think these are the things that
1:29:21like someone like Bezos even like hides
1:29:23behind, right? He's like, "Well, I I I
1:29:26don't do the loans. I sell my stock."
1:29:28And he's like,
1:29:29>> "Yeah." Well, that was another question
1:29:30cuz or she said like uh the the line
1:29:32everyone says about how the top 1% pays
1:29:3540% of the taxes or whatever. And she
1:29:36explained why that's wrong.
1:29:37>> The top 1% of earners.
1:29:39>> Yeah. But what's funny is like even if
1:29:41that were true, don't they own more than
1:29:4340% of the wealth? So like that it's not
1:29:45like even
1:29:46>> Yeah. He was talking about rates, not
1:29:47about actual money.
1:29:49>> It's like yeah, you maybe pay the most,
1:29:50but you have the most by far. So
1:29:53>> yeah,
1:29:53>> I speaking of which that reminds me of
1:29:55the the dude the 55 trillion stat is
1:29:58insane to me. The top 1% of wealth
1:30:01owners owning $55 trillion
1:30:05>> is in assets is [ __ ] insane. And the
1:30:09amount that that has gone up in like the
1:30:12last five years even is crazy. I think
1:30:16it's gone from like 45 trillion to 55 in
1:30:20that span of 5 years or something like
1:30:22that
1:30:23>> which is crazy because that is exactly
1:30:25the amount of our deficit if we were to
1:30:28I mean I you know I'm not saying we
1:30:29should just go seize all the money
1:30:31that's earned me
1:30:32>> but if you were to like that it match
1:30:35that exactly matches the rate of the
1:30:37deficit which is about $2 trillion a
1:30:39year which is just it's interesting math
1:30:42>> that I agree
1:30:43>> that was another piece that I thought
1:30:44was so interesting Like I look, I'm an
1:30:46American patriot, okay? When I'm near a
1:30:47communist, I break out in hives. But I
1:30:50thought what she was saying about how
1:30:52this rise of of socialism and wealth tax
1:30:54is going to push pressure, even if that
1:30:57doesn't come into power, like it'll just
1:30:58put pressure on lawmakers to say, "Okay,
1:31:00let's change this a little bit." Um, I
1:31:02thought it was great, right? That's
1:31:03really encouraging.
1:31:04>> I wanted to talk about that cuz do you
1:31:06remember when we read the book about
1:31:09canes, it went into detail about about
1:31:12that basically. So what gave the like
1:31:14fuel for Keynesianism at the time was uh
1:31:18can like Keynesian Keynesianism is
1:31:23supposed to combat socialism in that
1:31:25sense. Like we have to offer this like
1:31:28government supplemented alternative to
1:31:31economics because this flank exists
1:31:35right now and we need something else
1:31:37that like allows a market to exist but
1:31:41uh supplements all of the market's
1:31:43failures and that was like the rise of
1:31:45Keynesianism in that period of time for
1:31:47like that first 40th uh those like 40
1:31:50years of the beginning of the 21st
1:31:51century. I thought that was so it was
1:31:53interesting to like hear her say that
1:31:55and be like, "Oh, oh, I read I read
1:31:57about it. I'm so excited."
1:32:01Like
1:32:01>> should have busted that voice out. That
1:32:02would have
1:32:05>> uh Yeah. I mean, you know, the core the,
1:32:08you know, the fundamental principle is
1:32:10like capitalism only really works on a
1:32:13small scale or on a large scale when
1:32:15competition is there. This kind of
1:32:16factors into that like if there's no
1:32:18competitive pressure people naturally
1:32:20will start rentse seeking. They just
1:32:21that's what they do. They just find a
1:32:22way to like do the let Yeah. Yeah. So
1:32:25>> we yearn to extract rent.
1:32:27>> I think human beings you go to thousand
1:32:29years before capital ever existed. They
1:32:30just yearn to [ __ ] sit like
1:32:34>> trade route. He wants to just sit there
1:32:35and own a
1:32:36>> bought a cave and they rent out the
1:32:37cave.
1:32:38>> They literally want to [ __ ] extract.
1:32:40That's what they want to do. Like human
1:32:41beings would like to do no work and have
1:32:42someone else do it.
1:32:43>> Oh, so I can't own a cave. You're saying
1:32:44I have to pay taxes every year on the
1:32:46cave.
1:32:47>> The grog tax, dude. [ __ ]
1:32:49>> can I say I did feel like the like
1:32:52longer term answer of like one of the
1:32:54last questions I asked which is kind of
1:32:55this the the like anti- capitalist
1:32:57argument would be that like this
1:33:02economic organization of society
1:33:04continue will always allow this problem
1:33:06to continue to like proliferate and
1:33:08corrode and and and I'm not saying
1:33:11there's no arguments against that either
1:33:13but I don't I don't feel like she she's
1:33:15not like
1:33:16>> she she didn't really engage with that
1:33:18part of I feel like
1:33:19>> I I think that's a fair I shouldn't
1:33:20answer it, but I would just say that,
1:33:22you know, I think a fair
1:33:23counter-argument is that maybe that
1:33:24applies to every system ever. Like the
1:33:26literally everything in human history
1:33:27has been corroded over time. There's
1:33:29latest stage versions of everything.
1:33:30>> Yeah. I would say like you the
1:33:32consolidation of like power exists in
1:33:34like whatever framework you build out.
1:33:35Um
1:33:36>> it just feels like we have a bad
1:33:38>> Well, they I don't know. It's like we
1:33:40>> I'm thinking of I'm thinking of the
1:33:42skeptical left that listens to their
1:33:44podcast and like rip is ripping their
1:33:46YouTube comment, you know, like I I
1:33:48guess I that's who I'm thinking of and
1:33:50they're not walking away from that
1:33:52answer like particularly satisfied,
1:33:53which I don't necessarily expect them to
1:33:55be either. Uh but it and they're super
1:34:00hang fun to hang out with at parties
1:34:01too.
1:34:07Uh I also thought I also thought for
1:34:09what it's worth her answer about
1:34:11corporate taxes was really interesting
1:34:13because uh I a long time ago I had this
1:34:17like 2hour call where from this guy he
1:34:21worked at this think tank about like how
1:34:23to address the concerns of like
1:34:25corporate tax dodging. incredibly
1:34:27interesting. Honestly, so
1:34:30complicated that I've struggled to like
1:34:33represent it on this show in a way that
1:34:36I think would be good. But I remember
1:34:38like there's a whole world of kind of
1:34:41like Ry Matto who is who is trying to do
1:34:44this on the corporate tax front too,
1:34:46right? But it for the problems that she
1:34:49mentioned, there's because of the all of
1:34:51the weird company structures we've made
1:34:54and all of the structures of like trusts
1:34:56and then also the international system
1:34:58that allows all of these things to be
1:35:00different in different places. It's just
1:35:01so difficult to believe.
1:35:03>> It's even harder for corporations than
1:35:04it is. And she made it seem hard for
1:35:05humans for
1:35:06>> but like like you said, at least a human
1:35:09has to, you know,
1:35:11>> physically be in a place or live
1:35:12somewhere. Corporations are ethereal and
1:35:14could be split a million different ways
1:35:15fictionally on paper and be in the
1:35:17Cayman Islands and be
1:35:18>> I I think they love being in the Cayman.
1:35:20>> They love being in the Caymans or
1:35:21Ireland, bro.
1:35:23>> I mean that's like I can I can
1:35:25appreciate her interest in focusing on
1:35:27the individual side because it's like
1:35:30they're related, right? And so and for
1:35:32you know somebody some rich person to
1:35:34say well like come on I'm already paying
1:35:35corporate taxes. It's like well we
1:35:37should let's make sure individuals pay
1:35:39their fair share and then you can have a
1:35:40conversation. But while both of these
1:35:42feel weird and unresolved, you can just
1:35:44endlessly kind of loop about what you
1:35:46what should be done, right? So it's like
1:35:47fix the one side first and then you can
1:35:50calibrate the other against a fixed side
1:35:52as opposed to both being in flux all the
1:35:54time. I thought that made a lot of
1:35:55sense.
1:35:56>> Plus the end goal of these corporations
1:35:57is to take wealth eventually and give it
1:35:58to
1:35:58>> give it to humans, right? Like
1:35:59eventually people want to get the money
1:36:02and houses and yachts. Yeah. That is the
1:36:04ultimate it's trickle down really.
1:36:07>> I think that's the end result that we
1:36:08all trickle down economics. Yeah, I I I
1:36:11guess no matter how you slice it is like
1:36:13there's a point at which one human is
1:36:15passing money to another human and it's
1:36:18like that has to happen no matter what.
1:36:21So let's [ __ ]
1:36:23>> just find the way to tax that.
1:36:25>> Um I any other big thoughts?
1:36:29>> I don't I mean, I think she was
1:36:30optimistic at the end,
1:36:32>> but it is funny, you know, the idea that
1:36:35her entire book is about the I mean, not
1:36:36about, but it's like it's related to the
1:36:38French Revolution and it's like about
1:36:39how this has happened in history and it
1:36:41usually doesn't end well. When a lot of
1:36:42when this class of people gets complete
1:36:44tax immunity and their wealth grows at a
1:36:46way faster rate than everybody else,
1:36:47shit's got to happen. And I don't I mean
1:36:49I think maybe we get you know um the
1:36:52pressure she said but it it is ironic I
1:36:55guess cuz cuz like you said in your
1:36:57question it's very unlikely they're
1:37:00going to give up without a very very
1:37:01difficult fight. Do you know what I'm
1:37:02saying? There's so much at stake and
1:37:03they have so much power.
1:37:04>> There are like a lot more examples at
1:37:06least in American history of the
1:37:07government makes a pretty substantial
1:37:09change rather than revolution.
1:37:11>> Absolutely. But I think they came around
1:37:13big crisis. So you'd be like the Great
1:37:14Depression or it would be World War I or
1:37:17you know it would be like that. Yeah.
1:37:19>> So
1:37:19>> yes, I agree. But it just feels like
1:37:21it's not going to happen from us talking
1:37:23about it. That's my my concern is that
1:37:25us even if we made a really good
1:37:27podcast,
1:37:28>> it's not going to get tax law changed
1:37:30until something happens.
1:37:32>> This is I feel like this is the true
1:37:34human human weakness. Actually, we we
1:37:37did we read V for Vendetta this month
1:37:40for the book club, and it's a note that
1:37:42I had while I was reading it, and I was
1:37:44like, is this the the the the great
1:37:46human weakness is that we're react.
1:37:49We're just more reactive than we are
1:37:50proactive. Like, we can't help it. It's
1:37:53really really hard for us to reward
1:37:55proactivity because anything you're
1:37:57proactive about preventing is not
1:38:00noticed by anybody. And then anything
1:38:02that is a problem is the is the most
1:38:04important thing in front of you to react
1:38:06to. And it's just like it when people
1:38:08talk about human nature, I feel like
1:38:10that's the most human nature thing. And
1:38:12I don't I don't know how to circumvent
1:38:14that. Like I
1:38:16>> it it takes a crisis and uh and that
1:38:20doesn't feel super optimistic.
1:38:23I guess the optimistic part is that it
1:38:25could be a small thing like it I guess I
1:38:28guess um it does seem like people are
1:38:32more receptive to this line of thought
1:38:34after learning about education right
1:38:36>> 100%.
1:38:37>> So I just feel like uh that is our best
1:38:40way as humans to combat this is
1:38:43>> making it understandable and and
1:38:45educating people as much as you can. I
1:38:47think people then they're primed to be
1:38:48ready even at a smaller crisis to be
1:38:49like
1:38:50>> that's what I was thinking the easiest
1:38:51line to sell from all of this if you
1:38:53were like a you're going to Thanksgiving
1:38:54you're talking to your parents after
1:38:56this or something is like okay whatever
1:38:58you believe about all of this whatever
1:38:59you believe about like tax rates higher
1:39:01lower or whatever these richest people
1:39:04are paying like a fraction of a percent
1:39:06on the money that they make and we all
1:39:09have to pay in normal society like 20 to
1:39:1340%. And what if we just got them to
1:39:15like 35?
1:39:17>> I think that's a great sales pitch.
1:39:18>> Like that's and just start there and
1:39:20then figure out the rest, you know?
1:39:23>> Yeah, 100%. Yeah, I like that a lot.
1:39:25>> And then and then when they say but
1:39:27AOC's a communist, you say that's
1:39:29actually that's not what we're talking
1:39:30about. We're just saying these superw
1:39:33wealthy people are in a are in a class
1:39:34of asset where they don't pay taxes and
1:39:36that's it. I I really like that she said
1:39:38this is not about a big or small
1:39:39government. It's just that's not
1:39:41actually what it's about. It's just
1:39:42about should people pay taxes? That's
1:39:44it. That's the question. It's like yes,
1:39:45everybody agrees you should pay taxes if
1:39:47you work. At least they should match the
1:39:50rest of us.
1:39:51>> Let's get to the same page first.
1:39:52>> That's it. That's it.
1:39:54>> The big thing I found though, I I I
1:39:56remember during Biden's term,
1:39:58>> uh, he did a thing where he added
1:40:00400,000 new IRS agents.
1:40:02>> Yeah.
1:40:02>> And it was a big deal. And I remember
1:40:04made a video about it. I remember
1:40:04talking about it with chat and I pushed
1:40:06it and I was really excited about it.
1:40:08And the surprising amount of push back
1:40:10you get from people that are not
1:40:13anywhere close to being wealthy is
1:40:15crazy. I mean, it was one of the
1:40:18hardest,
1:40:20I don't know, like chat fights I've had
1:40:22where people just generally think IRS is
1:40:25going to screw me over. The more
1:40:27powerful they are, the more people they
1:40:29have, it's going to I don't know. It's
1:40:31like it's a real upward hill battle I
1:40:33feel it to get them to under like the
1:40:35truth is if you're a W2 earner they have
1:40:37no problem right now knowing everything
1:40:39you've got and [ __ ] and by the way I
1:40:42saw another stat which is like the
1:40:43majority now the majority of audits is
1:40:46on people who are W2 earners which is
1:40:49like insane because they don't need
1:40:50audits like most of them do not need
1:40:51audits but auditing people above and
1:40:53there's like the cuto off is now like
1:40:54100,000 which is nothing really but
1:40:57people above 100,000 have fewer audits
1:40:59than than below
1:41:00And it used to be opposite. And it's
1:41:03because people above 100,000 are just
1:41:04harder to audit. And they have such a
1:41:06stripped down staff at the IRS. And it's
1:41:08so bare bones lately, they just can't do
1:41:10it. They functionally cannot audit
1:41:12people that are wealthy that have assets
1:41:13in art or trusts or whatever. And that
1:41:18seems like a great place to start, too.
1:41:19It's like even our current shitty
1:41:20twisted rules, they just don't even
1:41:23enforce on people above 100,000, let
1:41:24alone above millions and billions, which
1:41:26is which is like ridiculous. So, I think
1:41:28people should more
1:41:30um get excited about when the IRS is
1:41:32funded. It just means that they can do
1:41:34the job that the laws say.
1:41:35>> Let's get hyped FOR IRS CHAT.
1:41:37>> NO, BUT LITERALLY NO, but it sounds bad,
1:41:39but literally like I think we just
1:41:41changed the territory.
1:41:42>> I think it's just because most people's
1:41:43individual interactions with taxes are
1:41:45>> it sucks.
1:41:46>> Entirely negative, right? Like you you
1:41:48you pay you pay a huge chunk of your
1:41:51check in taxes. You don't like live in a
1:41:53city with like good public
1:41:54transportation. You don't get
1:41:56healthcare. Like it just it feels like
1:41:58it just sucks money out of you and then
1:42:00and then you have to like submit them in
1:42:02this shitty way through one of these
1:42:03like apps that charges you
1:42:08>> and then and then so and then and then
1:42:12maybe because you [ __ ] it up, the IRS
1:42:14sends you a couple letters and I think
1:42:16that whole experience sour you on the
1:42:19idea that this institution can be any
1:42:22good. And I think that like the material
1:42:26like people's engagement there's so many
1:42:28layers to like how people's engagement
1:42:30with taxes like needs to also be fixed
1:42:33for them to be like oh it's good that
1:42:35the IRS is being expanded to do X and X
1:42:38because that's a shield that like way
1:42:39richer people get to hide behind.
1:42:41>> Yeah. Um
1:42:41>> I think it ties into what with that that
1:42:43mom Donnie clip we watched. Do we all
1:42:44watch this together or do we just watch
1:42:45on the 20? The one where he talks about
1:42:47the the changing language around like
1:42:49efficiency and stuff.
1:42:50>> [ __ ] fire clip. Yeah, as a fire clip
1:42:52and I think it ties into like what you
1:42:54said about uh services which like if you
1:42:56feel like you're seeing potholes get
1:42:58fixed and you're rebuilding that trust
1:43:00from ground one, I think you're
1:43:02>> your understanding of taxes comes into a
1:43:04better spot.
1:43:04>> Dude, that is one of his [ __ ] best.
1:43:06>> I think it's a banger
1:43:09heater.
1:43:09>> We got to we got to change public
1:43:10opinion on the IRS. We make a shirt says
1:43:13IR [ __ ] for taxes.
1:43:15>> Banger. How does he do it? I think we
1:43:18end the show on that note.
1:43:19>> He's a [ __ ] genius. He's a [ __ ]
1:43:21genius. We'll see you guys next week.
1:43:22>> See you guys next week.
1:43:23>> Yo, I hoped you liked that episode with
1:43:27Ray Matto, but there's one thing we
1:43:30wanted to talk about here, and it is the
1:43:31stock market game we have been running
1:43:33in the Patreon. So, for those who don't
1:43:35know, uh, as of a couple months ago, we
1:43:38started doing this thing where if you
1:43:39sign up for the Patreon, you can
1:43:40participate in a stock market game every
1:43:43month. You get a set budget of fake
1:43:45money. Some say that if you join Doug's
1:43:48fund, he gives you real money. uh and he
1:43:50has no way to defend himself. So he will
1:43:52do that.
1:43:53>> But the you can use fake money to buy a
1:43:55variety of like stocks or indexes and
1:43:58then see how you perform in the
1:43:59competition over the course of the
1:44:00month. And also something else you can
1:44:03do is join one of the like fund groups
1:44:05to see how you per uh do in the
1:44:08competition as like a team. There's five
1:44:10different funds right now. There's the
1:44:11independent, the working class, Aiden,
1:44:14Atriarch, and the Doug Doug fund. And I
1:44:16have to give credit Doug's fund came out
1:44:18on top. And uh who who came in last?
1:44:21Atriarch, just asking.
1:44:23>> So the people that signed up for the
1:44:24Atriarch fund turned out to be by far
1:44:26the biggest degenerates in this [ __ ]
1:44:29competition and they punted their money
1:44:32on absolutely insane wild bets that have
1:44:34not paid off in this, you know, macro
1:44:37environment and now they are doing
1:44:39badly. Though I will say that
1:44:41collectively this also looks bad because
1:44:43all of the groups have lost money.
1:44:45>> Yeah, it is.
1:44:46>> No has lost less money. There's been no
1:44:49none of the groups performed well.
1:44:52>> What is the S&P 500 done
1:44:55>> over the same period? I think that it's
1:44:57actually on this like website. You can
1:44:59see
1:44:59>> September to October. I guess they're
1:45:01down.
1:45:01>> The S&P was like over overc
1:45:04barely down. So, I think every all of
1:45:07the funds technically performed below
1:45:09the S&P. However, individuals did
1:45:12succeed. And I'll read off the top 10
1:45:14performers from our competition. Number
1:45:1610 was Kufier from the Netherlands. Uh
1:45:20Dwire uh or Derer was number nine. Uh
1:45:24number eight, Going. Number seven, Ash.
1:45:27Number six, Klein Stole. Number five,
1:45:29Real Lightfield. Number four, Will
1:45:32Willow. Oh, that's a Swedish guy. I've
1:45:33seen him in the Discord. Number three,
1:45:35NJ 331. Number two, J Wolf. And number
1:45:40one, just M coming out on top, turning
1:45:44their $10,000 into a nice $12,123.
1:45:48>> 15 videos on the risks of leverage ETFs.
1:45:51I look into this, it's like a bunch of
1:45:52people picking leverage ETFs in the HR
1:45:53Rock Fund and losing a ton of money.
1:45:55>> I'm going to be honest, if you come
1:45:56participate in this stock competition,
1:45:57you will be in the minority if you
1:45:58choose not to use a massive amount of
1:46:00leverage. Uh that's what it has been for
1:46:02the past two months.
1:46:03>> Suck bets would have been so much
1:46:05better.
1:46:05>> But you could uh check this out on our
1:46:08Patreon. patreon.com/lemonadestand.
1:46:10You can also get an extra episode of the
1:46:12show uh every week and or join our book
1:46:16club. Uh we will see you guys next week.
1:46:19>> Bye.
1:46:19>> We killed Doug. We actually killed Doug
1:46:21after this episode.

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