Minnesota’s Economic News — W/E 7/1/22
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On Thursday, August 6, Senator Bernie Sanders introduced a bill called “Make Billionaires Pay“. This bill is targeting taxes towards what Bernie sanders regards as “obscene wealth gains” from billionaires during the coronavirus. The proposal outlines a 60% tax on the windfall gains from 467 billionaires, on the wealth they made between March 18th and Aug 3rd. Bernie Sanders claims this tax would raise more than $420bn which would be enough to allow Medicare to pay for all out-of-pocket health-care expenses for the next year.
of $42.8 billion.
Setting aside the damaging impacts of wealth taxation, and all the other issues regarding the feasibility and sustainability of forcing the wealthy to pay for government programs, statements that digital companies took advantage of the coronavirus pandemic are simply untrue.
During the coronavirus, people shifted to online shopping. Amazon and other corporations like Walmart already have existing structures in place to satisfy online demand for goods and services. It does not take a lot of math to figure out that anyone who is able to provide high quality, affordable goods and services to multitudes of people will get impressively rewarded for doing so.
Back in March at the beginning of the year, the stock market ceased trading because stock prices were crashing due to the uncertainty surrounding the coronavirus. A lot of people lost money, including the so-called billionaires. In fact, in March Jeff Bezos lost $7bn overnight and $18bn a month during this period. But this was not talked about nor is it mentioned when considering how much wealth people really have gained.
It is true that a lot of people have been affected by massive job losses. And it is also true that during the coronavirus pandemic, a lot of richest Americans have seen their wealth grow. But however, billionaires have not been the only ones who have gained due to the shift in consumption trends that have happened due to Covid-19. But Bernie Sanders fails to take that into account.
While it is true that a lot of Americans are hurting, disruptions caused by COVID-9 have affected some groups more than others, benefited others, and left other people the same. The positive impact has additionally not been restricted to billionaires.
In fact, most of the people doing skilled work faced little job loss or loss of income. The fact of the matter is, most of the hardships of this pandemic have been mainly focused on low-income individuals. And this has been due to the concentrated effect the coronavirus has had on the hospitality and service industry. A lot of people outside of this sector have scarcely been affected.
In a lot of countries, internet startups have excelled in the age of Covid-19 because they are able to effectively provide services. Zoom has been one good success during this period, and the company’s founder has made billions simply because demand surged for his app during the virus. Zoom is not a major corporation, but still rather provides a service people value and demand currently. And that is why it has been successful.
COVID-19 has pushed people to reduce physical store foot traffic and turn to shopping online. This is why companies like Walmart saw their sales surge during the pandemic. It is not due to greed or selfishness. They just happened to have been perfectly positioned to take advantage of the new trend and meet people’s changing needs. On the other hand, stores with a low digital footprint did not have the necessary existing structures to reach consumers.
However, there has already been a big shift and businesses recognize that the old way of doing business is either gone forever or will take a while to come back. People are generally still not very confident to resume prior levels of shopping in physical locations. So, businesses have moved to take advantage of this new change and moved to increase their digital presence or at least reach customers much more remotely. There has been an increase in delivery services, touchless delivery, or contactless options.
But even if it were the case that shopping trends stayed the same there is a good reason why corporations like Amazon have been able to amass such wealth for their shareholders. The only reason that people shop at Amazon or Walmart is because they like the services they get there. They like the prices and prefer to shop there over every other store. Nobody in this country feels compelled to give billionaires their money out of the goodness of their hearts. Most of these people have been able to successfully start and operate businesses that move with time and are innovative enough to follow changing trends.
Consequently, taxing such people who are able to provide goods and services is simply taxing away innovation and growth. And in the long run, it is simply a tax on the American people. Because if we are to wage a tax on anyone who makes goods cheaper for people, we would be essentially making things expensive for people.
Amazon and Walmart provide much-needed service and people reward them for that service. Imposing a cost on that system will hurt not only the owners of these companies, but the American people. They are the ones who freely choose to shop on Amazon due to the ability of Amazon to satisfy their needs at affordable prices.