Jeff Bezos’ wealth has grown so much only because Amazon provides a valuable service to Americans
On Thursday, August 6, Senator Bernie Sanders introduced a bill called “Make Billionaires Pay“, to tax what Sanders regards as “obscene wealth gains” that billionaires made during the coronavirus. Specifically, the proposal has a 60 percent tax on the windfall gains from 467 billionaires, on the money that they made between mid-March and early August. Sanders claims that this tax would raise more than $420 billion which would be enough to allow Medicare to pay for all out-of-pocket health-care expenses for the next year.
If the bill passes, here is how some of the US richest people would be affected;
- Amazon CEO Jeff Bezos would pay a one-time wealth tax of $42.8 billion
- Tesla and SpaceX CEO Elon Musk would pay a one-time wealth tax of $27.5 billion.
- Facebook CEO Mark Zuckerberg would pay a one-time wealth tax of $22.8 billion.
- The Walton family would pay a one-time wealth tax of $12.9 billion.
This is a terrible idea that rests on a faulty assumption
To fully support Sander’s proposal, one must think that either (1) a wealth tax would help not hurt low-income Americans, or (2) Billionaires made their wealth by taking advantage of consumers, or both. In either case, a billionaires tax would redress any unfairness by helping low-income Americans without hurting low-income Americans and, at the same time correct the injustice that has been done by these billionaires who took advantage of consumers.
Wealth taxes are, however, damaging. They discourage saving and investment, which further hurts the economy and low-income individuals. Not to mention that these taxes are complex and costly to administer. This leaves one idea then, that billionaires took advantage of consumers during the pandemic. But is this true? The evidence says no.
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 by providing people with high-quality, affordable goods and services at a time when other businesses aren’t able to do so, are going to be handsomely rewarded.
Covid-19 and online shopping
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 structure to reach consumers.
But even if shopping trends stayed the same, there is a reason that companies like Amazon and Walmart have been so successful in amassing such wealth for their shareholders. People shop at Amazon or Walmart because they like the service that Amazon and Walmart provide. They like the prices and prefer to shop there over some other stores. Nobody in this country feels compelled to give billionaires their money out of the goodness of their hearts.
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.