Bernie Sanders calls for wealth tax

When looking for places to fund all of the spending, we do love dead people, don't we? They don't protest the way everyone else does when you take their stuff.

They are still taxing those people twice -- once when they earned it and again when they give it away (if they were dumb enough to wait until death. ... and they are not). The net result of a punitive estate tax is a law that benefits tax lawyers. As far as allocating capital, it is extremely wasteful. Rather than leaving people to make decisions with their own money, which conceivably ends up with capital allocated to investment that can help to make the world a better place. ... we create incentives for people to pay accountants and lawyers and insurance companies to structure tax havens. It's backward ass and a waste.

IMO, it's also wrong to tell people they are going to be punished for sharing the fruits of their labor or luck (or whatever) the way THEY choose to (as much as we all know that taxing it ensures that it will be spent more wisely by the Treasury).

 

When you "park" your money in, say a stock mutual fund, what do you think happens to that money?

 

I am not sure what that means. Anything of what that goes to what company? The mutual fund company? A stock the mutual fund is investing in? . ... Because your mutual fund investment has zero impact on the earnings of any of the companies in the fund's portfolio. In fact, it's the opposite. The earnings typically have an impact on the share price.

Most people investing in stock mutual funds are hoping for a return on their investment via capital gains and dividends. They aren't "parking" the money. They are investing it for a return on their investment. Mutual fund managers typically look for growing companies (that are valued in a way they believe is fair). Companies that consistently grow (and reward investors) alllocate their capital well -- and the best way to do that has always been to create new investment that fuels continued growth. Corporate earnings have always been what most reliably creates stock capital appreciation and/or dividends over the long term. I am not aware of any company that has who has ever achieved long-term corporate earnings growth by gutting its business. You can not sustain earnings growth that way for a long period of time -- unless it is some kind of extreme automation story that means your businesses require less human capital than it used to. In which case you have just created new goods and services and growth while freeing up human labor to do new things, which has the potential to lead to rises in standard of living.

The "profits are achieved by goosing things through layoffs and spending cuts" is not a formula that rewards shareholders over any long-term period of time -- the way companies such as Coca Cola or P&G or Apple or Merck or ConocoPhilips, etc. have, when you go back decades. When they have to lay off people, barring it being an automation story, it typically means something isn't working. If you have a good stock mutual fund manager, and a company is laying people off because something is failing, it should get his attention, because eventually that is going to be bad for any stock price if they can't fix the problem and start growing again. ... and he makes his management fee by attracting mutual fund investors based on his track record of picking stocks that appreciate.