There is talk about a wealth tax, particularly from Elizabeth Warren.  Some don’t know that Donald Trump once proposed a one-time wealth tax of 14.25% on those with over $10 million in assets.  That was back in 1999.  Luckily, he has not advocated for such a thing in a long time.

Bill Gates was recently discussing a wealth tax.  Gates is something of a coward.  Maybe it is because the Clinton administration took on Microsoft back about 20 years ago.  Gates mostly toes the establishment line.  It isn’t much different when it comes to a wealth tax. He said he’s paid over $10 billion in taxes, and he would be fine if he had to pay $20 billion.

However, he did half-jokingly say, “When you say I should pay $100 billion, then I’m starting to do a little math about what I have left over.”

Gates is supposedly currently worth about $106 billion.

Gates and Warren Buffett make it sound like they don’t mind paying high taxes.  Sometimes they will say that they should pay more. Yet, they never donate extra to the government.  They send a lot to charity and their pet causes, but that never includes funding the government beyond their minimum requirement to stay out of jail.

Now, here comes Bernie Sanders.  Sanders said the following on Twitter:

“Say Bill Gates was actually taxed $100 billion.  We could end homelessness and provide safe drinking water to everyone in this country.  Bill would still be a multibillionaire.  Our message: the billionaire class cannot have it all when so many have so little.”

That is spoken like a true socialist.  There are a couple of major points that need to be addressed based on these comments from Bernie.

Taxing Stock Ownership

A large portion of the wealth that Bill Gates has is on paper.  He doesn’t have this money in the bank.  Gates has diversified some of his wealth (smartly) out of Microsoft and into other stocks, and presumably other asset classes.

Still, a large portion of Gates’ wealth is in stocks, and particularly in Microsoft.  He may be worth $106 billion, but that is just a reflection of what his stocks (mostly Microsoft) are currently worth.

And there is a bigger point here.  If Bernie Sanders were in charge (I’m sure he would feel quite comfortable ruling over others), he could tax Gates $100 billion and say that he would still have several billion left over.  But he doesn’t know that.

If you start selling a mass quantity of one particular stock, even when it is a big company like Microsoft, it is going to drive share prices down.  Gates may be able to sell millions of dollars worth of Microsoft at its current price per share.  Maybe he can sell a few billion dollars close to its current share price.  But at some point, you need buyers to match the seller.  The buyers willing to pay a higher price for Microsoft shares will get their shares early on.  As Gates sells his mass quantity of shares, the price will go down.  If it is publicly known that he has to liquidate most of his wealth, the price of Microsoft may even go down significantly just in anticipation of him selling.

In other words, once Gates sells most or all of his shares in Microsoft, he probably can’t redeem $100 billion worth unless he is able to spread it out over a long period of time. But that isn’t what Warren and Sanders are talking about.  You would get hit with your tax, and you would be expected to pay it.

So if Gates were hit with a $100 billion tax, it would probably bankrupt him completely.

Government Spending as a Cure

The other part of Bernie’s Twitter comment that is important to address is that he says we could end homelessness and provide safe drinking water to everyone in this country.

Bernie has said a lot of stupid and ignorant things before, but this has to be one of his best. Economics is not one of his strong suits.

Let’s forget the drinking water and concentrate on the claim of eliminating homelessness (although the same logic can be applied to safe drinking water).

There are currently over 500,000 homeless people in the United States for at least one night during a year.  The chronically homeless is obviously lower than this.

So let’s say there are 100,000 people currently homeless, and that is seemingly their permanent situation.  If you had $100 billion to spend on homelessness, that would be one million dollars per homeless person.  I suppose you could pull an Andrew Yang and just give the homeless people the money directly. Of course, this is never how government works.  It has to go through the bureaucracy.  There will be programs to help educate the homeless.  There will be housing programs for them.  You know how it goes.

But if you did just hand over the money in one shot, why should we assume this would end homelessness?  Maybe some people don’t want a home.  Maybe some people would spend all of the money quickly on drugs.

And what about all of the people who are currently on the verge of homelessness?  Wouldn’t it benefit them to become homeless in order to collect the next round of checks?  For a million dollars, I might consider becoming homeless if it was for a short time.

In other words, it wouldn’t be sustainable, and the incentives would all be backwards, as they typically are with government.  And many of the homeless people would end up right back where they started.

If you want to get anywhere close to getting rid of homelessness, then you have to dramatically scale back the size and scope of government.  In California, where the problem is the worst, the home prices are astronomical in some regions.  There are high taxes on almost everything, and the regulations are ridiculous.  It gets reflected in the price of products and the wages that don’t keep pace with the cost of living.

Beyond all of this, I would like to point something out to Bernie and his supporters.  The federal government is spending almost $4.5 trillion per year.  This does not include state and local government spending.

In case Bernie can’t do the math, the federal government is spending over $10 billion every single day.  It is spending $100 billion in just over a week.  So if Bernie can get the federal government to divert just over one week’s worth of spending, we can cure homelessness according to him.  Of course, he will have to be in charge to implement the program.

The government is already running an annual deficit of about $1 trillion.  Why not just take on another 10% of that and eradicate homelessness?  It is that simple, according to Bernie.

Of course, the U.S. government could just stop fighting one or two of the wars overseas and save the $100 billion easily, but Bernie hasn’t brought up that as a solution.  He doesn’t really focus on foreign policy much, even though hundreds of billions could easily be saved (along with all of the lives).  He is too busy focusing on getting the rich.

After Bernie takes all of Bill Gates’ wealth and eradicates homelessness and provides safe drinking water, what will be next?  If he can get all of the wealth from Buffett and Bezos, Bernie should be able to eradicate all poverty and cure cancer.  Of course, he would have to be in charge.

According to the socialists, that is the only reason socialism hasn’t worked in the past. The right people need to be in charge.