Being Jeff Bezos

Let’s pretend.

Why Bezos?  Because he is the wealthiest man in the world.  Let’s assume his net worth to be $130 billion, which is more or less accurate as of today (Bezos' wealth is highly variable as it is based on the value of Amazon stock which – like the rest of the stock market lately – has been highly volatile.  The exact value of Bezos' wealth does not affect my argument in the slightest).

Let’s pretend his fortune is yours!

Let’s assume it doesn’t grow due to the growth of the underlying assets.  Let’s also assume it isn’t taxed.  No inflation, no recessions, no savings accounts or Treasuries.  It just remains $130 billion – except for how quickly you can spend it.

Let’s assume you have a wife and three children.  Let’s assume you have 44 years left to live (Bezos is 56, let’s keep him/you alive to 100 years old).  Let’s spend this wealth like crazy and see what happens.  This is our thought experiment: what is the lifestyle of a man who can have everything?

Housing

The Playboy Mansion was sold for $100 million in 2016.  Bill Gates’ home is worth $127 million.  Bezos himself owns a home in LA that he paid $165 million for, three more properties in NYC worth an extra $80 million and a property in Washington, DC worth $35 million.  Add them up together and it’s $507 million.  For kicks, let’s double that and you are paying $1 billion for housing.  ¾ of 1% of your wealth.

Servants

Let’s assume you need twenty(!) servants for each of your six homes for 44 years at $25,000 per servant/year.  You may think that $25,000 is too low a wage until you consider that they each have free room and board (in a mansion!); not to mention, how many of these homes really need twenty servants?  Nevertheless, the cost of servants over 44 years is 6 homes * 20 servants / home * $25,000 / servant-year * 44 years = $132 million, 1/10^th of 1% of your wealth.

Food

Let’s go whole hog.  Let’s spend $1,000 for dinner at one of the most expensive restaurants in the world.  That’s for you.  But you also have a wife and three kids to feed.  And three meals / day.  So, $1,000 / meal * 5 mouths to feed * 3 meals / day * 365 days / year = $5,475,000 per year, and $241 million for 44 years. What, you can’t eat home once in a while?  $241 million is less than 1/5^th of 1% of your wealth.

Transportation

Each of your homes deserves two automobiles, and a new one every three years!  In today’s market, a Rolls Royce Sweptail retails for $13.0 million, a Bugatti Divo $5.8 million and a Lamborghini Veneno Roadster another $4.5 million.  So, $7,766,667 / auto * 6 homes * 2 cars / home * 44 years / 3 (# of years car is kept) = $1.367 billion, about 1% of your wealth.

OK, OK, auto insurance, gas & oil, and repairs.  You think $15 million is enough?  It’s enough. Another 0.11% of 1% of your wealth.

How about personal jets?  Let’s assume two jets that you keep for five years each.  “A private jet can cost anywhere from $3 million to $90 million.  Ongoing expenses include flight crew salaries and expenses, the costs of routine maintenance and unforeseen repairs, hangar rental, and aircraft insurance.” (borrowed from Google).  The crew can be borrowed from our servants’ allocation, fuel and insurance will be a small fraction (let’s add another 50%) of each jet’s cost.  So, $45,000,000 / jet * 2 jets / 5 (years per jet’s lifetime) * 44 years = $800 million + 50% of that for maintenance, etc. = $1.2 billion, another 1% of your wealth.

Clothing

For a man like you, suits cost $2500.  Three new suits every year.  So, $2500 / suit * five persons * 3 suits / year * 44 years = $1,650,000, add shirts and underwear, etc., and you clothe your family for $2 million, another next to nothing of your wealth.

Education

Let’s keep all five of you in school at top prices.  Five persons * $100,000/person * 44 years = $22 million, another 1/60^th of 1% of your wealth.

Health

Let’s assume crazy: five quadruple bypasses for each of you for 44 years. The real cost per bypass may be $50,000, but let’s go with $500,000!  So, $500K / year per person * 5 persons * 44 years = $110 million for the five of you for 44 years, another 1/10^th of 1% of your wealth.

Jewelry and works of art

These are not necessities, and the figures that I have worked with above are so extravagant that you can own more than enough without going beyond the budget that I have imagined.

So, $1 billion for housing, $132 million for servants, $241 million for food, $1.38 billion for automobiles, etc., $1.2 billion for jets, $2 million for clothing, $22 million for education, $110 million for health care.  The total hit is $4 billion 87 million (spread evenly over 44 years, that is $92.9 million / year), which covers you in King Louis XIV splendor (do you think you could survive on this sum for the next 44 years?).  That is 3.14% of your total wealth.  You and your family could live like this for 1,500 years!  If tomorrow you lost 95% of your total wealth – to a stock market crash, to taxes! – you would be devastated by the loss – emotionally!   But once you got it together, you’d realize that you would not have to miss a meal or a suit, you would still have enough for your family to live real high on the hog (see above) for the rest of your life, for the next 44 years, until you are 100.  And the average American could live an upper-middle class life off of this remaining 5% of Bezos' fortune for – oh – 45,000 years!

As to the remaining un-spent $125.9 billion of your fortune, it would not be kept in your bathtub; it would be saved and invested in stocks, bonds, Treasuries, museum quality art, artifacts and jewelry.  Not spent.  And it would outgrow any attempts to tax it as wealth.  No one need fear it would just disappear!  No one need fear it would be worth less than $130 billion next year, stock market correction notwithstanding.  Bezos has pledged to spend an additional $1 billion / year on his outer space hobby, Blue Origin.  Still, his wealth will still grow much faster than his taxes and his hobby.

One of the possible lessons that you (once you are back in your own body) may draw from this thought experiment is: don’t be so bent out of shape when you hear a “socialistic” politician begin to talk about taxing the rich.  Indeed, this experiment uses the wealth of Jeff Bezos, and no one else lives his life.  But there are 621 billionaires in the USA in 2019.  And there were 5000 households in the USA in 2015 with wealth upwards of $100 million.  Americans who live in this economic stratosphere quite often declare no taxable income (Jeff Bezos pays himself a middle-class salary of $82,000) and thus pay no income tax whatever. They declare a Capital Gains income when they sell some stock, but even that tax rate is below the rate that you probably pay on your wage-slave income.

Elizabeth Warren has proposed a wealth tax that kicks in at $50 million.  You need not worry, nor need you waste any energy feeling empathy for those grandees who would be burdened by such a tax.   A tax on wealth in excess of $50,000,000!  In MY version of a wealth tax, I would kill the income tax altogether and the Capital Gains tax entirely, and depend solely on taxing wealth.  Does that idea frighten you?  Only multi-millionaires would pay more wealth tax than they pay income tax now.  But it would finally capture (in tax revenues) what it has failed to capture for decades: a portion of the wealth of the super-wealthy.  Imagine the good it could do: rebuild our infrastructure, eliminate annual deficits and pay down the National Debt, pay teachers enough to attract the BEST!, oh so much more.

There are a few folks out there who are concerned that a wealth tax could wipe out a man’s entire estate over time.  Indeed, if one billionaire’s wealth is, say, $1 billion, and the wealth tax were 6% (a very unlikely assumption) on his entire estate, and his wealth did not grow at all, his net worth after 10 years would have shrunk to $539 million, after 20 years it would shriveled to $290 million, and after 44 years he would have less than $66 million left to live on.  Can you imagine, $66 million left by the time he reaches age 100!  Poor fellow!  But the typical billionaire’s net worth does NOT stagnate over time; it grows – reliably – and faster than our supposed top wealth tax rate of 6%.  Jeff Bezos’s wealth has grown at upwards of 60% / year since he began, and the typical billionaire’s and multi-millionaire’s wealth accumulates at multiples of 6% annually; so – after taxes – their net worth still grows.  Shed no crocodile tears for your friendly multi-millionaires and billionaires.

Save your empathy for those who might benefit from it.  These folks could care less.  Unless they are running for president!

P.S.   A political (on again, off again) "friend" of mine has insisted that I hate billionaires (because I want to raise their taxes).  Offhand, I can think of only one billionaire whom I detest beyond reason, but none other whom I hate for his wealth.  As for Bezos – the world's richest man (for the moment) – I love love love love love the guy!  An inordinate amount of my shopping is with Amazon, as it delivers an ideal shopping environment: an incredible search mechanism, the lowest prices, no questions asked return policy, real people reviews, delivery time that is always faster than advertised (not a Prime member).  I also admire the guy for his hobby: Blue Origin (despite my pessimism re: a human Mars mission).  I am a subscriber to his newspaper, the Washington Post.  (I am not a fan of how he is charged with treating many of his low-level employees, but the same charge sticks to Bill Gates, Steve Jobs, and other luminaries as well; it seems to go with the territory, which is not an excuse – shame on them!)  But just because I admire and like the guy does not mean he should not pay more taxes, much more taxes.  He can and he should (whether he agrees with me or no) pay more taxes!  All super-wealthy Americans should pay more taxes, they all have gotten away with murder for far too long!  The country needs the extra revenue!  Tax the rich!

Addendum: Friday, 11/13/2020

MAJOR UPDATE

As of today, Jeff Bezos is worth $184.1 billion.  This is a 41.6% increase in less than nine months, or more than a 50% annual increase.   Don't you wish your bank offered you a savings account with an annual interest rate of 50%?  Whoopee, right?  Bezos' annual salary as CEO of Amazon is $81,840.  He may have a salary from his space venture, Blue Horizons, but I can't find anything.  And he may have significant "other compensation" too.  Nevertheless, the Federal Income Tax on his Amazon CEO salary is about $10,992.30.  He only pays "capital gains" taxes when he sells shares in his holdings, and he does so every year to help fund his Blue Horizons space company (among other reasons), $3 billion (this week) in capital gains, and $600 million in capital gains taxes (20%).  So, Bezos pays 1/3 of one percent of his Net Worth in Federal Taxes.  Or 0.00000597% of his Net Worth based on his Amazon CEO salary.  That is $1 of Fed Taxes for every $16,748,544 of Net Worth.  Don't you wish you...?

I do NOT hate Jeff Bezos.  I do NOT dislike Jeff Bezos.  I rarely buy anything of consequence without researching it on Amazon.  As a book reader, I read more than half the books that I read on my tablet in Bezos's Amazon's Kindle app.  I love what Bezos has done.  Still, I want him to pay more taxes, MUCH more taxes.  Better that we reduce our annual federal deficits than to allow this cash to remain idle in Bezos' vault.

There are 788 billionaires in the USA.  There are 34,507 American households with a Net Worth of over $100 million.  0.03% of the country, one household in 3,300.  And 97,287 American households with a Net Worth of over $50 million.  0.07% of the country, one household in 1400.  Why stop there?  Senator Elizabeth Warren (MA) has suggested a Wealth Tax on American households worth more than $50 million.  A 2% -3% tax on Net Worth above $50 million.   Bad idea?  Soak the rich?  The really rich pay way less taxes than YOU do, binkie.   This addition to federal tax revenues ($2.75 TRILLION over ten years?) could go a long way ... to making America great again.

Addendum: Monday, 01/11/2021

At this very moment, Elon Musk is the world's wealthiest man, having a Net Worth of $209 billion (to Jeff Bezos' $186 billion).  Musk's gross salary as CEO of Tesla is $23,760!   That's right, his gross income (from Tesla anyway) is so low that he pays NO Federal Income Taxes on that income.  Warren Buffett famously said: "we should tax the people who have the money."  As long as we don't tax wealth, we don't tax the people who have the money.  And you and I, or our children and grandchildren, make up the difference.

Addendum: Tuesday, 02/16/2021

Jeff Bezos owns 11.1% of Amazon.com, worth $192.6 billion.

At this moment, a share of Amazon.com (AMZN) stock is worth $3268.95.  On June 1, 1997 (16 days after its IPO), a share was worth $1.54.   This growth annualizes at 38% / year.  Recent growth (last 5 years) has annualized at 42.7% / year.  If a wealth tax of 7% on his net worth above $1 billion had been taxed at 7% / year for the last 5 years, his worth today would be $149.8 billion instead of $192.6 billion.  Think that would kill him?  Make it that much harder to reach $1 trillion net worth, 6 years instead of 5, at current rates of growth (which, btw, is unlikely).

I'm taking bets: do you think he would flee the country, instead of paying a 7% wealth surtax each year, which would cost him $13.4 billion this year.  I'd bet that he'd boast of his contribution to the Common Weal.

An aside: his main competitor for richest man in the world is Elon Musk.   What is surprising – and quite wonderful – is that they share the same hobby / dream, pushing the boundaries of outer space, Blue Origin and SpaceX, both private companies.  Quite wonderful.

Addendum: Sunday, 06/05/2021

As of today, Jeff Bezos is worth $186 billion.  Roughly 30% / year increase.  More than enough to absorb any wealth tax without breathing hard.  His Net Worth has been as high as $200 billion.  And he now has two challengers for the world's wealthiest person.   Now, the total 44 years of expenses, $4.087 billion, instead of being 3.14% of $130 billion is now 2.20% of %186 billion.  No tears for Jeff Bezos, please (or Elon Musk, or ...).

Addendum: Tuesday, 09/28/2021

As of today, Bezos is worth $197 billion; he has been worth as much as $211 billion.

But it's yachts that have prompted me to add this add.

In May of this year, Bezos added two yachts to his collection of toys.  One, a 417-foot "super yacht" nicknamed "Fat Man," like the Nagasaki bomb, and a 100-foot "support yacht"/heliport nicked Little Boy, like the Hiroshima bomb).  The combined cost is somewhere between $500 million and $1.2 billion, chump change for the wealthiest man in the world.  As much as these numbers may impact his lifestyle (not a whole lot), they don't alter my argument or its conclusion.

Addendum, Tuesday, 08/16/2022

As of today, according to a simple Google search, Jeff Bezos is worth $168 billion.  But Elon Musk is worth $265 billion!  I can't find data on how much Musk has spent of his personal wealth to fund SpaceX but it is probably short of $1 billion.  He does not seem to be a majority shareholder.

In any event, as before, these new numbers may change a few calculations, but they don't alter my argument or its conclusion.

Addendum: Saturday, 11/26/2022

As of today, Musk's worth is $183 billion and Bezos's worth is $114 billion (in the past 12 months, the price of Amazon and Tesla stock has been cut by 50%).  None of this matters as the point of this essay was two-fold: one, there is no way for an individual with a family of five members to spend $5 billion of their personal wealth in 44 years.  Or 50 or 60 years for that matter!  Two, if taxing authorities "confiscated" 90-95% of their wealth it need not impact their spending habits at all.  It would no doubt affect them psychologically but it need not dampen their enthusiasm to purchase that next $100 million estate.  And they could continue to spend $15,000 / day on restaurant food to the end of time.  What would be the effect of the federal government garnishing 10% of the wealth of the super rich annually?  I think that instead of our always running deficits we would begin to run surpluses to the end of time.  And pay down our National Debt!  And within a year, their wealth would have recovered and then some from this "confiscatory" taxation.