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Good Morning/ Afternoon/ Evening Class!
Today we are going to talk about Taxes – I can hear your collective eye -roll, and why this specifically concerns you. Before we start, anyone who already understands this, such as any member of the Patriotic Millionaire’s Club, Millionaires Against Pitchforks or Millionaires for Humanity, has a hall pass and may skip this lesson. The rest of you please pay close attention and some of you younger ones, especially you Elon, Mark, Sergey and Larry, and you too Jeff and Gina, and anyone else who skipped History classes or thinks they owe nothing to society at large - proponents of "The Virtue of Selfishness" and all that, please sit closer to the front so that you don’t miss anything. There will be a short test at the end of class.
Why we need more Taxes
As you know if you have read the previous post (go back and read it if you haven't), governments are already struggling to meet the demands of previous disruptions due to technical innovations, external events such as oil price rises, the pandemic and a growing number of natural disasters and financial shocks, and now they are facing an even bigger disruption. In most cases, except for the Savings and Loans scandal, it is also governments which have had to pick up the pieces, including bailing out banks and businesses to stop the whole financial edifice collapsing and even more workers being laid off.
Even though new jobs may emerge eventually, there will undoubtedly be a lag
between those new jobs coming on stream - and if the past is any guide, they
may be lower paid, more insecure and
short term – just look at the jump from Uber to driverless cars in the space of
just a couple of years. This means not only falling government revenue from the
income taxes those workers paid, but also from the businesses their work used
to support – the coffee shops the clothing stores and so on, and even the
sellers of new cars Elon, at the same time as demands on governments to support
them increase.
If we also wish to implement any of the measures proposed for dealing with them
such as Retraining, Shorter working Hours, UBI or Job Creation schemes, this
will require even more revenue than most governments currently have.
Why You
In the first place, almost all the wealth which has been generated in the last 40 years since the Reagan/Thatcher era tax cuts, together with increasing deregulation, globalisation and so on, has accrued to the top income earners, the owners of corporations, their shareholders and CEOs, not to the general public which has been left to pick up the costs. Although we are mostly talking about America here, which has followed the economic rationalist prescription most closely and displays the biggest wealth gap, much the same is true of other developed countries to the degree which they have followed the same path.
The Federal Reserve's figures for 2022 showed that the average income for the top 1% of earners grew at five times the rate of workers' between 1981 and 2021, and by 2023, the 1% owned approximately 32% of all wealth. For a very clear explanation of how this has occurred, watch the excellent video by Robert Reich here The promise of economic rationalism was that money saved on taxes would be reinvested in new enterprises such as new factories and businesses which would then employ people. That has not happened as much of this money has been reinvested in financial instruments and speculation, which produced profit but little else and accrued disproportionately to those who were already wealthy. Furthermore, it was largely done with cheap credit provided by domestic or foreign banks, thereby contributing to inflation on the one hand, and balance of payments issues on the other.
Almost all those countries which lowered taxes and cut welfare and other government services are also almost all currently in deficit and show the highest levels of inequality and social deterioration. Workers, whose income has hardly moved since the 1970s after adjusting for inflation, have largely borne the brunt of those changes and government expenses in the meantime.
GDP AND TAX RATES FOR OECD COUNTRIES
| Country | Current account (% GDP) | Top personal tax rate | Corporate tax rate |
|---|---|---|---|
| Denmark | +11.8% | 60.5% | 22% |
| Sweden | +8.7% | ~52% | 20.6% |
| Netherlands | +11.2% | 49.5% | 25.8% |
| Germany | +7.3% | 45% (~47.5% w/ surcharge) | 30.1% |
| Switzerland | +10.9% | ~40% | ~14.4% |
| Norway | +14.8% | 39.8% | 22% |
| Ireland * | +26.5% | ~48 \u201352% | 12.5% |
| — | — | — | — |
| United States | −3.6% | 37% | 21% (25.8% w/ state) |
| New Zealand | −3.7% | 39% | 28% |
| Australia | −2.9% | 45% | 30% |
| United Kingdom | −2.2% | 45% | 25% |
| Canada | −1.4% | ~53% (federal+provincial) | ~26.5% (federal+provincial) |
* Ireland's surplus reflects its attractiveness as a corporate tax haven (12.5% corporate rate draws multinational profit-booking), not higher domestic productivity — Ireland's own GNI* measure, which strips out this distortion, puts its real tax-to-GDP ratio much closer to comparable EU economies.
Table prepared by Claude (Anthropic), 2026, based on data from the IMF and World Bank (current account balances), the Tax Foundation (personal and corporate tax rates), and Trading Economics.
“But we've Created Jobs and Businesses “
Although some of you have created new jobs, it is especially the tech sector which is now
killing them off on an unprecedented scale. In your case Jeff, the new jobs weren’t in the
same locations as the old ones. For example, a bigger warehouse in Bangalore doesn’t
help the people laid off from the one in Dallas. Nor does the factory making
consumer goods in China, help the people who used to make them in the USA or
Australia or their communities.
Those who giveth, also taketh away. Rehiring a few customer service people does
not help the approximately 1.7 million call centre operators at risk of being
displaced by automated chatbots in the Philippines or the 20K IT workers already laid
off in India in 2024 and 2026, or the many which could be laid off with
the coming of agentic AI. Fortunately, the governments of both India and the Philippines are already upskilling their workforce in the use of AI. It is somewhat ironic that offshoring of both types of jobs not so long ago, contributed to the hollowing out of employment in developed countries.
It also ignores the fact that much of this wealth and those jobs were created using public money and or research. Although we do appreciate what you have done with renewables, EVs and probably Starlink, Elon, I understand they were created with $38 billion in government contracts, loans, subsidies and tax credits over more than 20 years, Larry and Sergey - your entire company started as a taxpayer-funded research grant drawn on public funds, and you Jeff, got $17.5 billion in federal tax subsidies in 2025 alone — about 10% of all federal income tax subsidies for publicly traded corporations that year.
Even companies which were not directly subsidised were using publicly funded research and the accumulated knowledge which society had built up over generations. There would have been no internet without the universities. Where would Starlink be without NASA and all the space research which had gone before? NASA itself confirmed that it also invested more than $15 billion in SpaceX alone.
Collectively you have also benefited from the infrastructure built by society both personally and in your business dealings. Where would Amazon be without the highways, airports and air traffic controllers around the world? Who built the planes and trucks and who educated the engineers who designed them? And who built the internet and the banks and the power stations, transmission lines and subsea cables through which you conduct your business? I don’t think you did.
I also assume you have piped water and a flushing toilet at your place(s) which you neither designed nor built, nor the sewerage works which carry your waste away. Does someone still collect your garbage? Were you born in a hospital? Most likely the hospital was funded by the state and the midwife was trained in its institutions. Did you receive your education at a University largely paid for by the state? Did you have books, access to computers and information? And were you able to pay your tuition without having to do side hustles and advertise yourself on sugar daddy or Only Fans sites?
Lastly, even billionaires benefit from a stable and fully functioning society where freeways and public goods are maintained, in which people are adequately fed, healthy, housed and educated, where courts enforce your rights – property, patent and contractual, where people, food and products you use are safe, where the military and police protect you and where people have enough money to purchase the goods and services which you sell. I will try to respond to your other objections one by one.
"We already Pay Taxes for those Services"
I am aware that most of you do pay some income tax – thank you Gina, even though many of you also spend inordinate amounts on avoidance and minimisation. I believe you Jeff, paid none at all in 2007 and 2011 and, according to tax transparency advocacy group Tax Justice Network, as far back as 2012 there was an estimated $21 to 32 trillion dollars was sitting in tax havens around the world, something like a quarter or more of global GDP and who knows how much in impenetrable trusts, shell companies, Crypto and other investment vehicles.
Some critics such as Robert Reich, argue that even much of your charitable giving, commendable as this is, is in fact also for tax minimisation, or for positive PR to deflect criticism, or in some cases, goes to organisations and think tanks which promote your interests, such as lowering taxes and rolling back environmental protections and so forth. Even in the first instance – genuine conviction, you are reducing the amount of tax dollars going into government coffers which sustain the entire population.
The US Institute for Policy Studies found that in 2022 this amounted to approximately $73 billion in lost Tax revenue. However, the real harm in this, even though many charities are able do good work because of it, is that what gets funded is based on the whims of a few fortunate individuals, not necessarily what society needs or wants. We are talking about returning a tiny portion of your wealth, perhaps 3-5% to the people who helped to create it to address an accounting error if you will, that’s been compounding since 1981.
“But the Government just wastes Taxpayer's Money”
I may not always be in agreement with everything our government does – I am not for example, excited about the idea of Australian taxpayers funding a football team in PNG – I would rather we funded training of district nurses, but perhaps that is what PNG wants – the prestige and visibility of having a football team. However, since I also think we need to get along with our nearest neighbours, we could probably fulfil that desire without destroying our own economy.
Regardless, in the long run, democratic governments and politicians must answer to voters and their constituents, whereas corporations are only answerable to their shareholders, not the wider population and its unmet needs. It might not be sexy to spend money on rebuilding a freeway or a failing sewerage system, when you can get more public credit for say, saving a forest or spending a night outside with the homeless, though all are important. This is called democracy.
“It will be bad for the economy”
The economy did not grow much faster than in the high taxing period from 1946 to 1981. Even Reagan's staunchest defenders at the Cato Institute put growth during his presidency at just 3.2% — only marginally ahead of the 2.8% of the preceding Ford-Carter years and unemployment rose to 10.8%. Even now the economies of higher taxing countries -check the table above, are doing better than most of those with lower ones.
“It will be bad for business”
As far as business goes, small businesses in the US have historically paid an average effective tax rate of around 19.8%. Meanwhile, in 2022, independent watchdog, The Government Accountability Office (GAO) found that large, profitable US corporations paid an average effective federal rate of just 9%, since tax changes in 2018.The structural tax advantages for big business, such as offshoring, transfer pricing, tax credits requiring expensive compliance infrastructure, simply aren't available to a small operation without the money to hire the lawyers who find them and those small businesses are the very ones which are suffering most from your global enterprises, so they certainly should not be expected to pay more.
What is far worse for business is uncertainty and constant chopping and changing. Research by Stanford and Chicago Booth economists Baker, Bloom and Davis, who built the widely-used Economic Policy Uncertainty Index, found that spikes in policy uncertainty reliably foreshadow declines in business investment, output and employment — across the US and 12 major economies — showing that unpredictability itself, not any particular tax rate, is what businesses actually fear most.
“Higher Taxes will Cripple Innovation”
Really? Then why is high -taxing Sweden the second hottest innovation hub after Silicon Valley. Perhaps it is because it enables it to spend more on education and research. There is another thing which cripples innovation - it is failing to invest in workers and not providing people with the means to develop their potential. The other trade -off is that Nordic countries do not need to spend as much on prisons and law enforcement and do much better on global happiness indices.
“It’s Communism”
Why am I always having to explain this to Americans? You can have Capitalism without Democracy as in Pinochet's Chile or more recently, as in China and you can have Capitalism within Democracies without it's most extreme forms as Nordic countries and much of Europe has. In the prosperous Post Word War II era until the 1970s, the UK also had a less rapacious form of Capitalism in which the government ran most public services and had higher taxes. They are two completely different things.
Communism is about the state taking ALL your money and deciding how that money should be spent and redistributing it equally among the people. Democracies whatever their expression, have at their core, government by the people, for the people, One person, One vote, Equality before the law and all voices have a right to be heard, not just who has the most dollars. To safeguard those rights for all and protect us from excessive Government interference we have established several separate institutions – The Courts, The Press, The Universities, even the Churches, but all have been increasingly disempowered and defanged because of the wealth and power of a few.
Previously, both Governments and Unions helped to prevent extreme wealth from gaining the upper hand – see the Anti -Trust Acts, and Health and Safety Laws, but Unions have increasingly been stripped of their power in recent years, particularly in the USA. You Jeff, I believe have been particularly active in this regard. Is it true you spent $17 million on dissuading workers from joining unions at your Raleigh, North Carolina warehouse in 2022 -23 and a further $12.7 million in 2024 and $26.6 m in 2025?
Things were apparently even worse at your Staten Island facility where union organisers were threatened and retaliation was directed at least one. You are apparently still fighting that court case after four years. / I know you are no longer head of the company Jeff, but you are still its major shareholder. It seems you are also using the latest algorithmic and geoSpatial technology to keep tabs on union sympathisers and money flows.
Not that you are alone. Collectively US employers spent a reported $1.7 billion resisting unionisation. Whatever happened to the right to free assembly and to form Unions?
This is not Democracy
What Americans have now is virtually a dictatorship by a small group of people with extreme wealth who, through their influence over media and politicians, are able to sway public opinion and decide who will be in power and what kind of policies will be pursued. It’s not about merit, but about maintaining their power and confers something like a feudal Divine Right to Rule, rather than a real democracy.
In the long run, the consequences of this are not pretty. As Steven Bartlett notes in his Diary of a CEO Podcast while interviewing billionaire investor, Jeremy Grantham, historically it tends to end in Societal Collapse, War or Revolution and in the eyes of Jeremy Grantham, that unravelling is already happening at the edges. This whole interview is worth a watch, see it here.
In my view it not only explains the rising level of discontent and the events of January 6, but also the increasing popularity of Far Right groups around the world. There is the same demonising of particular groups – in this case Immigrants, but also the 'woke,' the gays and the left, which anyone who knows anything about the lead up to World War II, would never wish to see or hear again. The sabre -rattlers are already making their bets.Given that this kind of reset is going to hurt everyone, even the predominant mercantile class – that means you, we can only hope that ‘incremental improvement’ in the form of government intervention to reduce the overwhelming wealth gap, can stave off the worst. The question is how do we do it?
Oh dear, we are out of time for today. Next time we will discuss the various ways in which this could be done. I am hoping that even the most hard -nosed among you would prefer a stable society and an uncorrupted government which treats everyone fairly.
Thank you Claude, for fact checking, proofreading, further discussion of various points and lots of references, also Ecosia, ChatGPT and of course, Copilot for the illustration
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