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Billionaires in Davos hate Alexandria Ocasio-Cortez’s 70% tax on the rich

Billionaire chief executive Michael Dell reacted Jan. 23 to a proposal put forth by Rep. Alexandria Ocasio-Cortez (D-N.Y.) to tax millionaires. (Video: The Washington Post)

When billionaire chief executive Michael Dell was asked on Wednesday whether he would support a proposal put forth by Rep. Alexandria Ocasio-Cortez (D-N.Y.) to tax millionaires at a 70 percent tax rate on income exceeding $10 million, the audience for a Davos panel about tech and global inequality burst into laughter before he could answer.

Dell, founder and head of Dell Technologies, first responded by saying he’s more comfortable allocating significant resources through his private foundation than handing over that money to the government. But then he answered more directly.

"No, I am not supportive of that, and I don’t think it would help the growth of the U.S. economy,” he said in response to questions from The Washington Post.

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When Dell was asked to explain why he thinks that, he said, “Name a country where that’s worked — ever.”

Co-panelist and MIT professor Erik Brynjolfsson jumped in to offer an answer: “the United States.”

“I don’t have a strong opinion on that proposal. The devil is in the details,” Brynjolfsson, the director of the Massachusetts Institute of Technology’s Initiative on the Digital Economy, said. “But there is actually a lot of economics that suggests that it’s not necessarily going to hurt growth, and I think we have to examine it more closely.”

Among several business leaders at the World Economic Forum, the debate about higher taxes for the super-rich seems already closed.

Ocasio-Cortez has said that America’s highest earners need to pay their fair share, but members of the elite group in Davos expressed alarm over her proposal, arguing that her plan is misguided and would harm investment and innovation.

“Seventy percent taxes definitely bothers me,” said Scott Minerd, chief investment officer of Guggenheim Partners. “It affects the people that have the most money, and they will start allocating capital in a way that is less efficient and will bring down productivity.”

Still, executives acknowledged that populist sentiment is rising and is likely to play a big role in the 2020 presidential campaign.

Ocasio-Cortez wasn’t at Davos, but her name was mentioned frequently, highlighting her role as a new political force whose ideas have reverberated in Washington and beyond.

"If you think about where we were in 2015 and the ideas that were being floated by then candidate Trump, they seemed pretty far out there. Now we’re living them,” Minerd said. “I think by the time we get to the election, modern monetary theory and 70 percent tax rates will be on the table.”

Billionaire investor Ray Dalio said on a panel Tuesday that he thinks there will be even more calls for higher taxes as the economy slows in the coming months and the 2020 campaign ramps up. “Something like the talk of 70 percent income tax, for example, will play a greater role” in the discussion, he said.

Calls by some policymakers for tackling inequality have extended to the way multinational corporations are taxed.

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At the panel on technology and globalization, the co-chief executive of Salesforce, Keith Block, said his company would adhere to any new tax policy put in place by foreign governments, such as those proposed by some members of the European Union. But he emphasized that providing education and access to technologies would be a better long-term solution than increasing taxes. “It’s an easy fix I think, for many people to say, ‘Well, let’s just tax,’ ” he said.

The same panel focused on the need for training workers, as increased automation and massive job displacement may exacerbate regional and international inequality.

“From our perspective, we see a shortage of talent and a shortage of skills, and the only answer to that is not to take them from the other companies, because that math just doesn’t work,” Dell said. “You have to hire them, train them and grow them from within the company, and you have to retrain and re-skill the existing workforce.”

Staff writer Heather Long in Davos, Switzerland, contributed to this report.