Zuckerberg losing $30 billion in a single day illustrates yet again why a wealth tax is undesirable
Meta (the new name for Facebook’s parent company) lost more than $200 billion in stock value on Thursday. As a result, Mark Zuckerberg saw his net worth significantly drop.
Facebook co-founder Mark Zuckerberg saw his net worth decrease by almost $30 billion following the record-breaking plunge of Meta shares Thursday.
With a current net worth of $84.3 billion, according to Forbes, it is the first time the 37-year-old hasn’t been one of the 10 richest people on earth since summer 2015. Zuckerberg owns nearly 13% of Meta, which recently rebranded from Facebook.
Zuckerberg’s $29.8 billion loss is the second-largest single-day loss in history, surpassed only by the $35 billion that the world’s richest man Elon Musk lost in November after he tweeted about selling 10% of his Tesla stake. Musk also lost $25.8 billion from his net worth last week, Bloomberg reports.
Meta’s stock plummeted after the company warned of weaker-than-expected revenue growth in the next quarter and said that recent privacy changes from Apple will cost the company $10 billion, CNBC reported.
This comes weeks after Elizabeth Warren called for a wealth tax, saying that billionaires have earned a great deal of money during the pandemic while the rest of Americans have suffered.
This is just one of the numerous other times she has made this remark. Unsurprisingly, these calls for a wealth tax are only renewed when billionaires are earning money. Nothing is said when they lose money.
Complexity issues
For most of the top richest people, their wealth is made up of stock in their respective companies. So, their wealth fluctuates based on how their companies are doing.
With such fluctuations, it is hard to accurately ascertain how much someone is worth. The system would have to figure out how to treat such fluctuations before deciding how much someone is worth. But that costs time and money. And given the evidence indicating that a wealth tax does not bring in a lot of revenue, it is questionable whether the significant costs to administer it would justify the minimal revenue.
Moreover, one problem with a wealth tax is that it is not levied on actual income, so it is not a reflection of someone’s ability to pay taxes. Zuckerberg is worth $84.3 billion, but that does not mean he has that cash on hand. To pay a hefty tax bill, he would have to sell stock to cover his taxes, which would cause the values of those stocks to plummet, further reducing his wealth. It could be a self-feeding cycle.
It is no wonder that most European countries got rid of their wealth taxes.