Who Rules America: An Investment Manager's View on the Top 1%

"I asked if her colleagues talked about or understood how much damage was created in the broader economy from their activities."

How does finance destroy the broader economy in general? Liquid functional capital markets are critical for a stable economy. Finance is only bad for the economy when incentives are structures so that government limits the downside.

"America's top corporations reported 31% profit growth and a 31% reduction in taxes, the latter due to profit outsourcing to low tax rate countries."

Outsourcing is not bad. He treats it like it is a dirty world. Companies should have work done where it is most efficient. Google comparative advantage. "It wasn't the hard-working 99.5%"

Because the top .5% aren't hard working.

"In my view, the American dream of striking it rich is merely a well-marketed fantasy that keeps the bottom 99.5% hoping for better and prevents social and political instability. The odds of getting into that top 0.5% are very slim and the door is kept firmly shut by those within it."

By definition, the odds of getting into the top .5% have to be very slim because only .5% of the population can get in there.

Also, I should note that the lower 99.5% benefit from lower capital gains taxes when it comes to appreciation on their homes. Obviously, this hasn't been a benefit lately. But, this is important given that the home constitutes the biggest chunk of net worth for many families.

Sergei Brin pays taxes on his income to the US.

Google Ireland doesn't pay taxes to the US on income earned in Ireland until they transfer the money to the US. (They do, however, pay taxes to Ireland.)

A guy working at a diner in Ireland will, as far as I know, never pay taxes even if he does transfer money to the US.

What percent of very wealthy Americans do you think would renounce their citizenship based on this? How much less investment capital would there be in the USA based on that?

Note: Not asking for a value judgment ("good riddance if they do!" - not productive). Just your estimate as to what percent of wealthy Americans would give up their citizenship and how much less investment capital would result. It's an important detail to consider.

False dichotomy. The article talks about the current financial system in the US hurting the economy. It's not suggesting dismantling the financial system in general.

Step back for a moment. The financial industry is infrastructure. It's there to grease the wheels of productive industry. It facilitates growth, but cannot in itself create that growth. Now, last year the financial industry accounted for something like 1/3 of corporate profits. It's gotten absolutely immense. Do we need such massive institutions just to create "liquid functional capital markets?" Are these companies so profitable because they're really creating enormous amounts of value for the economy, or because being close to the money makes it easier to justify taking a percentage cut of the money flowing through the system?

Now, I'm not attacking them just because they're profitable. But to an extent they're profitable because the benefit tremendously from government protection. When Apple innovates and sells iPhones, they pay 35% tax on those profits, but when a trader at Goldman moves money around to make profits, they pay less than half that in taxes. If we believe that tax rates create incentive structures, does it really make sense to incentivize the latter so much more heavily than the former?

Plus, who says we have a shortage of investment capital in the US? There is a ton of money floating around from pension funds and 401k accounts, even leaving out the money held by the very wealthy. If you look at the economy today, it's absurd to say that lack of capital is the reason for the lack of top-line growth.