Mark Cuban describes the best way to reduce wealth inequality
While politicians like Rep. Alexandria Ocasio-Cortez (D-N.Y.) and Sen. Elizabeth Warren (D-Mass.) have ambitious plans to reduce wealth inequality, billionaire Mark Cuban has a simple solution.
“The only way that people really improve their wealth is by buying a house, condo, whatever it may be, owning shares of stock,” Cuban said. “I think that’s where you start to change the rules.”
“If somebody is below a certain level of income and they’re able to buy a home and you give them more tax advantage, you don’t take away their deductions because they’re in California or New York when they have a lower income,” he said. “Now, they did some things to offset. But, still, you want people to be able to accumulate assets that grow in value, that appreciate. That’s how you get people so that their life becomes better.”
The Dallas Mavericks owner made the remarks to Yahoo Finance Editor-in-Chief Andy Serwer on an episode of “Influencers with Andy Serwer,” a weekly interview series with leaders in business, politics, and entertainment.
‘Trickle-down is not going to work’
Cuban referred to what occurred with Broadcast.com as evidence to support his argument. When he and his business partner Todd Wagner sold the video portal to Yahoo (former Yahoo Finance parent, now owned by Verizon) in 1999, their employees already had stock.
“We created 300 millionaires, because 300 out of 330 people invested their stock,” he said. “So when you work from the bottom-up like that, people have a chance to increase the value of their wealth.”
Cuban said that if someone has an advantage class of stock, when that stock is sold, “it should be treated as normal income.”
“If everybody’s got the same class of stock, then you treat is as capital gains if you’ve held it for more than a year,” he said. “I think you also advantage people if you have a company where all employees are offered stock. You give them other tax advantages.”
“Because then, AOC’s point, you’re lifting from the bottom up,” Cuban said. “Trickle-down is not going to work. But if you create opportunities where people all have to share in stock, then the disparity is going to decline, because everybody’s going to go up when things happen.”
Presidential candidate Warren floated the idea of a 2%-3% annual tax on a household’s net worth if the wealth exceeds $50 million. Ocasio-Cortez’s proposal suggests taxing the highest tax bracket at a 70% rate in order to fund environmental projects.
Cuban admitted that he’s not a fan of either trickle-down economics or trickle-down taxation.
“The concept that just tax, those who have a whole lot more, then all of a sudden it’ll find its way to those who need it — doesn’t work, hasn’t worked, won’t work,” Cuban said. “It’s not that taking more money — I’m ok with paying more taxes. I don’t have a problem with that. Where the issue is: How do you make it work?”