Should Jeff Bezos Benefit from OA?

Taxpayer-funded research is the premise. What if a billionaire pays no taxes?

At the recent World Economic Forum in Davos-Klosters, Switzerland, the topic of taxation came up in a way that exploded across social media, as historian Rutger Bregman, attending his first Davos, didn’t hold back in a discussion about inequality:

Well, wait a minute, there was only one panel apart from this one, one panel hidden away in the media center that was actually about tax avoidance. I was one of the 15 participants. Something needs to change here. I mean, 10 years ago, the World Economic Forum asked the question, what must industry do to prevent abrupt social backlash? The answer is very simple: Just stop talking about philanthropy, and start talking about taxes. Taxes, taxes. . . . just two days ago there was a billionaire in here, what’s his name? Michael Dell. And he asked a question like, name me one country where a top marginal tax rate of 70% has actually worked? And, you know, I’m a historian — the United States. That’s where it actually worked, in the 1950s during Republican President Eisenhower, you know, the war veteran. The top marginal tax rate in the US was 91% for people like Michael Dell. You know, the top estate tax for people like Michael Dell was more than 70%. I mean, this is not rocket science. I mean, we can talk for a very long time about all these stupid philanthropy schemes. We can invite Bono once more. But, come on, we’ve got to be talking about taxes. That’s it. Taxes, taxes, taxes. All the rest is bullshit in my opinion.

In reflecting on this in a podcast later the same week, Scott Galloway brought up the topic of tax avoidance in a more pointed manner:

Complexity favors the wealthy, and our tax system, slowly but surely . . . has been an elegant transfer of wealth from the poor to the rich. I would love somebody to do an analysis — I believe the most valuable company in the world and the wealthiest man in the world — Amazon and Jeff Bezos, respectively — have not only not paid any tax, but I believe they’ve been subsidized by the government.

Galloway points to the gamification of Amazon’s HQ2, which he views as a massive con that delivered $3 billion in concessions to Amazon. With Bezos owning 16% of Amazon’s stock, it effectively transferred $500 million to Bezos personally in gains. Galloway also asserts that Bezos borrows against his equity, a neat way to avoid paying taxes on his billions, as he never sells shares but simply incurs debt.

Extending this point, if Bezos and others like him are not paying their fair share of taxes, or even avoiding taxes altogether (net concessions and other manipulations of their wealth), how does this factor into the well-worn argument that scientific findings should be made freely available because they were funded by taxpayers?

Which taxpayers? Federal? State? Local? Income? Property? Sales? Corporate? Any of the above?

Clearly, the main point is about federal income tax in the US, which is the source of the money used to fund the NIH. However, property taxes also bear on this.

As you can sense (and probably already know), the logic of “taxpayer-funded” is actually pretty shaky when you get below the superficial rallying cry and into details and specifics. People don’t pay into a worldwide tax fund, some governments are at war with us, and so forth. When it comes to Bezos, the logic collapses entirely. Here is tax avoidance done right — all the benefits, at no cost. The same goes for all the billionaires in Silicon Valley who want information for free. How is CZI paying to fund its acquisition of Meta and support of bioRxiv? Is Zuckerberg selling shares to fund a 501(c)3, where the money is tax-free? Is he paying any taxes?

The question that arises is put nicely by Kara Swisher in the same podcast:

I think this topic [will resonate in the next election] — What do we do about the rich?

The other part of Bregman’s statement is also worth pursuing — what he calls “philanthropy schemes.” As noted above, CZI is one of these, and recent calls for more centralized funding via institutions and philanthropies carries risks I’ve outlined elsewhere.

It’s natural for people to want to cater to the rich, be around the rich, and hope that some rich rubs off.

But is it wise or seemly for scholarly publishers, editors, and authors to become vassals to the rich? Or should we work for the readers and researchers using business models that don’t depend on tax avoidance, philanthropy schemes, and centralized spending by large, ultra-rich entities?

I think there are better ways.