Bridgewater Associates billionaire investor and founder Ray Dalio joins the ‘Influencers’ for a discussion of what to expect with President Joe Biden at the White House.
Video transcription
ANDY SERWER: What do you think – how do you evaluate the Biden government, the president and, in particular, Janet Yellen so far?
RAY DALIO: Well, I would say that politically, it is a reality that there are two political parties in both cases and there are quite extreme elements in that. We can call it capitalist and socialist, or we can call it what we want. But there is a gap and not much in between. It is difficult to be in the middle because you have to align yourself with any of them.
So, in terms of, say, economic policies, in general, there’s not much – you know, it’s hard to fight Democrats and Republicans. And what does that mean? Things like the wealth tax can be a litmus test. But, in any case, I think there is a big movement to deal with those gaps that I am referring to.
Therefore, we should expect significant tax increases and so on, in a number of ways. We can join our discussion on this, if you want. And whether it is done intelligently or not, it will affect the markets. For example, when we cut corporate taxes, it benefited stock prices. Depending on how tax rates are changed and so on, this will certainly affect asset prices and capital flows.
ANDY SERWER: Let me ask you about the fortune tax. Tell us what your proposal would be – what your idea of a correct wealth tax would be.
RAY DALIO: I am a mechanic. I am not an ideologue. I’m basically someone who basically thinks that if you move the lever that way, what will happen? That’s basically it. What I did was do a study of all the cases of taxes on wealth in different countries that existed. And see what happened to those. And I pass this on. I didn’t comment on that, but there are facts, which is, like, I looked at 33 cases. And in none of these cases have they – have they been sustained and raised a significant amount of money.
In some cases, like Switzerland, it has a tax on wealth, and it is a very small tax, and it has been maintained. Norway has a tax, it is small and it is sustained. Those who are big did not last for a number of reasons. They are operationally difficult and so on, you know, illiquid assets. I’m not going to go into all of that. But there are different ways to tax wealth. And then you will see– I think you will see the easiest ways in which tax wealth becomes more popular, as an increased base.
In other words, nowadays, when you die, you get, if your equity values, you don’t have to pay capital gains tax and inheritance tax. I think you’re probably in danger. And I think you’ll find other different types, property taxes, other things, that can come up. But that is my thinking about wealth taxes in general. They also have a – the big risk is, is this an environment that is hospitable to capitalism and capitalists?
This affects capital flows a lot, and it’s not just affecting American capital flows. Americans think they are just Americans. No, no, no, foreigners have many more titles – American titles than Americans. So just the whole notion of where to go, where it is a safe market for capitalism and capitalists, has an effect on capital flows. So this is the mechanics.