Andrew Ross Sorkin of the New York Times in a recent DealBook post recently highlighted activity by Ray Dalio. He reports Mr. Dalio, Chief Investment Officer of Bridgewater Associates, has been making the rounds in Washington talking about the budget deficit.
Dalio has been discussing what he calls the “Three Percent Solution.” Simply put, the goal is to reduce the deficit to Gross Domestic Product (GPR) ratio to 3%. This can be done by 1) cutting spending, 2) raising tax revenue and 3) lowering interest rates.
Sorkin adds, “A fiscally responsible budget would ease volatility in the bond market. Any economic slowdown caused by reduced spending could be offset by lower interest rates, which is what a heavily indebted nation needs most.”
He follows by saying “All three levers need to work in tandem.”
ANALYSIS
In my opinion, the three percent solution idea makes sense.
Spending by Congress is something I cannot control, nor do I have any quick fix ways to do this.
SOLUTION
There is an idea to raise revenue: place an acquisition tax on the Big Tech firms (Google, Amazon, Microsoft, Apple, Facebook) for every company they have acquired.
Since they have all have over 80 acquisitions each, why not tax them on it, per acquisition, and make them pay for creating this situation. Make it an annual tax so they would pay it every year.
Big Tech seems to be averse to paying fines, both here in the United States and in Europe. They seem to complain more about being broken up. Well, if federal efforts at breaking them up do not work, why not at least profit from the status quo?
It would then need to be determined how much per acquisition they would have to pay. It could also be applied to companies in other industries such as Big Pharma. It would be based on the number of acquisitions made at the current moment. It could also apply to future acquisitions. It could also be graded, such as paying a higher rate the larger number of acquisitions or the price. The more the merrier.
Such a tax, no matter how widespread, is not a “solution” to the deficit problem. But it would be additional source of revenue. Yes it is a tax increase. However, it is not an income tax increase to the average citizen.
But what about if Big Tech threatens to raise prices to offset this tax? Well, to paraphrase President Trump:
“Make them eat it.”
