Ray Dalio – A Wealth Tax “Crosses the Line”

A wealth tax “crosses the line and is unnecessary,” according to Ray Dalio.

Elizabeth Warren, Bernie Sanders and other Democrats have proposed a 2% annual tax on wealth over $50 million, rising to 3% for wealth over $1 billion.

Dalio’s wealth is estimated to be $20.3 billion. Their proposal would cost him $598 million in the first year and would cut his wealth in half in 23 years. Those taxes would be in addition to any capital gains or income taxes he has already paid.

Dalio is the co-chief investment officer of Connecticut-based Bridgewater Associates, the world’s largest hedge fund, which he founded in 1975. He spoke on May 11 at the Wall Street Journal’s “Festival of Everything.” He was interviewed by Rachel Feintzeig, the WSJ’s work and life columnist.

He said we are already in the process of taxing wealth through inheritance and property taxes. A wealth tax would hurt capital flows and its objectives can be achieved in other ways.

“The gap in opportunity is what matters,” Dalio said. He endorsed the Biden administration’s plan with respect to its initiatives in education and early childhood development.

The future of artificial intelligence

Dalio was asked a series of questions about how artificial intelligence will impact the labor force and productivity.

He called automation the “big question of our times.” Capitalism and our system of profits and losses allocates resources, he said, but imperfectly. Automation can increase productivity, but it has implications for jobs and employment. Dalio said this is a government policy question. Companies will adapt and use technology to improve productivity, and the government needs to decide how to allocate the “pie” of wealth that corporations create.

Those questions are not answered individually, he said. It needs a policy response, which has yet to be initiated.