Impact Theory Host (4:34)

Okay, that is very clear and very bleak. So one idea that I have thought about endlessly, but it's the one thing that I always hesitate to say out loud. But it goes along with what you've just said, which is I believe for the economy to start moving in the right direction, we have to let some people fail. So there has to be. You're able to make a series of bad decisions fall on your face. And yeah, either your family picks you up or the church picks you up, local institution, something. But someone somewhere has to be able to fail. Otherwise we hit this really weird static position. Where once you get wealthy, you effectively don't fall back out. And that calcification of the class structure basically creates a caste system. And that's where it feels like we are right now. Am I close to the mark on that or do you think that's crazy?

Tom (5:29)

Yeah, I think there's a big overlap with what I believe, and that is before COVID the CEOs of the three biggest airlines took 150 million in compensation out. And the way they did that was through stock appreciation. And they kept using all their capital to buy back shares to take the stock price up, which disproportionately elevated their compensation. And then when Covid happens, the airline industry collapses. They turn into socialists and decide that we're all in this together and they need a bailout. No, those businesses should have gone chapter 11 and then someone else and their all of their equity should have been wiped out. And someone else should have the opportunity to buy these.

Tom (6:09)

You know, buy these assets for pennies on the dollar. That's part of the natural cycle in capitalism. We believe in winners and losers. We believe in winners and losers for middle class and lower income homes. Pull yourself up by your bootstraps. But for wealthy corporations and wealthy people, we're constantly talking about some form of bailout or tax policy that shields them. And it even goes as far as the legal structure. I believe the top 1% are now protected by the law but not bound by it. And the bottom 99% are bound by the law but not protected by it. I believe this. And that is I'm wealthy and I think was somewhere between if my son was incarcerated, I believe that somewhere between 3 and 10 million dollars. With my connections and my capital for 3 to 10 million, I could figure out a way to wiggle myself into a crypto summit or a fundraiser at Mar a Lago and somehow get a message to the president that I'm in for $3 million on a Z swing renovation. If my. Oh, and by the way, my son, my son deserves a review by the clemency board for pardon. I think effectively America is for sale for rich people. And whether it's health care, whether it's getting your kid out for a pardon, whether it's a bailout for your company, whether it's government contracts to your company that are not available to small, medium sized companies, America's basically become when it's capitalism on the way up, but socialism on the way down, it's cronyism. So I feel like we've gone full cronyist and what that means is eventually this is economic history repeats itself in America. We've always tried to exit that path. But basically what happens is a group of very talented, very lucky people get in the top 1% and inch by inch they weaponize government to ensure that they garner more and more economic power. And then at some point the bottom 99 goes. The fastest way to double my or triple my wealth would be to kill the top 1% or to tell them they got 24 hours to pack a suitcase and get out and nationalize everything. That's basically the story of Central America for the last 200 years. And we have done a good job of trying to stay out of that by continually redistributing income back into the middle class. And let me use the word redistribution. Unless you tax people in the top 10% at a high rate and shuffle that money back into forward leaning investments, eventually that 1% will garner more and more of the spoils. And at some point, the bottom 99 do the math and go, okay, there's one guy worth more than you know, or 26 families are worth more than the bottom half. At some point, the bottom half goes, I know, let's take the 26 families away. So.

Tom (9:07)

We have tried to exit this cycle of economic history, but now it feels like we're kind of returning to the laws of history in the jungle.

Impact Theory Host (9:16)

We're hitting pause for a moment, but there's plenty more ahead, so don't go anywhere. We'll get back to the show in a moment. But first, let's talk about the most expensive mistake you can make in business. Most business owners waste weeks posting jobs, drowning in unqualified resumes, hoping someone, somewhere decent applies. But that's backwards. You do not wait for talent. You hunt it. LinkedIn Jobs changed the game with their new AI assistant. It filters candidates based on your exact criteria. No junk, no time wasted, just qualified matches. Then it suggests 25 top candidates daily. People already on LinkedIn who fit your role. You invite them directly. No waiting, no hoping. Employees hired through LinkedIn are 30% more likely to stay for at least a year compared to the leading competitor. That is a huge deal. When every hire counts, that means everything. Post your job for free@LinkedIn.com impacttheory, then promote it to use LinkedIn Jobs new AI assistant, making it easier and faster to find top candidates. That's LinkedIn.com impact theory. To post your job for free, terms and conditions apply. Let's talk about who you're trusting with your security. Your phone carrier was Built by telecom executives, people whose expertise is connectivity, not security. AT&T Verizon T Mobile. They were designed to move data, not protect it. And as somebody who has had his phone hacked, it is not fun. Breaches are going to keep happening because of this setup. The people building carrier infrastructure don't think like hackers. Kape is different. It was founded by experts in cybersecurity and national security. OpenAI vetted them. The co founder of CrowdStrike vetted them. These are the people who protect the most valuable targets in the world. Kape owns its own mobile core, giving them full control over data collection and authentication. Head to Kape.

Impact Theory Host (11:26)

And use Code impact to get 33% off your first six months with CAPE. That's C A P E co impact and use Code impact to save 33%. Let's talk about what's hiding in your closet. Most guys own 30 shirts but rotate through the same five. That's certainly familiar. The reason is very simple. Only five actually fit right and feel good. The rest are just taking up space. That's the problem that True Classic solved. Premium fit and feel without the premium price tag. Tailored where it matters, relaxed where you need it. Fabric that actually feels good. This is why 5 million people have already bought 25 million shirts. When it comes to holiday shopping, the best gifts are the ones people are actually going to use, not the stuff that ends up in the back of the closet. Collecting dust to True Classic becomes part of that rotation. The shirts people reach for over and over again. Even better, True Classic now makes clothing for the entire family. Head to trueclassic.com impact and give something people will actually wear. Again, that's trueclassic.com impact.

Impact Theory Host (12:46)

Thanks for sticking around. Let's get right back into the action. Yeah, I try to get people to understand that money operates according to something akin to physics. And if you are either doing things like you're talking about regulatory capture where you're making it once you get in, then you're never going to fall on your face and get bumped back out. Or you just let debt run away and people don't pay attention to what I think is the just absolute cataclysmic effect of debt. If I were going to put things down to one thing that I think has had the biggest impact, it's that debt obviously forces money. Printing money printing forces people to try to escape. So they go into assets. Asset prices skyrocket in addition to the other things that you were talking about. And the only asset that people understand intuitively is home prices. And so once home prices become unavailable and people can't get on the property ladder, they can't avoid the impact of inflation. And so you get this, the, what you're describing, but not quite saying out loud is these two divergent economies. And so you've got the people in the top 1%, maybe the top 10% that are doing great, 2025 has been wonderful to me as an asset holder. And then you've got another economy that's just doing absolutely terrible. And to your point, they do eventually go, oh yeah, I can separate you from your head and I can do whatever I want. And so getting people to understand the reason that this loops in history is because humans only behave in a certain number of ways. Money only behaves in a certain number of ways. And so you put those together and you get these moments that occur over and over and over. So when I hear you talk, I, my impulse is, oh, let's get back to a non crony style of capitalism. But what I see happening among the group that most in my opinion needs capitalism, I see a rise of socialism. So when you look at say Mamdani and the. I don't know if you consider that the future of the Democratic Party. I certainly do. But when you look at that, what, what does that tell you about what's happening right now?

Tom (14:47)

Young people basically are saying whatever the current system is, it's not working. And so I'm going to embrace different systems. And young people who lean conservative. David Frum had this statement that really struck me. He said that if progressives won't enforce the border, fascists will. And what I find is young people are saying this isn't working for me and I don't want incremental change. I want chaos and radical disruption. And if I lean conservative, I'm willing to take a strong man and nationalism and start blaming other people and conflate masculinity with coarseness and cruelty, or leadership with coarseness and cruelty. And then if I'm on the left, I think that it's socialism. And quite frankly these words are, these words are perverted. Socialism is the means of production is controlled by the state. Communism is central planning. Capitalism is meant to say that, that the means of production are controlled by private sector individuals. And we all engage in a certain level of socialism. Social Security is socialism. Food stamps are socialism. It's just where on the scale you want to be.

Tom (15:54)

So what I think young people forget is what Margaret Thatcher said, that the problem with socialism is eventually you run out of other People's money. You do need incentives that motivate people to take risks and garner. And capitalism is winners and losers. My father, who is a Scottish immigrant, said something when I was young that I remember. He said, America is a terrible place to be stupid. What I think he was saying is America is a terrible space to be unfortunate. And we have voted for that. We are willing to have a lower safety net than other countries. I would argue the safety net is now the ground, a cement floor in exchange for un precedented upside. That creates a series of incentives that have been very productive for the US economy and probably resulted in more growth and a larger tax base to tax from to hopefully raise the net. But it's the proportion in the extreme that's gotten out of control where now people are worth more than the GDP of Costa Rica and the safety net is oh, your wife has lung cancer, that probably means you're going bankrupt. The gag reflexive young people to socialism is understandable. It's ill advised. Capitalism has brought more people out of poverty than anything in history. It's just what you mean by socialism. I'm for. I mean Mamdani says I want to raise taxes on billionaires. I'm actually okay with that as long as someone shows me that we're not going to end up with less tax revenue. Because billionaires will decide this is the final straw and they'll move to Florida or Texas. I get it. I've lived in the highest tax states in the world or in the union, California and New York. And the reason I decided to live there was it was worth it. At some point people decide it's no longer worth it. Now I don't know if what he's proposing is that final straw. And it doesn't appear to me that anyone wants to do the economic analysis. I'm living in London. They passed something called the non dominant tax reform where basically if you moved here from Hong Kong, Tony Player passed a bunch of private property laws that attracted wealthy people from all over the world. So if you were living in Hong Kong, you got to bring your tax status which basically was you paid no tax. There are a lot of people living in London paying zero tax now. They pay consumption taxes, property taxes, start businesses, etc. They passed this non dom that said no, if you've been here a certain amount of time, you now have to you're benefiting from UK infrastructure. You have to pay the same taxes as UK citizens. Philosophically, that's totally on point for me. I get it. The problem is in the last six months, 10,000 millionaires have left and the treasury is going to collect less money this year than it did last year.

Tom (18:34)

There's a difference between. And one of the things I don't like about my party on the far left is they're more concerned with being right than being effective. I get it philosophically that the wealthy should pay a little bit. I get it. I want a more progressive tax structure. But the top 1% pay 40% of the taxes in New York. And also it's a bit of a false argument, Tom, because first off, he's not going to get it through. Any tax increase has to go through the New York State legislature. He's not going to be able to do it. And then he goes to rent freeze. Okay, great. We need more. I get it. Young people can't afford to live in the city, housing is out of control. Freeze the rent. Every economic study says the same thing. When you try and implement rent control, you discourage construction and development and rents go up in cost. If you were serious about lowering costs, you would figure out a way to raise revenues through some sort of tax. Maybe it's on the wealthy, maybe it's on corporations. And you would create tax incentive for developers to build more. And you would have legislation getting rid of NIMBYism and you would unlock. The private sector's building is much better at building housing than. Than. I'm sorry, the private sector is much better at building housing than the public sector. When public sector builds housing, it usually ends up concentrating poverty and creating crime ridden areas. When you encourage builders to build a lot of housing, you end up with. This is a supply problem, it's not a demand problem. We need more houses. Nationally, I think a decent plan for the Democrats would have been one of the things I really don't like about my party. They're so fond. I just went to this master of the universe conference and everyone running for president was there, including the governors of Pennsylvania and Utah who I think are great, and they just want to cosplay Obama and talk about all this goddamn rhetorical flourish. All right, at some point are you going to get to an actual fucking idea? Here's an idea. Eight million new homes in 10 years. This is how you're going to do it. Manufactured homes which cost 50% less than homes on site. Tax incentives, anti NIMBYism laws like they've done in Austin or Minneapolis. And we're going to build 8 million new homes in 10 years that will materially lower the cost. Maybe government subsidize mortgages that bring down the interest rate. We are going to try and figure out a way to reduce the cost of a home such that the average income household has a shot at it. And then raise minimum wage to 25 bucks an hour as opposed to freezing rents. It doesn't work. So anyway, I've gone up script here. When America isn't working for people, they typically don't want policy or incremental changes. The reality is structural change around affordability is going to take years, if not decades. You need antitrust, you need more competition. You need a massive investment in housing. You need to ensure that there aren't three chicken companies controlling the entire poultry market. You need 10. You need to break up Big Tech. You need minimum wage to go to 25 bucks an hour which would hurt the stock prices of McDonald's and Walmart and it would be worth it. You need to put more money in the pockets of spenders, low and middle income homes. You need an actual progressive tax structure, not one that's progressive. Progressive till the 99th and then once you make the jump to lightspeed, it crashes and essentially put more money in the pockets of young people who spend it. Multiplier effect grows the economy and massive.

Tom (22:00)

Programs that increase this full body contact violence of competition where they are forced to offer a competitive product at a low price every year. Big Tech has increased its margins because they're monopolies and they're able to charge higher and higher rents. Pharma, Big Ag, Big, Big Chicken, Big Beef, all of these industries are able to rise their, raise their. But my industry is totally corrupt. We have essentially a cartel and we do something. I'm going to go really offline.

Impact Theory Host (22:30)

You're talking about universities.

Tom (22:31)

Universities. I'm going through this right now. Do you have kids, Tom?

Impact Theory Host (22:34)

I do not.

Tom (22:35)

Okay. I have a 17 year old, an 18 year old applying to college. There's something called early decision. And what they do is they say if you apply early decision here, we take the acceptance rates from 8% to 15%. So there's incentive to go early decision at the school of your choice. And you sign something saying if I get in, all my applications are automatically withdrawn from every other school. Okay, Fair trade. It's so they maintain total pricing pressure because Syracuse finds out that they're not going to be able to fill their class. So they go out and they start offering financial aid to people. Hey. Hey kid. You got in. If you pick us, we're going to give you 10, 20, $30,000 in financial aid next year. And then the kids who got an early decision, who committed, called and said, we want this financial aid. And they said, sorry, you're fucked, uned, you have to come here. So this is a means of basically reducing the economic power of applicants. And also, and you'll learn this if you have kids, every university happens to raise its prices almost in near exact lockstep. We're all charging pretty much the same. How did that happen? We all communicate with each other. And wouldn't you know it, when Colombia goes to 71,300, we go to 71,308. Do you think that just happened? So it's all a giant rig system, through pricing, through financial aid, through cheap debt, through artificial scarcity, limiting supply, such that we can raise prices faster than inflation, such that we can soak the middle class and transfer money to corporations and even to my industry, to the faculty and endowments of universities whose alumni, once they have degrees, love scarcity. Oh, my God. You rejected 90% of the applicants. Standing ovation, which in my view is tantamount to the head of a homeless shelter bragging he or she turned away nine out of ten applicants last night. America needs to reject this exclusionary, rejectionist LVMH like strategy that benefits the incumbents at the cost of the entrance. But it is. It is a virus that has infected every component of our society because the people in charge already have assets. So they want to see a scarcity mindset increase the value of their assets. And then they wonder why their daughters are obese and anxious and single at the age of 30.

Impact Theory Host (24:57)

Yeah, well, it was a fantastic rant that I think is really on the mark in terms of the economics. Okay, so looking at this, I think you and I draw. Every word out of your mouth is a banger for me. But we draw, I think, different conclusions about what you do next. So when I hear all of that, I think, okay, we need to shrink the size of government. As a history buff, looking at what America did at its founding, it was far more like, if you can make it here, you can make it anywhere. Because we don't have all the social safety nets that we have today, not by a long shot. When you look at just how much more the government spends now since COVID than it did in 2019, huge. And so I just go, yeah, I get the impulse to tax, and I don't. I am very much a believer in Ray Dalio's beautiful deleveraging. So there's going to absolutely be higher taxes, there's going to be wealth redistribution. But they have to be done so specifically to understand both the economic and the psychological impact. That's the part that I don't think people are talking about. Ultimately, I think the goal should be to reduce the size of government for the reason that you said when the public sector does things, they tend to create more problems than they solve. So when I look at this and I see, okay, you've got the rise of socialism over here on the left, you've got all kinds of cronyism going everywhere that's creating all of these different problems. I don't see that adding more government is going to be the solve. It's how do we dissolve some of these areas that have their grips on things in a way that does not benefit the middle class.

Impact Theory Host (26:36)

Why does that take seem out of step with the direction you want to go?

Tom (26:42)

I don't think it is. I just think there's some nuances. There's, there's then overlap where we agree and probably where we disagree. So when you talk about government size of government, there's two things. There's employment, size of government and then there's spending. So if you look at state and local government, I think employment is actually flat to down over the last 30 or 40 years. So it's not like, it's not like the payroll, the payrolls of state and local government has surged. If you look at spending, it's gone ape shit. And both Democrats and Republicans, the only thing that's bipartisan is reckless spending. It's like, okay, Republicans want more in defense and tax cuts and Democrats want more social programs. And they all get together and say, I know, let's do both and absolutely hamstring and inhibit future generations with just unsustainable, irresponsible levels of debt. Now the question is, all right, how do you close the gap? If we're a household, if US was a household that makes 50,000 a year in tax receipts, it spends 70 and it has household debt of 370,000 of which when the parents die after going to Cabo every weekend on their kid's credit card, the kid gets to inherit the debt. The debt doesn't die with the parents. And there's a lot of issues here. One, Washington is a cross between the golden girls and the land of the dead. If two thirds of Congress is going to be dead in 25 years, do they really care about the deficit or climate change? Do they really want to build a high speed train network that they're going to be in a wheelchair to cut the ribbon on. So we need younger people who think more long term. In addition, we have an obsession with I think we should means test and raise all roads lead to the same place and that is entitlements. If you want to have a serious conversation around reducing government spending, Doge tried to cut, what was it they were going to cut? A trillion dollars. It ends up that almost everyone they fired, they've decided they need to hire back. It ends up that you need people to land your planes. It ends up that the people actually protecting parks, the government. I think government is the most underestimated group of professionals in history.

Tom (28:50)

I work a lot with government officials. These are the brightest people I've ever met making $180,000. It could be working at Meta at a million, but instead decide to focus on cybersecurity defense for our nation. So I think generally speaking, Americans don't have an appreciation for how talented our government is until we put village idiots in charge, as we're doing right now. Two, it's not the tax rates, it's a tax code. And that is there's $760 billion a year that is owed but not collected. And the biggest tax cut in history wasn't capital gains or the tax cut of 2017, it was neutering the IRS. Because as someone who has a very complicated tax filing, I can tell you that the general incentives are don't hide capital, don't do anything illegal, but be as aggressive as possible because they don't have the staffing to come after you and audit you. They do have the staffing to audit someone making $60,000 a year. Their audit can be done by AI and it's pretty straightforward when they're lying. But if you're somebody who has limited partnerships, properties all over the world, different sources of income, different shell companies, they do not have. When you neuter the budget of the IRS, the people, the manpower to come after you. $760 billion a year in uncollected taxes that are owed. I'm not talking about intimidating people. I'm talking about the taxes that are owed and need to be collected. Two, all roads lead to the same place, and that is health care. We pay $13,000 a year per capita for health care. The rest of the G7 pay 6,500 in exchange for paying double. We die sooner, we're more obese and we're more anxious. If in our top 10%, you have the best health care in the world, if you're in the bottom 90, it means if your Wife is diagnosed with lung cancer. It also probably means you're going bankrupt. 40% of US households have medical debt. I believe that we need to take Medicare, which actually people are pretty satisfied with, and delivers at a decently economic basis, a pretty efficient basis. Lower it by two years, a year for 10 years till it's 45 and up, which is about three quarters of all health care, because 55 cents, 45 cents on the dollar of health insurance goes to profits and administration. And we need to get that $13,000 down to 10,000, then down to 9, and then, ideally, with our scale and our innovation, back to where the other G6 nations are. If we can produce every single product for the same or less money than the other G6, why are not we producing health care at the same rate? If you take 350 million people times $6,500 per capita in savings over the next 10 or 20 years, which America doesn't like to think because we only get reelected every 24 months, boom, you have your $2 trillion in savings. We need the tax code to be enforced, and we need to really go after health care. And we need to stop transferring money from young to old. We're obsessed with tax codes. We're obsessed with demonizing billionaires. Bernie Sanders and Elizabeth Warren want to lambast billionaires. They're each worth tens of millions of dollars. I get it. The tax code should have an alternative minimum tax on anyone who's making over $10 million. But that's not the problem. The problem is enforcing the tax code and attacking health care if we get really serious about fiscal responsibility. But the notion that we continue to pay 7, we continue to spend $7 trillion a year on 5 trillion in receipts is so morally bankrupt. I'm in the club doing champagne and cocaine, and the closest my kids get is they get to throw their credit card in so I can swipe it again so I can now do Rales Academy. What is going on here is entirely morally corrupt, and my generation needs to pay more taxes. I'm not saying, you know, I don't want to demonize billionaires. I want Elon Musk to make a trillion dollars. I want him to be taxed 60 or 70% on it. Because the bottom line is it's not going to make him any happier if he makes 800 billion versus 400 billion. I want the estate tax exemption lowered from 30 million to 1 million. If your kid inherits 7 million versus 9 million, no happier. And my understanding is once you're dead, you don't really sense whether you're happier or not happier. There are common sense solves to our fiscal problems. We just have DC that has been washed over by money, there's regulatory capture and we have old people voting themselves more money who don't want to think long term about the fiscal health of future generations.

Impact Theory Host (33:15)

Taking a short break, but there's more Impact theory after Stay tuned In the age of AI, you do not need to become an e commerce expert. You don't need to learn copywriting or photography or even inventory management. You don't even need to learn international shipping regulations. You need to level expertise that already exists. Shopify's AI does the expert work for you. No marketing degree is required. Beyond AI, you get world class expertise built right into the platform. Choose from hundreds of ready to use templates that already convert, plus inventory management, international shipping processing, returns, all handled automatically by systems that process millions of transactions. Turn your big business idea into reality with Shopify on your side. Sign up for your $1 per month trial and start selling today at shopify.comimpact. again, go to shopify.comimpact that's shopify.com impact thanks to HomeServe for sponsoring this episode. Here in Southern California, we've been hammered with rain recently. When weather changes fast, your home gets tested. The problem is, most people think their homeowner's insurance has them covered. But it doesn't. Last time we had a leak. I Wish I had HomeServe to get someone to help fix it immediately. HomeServe is like a subscription to your home. For as little as $4.99 a month, HomeServe manages repair plans that cover the critical systems insurance leaves out when a repair hits. You're not scrambling to find a contractor in a panic. You call HomeServe's 24. 7 hotline and they connect you with their trusted national network of 2,600 local contractors. Help protect your home systems and your wallet with HomeServe against covered repairs, plans start at just4.99amonth. Go to HomeServe.com to find the plan that's right for you. Again, that's HomeServe.com not available everywhere. Most plans range between $4.99 to $11.99 a month. Your first year terms apply on covered repairs. Data brokers are legally harvesting your information, your home address, your email, your phone number, even your Social Security number and flipping it for cash. Scammers use it to steal identities. Criminals use it to commit fraud. Stalkers even use it to find victims. That's where Incogni comes in. Incogni finds where your data is exposed across hundreds of data broker sites and and removes it automatically. You give them permission, they go to work. No phone calls, no forms, no stress, just real results. So if you're serious about privacy, take action right now. Go to incogni.comimpact and use code impact to get 60% off your annual plan risk free for 30 days. Again, that's incogni.com impact and use code impact. Incogni is spelled I N C O G N I.

Impact Theory Host (36:36)

Thanks for staying tuned. Now let's get back to it. Again. A lot of things that I think are really on the money. I'm going to ultra simplify that. Tell me if you think that this captures the sense of it. So you've got to get serious about talking about the spending problem. Spending problems entirely. Entitlements. Then you've got to find an efficient way to get more tax revenue and by taxing the wealthy. I don't. I didn't hear anything of what you just said about going in a Nordic style where we just tax the hell out of everybody. Is that one two punch? Obviously a gross oversimplification, but it'll give us a jumping off point, I think.

Tom (37:14)

Yeah, I think that's strong and just some nuance around the taxation. I bet you're where you live in L. A. Yeah. I'm going to assume you make a very good living. You know who gets most screwed in our tax code? We like the populist argument of the the poor are paying too much in taxes and the middle class and the rich aren't paying any taxes. Bullshit. The rich are paying a disproportionate. The top 10% pay 80% of federal income taxes. The people who get most screwed in our tax system are what I call the workhorses. I don't know much about you, but I'm going to stereotype you as being in the workhorse. A workhorse. A couple played by the rules, got great certification, worked their asses off. Mom's a baller at a law firm. She makes $1.2 million as a partner. Dad is a podcaster making 600 grand a year. They make $1.8 million. They live in a blue state, which is probably where you need to live to have these types of professions, this type of income. They are probably paying 50% in tax rates. Now if dad starts a podcast network and pours all of his money and can afford to reinvest in the company and then he incorporates the company and it gets bought by Sirius or Wondery or Time Warner and he gets a $30 million cash hit, his tax rate drops dramatically. Right. So the workhorses, the people making hundreds of thousands, pay too much taxes. When I was, when I was in my 30s and 40s making hundreds of thousands of dollars, I was paying 30 something, 40 something percent tax rate. Now that I'm making millions, some years, tens of millions, my tax rate and the fact that I'm mobile now because I have the money and I relocated to Florida, my tax rate has plummeted to kind of the high teens. That makes no sense. So when people hear the rich are not paying their fair share. No, actually the rich are probably paying more than their fair share. If we enforce the tax code, it's the super rich that are getting away with murder. We've decided if you get the gold medal, you get the bronze and the silver. The 26 wealthiest families in America pay an average tax rate of 6% a year. Corporations are paying their lowest tax rate since 1939. Right. And it's not made them any more productive. So I think there's common sense strategies. Let's go back to the tax era of that great socialist Ronald Reagan. Have the same tax rate on current income as capital gains. Take corporate tax rates back up AMT of say 40%. If you make more than 100 million in profits. If you're making more than $10 million in current income, alternative minimum tax of 40%. The tax code's gone from 400 pages to 4,000. Those incremental 3,600 pages are basically that are, screw the middle class. There are so many goodies for people in my income class. I start a company, I sell it. Something called 1202. First 10 million is tax free. What does that make any sense? But we need productive people to start businesses. I started nine businesses. If you held a gun in my head, I couldn't tell you what the taxes were when I started the business. That's not why you start a business, because of tax advantages. But, oh, we want VCs and institutional investors to get this giant loophole where if I invest 2 or 3 million dollars in one of my startups and it sells first 20 or 30 million 10 times the basis, or is it. No, it's 10 times the basis or now it's 15 million are totally tax free. What you want in an increase in taxes is the least taxing taxes possible. And there's a lot. One of my intellectual role models, an Israeli American psychologist named Daniel Kahneman, ton of Studies on happiness. Money can't buy you happiness. Bullshit. Absolutely. Correlation between money and happiness. Middle income people happier than lower, upper income happier than middle. But once you hit a certain income level, no incremental happiness. Billionaires are no happier than millionaires. There's a myth that they're less happy. That's not true either. Once you get above a certain number, no incremental happiness. Which says to me we should have an alternative minimum tax of 40 or 50% on anyone say over $10 million. Corporations can pay a higher tax rate now. We haven't seen a burst in productivity. We have seen an increase in stock prices because of more earnings, which again accretes to. Wait for it. The top 10% who own 80% of stocks. So one alternative minimum tax above a big number and two, lower the. We're about to see a transfer of wealth of $120 trillion. I think in the next 30 years of wealth, lower the state exemption from 30 million to 1 million. If your kids inherit 7 million instead of 9, not going to change their life or their happiness. And as far as I know, you're going to be dead, so you're not going to care. But the notion that we need to build dynastic wealth with out of control tax exemptions and estate tax, that's anti American. We're not supposed to be dynasties here. So alternative minimum tax corporations and exceptionally wealthy people.

Tom (42:10)

Reduce the estate tax exemption from 30 million to 1 million and means an age gate. Raise the age on Social Security and means test Social Security. And also above a certain point, you pay for your own health care full stop. And that turns those people into consumers who actually say how much is this MRI costing? And they shop around. I think all of these things are common sense solutions to bring fiscal sanity back into the system.

Impact Theory Host (42:38)

Okay, so I certainly have an allergic reaction to the idea of taxing more. You've said a lot of very true and very valuable things about. I did a whole deep dive on who actually pays taxes in America. You've covered it very well. So you have the wealthy paying a very disproportionate amount of. There is a psychological impact though when you start. So I in my best years am north of 50% in my tax bracket. There's something about that psychologically that is very difficult to swallow. And if, and I think you said something about. I know you've said this before, I can't remember if you said it today or not, but the idea that if I knew that the money was being spent efficiently, I would have A lot less problem being taxed. Like if I'm living somewhere and I feel like, oh, it's worth it, my tax dollars are being used incredibly well. This wonderful. Yeah, you have a much easier time stroking the check. But when, and this is me mapping my own beliefs. Not trying to put these words in your mouth, but when I look at the, the making a distinction between number of people working in the government and the amount that they spend to me does not change the dynamic of the more money that they have and are spending. We're getting a worse and worse result. So perfectly willing to buy that. The people in the government are amazing. But there's something about the way that the policies are enacted that end up not.

Impact Theory Host (44:07)

Yielding the result that we would see from that fiendish competition that you talked about in the private market. So that's my bias. So I'm, I am opposed to raising taxes long term.

Impact Theory Host (44:21)

Unless we can see that the government itself can become efficient. For me, I will peg that at the ability to balance the budget. And the one immutable truth that you put your finger on is that both the Republicans and the Democrats are just hell bent to spend, spend, spend. Because in a popular, well, in any moment that's how you get elected. But it gets way worse in a populist moment. So what do you see as the mechanism that pulls us back out of this? Because I don't see the government getting any more efficient. There is a psychological break that people will have. So the more they raise taxes, people are going to move even if they have to leave America. I think that there is a point where the taxes become so onerous that people will move. And so when I look out at it and, and hopefully you can back me off of this black pill ledge here. When I look out at it, I'm like, oh, the only thing that's going to make us actually change the direction, which again I peg is a debt and deficit problem. The only thing that will move us off of that, that I believe is the thing that's hollowing out the middle class is, is to have so much pain that we will finally be forced to backtrack. Do you see any other way other than economic collapse, a true hot civil war revolution, something like that that will actually begin moving us in the other direction.

Tom (45:40)

So a lot there. So, so first off.

Tom (45:45)

I think my tax, not this year, but last year my tax rate was 17%. Yours was 52. Does that seem fair to you?

Impact Theory Host (45:54)

It, it depends. It. No, we'll take the short answer.

Tom (46:00)

I made you know.

Tom (46:04)

I was accused of bragging about my wealth and it's true because I'm insecure. But my guess is I, I don't know what you made. I, I made an exceptional amount of money. Last year my tax rate was 17. It sounds like yours was 52. Tell me how that's in any way fair.

Impact Theory Host (46:18)

Well, the quick breakdown would be the year that I made the most money, my tax rate was much lower and I am perfectly willing to make the exchange for long term capital gains. So capital gains not being a tax.

Impact Theory Host (46:36)

I certainly do not know the tax as well as I know some other basic economic principles. But I will say that when I was building the company and taking insane risks with my entire livelihood, everything that we owned, that felt like a good okay, well, if I can get it across the finish line, at least I'm not going to be paying that same 50 plus percent tax rate. That would have been a bitter pill to swallow when you risk so much.

Impact Theory Host (47:05)

So, yeah, anyway, to me there is nuance there. Where I've lived both, I've had a much lower tax rate. I don't know if I've ever been in the teens, but I've certainly been in the 20s. And I was like, cool, yes, this was worth all the sacrifice, all the risk on a more mainstream year where I'm just making, by average person standards, I'm making a ton of money. I accept that I'm going to be paying ordinary income and it is what it is.

Tom (47:28)

I would just so budgets and taxes are a reflection of our values. And our values right now state the following that we think sweat is less noble than money. That when money makes money, when you make money from buying a house, selling stocks, that that money is more noble and we should tax at a lower rate than when someone shows up to a car wash or someone works really hard. As a podcaster, I think we should go back to Reagan. I think there should be one tax rate and I think if you enforce the tax code and didn't have all of these loopholes right by a plane, you get to write it all off in the first year. You don't even have to capitalize when you buy office furniture for your podcast studio, you have to capitalize and expense it over seven years. But someone who buys a gulf stream gets to write off the entire thing in year one. That to me is nothing but captured by the wealthiest 0.1%. So I would like, I think you could lower taxes as long as everyone paid them and you got rid of all these loopholes. That's why I like the AMT going after specific loopholes. There's too many. There are more lobbyists, full time lobbyists working for Amazon full time living in D.C. than there are sitting U.S. senators. And whoever raises the most money 93% of the time wins the election. So the game is rigged for whoever is willing to throw most money to maintain.

Tom (48:49)

Their private equity tax loophole where for some reason private equity investments are taxed at long term capital gains even though it's just a commission. If I sell a Subaru as a car salesman, the commission is taxed at a higher rate, then if I find an investment and use other people's capital to make the investment and I get a commission as a private equity general partner and then for some reason I get long term capital gains on that. That is a loophole sponsored by the lobbyists hired in Washington by the private equity industry. And then they get Kyrsten Sinema to basically hold up the infrastructure bill unless they strip that, you know, maintain that tax. So I'm for, I think you could lower taxes. And I don't see any reason why capital gains taxes should be lowered are more honorable than the money that sweat makes. I want people to work. I'm worried about young men not feeling the incentive to actually.

Tom (49:39)

Work the the notion of state that's federal. I actually believe federal taxes for the most part are a pretty good deal. I do believe we're spending too much money on our seniors, which is again the third rail. I'm a terrible person. This is the wealthiest generation in history. Nana and Pop Pop. If you can't upgrade from Carnival to Crystal Cruises, I'm okay with that. I don't see why young people are continuing to transfer money, this much money to old people. Do we eliminate Social Security? No, but you and I should not get Social Security.

Tom (50:16)

I don't see any reason why we should get it. So go after entitlements, lower taxes, but enforce them. And then with respect to states, I like competition. I like the idea that at some point Tom may say, you know what, I've had it. I'm moving to Texas and I'm going to build my podcast studio in Austin. And the fact that most states have to balance their budget, there's a certain level of fiscal responsibility enforced on them. They can't rack up enormous deficits, at least not directly, and they can piece out I left New York. Now, the reason I left New York was because my kid didn't get into preschool. But at some point I might have left because of the Taxes. I think it's good that states compete with one another. Yeah, agreed. So I think some of this gets solved. I think you're right. I think we should. I think governments should be forced to compete and, you know, offer a good service. I come at government from a little bit of a different place than you because I got a. I grew up in California, I grew up in Los Angeles where you are now. I got assisted lunch, I got Pell grants, I got into UCLA because it had a 74% admissions rate. Because the government spent a lot of money. Edmund Pat Brown spent a ton of money of taxpayer monies on building a lot of seats in this amazing institution called the University of California. So I feel a certain gratitude and affinity and feel like I've gotten a great deal from the federal government. I think some states, I think California is, you know, I think it's good that Texas is saying to Californians, come here, you don't have to pay any state tax. Because I think it forces the governor and the people there to take on unions, take on out of control spending. I think at some point, if enough people leave New York, they're going to figure out a way not to spend a billion dollars a mile. We spend seven times more per mile on subways in New York than they spend in Paris, which isn't known as a very efficient economy. So there is, I think competition is an answer. And I think, I would like to think that before we get to the revolution part of the program.

Tom (52:21)

Voters will get their heads out of their asses and maybe vote for some people that are honest with them and say, folks, do we need to raise taxes or lower government spending? The answer is yes. And I'm not going to give you quick solutions here. I'm not going to try and buy your votes. I'm going to have to means test and raise the age for eligibility for Social Security. I'm going to nationalize health care, which every. The health care industrial complex is going to spend billions of dollars trying to convince you I'm a pedophile or addicting diet, diet pills to try and make sure I don't get into Washington. But at some point I'd like to think the voters are ready for an adult conversation and say, okay, I am down with figuring out a way we can't just pay off the deficit. We got to go back to a smaller deficit, lower it, have a few surplus years such that the economy continues to grow. And at some point, instead of it being 150% of our GDP, it goes down to 70 or 80, which is sustainable. I'd like to think at some point the populace and voters are ready for an adult conversation and we'll vote those leaders in. Hasn't happened yet, but we used to vote those people in the 50s, 60s, 7. Bill Clinton had a budget surplus. You know, the voters that voted him in, I think there's still some of those out there. You know, a lot of Republicans had, not a lot, but a few had budget deficits, surpluses post World War II. Does it have to get to a point where, I mean, you could argue that when farmers are lining up at food banks, who, 80% of whom voted for Trump, they're probably going to vote differently in the next election. So I don't know. You know, I'd like to think that the democracy, our democracy works pretty well. The problem with our democracy is the pendulum. Like they say, it's visually impossible to see a pendulum at the exact bottom. Like you can never actually frame it at its exact bottom.

Tom (54:15)

American politics seem incapable because of gerrymandering to ever be at a center point. It's either rent control and tax the rich and ubi or.

Tom (54:30)

It'S cut taxes and spend more and have massive deficits.

Tom (54:35)

And I don't even know how you describe. The Trump administration is a lot more socialist than what Mamdani's proposing. Socialism is the means of control is controlled by the state. A golden share in US Steel. Because Donald Trump's so good at bankrupting casinos, he should run a steel company. Taking an investment in intel, which will favor that one chip company over others, deciding who should get to own TikTok and doling it out to his Republican friends. That is pure, unadulterated socialism. So, you know, look, who asked for this? Voters asked for this. Politicians are always afraid to say, get your head out of your ass. You voted for this. Oh, maybe you thought you were voting for, you know, racism, not tariffs, farmers. But this is what you got. The D in democracy is working. Are you ready for an adult conversation?

Impact Theory Host (55:30)

That's it for part one. Make sure you are subscribed so you do not miss part two. Coming up next soon.

Impact Theory Host (55:37)

Most healthy habits are hard. Meal prep takes hours. Gym routines get derailed all the time. Complicated supplement regimens fall apart, often within weeks. But AG1 Next Gen is different. AG1 Next Gen delivers what your body actually needs. 75 plus vitamins and minerals, 5 clinically studied probiotic strains, plus prebiotics and superfoods. It replaces your multivitamin, probiotics and more in one Simple Daily Drink AG1 Next Gen comes in three new flavors, Tropical Citrus and Berry. All plant based flavoring with 0 added sugar 0 artificial sweeteners 0 erythritol. Every flavor maintains NSF certification for sport, so you know you're getting the strictest quality standards. Subscribe today to try the next gen of AG1 and if you use my link you'll also get a free bottle of AG D3K2, an AG1 Welcome Kit and five of the upgraded travel packs with your first order. Click the link in the show notes or just head to drink ag1.comimpact to get started again. That's drinkag1.com impact how many times have.

Tom (56:56)

You wished you could be in two places at once? With wix you practically can. Wix's website builder is packed with powerful AI tools to make running your business online easier. Build a full site just by talking with AI, get an AI agent to manage your sales and marketing, or work like a 10 person team even if it's just you. So you don't need superpowers to get everything done, you just need Wix. Try it now for free@wix.com.