Scott Galloway wants YOU to pay more taxes - Episode 075

We're back. Another episode. Welcome back. C Suite Unfiltered with Mike Andes. How's it going?

Good, good, man, good.

Love to hear it. Well, we're gonna jump straight in. So I mentioned my not financial advice last week was to tune in next week.

Okay.

We're gonna continue the conversation on taxes.

Okay.

And based on a video that I watched, an interview that Simon Sinek, our podcast that Simon Sinek did with Scott Galloway.

Okay.

In the. The title of the podcast is the War on the Youth with Professor Scott Galloway. So that's kind of the, the beginning of it and that might be a turn off for some people. Very interesting. Listen. I recommend listening to the whole thing. But the second half of the podcast is interesting. They talk about, and let me get the title exactly right here. Moral Capitalism and Political Extremes. And a lot of that conversation revolves around actual taxes and some of the stuff we were alluding to last week. So I'll jump in with a couple of quotes here from Simon Sinek. And one of the things that they are talking about throughout this pod is the loss of idealism. So we're going to talk some, you know, some haughty language here. I know it's your favorite, but I would love to know your thoughts on the loss of idealism. And what Simon Sinek says is that nowadays we have all this divide in America and a lot of divide between the rich and the poor. And like, you should be paying more taxes, I should be paying less social programs, whatever it may be. Simon Sinek talks about the loss of idealism and he said talking about world peace was common historically. If you look at presidential speeches from jfk, from Ronald Reagan, whichever side of the aisle you were on from 1900s America up till, he basically says it kind of gets lost in like the 80s and 90s, especially with the dot com boom and the advancements in tech. But what are your thoughts on that? Has America or society as a whole lost elements of idealism? Because I can't even think of the last time I heard world peace. So someone talk about world peace. What are your thoughts on that?

I don't know. I don't think the. I don't think the ingredients of idealism are required to have the outcome right. Like, I don't think we need to be all talking about it in order for it to happen necessarily. And for it to be like our, like, like you can have world peace and no one be talking about it. And usually in times of peace is actually when no one is talking about it because it's not top of mind.

But I think, like, there will always be bad actors. There will always be political and religious fractions that create wars and strife between people, unfortunately. And unfortunately, we will not be man and women enough to actually just like, talk things through. We will throw bombs at each other and do all sorts of malicious things. But this is out of my sphere. Idealism. Okay, good. Like positivity. I don't know. Like, it's just a matter of like, I don't think things need to be talked about a lot in order for the outcome to happen. And a lot of times when the outcome is happening, you don't talk about it as very often. Right. So like when leads are pouring in, no one's talking about marketing.

Yeah, fair.

And when we have tons of people that are lining up to be hired, we're not talking about, like, how do you find employees? And so it's just like, it's not top of mind many times because it's happening. And historically, even with everything that's going on with. We are, from a relative standpoint, if you look back, compared to 500 or thousand years ago, relatively peaceful. So anyways.

Yeah. And world peace is using it more as an example. He's not saying like that is the end all be all of idealism. What he's getting at is that there's been this loss of idealism. And that now especially because from what Simon Sinek does is that he is a public speaker, he's a consultant to businesses, he's a coach, he's a motivator, however you want to classify him. And what the conversation that him and Scott are having is that basically American politics have gone too far. They don't care enough about the. The individual, the individual citizen that actually has put those representatives in place and the laws that they are signing into. Into place, as well as these corporations are mistreating employees. So that's kind of the conversation as well. It's like American politics and those that represent the American people have lost their way. And American corporations just steamroll their employees, if you will. You know, and Scott is one of the biggest big proponents, one of the big, big vocal voices right now of raising federal minimum wage. He believes it should be across the board, $25 an hour. We can unpack that differently. But Simon Sinek's just using world peace as an example of idealism. And he feels that because America's lost its way, because corporations have lost their way there, there needs to be a shift back to idealism that I can. Mike Andes and I feel like you do actually hold the elements of idealism that you want to change the level of professionalism in the lawn care and landscape industry. You, you also want to compensate your employees. Well, that's pretty ideal, right? You're not saying, like, I want to take all these other corporations out of business. I want to directly compete with grounds guys, Brightview, whoever it is, you're like, hey, I want to raise the level of professionalism in this industry. Ideally that floats all boats, right? A rising tide floats all boats. And ideally, if I can do that, I can pay my team premium wages, give them benefits, things of that nature. Does that make more sense?

Yeah, it does.

Yeah.

I just don't think about that stuff, dude. I'm just like, look, I need to make money and I want my owners at Augusta Nation to make money and I want industry, people in the industry make more money and, you know, will X, Y and Z make them more money? And yes, like, they can use that money to whatever extent they will get more satisfaction out of life, whether you spending on their kids or growing the business or whatever. And so I just focus on that stuff. Whether or not it's idealistic or not. I don't know. I think humans are idealistic in general because we're always striving to make our, our, our current circumstances better. Like if you throw someone in the, in the middle of the desert, the first thing they're looking for is like water, shelter, idealistic immediately.

Yeah.

And so I think it's inherently baked into us. And that's what, like from evolution, from a perspective of technology and us just becoming more civilized generally happens with time is because, like, if I can make the landscape industry better, great. And if someone else can make like baking better, great. And if someone wants to make like paint on the walls better, like if we all do that, eventually you have, you know, you know, idealistic thought of like becoming a better society.

Okay, so, so that's kind of the, the frame, the framework that they're talking about. It's like this loss of idealism that then shifts into moral obligations not only of the individual, but also of corporations. And Simon Sinek has this quote. He said, in the 19th century, the British and American wealthy gave massive amounts to charity building universities and hospitals, not out of tax obligations. So where do you think that shift has happened? He said he did a lot of research into this. You look at, you know, the Carnegie's, the Vanderbilts, and then prestigious universities and hospitals in England, in the uk he said it was very consistent. These were all donations. And they say it was a commonality of man, that every man has the experience of life and death, and they want to give back. Now, they weren't obligated to do that. They didn't do it for tax reasons. They did it to give back to their communities. Whether you believe that or not, what are your thoughts on that versus now? Now you have to really kind of hold the rich people over a barrel to get money out of them, if you will.

Yeah, like, there's. There's. As soon as you incentivize something, it changes the dynamic of the relationship. And so it's the same thing with, like, asking for a review from a customer, for example. I believe that people do that because the intrinsic value they get in proving to everyone else around them that sees that review that they are correct. I feel like that is actually the epitome of what a review is about and telling other people, basically, I made the right decision. Go use this service right now. As soon as you incentivize that and say, I'm going to give you a $50 gift card now, it immediately strips that away. And now it's about the incentive. And so if you're going to incentivize something like donations or philanthropy or charity, now it switches from the inherent goodness of the benefit I get receive emotionally by giving money, and it switches to now tax incentives. And so the problem with no problem.

What has happened with the tax code is because there's now incentives for everything that the government wants and needs to happen, like affordable housing, creating jobs, creating more places to live. Like, all of these things are incentives that they have created. But now, instead of doing it out of the goodness of your heart, there is an incentive. Therefore, we. We go after it for the incentive sake. And so I think it's like discretionary effort with employees. Like, yes, you can. You can pay people $50 more if they do this and $100 more if they do that, and then tell them, hey, if you do this, you'll get a bonus. Or you just be like, hey, go hire. Go hire thoroughbreds. They're just gonna go crush it. And then discretionary effort is released, and then you just give them more money as it happens. And so it's only as right or wrong. It's just a matter of like, do you want to have that kind of carrot before the horse? Or do you want to have the. Like go run for it and then get intrinsic value because of accomplishing things? And so the same thing is true when it comes to philanthropy. It's like, do I want the inherent feeling of giving that I actually receive value from or the incentive? And as soon as you put the incentive in place, I think people default to that. And everyone that wants to give for the sake of philanthropy and for the sake of what it makes them feel is going to be lumped into the bucket of. Oh, they do it for tax purposes. Yeah. That's why I don't talk about it, because it's like, if I'm giving for this reason, I will be lumped into the fact that you're doing it for tax purposes. Right. And so I try to keep it like, I am doing this for tax purposes or I'm doing this for charity in my brain. And then I just don't talk about any of them because otherwise it'll be misconstrued. It's like, everything. Everything I do is good is because of the incentive. Well, I don't believe that's true, but I think that as soon as you add the incentive, it takes away from the benefit. Like when I get a tax return, a tax receipt from a charity, it almost takes away from like, oh, well, yeah, like I did that was doing.

This to be kind.

Like, I got this warm fuzzy feeling when I gave that check, and now like, I'm getting something back in return. Well, now it's gone.

Yeah.

And I think the most. Most. One of the most satisfying things is we give with no ability for them to return back. And so that's when you give money to, like, a poor person or to someone that's begging, for example, like, they will never give you that money back. You will never see a return or an ROI for that money. And that's the inherent benefit that you get, is that feeling. And so if immediately when you turn the corner, there was someone else that was gonna give you $50 cause you gave them 20 or give you 10 back, like you had 50% off, or what do you get? The beggar. There's like this feeling like, well, I just got that feeling stripped away from me. Right.

So anyways, yeah, no, it's a good way to look at it. And I don't necessarily want to get a deep dive of giving, but that ultimately is kind of the. The balance that Simon and Scott are trying to talk about in this conversation is that there is a moral obligation to support those around you in fear in this. In the context of this conversation, however, when you bring taxes into play, well, now it's on a moral obligation. It's a moral responsibility. Well, it's not Even a moral, it's just a responsibility. Is it? There's a requirement by the land in which you live. And that's what they're getting at is how do we find that balance, how do we get back to that balance to give back to our communities, to our employees, to those who we live next, to our neighbors, if you will. So Scott has something here. I'll show you this clip. I'll put it in so you can get the full context. I thought about reading it, but he's just much, much more articulate than I could be even reading his own words.

So, yeah, it's one thing I always think about is like giving without the expectation of return is like the purest form of love. Like, you know, you give something to someone, typically you're doing it to foster the relationship and get return from it. But like, giving without any chance that you will get return from it is like the purest form of love.

Yeah. I think on that note, that's part of why donating time is so important. Yeah, right. If you can't donate money, you can. No one can ever give you back time. So whether it's just supporting, you know, a local children's sports league, you're donating your time to those kids to show them, you know, to be a good role model, to teach them.

You know, how to hard, how to work hard and how to win and how to lose. Or it could be all the way up to, you know, doing mission strips or going, you know, moving across the country or whatever it is to go serve people. Giving, giving your time is so important and so valuable as well. All right, so this is what Scott says here in this conversation about taxes and moral obligations.

We need long term solutions. Let me give you one very tactical idea. If we could go back in time, would we put a pretty immense tax on, on all carbon capture, all carbon emission and all oil pulled out of the ground? We knew that pulling fossil fuels out of the ground and then arbing it into a substance to create economic value was going to have a lot of externalities. So if we had said for every barrel we pull out, we're putting a $10 tax on it and we're going to start investing in forward leaning investments around the government, job training and renewables. We're at that moment the new energy. Seven of the ten most valuable firms in 1980 were energy companies. Seven of the ten most valuable Firms in 2024 are tech companies. But they're not, they're energy firms. They're all becoming the same firm offering something called compute. Instead of powering our cars and our factories, they're powering our phones and our LLMs right now. Right now. Query on ChatGPT takes 10 times the energy of Google right now. Is this an opportunity to put in place legislation and have forward leaning and forward thinking politicians who get enough support and say, okay, we're going to tax computer, we're going to tax compute because we know there are going to be externalities that will require money around misinformation, around teen depression. Everything you're saying, everything you're saying is correct.

Let's go straight into, we don't have to go into the specifics of it, but I want to look at the kind of black and white Scott Galloway says that tech companies are now the energy companies of the 80s and they should, we should be preemptive with our taxing of them because, because we understand or we don't understand how much COMPUTE power and energy they're going to need in the future. So we need to preemptively plan for that. What are your thoughts on that tax?

I think taxes are bad in general. So like.

They'Re just misused funds. Like the reason that the tech firms are able to now tap into COMPUTE and use this energy is because of the cheaper resource of energy. And so if I would have taxed the fuel tax, guess what have happened? Those resources would have been extracted from elsewhere in the world and guess where that power now would be competing from those countries. And so whenever tax, unless you were able somehow do a global tax and then, then everything that comes out of the earth like we are going to tax it, well then you just get a black market for oil drilling, right? So there's just a matter of like as soon as you start throwing these artificial, like well, if this happens, we'll do this. It's like, whoa, whoa, okay, well then what about the other thousand ways to get around that? And, and so yes, I do believe that that would be the right short term measure. I also believe that these companies have enough money that they would then just start to work outside of the country to avoid said tax. And they would set up the data centers instead of in Arizona and Nevada, they would just set them up in Europe, they would set them up in Africa, they'd set them up in Mexico to avoid the tax. So creating like small little like dams in a river does not, is not going to prevent the flow of the water. The water's gonna get downstream. And so I think it's more a matter of, of channeling this in a more constructive manner, not damning the river with taxes, because as soon as you put a tax, it's the opposite of an incentive. Right? So it's like, okay, if you do this, you will not be penalized. Okay, well, let's not do that. Oh, so like, we're not going to pull oil from the ground. Oh, we're not going to create, like, the best tech companies in the world from the United States. The United States. One of the biggest advantages we have is that these tech firms control the world. And one of our best geopolitical, like, advantages is the fact that every country, bar like Russia and China, rely on the core services that we have in this country. And so you lose that because you're like, oh, we're going to tax them and they're just going to bounce. Yeah, like, I'm sorry, but like 30 to 50% of the revenues from these tech firms come from international sources, so they could bounce. And so if you make it so adversarial and you're so against them, they're just going to leave. The same way that if you would have done that to oil companies, they would have left too. And they were just like, oh, we'll just keep mining, you know, drilling in the Middle east and we'll ship it over here. It'll be cheaper. And so if we didn't have the cheaper energy, that wouldn't set up the compute. And if we don't have the compute, it's probably gonna lead to something down the road that if we tax that so heavily and it bounces, then we lose out on AI, robotics and things that come down the road. And so I'd just be careful about it. I do believe that there's a monopolies. I do believe that there's way too much power being given to the tech firms. Cause, like, you can't compete with them in certain levels. And if they, you do compete with them, they just create the thing, bundle it up with their, like, subscription package, and they just wipe you. It's extremely hard to compete with them. I do think that it was like, unbridled power given to them. I think that in any new technology there's going to be unbridled power. The same way that seven out of the 10 companies, like you said were energy companies that extracted oil in the previous century. Yes, this century will probably be tech firms, but if we just demolish them, just like, okay, well, then we're just gonna crush you. The smithereens. If you sold the top four or five companies Completely. It would put a small dent in the US debt. So like why not curb the debt spending instead of focusing like, well, we could literally liquidate these companies and would put a small dink, like a little chink in the debt of the United States. So anyways, that was a long tyrant. Yeah.

So why would you be opposed to get to the basics, Simplify it for me if you will. Let's, let's dumb it down. I'm no economist, but what he is saying is by increasing taxes or regulations on them, they not stopping their growth, not stopping the advancements of technology.

But you do as soon as you put incentives in place.

Yeah, but increasing those taxes and essential essentially regulations on them, will that not help benefit the American economy and create better social programs and also help reduce the, the U.S. national.

Yeah, in the short term. That's what I'm saying. In the short term, this is a great solution.

So why, why doesn't that work in the long term?

Because long term you'll just get around the tax, right. You'll go to a different country. You're like, okay, great, you don't want to see. We're going to go headquarters someplace else. And you've seen it with like Tesla and SpaceX and like companies like, oh, you don't like us here. Oh, you're going to impose a new tax. Cool bounce. And in six months they're out. Yeah. And if you do that, these companies will leave the United States. And everyone that thinks that the United States will keep these companies forever is delusional because it's not hard to incorporate in other countries. It's not difficult. You just have to convince your talent force to move there. And if you have a large enough company, you say, okay, great, we're just gonna go build a town and they're gonna give us free taxes for the next 10 years if we come build the town, move our entire workforce. Oh, and by the way, the weather's great.

Yeah.

So you know what? We're gonna pay everyone the same amount in an economy where it's a third of the cost of living and for $100,000 you can buy a really nice house, we're still gonna pay your same wages if you move over to here. Like, I happen to believe that that would work out. Same way that companies have moved from like Texas, from California, Texas into Tennessee, et cetera and like their labor force does move with them.

So yeah, that's a fair point. I think the, once again, the greater context, and that's why I started this conversation, is There they are having an idealistic conversation like, Scott is not anti tech, he's not anti progress in that regard. He is pro the American citizen that needs social programs over the importance of corporate profit.

Yeah.

And that's where Scott, he admittedly says in this podcast and many others like he, he is far left. And that's why I think it's important that, you know, folks like yourself, moderate.

He's more moderate. Is he?

No, he classifies himself as far left in the traditional sense, not in the extremist sense. And that's part of the conversation they have. He says that political extremism is also part of the reasons it's hurting America equally on the left and the right. But he's like id, ideologically he is far left, but in modern American politics he is a moderate. A moderate Democrat, but he's a lifelong Democrat. Anyways, he is talking about the fact that corporate profits are at an all time high. These tech companies are booming. There's little to no regulation around them. They have all these different ways around this outdated tax policy right now around tech, like energy companies in the 70s and 80s. Why can't we idealistically impose taxes on them to not only not say we are prioritizing corporate profit, but also create social programs or benefits to the American citizen?

Yeah, so this is treating the symptom. Right? So I agree, I agree.

Yeah.

Here's the thing. It's a matter of, okay, so let's say we tax these companies over the next 15 years, they all start to move out, they start to diversify the $100 billion of extra tax that we will get from them because we really crack down. And let's just also realize that they have armies of tax accountants that will get around to all these things anyways. But let's just assume that the tax actually hits them and we get $100 billion. That is a small, tiny drop in the bucket to what our debt is. And honestly, what the bigger problem here is that we are now bound to these companies that we can't do anything about it because. And we can't impose taxes and get them out of the country or whatever because we have so much debt. Like if we didn't have any debt, this is a totally different conversation. Right? Because for example, let's say we get 100 billion, let's say we get $200 billion of extra tax revenue from these companies which, like, look at their corporate tax rates and like what they're actually paying, this would be like a million.