Scott Galloway: “Crony Capitalism Is Collapsing America — The Rich Rigged the System & Won.”

Welcome back to Impact Theory with Tom Bilyeu! In this thought-provoking episode, Tom Bilyeu sits down with Scott Galloway for a no-holds-barred conversation on the state of America’s economy, generational divides, and the future of capitalism. Together, they dive into the hard questions: Why are Boomers thriving while younger generations struggle to get ahead? What’s fueling the rise of cronyism and political polarization—and why does class mobility feel increasingly impossible? Scott Galloway shares sharp insights on topics like entitlements, tax policy, and structural barriers facing young Americans—from housing affordability and stagnating wages to the corrosive effects of monopolies and regulatory capture. The pair debate solutions ranging from progressive taxation and the need for genuine competition to massive investments in housing, education, and healthcare. But the discussion isn’t just about economics. Tom Bilyeu and Scott Galloway also unpack the psychological side of money, the shifting expectations around masculinity, relationships, and what it means for young men navigating today’s world. Throughout, they challenge each other—and listeners—to think critically about what kind of future we’re building. If you’re curious about how we got here and what can be done to move the needle, this episode is a must-listen. Let’s get into it! Business Wars: Follow Business Wars on the Wondery App or wherever you get your podcasts. Quince: Go to https://quince.com/IMPACTPOD for free shipping on your order and 365-day returns. Linkedin: Post your job free at https://linkedin.com/impacttheory HomeServe: Help protect your home systems – and your wallet – with HomeServe against covered repairs. Plans start at just $4.99 a month at https://homeserve.com Netsuite: Right now, get our free business guide, Demystifying AI, at https://NetSuite.com/Theory http://netsuite.com/Theory Shopify: Sign up for your one-dollar-per-month trial period at https://shopify.com/impact Raycon: Up to 20% off during this holiday season at https://buyraycon.com/IMPACTTHEORYBC Connectteam: 14 day free trial at https://connecteam.cc/46GxoTF ButcherBox: New users will receive their choice between filet mignon, ribeye or NY Strip in every box for a year + $20 off! at https://butcherbox.com/impact Incogni: Take your personal data back with Incogni! Use code IMPACT at the link below and get 60% off an annual plan: https://incogni.com/impact Cape: 33% off with code IMPACT33 at https://cape.co/impact True Classic: Upgrade your wardrobe at https://trueclassic.com/impact Bevel Health: 1st month FREE at https://bevel.health/impact with code IMPACT What's up, everybody? It's Tom Bilyeu here: If you want my help... STARTING a business:join me here at ZERO TO FOUNDER https://tombilyeu.com/zero-to-founder?utm_campaign=Podcast%20Offer&utm_source=podca[%E2%80%A6]d%20end%20of%20show&utm_content=podcast%20ad%20end%20of%20show: https://tombilyeu.com/zero-to-founder?utm_campaign=Podcast%20Offer&utm_source=podca[%E2%80%A6]d%20end%20of%20show&utm_content=podcast%20ad%20end%20of%20show https://tombilyeu.com/zero-to-founder?utm_campaign=Podcast%20Offer&utm_source=podca[%E2%80%A6]d%20end%20of%20show&utm_content=podcast%20ad%20end%20of%20show SCALING a business:see if you qualify here. https://tombilyeu.com/call: https://tombilyeu.com/call Get my battle-tested strategies and insights delivered weekly to your inbox:sign up here. https://tombilyeu.com/: https://tombilyeu.com/ ********************************************************************** If you're serious about leveling up your life, I urge you to check out my new podcast,Tom Bilyeu’s Mindset Playbook https://open.spotify.com/show/47VE90Cittmo6TGGFqg2xf —a goldmine of my most impactful episodes on mindset, business, and health. Trust me, your future self will thank you. ********************************************************************** FOLLOW TOM: Instagram:https://www.instagram.com/tombilyeu/ Tik Tok:https://www.tiktok.com/@tombilyeu?lang=en Twitter:https://twitter.com/tombilyeu YouTube:https://www.youtube.com/@TomBilyeu Learn more about your ad choices. Visit megaphone.fm/adchoices https://megaphone.fm/adchoices See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:00Tom Bilyeu?

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• 0:45Tom Bilyeu?

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• 1:08Speaker 01

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• 1:51Speaker 01

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• 1:57Speaker 02

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• 2:07Speaker 03

  The only thing that's bipartisan is reckless spending. Trump administration is a lot more socialist than what Mam Donnie is proposing. Golden share in US Steel because Donald Trump's so good at bankrupting casinos, he should run a steel company? 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. You know, I don't want to demonize billionaires. I want Elon Musk to make a trillion dollars. I want him to be taxed sixty or seventy percent on it because the bottom line is it's not going to make him any happier. I think effectively, America is for sale for rich people. I feel like this is literally a clown car running the nation right now. It's a corrupt crime family.

• 2:45Tom Bilyeu?

  I think America is already locked in a cold civil war, largely driven by economics. What happened exactly to our economy that's made boomers so prosperous while leaving the young to struggle mightily?

• 2:59Speaker 03

  It's a multi-dimensional thing, but if you were to try and distill it down to one thing, it would be that old people vote and keep voting themselves more money. I mean, social security, there's a dogma or that if you would ever talk about social security in a negative light, that there's something wrong with you. Most arguably the most successful social program in history, took seniors from thirty percent poverty to less than eight. It's been hugely successful. The other side of that coin is the wealthiest generation in the history of the planet receives one point two trillion dollars each year transferred from working age people to them every year.

• 3:41Speaker 03

  Forty percent of our budget is allocated towards seniors. And we spend four and a half percent on the Department of Education, one point four percent on SNAP, forty percent of which goes to kids. In some, kids don't vote. And whereas previous generations saw advantage in investing in education and technologies and infrastructure that had a longer term payoff for young people, those investments are no longer being made, but the things we continue to invest in are things that benefit old people. And then tax policy. Two largest tax deductions, capital gains and mortgage interest. Who owns homes and stocks? People my age who rents and makes their money from salary. Young people.

• 4:23Speaker 03

  So in some, old people have figured out a way to transfer more and more money from young to old. A average 25 year old is 24% less wealthy than the 25 year old 40 years ago. The average 70 year old is 72% wealthier than the average 72 year old was 40 years ago. In some, my generation is not paying it forward. And the last example I'll use is COVID. A million people dying would be bad, but what would be tragic is if my generation got less wealthy. So we flushed $7 trillion into the system, 85% of which was not spent. It was saved. So where did that go? Went into the stock market and the housing market.

• 5:05Speaker 03

  Homes went from 290 to 420 in two years. Who owns homes? People my age. So it was great for the incumbents. When you bail out the baby boomer owner of a restaurant, all you're doing is robbing opportunity from the 25 year old recent graduate of a culinary academy who wants her shot. So we've interrupted the natural economic cycle of boom and bust, which transfers money back from capital to labor or to young people, such that we could continue to make old people wealthier and wealthier. And the net result is for the first time in America's history, a 30 year old isn't doing as well as his or her parents were at 30.

• 5:41Tom Bilyeu?

  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

• 6:24Tom Bilyeu?

  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?

• 6:36Speaker 03

  Yeah, I, 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,

• 7:16Speaker 03

  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, I believe this and that is I'm wealthy. And I think with somewhere between, if my son was incarcerated,

• 8:01Speaker 03

  I believe that somewhere between three and 10 million dollars with my connections and my capital for three 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 a pardon. I think effectively, America is for sale for rich people. And whether it's healthcare, whether it's getting your kid out for, for a pardon, whether it's a bailout for your company, whether it's government contracts.

• 8:41Speaker 03

  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

• 9:26Speaker 03

  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 and come 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 shit away.

• 10:11Speaker 03

  So this, we have, 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.

• 10:23Tom Bilyeu?

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• 11:04Tom Bilyeu?

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• 11:46Tom Bilyeu?

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• 12:30Tom Bilyeu?

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• 12:50Tom Bilyeu?

  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 gonna 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.

• 13:34Tom Bilyeu?

  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, 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.

• 14:17Tom Bilyeu?

  And so, you put those together and you get these moments that occur over and over and over. So, when I hear you talk, 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, Mom Donnie, 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 does that tell you about what's happening right now?

• 14:51Speaker 03

  Young people basically are saying, "Whatever the current system is, it's not working. And so, I'm gonna 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.

• 15:35Speaker 03

  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. You know, social security is socialism. Food stamps are socialism. It's just where on the scale you want to be. 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 was a Scottish immigrant, said something when I was young that I remember.

• 16:18Speaker 03

  He said, America's a terrible place to be stupid. But I think he was saying is, America's 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 unprecedented 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.

• 17:01Speaker 03

  The gag reflex of 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...

• 17:17Speaker 03

  I mean, Mamdani says, I want to raise taxes on billionaires. I'm actually OK 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-DOM tax reform, where basically, if you moved

• 17:59Speaker 03

  here from Hong Kong, Tony Blair 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, et cetera. They passed this non-DOM that said, no, if you've been in 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. So there's a difference between, and one of the things I don't like about my party

• 18:41Speaker 03

  on the far left, is they're more concerned with being right than being effective. So I get it philosophically, that the wealthy should pay a little bit. I get it. I want a more progressive tax structure. But, you know, 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. He would have, any tax increase has to go through the New York State Legislature.

• 19:08Speaker 03

  He's not going to be able to do it. And then he goes to rent freeze. Oh, 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

• 19:51Speaker 03

  public sector. When public sector builds housing, it usually ends up concentrating poverty and creating a 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, you're going to get to an actual fucking idea. Here's an idea.

• 20:33Speaker 03

  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 eight million new homes in 10 years. That will materially lower the cost. Maybe government subsidize mortgages that bring down the interest. 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 off script here. When, when-

• 21:13Speaker 03

  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 the one that's progressive, progressive till the 99th, and then once you make the jump to light speed, it crashes. And essentially, put more money in the pockets of young people who spend

• 21:58Speaker 03

  it, multiplier effect grows the economy, and massive 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 raise their, but my industry is totally corrupt. We have essentially a cartel, and we do something, I'm going to go really offline.

• 22:34Tom Bilyeu?

  You're talking about universities?

• 22:35Speaker 03

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

• 22:38Tom Bilyeu?

  I do not.

• 22:39Speaker 03

  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.

• 23:04Speaker 03

  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. U N E D, 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? Well, we all communicate with each other, and wouldn't you know it?

• 23:49Speaker 03

  When Columbia goes to 71,300, we go to 71,308. Did you think that just happened? So it's all a giant rigged 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 910 applicants last night.

• 24:34Speaker 03

  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.

• 25:01Tom Bilyeu?

  Yeah, but 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,

• 25:45Tom Bilyeu?

  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.

• 26:30Tom Bilyeu?

  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?

• 26:40Tom Bilyeu?

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

• 26:46Speaker 03

  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 apeshit. And both Democrats and Republicans, the only thing that's bipartisan is reckless spending. You know, it's like, okay, Republicans want more in defense and, and tax cuts, and Democrats want more social

• 27:29Speaker 03

  programs. And they all got 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 2/3 of Congress is going to be dead in 25 years, do they really care about the deficit or climate change? Do they,

• 28:12Speaker 03

  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 mean stuff 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, we can, 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, you know, protecting parks, the government, I think government is the most underestimated group of professionals in history. I, I mean,

• 28:54Speaker 03

  I work a lot with government officials. These are the brightest people I've ever met, making 180,000 dollars. It could be working in 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 charges, we're doing right now. Two, it's not the tax, 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.

• 29:32Speaker 03

  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.

• 30:16Speaker 03

  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 healthcare. We pay $13,000 a year per capita for healthcare. The rest of the G7 pays $6,500. In exchange for paying double, we die sooner, we're more obese, we're more anxious. If you're in our top 10%, you have the best healthcare 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,

• 31:00Speaker 03

  which is about three quarters of all healthcare. Because 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 $9,000. 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 healthcare 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 healthcare and we need to stop transferring money from young to old. We're obsessed with tax codes, we're obsessed with demonizing billionaires.

• 31:46Speaker 03

  You know 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 making over $10 million. But that's not the problem. The problem is enforcing the tax code and attacking healthcare if we get really serious about fiscal responsibility. But the notion that we continue to pay seven, 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 Rails Academy.

• 32:25Speaker 03

  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 watched over by money.

• 33:08Speaker 03

  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.

• 33:19Tom Bilyeu?

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• 35:17Tom Bilyeu?

  Thanks for staying tuned. Now, let's get back to it.

• 35:21Tom Bilyeu?

  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 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?

• 35:55Speaker 03

  I think, yeah, I think that's strong and just some nuance around the taxation. I bet you're, you live in LA?

• 36:02Tom Bilyeu?

  Yeah.

• 36:02Speaker 03

  I'm gonna 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 paying too much in taxes, 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 gonna, I'm gonna 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 dollars as a partner. Dad is a podcaster, making 600 grand a year. They make 1.8 million dollars, they live in a blue state, which is probably where you

• 36:45Speaker 03

  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, impores all of his money and can afford to reinvest in the company, and then incorporates the company, and it gets bought by Sirius, or Wondery, or Time Warner, and he gets a 30 million dollar 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.

• 37:26Speaker 03

  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.

• 38:08Speaker 03

  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 there to 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? Oh, but we need productive people to start businesses. I've started nine businesses. If you held a gun to my head, I couldn't tell you what the taxes were when I started

• 38:53Speaker 03

  the business. That's not why you started 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 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 tax as 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

• 39:35Speaker 03

  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?

• 39:58Speaker 03

  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 estate exemption from 30 million to 1 million. If your kids inherit 7 million instead of nine, 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.

• 40:43Speaker 03

  We're not supposed to be dynasties here. So, alternative minimum tax for corporations and exceptionally wealthy people. Reduce, reduce the estate tax exemption from 30 million to 1 million. And means and age gate, raise the age on social security and means test social security. And also, above a certain point, you pay for your own healthcare, 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.

• 41:19Tom Bilyeu?

  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. There is a psychological impact, though, when you start. So, I, in my best years, am north of 50% in my tax bracket.

• 41:49Speaker 03

  Yep.

• 41:50Tom Bilyeu?

  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 is 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, 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

• 42:33Tom Bilyeu?

  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 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 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

• 43:14Tom Bilyeu?

  both the Republicans and the Democrats are just hell-bent to spend, spend, spend. Because in a populist, 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

• 43:56Tom Bilyeu?

  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 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?

• 44:21Speaker 03

  So a lot there. So, so first off, I think my tax, not this year, but last year, my tax rate was 17%. Yours was 52. Does that seem fair to you?

• 44:35Tom Bilyeu?

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

• 44:40Speaker 03

  I made, you know, I was accused of bragging about my wealth and it's true because I'm insecure. But I, my guess is, I don't know what you made. 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.

• 44:59Tom Bilyeu?

  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, 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

• 45:42Tom Bilyeu?

  risk so much. 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 twenties. 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.

• 46:09Speaker 03

  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, when you make money from buying a house, selling stocks, that that money's more noble and we should tax it 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? Buy 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.

• 46:53Speaker 03

  But someone who buys a Gulfstream 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, going after specific loopholes, there's too many. There are more lobbyists, full-time lobbyists, working for Amazon, full-time, living in DC than there are sitting US senators. And whoever raises the most money, 93% of the time, wins the election. So the game is rigged for whoever's willing to throw most money to maintain their, their, 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.

• 47:38Speaker 03

  If I sell a Subaru as a car salesman, the commission is taxed at a higher rate than 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 Kristin 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 work.

• 48:21Speaker 03

  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 if you and I should not get Social Security. I just, I don't, I don't see any reason why we should get it. So go after entitlements.

• 49:03Speaker 03

  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, they're enforced, 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.

• 49:40Tom Bilyeu?

  Yeah, agreed.

• 49:41Speaker 03

  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,

• 50:26Speaker 03

  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. Do you, 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, is an answer. And I think, I would like to think that before we get to the revolution part of the program. Voters will get their heads out of their asses and maybe vote for some people that are

• 51:05Speaker 03

  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 healthcare, which every, the healthcare 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

• 51:50Speaker 03

  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, we'll vote those leaders in. Hasn't happened yet. But we used to vote those people in in the 50s, 60s. 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 deficit surpluses post World War II. Does it have to get to a point where, I mean, you, you could argue that when farmers are lining up at food banks, who 80% of whom voted for

• 52:34Speaker 03

  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.

• 52:56Speaker 03

  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 it's it's cut it's cut taxes and spend more and have massive deficits. And I don't even know how you describe the Trump administration is a lot more socialist than what Mam Donnie is 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

• 53:37Speaker 03

  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?

• 54:09Tom Bilyeu?

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