Michael Bloomberg’s 2020 campaign for the Democratic presidential nomination came to a screeching halt this week, when he failed to win a single state on Super Tuesday.
The following day the former New York mayor suspended his campaign and endorsed Joe Biden. If online reports are to be believed, Bloomberg spent around $500m (half a BILLION dollars) on his failed presidential bid, which mostly went on expensive ads to raise his profile.
To put that in perspective, $500m is enough money to spend a dollar every second, every single day, for the next *sixteen years*.
Bloomberg’s decision to suspend his costly campaign has led to a lot of mockery online. With a net worth of around $60bn, it’s not like he’s strapped for cash, but to lots of people there’s obviously something satisfying about a billionaire finding one thing he couldn’t buy: public adoration.
But if you’re mid-way through typing a shady tweet about Bloomberg essentially setting fire to hundreds of millions of dollars, maybe wait a second before you press send.
After doing some digging, we’re sorry to tell you that Bloomberg's business probably made more money from president Trump’s 2017 tax reform than he wasted on his doomed campaign.
Trump’s tax cuts were among the most controversial things he’s done as president. Republicans claimed that the “miracle” tax cuts would benefit middle class families, while Democrats insisted that they were just a giveaway to billionaires.
The cuts mean that billionaires pay less tax proportionately than working class Americans for the first time ever. Introduced at a time when America’s national deficit had swollen to $1trillion, billionaires were given a $1.6trillion tax break.
In addition to income tax cuts, corporation tax was cut from 35 per cent to 21 per cent.
This means that businesses like Michael Bloomberg’s software company Bloomberg L.P. raked in millions.
So how much could Bloomberg’s corporation have made from the tax cuts?
We don’t know exactly how much money Bloomberg’s corporation makes each year. But figures quoted online suggest that the privately-held company is believed to generate between $8bn and $10bn in annual revenue.
How much of this is profit is even more difficult to know. A 2016 report by Vox suggested that around 40 per cent of the company’s revenue is profit. So by that estimate we’re talking between $3.2bn and $4bn.
Dean Karlan, Economics and Finance Professor at Northwestern University, tells indy100 that the profit figure might be slightly lower.
Based on revenue figures that have been quoted online for 2018 and 2019, it’s not crazy to estimate ballpark figure of $2b annual profit before charitable contributions each year. Though we can’t know for sure.
Based on the more conservative estimate of $2bn annual profit, this means that Trump’s 2017 corporation tax cut could have saved the corporation around $280m in 2018.
If that saving was replicated in 2019, then the cuts might have saved the company as much as $560m – more than the money Bloomberg reportedly spent running for president.
Of course there are all sorts of caveats at play here.
Bloomberg’s business is global, so this figure would only apply if the vast majority of these profits were made in the US, where US tax codes apply.
But seeing as the tax cuts look set to stay, it’s very likely that Bloomberg will end up making the money he wasted running for president back, even if he hasn’t already.
Karlan says that, in terms of Bloomberg’s personal taxes (not his corporation's), it wouldn’t surprise him if the billionaire pays none at all because of his charitable donations.
It wouldn’t surprise me if Bloomberg pays little to no taxes, as his philanthropy is active and huge and may come directly from his company.
Bloomberg Philanthropies supports many evidence-based ideas, and many efforts to improve our democracy and freedom. So while one may disagree with the politics, the evidence of genuine philanthropic intent is strong. In that sense, he is a striking contrast to, say, president Trump and the Trump Foundation, which was a foundation in name only, a fraudulent tax scheme which got shut down once it got aired out a bit, and was an act of greed and vanity without even a flicker of altruistic values.
There’s also the possibility that Bloomberg could eventually lose the money his corporation gained through the cuts when a Democratic president comes along.
Bloomberg's efforts to unseat Trump could end up costing him far more than $500m because the next Democratic president will likely undo Trump’s tax cuts for the wealthy, for people like Bloomberg.
But it's doubtful Bloomberg is too worried. After all, what better way to get over a crushing disappointment than spending time with your billions of dollars?