Three weeks ago, I had the honor of speaking at a conference hosted by Excessive Wealth titled “US vs. Billionaires.” Many of you have already heard from me about the importance of California’s Proposition 40, the Billionaires Wealth Tax, so I thought I’d use today’s blog to share my remarks with you to round out the conversation.
I’m the founder and one of the co-directors of Excessive Wealth. I’m an oligarch (my step one of a 10-step program) and I’m also a proud card-carrying member of the Patriotic Millionaires. The card is Amex Platinum. The Patriotic Billionaires get a Black card, but none have been issued yet.
We’re here to discuss what I see as the most significant challenge facing our nation: the crisis of excessive wealth. We have a diverse crowd: I see moderates, liberals, progressives and even democratic socialists. Each approaches tax policy differently. Starting with the radical fringe, the moderates, they believe deeply in three things: fairness, what’s good for business is good for America, and we must reduce the deficit. Liberals also believe in fairness, but raising revenue for social programs is paramount. Progressives, the 21st century version of liberals, while all in on fairness and social programs are beginning to see taxes as a way to control the influence of the uber-rich in our democracy and society. And the democratic socialists, the anti-oligarchs, see making the ultra-rich less rich as even more important than raising revenue. But no matter where one is on the spectrum, taxing the ultra-rich is good for all of us, and if we are going to stand up to the oligarchs and function as a democracy, we all must work on it together.
Excessive wealth means different things to different people. For some it conveys a concern about the harms caused by a few people having too much money. For others, unfortunately, it is an aspiration.
I don’t see any billionaires in the audience, but there must be a few wannabes. Polling shows that the main reason for wanting to be a billionaire is economic security, which I suppose for billionaires means being able to afford business class seats on trips to Mars. Well, I have some pointers on how to become a billionaire.
#1: Inherit your money. This is by far the best method. You skip those awkward twenty or thirty years of being merely comfortable and go straight to ultra-rich. It dramatically increases your chances of becoming a billionaire, since only one in five U.S. billionaires grew up in poverty or lower-income households.
#2: Drop out of college, ideally Harvard. You have to get into Harvard first, which is a lot easier if you’ve accomplished suggestion one. Take comfort in the fact that 20% of billionaires didn’t graduate college, and besides, you’re sure to get an honorary degree later on.
#3: Start a business, pay your workers minimum wage, then buy elections and hire lobbyists to make sure it stays minimum. On second thought, don’t call them workers. Call them “independent contractors” so you don’t have to pay benefits.
#4: Buy out your competition and become a monopoly. This requires substantial political contributions to pave your way for approval. But it is sure cheaper than trying to compete.
#5: Become a trader or real estate investor, or crypto-maniac. It’s all gambling, just like the lottery, but here the trick is doing it with other people’s money! No downside.
#6: Leach off the government. Take the subsidies, the contracts, and the tax breaks. Then go on a 3-hour podcast and explain that government handouts are socialism.
And #7, the main event, avoid taxes! This is more a condition precedent to becoming rich. Offshore havens, unrealized gains, GRATs and GRUTs, defund the IRS…And, of course, make sure that the peasants can’t rise up and start taxing you.
So, pick one or more of these techniques and lo and behold you’ve got a 0.00027% of becoming a billionaire!
(We’re not here to talk about Prop 40 – the conference was organized months before we even knew it would be on the ballot, but Prop 40 is illustrative of both how the billionaires got their money and the lengths they’ll go to protect it.)
Why do billionaires hoard? Damian Lewis, the star of the tv show Billions, said in an interview, they do it to play and WIN the game. It’s a game. They win AND everyone else loses.
Of course, greed is at the heart of billionaire-itis, what we call excessive wealth disorder. With all due respect to the aspirants, becoming a billionaire requires a level of greed that surpasses even that of Gordon Gekko of Wall Street fame.
For the rest of us, whose greed gene is not dominant, there are only two things you need to understand. The first is that raising revenue is no longer the only–and may not be the most–important reason for taxing the ultra-rich.
Wealth inequality is distorting our democracy and economy, creating status anxiety, driving loneliness in our society, and making all of us worse off in so many ways. We can’t pretend that tax policy can solve all these problems, but it can and must be used to dramatically reduce the harms caused by the ultra-rich.
The second takeaway is that wealth has, over the last 40 years, replaced income as the critical factor of inequality and that if the goal is reduce these harms in our lifetimes, a wealth tax is our most effective solution.
There are many outstanding proposals relating to income taxes that might slow the growth of the ultra-rich’s wealth and power, and for sure estate or inheritance taxes will have some impact 60 or 80 years from now, but only the wealth tax can clip the wings of centimillionaires and billionaires in our lifetimes.
To illustrate simply, a person with $1 billion will likely earn $100 million in a year. Even with a 90% income tax, their wealth would increase by $10 million. Income from investments they haven’t sold, aren’t taxed at all.
These so-called unrealized gains are only unrealized in the eyes of the IRS because billionaires use those gains as collateral for loans, buying business, and perhaps most importantly, keeping score. But unrealized gains would not escape the wealth tax.
We’ve been focusing on billionaires, but excessive wealth, we define, is above what we’d call the New American Dream of $50 million. At $50 million one has economic security, can have a vacation home, can’t own a mega yacht but can rent one for a vacation, can’t own the Picasso, but would have enough influence to get a private tour in any art museum.
Excessive Wealth, our organization, has been promoting what we call the Five and Dime Wealth Tax, a 5% tax on wealth more than $50 million, an additional 5% on wealth more than $250 million. The fall-out-of-your-chair findings from our research on that proposal is that there are 300,000 households in America with $50 million or more. 300,000! And the combined wealth of those households is a mind-boggling $40 trillion – a sum equal to the national debt.
Think about this: if we said each of those 300,000 households can keep their $50 million, the remaining total excessive wealth is $25 trillion, which if diverted over time to the government coffers by effective tax policy is enough to pay for virtually all the social programs many in this room are hoping to fund.
As is, the number of billionaires will grow from 1000 to 2000 over the next ten years. The Five & Dime wealth tax keeps the number at 1000, which suggests it is actually a modest tax. Having even 1000 billionaires is unacceptable, so a higher rate of wealth tax is needed, particularly on wealth over $1 billion. It is a testament to the oligarchs that we don’t yet have such a wealth tax.
One way or the other, we must make the ultra-rich less rich. We must do this not because we resent success—to the contrary, we’re 100% for shared prosperity. But today, when this much money and power is concentrated in the hands of the few, the survival of our very democracy is at stake.
As Marie Antoniette has said, “let them eat cake,” not our lunch. The ultra-rich have waged class warfare against us and have been winning since this country was founded. It’s our turn. It’s US vs. Billionaires.
Thank you very much for listening reading and being engaged in this vital conversation.