Billionaires are revolting. No, that’s not an applause line from a Bernie Sanders stump speech, but rather, according to The Washington Post, a matter of fact. The paper reports that as proposals by Sanders and Elizabeth Warren to tax the wealth of America’s richest individuals gain traction, the 750-member billionaire class is pushing back hard.
News that Michael Bloomberg, the billionaire former mayor of New York City, is testing the waters for a presidential run as a Democrat is perhaps the most obvious manifestation of the overdogs’ unease. The Post reports that in recent months, at least 16 billionaires have warned that a wealth tax and other measures pushed by progressive populists threaten economic growth and could guarantee the re-election of Donald Trump.
Bloomberg himself has suggested that a wealth tax is unconstitutional, which might be the case, and could result in America becoming the next Venezuela, which certainly would not be the case. Bill Gates of Microsoft said such a tax could harm “the incentive system” for making money, and Mark Zuckerberg of Facebook has argued that abolishing billionaires, as Sanders would like to do, could hurt philanthropic giving and scientific research, while assigning too much decision-making power to the government.
Leon Cooperman, a billionaire investor, was even more worked up. “I don’t need Elizabeth Warren, or the government, giving away my money,” he said on CNBC. “(Warren) and Bernie Sanders are presenting a lot of ideas to the public that are morally, and socially, bankrupt.”
To be fair, the billionaire class is itself divided on the question. A score of them signed a letter this past summer calling for “a moderate wealth tax on the fortunes of the richest one-tenth of the richest 1 percent of Americans — on us.”
But calculations published recently in The New York Times indicate why so many others are so worried. Warren’s wealth tax proposal — a 2% tax on wealth between $50 million and $1 billion, and 6% on wealth above $1 billion — would over time shrink vast fortunes significantly. Had it been in effect since 1982, Gates would have had $13.9 billion in 2018 instead of $97 billion; Bloomberg, $12.3 billion instead of $51.8 billion; and Jeff Bezos of Amazon, $48.8 billion instead of $160 billion. Even with these much diminished means, each of the three could still buy, for instance, several National Football League teams, the average value of which, according to Forbes, is $2.86 billion this year.
In short, there would still be a powerful incentive to make money.
Billionaire angst contrasts sharply with surveys showing that about seven in 10 Americans favor higher taxes on the rich. And no wonder. The Warren and Sanders proposals come at a time when inequality in America is at its highest level since the 1920s. For example, the 400 richest Americans control more wealth than the 150 million adults in bottom 60% on the wealth-distribution scale. And the top 10% of individuals own more than 70% of the nation’s wealth, more than twice what the bottom 90% own.
Meanwhile, ordinary people have been struggling for years to keep afloat financially amid crushing student loan debt, ever rising costs for housing, health care and child care, and wages that are increasing only modestly if at all. Warren and Sanders propose to address these pressing needs and others with the revenue reaped from a wealth tax.
That aside, there are other important reasons to scale back the wealth accumulated by the richest individuals. One is that wealth equals economic and political power in a system that is very much attuned to the needs and desires of the super-rich, especially in this Citizens United era. This distorts democracy: The very wealthy can further their own interests at the expense of the rest of society, and in doing so, extend their political influence as they accumulate even greater wealth.
Moreover, there is a good argument to be made that as it currently stands, the richest Americans could be in the process of creating multi-generational family dynasties. From the earliest days of the Republic, the establishment of an aristocratic class has been regarded as inimical to the democratic project. And great disparities of wealth between the few and the many are incompatible with a just society. Whether through a wealth tax, the estate tax, or by other means, shrinking these great fortunes is — sorry Mr. Cooperman — a moral and social good.