With the 2020 presidential campaign in full swing, it is clear that the defining issue of the election will be economic inequality — and that puts America’s billionaires in the dock.
Proposals for a tax on extreme wealth have been put on the table by Democratic candidates Elizabeth Warren and Bernie Sanders, eliciting responses of varying vehemence from the billionaires lobby.
These responses, as we’ve reported, have been mostly negative, although here and there a few billionaires have allowed that, yes, they may have too much money and it might be good public policy to redistribute some of it through taxation.
The wealth tax proposals are part of a general attack on economic inequality that all the Democratic candidates share, to some extent. “The middle class is getting killed,” former Vice President Joe Biden said during the Dec. 19 Democratic debate. “The middle class is getting crushed. And the working class has no way up as a consequence of that ... . The idea that we’re growing — we’re not growing. The wealthy, very wealthy, are growing. Ordinary people are not growing. They are not happy with where they are.”
Even the two certified billionaires in the Democratic race have expressed support for raising taxes on the ultra-wealthy. “I’ve been for a wealth tax for over a year,” Tom Steyer said during the debate. Michael R. Bloomberg, who did not appear at the debate, said at a campaign event in Phoenix three weeks ago that while a wealth tax of the variety proposed by Warren or Sanders “just doesn’t work,” he supports “taxing wealthy people like me.”
Sanders has proposed a graduated tax on net worth starting at 1 percent on wealth above $32 million for a married couple, rising in steps to 8 percent on wealth over $10 billion.
Both proposals would raise trillions of dollars over a decade. Both also are designed explicitly to break up big family hoards. Sanders says that under his plan, “the wealth of billionaires would be cut in half over 15 years which would substantially break up the concentration of wealth and power of this small privileged class.”
And in the words of Emmanuel Saez and Gabriel Zucman, the UC Berkeley economists who are advisers to Warren on her wealth tax plan, “if the rich have to pay a percentage of their wealth in taxes each year, it makes it harder for them to maintain or grow their wealth.”
On the other side of the debate are commentators such as Erskine Bowles, a White House chief of staff under Bill Clinton, and Henry Paulson, a treasury secretary under George W. Bush, who called the wealth tax proposals “wishful thinking” in a recent op-ed and lumped it together with proposals such as universal health care (“Medicare for All”) as policies that are “fundamentally misguided and would result in economically harmful outcomes that could put our economy on an unstable and precarious path.”
Skepticism about the extreme wealth disparity isn’t a new phenomenon. Given the passage of time, and social and economic evolution, it’s difficult to pin down how the wealth inequality that has developed in this country compares to that of bygone eras and distant climes. But in 1929, according to historian William E. Leuchtenburg, 36,000 families — the top 0.1 percent of that era — received as much income as the bottom 12 million households, or 42 percent.)
The extreme concentration of wealth in the United States in the late 1800s and again in the 1920s were major contributors to recurrent economic slumps and market crashes — once known as “panics” — climaxing with the crash of 1929 and the Great Depression.
Those crises led to two congressional investigations early in the last century, in which lawmakers tried to hold the millionaire nabobs of those eras responsible.
Can anyone really dispute that the level of wealth held by the richest Americans today has reached absurd levels? The wealthiest individual in America, Amazon founder Jeff Bezos, is worth $114 billion, according to the 2019 Forbes ranking of the 400 richest Americans. This is a sum that defeats efforts at human comprehension, but let’s try. If Bezos spent $100 million a year on himself, it would take him 1,140 years to spend it all.