When I was the old man activist fighting for cannabis reform I met a lot of younger activists. One of them on a social media site had the handle “EveryBillionaireIsAPolicyFailure (I’m not sure about the capitalization, I did it for easy reading). I loved it. It said so much in so few words. The idea is simple, if you are now worth a billion dollars, you probably weren’t paying your hourly workers enough.
Except that’s only part of the problem. Another part is, you could have inherited say $400M in 1985. If you only adjust it for inflation, it’s worth over $1.5B today. So If you invested it conservatively it should be worth way more than that today. Or you need a new financial advisor or you need a financial advisor.
I don’t begrudge overnight billionaires that invent a better mousetrap and reap the reward. Your hourly rate may have been fair at the time, even generous at the time. However, was there something preventing you from issuing bonuses that really boosts the standard of living of your hourly workers too. And what about now that you are a billionaire? How big is the difference between your hourly earnings and your line worker’s now?
Currently according to Forbes we’re creating one new billionaire every 17 hours. Most of these billions are money earned on money, not producing a good or service. During the Gilded Age those men created whole industries, steel, railroads, banking, electricity… It’s that third one that now outpaces the earnings of any one product or service producer. Yes, Jeff Bezos has a service but that’s one. Elon makes cars, that’s two. Name the next one. The Waltons are billionaires but they’re parents started the company. Now their children are billionaires too.
Talking about children, mine used to think Elon Musk was the super hero billionaire because of Tesla. I have to admit I have watched in amazement as his SpaceX rocket boosters landed the barge. I haven’t opposed NASA’s contract with SpaceX, I just hope it has an eminent domain clause. That billionaire is going bonkers.
Creating more than a billionaire a day is not good for the economy at large. It takes capital and spending power out of the market. If they can get billions in return without risking their capital, why would they?
How do billionaires compare to hourly workers? The average hourly wage is pennies shy of $30.00. Let's see for Bezos and Zuckerberg it’s roughly $1.25 million/hour. Getting into the money makes money people and you get Warren Buffet who makes $62 million/hour. Microsoft’s Balmer and Google’s Brin make over $40 million/hour.
Now yes, it’s great that some belong to the Billionaires Club promising to give half of it away. And it’s great that Mr. Buffett supports higher taxes on billionaires. The problem is last year we created half a million new millionaires ALL of whom want a tax structure that makes it easier to reach the billionaire plateau.
This is what I know about taxes. First FICA withholding stops at $168,000. So all those new billionaires and millionaires stop paying into Social Security and Medicare at $168K. Their employees on the other hand, most pay into FICA on every dollar Scrooge McDuck lets go of. The opposition’s argument against raising it is simple, it will be too harsh on the people earning at the cap level. Make it $500K and people earning that get the biggest hit, same is true if you make it $1M. Like everything in the tax code there has to be dividing lines. I think someone making $500K can afford an extra $35K/year. Maybe to make it easier on the taxpayer have it take effect in stages. The first two years you pay 3.5% into FICA on between $168K and $500K. After two years they pay the full deduction.
Here is something else I know about taxes. Over the entire period since 1958 and 2009, most income tax liabilities have been generated by rates below 28 percent. In other words most of the taxes raised come from the middle and lower tax brackets. Doesn’t sound like the “to whom much is given much is expected” the tax code we had before trickle-down came along. You know the tax code that created the middle-class.
In 1960 over 20% of the Treasury’s revenue came from corporate taxes. Now that number is below 10%. Again not exactly fair. Plus we all know about the many corporations that are out-it every year for obscene earnings and zero liability or worse a refund or credit. Simply put we should be expecting high earners to pay more than the hourly workers towards America’s bottom line.
Maybe it is the difference between the thinking of the Greatest Generation when it comes to taxes and their offspring. I’m a baby boomer and I know really some greedy people my age. I also watched a high school graduate and a primary school graduate earn enough money to eventually come to own several rental properties over the years. They didn’t send their five children to college. They did finance college for four of them. Then they were, like so many of the greatest generation, gone.
I’ve often wondered what would voting between 1968 and 1988 have been like if so many members of the Greatest Generation had not died in their forties. Prior to 1968 these were the Americans, who voted in the Congresses that gave us Social Security, Medicare, Medicaid, Civil Rights, Voting Rights and Housing Rights.
While they did it they insisted that those with the most money pay the biggest share of the country’s tax liability. If these tax rules were still in effect would it really mean fewer billionaires? And would that really be a bad thing? Especially if it means raising all our citizens out of poverty and having a vibrant, financially healthy middle-class. I’m in the middle class and we’re not financially healthy and certainly not secure. Our nest egg depends on the corporations who screw the workers in favor of faceless stockholders.
My old activist friend is correct. Every billionaire is a policy failure, at both the corporate and governmental policy levels. That’s why we need to elect governing majorities in both houses of Congress in November. And of course we need to bottle all this new energy elect Kamala Harris to sign the legislation coming out of a Democrat controlled Congress.