They're Back! And Rich As They Ever Were
Originally posted on Common Dreams, Sept. 24, 2013
Two weeks ago, Forbes released its 2013 list of the richest 400 Americans. And the not-so-surprising news: The fortunes of those at the top continue to rise while Americans across the country continue to suffer. What is surprising though is that they have now regained "all" of the losses from the economic collapse.
"Five years after the financial crisis sent the fortunes of many in the U.S. and around the world tumbling, the wealthiest as a group have finally gained back all that they lost. The 400 wealthiest Americans are worth just over $2 trillion, roughly equivalent to the GDP of Russia. That is a gain of $300 billion from a year ago, and more than double a decade ago. The average net worth of list members is a staggering $5 billion, $800 million more than a year ago and also a record. The minimum net worth needed to make the 400 list was $1.3 billion. The last time it was that high was in 2007 and 2008, before property and stock market values began sliding. Because the bar is so high, 61 American billionaires didn’t make the cut."
Half of those who dropped off the Forbes list didn't do so because their fortunes' declined. They "fell off the list" because others passed them up. As Forbes notes, "The rest simply couldn't keep up with the rising tide." It's an economic bonanza for the rich.
In glorifying and idolizing the superrich, what Forbes and much of our popular culture fails to acknowledge is the role that inherited wealth, race, gender, and public policy have played in shaping who is and who is not on the list. But last year, United for a Fair Economy (UFE) took a closer, more critical look at the list with the release of our "Born on Third Base" report, which analyzed the 2011 Forbes 400 list. Here’s what we learned:
- At least 40% of those on the 2011 Forbes 400 list inherited a medium-sized business or substantial wealth from a spouse or family member.
- Over 20% – including many Walton family members – inherited enough to place them on the Forbes 400 list with their inheritance alone. It's like they were born on home plate.
- Only a small number can be said to truly come from modest means, and even they had help.
America's long history of race and gender bias also shape who is and is not on the list. Women and people of color make up only a tiny sliver of the overwhelmingly white, male Forbes 400. Even in 2013, the Forbes list includes only one African-America: Oprah Winfrey.
In UFE's 2006 book, The Color of Wealth, we examine the history of these disparities, including the way that women and people of color have been systematically excluded from the wealth-building public programs that helped create the white middle class. These wealth disparities have been passed on to each successive generation through the power of inheritance.
It's not just the birthright, there are public policies that give an unnecessary "leg up" to those at the top. One of the more egregious tax breaks we give to the wealthiest Americans is the reduced tax rate on investment income. We tax investment income from capital gains and appreciated stock at nearly half the top rate at which we tax income from wages earned through actual work.
Who does that special tax break benefit? No great mystery here. 60% of the income made by the Forbes 400 billionaires comes from capital gains, i.e. investment income. Together with the rest of their compatriots in the top 0.1%, they capture half of all capital gains income in the country. At the very least, we need to "tax wealth like work" and end this special tax break that disproportionately benefits those at the top.
By ignoring the role of inherited wealth, race, gender, and public policy advantages, Forbes describes many of the richest Americans as "self-made." This is an assertion that UFE challenged, both in our "Born on Third Base" report and in our 2012 book, The Self-Made Myth.
Attributing the success of those at the top entirely to their own efforts, by implication, also insinuates that those who are poor, are poor by their own efforts. Such an incomplete, black-and-white narrative distorts our views on the merits of a host of public policies—through this lens, progressive taxes become akin to "punishing success," and public policies aimed at correcting past injustices become "hand outs." The list goes on.
Instead of falling over ourselves in gleeful adulation of the superrich, let's honor the labors of all hard-working people across the country, and not overlook all the nuances. At the very least, it will be a more honest dialogue.
At the most basic level, taxes exist to fund the government. Decisions about how much revenue we should raise from federal taxes and from what sources we should raise it are incredibly important. The influence of federal tax policy ripples throughout the entire economy and affects funding at all levels of government.
United for a Fair Economy believes a sustainable and people-oriented tax system should be based on three key principles. And, we support several common-sense policies that are designed according to those principles.
Tax Reform - the current effort underway in Congress and any changes to federal tax law - should be guided by some basic principles of good tax policy. Taxes should:
Generate the appropriate amount of revenue to fund our national priorities. The current tax code does not raise enough revenue, which leads to cuts to programs and services.
Raise revenue from the sources that can most afford to pay for our collective enterprise of government. New revenue should come from the wealthy and from corporations whose taxes are lower now than they were a generation ago.
Make it easier to file and collect our taxes. Making it easier to file taxes will make the system fairer and make tax avoidance more difficult. It will also reduce the burden of compliance on families and small businesses.
These principles should guide all federal tax reform and policy change decisions. The main purpose of taxation is to generate revenue. We should generate enough revenue to pay for our national priorities and avoid unnecessary budget cuts. We should raise tax revenue from the sources that can most afford to pay. And we should make paying and collecting taxes simpler.
UFE and Responsible Wealth have held many press events featuring remarkable guest speakers from varying walks of life and work. Many of those speakers are wealthy individuals who have been, or will be, affected by the estate tax. But, they all have at least one thing in common – passionate support for the estate tax, because of what it represents: the common good and opportunity for all Americans.
"Consider a wealthy family with two children. Under the  law, each child could inherit $3.5 million, tax free. That means each child would receive more, tax free, than the average worker would earn in two lifetimes. And the worker would be paying taxes on their earnings. Each of these children would receive more, tax-free, than 240 minimum wage workers would receive in a year."
- Anna Burger, Secretary-Treasurer of SEIU
"[P]assing a stronger estate tax is a matter of ethics, of responsibility, of pride in citizenship, and it's the right fiscal choice for our country...I don't ever forget, as do some of my colleagues, that I benefited from a lot of business incentives and tax laws as I was building Vanguard Group to what it is today, and I owe some of that back."
- John C. Bogle, Founder and former CEO of The Vanguard Group
“My family achieved success not in spite of, but because of the American system of taxation. After all, without reliable and safe roads there’d have been no Disneyland; without high functioning legal systems and a well regulated business environment there would have been no copyright protection for Mickey Mouse.”
- Abigail Disney, Filmmaker, philanthropist & heiress to the Disney fortune
"People who accumulate substantial wealth have not done so alone. They have benefited from the labor of employees and have built their businesses using public infrastructure such as clean water, ports, roads, utilities, and the internet. In view of these considerations, an estate tax is a responsibility which should be inescapable, and which people should be proud to pay."
- Dave Eiffert, Co-founder and Co-owner of Snoqualmie Falls Brewery
"Wind River wouldn’t have existed without government-funded research that I did at Lawrence Berkeley Laboratories. I wouldn’t have gotten that job at the lab if I hadn’t had a master’s degree. I wouldn’t have had a master’s or a bachelor’s degree if there weren’t a public university that provided me with financial aid. And if I hadn’t gone to a good high school, also public, I probably wouldn’t have gotten into the university...Indeed, it will give me great pride to repay [society], hopefully many-fold, through the estate tax."
- Jerry Fiddler, Principal of Zygote Ventures & founder of Wind River Systems
"No one accumulates a fortune without the help of our society's investments. How much wealth would exist without America's unique property rights protections, public infrastructure, and academic institutions? We should celebrate the estate tax as an 'economic opportunity recycling' program, where previous generations made investments for us and now it's our turn to pass on the gift. Strengthening the estate tax is important to our democracy."
- Bill Gates, Sr., Co-chair of the Bill & Melinda Gates Foundation
"At Frostyaire, our decisions about hiring employees, purchasing equipment, and expanding the business are not based on tax policy...The best way to help small businesses like ours is to put more money in the hands of the middle class who will spend the money as customers of our businesses, rather than cutting the estate tax to ensure that very wealthy heirs can have a larger inheritance."
- Jean Gordon, Co-owner of Frostyaire of Arkansas
“It seems to me that the least deserving recipients of wealth are inheritors. Further, there are many indications that inheritors often have trouble adjusting to their unearned inheritance. An inheritance tax would de facto help remedy this.”
- Julian Robertson, Founder of Tiger Fund
"The Rockefeller fortune could never have been created without the foundation of public laws, public education and infrastructure which undergirded American industry in my great-grandfather’s time and continues to do so today. Therefore, far from resenting our tax system, which allows this infrastructure to remain strong, I believe that a strong estate tax makes perfect sense."
- Richard Rockefeller, MD, Family Physician & great-grandson of John D. Rockefeller
"Our country is on an unsustainable fiscal path. A progressive estate tax can...fund deficit reduction, additional public investment, or added assistance to those affected by the economic crisis...Our nation has always held itself out as a meritocracy and a land of opportunity, and an estate tax helps avoid accumulation of inherited economic and political power that is antithetical to this historical vision of our society.”
- Robert Rubin, Former U.S. Secretary of Treasury
"I’ve been reasonably successful...I own and manage six office buildings and have some 50 people working for me, directly or indirectly. Would I say that I did it without public support? No. When I reflect on what helped my business succeed and grow, I owe quite a bit to public investments, including tax policies that help make the real estate industry lucrative."
- John Russell, Owner of Russell Development Company
"Our economy remains on the edge of a double-dip recession, and we urgently need to create millions of jobs and invest in our future, not give more tax breaks to the wealthy. Anyone who pretends to care about cutting deficits while opposing the restoration of the estate tax is clearly residing on a different planet."
- Richard Trumka, President of the AFL-CIO
We thank all of our guest speakers for their commitment to tax fairness.
Exxon, 3M, Chevron & Bank of America
- 3M: http://bit.ly/11nY03i
- Bank of America: http://1.usa.gov/11fKlR7
- Chevron Corporation: http://1.usa.gov/11EKuIH
- ExxonMobil: http://1.usa.gov/17zxubn
Exxon, 3M, Chevron & Bank of America
- 3M: http://bit.ly/11nY03i
- Bank of America: http://1.usa.gov/11fKlR7
- Chevron Corporation: http://1.usa.gov/11EKuIH
- ExxonMobil: http://1.usa.gov/17zxubn
Housing, a cornerstone of the "American Dream," is the largest form of privately wealth held by families across the United States. This infographic draws attention to the intersection of housing as both a globally-recognized human right and as a commodity in a global stock market controlled by the wealthy. We urge readers to acknowledge the history behind the long-standing racial wealth divide and to consider the interplay between federal housing policies and risky financial practices and their impacts on the divide.
We are releasing this infographic just days after Duke University released a new study, which found that Black and Latino homebuyers are paying more for housing than Whites. Earlier this year, shortly after the release of UFE's report on housing and racial inequality, a Brandeis University study highlighted homeownership as the number one driver of the growing racial wealth gap.
How many studies need to be published before policymakers begin treating housing like a human right and not a commodity to be gambled with on Wall Street? Perhaps more importantly, what must be done to unite and galvanize communities—of all races and classes—to push lawmakers and to take control of the situation where they're falling short? Inequality has become worse than most people think. Economic apartheid has gripped our country. But, money is no match for people power.
Learn more about what's happening on the ground with State of the Dream 2013: A Long Way From Home. Share this information and invite others to join the conversation and take part in efforts to address racial injustice in your community.
Infographic design by Design Action Collective
I didn't really know how to feel or what to do. I decided to pour myself into this [vigil]. Now it's here. I guess we'll see what happens next. —Rene Perez, Boston
It's hard to know how to react in moments of great tragedy. It's in those moments, though, that community is of parmount importance. The bombings at the Boston Marathon has created one of those moments. Boston has been home to UFE since our founding 18 years ago. What happened on Boylston Street on Monday, April 15, 2013 at approximately 2:50 p.m. hit home. Our Tuesday morning staff meeting became a reflective and supportive space for our grieving team, and it was an opportunity to reaffirm our commitments to making this sometimes painful world a better place for all people.
Only the work of law enforcement officials can reveal who is responsible for this attack. But, there is, perhaps, nothing the investigation would uncover that can fulfill our rational human need to know why this senseless act was carried out. There is no justifying it.
It would be difficult at this stage to contribute anything more or meaningful to the ongoing and often repetitive dialogue. Instead, we want to share with you some of the most helpful commentary we've come across. These insights may not bring closure to this horrific matter, but they've been helpful in guiding how we receive and mange both the information and our feelings in this moment.
Don't buy into everything you're reading or hearing wholesale. "There's still a lot we don't know," and "many of the initial reports on media outlets...have proven to be false" (Mother Jones). The consequences of widespread misinformation are damaging and can place innocent people in danger. Glenn Greenwald details the active role of mainstream media outlets in breeding and bolstering Islamophobia in moments of terror.
It's okay to be sad. It's perfectly appropriate to be angry. But, we can't allow fear and panic to take over. Bruce Schneier asks, "What has happened to 'the only thing we have to fear is fear itself?'" He urges that we "empathize, but refuse to be terrorized," because public reactions to this rare, albeit horrible, event will shape the state's response.
Vigilance—not wreckless vigilantism—is crucial if we're to uphold our values and avoid further fear-driven compromise of our rights in this crisis. 99.999999% of Americans may want to consider John Cole's more critical approach to information gathering, because a purely reactive, shoot-from-the-hip approach is more likely to reinforce destructive patterns and unfounded biases.
This week, Americans share the pain of mass violence with Iraqis, Somalis, Afghans, and Syrians, among others. But, should our species be defined in such a large part by our violent realities? Should our collective actions be informed to the greatest extent by the worst of us? "We are better than this," says Erin Niemela. "Humanity is better than this."
Time—according to Rinku Sen—to live with, feel, and share this moment together will give peace a fighting chance in the wake of devastation.
Photo credit: Anne Phillips via "Peace Here & Everywhere—Boston Vigil on the Common"
Tax Day 2013 is here!
Our coalition partner, American's for Tax Fairness, is getting the word out about tax day events and keeping the heat on corporate tax dodgers. (And some of our friends put together a nifty little game, Tax Evaders, that you ought to check out and share.)
Looking ahead, the House of Representatives, Senate and President have all put forward budgets for 2014 that represent three differing visions of how the federal government should raise revenue in the years ahead. All sides are doing their best to appear willing to compromise, but before a unified budget is passed, House Republicans, Senate Democrats and the Administration will all have to agree on the specifics. In other words, it’s unlikely that anything will happen soon.
Meanwhile, Senator Max Baucus (D, Montana) and Representative Dave Camp (R, Michigan) - the two top tax policy legislators in the Senate and House respectively - have also announced their earnest intention to address major tax reform. If they are successful, it will be the first comprehensive overhaul of the tax code since Ronald Reagan's effort with congressional Democrats in 1986.
The tax reform effort from Baucus and Camp (along with members of their committees - Senator Orin Hatch (R, Utah) in particular) is scheduled to be drafted over the next several months, before being released in August, just before Congress returns from its summer recess. Their tax overhaul is likely to come before the full Congress in September, just when budget negotiations might be truly heating up (fiscal year 2014 starts on October 1, so a budget or continuing resolution must be passed by the end of September to avoid a government shutdown). We're keeping our focus on the upcoming battle over tax reform, and on the estate tax.
The budget that the President put forward has appropriately received a lot of criticism both for not raising enough new tax revenue and for proposing cuts to Social Security and Medicare benefits. One positive aspect of the budget proposal from the Obama Administration is that it calls for an increase in the estate tax. Specifically, here's an excerpt from page 18 of the offical Administration budget (PDF):
Return Estate Tax to 2009 Parameters and Close Estate Tax Loopholes. The Budget returns the estate tax exemption and rates to 2009 levels beginning in 2018. Under 2009 law, only the wealthiest 3 in 1,000 people who die would owe any estate tax. As part of the end-of-year “fiscal cliff” agreement, congressional Republicans insisted on permanently cutting the estate tax below those levels, providing tax cuts averaging $1 million per estate to the very wealthiest Americans. [The Budget] would also eliminate a number of loopholes that currently allow wealthy individuals to use sophisticated tax planning to reduce their estate tax liability. These proposals would raise $79 billion over 10 years.
All other questions about the budget aside, it's good news that the President is proposing positive changes to the estate tax. There is more revenue to be had with a stronger proposal, and we'll be working with our partners and allies to get the strongest possible estate tax included in any federal budget or comprehensive tax reform package.
This amazing web video, posted by YouTube user, politizane, animates research by Michael Norton (Harvard University) and Dan Ariely (Duke University) about the dramatic differential between people's perceptions and the reality of the wealth divide in the United States. Their findings suggest that Americans overwhelmingly want to live in a more equal society—like Sweden's, specifically—but also that too many people just don't know how bad the economic situation has gotten.
Each year, we train hundreds of organizers, activists, educators, and others involved in social and economic justice work. Much of what we do is about engaging people—organizers, activists, educators, and others—in a conversation about the economy, and this video is rich with opportunities for dialogue. You can also play a role.
Share it with your online and real life networks. It's easy! Copy & paste this link everywhere: http://bit.ly/YYqIFm. Tell people why you think it's important. Ask for others' reflections. Urge them to consider the implications—social, economic, political, ecological, etc.—of an economy marked by massive wealth inequality. And, encourage them to become involved in efforts large and small to build a new economy on the principles of democracy, sustainability, and cooperation—one where everyone contributes their fair share and everyone has the same opportunity to succeed.
Our Popular Economics Education Team is hosting UFE's renowned Training of Trainers Institute in June 2013 in Boston, MA (details below). We invite organizers, activists, educators, students, and others across the U.S. who want to join and advance the movement for a just economy.
Transformative education—which includes reflection, thoughtful analysis, and learning from each other—is vital to the success of any movement for social and economic justice. In order to challenge the status quo, we first need to make sense of the roots of the Great Recession and, more broadly, the ways in which our economic system creates and perpetuates class, race, and gender inequality.
Working toward a shared understanding of how we got here and a shared vision for the future will help us to build a cross-race, cross-class movement for an equitable, democratic, and sustainable economy.
UFE's Training of Trainers Institute explores the causes and consequences of inequality and provides participants with tools to inform their communities and inspire political action.
Thursday, June 6 – Sunday, June 9, 2013
On-site check-in from 3:00–6:00 p.m. on June 6, 2013; The Institute ends at 1:30 p.m. after lunch on June 9.
40 Berkeley Hostel & Conference Center (Boston, MA)
Conveniently located in Boston's South End neighborhood, minutes from Back Bay, Copley Square, the Boston Common, Public Garden, and more.
ABOUT THE INSTITUTE:
Jeannette Huezo and Steve Schnapp, UFE's Senior Education Coordinators, will train you in how to lead UFE-style popular economics education workshops that demystify the economy and creatively educate, inspire, and mobilize people to take political action.
It is right for you if you are:
- An organizer, leader, activist, teacher, or trainer engaged in campaigns for economic or social justice, or
- If you are seeking to improve your training and facilitation skills in order to more effectively present information and engage people in dialogue about the economy.
You will learn about:
- National economic trends, the rules and policies that contributed to the Great Recession & the jobless recovery;
- The impacts of economic policies in terms of race and gender;
- Some history about popular resistance to economic inequality in the U.S.;
- Strategies to advance economic recovery by closing the economic divides; and
- Principles and practices of popular education.
You will have opportunities to:
Work in small groups to plan and practice leading either UFE's or original popular economics education workshop activities;
- Receive constructive feedback on how to effectively present workshops and lead productive discussions on economic inequality;
- Discuss how to best adapt UFE's materials to your communities and constituents;
- Practice responding to challenging questions and difficult workshop situations; and
- Network, build solidarity and open doors for collaboration with others working for economic justice.
The program includes presentations of creative and engaging activities from UFE's workshops, including:
- The Growing Divide - The Roots of Economic Security
- Closing the Racial Wealth Divide
- Bankers, Brokers, Bubbles, and Bailouts
- Immigration and the Growing Divide
Schedule & Registration:
- Participants should arrive at the Conference Center on Thursday, March 14, between 3:00 and 6:00 p.m.; program begins after dinner on Thursday and concludes after lunch on Sunday.
- Sessions will be conducted in the mornings, afternoons, and evenings.
- Breaks will be provided throughout the day to allow participants to reflect and network with other participants.
Space is limited and preference is given to applicants who are able to attend the full Institute. Some materials, including a detailed agenda for the Institute, short readings, and logistical information, will be sent to all registrants prior to the training to help participants prepare for the Institute.
Registration fee is $500, which includes the Institute fee, materials, meals, and room/board (double occupancy). Transportation is NOT included. Public transit (MBTA) makes for simple and affordable travel from Boston Logan Airport to the training site and back.
We offer a reduced fee to organizations sending two or more participants.
Partial scholarship is available to participants from low-income communities and/or resource-limited organizations. If you require financial assistance to attend the Institute, you need to complete a scholarship request form after submitting this application and paying your deposit.
A minimum $25 deposit is required with your application. Payment in full is due one week before the start of the Institute.
For more information:
Contact Jeannette Huezo (firstname.lastname@example.org, 857-277-7881) or Steve Schnapp (email@example.com, 857-277-7868).
Stay tuned for application details.