February 10th 2019
Gabriel Zucman is an Assistant Professor in Economics at UC Berkeley. Don’t let the “assistant” throw you off; he is one of the leading analysts of global wealth inequality in his field, and has co-written nine texts with the renowned Thomas Piketty, in addition to a large volume of other works.
Emmanuel Saez is an Assistant Professor in Economics at UC Berkeley, has also authored dozens of papers on wealth inequality, including with both Zucman and Piketty. He advocates a high marginal income tax rate (70-90%) on incomes over ten million as a way of equalizing the huge disparity caused by runaway capitalism.
How bad is that disparity? Zucman released a working paper the other day in which he showed the richest 0.00025 percent of the American population now own more wealth than the 150 million adults in the bottom 60 percent.
The obscene increase in wealth for the 400 richest Americans came at the harshest expense of that bottom 60% of the country. Their share of the nation’s wealth dropped from 5.7% in 1987 (and that was one of the worst rates of inequality in the developed world) to just 2.1% now. They have less than half what they did 32 years ago, and it all went to those undeserving billionaires.
It’s perhaps not surprising that both economists are working as advisors for the Elizabeth Warren campaign. She sees wealth inequality and the subsequent twisting of the rules as the biggest threat to America. While she advocates for a high marginal income rate for the highest earners (77% on $10 million/year or more) she also proposes a 2% wealth tax on estates worth more than $10 million, 3% on estates worth more than a billion. Zucman and Saez estimate that such a plan would raise about $275 billion a year on average in its first ten years.
The pushback has been frantic and immediate. The Private Bank of JP Morgan snapped that such a plan was unconstitutional, overlooking the fact that wealth taxes were about the only form of taxation available to the federal government prior to 1917. Property tax is perhaps the best known example of a wealth tax. So is the estate tax.
Other flacs for the rich declared that the tax wasn’t feasible because it was so difficult for a rich person to know how much his assets were.
Um, No. Just No. You don’t get to be a billionaire without hiring some very smart people who know exactly where every dollar of those assets lie. And you have a raft of other very smart people who can ensure the highest possible return on investment for all that money.
The fact is the ultra-wealthy have stopped having any positive affect whatever on the general economy (and it’s always been questionable as to how beneficial they actually were) and have now become voracious and parasitic, a risk to their host. Even the ultra-wealthy who are uneasily aware of the destructive nature of their class, such as Warren Buffet or Bill Gates, can’t give back anything near what they take. Most simply take, and give one half of one percent of their income to charity to try and justify their presence. They spend more in the system of legalized bribery that is the American elections system than they do on actual Americans, and have bought a large portion of elected officials, zombie representatives who oppose high marginal tax rates, wealth taxes, universal health care, workers’ rights, environmental protections, public transportation, a strong social safety net, and anything else that might stand between them and a high appreciation of their already obscene wealth. And to hell with all the rest of us.
The disparity of wealth is already the highest its been in American history. It’s as high was it was in France in the 1780s, or Russia in the 1910s. That’s a very dangerous place for any society to be, especially when the rich overreach and make it nearly impossible for most people to make a decent living.
That’s when you start getting revolutions, and trust me, nobody wants that. No sane person who understands history. The satisfaction wrought by the guillotine is only transitory, and it takes a while for conditions to improve to where they were before the revolution. Even the “successful” revolution in America needed thirty years for the colonists to enjoy the standard of living they had before they broke away from England.
Polls show that between 70% and 85% of Americans approve of Warren’s plan. Similar numbers support similar plans by Bernie Sanders, or the one proposed by Ocasio-Cortez.
Tell everyone not to vote for any multi-millionaire candidates, or any candidate who receives “dark money” from PAC—they are not on your side, cannot be on your side. They work for the people who are trying to take everything from you.
The people are speaking loud and clear, It’s time for the ultra rich to listen, and consider options that they can live with.
The alternative, horrible as it is, is absolutely inevitable otherwise.