It’s about time billionaires paid their fair share
Bezos' net worth is $186 billion, while 38.1 million people live below the poverty line in America as of 2018Image By: Courtesy of Creative Commons
A New York Times report found that President Trump paid $750 in income taxes in 2016 and 2017. For 10 of the previous 15 years, the report also finds he paid no income taxes at all. America works only for the billionaire class and the system needs to be scrapped in order to adequately support all Americans, not just the one percent.
Trump is not the only billionaire who evades taxes. In 2018, Amazon paid $0 in federal income tax. In addition to Amazon, nearly 100 Fortune 500 companies reported paying no federal income taxes in 2018. Netflix, Delta Air Lines and General Motors are notable companies in that list.
Personal tax returns are not public information, which makes it difficult to obtain those records; however former mayor and presidential candidate Mike Bloomberg was also under scrutiny for not releasing his tax returns. Bloomberg’s estimated net worth is over $50 billion.
California signed a law requiring presidential candidates to release their tax returns in order to appear on a primary election ballot, in an attempt to increase accountability for presidential hopefuls.
Tax evasion is just part of the problem created by the billionaire class. Wealth inequality is so much deeper than the ultra-wealthy people’s inability to fairly contribute to society.
It is past time for the billionaire class to start paying their fair share. This starts with overturning the Citizens United v. FEC decision.
Before Citizens United, Buckley v. Valeo was an early case on campaign finance violations that led to the beginning of so-called “dark money” in politics. The court found that there could be limits on individual contributions to campaigns, however a candidate could contribute unlimited money to their own campaign. This idea paved the way towards Citizens United.
After the Buckley decision, there was another important case ruled on by the court: Austin v. Michigan Chamber of Commerce. This case ruled in favor of the Michigan Campaign Finance Act, which barred corporations from using money towards candidates for political office.
In McConnell v. FEC, the court confirmed that the BCRA would impose a “minimal” restriction on free speech and therefore it was deemed constitutional in regulating money spent by corporations and wealthy individuals.
Despite earlier precedents, Citizens United overturned the Austin and McConnell rulings, arguing that “corporate funding of independent political broadcasts in candidate elections cannot be limited.”
This creates a loophole where a corporation is able to spend money influencing elections so long as it is not paid directly to a candidate. A political nonprofit, like a 501(c)(4) organization, does not have to disclose donors. This “Super PAC” draws in large amounts of money and creates political content aimed at influencing an election.
Such a series of decisions has created a climate where instead of promoting free speech for all, the courts have made it so free speech from the wealthy is more valuable than that of most Americans. Wealthy people are able to secretly create political content or self-fund campaigns, whereas other Americans are limited by the individual contribution limit, since they don’t have access to unlimited political funds.
So what? Why does this matter?
In effect, politicians need donations to run campaigns. If billionaires are able to donate significantly more money, politicians cater to earn billionaire’s donations. It is much harder to raise money collectively from hard-working, middle class Americans, rather than a one-time hefty donation from a billionaire.
Politicians cater to billionaires because it is easier to earn money that way through policies that help the top one percent.
What issues would most affect billionaires? Tax rates. Politicians, following wealthy individuals Super PAC donations, make tax policies with loopholes that billionaires are able to exploit in order to pay no income taxes — and in some cases even get tax refunds.
Billionaires donate money to politicians, who in turn enact favorable policies to those donors. In 2016, more than $700 million was spent just from outside money towards the presidential race. Of that, over $350 went towards pro-Republican or anti-Democratic causes.
Trump represents the billionaire class and gained support from these dark money groups. He also has his own vested interest in lowering taxes on the wealthy, with an estimated net worth of $2.5 billion.
Everything since the Buckley decision has culminated to create a “hyper-capitalist” economic system which puts extreme weight on benefiting the wealthy.
Understanding basic economics, in a capitalist economy, the market creates products where demand is generated by consumers. Supply and demand set the value of that good or service and that’s the primary means of exchange. Competition between companies makes the products not only the best, but also the cheapest.
The person who owns the product, the capitalist, hires laborers to produce more of said product at a fair wage based on the market's valuation of the product. In short, if a product has high demand, the capitalist will hire more workers in order to produce enough products to satisfy the demand.
In its purest form, capitalism would require no government intervention. Anti-intervention in America however, proved to be unsustainable, as seen through Rockefeller’s aggressive price manipulation, which created an oil monopoly. The government found that allowing an unregulated free market to operate would hurt people, since a monopoly would lead to price gouging.
In 1890, the government passed the Sherman Antitrust Act, in an effort to break up monopolies like that of Rockefeller’s Standard Oil. This idea created a precedent: the market should be allowed to operate freely unless it operates unfairly, in which case it will be remedied by new regulations.
Today however, instead of the government being relatively uninvolved in the free market, the market has infiltrated the government in order to pass laws that instead of limiting abuse of the free market — encourage it.
Besides the TCJA, the Gramm-Leach-Bliley Act (GLBA) of 1999 is another example of this. This act repealed the Glass-Steagall Act, which was created to prevent another disaster like the Great Depression occurring, by separating banking activities. The GLBA essentially did the opposite and expanded services that banks can offer, such as investments and insurance.
This created a conflict of interest which had been originally blocked by Glass-Steagall. By separating banking and investing, banks were focused on protecting people's investments rather than making aggressive investments of their own. The GLBA undid this.
This culmination of policies advances to create the problem we have today: a rampant wealth inequality gap that continues to grow.
In 1968, the top 20% of earners accounted for 43% of the nation's income. In 2018 that number rose to 52%. Black household income remains around 60% of white household income. Since 1989, the wealth gap between the richest and poorest families has more than doubled.
Not only are the top earners making progressively more money, but they are having to pay less in taxes. In 2018, the richest 400 households paid an overall income tax of 23%, compared to 70% in 1950. This number was lower than any other income group.
How is it that the wealthiest Americans are able to pay less in taxes than everybody else?
There is historical precedent to political revolution because of inequality. During the late 18th century, the third estate of France overthrew the French monarchy due to unfair economic policies.
The French Revolution was triggered in large part because of mass poverty, heavy taxation and rampant wealth inequality between the third estate and members of the first and second estate.
The Gini Coefficient is a measure of the wealth inequality of a country on a scale of zero to one, one being extremely unequal. It is estimated that at the time of the French Revolution, the Gini Coefficient of France would have been between 0.55 and 0.66.
For comparison, the Gini Coefficient in the United States has been on the rise, and currently sits at around 0.48, threatening to reach numbers seen during the French Revolution.
So what makes wealth inequality so pervasive in America? For decades, the policy of “trickle-down economics” argued that tax breaks for the wealthy would in turn “trickle down” to the middle and lower class. Instead of the government holding money from the wealthy, billionaires would keep their money and reinvest it into the economy in the form of jobs and philanthropy.
Instead of reinvesting that money however, the wealth gets stored in offshore bank accounts to evade taxes and earn interest. As of 2007 — the last year reliable data is available — it is estimated that $5.6 trillion of wealthy individuals' money is stored in offshore bank accounts.
Instead of going to actual working class Americans, it sits in foreign banks and earns interest for only the richest Americans. A strong economy is based on the middle and lower class being able to spend money at local businesses — not let trillions of dollars sit in foreign bank accounts.
So what can we do to fix wealth inequality here? Sen. Elizabeth Warren proposed a plan that would impose a marginal 2% wealth tax on fortunes over $50 million and a slight increase for fortunes over $1 billion. This means that instead of taxing yearly income of individuals, the tax would be imposed on total wealth after $50 million.
Sen. Warren’s estimates indicate that the tax would raise $3.75 trillion over a 10 year period and be able to fund things like universal pre-school, college debt cancellation and other economic justice causes.
Which begs the question: if a tax of only 2% is able to generate $3.75 trillion, just how much money do the richest Americans earn?
Jeff Bezos’ net worth is $186.2 billion. For perspective, let’s look at what it would take to make that much money. Let’s say you were alive at the start of the Indus River Valley civilization in 2500 BCE.
If you started saving $1,000 a day for the more than 4,500 years since then, you still would not have as much money as Jeff Bezos. At $1,000 a day, for an 8 hour work day you would be earning $125 an hour, which is nearly five times that of the average American worker.
To earn $1 billion in your lifetime, you would need to earn around $35,000 every day of your life for 80 years — or essentially the base price of a new Tesla Model 3. Jeff Bezos has done this 186 times. Bill Gates has done this 115 times.
It is unfathomable just how much money the wealthiest Americans have. Only 400 Americans will ever see anything close to this amount of money. It’s time for equitable distribution of wealth.
So yeah, Eat the Rich.
Riley is a junior studying Computer Science and Journalism. Do you think that wealth inequality is a major issue in the US today? Do you think the richest must be held more accountable? Send all comments to firstname.lastname@example.orgSubscribe to The Daily Cardinal Newsletter