According to Forbes magazine, the 400 richest families in America have now accumulated $3.2 trillion in wealth, and growing. Expanding the search to the top 10 percent reveals that “the wealthiest 10% of Americans hold more than 88% of all available equity in corporations and mutual fund shares (with just the top 1% controlling more than twice as much equity as the bottom 50% of all Americans combined)”
The Brookings Institute reports that “the top one percent alone holds more wealth than the middle class. They owned 29 percent—or over $25 trillion—of household wealth in 2016, while the middle class owned just $18 trillion.”
An observation can be made that investments made by the 400 families have created thousands of jobs, it’s just that those jobs are located in China, India and Malaysia. Where would China be without the Walton family (WalMart)? Even Warren Buffet, who admits that he has a lower tax-effective rate than his secretary, has invested heavily in the next generation of autos being produced in China, not the U.S.
The economies of China, India, South Korea and Singapore have all benefited from investment from American firms such as Apple, Cisco, HP, Google and Microsoft. Sadly foreign investment has created a double edged problem. In addition to the loss of American jobs to foreign workers, the multi-national companies take advantage of lower tax rates in foreign countries to avoid paying taxes in the U.S. Taxes that the U.S. desperately needs.
Microsoft had 138.5 billion dollars in profits in foreign banks in 2017, second only to Apple. The dilemma for Microsoft and others is how to get the money into U.S. banks without paying the 35% tax rate owed on the earnings. Ironically, Bill Gates Sr., father of Bill Gates, is on record as saying that he thinks the rich don’t pay enough taxes. Honor your daddy’s memory, Bill.
It is estimated that U.S. based multi-nationals have at least 2.6 trillion in profits sitting in foreign banks. The 664.9 billion brought home in 2018 through a reduced rate of tax percentage is a good start. Sadly, 15% is not the 35% that these multinational corporations should be paying.
The taxes due to the U.S. government could fund a lot of education, re-training and investment opportunities for U.S. citizens. For those who are not proponents of reinvesting in America, the repatriated profits could be used to pay down the national debt. This flight of capital to other countries, plus the unwillingness to pay taxes due on the profits, strikes me as the height of arrogance and extraordinarily unpatriotic.
The “tax holiday” being offered to these corporations to bring home their profits at a tax rate of 15.5% clearly is a huge benefit to the “400”.
Who are these fortunate few? Are these 400 families, the “job creators” we keep hearing about? The sad truth is that most of the 400 are not actively involved in the businesses that brought them wealth. According to the Institute for Policy Studies, “over 60 percent” of the Forbes richest 400 Americans “grew up in substantial privilege.”
Many of the 400 are 5th and 6th generations of inheritance. They don’t have to work for their riches because they were born wealthy. They don’t build new businesses, invest in factories or develop creative new ideas. Instead, they invest in money managers, lawyers, and lobbyists. They invest in people who influence our representatives to give them a bigger share of the American dream. They invest in PR firms to re-label the inheritance tax as the “death tax”, they invest in spinmeisters that lead us all to believe that some day when we hit the lottery, we’ll want these rules in place for ourselves.
Everyone talks about “the good old days”. I grew up in the 1950s. Back in the “good old days”, the highest marginal tax rate for individuals peaked at 92% in 1952 and 1953. The Golden Era of American Capitalism occurred during the time when America taxed the rich at the highest rate.
A “good old days” phrase I remember is, “A peacock who sits on his tail is just another turkey.” Maybe high tax rates for the wealthy are what’s needed to get the peacocks off their tails.