All this could mean bipartisan traction for a new bill introduced by Senators Bernie Sanders and Elizabeth Warren and Representatives Rashida Tlaib and Barbara Lee earlier this month. It would raise the federal corporate income tax rate on companies that pay their CEOs more than 50 times their median workers’ pay.The bigger the gap, the bigger the hike. At a 50-to-1 gap, the tax goes up by half a percentage point. At 500-to-1, firms would see their tax bills jump by 5 full percentage points. That might be enough to get corporate boards to rethink how much they pay their top executives — and how little they pay their workers.
A Corporate Tax Even Republicans Should Love
NOVEMBER 26, 2019 by Sarah Anderson
Imoved away from my hometown of Litchfield, Minnesota, several decades ago, and since that time, my politics have veered to the left as those in my hometown have veered to the right. Donald Trump won my family’s western Minnesota congressional district by over 30 percentage points.
And yet, when I visit the church bazaars and county fairs or attend family reunions in my hometown, we always find common ground when it comes to wealth-hoarding corporate CEOs.
So I’m not surprised by national polls showing that both Democrats and Republicans have had it with CEO greed. Some 78% of US workers feel CEOs are overpaid compared to their employees, one poll found last year.
It may be even worse than they think.
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Some CEOs earn 1,000 times more than their workers. Here’s how to stop that, by Sarah Anderson for CNN Business Perspectives November 26, 2019
Sarah Anderson directs the Global Economy Project at the Institute for Policy Studies and co-edits the IPS publication Inequality.org. She’s authored the institute’s annual “Executive Excess” report on CEO pay for over two decades. The opinions expressed in this commentary are her own.
I moved away from my hometown of Litchfield, Minnesota, several decades ago, and since that time, my politics have veered to the left as those in my hometown have veered to the right. Donald Trump won my family’s western Minnesota congressional district by over 30 percentage points.And yet, when I visit the church bazaars and county fairs or attend family reunions in my hometown, we always find common ground when it comes to wealth-hoarding corporate CEOs.
So I’m not surprised by national polls showing that both Democrats and Republicans have had it with CEO greed. Some 78% of US workers feel CEOs are overpaid compared to their employees, one poll found last year.
It may be even worse than they think.
A Harvard Business School study found that Americans think the right CEO-worker pay ratio is no higher than 7 to 1. But a report I co-authored for the Institute for Policy Studies found that 80% of S&P 500 firms paid their CEO over 100 times more than their median worker last year.In many cases, it was well more than 1,000 times.
All this could mean bipartisan traction for a new bill introduced by Senators Bernie Sanders and Elizabeth Warren and Representatives Rashida Tlaib and Barbara Lee earlier this month. It would raise the federal corporate income tax rate on companies that pay their CEOs more than 50 times their median workers’ pay.
The bigger the gap, the bigger the hike. At a 50-to-1 gap, the tax goes up by half a percentage point. At 500-to-1, firms would see their tax bills jump by 5 full percentage points. That might be enough to get corporate boards to rethink how much they pay their top executives — and how little they pay their workers.
Could Republicans like my old Minnesota neighbors get on board? It sure seems like it.
As recently as 2016, a Stanford University survey found that over half of Republicans — a full 52%— favor an outright cap on CEO compensation relative to worker pay. That’s even more radical than what Sanders, Warren, Tlaib and Lee have proposed, since their bill would tax — but not prohibit — those offensive pay gaps.
Several prominent Republican politicians have weighed in to support restraining executive pay excess.President Donald Trump railed against sky-high CEO pay during his 2016 campaign. In particular, he called for the closure of the “carried interest” loophole that allows hedge fund and private equity fund managers to cut the taxes they owe by almost half.
Mick Mulvaney, Trump’s acting chief of staff, has a record on the issue too. Before he left Congress, Mulvaney introduced an amendment to eliminate US Export-Import Bank subsidies for any company with a CEO that’s paid more than 100 times the median worker pay.
Of course, neither Trump nor Mulvaney has done much to turn those proposals into law. But while the 2017 GOP tax cuts Trump signed were otherwise a huge gift to the wealthy, they did close one perverse loophole that had encouraged excessive CEO pay.
Before this change, corporations could deduct unlimited amounts of executive pay from their federal tax bills, as long as they labeled that pay “performance-based.”
Just as cigarette taxes have helped reduce smoking rates while generating revenue for health programs, a pay gap tax could incentivize less harmful corporate executive behavior while raising revenue that could be used to reduce inequality. If the new bill’s penalties had been in place last year, S&P 500 firms with pay gaps over 100-to-1 would have owed as much as $17.2 billion in additional federal taxes.
Folks in my hometown would approve. Maybe even cheer.
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The U-Turn that Turned America Staggeringly Unequal
For decades in the mid 20th century, our nation’s grandest private fortunes were becoming less pronounced. And then . . .
BLOGGING OUR GREAT DIVIDE NOVEMBER 30, 2019 by Bob Lord
Wealth in America has concentrated — and dramatically so — over the past four decades. Since 1980, note wealth researchers Emmanuel Saez and Gabriel Zucman, the top 0.1 percent share of the nation’s total wealth has more than doubled, from under 10 percent in 1980 to over 20 percent today. In a nation of over 125 million households, just one ten-thousandth of those households — some 12,500 — now control over 10 percent of our wealth.
But can numerical abstractions like these help us truly grasp the reality of the inequality that’s overtaken America? Or are these numbers too, well, abstract?
Let’s come at this from a slightly different angle. Let’s look at actual wealthy American families.
Forbes magazine has been annually spotlighting our nation’s 400 largest fortunes since 1982. By comparing the 1982 and 2019 Forbes listings, we can get a remarkably vivid picture of how America’s wealthiest families have fared over recent years. We can even use the Forbes data to help us compare how the grand fortunes of the original and today’s Gilded Age have unfolded.
The inaugural Forbes wealth list in 1982 conveniently included wealth numbers for two sets of intergenerational wealth dynasties: those whose fortunes had taken root before 1900 — clans like the Rockefellers and the Du Ponts — and those whose fortunes blossomed much closer to 1982, like the Waltons of Walmart and the Mars candy empire. The 2019 Forbes list, in turn, offers up numbers that help us trace how that second set of dynasties has evolved.
With all this information, we can compare the fate of the Rockefellers and Du Ponts between the original Gilded Age and 1982 to the fate of the second set of intergenerational wealth dynasties between 1982 and today.
The comparison couldn’t be starker.
In 1982, the old-line Rockefeller and Du Pont families dominated the initial Forbes 400, with 13 Rockefellers and a stunning 27 Du Ponts making the list. The 13 Rockefellers listed by Forbes held a total wealth of $2.85 billion. The Du Ponts appearing on the 1982 Forbes list held $5.13 billion. In 1982, Forbes estimated that all the then-living descendants of Pierre Samuel duPont de Nemours, some 1,700 of them, held a combined fortune of $10 billion.
TAX THE RICH BEFORE THE REST – Billionaires ought to be good for at least $1 trillion
How does this 1982 Rockefeller and Du Pont net worth compare with the Rockefeller and Du Pont net worth back at the tail-end of the original Gilded Age? In 1918, U.S. total wealth hovered around $200 billion. John D. Rockefeller, according to a contemporary Forbes analysis, controlled $1.2 billion in wealth at that time, giving him over half of 1 percent of the nation’s entire wealth. By 1982, the Rockefeller family share of the nation’s wealth had dropped by over 90 percent, to less than one-twentieth of 1 percent of America’s total wealth.
Similarly, in 1929, the country’s total wealth sat around $350 billion. At that time, the stock of the DuPont corporation remained privately held within the Du Pont family, and that makes valuing the net worth of the Du Ponts difficult. But we do know that the DuPont corporation held a 36 percent stake in General Motors at the time, a company then worth $3.1 billion. If we add in the value of the DuPont chemical empire, the Du Pont family share of the nation’s wealth in 1929 must have been at least 1 percent, much greater than the one-tenth of 1 percent share the Du Ponts held in 1982.
In other words, at America’s economic summit, the wealth of the original Gilded Age’s richest de-concentrated in the mid-20th-century decades before 1982.
Unfortunately, by the early 1980s, America’s wealth had begun to concentrate all over again.
The Institute for Policy Studies Billionaire Bonanza report last year identified 15 family wealth dynasties whose richest individuals appear on both the 1982 and 2018 Forbes 400 lists. Among these families, three — the Walton, Koch, and Mars dynasties — have seen their wealth increase nearly 6,000 percent since 1982. These three dynasties now hold a combined $348.7 billion.
And what about the share of the nation’s wealth these families hold? The wealth share held by the Walton, Mars, and Koch families has increased 29-fold, 9-fold and 11-fold, respectively, since 1982.
America’s wealthiest families aren’t just increasing their share of the nation’s wealth. Even more stunning: The individual heirs of the new wealth dynasties Forbes identified in 1982 hold a greater share of the nation’s wealth today than did the patriarchs who forged these dynasties.
That didn’t happen with the Rockefeller and Du Pont fortunes. John D. Rockefeller’s grand private fortune dispersed into ever smaller chunks, first to his children, then to their children. By the third generation, no individual Rockefeller had a personal fortune — and a share of the nation’s wealth — anywhere close to the fortune and wealth share that John D. personally held.
In the Du Pont family, the wealthiest individual Du Pont heir on the 1982 Forbes list — Lammot du Pont Copeland — held just a tiny fraction of the national wealth share his uncle Pierre controlled during the Gilded Age. How tiny? Pierre’s wealth share outpaced Lammot’s by over 100 times.
Compare that to the trajectory of the Walton family fortune after 1982. The three living children of the legendary Sam Walton each hold a share of the nation’s wealth over eight times the share held by their old man in 1982. Lukas Walton, Sam’s grandson, sports a net worth of over $18 billion and a share of American wealth nearly triple the wealth share his grandfather held.
Will the current trajectory continue? Will our richest families hold ever increasing shares of the country’s wealth, with individual members of these families each holding wealth far greater than their fortunate forbears held? A generation from now, will Sam Walton’s great-grandchildren own a larger share of the nation’s wealth than Sam did in 1982? Unless American tax policy changes, the answers to those questions will all be “yes.”
So let’s change that policy. Let’s tax our billionaires!
Bob Lord, an Institute for Policy Studies associate fellow, practices tax law in Phoenix.
Boberg | It’s time to (sur)tax the rich Nov 26, 2019
Economic inequality in the United States is at its highest point in more than five decades since the Census Bureau first started measuring it. Jeff Bezos, Bill Gates, and Warren Buffet together own more wealth than the bottom half of the entire country — about 160 million people. Wages for the vast majority of Americans are barely growing and when factoring in inflation, real wages have actually fallen 9% since 2006, while those lucky enough to be in the top one-tenth of the 1 percent have never been richer.
The American inequality crisis is here, and it’s not going to go away until we do something about it. We need to tax the rich. But how do you tax the rich in a way that effectively narrows that wealth gap and only affects the 268,000 or so individuals that make up a tiny bit of the top 1 percent?
Enter the Millionaires Surtax.
The Millionaires Surtax is a tax plan laser-focused on getting to the core of the problem facing this country — extreme wealth, and our current tax code’s failure to treat it just like the wages of working Americans. It does this by imposing a 10% surtax on all annual income above $2 million, or within the top 0.2% of incomes. The key word here is “all” income, since most of those 268,000 people don’t make their vast sums of money off of salaries or wages like the rest of the country, but through investment income like capital gains.
Enacting a surtax on both these types of income is absolutely critical to bridging the inequality divide. As the top 1% have rapidly increased their share of the nation’s wealth over the past decade, their tax rates have steadily dropped, and it’s no coincidence that this period coincides with skyrocketing inequality. Thanks to the outrageous number of special tax breaks and loopholes that investment income gets in our tax code, in 2018, the 400 richest Americans actually ended up paying a lower effective total tax rate — a measly 23% — lower than any other income group in this country spanning federal, state, and local taxes.
What’s more, tacking a surtax onto both types of income dodges a key problem in most progressive taxation plans. Other proposals currently being debated in the public sphere, such as the 70% top marginal income tax rate championed by Rep. Alexandria Ocasio-Cortez, are great ideas for tackling salaried income inequality, but since the super-rich rarely actually work for a living raising income tax rates doesn’t effectively hit the source of their extreme wealth. Jeff Bezos, for instance, could theoretically take a $1 check from Amazon for his work as CEO while still owning billions of dollars worth of Amazon stock, successfully avoiding that tax and continuing to amass piles of wealth. Under the Millionaires Tax, Bezos would owe the IRS 10% on every dollar over his first $2 million annually, regardless of whether those dollars came from a paycheck, a stock sale, or from selling a yacht or two.
The Millionaires Surtax is also an incredibly easy sell to the American public. A clear majority of both Democrats and Republicans alike support raising taxes on the ultra-wealthy and believe the government should take steps to reduce inequality. This tax would make serious headway on both of those goals, and by targeting only the very top of the top 1% — a couple hundred thousand people in a country of over 350 million — it’s easy to communicate to the average voter that this tax wouldn’t affect them and will only hit those who can easily afford it.
The Millionaires Surtax is simple, efficient, and laser-focused on the richest people perpetuating the worst inequality we’ve seen in our lifetimes. Inequality of this magnitude can and will hurt everyone in the country, including the rich. It’s time for everyone — even those in that top 0.2% — to get on board.
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Rich Boberg is a retired tech entrepreneur and investor from Silicon Valley and a member of the Patriotic Millionaires.
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FACES ON THE FRONTLINES
As Global Inequality Rises, So Are the Movements Fighting It
A new report gathers insights from over 170 activists on the frontlines of inequality struggles in 23 countries on how to build and sustain their movements.
RESEARCH & COMMENTARY
NOVEMBER 26, 2019
by Jenny Ricks
This week we as Fight Inequality Alliance have released our first report, The State of the Growing Movement Fighting Inequality. We aimed to begin balancing the plethora of research on inequality — its causes and symptoms, as well as the data crunching and killer stats that others have been doing so well since inequality has skyrocketed to its current crisis levels — with some analysis of how the movement fighting back is growing in response.
Over the last year, headlines generated by mass protests on issues of inequality have intensified. From Chile to Ecuador to Lebanon to Haiti to France and well beyond, a particular grievance like a rise in fuel prices or transport fares has been the spark for mass action by citizens who have simply had enough. Typically, this spark has given rise to a larger struggle for more systemic change. In most instances, as governments respond with violence and repression, it is clear we are in desperately difficult and dangerous times for people who are bold and brave enough to seek a more just, equal, and sustainable world.
As protests continue to spark and grow around the world, the question of how movements fighting inequality are built and sustained has come into sharper focus.
In partnership with researchers at Rhize, we conducted surveys and interviews with over 170 activists on the frontlines of inequality struggles in 23 countries across Latin America, Africa, Asia, and Europe over 2018-19. Our new report, The State of the Growing Movement Fighting Inequality, analyzes these surveys and interviews, providing great insights for the way forward for those of us seeking systemic change to the inequality crisis.
Through this report, we found out that most movements fighting inequalities grow as a direct response to the impacts of inequality people are experiencing. When people are faced with the realities of inequality every day, they organize, linking up and finding power in uniting with each other to tackle the root causes.
We are now seeing this on a wider scale in how the climate movement, trade unions, community, indigenous rights, feminist and civil rights groups, and many others are increasingly joining together to fight inequality. Often movements organizing and challenging power face increasing repression and sometimes violence from the state.
The research found the three biggest struggles where inequality movements are most active are natural resources, elite capture and corruption, and women’s rights and feminist agendas.
The fight for access to and control over natural resources, including land, reflects underlying dynamics of political and economic power in countries — for example, reflecting the historical consequences of colonialism, and patriarchal and racist systems on the rights and liberties of Indigenous Peoples and communities. This is also linked to concerns about the climate crisis and how to create an energy transition that doesn’t reinforce existing inequalities.
Many activists who we interviewed also spoke about injustices stemming from elite capture of wealth, power, and corruption, which is linked to and often fueled by the use of or control over natural resources.
There is also a strong push and need to bring feminist analysis, agendas, and action into broader inequality movements to make them truly transformative. Additionally, the growth of the #metoo movement has seen renewed attention on women’s rights and power dynamics within organisations and movements. It has proven to be the beginning of a necessary wake-up call within civil society for many movements when abuses of power and harassment have surfaced. Respondents interviewed for the study grappled with patriarchy and advancing feminist agendas in their own movements.
We also found out that movements want to become more globally connected. Seventy-four percent of survey respondents chose “Opportunities for joint international campaigning, visibility and support” as a top form of support and connection they wanted from others in the movement.
In this era of far-right populism, with leaders preaching hate, fear, greed, nationalism, and with multilateralism at a perilous point, this shows that an internationalist movement is possible and wanted by those who need it most. But activists need to be in the driving seat.
Despite the often-bleak picture we find ourselves in, the energy and dynamism of the movement that the report reveals is inspiring and cause for hope. The cautionary tale is that if we want systemic change then we have to do the hard work, both on ourselves and in our movements, as well as remaking the societies we live in to make it happen.
