Chuck Collins is a senior scholar at the Institute for Policy Studies in Washington, D.C., who comes to this subject through personal experience. In The Wealth Hoarders, he argues that genuine change requires clamping down on what he calls the “Wealth Defense Industry,” its clients, and its self-serving ideology. Collins was an heir to the Oscar Mayer lunchmeat fortune. In the 1980s, while in his early twenties, he attended a weekend conference for millionaires held by a local family office and foundation. When he admitted that he was uncomfortable with the ethics of inherited wealth, attendees expressed alarm. Donate every penny of the interest, if it makes you feel better, but don’t touch the principal, they counseled. Instead, Collins decided that the benefits of his upbringing, skin color, proper nutrition, health care, and good education were privilege enough. Soon after the conference, he donated his entire inheritance to four progressive foundations.
The power of dynastic wealth has only concentrated since then, Collins writes. In 2019 there were more than 20,000 individuals in the US worth at least $100 million. He chronicles how the Wealth Defense Industry works to make taxes low and complex, collectively through campaign contributions and lobbying, and individually through trusts, foundations, and tax havens. The ultrawealthy have successfully bent the political system to their will. Not surprisingly, between 1980 and 2018 the tax burden on America’s billionaires decreased by 79 percent, despite the fact that most Americans believe the wealthy should pay higher taxes.
The issue will only grow in importance. In the coming decade, households with wealth over $5 million will transfer an estimated $15.4 trillion to the next generation. By 2050, this intergenerational transfer of wealth is expected to be as high as $68 trillion. The transfer will occur as humanity faces its greatest collective action challenge—a pandemic, global warming, a chasm of inequality.
It’s not only an American problem. A global elite has formed, unbound by the nation-state and aided by the secrecy of tax havens. Their assets are transnational, mobile, and inaccessible to governments that wish to tax and regulate them. The workforce that serves this elite has itself prospered and grown worldwide. Estimates of the number of family offices that manage concentrated wealth range from 7,000 to 10,000, with over half founded in the last fifteen years. Keeping money out of the hands of the government is big business. While the bulk of the activity consists of legal tax avoidance, criminals employ the same methods.
The system protecting the ultrarich poisons America by increasing inequality. When 640 US billionaires possess more than $3.5 trillion combined—equivalent to the total wealth of all 50 million US Latino residents—economic opportunity and social mobility become constricted. From South Dakota to Washington, D.C., the Wealth Defense Industry and its clientele write the rules in their own interest rather than that of the public, with the Trump tax cut only the most recent example.
At its most virulent, the Wealth Defense Industry adheres to a libertarian ideology that taxation is theft and the common good does not exist. It is they, the wealth creators, who are the oppressed of society. This ideology is not new to America. In 1933, during the Great Depression, Congress called J.P. Morgan Jr. to testify. Morgan, no stranger to underhanded means, had paid no income tax in the previous two years. The master financier argued that it was up to the government to fix the loopholes, and until they did, he would employ them. Nearly eighty-five years later, Gary Cohn, President Trump’s chief economic adviser, told Senate Democrats that “only morons pay the estate tax,” presumably so the senators wouldn’t fret over raising the eligibility for who pays it. Cohn later clarified that the morons in question were “rich people with really bad tax planning.”
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