Can the Wealthy Hardwire Inequality into Our DNA?

Sam Pizzigati

Sam Pizzigati Editor, Too Much online magazine

Remember the college admissions scandal? Earlier this year we learned that awesomely affluent parents have been spending small fortunes on scams to get their undeserving teenage offspring into America’s most elite colleges and universities.

This admissions scandal crept back into the news cycle earlier this week when Vanity Fair reported that the wealthy parents of one California teen had plotted with a top admissions “consultant” to get their white — and distinctly non-athletic — daughter accepted by elite schools as a black tennis champ.

In this case, the rich parents overreached. Their scam failed. But plenty of other sports-related scams, we now know, worked quite well. Rich families paid to have their kids’ faces photoshopped onto the bodies of real high school athletes. They conspired with college tennis, soccer, and water polo coaches to get their kids admitted under false pretenses into schools like Yale and Georgetown.

All these kids had no outstanding athletic talent. But what if wealthy parents had the ability to give their kids that athletic talent? What if our nation’s rich could use emerging 21st-century “gene-enhancement technology” to make their kids physically bigger, stronger, or faster? What if they could even use that same technology to make their kids smarter? Would they?

The answer the college admissions scandal makes plain: Many of the richest among us will stop at nothing to perpetuate their privilege. Spend a fortune to make their kids genetically superior? Of course they would.

Should we be aghast at this prospect? Of course we should.

What used to be pure science fiction — the ability to edit our DNA — has now become science reality. A generation ago our hippest young programming hotshots were working in computer code. Now the high-tech hip are busy working to reprogram our genes.

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New York Points A New Way Forward For The Nation

Sam Pizzigati

Sam Pizzigati Editor, Too Much online magazine

What happens at America’s state level can sometimes reverse the political momentum of the entire nation. We experienced just such a reversal in 1978, when California conservatives pushed our country to the right. We may be poised to take a new direction, thanks to important victories in New York State for progressives.

Back then, on a calm June day, conservatives engineered a California earthquake. They won nearly two-to-one voter support for a ballot initiative that wrote a cap on local property taxes into the state constitution. This “Prop 13” initiative would in short order crater funding for California’s world-class public services.

For business interests, meanwhile, Prop 13 would prove to be a gift that keeps on giving. Before 1978, corporate property owners footed two-thirds of the state’s property tax bill, homeowners one-third. After 1978, that ratio flipped, leaving the homeowner share at two-thirds.

But Prop 13’s most lasting impact would be political. Prop 13 gave America’s cheerleaders for grand private fortune a simple winning formula for electoral success: Make elections about cutting taxes. Always.

Conservative pols would follow that formula. In the immediate wake of Prop 13, over a dozen other states enacted similar tax caps. In the 1980 presidential election, Ronald Reagan would then ride this tax-cut wave into the White House. Once in office, his administration quickly set about rewriting America’s economic rules — to privilege the rich and the corporations that make them richer.

Today, four decades later, we’re still living amid the extreme inequality Prop 13 did so much to create. But now, in a state a continent away from California, the surprise outcome of another titanic political battle may well signal the dawning of a new and far more egalitarian epoch.

New York has just enacted — over fierce billionaire opposition — legislation that takes a giant step toward defining decent, secure housing as a basic human right.

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Taxes, Grand Fortune, and Gloria Vanderbilt

Sam Pizzigati

Sam Pizzigati Editor, Too Much online magazine

Hundreds of advocates for a more equitable economy will be gathering in Washington, D.C. this coming Tuesday for an all-day conference on “Taxing the (Very) Rich.” Hundreds more will be streaming online and watching as conference speakers explore a variety of bold new proposals, everything from an annual tax on wealth to tax penalties on corporations that pay their top execs unconscionably more than their workers.

Many of these same proposals will then soon likely surface again almost immediately, at next week’s first set of national debates for the Democratic Party’s White House hopefuls. Most of the 20 debaters figure to endorse one — or more — of the ideas that get Tuesday’s “Taxing the (Very) Rich” spotlight.

In other words, we’re shaping up to have a really good week for tax justice. We haven’t had a political climate this open to new initiatives for taxing the super rich since FDR sat in the White House.

All this political momentum, not surprisingly, has America’s flacks for grand fortune more than a little bit worried. They thought they had us convinced that upping taxes on the rich would wreck the economy and penalize “success.” But Americans aren’t buying what the flacks are selling. Our richest owe their “success,” many more of us now understand, to an economy they’ve spent the last four decades rigging.

Serenades to the “successful” are clearly not winning over a deeply skeptical — and cynical — American public. So the flacks are switching gears. They’re doubling down on the cynicism all around us. They’re arguing that taxing the super rich will always be a fool’s errand — because the rich and their armies of lawyers and accountants will always be able to stay a step ahead of Uncle Sam.

So why bother trying to tax the rich, the argument goes, when these deepest of pockets can simply evade whatever taxes Congress imposes? Just accept reality, the flacks implore us. The rich will always stay rich.

That happens not to be true. History shows we can make real progress against grand concentrations of private wealth. We did just that in the mid-20th century, a time when Americans making more than $400,000 a year faced top income tax rates over 90 percent and heirs to grand fortunes had to watch estate tax rates as high as 77 percent carve multiple millions off their inheritances.

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How The Super-Rich Avoid Paying Their Share

Sam Pizzigati

Sam Pizzigati Editor, Too Much online magazine

We have a great deal of statistical data, in America today, about the economic circumstances of Americans who live in poverty. We know far less, by contrast, about Americans who live amid great wealth. And much of what we do know, suggests a revealing new study, turns out to be wrong.

America’s wealthiest, this new study details, almost certainly hold substantially greater personal fortunes than our standard analyses of the nation’s distribution of wealth indicate.

What are these conventional analyses not taking into account? A simple reality of our deeply unequal age: Extravagantly wealthy people cheat on their taxes. Regularly. Extravagantly, too. Our super rich are stashing vast chunks of their personal fortunes in offshore tax havens, generating billions annually in new income that — to their governments — goes unseen and untaxed.

Just how enormous has this tax evasion by the super rich become? University of California-Berkeley economist Gabriel Zucman and his Scandinavian colleagues Annette Alstadsæter and Niels Johannesen calculate — in a just-published American Economic Review paper — that offshore tax havens are enabling our world’s richest 0.01 percent to evade 25 percent of the income taxes they ought to be paying.

The holdings of this wealthiest one-hundredth of 1 percent, the three researchers relate, make up about 50 percent of the overall assets parked in tax havens. The super rich are using these havens, add Zucman and his colleagues, to conceal about 40 percent of their total personal fortunes.

The most recent Federal Reserve Board figures on U.S. inequality, released this past March, put the top 1 percent’s share of American personal wealth at 32 percent, up from 23 percent in 1989. Other estimates place the top 1 percent share closer to 40 percent. But with the new calculations from Zucman and his colleagues, the Institute on Taxation and Economic Policy’s Matthew Gardner reflects, even this 40 percent estimate could well be a distinctly “low-ball number.”

But can we trust the numbers from the Zucman team? After all, how could a mere trio of researchers unearth hidden fortunes that the super rich spend big bucks to keep hidden? These three particular researchers had some unconventional assistance.

Over recent years, whistleblowers at some of the private banks and legal firms that cater to wealthy tax evaders — remember the “Panama Papers”? — have exposed vast stores of financial records that document the daily nitty-gritty of tax-evading transactions. The Zucman team tapped these records.

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A Nation Where Only The Rich Have Homes?

Sam Pizzigati

Sam Pizzigati Editor, Too Much online magazine

In our daily lives, as anyone who keeps a household budget can attest, the unexpected happens all the time. A refrigerator motor fails. Some part on your car you never realized existed breaks down. A loved one passes away and you have to — you want to — be at the funeral a thousand miles away.

“Unexpected” expenses like these will, sooner or later, hit all of us. But all of us, says new research out of the Federal Reserve, can’t afford them.

In fact, just under 40 percent of Americans, says the Fed’s sixth annual household economics survey, “would have difficulty handling an emergency expense as small as $400.”

A fifth of American adults, the new Fed study adds, had major unexpected medical bills last year. An even larger share of Americans — one quarter — “skipped necessary medical care in 2018 because they were unable to afford the cost.”

Meanwhile, 17 percent of American adults can’t afford to pay all their monthly bills, even if they don’t experience an unexpected expense.

The new Fed report offers no anecdotal color, just waves of carefully collected statistical data. For a sense of what these stats mean in human terms, we need only look around where we live, particularly if we live in one of the many metro areas where inequality is squeezing millions of Americans who once considered themselves solidly “middle class.” Places like the Bay Area in California.

San Francisco, recent research shows, now has more billionaires per capita than any other city in the world. By one reckoning, San Francisco also has the highest cost of living in the world, as all those billionaires — and the rest of the city’s ultra rich — bid up prices on the most desirable local real estate.

But the Bay Area squeeze goes beyond the confines of San Francisco. Nearby Oakland and Berkeley are facing enormous affordable housing shortages as well. The Bay Area as a whole now has more than 30,000 homeless.

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A Plaintive Plea from America’s Rich: Can We Please Change the Subject?

Sam Pizzigati

Sam Pizzigati Editor, Too Much online magazine

America’s elites have for decades now enjoyed — and exploited — a mainstream political consensus.  America is doing just fine, this consensus has held, but just not for everybody. We have some poor, unfortunate souls in our midst, the consensus continues, and decency demands more “opportunity” for them.

Aspiring politicians have always loved this opportunity message. They can spout it and sound compassionate and caring to the voting public. The message’s more important attraction: Pols can spout it and not in any way come across as threatening to the deep pockets they count on for campaign cash.

The rich, after all, simply adore the mainstream “opportunity” gospel. Talking about increasing opportunity distracts attention from how rich people — and the corporations they run — behave, how what the rich do to become and stay rich keeps poor people poor and most of the rest of us struggling.

But this mainstream political consensus has over recent years collapsed. Precious few analysts are still claiming that the nation is doing “just fine.” The United States these days is essentially working well only for the rich, and appreciable numbers of Americans no longer just wonder why. They’re demanding checks on grand private fortunes and the behaviors that pump these fortunes up.

All this has today’s rich worrying. Really worrying. Recent headlines tell the story. From the Financial Times: “Why American CEOs are worried about capitalism.” The Guardian: “The kings of capitalism are finally worried about the growing gap between rich and poor.” The Washington Post: “U.S. billionaires worry about the survival of the system that made them rich.”

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Gentrification Now Has More than Landlubbers Worried

Sam Pizzigati

Sam Pizzigati Editor, Too Much online magazine

We typically think urban neighborhoods when we think gentrification. We think places where modest-income families have thrived for generations suddenly becoming no-go zones for all but the affluent.

The waters around us have always seemed a place of escape from all this displacement, a more democratic space where the rich can stake no claim. The wealthy, after all, can’t displace someone fishing on a lake or sailing off the coast. Or can they? People who work and play around our waters are starting to worry.

Local boat dealers and bass fishing aficionados alike, reports one leading marine industry trade journal, are all now “expressing concern about the growing income disparity in the United States.” That journal, Soundings Trade Only, is even highlighting stats that show America’s top 1 percent holding more wealth than “the bottom 90 percent of the population combined.”

What has boat dealers so concerned? The middle-class families they’ve counted on for decades are feeling too squeezed to buy their boats — or even continue boating.

“Boating has now priced out the middle-class buyer,” one retailer opined to a Soundings Trade Only survey. “Only the near rich/very rich can boat.”

Mark Jeffreys, a high school finance teacher who hosts a popular bass fishing webcast, sees a bubble close to bursting. His pastime is getting too pricey, and he wonderswhen bass anglers are “going to get to the point where they’re not going to pay $9 for crankbait.”

Not everyone around water is worrying. The companies that build boats, Jeffreys notes, seem to “have been able to do very well.” They’re making fewer boats but clearing “a tremendous amount” on the boats they do make.

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Plutocracies as Problem-Solvers (for the Privileged)

Sam Pizzigati

Sam Pizzigati Editor, Too Much online magazine

We all know how democracies are supposed to work: People come together, identify their common problems, then debate and decide solutions. But this elegant give-and-take can break down. What breaks it? Inequality. Democratic deliberations start going haywire whenever wealth starts furiously concentrating at a society’s summit.

In societies growing significantly more unequal, people simply share ever fewer common problems. And some people, thanks to their increasing wealth, have the political power to make their problems the problems their society addresses.

And what happens to the problems of people without grand private fortune? Their problems go ignored. Democracy becomes plutocracy.

In our contemporary United States, we see this plutocratic dynamic play out all the time. Oxfam, the activist global charity, has just offered up a particularly vivid example: the crisis around prescription drugs.

For Americans of modest means, prescription drugs have emerged as a top-tier problem on any number of fronts. Start with cost. The drugs doctors prescribe have become so expensive that millions of Americans can’t afford to buy all the pills their doctors want them to take.

Meanwhile, drug companies have become drug pushers, overselling the benefits and shortchanging the hazards of profitable painkilling medications, in the process creating an opioid epidemic that has devastated millions of American households — and communities.

Big Pharma’s relentless chase after profits drives and distorts medical research agendas, too. On cancer, for instance, drug companies will only conduct costly clinical trials on substances that can be patented and pay off in big earnings. Promising but unpatentable natural substances can’t deliver big profits. So they don’t get tested. They remain on the medical fringes, their curative potential untapped.

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On Capitol Hill: A Clueless Big-Bank Top Executive

Sam Pizzigati

Sam Pizzigati Editor, Too Much online magazine

As CEO of banking giant JPMorgan Chase, Jamie Dimon has ultimate budget responsibility for a mega-billion-dollar enterprise. But last week, testifying before Congress, Dimon declined to take any responsibility for — or show much interest in — the budget challenges JPMorgan workers face. Rep. Katie Porter of California asked Dimon what advice he’d give an entry-level JPMorgan employee with a child who lives in a one-bedroom in her district that rents for a monthly $1,600. After food, child care, and other basic expenses, the $2,425 the worker takes home monthly from JPMorgan leaves her $567 in the red. Dimon at first quipped that the entry-level worker just “may have my job one day.” Maybe, replied Porter, but right now she’s doesn’t have “your $31 million” to spend. Porter went on to press for a helpful budgeting suggestion. Replied Dimon: “I don’t know. I’d have to think about that.”

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The Tax-the-Rich Ideas Just Keep Coming

Sam Pizzigati

Sam Pizzigati Editor, Too Much online magazine

Serious societal change typically only takes place when the pressure for change hits “critical mass.” At one level, we’ve had critical mass for years now on seriously taxing America’s rich. Polls regularly show broad public support for having our wealthiest pay quite a bit more at tax time.

But we haven’t had critical mass on taxing the rich within our political class. That finally may be changing. High-profile pols old and new have of late been one-upping each other with sober proposals for trimming the super rich down to a much more manageable democratic size.

The latest significant player to add to this growing political class critical mass: U.S. Senator Ron Wyden from Oregon. He’s just announced his intention to push a bold new tax on capital gains.

Most Americans know precious little about capital gains income because most Americans get precious little income from capital gains. On average, capital gains income — profits from the sale of stocks, bonds, and other assets — makes up just 6.1 percent of the dollars Americans report on their tax returns.

But this average wildly overstates how much income everyday households collect from capital gains. In 2016, the latest year with IRS stats, capital gains made up a miniscule 0.7 percent of the income for households earning less than $100,000. Households making over $10 million, by contrast, counted on capital gains for nearly half, 46.4 percent, of their income.

The richest of our rich, our top 0.001 percent, grab an even higher income share, 55.1 percent, from capital games.

These fabulously rich don’t just grab the overwhelming bulk of the nation’s capital gain dollars. Our tax code gives them and their capital gains preferential treatment. A dollar of income from salary and wages can currently face a tax rate of up to 37 percent. A dollar of capital gains income never faces a tax slice more than 23.8 percent.

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