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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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A ‘Buyback’ for Our Future?

Sam Pizzigati

Sam Pizzigati Editor, Too Much online magazine

People who are trying to do good — with a Green New Deal, for instance, or Medicare for All — regularly find themselves confronting a simple and sometimes sneering gotcha question: So where’s the money coming from?

How about we start putting this same simple question to the top executives of Corporate America?

These execs are currently spending incredibly vast sums buying back their own companies’ shares of stock off the open market. In 2018, researchers at Dow Jones report, 444 of America’s top 500 firms spent dollars on stock buybacks. Lots of dollars: $806.4 billion in all, up 55 percent over the year before and up 37 percent over the previous all-time buyback annual record high.

These stock buybacks have no redeeming social value. Buybacks don’t make corporations more efficient or effective. They just make the rich richer. Buybacks reduce the volume of shares that trade, in the process upping earnings per share and share value. Who benefits from these upticks? Top corporate execs see an immediate boost. Over 80 percent of their pay comes from stock-based compensation.

The wealthy overall benefit, too. America’s top 1 percent, researchers at Goldman Sachs observed earlier this year, now own half of all the nation’s shares of stocks, with nearly 85 percent in the pockets of America’s wealthiest 10 percent.

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Putting Billionaires in Their Place

Sam Pizzigati

Sam Pizzigati Editor, Too Much online magazine

America’s billionaires have suddenly realized they just may be facing an existential crisis. A good chunk of the American people, they now understand, would rather billionaires not exist. Every billionaire, as a key aide of Rep. Alexandria Ocasio-Cortez has famously quipped on his popular Twitter feed, represents “a policy failure.” The nation needs, posits a recent New York Times op-ed, to “abolish billionaires.”

Our more pugnacious billionaires — and their devoted admirers — have greeted this new abolitionist thrust with predictable scorn. National Review columnist Kevin Williamson has tagged the case against billionaires as “irredeemably stupid.” Any attempt to tax billionaires out of existence, suggests three-comma investment banker Ken Moelis, would surely “crush the economy.”

More sober defenders of the billionaires in our midst take care to acknowledge the widening — and troubling — gap between the fabulously wealthy and everyone else, but then urge us, all the same, to “think twice before seeking to flatten every tycoon.”

“It may seem counterintuitive,” adds Washington Post editorial page editor Fred Hiatt, “but billionaires can be good for democracy, and a bulwark against tyranny.”

Bill Gates, the holder of the world’s second-largest fortune, agrees: “The idea that there shouldn’t be billionaires — I’m afraid if you really implemented something like that, that the amount you would gain would be much less than the amount you would lose.”

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When Dorms Mimic Mansions

Sam Pizzigati

Sam Pizzigati Editor, Too Much online magazine

At Princeton, they like to do things in style. One of the newer dorms on the university’s New Jersey campus has triple-glazed windows framed in mahogany.

Princeton — and the rest of America’s elite private universities — can easily afford such exquisite touches. These institutions of higher education are sitting on mountainous caches of cash, as the just-released new annual numbers on collegiate charitable contributions make abundantly clear.

Three elite schools — Harvard, Stanford, and Columbia — each received over $1 billion in new donations last year. The 20 universities with the year’s highest charitable hauls took in 28 percent of the contributions America’s colleges and universities pocketed in 2018. These 20 schools enroll just 1.6 percent of the nation’s college students.

Princeton, according to the latest public figures, holds an endowment worth $23.4 billion, the equivalent of over $2.8 million per student.

Should any of this concern you? Should those mahogany windows particularly bother you in any way? Probably should. You, after all, are helping pay for that mahogany.

Billionaires like former eBay CEO Meg Whitman, the patron of Princeton’s triple-glazed-window dorm, get to deduct off their taxable income the millions they contribute to their elite alma maters. Before last year, Americans with deep pockets could use charitable donations to write off up to 50 percent of their annual income. Today, thanks to the Trump tax cut enacted in 2017, our wealthiest can use those donations to write off up to 60 percent of that income.

In other words, average taxpayers are subsidizing billionaire contributions to “Grand Old Ivy.” For every $1 million billionaires make in contributions, they currently save in federal income taxes — and the federal treasury loses in revenue — $370,000. State governments lose dollars, too.

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Have the Rich Always Laughed at Stiff Taxes?

Sam Pizzigati

Sam Pizzigati Editor, Too Much online magazine

The guardians of our conventional wisdom on taxing the rich have messed up — and they know it. They slacked off. They started believing their own tripe. Average Americans, they assumed, would never ever smile on proposals to raise tax rates on the richest among us. After all, the conventional wisdom maintains, those average folks figure that someday they’ll be rich, too.

But now, with tax-the-rich proposals proliferating and polling spectacularly well, the keepers of our bless-the-rich faith are panicking. Their old rhetorical zingers no longer zing.

Higher taxes on the rich as a “penalty on success”? Average Americans today don’t see “success” when they gaze up at America’s top 0.1 percent and see a 343 percent increase in earnings, after inflation, over the past four decades. They see monopoly and outsourcing and insider trading.

Some fans of grand fortune see an opportunity amid this cynicism. They’re realizing that riffing off this cynicism may be the only way to keep taxes on rich people low. Raising tax rates on the wealthy may seem reasonable, their argument goes, but high tax rates on the rich can never actually work out as intended. The rich and their paid help — their accountants and lobbyists — can always end run them.

So disregard those high tax rates on the rich in effect back in the middle of the 20th century, the argument continues. Those top rates — 91 percent in the 1950s and into the 1960s, then 70 percent through the 1970s — never made much of a difference on how much the wealthy had in their wallets.

“The overall trend is unmistakable,” pronounced John Carlson, the cofounder of the right-wing Washington Policy Center, earlier this month. “When rates were much higher, the wealthy sheltered their money and paid a smaller share of the nation’s tax bill.”

In other words, seriously taxing the rich will always be impossible. So why bother even trying?

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Have the Rich Always Laughed Stiff Tax Rates Away?

Sam Pizzigati

Sam Pizzigati Editor, Too Much online magazine

The guardians of our conventional wisdom on taxing the rich have messed up — and they know it. They slacked off. They started believing their own tripe. Average Americans, they assumed, would never ever smile on proposals to raise tax rates on the richest among us. After all, the conventional wisdom maintains, those average folks figure that someday they’ll be rich, too.

But now, with tax-the-rich proposals proliferating and polling spectacularly well, the keepers of our bless-the-rich faith are panicking. Their old rhetorical zingers no longer zing.

Higher taxes on the rich as a “penalty on success”? Average Americans today don’t see “success” when they gaze up at America’s top 0.1 percent and see a 343 percent increase in earnings, after inflation, over the past four decades. They see monopoly and outsourcing and insider trading.

Some fans of grand fortune see an opportunity amid this cynicism. They’re realizing that riffing off this cynicism may be the only way to keep taxes on rich people low. Raising tax rates on the wealthy may seem reasonable, their argument goes, but high tax rates on the rich can never actually work out as intended. The rich and their paid help — their accountants and lobbyists — can always end run them.

So disregard those high tax rates on the rich in effect back in the middle of the 20th century, the argument continues. Those top rates — 91 percent in the 1950s and into the 1960s, then 70 percent through the 1970s — never made much of a difference on how much the wealthy had in their wallets.

“The overall trend is unmistakable,” pronounced John Carlson, the cofounder of the right-wing Washington Policy Center, earlier this month. “When rates were much higher, the wealthy sheltered their money and paid a smaller share of the nation’s tax bill.”

In other words, seriously taxing the rich will always be impossible. So why bother even trying?

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Egalitarians Gain Ground in Washington

Sam Pizzigati

Sam Pizzigati Editor, Too Much online magazine

If you worry about inequality, and if you want an end to grand — and dangerous — concentrations of income and wealth, pinch yourself. We have entered a new political moment. Egalitarians have suddenly seized the policy momentum. They have forced onto the nation’s political center stage initiatives for shearing the ultra rich down to democratic size that no major elected leader in America would have dared propose only a year ago. Maybe even a few months ago.

This stunning shift began early in January when Rep. Alexandria Olivia-Cortez from New York proposed a new 70 percent tax rate on income over $10 million.

Senator Elizabeth Warren from Massachusetts, in quick order, then put on the table a “wealth tax” on the grand fortunes of America’s richest 75,000 households. Warren, an announced prime-time candidate for the 2020 Democratic Party presidential nomination, called for a 2 percent federal levy on personal assets over $50 million and a 3 percent wealth tax rate on fortune over $1 billion.

This week, just before month’s end, still another stunning proposal: Senator Bernie Sanders from Vermont, another likely — and leading — 2020 presidential candidate, urged a 77 percent tax on the value of estates left behind at death over $1 billion.

These three new proposals, each one far bolder than the conventional political wisdom has deemed acceptable over recent decades, did attract some assorted jeers and ridicule. But, more significantly, the three proposals drew widespread public — and even pundit — support.

How much support?

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A Billionaire with a Truly Bottom-Line Moral Code

Sam Pizzigati

Sam Pizzigati Editor, Too Much online magazine

Some advice for billionaire investment fund manager Tom Barrack: Don’t give any more lectures on morality. Last Tuesday, this long-time Donald Trump pal — and chairman of his inauguration — did a bit too much moralizing. Speaking in Abu Dhabi, Barrack called the hand-wringing over Saudi crown prince Mohammed bin Salman’s role in the savage murder of Washington Post columnist Jamal Khashoggi “a mistake.” After all, he noted, “we have a young man and a regime that’s trying to push themselves into 2030.” We ought not, Barrack added, try “to dictate” the Saudi “moral code.” The pushback would be quick and massive. On Wednesday, Barrack apologized, but didn’t, news reports noted, “retract praise for the crown prince.” One possible reason: Barrack’s investment fund has tanked of late, its share price down by over half. Barrack has raised over $1.5 billion in bailout aid from Saudi Arabia and the UAE. He may be hoping for still more.

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Union Matters

Higher Taxes & Broken Promises

From the AFL-CIO

While many Americans are frustrated by smaller refunds this Tax Day, major corporations like AT&T are celebrating billions in massive giveaways, courtesy of the Tax Cuts and Jobs Act.  

The tax bill, which was signed into law in 2017, dramatically cut the corporate rate tax from 35% to 21%. This led AT&T’s CEO to vow that the company would create at least 7,000 jobs.

Instead, AT&T has eliminated more than 12,000 jobs since the law took effect.

At the same time, the corporation’s annual report shows the company increased executive pay and suggests that after refunds, it paid no cash income taxes in 2018.

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A Moral Imperative

A Moral Imperative