Americans, Don’t Get Duped
Seeking primarily to dethrone Trump, the rich’s proposed wealth tax is unlikely to radically alter massive wealth inequality
Recently, a small group of ultra-wealthy individuals, including Chris Hughes, the co-founder of Facebook, has issued a missive asking the American government to increase their taxes.
Eli Broad, an American billionaire, in The New York Times op-ed, also joined in the public relations campaign, writing:
I simply believe it’s time for those of us with great wealth to commit to reducing income inequality, starting with the demand to be taxed at a higher rate than everyone else.
But this effort by the ultra-wealthy raises some questions: What about taxing overseas assets; why not simply close existing tax loopholes or prosecute tax evaders; how genuine is this call to reduce wealth inequality in America; how much would this wealth tax is supposed to generate in additional tax revenue.
According to the Financial Times, the billionaires seem to support Democratic candidate Elizabeth Warren’s wealth tax proposal, which would bring in an estimated $2.75–3 trillion over 10 years. Let’s say we are optimistic and it is $3 trillion which comes out to be $300 billion per year in additional tax revenue. The working age (15–65) population of the US is about 200 million. The math is highly stylistic: $300 billion divided by 200 million workers is $1,500 dollars per person, which is a sizable tax break for most Americans. This is like Southeast Asian politicians buying votes with cash. While most Americans get a small sum of money, massive wealth inequality will likely to continue unabated.
But this is the best case scenario, in which our government can efficiently and effectively return the tax money to us in meaningful ways and not captured some private sector middleman.
The sincerity of this proposed wealth tax is further called in question when we consider the existing tax code. The industry of tax professionals and their high salaries seem to indicate that the tax code is extremely complex and full of loopholes. The complexity can only exploited by those with extreme wealth because it is they who have the means to pay smart and highly educated people to help them pay as little taxes as possible.
But if the spirit of economic equality already resides in the tax code, then it is not so much about changing the law but it is about enforcement. The federal government simply cannot, perhaps underfunded, or not willing to commit the resources to prosecute the truly rich tax evaders. If the US government has the coercive apparatus to place economic sanctions on sovereign countries like Iran and China and pursue arrests of foreign nationals, then surely it has the capacity to reign in its own citizens if it wants to. The US government can further enforce the tax code by demanding that popular offshore tax havens like the Cayman Islands to behave in the interests of the American people. Like when the US invaded Grenada in 1983, it could declare the Cayman a threat to the American republic and send in a few thousand US Marines to occupy the islands and demand the end of banking secrecy. But this has not been done for obvious reasons. Messrs. Broad and Hughes already know this. On their staff are already highly-compensated tax lawyers, accountants and financial wealth advisors. They understand the impact of this proposed wealth tax more than anyone, including the US government.
Responding to the rising anxiety among young people regarding the legitimacy of the American state, Broad and allies are demonstrating canny tactical efforts to counteract this movement. They are, so to speak, passing the ball to the government and asking them to do its job. But they know the government has not been able to do its job because there are people, who are running the agencies inside the government, sympathetic to the interests of the ultra-wealthy. While the federal budget is bloated in general, the government is underfunded in critical areas — education, infrastructure, health care, tax enforcement — areas that really matter to most Americans.
Therefore, the recent stuff of a wealth tax is no more than a public relations campaign. If the wealth tax proposed by our billionaires is not meant to radically alter massive wealth inequality, then one wonders what is its purpose. It seems to me that Broad and Hughes hope to dethrone Trump rather than to genuinely close the wealth gap between them and everyone else. Businesses do not like uncertainty and the mercurial Trump has shown anything but certainty. Even The Wall Street Journal, the premier mouthpiece for big business, allowed an op-ed by Bernie Sanders, in which the Senator criticizes the President for using “the government power and taxpayer resources to enrich Mr. Trump and his billionaire friends.” This is an oligarchic feud. After Trump is defeated, I’m afraid it will be back to business as usual. Not too long ago in 2017, we had a tax cut for the wealthy and corporations, though no billionaires publicly spoke against that policy. We saw corporations used the money to make their managers and investors richer by buying back stocks. This was a part of the effort of the ultra-wealthy to further separate themselves from everyone else.
The massive wealth inequality in America forces ordinary people to question the legitimacy of their economic system and whether the wealth accumulated by the ultra-wealthy is earned. While most Americans have not reached the conclusion that the wealth has been an act of theft, they are frustrated at their opportunities to achieve a life of economic dignity. When a single person like Jeff Bezos has amassed a fortune equal to those of some small and medium-sized countries, the average American begins to question whether one man or a group of men and women have too much wealth that they corrupt the ability of everyone to live a good life.
And can the majority of the American public imagine themselves achieving what Broad and Hughes have achieved in terms of material wealth? They are no doubt smart and ambitious. In fact, wealth inequality is normal in many societies, including those of the past and present. Men and women are born unequal, in terms of talent and luck, and thus should have some unequal wealth and income. But how much economic inequality is fair?
In 2012 when Hughes spent just a fraction of his wealth to purchase The New Republic for a reported $2.1 million and used it as a pet project, what chance does the average writers or journalists or aspiring publishers have to pursue their own vision? For many Americans, this sum, if they’re lucky, is what they would make in their lifetime. We are asked to be “practical” and work as computer programmers, financial analysts or corporate lawyers. But we are actually being asked to sell our soul and dream to make ends meet. How can a society be fair if her artists, broadly speaking, cannot become artists? Instead of novelists, musicians, actors, and teachers, we have extremely well-paid corporate workers, working day and night to look for hidden tax loopholes that would save their rich clients some money that they do not need.
Focusing on the big picture, it is not just about Broad and Hughes or any individual billionaires, but it is about our unfair economic system. The fact is that the proposed wealth tax, even if it is implemented successfully, will not change the social relations between many of us and the ultra-wealthy. Through their wealth, they would still wield disproportional power over us and our society. Today, to get rid of Trump and his billionaire cronies they are offering a small concession. After Trump is gone, who or what is to stop them from rewriting the tax law. At the material level, Broad and Hughes have more in common with Trump that any of us will ever have.
