6 Noxious Facts About America's Billionaires
When Facebook founder Mark Zuckerberg announced this week that he will give away 99 percent of his personal fortune—now estimated at $44 billion—during his lifetime, he was lauded in newspapers and TV broadcasts from coast to coast. But few people noted that giving away his billions will still leave Zuckerberg, his wife Priscilla Chan and newborn daughter Max, with at least $440 million to live on.
Such vast sums of money are unimaginable to most of us. But according to a just-released report, "Billionaire Bonanza: The Forbes 400 and the Rest of Us," by the Institute for Policy Studies, the Facebook founder is merely one of the 400 wealthiest Americans, whose net worth is growing while they evade taxation and drive economic inequality.
“The Forbes 400 provides a useful snapshot of the nation’s wealthiest individuals, an insight into a world most people will never witness firsthand,” the report said, as it lists some incredible comparisons that contrast the vast wealth held by a select few compared to average Americans. “The Forbes 400 also provides an insight into just how lopsided our economy has become: Just 400 people hold as much wealth as over 190 million.”
Consider the following six bullet points from the report. The authors state they “believe that these statistics actually underestimate our current national levels of wealth concentration,” because, “the growing use of offshore tax havens and legal trusts has made the concealing of assets much more widespread than ever before.”
- A luxury jet versus half a continent. America’s 20 wealthiest people — a group that could fit comfortably in a single Gulfstream G650 luxury jet – now own more wealth than the bottom half of the American population combined, a total of 152 million people in 57 million households.
- The unbelievable racial wealth gap. The Forbes 400 now own about as much wealth as the nation’s entire African-American population, plus more than a third of the Latino population, combined.
- Blacks still have the least wealth. The wealthiest 100 households now own about as much wealth as the entire African American population in the United States. Among the Forbes 400, just two individuals are African American: Oprah Winfrey and Robert Smith.
- Latinos are barely doing better. The wealthiest 186 members of the Forbes 400 own as much wealth as the entire Latino population. Just five members of the Forbes 400 are Latino: Jorge Perez, Arturo Moreno and three members of the Santo Domingo family.
- Four hundred versus 194 million. With a combined worth of $2.34 trillion, the Forbes 400 own more wealth than the bottom 61 percent of the country combined, a staggering 194 million people.
- Astounding wealth gap. The median American family has a net worth of $81,000. The Forbes 400 own more wealth than 36 million of these typical American families. That’s the number of households in the United States that own cats.
There are many reasons why it's important to track the nation’s richest individuals and the wealth gap between them and average Americans. The authors point out that many of today’s economic insecurities could be lessened if the wealthiest Americans—exemplified by the Forbes 400—paid a fairer share of taxes and were no longer able to use an encylopedia’s worth of federal loopholes that enable them to park their money offshore and exercise disproportionate influence in the political process, from elections to lobbying.
But before delving into their recommendations and policy solutions, the authors explain that simply using the term top 1 percent doesn’t really reveal the true picture of wealth concerntration in America. Nor does focusing on the top one-tenth of the 1 percent.
“The bulge at the top of our wealth ‘space needle’ reflects America’s wealthiest 0.1 percent, the top one-thousandth of our population, an estimated 115,000 households with a net worth starting at $20 million,” they write. “This group owns more than 20 percent of U.S. household wealth, up from 7 percent in the 1970s. This elite subgroup, University of California-Berkeley economist Emmanuel Saez points out, now owns about as much wealth as the bottom 90 percent of America combined.”
Peeling Back Layers of Super Wealth
A look at the wealthiest 400 people in the U.S. provides a better reflection.
“We need to examine our wealthiest 400, a cohort small enough to dine in the rotating luxury restaurant atop the Space Needle in Seattle,” they write. “These 400 all possess fortunes worth at least $1.7 billion. Our wealthiest 400 now have more wealth combined than the bottom 61 percent of the U.S. population, an estimated 70 million households, or 194 million people. That’s more people than the population of Canada and Mexico combined.”
And then there’s the top of the top: the 20 wealthiest individuals in the U.S. “The 20 wealthiest Americans include eight founders of corporations: Bill Gates (Microsoft), Larry Ellison (Oracle), Jeff Bezos (Amazon), Mark Zuckerberg (Facebook), Larry Page and Sergey Brin (Google), Michael Bloomberg (Bloomberg), and Phil Knight (Nike). The list also features nine heirs from families of dynastic wealth: two Koch brothers, four Waltons (Walmart), and three fortunate souls from the Mars candy empire. Rounding out this top 20: investors Warren Buffett and George Soros and casino mogul Sheldon Adelson.”
Of course, there’s a vast racial dimension to wealth gap, which they document.
“Just 400 extremely wealthy individuals — the number of people who could fit into the swanky 21 Club Restaurant in midtown Manhattan — have as much wealth as 16 million African-American households and 5 million Latino households,” they write. “An even more striking stat: The wealthiest 100 members of the Forbes list alone own about as much wealth as the entire African American population of 42 million people.”
You might ask, aren’t there any billionaire blacks and Latinos? “Only two African-Americans, Oprah Winfrey (#211 with $3 billion) and tech investor Robert Smith (#268 with $2.5 billion), currently reside within the Forbes 400,” they note. “The only other African-American billionaire in the United States, Michael Jordan, did not make the $1.7 billion Forbes 400 cut. Jordan’s net worth: $1.3 billion.”
“Five members of the Forbes 400 come from Latino backgrounds,” they continue. “Jorge Perez, the condo king of Miami (#171 with $3.5 billion) and Arturo Moreno, a billboard billionaire and owner of the Los Angeles Angels baseball team (#375 with $1.8 billion). The three remaining Latinos all hail from one family, the U.S. children of the late Colombian beer magnate Julio Mario Santo Domingo, a major shareholder of SABMiller. Alejandro and Andres Santo Domingo sit at #149 on the list with $3.8 billion each, with Julio III at #358 with $1.9 billion.”
Negative Impact on American LIves
Such disproportionate private wealth matters for many reasons, the authors say. First, it corrupts the political system. “Wealthy donors dominate our campaign finance and lawmaking systems, even after efforts at reform,” they write.
It causes bad public health outcomes. “Unequal communities have greater rates of heart disease, asthma, mental illness, cancer, and other morbid illnesses,” they write. “It is well known that poverty contributes to bad health outcomes. But research is showing that you are better off living in a community with a lower standard of living, but greater equality—than living in a community with a higher income, but more extreme inequalities.”
It leads to less cohesion as communities and nations: “We’re becoming more polarized by class and race in terms of where we live,” they note, and that leads to economic instability. “More equal societies have stronger rates of growth, longer economic expansions, and are quicker to recover from economic downturns.”
The solutions must come from government intervention, they emphasize. First, there must be efforts to lift people who are the bottom of the economic ladder out of poverty, such as passing higher minimum wage laws, paid sick leave, early childhood education, universal health insurance, and guaranteed minimum incomes, such as the fast-food worker campaign for a $15 minimum hourly wage.
Then government tax reforms must not only make the wealthy pay a much larger and fairer share, they should repeal the fine-print laws that treat domestic and international business differently, usually conferring advantages to global enterprises. Government must also adopt stronger anti-monopoly policies, enforce anti-trust laws and close off the escape routes and tax dodges that enable individuals and corporations to park multi-billions in assets overseas.
Closing loopholes and adopting progressive tax rates by seriously taxing the wealthiest households would yield significant revenues that could be invested in improving the economic security of all Americans, such as offering debt-free college and universities, restructured student loans with no interest, affordable housing, and improving access and benefits to safety net programs.
As the 2016 presidential campaign continues and the candidates, especially the Democrats, cite many of the issues raised by this report, it is worth taking note of what solutions are being proposed and how they would be financed. The Billionaire Bonanza report underscores that the money is there to improve the livelihoods and economic security of average Americans—without leaving the super-super-rich anywhere near the poorhouse.
After all, if the Zuckerbergs can pledge to give away 99 percent of their fortune in their lifetimes and still be left with at least $440 million to get by, other slightly less rich billionaires would likely find their lifestyles hardly dented.