The Koch Brothers Are Now Worth an Obscene $100 Billion -- And They Are Using That Fortune to Destroy Our Society
17 April 2014
On Wednesday, Charles and David Koch - the Koch Brothers - reached a new personal milestone.
According to the Bloomberg Billionaires Index, they now have a total net worth of around $100 billion.
That means that if the Kochs were counted as a single person, they would be the single richest person in the entire world. It also means that they control two million times the amount of wealth that the average American takes home every year.
That, of course raises the question: Just what exactly do the Kochs do with all that money?
Well, for one, they spend a lot of it trying to help Republicans win elections. The Koch-backed group Americans for Prosperity, for example, has already spent $22 million on television ads this election cycle, outpacing all other Republican groups combined.
The fact that super-rich tycoons like the Kochs could have such a huge role in our political system would have terrified our most famous Founding Father, Thomas Jefferson. He laid out his thoughts about the dangerous role of money in politics in an 1816 letter to Samuel Kercheval, nothing that,
Those seeking profits, were they given total freedom, would not be the ones to trust to keep government pure and our rights secure. Indeed, it has always been those seeking wealth who were the source of corruption in government.
But the problem with the Koch Brothers isn’t just that they use their money to corrupt the political system. Ultimately, the biggest problem with the Koch Brothers and every other billionaire in the United States and around the world is that they’re billionaires and thus, by definition, have more money than they can ever hope to use.
This has devastating consequences for the economy.
Think of it this way. The average person making, say, $50,000 a year (the median income in the U.S.) puts almost their entire salary back into the economy by spending it on things like groceries, consumer goods, food, and transportation. This creates demand, which, in turn, stimulates the economy and helps it grow.
Billionaires like the Koch Brothers, however, don’t behave the same way as everyday people do with all the money they make.
Because it’s so easy for billionaires to make ends meet, they end up having millions of dollars leftover every day after buying their groceries and paying their mortgage (if they even have one). And instead of spending all that extra money on productive things that stimulate the economy, they throw it into the Wall Street casino or stash it in Swiss bank accounts. This robs the productive economy of trillions of dollars worth of demand that could be building a vibranteconomyand stabilizingthe lives of working people and small business owners.
We’ve seen over the past 30-plus years what kind of impact this can have on an economy. Since the Reagan Revolution, even as workers have become far more productive, they’ve received less and less compensation for what they create. Meanwhile, income levels for the top one percent have ballooned.
Why has this happened? Easy - the billionaires have used low marginal tax rates, lax labor laws, and so-called free trade deals to suck an ever increasing amount of money out of the productive economy and into their Swiss bank accounts. They’re hoarders - not job creators, and as result, our country now looks more like a banana republic than the land of opportunity.
The problem of what to do with the excess wealth of the super-rich has perplexed lawmakers and policy makers since the very founding of our Republic.
One solution that many countries use is a wealth tax. A wealth tax takes the wildly excessive money out of the hands of the unproductive super-rich and puts it back into the hands of the productive middle and working classes. The same is true of the estate tax.
Thomas Jefferson proposed such an idea in an 1816 letter to Joseph Milligan, writing that, "If the overgrown wealth of an individual be deemed dangerous to the State, the best corrective is the law of equal inheritance to all in equal degree.”
And it’s not like a wealth tax is some wildly radical idea, either. Economist Ronald McKinnon made the “conservative case” for a wealth tax in a 2012 Wall Street Journal editorial.
Even Donald Trump has, in the past, spoken out in favor of some form of national wealth tax. In 1999, he proposed a 14.25 percent tax on the wealth of all people holding $10 million or more that could be used to pay off the national debt.
I’m not as worried about the debt as the Donald is, but I do think a national wealth tax is a great idea. I think we should impose a 100 percent tax on all wealth over $1 billion. The money made from that tax could then be redistributed to average working people. Those working people would then spend that money and stimulate demand, which would help grow the economy.
And at the same time, taxing the billionaires would also go a long way towards breaking up big monopolies. This would, in turn make room for small, local businesses to grow and prosper. It’s all part of one big virtuous cycle.
Of course, right-wingers would probably say that such a wealth tax would “hurt job creators” and “kill innovation.” But those arguments don’t really meet much scrutiny. After all, we’ve been letting the billionaires hoard their wealth for three decades now and they’ve used that opportunity to bleed the middle class dry.
On the other hand, during the time of America's highest income and inheritance taxes, we also had the strongest economy in our history. And when trust-busters from Teddy Roosevelt to Nixon and Carter broke up Standard Oil and AT&T, the result was an explosion of innovation, competition, and an actual increase in shareholder wealth.
It’s time to give the real job creators - working and middle class Americans - a chance to invest in the economy. And the only way to do that is by banning billionaires. You can find more information at www.nobillionaires.com.