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Sam Pizzigati
Published: Monday 19 March 2012
“Austerity budgets are spreading everywhere, but wealth, new data show, has become more concentrated at the global economic summit than ever before.”

Should The Billionaire Club Start Paying Dues?

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Forbes magazine started tracking America’s 400 richest on an annual basis back in 1982.  Five years later Forbes started annually counting billionaires — on a global basis.  Earlier this month, this global list celebrated its 25th anniversary.

In one sense, not much has changed over those 25 years.  On the first Forbes global billionaire list in 1987, the United States led the ultra-rich pack.  That still remains the basic story.  In fact, Americans now make up an even greater share of the world’s billionaire population than they did a quarter-century ago.

In 1987, 41 of the 140 billionaires that Forbes spotted — 29 percent of the deepest-pocket total — hailed from the United States.  Americans now account for 35 percent of the global total.  They make up 425 of the world’s richest 1,226.

These richest of the rich, the Forbes data also show, have never been richer.  They now hold $4.6 trillion in combined net worth.  The combined net worth of the global super rich in the original Forbes billionaires list: only $295 billion.

Forbes had 50 staffers working on this year’s billionaire tally.  Those researchers totaled up individual super-rich holdings in publicly traded and privately held businesses, financial investments, real estate, yachts, art, and just plain cash.

But one wealth management company founded by former Forbes researchers, the Singapore-based Wealth-X, is charging that the new Forbes numbers actually understate the wealth of the world’s wealthiest.  Wealth-X research puts the global billionaire total at nearly 2,500, twice the Forbes count.

Researchers at Bloomberg BusinessWeek also believes that Forbes is missing a significant chunk of super-rich wealth.  A limited investigation by the magazine has found eight billionaires who don't appear on the new Forbes list.

Why such uncertainty over the wealth of the super wealthy?  At the root of the counting confusion: Governments, by and large, don’t keep track of how much wealth individual wealthy people hold.  They don’t keep official track of the wealth of the wealthy for one simple reason: They don’t tax it.

Governments, by contrast, do tax the wealth of the middle class.  Most middle class wealth comes from home ownership.  Homes face property taxes.

The super rich certainly do pay property taxes as well.  But homes make up just a minor share of their net worth.  The vast bulk of the assets the really rich hold — their investment, jewels, and yachts — goes tax-free.  And these assets are going tax-free at the same time that governments worldwide are adopting austerity budgets that are destroying jobs and futures for families of modest means.

Hundreds of billions in untaxed wealth.  Hundreds of billions in budget cuts. Perceptive people worldwide are beginning to notice. And they're beginning, in one nation after another, to start pushing the notion of taxing wealth. All wealth.

Last week, for instance, former U.S. secretary of labor Robert Reich noted that America’s 400 richest “have more wealth than the bottom 150 million Americans put together” and called for a new tax levy on grand fortune.

“Let Santorum and Romney duke it out for who will cut taxes on the wealthy the most and shred the public services everyone else depends on,” Reich urged. “The rest of us ought to be having a serious discussion about a wealth tax.”

Wealth taxes do already exist on an isolated basis.  Several European countries have had wealth taxes on the books for years.  Norway levies a 1.1 percent tax on assessed assets over a basic threshold, and about 17 percent of Norway’s adult population currently has some wealth tax liability.

Most other existing wealth taxes run under 1 percent.  The new push for wealth taxes now emerging is calling for higher rates.  In the United States, Yale law profs Bruce Ackerman and Anne Alstott proposed an annual 2 percent tax on the nation’s richest 0.5 percent, households worth over $7.2 million.

“Rather than draconian cuts to Medicaid or Medicare,” Ackerman and Alstott ask, “why not a wealth tax?”

From Stanford University, the conservative economist Ronald McKinnon is making a similar push.  In a Wall Street Journal op-ed this past January, McKinnon called for an annual 3 percent tax on wealth over $3 million, a level that would touch less than 5 percent of the nation’s population.

Elsewhere in the world, wealth tax advocates are pointing to the global economic emergency all around us and demanding even more substantial action — in the form of a one-time, high-rate tax on assets.

Inequality, notes British income analyst Stewart Lansley, is choking off economic recovery.  Average consumers in the United States, he notes, would have nearly $800 billion more in their pockets today if they were still earning the same share of the nation’s income they earned in the late 1970s.

“With the national cake so unevenly divided,” Lansley notes, “consumers have been denied the means to help revive the economy.”

A wealth tax, analysts like Lansley believe, would raise the revenue necessary to give stagnant economies the stimulus that consumers cannot.  Just how high should a one-time, economic emergency tax on the assets of the wealthy go?

The CEO at EFG Hermes, the Middle East’s most important investment bank, last fall urged a one-time “global wealth tax” of 10 to 20 percent on individuals with net worth over $10 million.  Receipts from this new levy, EFG Hermes exec Hassan Heikal proposes, would go to each wealth taxpayer’s country of citizenship.

Such a levy, says EFG Hermes CEO Heikal, would touch less than 0.01 of the world’s population and raise — at a 10 percent rate level — about $5 trillion.  Europe, Heikal notes, would pocket from this wealth tax “more than enough to deal with the European public debt crisis.”  Developing nations would be able to reduce their public debt and “reinvest in infrastructure, research, and other means of energizing labor markets.”

And the United States, he points out, would have budget “room to breathe” — and be better able to help fuel global economic recovery.

“If we are really serious about getting out of the current crisis,” concludes CEO Heikal, “the rich should pay their dues.”

This dues paying, adds Hofstra University legal scholar Leon Friedman, may have to continue for the next five to ten years, “until our financial health improves.”  Friedman supports a simple 1 percent tax on America’s top 1 percent.

“In the face of the nation's stark financial problems, our richest Americans can afford this modest diminution of their wealth,” he observes.  “And they certainly would have no right to complain, since it was previous government actions that enabled them to accumulate it.”



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ABOUT Sam Pizzigati

 

Veteran labor journalist Sam Pizzigati, an Institute for Policy Studies associate fellow, edits Too Much, the Institute's online weekly on excess and inequality. His latest book: The Rich Don’t Always Win: The Forgotten Triumph over Plutocracy that Created the American Middle Class, 1900-1970 (Seven Stories Press, November 2012).

The rich were always ruling

The rich were always ruling the world. Relative prosperity of the middle class is a new phenomena that started with industrial revolution in which labor movement combined with productivity increased the incomes of the working people and created more prosperous and just society.

Unfortunately allowing large corporations to purchase our political system had led to large inequalities similar to robber barrons heartless rules, which were eliminated by Roosevelt administration and threat of communism. Now that Communism had proven to be unable to feed its people and had reverted to old fashioned catch-as-catch capitalism and consumerism, wer are paying for greed and lack of checks and balances.

We need to re-establish free markets which level the playing fied rather then favoring those with money. We also need to stop worshiping money as God, which had led to consumers not paying attention what the politicians are doing. The occupy people should be participating daily as local governments and their decisions if they want to be more than just hot air.

We have to demand that

We have to demand that Congress Change the Tax Code to include the rich and the super rich. In 1938 we had 33 tax brackets to cover all classes of income. These tax brackets ranged from 4% for all income up to $64,000. (which would cover most of the population since nobody is earning raises these days) all the way up to 79% for income over $79,Million. Now that is what I call Fair and Balanced". "Tax Em Like 1938" is my battle cry. God Bless the 99%.

Where's the creativity we

Where's the creativity we need to solve these problems? Maybe it would be easier to pass a bill for higher taxes for the wealthy if there could be a deduction for the purchase of automobiles or other high price goods. It would help the economy and replenish a bit of the money lost to taxes to those who can afford these goods.

Sam is a tireless reporter on

Sam is a tireless reporter on the subject of wealth and income inequality. He finds the facts, and reports on them fairly and objectively. He's the best in the business.

We need to frame these

We need to frame these conservative bastions and corporate raiders as hoarders and dumpster divers, since the hoard the nations good will,its goods, its services and most of all our ability to live on a paycheck, while at the same time they dive into our men's, women's and children's lives to restrict deny and extract our private habits and outsource and market them to the highest bidder

The filthy rich plutocrats

The filthy rich plutocrats will be charging obscene prices for guillotines, torches, and pitchforks, none of which were manufactured in this country or by union labor in a foreign country.

The stupendous wealth of the

The stupendous wealth of the Rothschild tribe and some other closely held vast private fortunes likely in the high trillions, were they known, would make that Forbes bunch look not so rich, but more likely to face the guillotine.

Since they've stolen that

Since they've stolen that "wealth" from us and our progeny and our Mother Earth...

I'd have to say YES...

But, I concur that we may have to resort to the guillotine, torches and pitchforks.

It is probably too late for

It is probably too late for that. Throughout history, when the super rich (super powerful) emerge as the ruling class, they wield too much power to get the job done. Then you have to resort to the guillotine, torches and pitchforks.

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