How we can prevent the wealthiest of our wealthy from exempting virtually unlimited billions from tax.
You don’t hear much about millionaires these days in America. Which makes some sense. Add up all our nation’s personal wealth, divide by our number of people, and we have an average wealth per person in the United States today of about $300,000. At that average, a family of three worth a million dollars turns out to be barely better off than any family of three would be if our country’s wealth were spread perfectly even.
America’s wealth, of course, doesn’t spread anything close to even. Roughly half our households have no more than $100,000 in net worth, and most of these households have considerably less. Many millions of households have no wealth at all.
So millionaires, overall, still rate as something out of the ordinary. But not all that much out of the ordinary. Over 10 million American households currently hold net worths over $1 million. Millionaires in the United States clearly no longer belong to an exclusive club.
Neither, in a way, do billionaires. Back in 1982, the debut year of the annual Forbes 400 list of America’s richest, the United States hosted just 13 billionaires. In a country of 200 million, these 13 deep pockets made for an ultra-exclusive club.
Our current billionaire population? A recent Institute for Policy Studies report counted 643 American billionaires. This billionaire total does bounce a bit daily as the stock market fluctuates, but the trend line has been consistent. If that line continues, America will soon be home to 1,000 billionaires. Billionaire status will have almost become ho-hum.
And that rates as a remarkable development. A billion dollars, we need to remind ourselves, amounts to an almost unimaginable level of fortune. Suppose someone who sailed with Columbus over 500 years ago had started saving $5,000 per day on the way to the New World. That person, if alive and still saving here in the 21st century, would not yet have put away a billion dollars.
Despite this enormity of billion-dollar-fortunes, we have more billionaires in the United States today than professional golfers with PGA tour cards. How zany has our reality become? A billion dollars won’t get you a PGA tour card, but a PGA tour card might get you a billion dollars. Tiger Woods has earned over $1.4 billion since turning pro and at last count sported a net worth of $800 million. From playing golf.
We have more billionaires in the United States today than professional golfers with PGA tour cards.
Tiger, statistically speaking, has almost become a billionaire. But Tiger, culturally speaking, hasn’t yet entered the ranks of the super rich. A mere $1 billion no longer brings the status that the term billionaire once bestowed. To gain today’s super-rich status, a $1-billion fortune will simply not do. You need to graduate to a higher wealth class. You need to become a decabillionaire and sit on a fortune worth $10 billion.
Americans first reached the decabillionaire milestone in the mid-1990s. Bill Gates topped the 1996 Forbes 400 list with a net worth reported at $18.5 billion, with Warren Buffett close behind at $15 billion. At the time, the pair rated as America’s only decabillionaires. Within a few years, they had company. By 1998, five Americans boasted $12 billion or more in wealth.
Decabillionaire status, back in the 1990s, put you at America’s wealth pinnacle. Not anymore. A $10-billion fortune today merely gets its holder into America’s wealthiest top 50.
Extreme wealth in America now starts at a $100-billion net-worth mark. The wealthiest American, Jeff Bezos, passed that milestone a few years back. At last count, his fortune was sitting at $165 billion. Combine that with his ex-wife’s $54 billion from the same source — Amazon — and the total fortune of the first awesomely affluent Bezos couple exceeds $215 billion.
Bill Gates, the first to reach $10 billion back in the 90s, currently holds a net worth at about $113 billion, but would be worth far more absent his philanthropy. Other oft-mentioned billionaires, including Warren Buffett and Mark Zuckerberg, are approaching “hectobillionaire” — $100 billion — status as well.
Some more context for these numbers: Had Columbus’ ageless sailing buddy been saving a million dollars per day since 1492, or $365 million per year for the past 528 years, his wealth today would fall $20 billion or so short of the $215 billion fortune of the first Mr. and Mrs. Bezos.
Real average Americans, meanwhile, are hanging on by their fingernails. Tens of millions lack sufficient health insurance coverage. Over one in ten live in poverty. A recent New York Times report calculates a same-city life-expectancy difference of 30 years between those born in wealthy neighborhoods and those born in poor neighborhoods.
Those years measure just how unequal America has become. Do Americans see a limit to how unequal we should be? Should billionaires even exist? In the 2020 Democratic primaries, Bernie Sanders argued that wealth’s concentration in the United States had surpassed any level of rationality and had to be reined in. The Democratic Party’s conventional wisdom held that Sanders needed reining in.
In this conventional view, not only should billionaires exist, but hectobillionaires make for no big deal, either.
The next step up from hectobillionaire would be, of course, trillionaire status. Indeed, speculation about when we might see our first trillionaire has already started, and that prospect, USA Today reports, has left ordinary Americans not at all happy.
So we may be welcoming a return to rationality after all. Agree or disagree whether billionaires should exist. Let’s at least agree that trillionaires shouldn’t.
Institute for Policy Studies associate fellow Bob Lord practices tax law in Phoenix.