History doesn’t repeat itself, but sometimes, as the old saw goes, it rhymes.
Take this year’s Forbes 400. If you listen close enough, you can hear echoes of the first Forbes list back in 1982 — you just have to turn it up about 100 notches.
Back in 1982, with Reaganomics in its infancy, the first Forbes list of America’s ultra-wealthy had just 13 billionaires on top. The two richest of these billionaires, Daniel Ludwig and Gordon Getty, held personal fortunes estimated in the $2 billion range. The other 11 billionaires on that first annual Forbes list clustered together at the $1 billion level.
Multiply that 1982 billionaire breakdown by 100 and you’d have something awfully close to the present list.
The nine current wealthiest Americans today — all white men — each hold a net worth above or rapidly approaching the $100 billion mark. Two of these “hectobillionaires,” Jeff Bezos and Elon Musk, hold around $200 billion.
To what do we owe this awesome increase in billionaire fortune?
The substantial increase in America’s national wealth since 1982 partially explains it. But our nation’s total combined wealth has only jumped about ten-fold since 1982, from under $10 trillion then to a little over $100 trillion today. That increase pales in comparison to the 100-fold increase in the wealth of those at America’s economic summit.
With fortunes well into the billions passing virtually tax-free from one generation to the next, the era of trillionaire trust fund babies is fast approaching.
This giant leap at our economic summit should worry us, especially once we start contemplating how a future verse of the Forbes list might sound.
A generation from now, if current rates of wealth concentration continue, we may have to turn the volume up a thousand times over 1982 levels to hear the Forbes list rhyme. The 1982 $1 billion standard will have become $1 trillion.
That future would rhyme with 1982 on another more insidious level as well. Back in 1982, almost all the grand fortunes on the initial Forbes list came largely as inherited hand-me-downs. Only two billionaires on the 1982 list, Daniel Ludwig and David Packard, could claim anything resembling “self-made” status.
But inheritors of grand fortune, if current trends continue, will soon be regaining their privileged place at America’s economic pinnacle.
Over recent decades, Republicans have hollowed out our estate and gift tax laws. Their legislating has allowed tax avoidance planners to effortlessly pass billions from one generation to the next — and often to the next generation after that — without incurring tax liabilities.
One former Donald Trump economic adviser, Gary Cohn, infamously noted that “only morons pay estate tax.” We can condemn Cohn’s disparagement of wealthy Americans who choose not to engage in tax avoidance, but we can’t challenge his basic point: In the United States today, the estate tax has become essentially a voluntary levy.
Shady operators like the late Jeffrey Epstein got rich themselves, the New York Times has detailed, by exploiting trusts to shelter billions in their clients’ wealth from estate and gift taxes.
In 2013, the Washington Post reports, the now deceased Sheldon Adelson used similar maneuvers to avoid gift taxes on his transfer of $7.9 billion in trust to his children.
And the Forbes listing of the Mars family’s wealth, the Institute for Policy Studies has noted, indicates that two generations of Mars family grandees have now successfully done an end run around the federal estate tax.
With fortunes well into the billions passing virtually tax-free from one generation to the next, the era of trillionaire trust fund babies is fast approaching. Our leaders could prevent that era. All they need would be the courage to reform our broken estate and gift tax system.