IPS report documents missing millions as Massachusetts state legislature fails to act on Boston’s luxury transfer tax.
Take all that post-election commentary about foolish billionaires and wasted millions in political contributions with a grain of salt. Our billionaires don’t have to actually win on Election Day to get their way.
We’ll never know exactly how much America’s super rich pumped into the 2012 elections. Hundreds of millions in “dark money” — contributions laundered through hyper-politicized nonprofits like the U.S. Chamber of Commerce — will forever remain untraceable.
Even so, we do know that hundreds of billionaires and mega millionaires spent at incredibly extravagant levels on 2012 election campaigns. Las Vegas casino magnate Sheldon Adelson appears to have spent at least $53 million. The notoriously right-wing Koch brothers likely spent even more.
The prime targets of this super-rich cash offensive, from President Obama on down, almost all seem to have survived quite nicely on Election Day. In race after race, candidates that super-rich conservatives opposed swept to victory.
These super rich themselves are now coming across, in the election wake, as a cast of rather pathetic characters, as egotistical political dilettantes and rigid ideologues unable to make rational political calculations.
Who ever thought, marvels Washington Post analyst Steven Pearlstein, that businessmen would be “even worse at making political investments than politicians are in making business investments.”[pullquote]The super rich are now coming across as egotistical political dilettantes and rigid ideologues unable to make rational political calculations.[/pullquote]
This image of bumbling billionaires no doubt comforts many mainstream pundits. Our democracy has triumphed, their emerging narrative goes. We don’t have to worry about our super rich. All their billions can’t buy victory at the ballot box.
But our super rich didn’t bumble — or waste away — anything in 2012. Ideology didn’t blind them. Self-interest drove them. They behaved rationally.
All investments involve some level of risk. Wise investors balance risk and reward. The political investment the right-wing super rich made in this year’s elections involved little risk — and promised substantial reward.
Let’s examine, as an example, the political calculus for a deep pocket with a $1 billion fortune and $100 million in annual income. Let’s assume that our billionaire pays federal taxes on this income at a 14 percent actual rate, the same rate that Mitt Romney paid on his 2011 income, after exploiting various tax loopholes.
After federal taxes, our billionaire would be left with $86 million in annual income. In 2012, this billionaire could have spent $10 million on political contributions and still ended the year with a higher personal net worth than he had when the year began. In other words, that $10 million would hardly represent much of a risk.
And the potential reward? Consider the tax implications alone.
Candidate Mitt Romney pledged that he would repeal Obamacare. Much of the Obamacare funding comes from new taxes on the rich, a 0.9 percent payroll tax on ordinary income that couples pull in over $250,000 and a 3.8 percent tax on capital gains, dividend, and interest income over that same threshold.[pullquote]The political investment the right-wing super rich made in this year’s elections involved little risk — and promised substantial reward.[/pullquote]
President Obama also campaigned on a pledge to let the Bush tax cuts for wealthy households expire, a move that would hike the top marginal income tax rate on ordinary income from 35 to 39.6 percent and the core tax on capital gains from 15 to 20 percent. A Romney victory would have prevented these increases.
Just the tax savings alone from a Romney victory would have saved our billionaire, in just one year, his entire $10 million in 2012 political contributions. Quite a reward, a most satisfying return on investment.
But candidate Mitt Romney, of course, lost his White House bid. Does that make our billionaire’s $10 million investment to elect him a total waste? Absolutely not. Even without a Romney victory, our billionaire’s investment will pay dividends for years to come.
Here’s why. All those millions super rich right-wingers pour into politics force the candidates they target, if they want to remain electorally competitive, to go out and aggressively cultivate their own deep-pocket sources of campaign cash.
The more cash these targeted candidates need to raise to remain competitive, the greater the pressure on them to push a political agenda that an appreciable number of affluent deep pockets will find appealing.
This inexorable dynamic may help explain why President Obama isn’t proposing to restore taxes on America’s super rich to their pre-Ronald Reagan levels. The President is only asking the rich, as ne noted repeatedly on the campaign trail, to pay a “little more.”
If President Obama wins all the tax increases on the rich he has proposed — and the new Obamacare taxes on the rich stay in place — America’s super rich will still be paying taxes at less than half the rate that our richest faced back in the 1950s, under Republican President Dwight D. Eisenhower.
So right-wing billionaires like Sheldon Adelson are essentially winning, even when they lose on Election Day. Their hundreds of millions in political contributions are distorting our national political discourse — and keeping real change off the table.
Our conservative billionaires, in short, only look crazy. They’re actually behaving, given their long-term goals, quite sensibly. We have to behave sensibly, too, and start fighting to trim their colossal fortunes down much closer to democratic size.
Sam Pizzigati’s latest book, The Rich Don’t Always Win: The Forgotten Triumph over Plutocracy that Created the American Middle Class (Seven Stories Press), will appear later this month.