The UK, a nation of food banks and Ferraris, ranks as the world’s sixth-richest economy. Advocates are demanding change.
New study shows striking divide between nation’s wealthiest and the rest of us.
Flipping through the glossy pages of the Forbes 400, it’s easy to get wrapped up in the pomp and circumstance of the nation’s financial titans. While the ads for private jets and five-figure watches may imply an intended audience, only a tiny number of people can afford to buy such products.
In fact, America’s 20 wealthiest people — a group that could fit comfortably in one single Gulfstream G650 luxury jet — now own more wealth than the bottom half of the American population combined, a total of 152 million people in 57 million households.
A new report, Billionaire Bonanza: The Forbes 400 and the Rest of Us, I authored with my colleague, Chuck Collins, outlines the growing gap that exists between the wealthiest households and the rest of the country.
The impact of the annual Forbes list has shifted since the magazine first started keeping track in 1982 during the Reagan Revolution. In 1982, there were only 13 members who were billionaires on the list. Today there are 545 billionaires in the United States and to make the Forbes list requires a minimum fortune of $1.7 billion.
The intended effect of the Forbes ranking today is not abhorrence at the gaudiness of our nation’s wealth hoarders. Instead, we are led to revel at the immense fortunes of our modern economic royalists. The assets of the superrich are tracked like a March Madness college basketball team in contention for the top spot, their life story ranked with a “self-made score”.
The amount of wealth concentrating into so few hands is shocking, even for those who’ve paid close attention to its rise over recent decades. Today’s Forbes 400 own $2.3 trillion in wealth, more than the GDP of India, a country with a population over a billion people.
Meanwhile, the wealth outlook for typical families in the United States has stagnated, with median wealth today at just $81,000. For people of color, the divide is even greater. The median wealth for African-Americans and Latinos is just $11,000 and $13,700 respectively.
How do we begin to bring down this absurd inequality? To reduce the wealth divide, bold action is required of Congress to end the preferential treatment we bestow on today’s wealth hoarders.
Lawmakers must close the tax loopholes and offshore tax havens the wealthy exploit to hide their immense fortunes. Our best estimates of the wealth divide are most likely vastly under-valued considering how much money is hidden offshore in places like the Cayman Islands and Luxembourg.
We should institute a direct tax on immense wealth, an idea popularized by Thomas Piketty in his landmark book Capital in the Twenty-First Century. This would both increase tax fairness and raise significant revenue.
A direct 1 percent tax on the wealth of the richest 1 percent would raise more than $2 trillion over ten years. This increased revenue could be invested in creating wealth-building opportunities for those at the bottom and middle, like affordable housing and debt-free higher education.
Perhaps what’s most needed is a shift in our nation’s views of the obscenely wealthy. The time is past due to acknowledge the gaudiness of hoarding more wealth than one can spend in a dozen lifetimes, beyond any semblance of fairness or balance. Then we can begin the public policy work required to dismantle this wealth concentration and perhaps in doing so start to create a more equal and just society where everyone has access to the opportunity to prosper.
Josh Hoxie directs the Project on Opportunity and Taxation at the Institute for Policy Studies. He, along with his colleague Chuck Collins, is the author of the report Billionaire Bonanza: The Forbes 400 and the Rest of Us. He can be reached at Josh@ips-dc.org.