Billionaires Are ‘Becoming a Problem for the Economy,’ Declares Wall Street Journal Report
Original article by Brad Reed republished from Common Dreams under Creative Commons (CC BY-NC-ND 3.0).
“Debate about how much tax billionaires pay is likely to grow as America’s fiscal situation deteriorates and its wealth gap widens.”
A report published Wednesday by the Rupert Murdoch-owned Wall Street Journal outlined how billionaires’ tax evasion schemes are causing problems for the US economy.
The report, written by London-based columnist Carol Ryan, began by noting how completely the US economy has come to depend on the spending habits of its richest households, whose wealth is primarily tied to the fortunes of the stock market, which “could mean the entire economy pays a steep price in the next market correction.”
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Ryan then walked through some of the plusses and minuses of the wealth tax being debated in the state of California, which has more billionaires than any state in the nation.
Even while personally finding flaws with the California proposal, Ryan said that plans to extract wealth from the super-rich aren’t going away, even if the California tax plan is ultimately defeated.
“Debate about how much tax billionaires pay is likely to grow as America’s fiscal situation deteriorates and its wealth gap widens,” Ryan wrote. “Data from the Federal Reserve shows that only the richest 1% of households have grown their share of overall US wealth since 1990.”
Ryan also broke down how the very richest Americans have tax evasion options that mere multimillionaires don’t have.
“A common strategy is to avoid salaries, which are heavily taxed,” she wrote. “Billionaires prefer to be paid in shares, which are subject to capital-gains taxes when sold. But they don’t need to sell to fund their lifestyles. Billionaires use borrowed money for living expenses, pledging their shares or other assets as collateral.”
Ryan added that “the interest on the debt is much lower than a capital-gains tax bill would be,” and billionaires compound this wealth by passing it off to their children as part of a “buy borrow die” tax avoidance plan.
Boston College law professor Ray Madoff told Ryan that the wealth at the very top has grown so concentrated that even “very well-off Americans with high incomes” are now aligned “much more with the middle class” than in the past.
Ryan’s report isn’t the only one published by the Journal in recent weeks to warn of dangerous levels of US wealth inequality.
Chief Wall Street Journal economics commentator Greg Ip last week posted data showing that corporate profits’ share of gross domestic income is now the highest it has been in more than 40 years, while the share of income paid out in workers’ wages is at the lowest.
“Profits have soared since the pandemic, and the market value attached to those profits even more,” wrote Ip. “The result: Capital, which includes businesses, shareholders, and superstar employees, is triumphant, while the average worker ekes out marginal gains.”
Ip also said that this problem could grow worse if artificial intelligence lives up to its creators’ hype and starts replacing human workers on a mass scale.
In such a scenario, wrote Ip, the “biggest winners” of the economy would be shareholders who, as Ryan explained in her piece, have ample tools to avoid paying taxes.
Original article by Brad Reed republished from Common Dreams under Creative Commons (CC BY-NC-ND 3.0).
