News Journal: Billionaire class threatens our democracy
Oxfam International just released a report based on research from Credit Suisse, the Swiss financial services company, and the Forbes annual list of the “500 richest people in the world.” In March 2014, the top 80 individuals on that list had the same amount of wealth as the 3.6 billion poorest people on earth. Just four years earlier, it took 388 billionaires to accomplish the same result. Oxfam projects that when 2016 data is available, it will show that the world’s richest 1 percent will have more total wealth than the remaining 99 percent.
I thought that kind of income inequality had important political ramifications, but not to worry, said C.L. Lewis in a recent column in this newspaper. “Forbes Magazine reports there were 536 billionaires in the United States in 2015,’ he wrote, “but the notion that they constitute a ‘class,’ in the sense of an economically self-interested group that acts as a political unit, is a figment of [Democratic presidential candidate Bernie] Sanders ideology, or demonology.”
Mr. Lewis buttressed his argument by noting that billionaire George Soros gives millions to Democrats and billionaire Warren Buffet supports Hillary Clinton, but the old saw about the exceptions proving the rule nevertheless rings true. And Mr. Lewis did finally concede, “Fair enough: Many, if not most, billionaires do, indeed, back conservative, pro-business candidates and causes.”
That sure sounds like a class to me. Are the Koch brothers “an economically self-interested group that acts as a political unit?” Unleashed by the 2009 Citizens United decision, they sure are. They spent at least 400 million dollars in 2012, and plan to spend at least 900 billion in 2016. That is $200 million more than the Republican National Committee and the two Republican Campaign committees combined spent in 2012. Even if you agree with them, that kind of unrestrained monetary influence by two people is certainly not a figment of anyone’s ideology.
The Koch brothers have a lot of billionaire company. In the first four weeks of Ted Cruz’s campaign, a billionaire named Robert Mercer was mainly responsible for $31 million in super PAC backing for the senator’s campaign. How much has he spent since? No one knows. When presidential candidates flock to Nevada for what has become known as the “Adelson Primary” (vying for support from billionaire casino owner Sheldon Adelson), should we not worry about the influence of the billionaire class in our politics?
There is no secret about the one thing most billionaires want from politicians: Keep our taxes low. And they are willing to spend hundreds of millions of dollars on super PACS, lobbying, and PR campaigns to accomplish that. Led by heirs to the Sam Walton fortune (numbers 9, 10, 13 and 14 on the Forbes American list), the PR campaign that over a period of years transformed the estate tax into the ominous “death tax” was wildly successful. Today, only 1.5 out of every 1,000 estates owe any tax at all. And the Center on Budget and Policy Priorities reports that “among the 3,780 estates nationwide that owed any estate tax in 2013, the effective tax rate…was 16.6 percent, on average…far below the top statutory rate of 40 percent.” Why? Loopholes and the fact that capital gains held at death are not subject to any income tax at all.
The recent budget bill forced through Congress includes all kinds of tax breaks for billionaires. And of course it did nothing to correct the giant loophole that allows hedge fund managers to pay only slightly more than 20 percent on their “carried interest” income.
“Two decades ago,” the New York Times reported last month, “the 400 highest-earning taxpayers in America paid nearly 27 percent of their income in federal taxes, according to IRS data. By 2012, that figure had fallen to less than 17 percent, which is just slightly more than the typical family making $100,000 annually, when payroll taxes are included for both groups.”
Are income inequality and the unrestrained political spending of billionaires legitimate issues in the 2016 elections? I disagree with Mr. Lewis; they are. So too is the steady decline of the middle class, throughout American history the bulwark of social stability.
I believe that rising income inequality combined with the Supreme Court’s Citizens United decision has resulted in a toxic mix that threatens our democracy.
Ted Kaufman is a former U.S. Senator from Delaware.