A few weeks ago, I was having breakfast with my son and my nine-year-old grandson, Simon. Simon would pause from eating to work on a math problem with his dad, multiplying 2 three-digit numbers. Watching this prompted me to ask Simon about jellybeans, true story.
“Simon, I know you love jellybeans, but pretend you are the federal government and you need two jellybeans to do all the things governments do but you don’t have any jellybeans. Your father, though, has six jellybeans, and I have two jellybeans. There are three ways in which you can get your two jellybeans…” and he interrupted me, saying “I can take two from my dad, or two from you, or one from each of you.” I said, “that’s right, so what would you do?” He promptly said he’d take two beans from his dad. And then he added “I would ask my dad to give you one jellybean so you’d each have the same amount.” Wow!
We are about to engage in a major tax fight in 2025 which will hinge on which approach we take to funding our government, including our public investments in Social Security, Medicare, the rule of law, transportation, national parks and more for the common good:
1) retain the Trump tax cuts for the wealthiest individuals and largest corporations and starve government from investing in the common good; 2) take a jellybean from the ultra-rich as well as everyone else; or 3) take two jellybeans from the ultra-rich. There are 130,000 households in the U.S. with more than $50 million each and have total wealth combined in excess of $30 trillion! Why would one even think about taking a jellybean from anyone other than the ultra-rich until they were brought down closer to earth? My grandson’s response was instantaneous. So, if a nine-year-old can understand this, why can’t Congress?!
There are many ways to collect jellybeans only from the ultra-rich: a) the multi- millionaires surtax places an extra 10% tax on incomes over $2 million, applied equally to earned income and capital gains; b) a five-and-dime wealth tax which taxes accumulated wealth above $50 million at 5% and above $250 million at 10%; and c) “realization at transfer” so that any time an appreciated asset valued at more than $1 million is transferred, either into a trust, estate or charitable entity, a capital gains tax is applied to the amount of the appreciation (gain).
Some combination of these proposals would raise oodles of money and obviate the need to raise taxes on anyone not occupying a seat in the stratosphere to pay for needed social investments. But frankly, the most important reason to tax the ultra-rich is not to raise money but to make them less rich. Hamilton Nolan shows how obscenely rich they are in his article, Enough Wealth to Warp the Universe, and you won’t know whether to laugh or cry.
Our friends at Patriotic Millionaires, working with Good Ancestor Movement in England, have produced the best case to date for why making the ultra-rich less rich is essential. The Risks of Extreme Wealth explains the benefits to curbing excessive wealth by virtue of its positive impact on democracy, media, law, the economy, social cohesion, equality, and the environment. Even with excessive wealth being a critical negative factor in just about everything philanthropists care about, it is shocking how little money is given to support efforts to tax the ultra-rich. Okay, maybe not shocking, given who the philanthropists are.
Regrettably, a substantial majority of people have been fooled into believing the new President will be good for the economy. I’d hardly describe it as an upside to the recent election results, but the tremendous resulting stock market windfall means we philanthropists can do a heck of a lot more to support the organizations on the frontlines combatting plutocracy. Let’s put all those extra jellybeans to good use and join in an effort to end the abuses of excessive wealth.
May we all find peace, harmony and share a few extra jellybeans in the new year.