“Because of changes in tax law and aggressive use of trusts and tax dodges, we are now witnessing a resurgence of dynastic inherited wealth,” Collins of IPS observed in an op-ed for Common Dreams on Tuesday. (Images: Institute for Policy Studies)

“Today’s extreme wealth inequality is perhaps greater than any time in American history. This is largely the result of rapidly growing wealth dynasties and a rigged economy.”

On November 1, 2018, Jake Johnson writes on Common Dreams:

Here are just a few startling facts that tell you nearly all you need to know about who the American economy has worked for—and against—over the past several decades:

• Amazon CEO Jeff Bezos, Microsoft founder Bill Gates, and financier Warren Buffett own more wealth than the bottom 50 percent of the U.S. combined;
• As median household wealth has declined since 1982, the Walton, Koch, and Mars families have seen their wealth grow 6,000 percent;
• A full-time Amazon employee making $15 an hour would have to work for 2.5 million years to earn $78.5 billion, the amount Bezos’s fortune has expanded in the past year alone.

Published by the Institute for Policy Studies (IPS) on Tuesday in a new report—titled “Billionaire Bonanza 2018: The Role of Dynastic Wealth” (pdf)—these numbers paint a striking portrait of an economy designed to enrich a handful of individuals and family dynasties while leaving the rest of the American population with stagnant or falling wages, meager or even negative wealth, and soaring economic insecurity.

“Today’s extreme wealth inequality is perhaps greater than any time in American history,” Josh Hoxie, a co-author of the report, said in a statement. “This is largely the result of rapidly growing wealth dynasties and a rigged economy that enables the ultra-wealthy to grow their wealth to never-before-seen highs.”

“These families have used their wealth and power to lobby and rig the rules to expand their wealth and power.”
—Chuck Collins, Institute for Policy StudiesCiting economist Thomas Piketty’s warning that the United States is operating under a system of “patrimonial capitalism” that allows the wealthy few to hoard their riches and pass them on to their heirs—fueling the rapid explosion of inequalitysince the 1970s—IPS found that “seven of the 20 wealthiest members of the Forbes 400 inherited their wealth from previous generations, often through companies founded by their ancestors.”

These members, the report notes, include “Charles and David Koch of Koch Industries as well as Jim, Alice, and S. Robson Walton of Walmart and Jacqueline and John Mars of the Mars candy empire.”

According to IPS, these three “wealth dynasties” own a combined $348.7 billion—over four million times the median wealth of American families.

When IPS looked at the 15 wealthiest American families with multiple members on the vaunted Forbes 400 list, it found that the wealth of each of these families “comes from companies started by an earlier generation, either a parent or more distant ancestor. Each of them also represents a wealth dynasty passing generation to generation free from interruption.”

Combined, these families are worth $618 billion.

In total, IPS found, “136 out of the 400 members of the Forbes 400 derive their wealth from companies started by an earlier generation. That’s 34 percent, or about a third, of the entire list.”

As millions of American workers and households find themselves in an increasingly precarious economic position—unable, for instance, to afford a $400 emergency payment—these dynastic families have seen their already staggering wealth grow thousands of percentage points over the past three decades, contributing to the growing gulf between the ultra-rich and everyone else and giving a few billionaires disproportionate power to shape public policy.

“These families have used their wealth and power to lobby and rig the rules to expand their wealth and power,” explained Chuck Collins, IPS senior scholar and co-author of the new report.

Contrary to the right-wing view that the vastly unequal wealth distribution in American society is the unavoidable result of “market forces” and ever-advancing technology, IPS argues that there is “nothing inevitable about dynastic wealth” and that such inequality is perpetuated by the wealthy themselves, who use a variety of “dynasty protection techniques” to undercut redistributive policies and escape taxes.

“There is now ample evidence that some billionaire families are engaged in aggressive practices to preserve dynastic wealth.”
—Billionaire Bonanza 2018“There is now ample evidence that some billionaire families are engaged in aggressive practices to preserve dynastic wealth. These include using their wealth to lobby for tax cuts and public policies that will further enrich their enterprises,” the report notes. “They hire armies of tax accountants, wealth managers, and trust lawyers to create trusts, shell corporations, and offshore accounts to move money around and dodge taxation and accountability.”

Curtailing the meteoric rise of dynastic wealth and bringing inequality under control will require bold policy interventions that are sure to face resistance from the billionaires used to getting their way in the political sphere.

In its new report, IPS outlines two possible solutions: a wealth tax and an inheritance tax.

“A direct tax on wealth paid by the wealthiest one tenth of one percent could generate significant revenue to be reinvested in creating and restoring opportunities for low wealth households to prosper,” the report notes.

Pointing out that the federal estate tax has been “significantly weakened”—most recently by President Donald Trump and the GOP’s $1.5 trillion tax bill—IPS argues that “[t]axing inherited wealth as income would help break up current and future wealth dynasties.”

“Because of changes in tax law and aggressive use of trusts and tax dodges, we are now witnessing a resurgence of dynastic inherited wealth,” Collins of IPS observed in an op-ed for Common Dreams on Tuesday. “To protect our democracy, we need to strengthen and expand taxes that reduce this concentration of wealth and power.”

https://www.commondreams.org/news/2018/10/30/handful-billionaire-families-grab-nations-wealth-themselves-new-report-details-how?fbclid=IwAR3vBB-puEJQcRG05brL7GjBCtyBMFf_RoRUMnuJ6ZSYhUyaV6KEW4_HpSY

Gary Reber Comments:

If you haven’t figured it out already, these billionaire individuals and families are wealthy because they OWN productive, wealth-creating, income-producing capital assets, acquired through a system that requires past savings in order to take the risk to invest.

The solution should be obvious. That is to empower EVERY child, woman, and man to acquire personal ownership stakes in the productive capital assets formed in the future economy, without the requirement of past savings and without having to be subject to personal financial risk. This solution is the essence of the proposed Capital Homestead Act, a modern-day Homestead Act, but instead of land ownership it is the non-human productive capital assets that are the primary means applied to producing goods, products, and services.

We need to turn our country around a face up to the devastating effects of outsourcing our productive capabilities.

We are in a battle with Communist China, Communist Vietnam, and other low-cost production countries, who are determined, particularly China, to be the producers of consumer goods and products and the supply chain producers for the world. American corporations have joined them to expand their profits and the American people have supported this productive transition to China by buying the products produced there. This needs to stop or America will be drained of our capabilities to produce ourselves. And will be disastrous and result in widespread upheaval.

And that is why we are all wearing Chinese-made clothes and cooking on Chinese-made appliances, shoes, computers, phones,and are dependent on all manner of parts that show up in automobiles, and the list goes on and on, etc. etc. And if not in China they will be made in some other low-cost country.

American corporations and other developed countries corporations took advantage of the low-labor and non-regulated opportunities the Chinese Communist government provided as long as the Chinese would have at least 51 percent ownership with the American corporation partnering with a Chinese firm. Then the situation is shared “stolen” technology. This occurred over time, within a couple or three decades. A few first began to outsource, and then other followed outsourcing to stay competitive, resulting in millions of jobs outsourced. Not only with respect to manufactured goods and products, but also services. All this time our governments did nothing to penalize outsourcing and putting tariffs on goods and products entering the U.S. made in China. And of course, Walmart became China’s biggest distributor of consumer products and is now the biggest employer in the U.S. While there are still jobs available in the U.S. but for less wages, with less hours, no benefits, and little to no job security. Contrary to the popular notion, there is inevitably a long line of applicants for even the lowest-paying jobs. People are desperate for jobs, as there’s nothing to fall back on today. We have an abundant supply of job-ready people who are desperate for any job at any wage. Employers no longer need to pay more, in order to get enough qualified workers. Too many Americans today are forced to work two or three jobs to survive. Minimum wages legislation is only a band-aid; it is not the solution to economic inequality.

Deterring China from becoming the world’s producer is the real battle we must win. China is determined to win or the hundreds of millions that left their agricultural roots to take jobs in the cities will have no job and no alternatives unless they do what we must do. The only way to fight this trend and be competitive with China is to automate and extensively use technological robotics and AI to produce more efficiency and as much as possible the goods and products wanted and needed by our own people. So the impact of all this is the American worker either lost or is losing his or her job due to outsourcing or they lose their job to automation, which they do not own. Disaster is here now and will get worse as tectonic shifts in the technologies of production intensifies, and we are not planning for this future. The central question is Who should own this future? 

So, to me anyone advocating for outsourcing is not acting in the best interests of the American people. And not putting forth solutions is not taking responsibility.

The solution is to enact the proposed Capital Homestead Act (aka Economic Democracy Act and Economic Empowerment Act) at http://www.cesj.org/learn/capital-homesteading/, http://www.cesj.org/learn/capital-homesteading/capital-homestead-act-a-plan-for-getting-ownership-income-and-power-to-every-citizen/, http://www.cesj.org/learn/capital-homesteading/capital-homestead-act-summary/ and http://www.cesj.org/learn/capital-homesteading/ch-vehicles/. And The Capital Homestead Act brochure, pdf print version at http://www.cesj.org/wp-content/uploads/2014/11/C-CHAflyer_1018101.pdf and Capital Homestead Accounts (CHAs) at http://www.cesj.org/learn/capital-homesteading/ch-vehicles/capital-homestead-accounts-chas/ as well as supporting Monetary Justice at http://capitalhomestead.org/page/monetary-justice.