Yves here. IMHO, the bigger deal in this tax proposal is closing the carried interest loophole, which would trim the sails of private equity and hedge fund barons. It’s also striking to see the factually-challenged, knee-jerk reaction from Cuomo on raising taxes on the rich. When I was a young thing in New York, the top marginal rate was 70% and it kicked in at a much lower level, in real income terms, than now. Rich people were still eager to and did live here.
By Julia Conley, staff writer for Common Dreams. Originally published by Common Dreams
Imploring New York Gov. Andrew Cuomo to allow them to contribute to the state’s future in a way that benefits all New Yorkers, four dozen millionaires are demanding that lawmakers pass a “Multi-Millionaires Tax” to raise billions of dollars for education, infrastructure, and other programs for the greater good.
Forty-eight millionaires sent a letter to Cuomo and the New York State Assembly as lawmakers weigh proposals for closing the state’s $2.3 billion deficit—arguing that raising their taxes could provide the state with an additional $2 to 3 billion per year.
“We millionaires and multi-millionaires of New York can easily invest more in the Empire State, and lawmakers like you have a moral and a fiduciary duty to make sure we do so,” wrote the Patriotic Millionaires, including former Blackrock executive Morris Pearl and filmmaker and entertainment heir Abigail Disney.
“The taxes we’re talking about will not affect people’s quality of life. They will not have any fewer private airplanes or boats because of this tax.” —Abigail Disney, Patriotic Millionaires“Raising taxes on high-income New Yorkers like us in order to invest in our people and our communities is not just the right moral choice, it also happens to be in the long-term economic best interest of everyone, including millionaires like us,” they added.
As the letter was delivered to the State Capitol, Pearl testified at a state budget meeting on the Multi-Millionaires Tax proposal.
The tax would be levied against households earning more than $5 million per year, Pearl said. The group is also proposing that lawmakers close the carried interest tax loophole, which allows many Wall Street managers to pay the lower capital gains tax rate instead of the income tax rate that middle class families have to pay.
Cuomo has dismissed proposals to tax the rich at a higher rate, saying it will send the richest New Yorkers, who he says pay about half of the state’s income taxes, fleeing the state—a claim Pearl debunked in his testimony.
“I will tell you as someone who knows a lot of rich people in New York, the rich people who make decisions on where to live based mainly on taxes do not live in New York, and they have not lived in New York in decades,” Pearl said. “It would be a colossal mistake for us to compromise the things that actually make rich people want to live in this state in order to appease these fictional New York millionaires who care enough about taxes to leave if we expand the millionaires tax.”
The group added in its letter that since 2009, when New York passed a Millionaires Tax affecting households making $300,000 or more, the number of millionaires in New York has risen 63 percent.
Furthermore, the millionaires wrote, “Most of us will literally not notice the difference” in their tax bills if their rate is raised.
“The taxes we’re talking about will not affect people’s quality of life,” Disney told the New York Times on Tuesday. “They will not have any fewer private airplanes or boats because of this tax.”
Pearl added that his wealth provides such an enormous cushion that he—and, very likely, most other extremely high earners—couldn’t pinpoint how much Trump’s tax cuts had saved him.
“To tell you the truth, I’m not sure exactly,” Pearl told the Times. “I pay so much lower taxes than people who work for a living anyway, that I’m not overly worried about it.”
The Patriotic Millionaires have condemned President Donald Trump’s 2017 tax law, with member Eric Schoenberg calling the tax code a “monstrosity” and Disney releasing a viral video before the 2018 midterm elections warning of the GOP’s plan to pass even more tax cuts for the rich.
"Our tax system is a monstrosity. It's terrible in ways that have been perpetually slanted toward the rich. And I say this as someone who has done quite well in life."
-Patriotic Millionaire Eric Schoenberghttps://t.co/ZURbJjUgIQ
— Patriotic Millionaires (@PatrioticMills) February 12, 2019
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Still, what to do about unearned economic rents? The menace of legal privilege is the real problem.
Isn’t that the underlying trick here? “Hey here’s my wallet, please take more money out of it!!” — when all the real wealth is elsewhere.
Still, generally happy about even that attitude. This country is listing so badly that we don’t have time to design a new ship, this one needs at least somewhat righted now. Some, I hope most, of the “rich” (define how you will) see that.
I wonder if these rich are new rich, either got rich themselves or their parents did.
I wonder what the Old Money Dynasty families feel about all this.
So do you think a name like ‘Disney’ implies new money or older money? Since that family is now on the 3rd or 4th generation you can safely call them Old Money.
So the rate needs to be higher, is what I’m hearing. That’s what she’s implying, right?
Oh how sporting of them. Taxes are the least of it and fails to address how their money influences laws, exempts them from legal responsibility and promotes the kind of gatekeeping that shields them from competition/prevents others from becoming wealthy. Charity is a poor substitute for justice.
I disagree. The experts who have been writing about the rise in income and wealth inequality are very clear: higher taxes on the rich are necessary and desirable to stop and reverse the growth of an oligarchy. The fact that these rich people are saying the tax increases won’t even make much difference to them is tantamount to a statement that the proposed taxes need to be higher.
What is to be done about the wealthy simply putting more assets in offshore accounts? I agree wholeheartedly that the wealthy should be paying rates similar to what they did decades ago, but how would we curb the usage of tax havens or make said tax havens report on the assets of their account holders? While I am far from an expert on this sort of thing, I thought part of the problem of why tax havens are such an attractive option for the super-rich is that they are unfortunately perfectly legal as they operate outside of the jurisdiction of the borders of the countries the squillionares reside in who’s taxes they are trying to duck.
Great! Hiding the money under the mattress or in offshore accounts has a similar effect. If it’s hidden it (almost) doesn’t exist. The trick is to tax it at 99% when and if they try to spend it.
Money by itself confers little power. That’s why it’s essential to make bribery legal. It allows the rich to convert money into power.
===rich people are saying the tax increases won’t even make much difference to them is tantamount to a statement that the proposed taxes need to be higher====
Yes. That is one issue that Lambert brings up as well is some of the tax ideas such as the 70% upper bracket by AOC or a wealth tax by Liz Warren are good “starting points”. Below is a video about what the average American believes the distribution wealth inequality is in the US vs. the actual wealth distribution.
https://www.youtube.com/watch?v=QPKKQnijnsM
Most likely the Democratic Party will not be as bold as is needed because they are the Thomas Frank Listen Liberal, professional, elitist Democrats and will only try for half measures. This can be seen in today’s post “If Medicare for All Is Politically Impossible, “All Payer” Could Fix the System”. I believe if the Dems controlled both chambers of Congress, Medicare for All would still be a non-starter.
I am optimistic that we will see more AOC’s and Bernie disciples in the future and then maybe things will change. If not, the elites can expect what is happening in France, the Gilets Jaunes Yellow Vest protests, to happen here.
https://www.city-journal.org/html/french-coming-apart-15125.html
The average American does not know just how unequal wealth distribution has become in the United States. Also, the ideal distribution is broadly agreed across the entire political spectrum; the methods of getting there are; that has been understood by some researchers for a decade or more, and their findings have required just a simple internet search or even just a library; all the highly educated “nattering nabobs of negativity” in our “free media” have not bothered to report such inconvenient facts. However, Russia!Russia!Russia! is thoroughly and lovingly reported on.
Yes comrades, The System is working just as it is supposed to.
Yves: Rob Arnott has studied this. He has reached some surprising conclusions. Here is the Executive Summary. Click at the top for the full article.
https://www.researchaffiliates.com/en_us/publications/journal-papers/359_the_myth_of_dynastic_wealth_the_rich_get_poorer.html
From Rob Arnott’s Wikipedia page:
He serves as chairman of Research Affiliates, LLC, which advises on over $195 billion in investment assets, as of September 2018.
Political contributions
Arnott has given $750,000 to support The Club for Growth, a conservative anti-tax group. Arnott considers himself a libertarian, and opposes the Patient Protection and Affordable Care Act.[18]
A libertarian writing against anti tax and any other measures to offset wealth inequality. Color me surprised—not!
If you are going to present a counter argument against higher taxes on the wealthy and other measures to counter the increasing rise of vast oligarchic wealth please use some evidence that does not come from a source that is clearly biased.
The Illinois Billionaire Ken Griffin “recent” property purchases add up to the entire annual budget of the Illinois Department of Children and Family Services. Houston we have a problem.
Thank you.
Club for Growth:
https://www.sourcewatch.org/index.php/Club_for_Growth
His co-authors included one Democrat and one Republican.
Would you consider Piketty biased, since his parents were Trotskyists?
===Would you consider Piketty biased, since his parents were Trotskyists?===
Probably. I confess to not having read much Piketty. When his Capital in the Twenty-First Century book came out it was so wildly popular and my nature is not to be a “bandwagon” person or get caught up in the new thing. Some of the reviews I read said that the book was very good but some of it went overboard and IMO that was the Trotskyist part of Piketty coming out. But I have read some articles by Piketty as some of his reasoning seems sound.
I like to read posts on the World Socialist Website. The identify as Trotskyist in their views. Some of the posts on their site are very over the top and they are clearly biased at times in their views. But I try to sift through the hyperbole and see if there is any thing of substance in some of what they say and sometimes there is.
I am also one to not “throw the baby out with the bathwater” so the ideas Piketty and others write (i.e. income, wealth, and capital inequality) about is valid. Anthony Atkinson wrote a really good book called Inequality that you might find interesting.
I am a week shy of 60 years old so I can remember a time when being rich or wealthy was a “modest” rich or wealthy. Doctors, lawyers, etc. lived in the same middle class neighborhood that I did and had a bigger house and a nicer car but it was not obscene. Much of today’s wealth inequality is obscene, IMO.
Lastly I recommend reading a recent post on NC that discusses inequality and socialism.
https://www.currentaffairs.org/2019/02/a-speech-on-socialism-at-andover
http://london.sonoma.edu/writings/WarOfTheClasses/socialist.html
Thank you, beautiful, really wish I dared share the Andover address with my once upper-middle class bizarrely turned Randian multimillionaire brother.
But it’s all Kool-Aid to him. Someone (I think it’s in Democracy in Chains) mentions that it’s an actual tenet of the Buchananites NOT to do any critical thinking. Just rinse and repeat.
Thanks for those links. I’ll read them.
You and I are nearly the same age. I think your observations about the doctors and lawyers in the past living in the same neighborhoods as people of more modest means is spot on. I could show you the neighborhoods in our town and neighboring towns where that was the case. I don’t think the lawyers are making as much money as they were. The doctors may be, but their working conditions are not good, and they’ve lost lots of autonomy.
I think Richard Reeves’ book about the upper middle class, ‘Dream Hoarders’, is correct. The press keeps the focus on the very wealthy, but it is the upper middle class that has stacked the school system, the student loan system, residential real estate, and even the health insurance system in their favor.
As for Rob Arnott, his comments echo those of several other people I’ve read, including Stuart Lucas, the Carnation Instant Breakfast heir who wrote ‘Wealth’. It is tough for wealthy families to remain wealthy, especially in the US. In Europe, the wealthy tend to be thriftier, and have a deeper sense of potential catastrophe. Plus, compared with Americans, they are not so philanthropic.
Arnott’s piece is worth a read, in my opinion, because they apparently went through lots of data. You can criticize their analysis or their data, but please point to something better.
Keep in mind that by the time you start looking at world-wide third generation inherited wealth, you start tapping into the cohort whose family’s wealth had to survive the rolling depressions of the late 1800s and early 1900s, WW I, the very high taxes on estates in Europe to pay for WW I in the 1920s, the Great Depression, WW II, more high taxes after WW II to pay for it, and then the great inflation of the 1970s.
It appears that the wealthy have gotten very good at learning from this and so we see the political maneuvering to get low tax rates, but more importantly lobbying to get bailed out during the financial crisis. The rise in the conservative think tanks to create a theoretical basis for why concentrated wealth is a good thing is an example.
The 1929-1932 bear market wiped out much of the wealth inequality that had built up in the Roaring 20s and a major lobbying focus was ensuring that did not happen again in 2008-2009. Similarly, they have been able to fend off attempts to raise taxes to reduce federal deficits (this had occurred in European 1920s and post WW II, US post WW II, Russia simply killed the rich aristocracy and nationalized everything in the 1920s).
So for the past 30 years “this time is different” has actually been true. But the wealthy are justifiably nervous about some of the rising populist movements as these “this time is different” periods often end quickly and badly. My concern is that the average person usually becomes collateral damage as wealth inequality becomes reduced in uncontrolled implosions.
I am baffled, While I realize this appeal only covers New York State taxes, why not simultaneously demand the federal government direct fewer dollars towards war and the Pentagon and instead spend that wasted money on infrastructure and education, healthcare and the environment.
Something similar happened in Kansas when it became clear that Brownback’s tax cuts were destroying the state’s future. Many many GOP legislators and the state’s very successful companies and wealthy people (not all) supported and campaigned for the move. (The state’s 2 wealthiest people opposed the move.)
https://www.nytimes.com/2017/06/07/us/sam-brownback-kansas-budget-override.html
To be clear: the ‘move’ they supported was the rollback and reversal of Brownback’s tax cuts.
This would be more compelling if, rather than simply testifying for a tax increase, the 48 multimillionaires put their money where their mouths are and threatened to generously fund campaigns against incumbents who did not vote for one.
indeed.
+1
Talk is cheap.
One of the ‘Patriotic Millionaires’ whose name I can’t recall got a lot of TV time and showed his tax return on television. He barely grossed a million dollars. I guess ‘Patriotic Members of the Aspiring Upper Middle Class’ doesn’t have the same cachet.
In the beginning people tend to take care of them self first when they dont have enough to want to succeed badly or get lost in competition. Rigging the game to your end could be a mission or at least trying to exploit every possible advantage for success. Thennn you start to see the fallout, your part in it, how others suffer and do not have the advantages you have had. I dont think the mega rich want to live in a third world country where their wealth is at risk, and default culture of the country and people they have to co exist with hate and resent them. News like this makes me feel good. My hope is they realize we are all brothers and sisters and all in this together. Warren Buffets comment about class warefare being real and waged by his class comes to mind. At least the pains of the many are being accepted and heard and people with the capability to make a real difference are stepping up trying to invoke change. Maybe we do have hope. One way or another things will change.
I sympathize with your attitude, however I also believe it to be grossly — dangerously, optimistic.
The pragmatic dark barb is in the last sentence
“We millionaires and multi-millionaires of New York can easily invest more in the Empire State, and lawmakers like you have a moral and a fiduciary duty to make sure we do so,” wrote the Patriotic Millionaires, including former Blackrock executive Morris Pearl and filmmaker and entertainment heir Abigail Disney.
The anti-tax lobbying outfit Americans for Prosperity will not like this statement, not one bit.
The “greed is good” people. Bless their rancid, soulless, little hearts.
This man bites dog story appears regularly.
My view is that rich people, especially second-generation, are generally in favor of higher taxes, in order to keep the nouveau riche out. Think Rodney Dangerfield in Cattyshack. Also, this limits competition for Upper East Side condominiums and reservations at five-star restaurants. As the letter writers say, the taxes will have no effect on their life, but not being able to get reservations for dinner…
In addition, these rich people have or could have most of their assets in nondividend paying companies, municipal bonds or other assets not taxed currently.
I am not saying that higher taxes on rich people could be good public policy. I am only saying that the position of the letter writers is neither surprising or particularly admirable.
I like the tone it sets. It’s a challenge for all obscenely rich citizens. It’s not that they are rich. If they were rich and it did not effect the rest of society it would not matter. It is, however, that good things are out of reach for the 90% because policies that favor wealth accumulation are justified by impoverishing the rest of us. It’s commendable for the patriotic millionaires to take a stand. And want to give back. But, once again, it is “charity” not policy. Without policy, charity is fleeting and sporadic at best. And not up to the job. We need good government; one that provides for us all; then this grand display would be unnecessary. It would be good if the rich understood the dynamic a little better. It would make them better citizens.
In the 50s, under the great socialist Eisenhower, we had 90% top rates, and I do not recall from newsreels or papers of the time seeing any movie stars or industrialists in bread lines.
Whatever happened to the argument that it was high tax rates which encouraged investment and tax deductible expenses like employee salaries?
“It would be a colossal mistake for us to compromise the things that actually make rich people want to live in this state in order to appease these fictional New York millionaires who care enough about taxes to leave if we expand the millionaires tax.”
Bingo. At the end of the day where would a person of means rather live? Guatemala or Sweden? The United States is rocketing towards developing world, banana republic status wth each successive year and each new tax cut, but all we hear from our two main political parties is how evil taxes and socialism are. AOC’s controversial 70% top marginal rate seems pretty tame to me, especially if you are billionaire who makes your money by engaging in activities which destroy economic value and cause societal harm. Progressively tax to prevent democratically corrosive wealth concentration and to preserve social cohesion, but also tax to de-incentivize bad economic behavior. (Looking at you outsourcing and financialization) 99% of Americans, particularly the ones who moan about their taxes, aren’t even aware how radically different (more progressive) our tax system was when conservative icon Reagan was president. Don’t even get me started on how things worked when Eisenhower or FDR was president. My conservative, Republican, CPA father used to remind his tax adverse clients that taxes were the membership dues for civilization. We didn’t see eye to eye on a lot of issues, but he was a wise and patriotic man. I cannot say the same of today’s Republicans and most Democrats. If he were alive today I suspect he might be a Bernie supporter.
” taxes [are] the membership dues for civilization”
What an excellent line!
It needs to be put on campain t-shirts!
“At the end of the day where would a person of means rather live? Guatemala or Sweden?”
Not having to pay a personal militia and make your home a fortress is almost worth the taxes for some…
“The taxes we’re talking about will not affect people’s quality of life,” Disney told the New York Times on Tuesday. “They will not have any fewer private airplanes or boats because of this tax.”
This shows how very far gone our oligarchs really are. If I didn’t have to worry about medical bankruptcies and lead in public school water systems and — oh, yeah — the end of life on this planet, I would feel sorry for them.
It’s a smart move. It does remind one a little bit of the negotiations the Bourbon and the Romanov families attempted to stave off their eventual fate. Bernie and AOC are rattling the gilded cages!
I had a visualization today when talking about wealth inequality to friends. A healthy body, the blood flow branches out like the roots of a tree every area fed. Our current system, we have many tumerous black growths monopolizing the blood supply, attached to an anemic body whose externalities suffer and wither. Tumors so engorgered and engulfed in their own behaviors they can not see or comprehend other realms of existence. But it’s all one host there is no escaping that. Everyone needs a healthy host to exist and truly prosper. Sometimes sickness has to reach a certain level before it’s really recognized, and taken seriously. Feeling more and more like we are finally there. It’s all a progression with elements of inertia.It can still be healed
Or just morbid obesity.
Hedge fund plutocrats avoid fully-taxable personal income by taking all compensation in “carried interest,” which is only subject to 20% maximum capital gains rate.