The earnings of the ultra-rich are literally unearned. This isn’t a value judgment: it’s the US tax agency’s term for money made through “investment-type income such as taxable interest, ordinary dividends and capital gain distributions”. While Astor and Rockefeller surely followed the wealth-maximising maxim of buy low, sell high, and put money in trusts, charities and other vehicles to minimise taxation, we’ve seen this logic taken to the next level, without policy changes to correct for it.
Most of us pay tax on our incomes at double-digit rates; if we’re fortunate enough to own assets, we pay tax on the profits when we sell them. Billionaires, on the other hand, “can borrow against their growing investments year after year without owing a dime in taxes, allowing them to pay lower tax rates on their income than ordinary Americans pay on theirs”. That statement doesn’t come from Bernie Sanders, by the way, but from the achingly centrist White House, which in 2022 proposed a 20% minimum tax on households worth more than $100m. It went nowhere, in part because its subjects so strongly opposed it.
The impending arrival of the trillionaire signals another step backwards in the fight for a more balanced economy and healthier democracy. The billionaire class, after all, skews the balance of power in the marketplace, in politics and in society. Its members own newspapers that shape public opinion. They donate to politicians who pass the laws that they want. According to one study, 11% of the world’s billionaires have held or sought political office, with the rate of “billionaire participation” in autocracies hitting an astounding 29%. Another study shows they tend to lean to the right: positions that typically help them keep their own wealth, and that of their peers, intact.