“The Worst Billionaires Are the Good Billionaires”

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Tell me how you feel about this:

By most accounts, if any billionaire could be considered a really good guy, it would be Warren Buffett. He seems not to care about money or possessions, he famously said years ago that the tax system should be changed so that he’d have to pay more, and he and Bill Gates established “The Giving Pledge” in 2010.

That is “a movement of philanthropists who commit to giving the majority of their wealth to philanthropy or charitable causes, either during their lifetimes or in their wills.”

Assuming the web site is up to date, 211 veryvery rich folks have signed on.

Sounds fair? Not to Anand Giridharadas, author of the book Winners Take All: The Elite Charade of Changing the World. In an Opinion piece that appeared in The New York Times, Giridharadaras called Buffett “the most dangerous kind of billionaire we have.”

Why? Because when billionaires are disreputable like the Sackler family, who knowingly profited from making opioids even more addictive, thereby leading to many deaths, we may be tempted to think in terms of better regulations or other ways to improve the system. But, he writes,

“…as America slouches toward plutocracy, our problem isn’t the virtue level of billionaires. It’s a set of social arrangements that make it possible for anyone to gain and guard and keep so much wealth, even as millions of others lack for food, work, housing, health, connectivity, education, dignity and the occasion to pursue their happiness.

“There is no way to be a billionaire in America without taking advantage of a system predicated on cruelty, a system whose tax code and labor laws and regulatory apparatus prioritize your needs above most people’s. Even noted Good Billionaire Mr. Buffett has profited from Coca-Cola’s sugary drinks, Amazon’s union busting, Chevron’s oil drilling, Clayton Homes’s predatory loans and, as the country learned recently, the failure to tax billionaires on their wealth.”

This is an important time for us to be talking about wealth and taxes. A majority of Americans—apparently, even in Joe Manchin’s West Virginia—support President Biden’s expansive plans on infrastructure and aid to families.

But talks with the Republicans have broken down because they won’t consider any type of tax increase on the wealthiest among us.

At the same time, we learned from ProPublica’s revelations based on an IRS leak that Buffett headed the list of Americans who’ve paid almost zero taxes over the years. They manage this feat, legally, because sources of their wealth, such as stocks, bonds, and real estate, are treated differently than income.

Giridharadas writes:

“From 2014 to 2018, Mr. Buffett’s wealth soared by $24.3 billion, according to ProPublica. (To underline, this is just the amount the fortune grew.) The amount of taxes Mr. Buffett paid over this period? $23.7 million. If middle-class Americans in their 40s enjoyed such a low effective tax rate, they would have paid a few dozen bucks per household over this same time period. Instead, as the ProPublica story notes, they paid around $62,000.”

Reading that, I felt it was worth checking to see if Buffett’s been living up to the Giving Pledge. In 2020, he gave away $2.9 billion. That made a total of $37 billion over the years, according to CNBC, but he still had about $67.5 billion worth of Berkshire Hathaway Class A (the best) stock.

Today, writes Geoffrey James in Inc., Buffett’s net worth is $82 billion.

“Buffett is 90 years old, so if he’s planning on giving away at least half his wealth, he’d damn well better get crackin’!”

James is extremely critical of the billionaires behind the Giving Pledge, which he said just “hasn’t panned out.” He states three reasons:

“1. Many billionaires give only to fake charities.”

James cites information from the Institute for Policy Studies that increasingly, such donations go to “tax-privileged private foundations and donor-advised funds” that forward little to actual charities, but do obtain tax benefits for the donors.

“2. Billionaires have totally rigged the system.”

There are a slew of ways these billionaires avoid paying taxes—beyond the offshore accounts and illegal schemes we’ve long heard about.

Although this wasn’t part of James’s article, the Associated Press observed after passage of the 2017 $1.5 trillion tax cut that money spent by lobbyists had “skyrocketed” prior to the passage of the bill, which was “hustled through Congress in less than two months and mostly written in private.”

I guess it’s not news that the billionaires’ lobbyists essentially wrote that law, but it does stand in stark relief to their professed concerns about “giving back” to society.

And it underscores how important the section of the languishing For the People Act (S.1) would be in revealing the sources of “dark money.” That battle is worth pursuing.

“3. The Giving Pledge thwarts real financial reform.”

The successful public relations aura billionaires have obtained as a result of the Giving Pledge has made financial reforms more difficult, James noted, unfairly burdening workers and small business people whose productivity has resulted in the 30 years of gains that have benefited those at the very top.

President Biden has asked for more money to help the Internal Revenue Service (IRS), which has been underfunded for years, improve its ability to enforce the tax laws affecting the wealthiest Americans. But it seems that what’s needed is greater reform of existing tax law to address the ways that the “superrich” accrue and protect their wealth.

For example, they use their wealth as collateral to take large loans so that they don’t have to sell assets and pay taxes; instead, they show losses from the loans while their fortunes increase. Maybe that’s a practice that should not be legal?

In the wake of the ProPublica disclosures, The New York Times reported that Senator Elizabeth Warren’s proposal to tax wealth instead of income through a two percent tax on the net worth of individuals with assets of more than $50 million may gain support.

According to the Times, even some Republicans are looking at possible changes in the tax code.

Senator Pat Toomey, one of the authors of the 2017 tax law that cut taxes so severely, said:

“My intention…was not that multibillionaires ought to pay no taxes. I believe dividends and capital gains should be taxed at a lower rate, but certainly not zero.”

A bipartisan effort to enhance tax equity by insisting the billionaires—“good,” “bad,” or otherwise—pay their fair share? An actual tax on wealth? Hmmm. What would Minority Leader Mitch McConnell say to that? Think we’ll see such action any time soon?

Annie

19 thoughts on ““The Worst Billionaires Are the Good Billionaires”

  1. I’ve been touting Giridharadas’s book, “Winners Take All” ever since it was published. While I was well aware of companies like Koch Industries and their “techniques” of gaining public acceptance through their charities, his book made me aware of the lesser known philanthropists like the Sackler family. They have now been exposed for their ownership of Purdue Pharmaceuticals, the most egregious of the companies responsible for the opiate crisis. The bottom line message is that all philanthropists need to tell people how they achieved their immense wealth.
    While I have no idea the number of philanthropists that play the “win win game,” that is having immense wealth both by what I call capitalist hardball (lobbying for huge tax breaks, crushing competition through favorable legislation etc) and at the same time gaining the admiration of society through their charities. it’s clear that more transparency is needed.
    Having said all of this, I still believe that capitalism remains as the strongest economic engine for innovation and progress. Vulture capitalism is the problem, and it’s success is directly tied to the money allowed in politics and the big business mentality that is championed by a conservative Supreme Court. We need a Teddy Roosevelt type leader, who, although an ardent capitalist, understood the need for sane regulation of those powerful individuals and their businesses. My question remains, that is, will the economic pendulum move back to where policies will benefit the many over the few?

    Liked by 3 people

    1. I agree about sane regulation and greater transparency, Steve. I think Biden could be that kind of leader: he’s clearly committed to raising the standards of living for poor and middle class people and reducing the gross inequities of wealth.

      Liked by 1 person

  2. I agree with Giridharadas up to a point. Not that people like Buffett are the worst — it’s those like the Koch brothers, who use their wealth for positively malignant ends, who qualify as that. But philanthropy is not a substitute for equitable taxation, and should not be allowed to distract from the need for it. Government needs a reliable flow of funding for the projects which democratically-elected legislatures have determined to be most necessary. Abundant donations to causes chosen by the idiosyncratic priorities (however worthy) of individuals who happen to be wealthy, cannot substitute for that.

    There are some wealthy people who actually lobby for higher taxes upon themselves. If Buffett really wants to do the most good, he should join in their efforts.

    I believe dividends and capital gains should be taxed at a lower rate

    I’ve never understood this. Why should money which for doing nothing but a bit of typing on an investment company’s website be taxed less than money I work forty hours a week to earn? If anything, it should be the other way around.

    An actual tax on wealth? Hmmm. What would Minority Leader Mitch McConnell say to that? Think we’ll see such action any time soon?

    Only if there is either (a) intensive lobbying by the wealthy in favor of it, or (b) a groundswell of support from the Republican voting base for it. I wouldn’t entirely rule out the latter. There is now a huge disconnect between the priorities of the party establishment (which include low taxes for the wealthy) and those of its voting base (immigration and culture-war issues). Give Trump credit, at least, for clearing the air about this — we now know that most Republican voters don’t much care about issues like the free market and free trade that their “betters” in the party told them they should care about. As you point out, Biden’s infrastructure proposals have a lot of support among Republican voters, and I recall a couple of years ago seeing surveys that showed high support for raising taxes on the wealthy if needed to pay for such investments.

    It would be difficult to mobilize that support into a form that would pressure Republicans in Congress to vote accordingly, though. From what I see of the right-wing media, they’re mostly focused on obsessing over stuff like Trump’s election-fraud claims or allegations of Biden’s cognitive decline or (in the case of religious sites) abortion. There’s almost no discussion of actual issues currently being legislated at all.

    Liked by 3 people

    1. Infidel: I emphatically agree with your statements about government needing a reliable flow of funding–and that decisions shouldn’t be left to the pet projects of a few charitable individuals.

      Buffett came on to the “giving” scene by saying bluntly that he should be paying more in taxes; the tax laws needed to be changed. But he seems less concerned about this issue than he once was. Giridharadas notes in his Times piece that Buffett released a lengthy statement last week about his longstanding support for fairer taxes, but then wrote: “I believe the money will be of more use to society if disbursed philanthropically than if it is used to slightly reduce an ever-increasing U.S. debt.” (No mention of how fairer taxes could themselves reduce that U.S. debt!)

      Yes: Toomey’s comment about the taxes on investments is a head-scratcher. I do wonder what kind of taxes he’d be “comfortable” with.

      As for your point about surveys showing high support for raising taxes on the wealthy, I read just today about a survey that, while quite small, showed greater support for the infrastructure plan when people were asked how they’d feel if it were paid for by an increase in the corporate tax rate.

      I can’t see current Republicans voting for any tax increases, but there is definitely a brewing sentiment that crosses traditional boundaries in support of greater tax equity. This is an important messaging opportunity for Democrats, and I hope they include it in their outreach to voters.

      Liked by 2 people

  3. I’m unqualified to wade more than slightly into tax policy waters. I think there are more pressing issues than taxes, though. The strength of American democracy, for instance, and voters’ rights. As we know all too well, they are under attack by the mutants known as Republicans.

    Liked by 3 people

    1. Neil: I don’t think we need to be tax experts to appreciate that middle class people are bearing the burden of the billionaires’ and corporations’ failure to pay their fair share–and that the moneys could be used to fund the kinds of programs that would make a real difference in the lives of poor and middle class people.

      You’ll get no argument from me about the importance of saving our democracy and fighting back against incursions of voting rights: I’ve been writing about these topics repeatedly here. But I think there’s a strong connection between those primary issues and this one. There’s so much disaffection on the part of many voters because they don’t think government works for them. Biden’s proposals are all designed to prove them wrong. But he needs to pay for these proposals, and greater tax equity has a lot of appeal and practicality. So if government can show it’s working and people feel it in their daily lives, more people will vote for those who have made it work.

      Liked by 2 people

  4. It was interesting and shocking to me to read recently how little many of them have paid and I often have wondered with all those philanthropic funds what exactly the money is used for.

    Liked by 2 people

  5. This was very interesting. I’ll never understand how someone with that amount of money can’t even be bothered to pay taxes despite saying that billionaires should actually pay MORE. And, yet, some people struggle everyday to eat and people like this are donating to fake charities and doing the minimum to share while people are suffering. I can’t believe someone like this would attempt to play the ‘good guy’ as well. Thanks for raising awareness about this.

    Liked by 1 person

    1. Thank you for your comment. I don’t know if Buffett was one of those who contributed to fake charities, but he sounds far less committed to higher taxes and tax reform than he was years ago.
      And if “The Giving Pledge” is to have any meaning, I would think its adherents would demand that those who sign give to existing charities—rather than starting their own.

      Liked by 1 person

  6. I think (and hope) that future generations will look back upon the tax system we have now and scoff in the same way we scoff at serfdom in the middle ages. I think we can conclude that any kind of voluntary system for the highest earners is flawed at conception.

    Liked by 1 person

  7. Vulture capitalism. Scoffing at serfdom in the middle ages. Fake charities. Flawed at conception. . . . Pretty apt phrases from you and your readers. Thanks for raising awareness on the issue. Another icon falls. (I had admired the giving pledge and the Buffet / Gates collaboration it).

    Liked by 1 person

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