Bernie Sanders claims that those who have billions shouldn’t exist because, as a true socialist, he believes that if the state taxes wealth away from those in possession of an “unacceptable” amount of wealth and then redistributes it to lower wealth households, inequality would be reduced.
But if the left is serious about taxing wealth shouldn’t they turn their attention to where the real money is – the one sector that is truly undertaxed – universities and foundations?
The amount of wealth held by major universities and large grant-making foundations is astounding. According to the National Association of College and University Business Officers’ annual study, 107 institutions held endowments of $1 billion or more as of June 30, 2019. Together, these institutions of higher learning held $494 billion in assets, or roughly a tenth of the total net worth of all individual billionaires in the United States combined.
Charitable foundations hold even more wealth. One estimate found they held more than $1 trillion in assets in 2017, with the richest five alone holding nearly $100 billion between them. Given that the stock market has risen more than 50% since then, their portfolios should be hundreds of billions of dollars richer.
Combined, universities and charitable foundations hold at least $1.5 trillion in assets. That’s far more wealth than that of Jeff Bezos, Bill Gates, Mark Zuckerberg, Elon Musk and the founders of Google and Oracle combined. In comparison to the 23.8% average that the wealthy already pay on capital gains, these rich universities and foundations pay a mere 1.4% in federal taxes on their net investment income.
Of course the left would never even consider taxing their left-wing allies. Registered Democrats at 32 elite colleges and universities far outnumber registered Republicans by more than 10 to l and Foundations also tilt heavily to the left. Treating institutional wealth the same as Democrats propose treating individual wealth clearly would harm their friends much more than it would harm their enemies.
Robert Reich, professor at UC@ Berkeley, in an article for the Huff Post, claims that the ONLY way for America to reduce the long-term budget deficit, to maintain vital services, protect Social Security and Medicare, invest more into education and infrastructure while not raising taxes on the working peasants is to screw the super-rich.
What the left won’t tell you is that much of the recent modest rise in wealth stems from innovations in our economy that actually creates jobs and provide new services to benefit the people. For example, Brian Acton and Jan Koum built huge multibillion dollar fortunes by creating WhatsApp that provides free phone service for 1.5 billion users globally.
Another little tidbit that doesn’t pop up in the lap dog media is that these new confiscatory taxes may make the super-rich feel a slight pinch to their wallets but they will actually harm the working peasants far more. With less money to invest and reinvest in creating new jobs and in supplying the masses with goods and services, those goods and services will become more costly and more scarce putting them beyond the reach of the average and lower income households.
A less efficient allocation of resources makes us all worse off, a result disproportionately harmful to the very people the left claims to be championing. In other words, confiscatory taxes would not only fail to improve the living standard of the peasants; they will shift power further away from the citizens and into the hands of an already bloated government, which of course is what they want.
In reality, the left’s main argument for confiscatory taxes, that the wealthy are paying an unfairly low share of taxes, is a gross misrepresentation. In 2018, the latest year for which complete IRS data is available, the top 1% of taxpayers earned 21% of total adjusted gross income in the economy, but they paid over 40% of total federal income taxes. The top 10% earned 47% of income, but paid 71% of taxes.
Calls to make the individual tax code even more progressive are calls on higher-earning families to bear an even more disproportionate share of the tax burden than they already do, not to merely pay as much as everyone else.
The desire by some to impose confiscatory taxes on the wealthy is driven largely by an envy that blinds them to the fact that such taxes would end up hurting the peasants much more than the billionaires. Moreover, the taxes could serve to protect the already wealthy from competition and hamper economic progress.
It may be emotionally satisfying for many to favor sticking it to billionaires, but reason informs us that in so doing it is the peasants who would end up paying the steepest price.
Source: Should Billionaires Exist? By Bradley Thomas, Mises Institute; Opinion: So you want to tax the rich? Okay, let’s start with Harvard by Henry Olsen, Washington Post; Biden’s confiscatory tax plans unleash class warfare by Chris Rauh and Aharon Friedman, The Hill