As Sanders and Warren Rise Billionaires Grow Increasingly Agitated
By Jeff Stein, The Washington Post
10 November 19
"For the first time ever, we are having a national political conversation
about billionaires in American life," a historian said.
The political and economic power wielded by the approximately 750 wealthiest
people in America has become a sudden flash point in the 2020 presidential
election, as the nation's billionaires push back with increasing ferocity
against calls by liberal politicians to vastly reduce their fortunes and
clout.
On Thursday, Michael Bloomberg, a billionaire and former mayor of New York
City, took steps to enter the presidential race, a move that would make him
one of four billionaires who either plan to seek or have expressed interest
in seeking the nation's highest office in 2020. His decision came one week
after Sen. Elizabeth Warren (D-Mass.) proposed vastly expanding her "wealth
tax" on the nation's biggest wealth holders and one month after Sen. Bernie
Sanders (I-Vt.) said America should not have any billionaires at all.
The populist onslaught has ensnared Facebook founder Mark Zuckerberg and
Microsoft co-founder Bill Gates, led to billionaire hand-wringing on cable
news, and sparked a panicked discussion among wealthy Americans and their
financial advisers about how to prepare for a White House controlled by
populist Democrats.
Past presidential elections have involved allegations of class warfare, but
rarely have those debates centered on such a small subset of people.
"For the first time ever, we are having a national political conversation
about billionaires in American life. And that is because many people are
noticing the vast differences in wealth and opportunity," said Timothy
Naftali, a historian at New York University.
The growing hostilities between the ascendant populist wing of the
Democratic Party and the nation's tech and financial elite have spilled
repeatedly into public view over the past several months, but they reached a
crescendo last week with news that Bloomberg may enter the Democratic
primary. With the stock market at an all-time high, the debate about wealth
accumulation and inequality has become a top issue in the 2020 campaign.
The leaders of the anti-billionaire populist surge, Warren and Sanders, have
cast their plans to vastly increase taxes on the wealthy as necessary to fix
several decades of widening inequality and make necessary investments in
health care, child care spending and other government programs they say will
help working-class Americans.
Financial disparities between the rich and everyone else have widened over
the past several decades in America, with inequality returning to levels not
seen since the 1920s, as the richest 400 Americans now control more wealth
than the bottom 60 percent of the wealth distribution, according to research
by Gabriel Zucman, a left-leaning economist at the University of California
at Berkeley. The poorest 60 percent of America has seen its share of the
national wealth fall from 5.7 percent in 1987 to 2.1 percent in 2014, Zucman
found.
But the efforts at redistribution pushed by Warren and Sanders have elicited
a fierce and sometimes personal backlash from the billionaire class who
stand to lose the most. At least 16 billionaires have in recent months
spoken out against what they regard as the danger posed by the populist
Democrats, particularly over their proposals to enact a "wealth tax" on vast
fortunes, with many expressing concern they will blow the election to Trump
by veering too far left.
Bloomberg's potential presidential bid follows that of fellow billionaires
Tom Steyer, a major Democratic donor, and former Starbucks CEO Howard
Schultz, who in September suspended his independent presidential bid. Steyer
has proposed his own wealth tax, but Schultz ripped the idea as
"ridiculous," while Bloomberg suggested it was not constitutional and raised
the prospect of America turning into Venezuela.
Piling on against the wealth tax have been corporate celebrities from
Silicon Valley and Wall Street. Zuckerberg suggested Sanders's call to
abolish billionaires could hurt philanthropies and scientific research by
giving the government too much decision-making power. Microsoft co-founder
Gates criticized Warren's wealth tax and mused about its impact on "the
incentive system" for making money.
David Rubenstein, the billionaire co-founder of the Carlyle Group, told CNBC
that a wealth tax would not "solve all of our society's problems" and raised
questions about its practicality. Also appearing on CNBC, billionaire
investor Leon Cooperman choked up while discussing the impact a wealth tax
could have on his family.
Amazon founder Jeff Bezos, a multi-billionaire and the world's richest man,
asked Bloomberg months ago to consider running for president in 2020, Recode
reported Saturday. A Bloomberg spokesman did not immediately return a
request to confirm the call. (Bezos is the owner of The Washington Post.) An
Amazon spokeswoman did not respond to a request for comment.
"I don't need Elizabeth Warren, or the government, giving away my money,"
Cooperman said. "[Warren] and Bernie Sanders are presenting a lot of ideas
to the public that are morally, and socially, bankrupt."
Then there is perhaps the most prominent wealthy person of all likely to
stand in the way of populist Democrats' proposals: President Trump. Asked
about the wealth tax, a White House spokesman declined to comment directly
on the proposal but said in an email, "President Trump has been very clear:
America will never be a socialist country."
But there are signs the pushback is having little impact on nixing the idea
in Democrats' minds. Rep. Brendan Boyle (D-Pa.), who has endorsed Joe Biden
for the Democratic nomination, told The Washington Post he is crafting a new
wealth tax proposal to introduce in the House of Representatives. Boyle's
involvement suggests the idea has broader political support among Democrats
than previously thought.
Warren's campaign has created a tax calculator that shows how much money
multimillionaires would pay under her plan. The initial wealth tax raised by
Warren would raise close to $3 trillion over 10 years - enough money to fund
universal child care, make public colleges and universities tuition-free,
and forgive a majority of the student debt held in America, according to
some nonpartisan estimates.
America has long had rich people, but economists say the current scale of
inequality may be without precedent. The number of billionaires in America
swelled to 749 in 2018, a nearly 5 percent jump, and they now hold close to
$4 trillion collectively.
"The hyper concentration of wealth within the top 0.1 percent is a mortal
threat to the American economy and way of life," Boyle said in an interview.
"If you work hard and play by the rules, then you should be able to get
ahead. But the recent and unprecedented shift of resources to billionaires
threatens this. A wealth tax on billionaires is fair and, indeed,
necessary."
But conservatives and even many Democrats have raised a number of objections
to the wealth tax, arguing it could be easily skirted and may have limited
political appeal. Microsoft's Gates, famous for his philanthropic efforts,
joked to the New York Times that it could erase his entire fortune. Sen.
Chris Van Hollen (D-Md.) and Rep. Don Beyer (D-Va.) this week proposed a
surtax on couples earning more than $2 million a year to address what they
framed as unfairness in the tax code exacerbated by the Republican tax cuts,
while stopping short of the starker wealth tax.
In an email, Bloomberg adviser Howard Wolfson denied that the prospect of
paying the wealth tax factors into the former mayor's interest in running
for president: "Mike's not worried about what would happen if Elizabeth
Warren won. He's worried about what would happen if Donald Trump won."
Still, the ultrarich have still taken notice of the threat, according to
interviews with half a dozen financial planners and wealth managers.
Kathryn Wylde, president of the Partnership for New York City, whose
membership includes many of the country's biggest financial firms, said
members of the business community are "agonizing" over the prospect of
having to choose between Warren and Trump in the general election.
"A lot of people in the Wall Street crowd still think the world is
top-down," Wylde said. "They think the people at the top of the pecking
order are still making the decisions or driving the debate, as opposed to
the new reality of grass-roots mobilization. They don't realize the way
pushback to their criticism goes viral."
Lance Drucker, president and CEO of Drucker Wealth Management, said he has
recently heard alarm from many of his millionaire clients over plans like
Warren's to implement a wealth tax on fortunes worth more than $50 million.
"Honestly, it's only been the last month when people started getting
worried," said Drucker in an October interview. "These tax proposals are
scaring the bejeezus out of people who have accumulated a lot of wealth."
Some financial planners are urging wealthy clients to transfer millions to
their offspring now, before Democrats again raise estate taxes. Attorneys
have begun looking at whether a divorce could help the super-rich avoid the
wealth tax. And some wealthy people are asking whether they should consider
renouncing their U.S. citizenship and moving to Europe or elsewhere abroad
ahead of Democrats' potential tax hikes.
"You're hearing it already," said Jonathan Lachowitz, a financial planner at
White Lighthouse Investment Management, who said he has heard discussions
about leaving the country and renouncing citizenship or other legal tax
planning moves due to Democrats' tax plans from several multimillionaires.
"As the frustration mounts and tax burdens rise, people will consider it,
just the way you have New Yorkers moving to Florida."
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