Ultra-rich seeking wealth tax to remedy inequality

The US federal government can only tax income, not property, but there is a growing call for a so-called 'wealth tax'.

    Entrepreneur Nick Hanauer, warned his 'fellow zillionaires' about the country's growing wealth divide in 2014, writing that 'there is no example in human history where wealth accumulated like this and the pitchforks didn't eventually come out' [Bloomberg]
    Entrepreneur Nick Hanauer, warned his 'fellow zillionaires' about the country's growing wealth divide in 2014, writing that 'there is no example in human history where wealth accumulated like this and the pitchforks didn't eventually come out' [Bloomberg]

    They're an eclectic bunch -- some of the nation's most privileged heirs alongside entrepreneurs who have made spectacular fortunes in real estate, finance and Silicon Valley. But collectively they're united on the need to tax more of the richest Americans' assets.

    George Soros, heiresses to the Pritzker fortune, Abigail Disney and Facebook Inc. co-founder Chris Hughes are among those calling for a wealth tax to help address income inequality and provide funding for climate change and public health initiatives.

    "We are writing to call on all candidates for President, whether they are Republicans or Democrats, to support a moderate wealth tax on the fortunes of the richest one-tenth of the richest 1% of Americans -- on us," according to a letter signed by 19 individuals -- one anonymously -- and posted online Monday. "The next dollar of new tax revenue should come from the most financially fortunate, not from middle-income and lower-income Americans."

    One of the youngest signers, 35-year-old Liesel Pritzker Simmons, whose extended family is worth more than $33 billion, framed the situation simply: "We are part of the problem, so tax us."
    The signers "thought it was important for people who would be affected by a wealth tax to come out publicly and say we want this, this is OK, this leads toward the America we want to see," she said in a phone interview.

    In the short term, the group hopes the letter "sparks a debate with the 2020 candidates" and that a wealth tax, or alternatives to one, are discussed during the upcoming Presidential debates, said Pritzker Simmons, who supports Elizabeth Warren for the Democratic nomination. "These are conversations that have been had in the past, but now the time is right," she said.

    Warren, a senator from Massachusetts, as well as fellow Democratic presidential hopefuls Pete Buttigieg and Beto O'Rourke support the idea, according to the letter. Warren has proposed a 2% tax on assets of $50 million or more, and a further 1% on assets over $1 billion. It is estimated to generate nearly $3 trillion in tax revenue over 10 years.

    The wealth tax isn't embraced by all Democrats, though, with some arguing it would be difficult to objectively assess the value of wealth like artwork and jewels or illiquid assets. There are also concerns that such a tax is unconstitutional because the federal government is prohibited from taxing property, only income.
    "If your main argument is that it's going to be hard, that's a lazy argument," Pritzker Simmons said. "We can figure it out."

    European countries have experienced mixed results with a wealth tax. Of 15 nations in the Organization for Economic Cooperation and Development that had them in 1995, only four -- Switzerland, Belgium, Norway and Spain -- still do. France, Sweden and Germany are among those that backed away from the levy because of the difficulties implementing them.

    Some of those signing the letter have already expressed concerns about rising inequality. Hughes has evangelized for higher taxes on the rich in his book "Fair Shot." Disney, whose grandfather and great-uncle founded Walt Disney Co., recently called Chief Executive Officer Bob Iger's $65.6 million compensation package "insane."

    The New York Times reported on the letter earlier Monday.

    Another signatory, entrepreneur Nick Hanauer, first warned his "fellow zillionaires" about the country's growing wealth divide in 2014, writing that "there is no example in human history where wealth accumulated like this and the pitchforks didn't eventually come out."

    Such inequality has only deepened. Last week, Bernard Arnault joined Jeff Bezos and Bill Gates as the third person with a fortune of at least $100 billion on the Bloomberg Billionaires Index, whose 500 members have a total net worth of $5.5 trillion, up from $4.9 trillion two years ago.

    "If we don't do something like this, what are we doing, just hoarding this wealth in a country that's falling apart at the seams?" Pritzker Simmons said. "That's not the America we want to live in."

    SOURCE: Bloomberg