America’s Ridiculously Rich: The 2014 Edition

Guest Post by Sam Pizzigati

Imagine yourself part of the typical American family. Your household would have, the Federal Reserve reported last month, a net worth of $81,200.

Not much. But 50 percent of America’s households would actually have less wealth than you do. The other half would have more.

Now imagine that your net worth suddenly quadrupled to about $325,000. That sum would place you within the ranks of America’s most affluent 20 percent of income earners. You would be “typical” no more. On the other hand, you still wouldn’t be rich, or even close to grand fortune.

So suppose we quadrupled your wealth still again, enough to get your net worth — your assets minus your debts — all the way up to $1.3 million.

Congratulations. You now hold 16 times more wealth than the typical American. You probably have paid off your mortgage. You have a healthy balance in your 401(k). You have investment income. You have it made.

But not really. You still have to worry financially, about everything from losing your job to helping your kids with their college tuition.

So let’s quadruple your net worth once again — to $5.2 million.

You now sit comfortably within the ranks of America’s richest 1 percent. You can afford, well, just about anything you want. A getaway in the mountains, another getaway on the shore. Two beamers in the driveway. Impressive philanthropic gestures. Direct access to your U.S. senators.

Enough already? Actually, no. With a fortune of just $5.2 million, you still have to put up with the inconveniences of mere mortal existence. Yes, you can fly first class anywhere you want. But you have to fly with the great unwashed back in coach — and they take forever getting their carry-ons up in those overhead bins.

You need relief. We’re going to give it to you. We’re going to multiply your $5.2 million fortune 1,000 times over — to $5.2 billion. Now you can buy your own private jet.

Even better, now you get your name printed in the annual Forbes magazine list of America’s 400 richest. At $5.2 billion, your fortune would nearly rate as an average Forbes 400 stash. America’s top 400, Forbes revealed last week, now hold a combined net worth of $2.29 trillion. That places the average Forbes 400 fortune at $5.7 billion, an all-time record high.

Remember back when you held that median American nest-egg of $81,200? The average member of the Forbes 400 holds a fortune over 70,000 times that size.

And the richest of these 400 hold far more than that average. Take Larry Ellison, the third-ranking deep pocket on this year’s Forbes list. Ellison just stepped down as the CEO of the Oracle business software colossus. His net worth: $50 billion.

What does Ellison do with all those billions? He collects homes and estates, for starters, with 15 or so scattered all around the world. Ellison likes yachts, too. He currently has two extremely big ones, each over half as long as a football field.

Ellison also likes to play basketball, even on his yachts. If a ball bounces over the railing, no problem. Ellison has a powerboat following his yacht, the Wall Street Journal noted this past spring, “to retrieve balls that go overboard.”

Hiring that ball-retriever qualifies Ellison as a “job creator,” right? Maybe not. Ellison has regularly destroyed jobs on his way to grand fortune. He has become, over the years, a master of the merge-and-purge two-step: First you snatch your rival’s customers, then you fire its workers.

In 2005, for instance, Ellison shelled out $10.6 billion to buy out PeopleSoft, an 11,000-employee competitor. He then proceeded to put the ax to 5,000 jobs.

Five years later, Ellison bought out Sun Microsystems and indignantly denied that any “massive layoff” would be in the offing. Five months later, Ellison’s Oracle quietly acknowledged a major downsizing in an official federal regulatory filing.

Job massacres like these been hollowing out America’s middle class ever since Forbes started annually identifying the nation’s richest 400 back in the 1980s. Since 1989, Federal Reserve figures show, the median net worth of families in America’s statistical middle class — the middle 20 percent of income earners — has dropped from $75,300 to $61,700, after taking inflation into account.

This year, for the first time ever, Forbes has assigned a “self-made score” to every one of America’s richest 400. More than two-thirds of this year’s 400, Forbes claims, rate as “self-made,” Ellison among them.

Forbes doesn’t bother asking how those rich went about self-making their fortunes. We should. Our top 400, after all, haven’t just made monstrously large fortunes. They’ve made a monstrously large mess. To unmake it, we need to unmake them.

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4 Comments
wip
wip
October 9, 2014 8:49 am

A HEAVY inheritance tax on any dollar amount over….How much?

Iska Waran
Iska Waran
October 9, 2014 9:47 am

Prediction: Any “cure” to this “problem” will have enough unintended consequences to be worse than the disease. Go ahead and propose so-called solutions, but they’ll be codified by Al Franken and enforced by Richard Cordray. Libs harken back to the ’50’s when nominal income tax rates approached 90%, but the effective rates paid were no higher than today’s. Even after JFK had cut income tax rates, the avoidance schemes had, by the ’70’s metastasized to the point where credit card interest and sales tax paid at the hardware store were deductible, to say nothing of three year retroactive income averaging and accelerated depreciation with no passive loss limitation rules. Talk about complexity. The complexity of income taxes in 1979 dwarfs the complexity of today’s system. It’s the equivalent of having a 15 mph speed limit, but letting most people drive 50 mph over the limit. If someone wants to live under that system, I might suggest Nigeria. Just carry bribe money wherever you go. As far as inheritance taxes, one can make equally logical (and arbitrary) arguments for a 0% rate and a 100% rate. Today’s 40% federal inheritance tax rate (+ and state tax) seems a reasonable compromise. Any higher and you just stoke the living trust racket. If we want to fight a growing oligarchical accumulation of wealth, we probably need to tweak trust law more than we need to change tax rates (income or estate).

Larry Ellison undoubtedly has way more than he needs, but do we really want politicians setting the maximum wealth level? Ellison will be dead soon enough anyway. His boats won’t do him any good then, and his heirs will piss away the fortune within a generation or two.

ASIG
ASIG
October 9, 2014 3:28 pm

“Our top 400, after all, haven’t just made monstrously large fortunes. They’ve made a monstrously large mess. To unmake it, we need to unmake them.”

What an idiotic, totally ignorant statement based on what, one’s personal prejudice?

He picks Ellison as an example and argues that Ellison “regularly destroyed jobs”. Ok well if you’re a simple minded person that can only see events in isolation than yea it would appear that way. But what happens if you look in more detail.

Let me comment on Sun Microsystems. He uses “massive layoff” at sun as one example of Ellison’s evil.

I worked as a contract employee on a project at sun and from my experience working there that company was massive overloaded with deadwood. Based on what I saw Sun was poorly managed and would eventually self-destruct. Left alone Sun would eventually fold and ALL the employees would be out of a job. Cleaning out a company and getting rid of the deadwood is like removing a cancer. That’s a good thing. So if you can see that perspective than you can see he actually saved a lot of jobs.

TE
TE
October 9, 2014 4:07 pm

Quit taxing “passive” (ie for the well-to-do) at a lessor rate than the poor, single, schmuck, that doesn’t have kids and is an assistant manager at McDs. He works many unpaid hours, he works seven days a week, 365, schedule. He probably pays upwards of 50% of his income in “taxes.”

Quit giving tax abatements and government grants to the rich guys to build stadiums and sports teams.

Lower ALL tax rates – with the exception of “passive” income – make it truly fair and level and things might start to change.

Tax income earned on foreign investments at a MUCH higher rate. Screw Apple and their billions parked offshore – especially when you dig down and start to discover the money comes from US sales and foreign production.

Telling the little start up that they get to pay 39% of income to sell to ‘murkins, but the giants can play games and set it up so their American income is tiny and their offshore profits great.

Then revoke all the “free-trade” agreements UNLESS the other market is comparable to ours in compliance and regulatory – the wages are secondary to these issues.

These things might go a long way to balancing the imbalance.

BUT the reality is every little guy – like my hub – RAILS against upping taxes on Buffett because of the hope that someday he might have to pay it too.

Reality is he will NEVER be that successful, so to hold out the “we are doomed” bullshit if we tax Buffetts’ billions, is, well, bullshit.

We allow those absolutely screwing over this country to bankroll a couple politicians, then pocket the rest.

Until that stops this is going to continue.

Well, until the day these uber rich bastards finish mining the resources of this country and move away with their “earnings,” leaving the disaster to be paid for by people that IN TOTAL are not worth as much as these few men.

As if, we aren’t going to do a freaking thing but sit back and argue about it – which is EXACTLY what these elite hope – and be too worried to demand any changes that might actually change things.