When wealth-tax advocates like senators Bernie Sanders and Elizabeth Warren are two of the top three contenders for winning the 2020 Democratic primaries, you can bet that the US ruling class is terrified by the possibility of being slightly less rich (FAIR.org, 4/16/19). Notably, US oligarch Jeff Bezos (who owns the Washington Post) asked fellow oligarch Michael Bloomberg (and owner of Bloomberg News) to consider running for president, which Bloomberg decided to do a month after Sanders declared that billionaires shouldn’t exist, and a week after Warren proposed expanding her wealth tax (Washington Post, 11/9/19).
FAIR took a look at news coverage and editorials about the wealth tax from Bezos’ Washington Post, and Rupert Murdoch’s Wall Street Journal, to see if these oligarch-owned newspapers would defend their billionaire owners’ material class interests (FAIR.org, 9/16/19).
To the Post’s credit, although some reporters (e.g., 5/22/19) have tried to peddle austerity fears of “new entitlement programs” funded by the wealth tax resulting in “ballooning costs that plunge the government deeper into debt,” its coverage (1/24/19, 9/24/19, 10/16/19) generally did a good job explaining what the wealth tax proposals are, included statements from both supporters and opponents, as well as situating these within the context of historic inequality.
The Post’s editorials, however—which are supposed to represent the paper’s official stance) told a different story. “A Wealth Tax Isn’t the Best Way to Tax the Rich” (6/30/19) offered a whole host a reasons why a wealth tax (despite being a “bold and spectacular proposal”) isn’t “the optimal means of raising taxes on those who can afford to pay more.” The Post argued that a wealth tax would face a “likely constitutional challenge,” “implementation problems” like how to consistently appraise diverse assets ranging from “land to rare art,” or would “bring in less revenue than advocates anticipate.” The Post also argued that a wealth tax would “not distinguish” between “socially productive wealth” gained from “enterprise and innovation,” and wealth gained through “inheritance or rent-seeking,” which is not “socially productive.”
Contrary to reports that argue that a majority of the world’s richest people are “self-made” (an extremely dubious and arguably false concept), a 2017 study by Thomas Pikkety and his economist colleagues found that around 60% of all private wealth in the US is inherited. Another notable economist, Joseph Stiglitz, has declared that the magnitude of rent-seeking (manipulating public policy to benefit the rich at the expense of everyone else) is “clearly enormous,” though hard to quantify. Neither does the Post grapple with economists like Dean Baker, who notes that patents and copyrights are arbitrary rent-seeking rackets for billionaires like Bill Gates, or Mariana Mazzucato, who pointed out that the public sector is far more consequential for technological innovation than “enterprising” capitalists. (The US military developed almost all the technology found in the iPhone, Mazzucato points out).
Instead, the Post advocates for measures it claims are “clearly constitutional” and “readily administrable by the existing Internal Revenue Service”: They urge the next president to reverse provisions of the 2017 Trump tax law that gave “favorable treatment to large estates,” to “reduce” (not eliminate) the “favorable treatment of capital gains,” and to “eliminate the huge break for profits on the sale of stock by people who inherit it from rich benefactors.”
A later Post editorial “Progressives Are Right to Worry About Income Inequality. But Punitive Policy Isn’t the Answer” (11/16/19) took absurdity to a new level by echoing right-wing talking points that a wealth tax amounts to punishing success. The Post echoed the familiar “horseshoe theory” caricature of “totalitarians of the right and left” who want to “confiscate companies, houses and farms,” and argued that “private property” and “private wealth” are “integral to any free society,” as if that had any relevance to proposals from wealth-tax advocates: Neither Sanders nor Warren has ever proposed abolishing “private wealth,” much less “private property,” but the point is to paint them both as dangerous radicals.
Even though the Post acknowledges that much of the inequality and enrichment of the ultra-wealthy “derives from financial manipulation and other rent-seeking activity,” and that the Post is sustained and owned by wealthy capitalists like Bezos, are we supposed to believe that ownership of the paper has nothing to do with their belief that “every billionaire is not a policy failure,” and that counterarguments against a wealth tax from billionaires aren’t self-interested or unreasonable? Is the Post’s dismissal of claims about the US being an “oligarchy,” or their claim that private wealth being “off-limits” from taxation is “integral to any free society,” mere coincidence?
Compared to the Post, the Wall Street Journal was much less subtle in its opposition. While some of the Journal’s guides to Sanders and Warren’s proposals were mostly credible (8/27/19, 9/24/19, 10/21/19), other reports betray the Journal’s pro-oligarch outlook.
The Journal’s “The Trouble With Taxing Wealth” (3/6/19) and “What Fewer Billionaires Could Mean for the Rest of US” (11/20/19) implied that the existence of billionaires and a successful economy often go “hand in hand,” and characterizes less potent tax reforms that don’t touch the oligarchs’ wealth as “better” or “more effective,” because a wealth tax “may not be an efficient response,” despite being “an immensely appealing, nearly surgical strike at its most glaring manifestation.”
The Journal’s later report, “Democratic Candidates’ Wealth Tax Plans Would Shake Up Billionaire Philanthropy” (11/16/19), portrayed a wealth tax as disruptive and harmful to charitable causes, preventing the mega rich from exercising their noblesse oblige:
The wealth taxes proposed by top Democratic presidential candidates might spark a short-term boom in billionaires’ donations to charity, as they accelerate gifts to avoid years of taxes eroding their fortunes.
Facing an annual tax that eats into returns and shrinks wealth, billionaires would have an incentive to move money out of their control—and out of the wealth-tax base. Otherwise, every year would see more of their money sent to the government for public projects and less to charities of their choosing….
Either tax would mark a major expansion in US taxes on the country’s wealthiest citizens, a possibility especially important to a philanthropic sector that has become more top-heavy and increasingly reliant on donations from the rich.
Why has the philanthropic sector become more “top-heavy” and “increasingly reliant on donations from the rich”? Could historic inequality and stagnant wages obscured by reports of a “strong economy” be a reason (FAIR.org, 11/19/19)?
Of course, the fact that rich people give less to charitable causes than the poor as a percentage of their income (and “philanthrocapitalism” really being corporate hypocrisy) didn’t stop the Journal from asserting that “higher taxes reduce how much money people have available to give to charity.” The rich also give more to selfish “causes” like the corruption of higher education and political donations to finance campaigns in the American system of legalized bribery, as well as self-dealing foundations and nonprofits—rather than food and shelter meeting the poor’s most immediate needs—and then use these “donations” to exploit tax deductions on “charitable giving” designed mostly for them. The Journal seemed to hint at this when it described how a wealth tax would “create incentives” for “aggressive tax avoidance using nonprofits” and encourage “political donations.”
A later Journal headline, “Elizabeth Warren’s Tax Plan Would Bring Rates Over 100% for Some” (11/15/19), was a flat-out distortion: The report calculates a hypothetical wealth tax and income tax, then adds them together, comparing the total to the imaginary taxpayer’s income: “a combined tax rate of 158%”! Of course, the wealth tax is not a tax on income, but a tax on wealth, so expressing it as a proportion of income is nonsensical. It’s true that a wealth tax may reduce the net worth of some of the ultra-rich; the Journal is no doubt aware that this is exactly the point, since the wealth tax’s goal is to combat inequality by redistributing wealth—but it pretends that this is an unintended consequence in order to manufacture sympathy for the very few who are rich enough to qualify for the tax. (An estimated 75,000 households with at least $50 million in assets would be subject to a wealth tax under Warren’s proposal, compared to Sanders’ proposal affecting an estimated 180,000 households with at least $32 million in assets.)
With coverage like this, it’s no surprise that the Journal’s editorial board (6/26/19) published an obtuse “open letter” mocking “patriotic billionaires” who support a wealth tax, implying that they’re hypocrites for not voluntarily “writing checks” to the government instead of “waiting for legislation.” Another editorial (11/4/19) argued that the wealth tax “stays alive in the socialist mind because it is the ultimate populist envy tax,” peddling the perception of the greedy poor and the virtuous rich. It characterized a wealth tax as a proven failure in Europe, and an immoral “confiscatory” tax on the wealthy’s assets that would cause “economic damage.”
As noted in the Post and the Journal’s news coverage, one of the strongest arguments for a wealth tax is that investments usually appreciate at a higher and faster rate than wage growth, so taxing income alone is not enough to reduce economic inequality. This is obvious and consistent with most people’s lived experience following decades of stagnant wages coexisting with exploding stock markets, resulting in the top 1%’s net worth (who usually gain income from investments) increasing by $21 trillion, and the bottom 50%’s net worth (who usually gain income from work) decreasing by $900 billion from 1989 to 2018 (People’s Policy Project, 6/14/19; Extra!, 7/02). Unlike workers, who have taxes deducted automatically from every paycheck, wealth accumulation and capital gains from investments by the wealthy are taxed at lower rates than earned income (when not evaded), and taxes on those assets are essentially voluntary, because they aren’t taxed unless they’re “realized” through sales.
While there may be questions regarding the constitutionality of a wealth tax—based on constitutional provisions meant to uphold slavery—legal scholars have offered several arguments defending the proposals’ constitutional legitimacy. It’s true that judges, particularly those appointed by politicians backed by the wealthy, might put barriers in the way of a wealth tax—because extreme concentrations of wealth also translate into political power. This is no less the case when oligarchs like Bezos and Murdoch can buy media outlets to influence public opinion by attacking proposals to tax their owners’ wealth.