In a fair society, there would be no billionaires. Bernie Sanders says they shouldn’t exist and Elizabeth Warren sells mugs of their tears. I’m talking about billionaires and making the case that an economic system that allows them is immoral.
We have arrived at an obscene inequality crisis, in which wealth is concentrated in the hands of a powerful few, at the cost of crippling hardship, precarity, and compromised well-being for the many. When a single billionaire can accumulate more money in 10 seconds than their employees make in one year, while workers struggle to meet the basic cost of rent and medicine, then yes, every billionaire really is a policy failure. Here’s why.
What does a billion dollars look like?
Most of us would consider a multimillionaire to be extremely wealthy. A billion dollars exists on an altogether different scale. If you want to imagine what it looks like, this visualizer compares bundles of $100 bills to show how a million stacks up to a billion. It’s a mind-bogglingly large sum of money, so let’s try to make it meaningful in day-to-day terms. If someone gave you $1,000 every single day and you didn’t spend a cent, it would take you three years to save up a million dollars. If you wanted to save a billion, you’d be waiting around 2,740 years. See for yourself — this calculator works out how long it would take for one of the big billionaire CEOs to earn your annual salary or pay off your student loan. All this shows how the personal wealth of billionaires cannot be made through hard work alone. The accumulation of extreme wealth depends on other systems, such as exploitative labor practices, tax breaks, and loopholes that are beyond the reach of most ordinary people.
How does a billionaire become so wealthy?
Alexandria Ocasio-Cortez explains how the ultra-rich can be seen as beneficiaries of an unjust economic system where she says billionaires don’t make money, they take money. It’s impossible to have that much money without profiting off of other people's lack of it. Even if individuals are only implicated discreetly, the capitalist class generates profits upwards by denying workers a living wage, engaging in exploitative labor practices (directly or indirectly along the supply chain), ensuring that medicine and health care costs remain high, or lobbying for or even simply benefitting from favorable taxation policies and cushy government subsidies. Wealth is also able to accumulate via close proximity to power, with corporate connections leading to elected office, or merely allowing people to use their influential status to set the agenda according to their own interests. This is known as plutocracy, or rule by the rich, and it undermines democracy. It’s no coincidence that Donald Trump’s landmark 2017 tax cuts were driven largely by big business and helped billionaires pay less than the working class for the first time. When the capitalist class is able to write the rulebook and lobby for preferential tax rates, it’s virtually impossible to achieve social and economic reform in a way that is meaningful to the majority of working- and middle-class Americans.
Is it possible to be a self-made billionaire?
It’s really a question of whether anyone can ever be “self-made,” or whether this is the language of a larger myth that justifies wealth inequality. The self-made myth conceals the multitude of barriers to wealth accumulation and reinforces the notion that if you’re poor, it’s because you’re lazy or made bad choices. The notion that a billionaire has worked hard for every penny of their wealth is simply fanciful. The median U.S. salary is $34,612, but even if you tripled that and saved every penny for a lifetime, you still wouldn’t accumulate anywhere close to a billion dollars. Here, it’s also worth looking at Oxfam’s extensive study on extreme wealth, which found that approximately one-third of global billionaire fortunes were inherited. It’s not about working harder, smarter, or better. There are many factors built into our economic system that help extreme wealth to multiply fast. It’s a matter of being well-placed to benefit from the structures that favor capital and produce a profit off the back of exploitation.
How deep is the inequality divide?
In October 2021, there were 745 American billionaires, while around 11.5% of the population live below the poverty line. During the pandemic, their collective fortunes swelled by $2.1 trillion — just to frame that figure in real terms, that roughly equates to more than the total outstanding student debt and more than is being offered in Biden’s “once-in-a-generation” American Families Plan, which promises national investment for 10 years. Meanwhile, there’s not a single state in the U.S. in which even a $15 wage, which sits above the minimum in many states, would afford someone to rent a two-bedroom apartment. This report illustrates the scale of billionaires’ surging wealth in line with the precarious conditions of essential workers, many of whom have been denied hazard pay or substantial sick-leave benefits. There is no ethical way to justify this and there’s not an economic reason either. Jeff Bezos could give every single one of his 876,000 employees a $105,000 bonus and he’d still be as rich as he was at the start of the pandemic.
But if billionaires didn’t exist, wouldn’t we all be worse off?
While it appeals to common logic to think the wealth of the richest few eventually trickles down to the many, the reality is that it doesn’t work this way, not least because America’s richest can entirely and legally sidestep the system to enjoy virtually tax-free status. It’s true that the billionaire class creates jobs and that wages have the potential to drive the economy, but that argument falters when workers barely have enough to survive. The potential to generate tax dollars from billion-dollar profits is enormous. Oxfam found that if the world’s richest 1% paid just 0.5% more in tax, we could educate all 262 million children who are currently out of school and provide health care to save the lives of 3.3 million. But given generous tax cuts and easily exploitable loopholes like the ability to register wealth in offshore tax havens, this rarely comes to pass.
So what could keep extreme wealth in check?
Prior to the 2020 election, prominent Democrats were rallying to tax the rich. Elizabeth Warren touted an annual wealth tax and Senator Sanders planned to hike the top estate tax rate to 77%, while AOC pitched a 70% top marginal tax rate. Seventy percent may sound drastic, but it’s actually not that radical. The U.S. had a similar rate in the 1960s for the wealthiest households, during what economists like Paul Krugman cite as “the most successful period of economic growth in our history.” Check out this rundown to learn how it would work.
If billionaires do not live off work but live off wealth, why don’t we tax wealth like we tax work? Most Americans believe the government should do more to address extreme wealth. After all, Joe Biden was elected on a promise to raise taxes for those earning over $400,000 from 37% to the pre-Trump cut levels of 39.6%, and limit tax breaks. This barely scratches the surface when it comes to the obscene wealth of billionaires. While taxing unrealized capital gains at death goes some way to shift the balance, it falls short of a progressive tax on the unrealized gains that accumulate while the richest in our society are still alive.
Much more must be done to tackle the systemic causes of soaring wealth and entrenched inequality. As well as correcting under-taxation, legislators must close loopholes to make tax laws watertight. It’s promising that, if passed, the Build Back Better framework contains legislation that would see the U.S. join 136 countries in a global 15% minimum corporation tax agreement, in a bid to deter multinationals from shifting profits to low-tax havens.
Only a progressive, root-and-branch approach is capable of tackling this deep divide. The campaign Make Billionaires Pay has offered up no fewer than 14 ways to tax the rich, while Public Citizen has pitched a Wall Street sales tax on speculative transactions like stock, bond, and derivative trades. Nicknamed a Robin Hood tax, estimates show just a tiny fee of 10 cents per $100 traded would generate $777 billion over 10 years, with the potential to raise even more, depending on the tax rate set. Targeting high rollers through a tax on financial speculation would have the added benefit of limiting high-frequency trading — a type of algorithmic financial trading that can be risky and unfair in its potential to help the wealthiest rapidly accrue assets and has been blamed in part for flash crashes. Some favor the adoption of universal social security measures, paid for via progressive taxes. It’s been argued that Universal Basic Income, Guaranteed Minimum Income, and Universal Basic Services could aid prosperity in a world grappling with growing populations, societal aging, and climate breakdown. Piecemeal proposals are not enough to remedy a crisis of poverty in the midst of plenty. And a fair world would not further the acceleration of either.
Want more from Teen Vogue? Check this out: Billionaires Barely Pay Taxes — Here’s How They Get Away With It
Stay up-to-date with the politics team. Sign up for the Teen Vogue Take
