As the awful year of 2020 draws to a close, at least one small group of people will look back on it as a very prosperous one: America’s billionaires. Since the coronavirus shutdowns began, in March, six hundred and fifty-one members of this exclusive club have seen their collective wealth increase by more than a trillion dollars, a new report from progressive groups notes.
Among the biggest gainers are eight tech barons with large stock holdings: Elon Musk (Tesla), Jeff Bezos (Amazon), Mark Zuckerberg (Facebook), Larry Ellison (Oracle), Larry Page and Sergey Brin (Alphabet), and Bill Gates and Steve Ballmer (Microsoft). The new study, which comes from Americans for Tax Fairness, a lobbying group, and the Institute for Policy Studies, a Washington-based think tank, notes that between March 18th and December 7th, Musk’s worth rose by $118.5 billion, Bezos’s worth rose by $71.4 billion, and Zuckerberg’s worth rose by $50.1 billion. The other five—Ellison, Page, Brin, Gates, and Ballmer—each saw gains of between twenty billion and thirty billion dollars. As a result of these developments, the report adds, Musk, Zuckerberg, and Gates have joined Bezos as “centi-billionaires,” meaning that each is now worth more than a hundred billion dollars.
The surge in tech stocks that fuelled this explosion of wealth was driven partly by the shift to remote commerce during the pandemic, and partly by the Federal Reserve’s crisis policy of pumping trillions of dollars into the financial markets and adding financial assets to its balance sheet. Either way, the billionaire class, over all, has been the biggest winner from the pandemic, and the working class has been the biggest loser. Published at a moment when the country is seeing record numbers of COVID-19 cases, and when at least 10.7 million Americans are without jobs, the new report argues that the country’s wealthiest people could well afford to bear more of the cost of providing additional financial relief to workers, small businesses, and state and local governments.
The collective wealth gain of roughly a trillion dollars that the billionaires have enjoyed is more “than it would cost to send a stimulus check of $3,000 to every one of the roughly 330 million people in America,” the report states. “A family of four would receive over $12,000.” The report points out that a trillion dollars is also “double the two-year estimated budget gap of all state and local governments”—the deficit facing states that will certainly prompt them to make more cuts in public jobs and services if it isn’t addressed. The authors of the report don’t argue that taxing the recent gains of the mega-rich would cover the entire fiscal cost of the pandemic. They stress, instead, the undoubted fact that, at the very apex of U.S. society, there is now a staggering—and historic—amount of wealth that could be taxed. “Never before has America seen such an accumulation of wealth in so few hands,” Frank Clemente, the executive director of Americans for Tax Fairness, said in a statement accompanying the report.
Of course, given that the Republican Party controls the Senate, and Donald Trump would have to sign any new spending bill, there is virtually no prospect of the U.S. government sending the tab for a relief package, or even part of it, to its billionaires. But just because something isn’t viable in a deeply corrupt political system doesn’t mean it isn’t an idea worth considering. And, indeed, there is now a well-formulated plan on the table to make the wealthy bear at least some of the costs of the pandemic.
The plan comes from the United Kingdom, which the coronavirus has hit exceptionally hard in human and economic terms. In a country of just about sixty-seven million people, there have been more than seventy-three thousand deaths. Gross domestic product is heading for a fall of more than ten per cent in 2020, and the budget deficit is expected to approach twenty per cent of G.D.P., a peacetime record. To help restore the country’s battered public finances, a U.K. commission of independent economists and tax experts is calling for a one-off, emergency tax on wealth.
In a lengthy report issued earlier this week, the Wealth Tax Commission, which was created earlier this year, laid out several proposals that could raise as much as ten per cent of G.D.P. Under the simplest one, anyone with over-all wealth, including financial assets and real estate, of more than five hundred thousand pounds would be obliged to pay an annual levy of one per cent for five years. Other versions of the plan are more progressive, with higher tax rates exercised on the largest fortunes, but all of the plans share one thing. “The defining feature of a one-off wealth tax is that it would be a one-off exceptional response to a particular crisis,” the report states. Because this tax would involve a onetime hit on wealth that has been accumulated in the past, it shouldn’t affect incentives to work and invest in the future, the report adds, gesturing toward a concern that many critics of wealth taxes have used to knock down such proposals. The members of the commission argue that this critique doesn’t apply here.
Britain has never had a wealth tax, and the commission pointed to a number of problems associated with introducing a permanent one, including high administrative costs and widespread avoidance. But a one-off levy “is a very different proposition,” Gus O’Donnell, a former Cabinet secretary and head of the civil service, wrote in a foreword to the commission’s report. The basic idea is to ask the country’s wealthiest people to help address an unprecedented economic emergency. The report recalls how after the First World War, Italy, Austria, Hungary, and Czechoslovakia introduced one-off wealth taxes. After the Second World War, the report adds, “capital levies played a role in the reconstruction efforts of France, West Germany, Japan, Belgium, the Netherlands, Finland, Luxembourg, Norway and Denmark. . . . The Japanese levy of 1946–7 raised over 10% of national income in the year that it was collected, mainly from the wealthiest 3% of Japanese society.”
The Covid-19 pandemic isn’t a ruinous military conflict, to be sure, but the shutdowns it engendered delivered an unprecedented financial shock to workers, small businesses, and state and local governments. If the lame-duck U.S. Congress passes another relief package to address some of the crisis’ most pressing needs, the Treasury Department will issue bonds to cover its cost, and the new borrowing will be added to the budget deficit for the 2021 fiscal year.
In February or March, the incoming Biden Administration will be looking for Congress to pass another big spending bill, which may contain more COVID-19 relief, as well as funding for some of the President-elect’s longer-term proposals, such as expanding child tax credits and subsidizing green investments.
With interest rates at historic lows—ten-year Treasury bonds are yielding less than one per cent—and mass vaccination likely to fuel a sharp economic recovery and surging tax revenues in 2021, the United States can afford these expenditures. But it would still be better off if it could quickly defray some of the debt that the pandemic has imposed. In fiscal 2020, the budget deficit, of 14.9 per cent of G.D.P., was the highest it has been since 1945. Between 2019 and 2020, the over-all federal debt held by the public rose from 79.2 per cent of G.D.P. to 100.1 per cent. Given this background, the Congressional Budget Office, in a report released earlier this month, warned that the country’s longer-term fiscal outlook was “daunting.”
Republican opposition almost certainly precludes any kind of wealth tax, including a one-off version. And it’s far from clear that Biden would endorse such a proposal, either. But the sight of billionaires getting even richer as tens of millions of Americans face titanic financial struggles is an affront to any notion of fairness or decency. In the extraordinary circumstance of a pandemic, wouldn’t it be reasonable to ask those who have benefitted financially from this annus horribilis to make a contribution toward getting the country beyond it?
Read More About the Presidential Transition
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- With litigation unlikely to change the outcome of the election, Republicans are looking to strategies that might remain even after rebuffs both at the polls and in court.
- With the Trump Presidency ending, we need to talk about how to prevent the moral injuries of the past four years from happening again.
- If 2020 has demonstrated anything, it is the need to rebalance the economy to benefit the working class. There are many ways a Biden Administration can start.
- Trump is being forced to give up his attempt to overturn the election. But his efforts to build an alternative reality around himself will continue.
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