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The Greed Pandemic

by Ed Raymond | .(JavaScript must be enabled to view this email address) | Gadfly | July 26th, 2020

Why We Need a Wealth Tax
In one of the wealthiest neighborhoods in one of the wealthiest cities on Planet Earth, a homeless woman named Rosa lives her life a nickel at a time. The New York City 5-cent deposit system provides her some income because she sorts through bags of trash for cans and bottles from the elite apartments surrounding Gracie Mansion, the mayor’s residence. When she counts out 200 bottles and cans, she puts them in blue bags given her by a sanitation company. The company picks them up by truck and she is slipped a $10 bill for each bag she has collected. Rosa has been doing this for years, sometimes sleeping in shelters or in nearby parks. Sometimes she even dares to sleep in Central Park. Rosa is hoping the city expands the type of cans and bottles allowed so she can earn more nickels. An entire “homeless” economy has developed around bottles and cans. The surrounding apartments rent for $13,500 a month. In May of 2020 there were 59,308 homeless in New York City, including 13,523 families with 20,044 children making up two-thirds of the homeless population. “Nice” Minnesota currently has over 10,000 homeless. The Minneapolis Park Board recently approved 20 designated city parks that each could have a maximum of 20 tents housing the homeless.

The Salzberger estate of 260 acres on the border of New York and Connecticut is for sale for $49.5 million. Built at the end of the 19th Century Gilded Age, the main house has 17,000 sq. ft. of living space with eight bedrooms, ten bathrooms, a library, a conservatory, separate living, dining, and breakfast rooms, and an Olympic-sized swimming pool. On the grounds are four guest houses, two horse barns, a swimming pool, a private lake, and a hedge maze puzzle for adults and children. The present owner wants to sell because she has other homes in Florida and New York. The one in New York is valued at $65 million. Many school buildings in the poorer precincts of New York City have roofs that leak only when it rains.

Wealthy parents are already making plans to educate their children at home or in pods if regular schools are unable to open this fall. Some are planning to hire tutors to take over home schooling at a cost of $500 to $1,300 a month for each child. Other parents are considering offers from pandemic “learning pods” to rent space to teach small groups of children. Groups of six children will cost about $720 a week in Philadelphia. Other wealthy parents are considering hiring out-of-work public school teachers as live-ins for about $100,000 a year to teach their children. If wealthy parents follow through with such plans, the inequities in education will greatly multiply. In one of the richest ZIP codes in the country, Fairfax County by Washington, unemployed teachers have been deluged with offers. When wealthy college kids couldn’t use the airlines to fly home when their universities closed, their parents had a simple answer. Hire a private jet service to pick up the kid at $5,000 an hour. About 28 million K-12 U.S. students come from poor families who cannot afford computers,WI-FI, or other equipment—and certainly can’t afford to pay tutors or teachers in leaning pods.

People who want to live in an ordered society pay their fair share of taxes to keep the society believing that “all men are created equal.” People who don’t give a crap about other people or the country they live in always demonstrate they don’t want to contribute to the welfare of all members of the human family. Republicans have dramatically demonstrated that “greed is good” since the white supremacists and the Tea Party branch have become the spokesmen for the party. The Republicans sponsored a decade-long campaign to strip the Internal Revenue Service of enforcement powers and employees who could lawfully collect taxes. They have cut the IRS budget by a fifth since 2010. A Congressional Budget Office(CBO) report on the years 2011 to 2013 indicated the IRS failed to collect $381 billion from rich tax delinquents in each of those years. The CBO reported adding $40 billion to the IRS budget would bring in $103 billion in additional revenue. For every 33 cents in the budget the IRS collects $100. The IRS has asked for an additional $900 million in the 2021 budget. If approved, the revenue could pay the tuition of all college students. The richest 1% is responsible for 70% of all unpaid taxes. If the IRS had been fully funded we could pay off the entire student debt in about four years. A sufficient tax on wealth could accomplish the task in two years. Because of the decreased funding by Republicans 40% fewer returns are being audited and people with incomes over $1 million are now audited 63% less than a decade ago. And—of course—tax havens around the world and in this country are filled with U.S. customers. The IRS is still using computer software developed when JFK was president!

Two University of California economists in their book “The Triumph of Injustice” describe how the effective tax rate of federal, state, and local taxes paid by top earners has steadily declined over the last 70 years from a period where rates were quite progressive. The best evidence: In 2018 the top 400 earners paid a lower effective tax rate than their secretaries and finance managers. In the meantime a minority has gained an ever-increasing share of economic growth. As an example, the top 0.1% incomes have increased 500% from 1970 to 2018 from $1 million to $5 million, and the top 0.01% incomes have gone up 700%, from $3.5 million to $25 million. During the same time the bottom 50% of earners grew from $8,000 to $27,000 in 2018, slightly above the poverty line for a family of four. When will we learn that taxes are not a penalty but a collective budget for everybody’s benefit? The minimum wage of $7.25 has not been raised for over a decade. Full-time workers who make a minimum wage cannot afford a two-bedroom apartment in any state in the US without spending 30% of their income. Income per hour required by some states for two-bedroom apartments: North Dakota-$16.18, Minnesota-$20.53, Wisconsin-$17.27, California-$36.96, Arkansas-$14.29, Texas-$20.90, and Hawaii-$38.76.

What motivates a wealthy person to buy at auction a Hermes handbag made of Nile River crocodile hide with 18-karat gold buckles and diamond encrusted strap for $376,000? What motivates another to buy his wife a $30,000 Hermes purse to celebrate her 30th birthday? What motivates another to pay $50,000 for a broken tennis racket Serena Williams smashed when she lost a match in the 2018 U.S. Open? What motivates another to pay $46,000 at auction for a land crab weighing 2.7 pounds? What motivates casino magnate Steve Wynn, with a fortune of $3.1 billion according to Forbes, to pay $105 million for a pair of Picasso paintings? He is an art collector who displays hundreds of millions of dollars’ worth of paintings in his collection at a number of resort-casinos he has developed. At the same time he’s facing dozens of sexual misconduct charges from women workers. Is it it total lack of empathy? He seems to face the question: when do you have enough money and sex? Meanwhile, in Jackson, Mississippi, where in the first half of the 19th Century had more millionaires than New York City because of cotton and slaves, the public schools are now suffering from of lack of funds. The Jackson public schools are 95% black, with some of them having 95% of their students on free or reduced lunch. (About half of the 51 million K-12 students in the U.S. qualify for free or reduced lunch.) Mississippi has the highest black children’s poverty rate in the country at 43%, with the white rate at 14%. A third of Jackson’s students do not have a computer or Internet. In several high schools 25% of the students are chronically absent. The 22,500 Jackson students score only 24% in proficiency standards and 27% in language arts.

According to the Wall Street Journal, Regency Seven Seas Cruises is launching a new cruise ship The Seven Seas Splendor this month with a 4,443 sq. ft. Regency Suite for the very wealthy. The master bedroom features a $200,000 bed. The suite has a guest bedroom, private dining room so the renters don’t have to eat with the peasants, and a price of $11,000 a night. The suite has been fully booked for the first year. The new ship caters to the wealthy with 375 “elegantly” designed suites with private balconies, 500 crystal chandeliers, more than an acre of imported Italian marble, five high-end restaurants, and four theater productions. Regency has not revealed price lists for the new ship except for the Regent Suite. I imagine that one of the passengers will be the person who paid $250,000 at an estate auction for a kitchen knife used by Anthony Bourdain of TV chef fame. The Cruise Lines International Association says 32 million will take cruises in 2021. By the way, another passenger may be the person who paid $120,000 to eat a banana that was on display as an art object in Miami. It was getting ripe.

While the wealthy cruisers welcome the moon from their private balconies aboard ship, over 22,500 students in Fairfax County, Virginia will be receiving their education in poorly constructed plywood trailers. Although Fairfax County is the third richest county in America, the school district owns 820 plywood trailers,many of them with visible green and black mold that can spread disease. There are thousands of these trailers in use in Virginia that present health and safety risks. Students sometimes break through the rotten floors. Virginia teachers make $9,000 less than the national average salary.

Over 60% of all of the U.S. wealth is now inherited. We are creating a large aristocracy who will never have to work a day in their lives. Meanwhile the IRS does not have the money to investigate 879,415 high-income people who didn’t file returns in 2014 through 2016. They allegedly have not paid $45.7 billion in taxes.There are 1,891 who each owe more than $1 million. Each U.S. average household is paying a $3,000 surtax to cover those who are not paying what they owe. The wealthiest 5% of American families now hold 57% of all household wealth.

Daniel Markovitz of Yale University reminds us what the COVID-19 virus is doing to the bottom 95%: “The inequities among children are especially awful and will reach deep into our future. Rich private schools (Harvard has a $41 billion endowment, Princeton $14 billion) move online with great success, while public schools, especially in poorer districts, find remote learning much more challenging. Long summer holidays already segregate the rich, whose achievement test scores continue to rise, from the poor, whose reading and math skills fade each summer. Just imagine the unequal effects of a lost semester, or, God forbid, two.” So far the richest 50 families have dedicated less than one-tenth of one percent of their wealth to alleviate the health and economic crisis. If that’s what the selfish think of America, they should get the hell out of the country and move to their tax havens. At least then it would be against the law for them to buy our politicians.

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