The coronavirus pandemic has triggered a dual crisis: The rapidly spreading disease that has thus far infected more than 3.5 million people and killed over 250,000 worldwide – and at the same time wrought economic devastation, exacerbating inequality in virtually every nation across the globe.
In the United States, suffering with the most COVID-19 cases of any nation, there’s a huge disparity in who is hurt most by record unemployment, not seen since the worst days of the Great Depression of the 1930s. What’s worse is that over the last four decades, the U.S. has seen a dramatic rise in income inequality. According to the World Bank, America is now the second most unequal nation among developed economies, behind China.
In a new report titled, “Billionaire Bonanza 2020: Wealth Windfalls, Tumbling Taxes, and Pandemic Profiteers,” the Institute for Policy Studies finds that the wealth of billionaires has grown astoundingly over the last few decades — and for some quite dramatically since the beginning of the coronavirus crisis, even as their tax obligations have plummeted. Between The Lines’ Scott Harris spoke with Chuck Collins, director of the Program on Inequality and the Common Good at the Institute for Policy Studies, and co-author of the report, who summarizes its findings and recommendations to prevent the pandemic from further concentrating wealth and power.
CHUCK COLLINS: The tax obligations of U.S. billionaires as measured as a percentage of their wealth went down almost 80 percent since 1980. And then since 1990, again, looking at each decade, U.S. billionaire-combined wealth went up over 1,100 percent. And if you look at what happened to sort of the median U.S. wealth, the wealth of the household in the middle of the United States middle population — their wealth grew 5.3 percent over that same 30 years. So just to show that the super-wealthy are pulling apart. But then we were curious about, you know, how has this pandemic affecting wealth of the billionaire class? And you probably remember in late February and March, there were all these stories about how the billionaires have lost all this money, you know, $400 billion just vanished from U.S. billionaires’ pockets. So we started to track it almost on a daily basis what’s been going on.
And it’s true March 18, billionaire wealth was down a bit from last year, but really in the last six weeks, it has just continued to surge to the point where, between March 18 and last Thursday, a six-week period where 30 million people lost their jobs in the United States, billionaire wealth went up $406 billion, a 13 percent increase. So, you know, if we’re looking for a symbol or a dramatization of what I would call the tale of two pandemics or the unequal sacrifice, here’s a group of people whose collective wealth continues to grow even though the fortunes of a vast majority of people are declining.
SCOTT HARRIS: Chuck, one of the really important parts of your report delves into recommendations: Number one, how we can stop the profiteering that’s going on in the upper levels of the income scale in this country — people taking advantage of this crisis. But longer term, how we can prevent the increasing disparity between the super wealthy in this country and the rest of us. What are some of the top recommendations — and I don’t know if you’ve got certainly nine or 10 of them that we could explore — but maybe pick some of the more important issues that you think our listeners should know about.
CHUCK COLLINS: Well, I think in addition to sort of the oversight and monitoring for profiteering, the other thing is this quarter we’re adding almost $3 trillion to the national deficit. At some point, we’re going to have to figure out how to pay for that. And that’s the point at which the wealthy, you know, it’s kind of like they’re in a fancy restaurant and they sort of slip out the back door without paying the bill and leave it for everyone else. We have to be very vigilant. We have to monitor the ways in which the wealthy hide their money, use the offshore tax system and trusts and all kinds of ways to hide and obfuscate what they own and anticipate that, and close down what I call the hidden wealth system. So that’s one thing that we should be looking at as well as what are some of the tax policies that we should use to raise revenue to ensure that the billionaires and the people in the top one-tenth of 1 percent pay their fair share of taxes as we come out of this pandemic.
So we advocate for something called a millionaire surcharge, which is an income tax on the very wealthiest one-tenth of 1 percent, as the first way to raise a trillion dollars to cover these expenditures. Another thing — and we’re really kicking into gear this week on this — is the fact that wealthy people give a lot of money to charity, take tax deductions, and then that money sits in private foundations and donor-advised funds. It’s essentially sidelined and we’re calling on Congress to pass what I would call an emergency charity stimulus, which is to increase the payout requirements for these private foundations and donor-advised funds. We think about $200 billion could move in the next two to three years into the nonprofit sector, into the frontline charities. And as we know, people are lining up at food banks and yet these nonprofit organizations are in dire straits.
There are 12 million people who work in the nonprofit sector. It’s 10 percent of the private workforce. If we could move that $200 billion over the next couple of years, that would make a huge difference. So we’re basically calling on Congress to get that wealth off the sidelines. It’s already been paid for by tax breaks that rich people have already taken. So those are a couple of the things that we think we should be focusing on.
One thing that’s not really in our report, but I’ll just mention it, is since our report came out, we’ve discovered that there’s a huge giveaway. We call it the millionaire giveaway in the CARES Act – the March bill that Congress passed that supposedly we’re getting our $1,200 a stimulus check. Well, turns out there was a secret provision in there, a loophole that allowed 43,000 business owners who are making more than $1 million a year to get an average $1.6 million tax break. And so we’re trying to close up that loophole and people can just Google “millionaire giveaway” and they’ll find out information about how to repeal that part of the CARES Act.
For more information, visit the Program on Inequality and the Common Good at the Institute for Policy Studies at Inequality.org.