Patriotic millionaire: Don't just tax the rich, tax more of them
Patriotic Millionaires Chairman Morris Pearl on New York City Mayor Bill de Blasio announcing his candidacy in the 2020 presidential race.
The billionaires are starting to get worried. Not a day goes by without a millionaire or billionaire decrying the growing existential threat of socialism’s rising popularity.
Amid rising income inequality, the wealthiest people on our planet gathered in Los Angeles earlier this month for the annual Milken Institute Global Conference, where they were forced to confront the growing populist anger of millions of Americans barely scraping by.
While some speakers recognized the need to address these concerns, most brushed off the idea that our system of capitalism requires common-sense reform and regulation. Instead, they chose the usual playbook: fear-mongering about socialism.
Capitalism is the best system in the world for providing a great standard of living to a huge number of people -- but, taken to the extreme, it sows the seeds of its own destruction.
As a former managing director of BlackRock Inc. -- the world’s largest investment firm -- I don’t need a break. But our laws have decimated the middle class, while making a few people like me richer than at any point since the last Gilded Age.
The wealthiest Americans should support a healthier form of capitalism through public policy. Without immediate reforms, like the implementation of a fair tax code and a national living wage, a popular revolt against the millionaire and billionaire classes is inevitable.
Higher minimum wage
Our low unemployment numbers tell only half the story. Wages for most Americans have barely increased in four decades, while housing and health care costs have skyrocketed. Nobody in the wealthiest country in the world should work full time and still be unable to provide for themselves and their families.
Additionally, stagnant wages depress economic growth. With barely enough to keep the lights on and a roof over their heads, the millions of Americans who make less than $15 per hour have barely enough disposable income to save - and are unable to support their local businesses, invest in a home, or buy shares of a company.
One positive step would be to endorse the Raise the Wage Act in Congress. The bill would increase the federal minimum wage over the next five year until it reaches $15 an hour in 2024.
It would also help to unleash growth in the economy by unlocking the purchasing power of millions of Americans. Consumer demand drives growth, and with 40 percent of American workers earning less than $15 an hour, our economy has much greater potential than its current performance.
Higher taxes on the wealthy
The Trump tax cuts are speeding up out-of-control income inequality in the United States.
Rather than using our tax system to address the widening gap between the 1 percent and the rest of Americans, Republicans created a loophole in the U.S. tax code that gives corporations a tax cut for moving American jobs and factories overseas.
A smart tax system would prioritize the interests of Main Street over Wall Street. It would require more from those of us who have benefited the most, before the people of this country decide they’ve had enough and topple this rigged system.
We’ve done this before.
Although she was pilloried as unrealistic and extreme for suggesting a 70 percent top marginal tax rate, Rep. Alexandria-Ocasio Cortez, D-N.Y., could have gone higher. The top marginal tax rate in the U.S. was higher than 80 percent for more than two decades, from 1940 to 1963, during one of the most prosperous periods in our history.
A majority of Americans even favor taxing the wealthy, according to a Fox News poll.
Taxes and living wages before pitchforks
Those who aren’t interested in fixing our country’s gross inequality are fooling themselves. Take billionaire investor Ken Griffin who, at the Milken Conference, said “soaking the rich doesn’t work.”
Wealthy people like myself cannot pretend that the United States economy and our mode of capitalism, as it exists right now, works well for the vast majority of Americans just because it made us rich.
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If we have to choose between pitchforks and taxes, or between pitchforks and living wages, the wealthy must choose taxes and living wages.
Morris Pearl is chair of the Patriotic Millionaires, a group of hundreds of high-net-worth Americans who are committed to making all Americans, including themselves, better off by building a more prosperous, stable, and inclusive nation.