Why The Rich Get Richer, And You Don’t
Published on: 07/01/2021
In this edition of Chart Talk, Tony Ogorek and Jeff Viksjo take a look at the income taxes paid by the top 25 wealthiest Americans from 2014 to 2018.
I’m Tony Ogorek and I’m here with Portfolio Manager, Jeff Viksjo. And Today we are going to ask the probing question, Jeff: why do the rich get richer and we don’t? Jeff, you know I think Somerset Maughman said it best when he said, the rich are different than you and me. And the rich, what we’re talking about is people who are Billionaires. We have a chart here which talks about just how different they are and we’re going to see if we can get into an explanation of why that is the case. So, let’s take a shot at it, what do you see here?
The chart looks at the top 25 wealthiest Americans from the period of 2014 to 2018, and it looks at just the change in their wealth. So, the top 25 Americans amassed $400 Billion additional in wealth between those years and they pay just $13 Billion in taxes. That’s an effective rate of about 3%. The reason is this wealth doesn’t come from where everyone else gets their wealth from, their income. They don’t make a dime in income, typically, they’re making everything in the stock market.
So, the interesting thing here is, Jeff, we’re running big deficits in the country and it isn’t because we are spending more that we should. If you look at the OECD tax rates, we are one of the lowest takes in terms of revenue that we get into our government, relative to our gross domestic product. So, the bottom line is, we have this sort of fake populism out there that we’re fighting for you and want to keep taxes down, don’t want to increase taxes. But the fact is, these 25 wealthiest people are paying next to no tax relative to the wealth they’ve got. People with W-2 income, they’re the ones that are paying for most everything in this country. That’s why we’re hearing cries for a wealth tax because they can say ‘I’m paying everything to code says to’, but the bottom line is, that the code is letting them get away with murder. So, hopefully this gives you a little bit more insight into why we’re hearing about wealth taxes and what the fallout from this ProPublica dump of IRS data’s been about.
Thank you for spending some time with us, and we look forward to seeing you at our next talk.
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