In a recent interview with CNN, billionaire Leon Cooperman choked up, visibly upset as he talked about the future he envisioned for his vast fortune and the havoc he imagines a wealth tax, like those proposed by Elizabeth Warren and Bernie Sanders, would wreak on his plans. He characterizes her proposal as “socially and morally bankrupt” and complains, echoing Chase CEO Jamie Dimon, that Warren has been engaging in the “vilification” of billionaires.
“I don’t need Elizabeth Warren telling me that I’m a deadbeat and that billionaires are deadbeats,” Cooperman told CNBC. “The vilification of billionaires makes no sense to me.”
Cooperman sobs in this interview, verklempt that his plans to give away half of his fortune through philanthropic endeavors and to leave the other half to his family is somehow legitimately threatened by Warren’s proposal.
Should we “pity the billionaire,” to borrow the title of one Thomas Frank’s books?
Well, let’s think rationally and try to calculate the extent to which Cooperman’s hopes and dreams have been dashed.
Warren, who has been embroiled in a public argument with Cooperman and Bill Gates, created a tax calculator for billionaires so at least their complaints could be accurately informed rather than replete with overblown exaggerations that Robin Hood Warren is going to drain their bank accounts, leaving them penniless.
Bill Gates, whose worth is valued at $107 billion, has said he now pays roughly $10 billion in taxes and can see fairly paying up to $20 billion in taxes, joking that he doesn’t think paying $100 billion would be fair.
He has said, “I’d love for somebody to find a middle-ground approach.”
According to Warren’s calculator, Gates would pay an additional $6 billion in taxes, less than the $10 billion even he sees as reasonable.
Is this middle ground?
Cooperman’s worth is valued at $3.2 billion. Let’s say he had to pay an additional $18 to $25 billion in taxes. He’d still have some $275 billion, while Gates would have roughly $100 billion.
A reasonable mind might conclude they’ll still have quite a vast fortune to leave to their heirs or pursue new ventures.
Let’s keep in mind that the top marginal tax rate for individuals in the U.S. through the 1950s and 1960s exceeded 90%; from 1971 through 1980, the top rate was 70%; and Ronald Reagan cut the top rate to 50% in 1982. In recent years, the top rate has fluctuated between the mid- to high-30s. So the proposed rates in these wealth taxes are nowhere near restoring even historical rates.
And let’s keep in mind, as we think about what’s reasonable and fair, that 40% of Americans don’t have $400 to be able to cover an emergency expense. That is, a large number of Americans are living on the edge of economic survival.
Let’s also keep in mind that the vast majority of taxpayers have hopes and dreams as well—hopes of affording a college education for themselves or their children, of having childcare so they can work, of having access to affordable healthcare. The wealth tax would go a long way toward making these dreams a reality.
And let’s also keep in mind that these same taxpaying Americans who struggle to educate and take care of their children and pay medical bills don’t have the same luxury as Bill Gates of engaging major media outlets to let them know what they’re willing to pay in taxes. Unlike Cooperman, they don’t get to be on television sobbing about their hardships of having only $275 billion left to leave to their children.
Let’s put that number in perspective. Think about making the very nice salary of $100,000 per year. One would have to work 1,000 years to earn $1 billion and thus 275,000 years to earn $275 billion.
Who deserves our pity and a tax break? The billionaire or the average American?
But is it fair, or are the likes of Warren and Sanders just “vilifying” billionaires, as Dimon and Cooperman claim?
Warren has simply tried to suggest that these billionaires have amassed their fortunes with significant help from the public sphere and infrastructure in which we all invest through the taxes we pay. She is simply asking billionaires to recognize, through the taxes they pay, we have all technically invested in their pursuits by helping to provide the educated workforce, the roads, airports, ports, public utilities, and so forth. The “people” deserve a fair return on that investment. Thus, this understanding of taxation is simply recognizing the basic reality of our socio-economic interrelationships.
CNBC’s Jim Cramer has defended Cooperman because of the magnitude of his philanthropic giving.
Let’s be clear, though, that philanthropic giving and paying taxes are in no way equivalent. Philanthropic giving, whereby one chooses where one directs one’s money, will not guarantee the upkeep and investment of our public sphere—our school systems, roads, parks, water systems, electrical grids, transportation systems, etc.
We hear the likes of Dimon decry income inequality, or people like Bill gates and other billionaires suggest they are willing to pay more taxes—and should; but when it comes to it, they resist and cry foul, as they are doing with proposed wealth taxes.
And sometimes, as with Cooperman, they’re not just crying foul; they’re crying out loud.
What they never return to talking about, after complaining about wealth taxes, is how we’ll address the challenges of ensuring Americans have healthcare, quality public education, universal childcare, and so forth.
It seems they don’t really care about those issues, which is a pity.