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Dare to Demand Your Share of the Wealth

Life is unfair. Some people are handsome, healthy, wealthy, and/or wise; while others are hideous, sickly, poor, and/or stupid. There’s not much you or I can do about those attributes, assets, or characteristics that are inherited. Life is what it is.

Actually, we can alter some of them. We can improve our looks, our health, and our wisdom a little via exercise, better nutrition, and through education and experience. Wealth is a stickier widget to deal with. Changing its distribution requires a lot of imagination, much skill and huge doses of daring, cunning, and tenacity. And that is because wealth is protected by laws, law enforcers, and courts. Robbing banks or people is against the law. Violating contracts and agreements is illegal. Tax advantages and disadvantages are written into laws. Property rights are deeply embedded in the laws. Outsmarting someone, however, is not against the law—especially when it is done fairly and with honor. It helps when that other person has huge sums of wealth, and he or she is beating your brains out unfairly in the market place or in the game of life with it.

This essay is about turning the tables on those who have been beating us unfairly with their wealth. It shows how you and I can acquire a lot more of the wealth that you and I have produced. And because the top 1 percent hold more wealth than all the remaining 99 percent of us combined—what could be fairer than diverting some of that newly created wealth away from them and to us? After all, we produced at least 99 percent of it, and we are likely to continue producing at least 99 percent of it.

I want first to make certain that we all understand the moral issue at hand. We don’t want to take anything that is not ours, nor do we want to break the laws that protect the wealthy from us. We simply want to outsmart the wealthy—fairly and squarely on terms that are in harmony with the laws of the universe. Like our forebears before us, we can begin by proclaiming that it is our Manifest Destiny to own that which we have already produced.

We know that GDP is the final value of all goods and services produced in one year. But that value (currently about $17 trillion) does not tell us anything about the value of the resources that were created, consumed, polluted, or diminished in their production. Current estimates put the value of creation, consumption or diminution of our stock of knowledge, air, land, waters, natural resources, and airwaves at 15 percent of GDP. The total comes to $2.5 trillion per year, or $17,500 per income earner. And so, to fairly apportion America’s stock of knowledge paid by taxpayers via university research and development costs; the cost of new products that take away jobs paid by taxpayers, we need to give taxpayers below the average income a tax credit. In addition, we can assess a carbon tax ($300 billion); a financial speculation tax ($350 billion); intellectual property charges ($300 billion) on corporations with market capitalization values above the average market capitalization value. [1]

Notice that corporations in general, and high level corporate officers in particular, along with their stock holders are the recipients of all those hidden costs paid by you and me. Increases in dividends, stock prices, stock buybacks, and tax breaks flow to them, not to us—the ones who pay the taxes. They sit on $90 trillion of wealth. How big is your stack? It’s only fair to ask. And to reassess. And to reapportion. And to do so is in accordance with universal laws of justice.

Did you know that 90 percent of GDP comes from spending? It’s true . 70 percent is from consumer spending (that’s you and me), and 20 percent comes from government spending (that’s our tax dollars). Together, those two categories account for $15.3 trillion of current GDP. They also account for $13 trillion of personal income, and $6.1 trillion of tax revenues at all levels of government. The money in those two spending categories is called “money in circulation,” or M1 in the jargon of the Federal Reserve. M1 is the source of jobs.

So who are the job creators? Spenders! That’s also you and me. That $15.3 trillion in personal incomes account for the entire workforce of 144 million workers. Divide the 144 million into $15.3 trillion and you get an average annual income of $106,250. That is not a typo. If your income is less, then you are paid less than the average income. And the reason why you are paid less is because a few are paid more—a lot more. You can start with Ray Dalio, the hedge fund manager, who was paid a cool $4 billion a couple of years ago. In his case, he pulled down the average income by a big chunk.

How many jobs do the rich create? Actually, it’s very close to zero. That is because they are not spenders; they save. And savings are not money in circulation. That money (M2) is out of circulation. It grows from capital appreciation and from dividend payments. Both flow mainly to the wealthy. They have lots of ways to escape taxation altogether. Off shore tax havens are one, private foundations are another. Remember Ross Perot? He’s that Texas billionaire who ran for president back in 1992. Last I heard he had all his wealth tied up in Texas municipal bonds that are exempt from both federal and state income taxes. The Walton siblings (children of Sam Walton, Wal-Mart founder) have about $140 billion that Sam left them. It is reported they pay no taxes at all by using a very sophisticated network of legal loopholes. Suffice to say when the wealthy run out of ways to avoid taxes, they pay just 15 percent on a small portion of their income.

Let me leave you with just a few more factoids about wealth. Today Americans hold $100 trillion dollars of wealth (net value of all major assets minus debts). With approximately 100 million families in America, the average comes to $1 million per family. If your family has a net worth of less than $1 million, you are below average. If you are in the middle class your family net worth is about $333,000. If you are in the bottom 50 percent, your net worth is zero. The bottom 99 percent would be worth a lot more if you held more of the wealth that you helped to create.

For Discussion: This essay is just the start of a broader and deeper discussion that needs to take place. All taxpayers, for example, pay 90 percent of the research and development costs paid by the government, yet the fruits of that work that flow in the form of profits accrue mainly to the very wealthy who had almost nothing to do with developing the stock of knowledge that created it. A similar case can be made for resource ownership and its use; land ownership and its use; and pollution costs. Readers are encouraged to give these issues much thought, to develop your own ideas, and to make them as widely available as your immense talents and remarkable skills can push them. Don't despair that your voice means nothing. One essay can become 15; and those can become 500; and 500 can become 5,000. A petition based on one brilliant idea can go viral. It’s your country, and your future. How to fairly apportion wealth is not the whole story, but it is the most important part of how to make your financial goals in life a reality.
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[1] Some of the data in this paragraph is from professor Paul Buchheit, author of American Wars: Illusions and Realities, Clarity Press, 2008.