Simon Hunt and Ben Steverman
April 30, 2021
“We are the obscenely rich elite!—
and we’re getting richer while the poor starve!”
“LET THE POOR EAT CAKE!”
— Marie Antoinette, Queen of France,
before her head was chopped off, 16 October 1793
Joe Biden’s election has done little to slow the inexorable surge of wealth among U.S. billionaires. In the president’s first 100 days in office, against a drumbeat of calls for the rich to pay more in taxes, the 100 wealthiest Americans added a combined $195 billion to their fortunes, according to a Bloomberg analysis.
The most recent gains have been fueled by the continued rise of the stock market since Biden was sworn in Jan. 20, along with the vaccination program’s fast rollout and a $1.9 trillion government stimulus package. The S&P 500 and Dow Jones indexes have both climbed more than 10% during that time.
Attempts such as Biden’s to refloat the economy can boost incomes and wealth at the very top, said Mike Savage, a sociology professor at the London School of Economics.
“We’ve seen that paradox since the 2008 financial crash with quantitative easing, which has mostly benefited people with assets, inflating their value significantly,’’ Savage said.
The richest 100 made a further $267 billion between the 2020 election and Biden’s inauguration, amounting to a total gain of $461 billion since Nov. 4. From Donald Trump’s 2017 inauguration to last fall’s election, those billionaires got about $860 billion richer.
The combined fortunes of the richest 100 Americans have reached $2.9 trillion, greater than the combined $2.5 trillion wealth of the bottom 50% of the U.S. population, according to data from the Federal Reserve.
The rise has been driven by an explosion of wealth among a handful of ultra-billionaires. The 10 wealthiest Americans have added $255 billion since election day, bringing their combined net worth to $1.2 trillion.
The biggest driver of this wealth surge has been tech companies like Amazon.com Inc., Facebook Inc. and Alphabet Inc.’s Google, bolstered by increased online and stay-at-home activity during the coronavirus pandemic. The FANG stocks index has climbed 94% in the past 12 months compared with the 45% advance of the S&P 500.
Amazon founder Jeff Bezos, the world’s richest man, has gotten $11.7 billion richer this year, according to the Bloomberg Billionaires Index, adding to about $120 billion of wealth gains during the Trump presidency. Mark Zuckerberg’s net worth rose $8.1 billion yesterday alone on the strength of Facebook’s first-quarter results.
Google’s Larry Page has added $26.6 billion this year after the California-based company posted record profit last year, while the wealth of Tesla Inc.’s Elon Musk has grown $5.1 billion since January.
Finance billionaires such as Warren Buffett and Blackstone Group Inc.’s Stephen Schwarzman have also been major beneficiaries of stock market rises.
The wealthiest 10 Americans have added almost $150 billion to their fortunes since the start of 2021
In his first 100 days, Biden has moved quickly to propose sharp tax hikes for the rich and programs to funnel trillions of dollars to middle- and lower-class Americans in the form of new infrastructure, social spending and stimulus checks. He laid out those policies in his first address to Congress on Wednesday.
“Sometimes I have arguments with my friends in the Democratic Party,” Biden said. “I think you should be able to become a billionaire or a millionaire. But pay your fair share.”
Under his “American Families Plan” announced Wednesday, the top rate of personal income tax would increase to 39.6% for the highest 1% of earners from the current 37%, while the capital gains rate would be raised to the same level for those earning above $1 million, wiping out the discrepancy between income and capital gains tax rates that has benefitted many of the ultra-rich.
The wealthiest 1% currently pay 40% of all federal income taxes, according to Internal Revenue Service data, an amount that doesn’t include payroll taxes.
“When you ask the American people what they want, they want corporations and millionaires and billionaires to pay higher taxes,” said Erica Payne, founder of the Patriotic Millionaires, a group of progressive high-net-worth individuals. “It is politically a winner, it is economically the right thing to do and it is morally a no-brainer.”
Corporate Tax Hike
The White House has also proposed a plan to hike corporate taxes to fund infrastructure spending. In a surprise this month, Bezos issued a statement saying he supports the general idea. “We look forward to Congress and the administration coming together to find the right, balanced solution that maintains or enhances U.S. competitiveness,” he said.
Conservatives say boosting spending by adding a greater burden on the wealthy can backfire.
“Government investments are often sold to the public with the promise that they will improve lives and improve the economy,” Scott Hodge, president of the Tax Foundation, argued in testimony before Congress this week. “In every case, the economic harm caused by the taxes would swamp any of the benefits from the new spending, leaving taxpayers and the economy worse off.”
Despite the pandemic, Fed data show all groups gained wealth last year. The top 1% did best, however, adding $4 trillion in 2020 and bringing their total net worth to almost $39 billion, more than the bottom 90% of Americans combined.