“Anti-intellectualism has been a constant thread winding its way through our political and cultural life, nurtured by the false notion that democracy means that 'my ignorance is just as good as your knowledge.'” — Isaac Asimov
Art makes up 2.5 percent of the biggest estates and just 0.6 percent of those who had between $10 million and $20 million. This Picasso fetched more than $95 million in 2006. TIMOTHY A. CLARY/AFP/GETTY IMAGES
The superrich are different from the very, very rich. For one thing, they own more art.
Estate tax data recently released by the Internal Revenue Service show what the wealthiest Americans possess when they die—and where the money goes.
First, a few basics. The returns in the data sample were all filed in 2014, which means they came largely from the estates of people who died in 2013. That year, the tax applied to estates of individuals exceeding $5.25 million, with a top rate of 40 percent, up from 35 percent the year before. Estates can deduct charitable contributions and bequests to surviving spouses, who then pay up when they die.
The most important thing to remember about the estate tax is that almost no one pays it anymore. Congress has bumped up the exemption and indexed it to inflation, ensuring that almost all of the 2.6 million people a year who die in the U.S. never have to worry about the estate tax.
That leaves the very wealthiest sliver of the country. Fewer than 12,000 estate tax returns were filed in 2014, and more than half of those returns didn’t yield any tax for the federal government.
The data break down what assets people hold at death, offering a glimpse into the holdings of the ultrawealthy. They don’t provide much information about all of the ways that wealthy individuals shift assets out of their ownership or all of the convoluted planning maneuvers that can reduce the size of estates before death. People who died with more than $50 million–the top category–were heavily invested in stock and closely held businesses.
Those who were rich enough to file an estate tax return–but not at the very top–relied much more heavily on retirement accounts such as 401(k) plans and on real estate.
It’s tough at the top. As one psychological counsellor to the 1% says: ‘I am not necessarily comparing it to what people of color have to go through, but …’
It is hard for the wealthy to discuss their troubles as others see them as overprivileged. But one therapist tells them: ‘Money is not the only thing that defines you. Your problems are legitimate.’ Photograph: Alamy
It’s a rainy Wednesday morning and Clay Cockrell is sitting in his office at Columbus Circle across the street from 1 Central Park West, which houses Trump International Hotel and Tower. In front of the tower is Central Park, where Cockrell holds his popular walk and talk therapy sessions.
Dressed in comfortable pants and a flannel shirt, Cockrell, a former Wall Street worker turned therapist, spends large parts of his days walking through Central Park or the Battery Park in downtown Manhattan near Wall Street, as a confidant and counsellor to some of the New York’s wealthiest.
“I shifted toward it naturally,” he said of his becoming an expert in wealth therapy. “We are trained to have empathy, no judgment and so many of the uber wealthy – the 1% of the 1% – they feel that their problems are really not problems. But they are. A lot of therapists do not give enough weight to their issues.”
And as they stroll through Manhattan, what issues are America’s 1% struggling with? There is guilt over being rich in the first place, he said. There is the feeling that they have to hide the fact that they are rich. And then there is the isolation – being in the 1%, it turns out, can be lonely. It seems F Scott Fitzgerald was right, the very rich “are different from you and me”. Especially in 2015.
From the Bible to the Lannisters of Game of Thrones, it’s easy to argue that the rich have always been vilified, scorned and envied. But their counsellors argue things have only gotten worse since the financial crisis and the debate over income inequality that has been spurred on by movements like Occupy Wall Street and the Fight for $15 fair wage campaign.
“The Occupy Wall Street movement was a good one and had some important things to say about income inequality, but it singled out the 1% and painted them globally as something negative. It’s an -ism,” said Jamie Traeger-Muney, a wealth psychologist and founder of the Wealth Legacy Group. “I am not necessarily comparing it to what people of color have to go through, but … it really is making value judgment about a particular group of people as a whole.”
The media, she said, is partly to blame for making the rich “feel like they need to hide or feel ashamed”.
‘It’s easy to scapegoat the rich’
Traeger-Muney, who moved to Israel six years ago, runs a global firm and specializes in working with inheritors, who often get a bad reputation in the press.
These types of protests can be very stressful for the rich. “It’s really isolating to have a lot of money. It can be scary – people’s reaction to you,” said Barbara Nusbaum, an expert in money psychology.
“There is a fair amount of isolation if you are wealthy. We are all taught not to talk about money. It’s not polite to talk about money. In itself, ironically, it’s harder to talk about having money than it is to talk about not having money. It’s much more socially acceptable to say: ‘I am broke. Things are hard.’ You can’t say: ‘I have a ton of money.’ You have to keep a lot of your life private except in small circles.”
As a result, Cockrell points out, the rich tend to hang out with other rich Americans, not out of snobbery, but in order to be around those who understand them and their problems.
‘The rich have become more and more isolated’
The growing gap between the poor and rich is a global phenomenon. According to Oxfam, the richest 1% have seen their share of global wealth increase from 44% in 2009 to 48% in 2014 and are on track to own more than the other 99% by 2016.
Here is a eye-popping statistic from Brazil: 1 percent of the populationcontrols almost half the land. The country is one of the most unequal places in the world in terms of land distribution. And one reason is colonial-era laws that are still on the books.
At an office in central Rio de Janeiro, where real estate sales in this area get notarized, the notary reads to us a list of families who are owed a percentage of all real estate transactions in certain parts of the city.
Among them is Orleans-Braganza — the name of the former Brazilian royal family.
The system is called enfiteuse, and practically speaking, it means that some people in Brazil still have to pay property taxes to former Portuguese royals and nobles.
The Brazilian royal family, pictured in 1887, included, from left to right: Antonio, Isabel, Pedro, Luís (seated), Augusto, Emperor Pedro II, Gaston, Empress Teresas Cristina and Pedro Augusto. Under the Brazilian system of enfiteuse, which grants land rights forever, descendants of the family are entitled to receive tax today.
Here’s the history: Enfiteuse is believed to have started in ancient Rome. It was taken to Brazil when Portugal colonized the area in 1500.
“In colonial times, private property didn’t exist in Brazil. All the lands were considered property of the Portuguese crown. The king would give concessions over the land to friends of the court,” recounts Alex Magalhães, a professor at Federal University of Rio de Janeiro.
Some of these concessions were vast. After all, Brazil was practically the size of a continent.
Those nobles — and the Catholic Church, which also received land — could earn rent by allowing other people to build on the property but keeping the land rights for themselves.
Shades Of Feudalism
It emulates a kind of feudal system that was popular in many parts of Europe centuries ago. Unlike the leasehold system in England, enfiteuse grants land rights forever.
Magalhaes says that, back then, it made sense: It was a way of supporting the whole colonial enterprise, and no one person could develop enormous landholdings.
It wasn’t too long ago that American power and the wealth of the nation was created by cities like Baltimore, Detroit, and Newark. Now, as wealth has been concentrated among the elite, these and many American cities are in decline. Infrastructure is crumbling, the middle class is struggling, and the effects of urban poverty are becoming harder to ignore.
VICE News contributor Charlie LeDuff (https://twitter.com/charlieleduff) looks at these issues in his work for VICE News and joined On The Line to take your questions.
How the American workplace is enriching the wealthy — and destroying everyone else
At a time when so many Americans are struggling just to earn a decent living and find adequate employment, it may seem counterintuitive to indict the work people are doing as one of the biggest problems facing the country. But when you take a look at what our work is turning us into and what it’s actually accomplishing, it becomes clear that our priorities are all out of whack.
In his 2015 State of the Union address, President Obama spoke about important labor issues like unequal wages for women and a lack of paid sick and maternity leave. He called on Congress to pass legislation raising the minimum wage and requiring employers to guarantee at least seven days of sick time a year to their employees. He had to do this because, remarkably, nearly 40 percent of the American workers have no sick time at all, nor is there any requirement for their employers to provide any – a regressive distinction the United States shares with only two other countries, Papua New Guinea and Oman.
Hopefully these important issues will be brought to light as the 2016 presidential race heats up, especially with Bernie Sanders running. The anti-family nature of U.S. labor law should make it a logical target for any values-oriented crusader; but predictably, Republican politicians oppose reform. While hiding behind a defense of small businesses, the Republican agenda is really a handout to mega corporations.
Walmart, for instance, has been exposed for its discrimination against pregnant women, forcing them onto unpaid leave or firing them outright if they become unable to perform certain duties. In April 2014, activists and employees forced the company to modify its policy, allowing for a “reasonable accommodation” to be made for women with “a temporary disability caused by pregnancy.” This weak and ambiguous concession leaves women with healthy pregnancies in the lurch, even though they still may require modified job duties.
Congress could intervene and establish better protections for pregnant women, but it doesn’t. The 1978 Pregnancy Discrimination Act – the last such act passed on the federal level – is so feeble that a Walmart spokesperson in 2014 could truthfully say, “We’re proud of our new policy. It is best in class and goes well beyond federal and most state laws.” That reveals at least as much about federal and state laws as it does Walmart. The Waltons are among the wealthiest people on the globe, yet their business won’t guarantee American workers the fundamental dignity of having a child without fear of repercussion. And so it goes with workers’ rights across sectors of the economy.
In 1991, the public was outraged by the amount of water that wealthy homeowners like Mark McGwire were using. These days, that information is off-limits.
Mark McGwire of the Oakland Athletics watches his first-inning, three-run homer sail over the left field wall on Friday, Sept. 19, 1992 in Seattle during a game against the Mariners. The homer was the 39th of the season for McGwire who finished the game with four RBI?s as Oakland beat Seattle 7-4. (AP Photo/Bill Chan)
During California’s last crippling drought, baseball slugger Mark McGwire became a poster boy for water wasters.
The burly first baseman figured prominently in a 1991 Oakland Tribune investigation that showed how residents of upscale neighborhoods skirted the conservation demands facing everyday homeowners. The Top 100 users in the East Bay used 15 times more than the typical household.
That included the Oakland A’s star, who pumped 3,752 gallons a day in the summer months at his home in Alamo. “There’s no way I would waste water,” he told the newspaper.
In response to the outcry that followed the story, the East Bay Municipal Utility District demanded that its top users cut water use by 20 percent, the Tribune reported. If customers refused, the district would limit them to about 1,200 gallons a day.
“There’s no way I would waste water,” insisted Mark McGwire in 1991, during California’s last crippling drought.
Today, nearly 25 years later, while McGwire’s had to deal with more high-profile denials, California again is in the clutches of a massive drought. And the very information that has the potential to drive smart policymaking is now off-limits to the public and journalists.
When a duplex condominium in New York’s new One57 supertall tower sold for $100.5 million dollars in January, it shattered all records. This condo is the most expensive single-family residence ever sold in Manhattan. Yet, at the rate that luxe residential towers are coming online in the part of Midtown known as Billionaires Row—consider the $91.5 million sale just last month—even that mondo One57 record may not last for long.
Steamy eight- or nine-figure sales were always the dream of former Mayor Michael Bloomberg. “If we can find a bunch of billionaires around the world to move here, that would be a godsend,” then-Mayor Bloomberg told The New York Times back in 2013. “Because that’s where the revenue comes to take care of everybody else.”
Construction is now underway on Nordstrom Tower, a supertall residential tower designed by Adrian Smith and Gordon Gill, the architects behind the Burj Khalifa. When the building is finished, the Nordstrom Tower will be the tallest residential building in the world. The one-percenters who can afford its lofts will be treated to some of the best views the United States has to offer.
And that’s just one of several buildings coming up that caters to the world’s wealthiest. So by Bloomberg’s logic, Gotham is saved, right? Not quite.
Thanks to the structure of city and state tax codes, the billionaires buying pieds-à-terre in the sky over Central Park are hardly paying property taxes at all. The values of these new condos are being assessed at just a fraction of what they’re worth. And buyers are paying only a fraction of that fraction in property taxes.