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April 15, 2013 |
| THIS WEEK | |
| Back in 1950, movie mogul Charles Skouras took home $800,000, more than any other top corporate exec in America. At the tax deadline that year, Skouras faced a tax rate just above 90 percent on his take-home over $200,000.Skouras, interestingly, didn’t seem to mind. He paid his taxes with a smile, the mogul told reporters, proud to live in a country where you had taxes, not graft.
Our top executives today, by contrast, don’t smile at tax time. They laugh — at the feeble efforts of officialdom to block their massive corporate tax avoidance. How can we squelch this arrogant avoiding? Well, we could play a video game. Like the brand-new Tax Evaders, a deliciously creative blast against the games CEOs play at tax time. Last week, Tax Evaders activists projected their game onto buildings that house some of America’s most notorious corporate tax dodgers. Charles Skouras, a big projector guy, would no doubt have approved. Inside this week’s Too Much, more on movies and imagination. |
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| GREED AT A GLANCE | |
Last week’s uproar over the future Social Security benefit cuts in the new White House budget proposal has overshadowed a little-known retirement tax break that, unlike Social Security, really does need trimming. This tax break, the Roth IRA, went into effect at the end of the 1990s. The program’s beneficiaries, Roth boosters claimed, would be average Americans. But the real winners, tax lawyer Bob Lord details in a new Inequality.Org analysis, have been America’s wealthy. They and their kids can use Roth IRAs to generate tax-free income for up to a century. In the not too distant future, Lord notes, the aggregate Roth IRA balance of America’s rich will hit a stunning $1 trillion. The new White House budget does promise some relief against IRA abuse, but doesn’t spell out any specifics . . . The Austrian banker Herbert Stepic could have pocketed 5 million euros, about $6.5 million, for his labor last year. His bank’s share price has jumped 62 percent the past three years, and Stepic has a contract that ties his pay to that share price. But Stepic last week returned $2.6 million worth of his 2012 pay. He told Raiffeisen bank employees that “market compliant” pay can “turn out to be too high.” Stepic termed his giveback “a moral obligation” to fellow staff. Meanwhile, in New York, top execs are offering another take on morality. Con Ed, the New York electric utility that left the victims of last fall’s Superstorm Sandy without power for days, has handedCEO Kevin Burke and his executive team millions in bonuses “in recognition of their efforts” through “a series of extreme weather events.” Burke’s bonus will run $1.8 million . . .
The wealthy don’t like to wait. Even for movies. Now they don’t have to. Prima Cinema is now offering a new service that lets movie-lovers of means view the latest Hollywood release the same day that release hits movie theaters. The cost: $500 per viewing, after installing special projection equipment that costs $35,000. This new service will initially be available only in Southern California, New York, and Florida. Says Prima CEO Jason Pang: “This is not Netflix.” The service debuted in January. Pang is expecting 1,000 subscribers by year end. |
Quote of the Week “The plutocracy has learned something important from the collapse of 2008 and its aftermath. If you cause a depression, if you loot and exploit the vulnerable to enrich yourselves while spreading the gap between rich and poor, and if you even go so far as to steal the homes and other assets of your victims in broad daylight, then mainstream parties of the contemporary West will do nothing to stop you.” |
| PETULANT PLUTOCRAT OF THE WEEK | |
 Ron Johnson considered himself a CEO superstar when he took the reins at retailer JC Penney 17 months ago. Penney certainly paid him like one: $53.3 million right at the start, most of that to replace the stock Johnson would have grabbed if he had stayed on with Apple computers, where he ran retail operations. As CEO, Johnson loudly ridiculed Penney’s in-house culture and moved to reinvent the chain as “a hip place to shop” for young affluents. He imported new top lieutenants and paid them handsomely, too, $33.4 million for his chief operating officer and $20.2 million more for a “chief talent officer.” Now Johnson will have to peddle his own talent. Last week, with sales down by billions, the powerful hedge fund manager on the Penney board who’d recruited Johnson turned on his superstar and helped orchestrate his ouster. |
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| IMAGES OF INEQUALITY | |
 Motion graphics artist Nick Pittom, inspired by the smashing viral success of last year’s Wealth Inequality in America video, has just published online an equally compelling look at our grand economic divide, but focused on the global scene. The world’s 300 richest, points out his new Global Wealth Inequality: What you never knew you never knew, hold as much wealth the world’s poorest 3 billion. |
Web Gem therules.org/ Learn more about the vast global wealth divide and help change the rules that concentrate wealth at the world’s economic summit. |
| PROGRESS AND PROMISE | |
 Out of France: a new twist on what governments can do to discourage excessive executive compensation. Late last year, the French high court threw out on technical grounds a plan by French president François Hollande to tax individual income over million euros — about $1.3 million — at a 75 percent rate. Now Hollande is proposing that French corporations pay a 75 percent tax on any compensation over 1 million euros they lay on their top executives. One of those top execs, France Telecom’s Stéphane Richard told reporters last week he would forego any pay over a million euros if the new tax goes through. Noted Richard: “I would not want France Telecom to have to pay this tax on my salary.” |
Take Action on Inequality Looking to learn how to better engage people in dialogue about the wealth gap and how to fight it? Check out the latest United for Fair Economy “training of trainers” conference this June in Boston. Details online. |
| INEQUALITY BY THE NUMBERS | |
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Stat of the Week Why America’s deep-pocket tax cheats aren’t exactly shaking in their boots: The number of criminal convictions for tax offenses has fallen over a third since 1992, despite a 22 percent increase in the nation’s population. The odds of getting convicted for a tax crime, notes tax analyst David Cay Johnston, have dropped by nearly half over the last two decades.
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| IN FOCUS | |
| Not the Picture Picasso Would Have PaintedA colossal gift from a fabulously rich patron of the arts has the museum world buzzing. But hold the hosannahs. The rich aren’t saving us.
Thomas Campbell didn’t have a good week last week. He had a great week. Campbell directs the Metropolitan Museum of Art in New York. Last week heannounced “something museum directors only dream about”: the donation to the Met of a collection of paintings, drawings, and sculpture worth over $1 billion.
Forbes estimates Lauder’s overall net worth at well north of $8 billion. Chunks of this fortune have been going to the art world for some time now. In 2008 alone, Lauder gave $131 million to the Whitney Museum. Philanthropy this bold simply thrills apologists for inequality. Immense concentrations of private wealth, these cheerleaders for grand fortune love to claim, bring culture to our civilization. Only the truly wealthy, the argument goes, have the time and resources to cultivate a real appreciation for the finer things in life. “The rich make life more interesting,” as the prominent business editor William Davis gushed in the early 1980s. “Walk around any museum and look at the treasures they have left us, and ask yourself what there would be to see if Communism had arrived four centuries earlier.” Editorial writers at the New York Post echoed those sentiments last week in a tribute to Lauder’s latest king-sized gift to the art world. Let’s hope this gift, the editorial opined, helps change the way our society “thinks about billionaires.” “Being rich doesn’t make you evil,” the Post editorial continued. “And the accumulation of wealth can enrich others — in countless ways.” Let the Lauder gift especially be a lesson, the editorial huffed, to those who may still want to subject the rich to “millionaire taxes” meant to “share the wealth.” In reality, of course, we’ve seen precious little “sharing the wealth” over recent decades. Billionaires like Leonard Lauder have watched the tax rates on their incomes plummet. And the resulting squeeze on the public purse has had a substantial — and troubling — artistic impact, especially in America’s schools. In New York City, as one local arts group relates, budget cuts have painted a “grim picture for arts education.” Kids in New York live “surrounded by a priceless array of arts and cultural institutions.” Yet they’re growing up “culturally isolated.” Nearly a quarter of New York’s schools have no certified arts instructor in them. New York hardly stand alone. In Los Angeles, one arts activist noted last fall, 53 percent of elementary-age kids are getting no exposure to arts instruction. In Detroit, 60 percent of schools “lack art education as part of the curriculum.” Nationwide, the same pattern. The U.S. Department of Education reported last spring that 4 million elementary school students are going without visual arts instruction. Adds Dan Domenech, the executive director of the American Association of School Administrators: “We haven’t hit bottom yet.” The “top” for arts education came back in America’s share-the-wealth golden age in the mid 20th century, the years when America’s wealthiest faced federal income tax rates as high as 91 percent, over double the top current rate. In 1960, lawmakers in Albany okayed the creation of the New York State Council on the Arts. Four years later, Congress established the National Endowment of the Arts. The federal government became, for the first time ever, a major player in arts funding. In community after community, federal dollars began leveraging a vital partnership of nonprofits and public agencies. The arts flourished. We can’t, of course, totally blame the demise of this golden age on shrinking billionaire top-bracket tax rates. Other factors have been at play, most particularly the rising pressure on school systems to narrow the curriculum to subjects that lend themselves to endless rounds of standardized testing. But who’s bankrolling this intensely market-driven approach to education that has no patience for “frills” like art? America’s billionaires, through the vast network of think tanks and foundations they’ve so lavishly underwritten. So let’s keep in mind what really happens — to the arts — when we let wealth concentrate. Museums get paintings from the awesomely affluent. These affluent get plaques in the museums testifying to their generosity — and lucrative deductions on their tax returns for the art they donate. And the rest of us? We pay our $25 admission fee to enter museums like New York’s Met and watch art education fade away from our schools. |
New Wisdom on Wealth Jeff Faux, Where’s the Change? American Prospect, April 9, 2013. Top Democrats remain afraid to threaten the economic power and ideological comfort of America’s corporate rich. Andrew Fieldhouse, How High Should Top Income Tax Rates Be? (Hint: Much Higher), Fiscal Times, April 10, 2013. Raising top income tax rates would be the least harmful policy option for deficit reduction. Bill Moyers and Michael Winship, Dr. King’s ‘Two Americas’ Truer Now than Ever, Common Dreams, April 11, 2013. Breathtakingly prescient words for a society where the chasm between super rich and poor has grown ever wider. Ryan Lambie, Elysium and the gap between rich and poor in sci-fi cinema, Den of Geek, April 11, 2013. From H. G. Wells to today’s latest, this engaging survey looks at how movies have tried to show “how the lives of the wealthiest affect those beneath them.” As Tax Day Approaches,The Laura Flanders Show, GRITtv, April 10, 2013, An interview with Too Mucheditor Sam Pizzigati on what we can learn, on the tax front, from our progressive forbears.
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| NEW AND NOTABLE | |
In All Things, Moderation — and Always! William Howard Adams, On Luxury: A Cautionary Tale. A Short History of the Perils of Excess from Ancient Times to the Beginning of the Modern Era. Potomac Books, 220 pp.
In a book about luxury, readers expect elegance. We do get elegant prose in this new history of luxury. But we get much more. We get wonderfully wise reflections on the “age-old anxiety” over excess and inequality. The probing — and unfamiliar — history author William Howard Adams tells in these pages takes us from the ancient Greeks straight through to the dialogue and debate over luxury that agitated America’s generation of 1776. We today, Adams argues, need to rekindle this discourse “over the line between ordinary, achievable things we need” and lust for “redundant, ephemeral” accumulation. Our dwindling natural resources, if nothing else, make that rekindling absolutely essential. In any age, Adams writes, those wealthy elites that usurp “a disproportionate chunk” of their society’s resources and power “to support their exclusive lifestyle” do their best to “persuade everyone else that they too might some day reach such meaningless heights of limitless extravagance.” These elites can be persuasive. We end up with charades that hold entire societies “hostage to the hubris of the benighted few.” But we can learn from history. Especially this history. The best minds in ancient Greece, Adams reminds us, championed “moderation and resistance to excess in all of its incarnations.” Their most basic admonition still makes exquisite sense: “Nothing in excess.” |
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| ABOUT TOO MUCH | |
| Too Much, an online weekly publication of the Institute for Policy Studies | 1112 16th Street NW, Suite 600, Washington, DC 20036 | (202) 234-9382 | Editor: Sam Pizzigati. | E-mail: editor@toomuchonline.org | Unsubscribe. | |
The donor: cosmetics magnate Leonard Lauder. His gift: 33 pieces by Pablo Picasso and dozens of other landmark works from Picasso’s fellow artists, activists all in the “cubist” movement that ushered in the modern era of abstract art.