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The Growing Danger Of Dynastic Wealth

We’re on the cusp of the largest inter-generational transfer of wealth in history.

White House National Economic Council director Gary Cohn, former president of Goldman Sachs, said recently that “only morons pay the estate tax.”

I’m reminded of Donald Trump’s comment that he didn’t pay federal income taxes because he was “smart.” And billionaire Leona Helmsley’s “only the little people pay taxes.”

What Cohn was getting at is how easy it is nowadays for the wealthy to pass their fortunes to their children, tax-free.  

The estate tax applies only to estates over $11 million per couple. And wealthy families stash away dollars above this into “dynastic” trust funds that escape additional taxes. 

No wonder revenues from the estate tax have been dropping for years even as wealth has become concentrated in fewer hands. The tax now generates about $20 billion a year, which is less than 1 percent of federal revenues. And it applies to only about 2 out of every 1,000 people who die.

Now, Trump and Republican leaders are planning to cut or eliminate it altogether.

There’s another part of the tax code that Cohn might also have been referring to – capital gains taxes paid on the soaring values of the wealthy people’s stocks, bonds, mansions and works of art, when they sell them.

If the wealthy hold on to these assets until they die, the tax code allows their heirs to inherit them without paying any of these capital gains taxes. According to the Congressional Budget Office, this loophole saves heirs $50 billion a year.

The estate and capital gains taxes were originally designed to prevent the growth of large dynasties in the U.S. and to reduce inequality.

They’ve been failing to do that. The richest 1 tenth of 1 percent of Americans now owns almost as much wealth as the bottom 90 percent.

Many of today’s super rich never did a day’s work in their lives. Six out of the ten wealthiest Americans alive today are heirs to prominent fortunes. The Walmart heirs alone have more wealth than the bottom 42 percent of Americans combined.

Rich millennials will soon acquire even more of the nation’s wealth. 

America is now on the cusp of the largest inter-generational transfer of wealth in history. As wealthy boomers expire, an estimated $30 trillion will go to their children over the next three decades. 

Those children will be able to live off of the income these assets generate, and then leave the bulk of them – which in the intervening years will have grown far more valuable – to their own heirs, tax-free.

After a few generations of this, almost all of the nation’s wealth will be in the hands of a few thousand families.  

Dynastic wealth runs counter to the ideal of America as a meritocracy. It makes a mockery of the notions that people earn what they’re worth in the market, and that economic gains should go to those who deserve them.

It puts economic power into the hands of a relative small number of people who have never worked, but whose investment decisions will have a significant effect on the nation’s future.

And it creates a self-perpetuating aristocracy that is antithetical to democracy.

The last time America faced anything comparable to the concentration of wealth we face now, occurred at the turn of the last century.

Then, President Teddy Roosevelt warned that “a small class of enormously wealthy and economically powerful men, whose chief object is to hold and increase their power,” could destroy American democracy.

Roosevelt’s answer was to tax wealth. The estate tax was enacted in 1916 and the capital gains tax in 1922.

But since then, both have been eroded. As the rich have accumulated greater wealth, they have also amassed more political power, and they’ve used that political power to reduce their taxes.

Teddy Roosevelt, a Republican, helped create a movement against dynastic wealth. Trump and today’s congressional Republicans will not follow in his footsteps. I doubt even today’s Democrats would do so if they had a chance. Big money has become too powerful on both sides of the aisle.

But taxing big wealth is necessary if we’re ever to get our democracy back, and make our economy work for everyone rather than a privileged few.

Maybe Gary Cohn is correct that only morons pay the estate tax. But if he and his boss were smart and they cared about America’s future, they’d raises taxes on great wealth. Roosevelt’s fear of an American dynasty is more applicable today than ever before.

HUFFINGTONPOST.COM

http://www.huffingtonpost.com/entry/the-growing-danger-of-dynastic-wealth_us_59bf193ae4b0edff971d1766?section=us_contributor

More protests break out in St. Louis after acquittal in police shooting

Protesters marched through an upscale St. Louis-area shopping mall on Saturday and the rock group U2 canceled a concert hours after police clashed with a crowd outraged over the acquittal of a white former policeman accused of murdering a black man.

In a second day of protests over the judge's ruling in the 2011 shooting death, hundreds of people chanted "Shut it down" and waved fists in the air as they snaked through the West County Center in the St. Louis suburb of Des Peres.

Police officers were out in force but there were no skirmishes, unlike the previous night, when nine city officers and a state trooper were injured, and at least 23 people were taken into custody during the clashes.

"We don't want to see property destruction or see people getting hurt," Elad Gross, 29, a St. Louis civil rights attorney said on Saturday as protesters gathered in a park before going to the mall. "But this is a protest that addresses injustices not only happening here in St. Louis but around the country."

On Friday, Circuit Judge Timothy Wilson acquitted former St. Louis Police Officer Jason Stockley, 36, of first-degree murder in the shooting death of Anthony Lamar Smith, 24.

The verdict and the subsequent protests come about three years after rioting broke out in the St. Louis suburb of Ferguson when an unarmed teenager was shot dead by a white police officer. That killing touched off a nationwide soul-searching over law enforcement's use of force against African-Americans, the mentally ill and other groups.

After the ruling on Friday afternoon, around 600 chanting protesters marched from the courthouse through downtown St. Louis, some of them holding "Black Lives Matter" signs.

Later, some of protesters broke windows at a library and two restaurants, and threw bricks and bottles at officers, who used tear gas and rubber bullets to disperse them. At one point, protesters also threw rocks and paint at the home of St. Louis Mayor Lyda Krewson, police said.

Following the violence, rock band U2 canceled a concert scheduled for Saturday night in St. Louis, citing safety concerns for fans who would have attended.

SHOOTING AFTER CHASE

Smith was shot five times in his car after attempting to elude Stockley and his partner, who had chased the suspect after an alleged drug deal, authorities said.

During the pursuit, Stockley could be heard saying on an internal police car video he was going to kill Smith, prosecutors said.

Stockley believed that Smith was armed, defense attorneys said, and a gun was found in the car. But prosecutors argued Stockley planted the weapon and the gun had only Stockley's DNA on it.

Stockley, who left the St. Louis Metropolitan Police Department in 2013 and was arrested last year, had waived his right to a jury trial, allowing the judge to decide.

"This court, as a trier of fact, is simply not firmly convinced of defendant's guilt," Judge Wilson wrote in his ruling.

Smith's family settled a wrongful death lawsuit against the city for $900,000 in 2013, according to Al Watkins, an attorney for Smith's fiancée, Christina Wilson. 

AOL.COM

READ MORE: https://www.aol.com/article/news/2017/09/16/st-louis-protests-turn-violent-after-ex-cop-acquitted-of-murdering-black-man/23210759/

Supreme Court Puts Redrawing Of Texas Electoral Maps On Hold

In August, a federal court struck down two GOP-drawn congressional districts saying they were discriminatory.

An ideologically divided U.S. Supreme Court on Tuesday handed a win to Republicans in Texas by putting on hold rulings that said electoral districts drawn by state lawmakers discriminated against minority voters.

On a 5-4 vote, with the court’s conservatives in the majority and the liberal justices dissenting, the court in a brief order blocked two different lower court decisions that found fault with both congressional districts and state legislative districts drawn by the Republican-controlled state legislature.

In August, a federal court in Texas struck down two Republican-drawn congressional districts saying they were discriminatory and ordering new maps to be drawn ahead of elections in 2018.

The court said the 27th and 35th congressional districts were drawn in violation of the U.S. Voting Rights Act. Texas has 36 districts, with Republicans holding 25 seats in the U.S. House of Representatives and Democrats 11.

The August decision and a similar ruling on the state legislative districts will both remain on hold, meaning no new districts will be drawn in the interim while the high court considers Texas’ appeal in the cases.

Voting rights advocates say the Republican lawmakers drew up the districts to undermine the influence of racial minority voters, who typically show more support for Democrats than Republicans.

HUFFINGTONPOST.COM

READ MORE: http://www.huffingtonpost.com/entry/supreme-court-texas-electoral-maps_us_59b8d9a7e4b02da0e13d674b?ncid=inblnkushpmg00000009

Justice Department Will Not Charge Police Officers Involved In Freddie Gray’s Death

“It’s not surprising. Police officers still continue to get a free pass to killing black people,” said one activist. 

New Financial Center Identifies HBCUs To Impact Black Wealth

Fisk University will be the first HBCU to participate in a new program offered by The Center for Financial Advancement designed to elevate African-American wealth.

The program launches this semester at the Nashville university with the goal to “elevate money management skills, teach students about credit and homeownership plus position many for a financially rewarding career in the mortgage industry,” according to a press release.

The program is a collaboration between Wells Fargo, Mortgage Bankers Association (MBA), Bank of America, and HomeFree-USA, a HUD-approved non-profit organization that specializes in homeownership development, foreclosure intervention and financial coaching.

“There is desire in the African-American community to move up and to uplift ourselves. We just need a little bit of guidance, some direction and just a bit of advice,” said HomeFree-USA President/CEO Marcia Griffin, a Fisk alumna and founder of the new program.

“The reality is this: Money is made off the backs of those who don’t know. The less we know, the more somebody’s going to make off of us. The less we know, the more opportunity there is for rip off. I’m here to show the mortgage, real estate, and finance industries what we can do – not just HomeFree-USA, but what HBCUs can produce.”

Griffin believes the training of the next generation of mortgage financiers by HBCUs could be pivotal. The need to expand diversity and inclusion in the mortgage industry will be crucial as the face of the typical homebuyer is changing and as the population of America becomes increasingly brown, says a statement announcing the program. A 2015 study by the Stratmor Group found:
• The average age of a mortgage loan officer is 47.
• About 10 percent of loan officers are over the age of 60 while only 3.3 percent are younger than 30.
• Only 10 percent of loan officers who reported their ethnicity were Hispanic or Latino, and only 3 percent identified as Black or African-American, while 81 percent self-identified as White.

Organizers of the new center say it aims to address all of these racial disparities and more.Organizers of the new center say it aims to address all of these racial disparities and more.

“The benefits in this partnership are two-fold,” said David H. Stevens, President/CEO of the Mortgage Bankers Association. “African-American students will develop important money management and financial literacy skills, while also having the opportunity to explore a career in the real estate finance field.  At the same time, the industry will benefit from an influx of better educated potential homeowners, not to mention an influx of diverse new talent into the industry who can bring homeownership opportunities in traditionally underserved communities.”

Disparities in homeownership is “the biggest driver of the racial wealth gap,” concludes a Brandeis University study on the roots of the widening wealth gap. The study also points to “toxic inequality” rooted in policies and tax preferences that “favor the affluent.” This kind of information – typically unknown to many in the Black community – will be taught in the Center for Financial Advancement.

“We are proud to be part of this effort to prepare more African-Americans for successful careers in the mortgage industry while also promoting financial literacy that can lead to an increase in African-American homeownership,” said Brad Blackwell, executive vice president; Housing Policy and Homeownership Growth Strategies, Wells Fargo, the founding supporter of the Center for Financial Advancement. “Wells Fargo recognizes the important role a diverse workforce plays in making homeownership possible for people in all communities.”

Ranked within the top 10 of HBCUs by U. S. News and World Report, Fisk’s President Dr. Kevin Rome, in an interview with The Tennessean, pointed to “entrepreneurial opportunities” as a possible strategy for growth on campus. 

The more than 700 students from all majors on the 40-acre campus will have the opportunity to use the center.

Griffin envisions the Center as a growing program, which will gradually expand to other HBCU campuses. 

She also notes that the Center is not just for students, but also for parents, faculty and the community on HBCU campuses. “Because we are in the real estate and financial services business, anything that we can do for and with the families in terms of buying a home, keeping a home, credit enhancement or anything financial. That’s a part of the package.”

THENEWJOURNALANDGUIDE.COM

http://thenewjournalandguide.com/2017/09/07/new-financial-center-identifies-hbcus-impact-black-wealth/

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