At the beginning of the March 3 NYU Law Forum, sponsored by Latham & Watkins, moderator Ray Madoff ’84, LLM ’86, a professor at Boston College Law School, noted that the wealthiest one percent of Americans own about $44 trillion, according to recent Federal Reserve data. That amount, she said, constitutes more than one-third of the nation’s wealth, up from less than a quarter a decade ago. Over the course of the COVID-19 pandemic, Madoff added, the wealth of American billionaires increased 62 percent, and she suggested that income inequality likely will continue to grow.
The Forum’s panel of experts considered recent findings that many of the wealthiest Americans pay little or nothing in taxes, and the panelists explored both the likely causes and potential solutions. The participants included:
- Jesse Eisinger, senior editor and reporter at ProPublica
- Tabetha Peavey, attorney advisor at the Tax Law Center at NYU Law
- Michael Strain, director of economic policy studies and senior fellow at the American Enterprise Institute
Watch the video of the event:
Selected remarks by the panelists:
Tabetha Peavey: “There are ways to make it look like you don’t own the asset, to give the asset away, put it in this little bucket over here, so that when the IRS looks at it they say, ‘Oh, you don’t own that, that’s in the bucket.’ But the complexity in the code—through grantor trusts, grantor retained annuity trusts, self-canceling installment notes; there are so many tools—allows me to take [the] bulk of my wealth, put it in this bucket so the IRS doesn’t think I own it, and siphon the economic benefits off while I’m alive.... Both our income tax system and the estate tax system that’s meant to fix this are failing to tax gains from wealth.” (video 29:30)
Jesse Eisinger: “It used to be in the United States that we were a country that both had what we thought was a lot of income mobility and relative class mobility—that’s kind of the cliché about the American economy—and that we didn’t believe in the persistence of wealth through the ages and generations. Today, now we have a calcified class system where it’s much more difficult to move around in the income quadrants and wealth quadrants. We have less mobility than Europe, and we have the persistence of great fortunes.” (video 34:59)
Michael Strain: “If I could wave a wand and create a new revenue system for the government, it wouldn’t be to tax wealth and it wouldn’t be to increase taxes on income. It would be to tax consumption…. If we tax income or if we tax wealth, we are taxing…national savings. If we have less savings, we have less investment, and investment is what drives productivity gains and wage growth for lower-wage and middle-wage workers over the long term.” (video 1:05:25)
Posted March 28, 2022