According to CNN, if you add up the net worth of the 400 wealthiest Americans, you come up with a combined net worth of $1,250,000,000,000. That’s $1.25 trillion.
That’s an increase of $120 billion from last year.
The article then goes on to describe who is in the list (only billionaires, no lowly millionaires). Warren Buffett and Bill Gates, pictured here, are at the top, But that’s not important to me today. This is what I really want to know:
Where did the $120 billion increase come from? The government didn’t just print 1,200,000,000 $100 bills and pass them out to a select few. The money that landed in the hands of the 400 richest had to come from existing money somewhere.
The best answer is the money came from other people, individuals not on the list of the 400 wealthiest Americans. Did your net worth increase by $300,000,000 last year, like the average richest 400? If not, it’s quite possible you’ve contributed nicely towards the increase of the elite.
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5:38 pm (reply)
Now that I’ve picked my jaw up off the floor, I think you have a typo—their combined net worth didn’t rise “from” $120 billion, it rose BY $120 billion. So that is about an 11% increase… those bums were slacking off!
6:24 pm (reply)
My brain likes to add words where there aren’t. I fixed the numbers. It’s still quite impressive in nominal terms.
10:20 pm (reply)
Didn’t necessarily come from others. Likely they all own stock and the market has been going up. Likely also they are business owners.
11:03 pm (reply)
Typical class warfare retorhic. Just becasue Gates / Buffet / et al are richer it doesn’t mean that they “took” the money from the rest of the public. The US Economy grew approximately $500 billiion, and the world economy grew by even more.
12:12 am (reply)
I’m going to agree with the two previous posters. Just add up the numbers, if their wealth increased by $120 billion (~10%) that is only about as good as the SP500 did in during the previous year; so what is the big deal?
My net worth increased this year too, does that mean that I’m stealing from the poor?
4:43 am (reply)
If the “economic pie” was fixed in size, we’d still be swinging from trees and killing each other over shiny beads.
As for specifics, their net worth increased exactly as much as the stock market and less than many real-estate markets did last year. Also, these numbers are theoretical; if they liquidated their holdings, the actual cash they could get would be far less since markets would crash and they’d pay tons of taxes…
8:00 am (reply)
I have to agree… that sounds pretty much like class warfare. If you look at it, it is very likely that it is only on paper, and they did not grow by a mere 11% in liquid assets.
Further, you have to realize that about only half of the money that circulates in the economy has physicial currency backing it. We have went from the Gold/Silver standard that backed our money to having faith in the currency. Now, we are living in a world of electronic transactions where currency is backing the electronic funds, and that is slowly going away. Really, it was only a matter of time. People are creating all of these assets (be it real estate, consumer goods, capital goods) that are worth more in value. Why should we be subject to the Fed to dictate the economy? That doesn’t seem like it is very Free Market…
Foobarista: You are exactly right. The French hold the mentality that the economic pie is a fixed size… and look at their economy; it is sucking wind. They have implemented a lot of new employment laws in the past few years, and their economy has not improved one bit. Before the laws, unemployment was 10%... and now, after the laws have been in place a few years, unemployment is still 10%. I am glad I am not a French citizen, for many reasons.
11:40 am (reply)
Good comments here, people are very passionate, especially when they think their thoughts about economic (and political?) ideals are being questioned.
The “economic pie” isn’t fixed in size, I agree with Foobarista. But the economic pie also doesn’t change significantly (swinging in trees to broadband technology) in one year. A lot of business owners’ wealth does come from those who patronize those business, buy those products and services, etc., and those people are not in the group of the top 400 wealthiest Americans.
Everytime you buy a new computer (unless there’s no operating system on it or if it’s a Mac), you are helping Bill Gates. Every time you pay your GEICO auto insurance, you’re helping increase the value of Warren Buffett’s business. Sure, billionaires have to pay car insurance too, but there are many more of us than there are of them.
Therefore, money we spend goes to the pockets of the richest far more than the money they spend goes into our pockets.
This is massive wealth redistribution in the market, the same theory behind Social Security controlled by the government, which moves some cash in the opposite direction. The major difference besides the direction of flow is the impetus: the market vs. the governemnt. It’s not “class warfare,” it’s just how money changes hands. It’s not stealing, either.
When you’re a business owner, and the “value” of your company increases, it’s mainly due to sales or projected earnings. Sales and projected earnings increase because other people are patronizing (or expected to patronize) your business. In the act of patronizing, money is changing hands from the customer to the business. In the case of many of the top 400—their wealth increased because of their business (business owners) or the general market (major shareholders) or real estate holdings (major investors). It’s basically the same thing. People pay more for real estate and pay more for services and products, raising the value of the properties and companies owned.
3:37 pm (reply)
Hasn’t Gates’ net worth decreased significantly in the past year? He and his wife have been dishing out money like it’s their job. My net worth has increased in the past year also (not quite in the black, heh). I’m fairly certain that a solid majority of peoples net worth has increased in the past year as well. I don’t see any problem with the wealthy attaining more wealth because I hope to be wealthy some day.
The top 50% of wage earners in this country pay over 96% of the taxes. The “elite” 1% of wage earners pay over 34% of all taxes. Should it be higher? If yes, how much higher? Who should decide how much higher and how can it be justified?
4:32 pm (reply)
Those rates were for 2003. I found the rates for the 2004 fiscal year here:
http://www.irs.gov/pub/irs-soi/04in06tr.xls
Scroll down to line 129. The “elite” 1% are paying 36.89% of all taxes and the top 50% are paying 96.70% of all taxes. The trends are only increasing, which could be interpreted that the rich are getting richer (this year they are) and/or the tax rates on the rich are getting higher.
11:38 pm (reply)
Still, the poor still pay a lot in taxes. Back when I first started out a few years ago, I was making $20k and I still paid about $2k in taxes. That is a TON of money considering $20k is very little money in the first place.
2:31 pm (reply)
Joe, is that $20K for just yourself, or a family? If it is just yourself, I would hardly call it poor (just I certainly wouldn’t call it wealthy). I could make $100K a year, but per capita in my home it would be $20K.
I must also say that I pay less in taxes now, even though I make twice as much, than I did in 2000 and 1999.
It is all about perspective. If you feel that the poor pay too much in taxes, then relative to that, the wealthy pay way too much. And I do agree, we ALL pay too much in taxes. Our federal government does WAY MORE than it was designed to do. The Founding Fathers envisioned that state and local governments would handle about 95% of the workload and that the federal government would only deal with 5%.
3:37 pm (reply)
If you go by total taxes, including “employer share” of SS/Medicare, my wife and I will pay almost $60K in taxes of various forms this year. And we don’t make that much – less than $200K gross.
Taxes are by far our family’s biggest expense – several times more than our mortgage and significantly more than our total household budget of about $40K.
10:36 am (reply)
Flexo, I cannot say that the wealthy being wealthy is wealth REdistribution; it is just wealth distribution, the natural way it is distributed based on the free markets. Government actions, however, are wealth redistribution, in that they are actually REdistributing something that was already distributed.
4:50 pm (reply)
Back to the original topic of The 400 and off of taxes, an article in the Washington Post cites a macroeconomist from the Center for Economic and Policy Research who agrees with me in that growth of the economy is not a good enough explanation for the wealth increase at the top. It comes from the rest of us, whether you call it distribution or redistribution.