Taxes and Tariffs
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Why do rich people dress so boring now?
Rich people dress so boring now.
When we see our wealthy, particularly the wealthy that have come about in the last 20 or 30 years, our tech wealthy, they are very much just like the rest of us. Or, you know, everybody in their T-shirts and hoodies.
Boston Law Professor Ray Madoff. We're talking live on stage at the Center for Brooklyn History.
You see Elon Musk, he's just a regular guy. Don't go thinking he's somebody fancy or somebody rich. He's just like you and me.
But once upon a time, it used to be extremely clear who was rich. In the turn of the last century, in the 1890s, 1910s, robber barons and industry tycoons announced their wealth proudly. They wore top hats and fancy things, tons of jewels. The daughter of Cornelius Vanderbilt wore tiaras.
She actually wore crowns. She wore a crown walking around New York City. I'm like, man, they don't make rich people like that anymore. No. And then they threw these unbelievable parties, but not off on a private island, you can't come parties. They had glass doors, glass walls, so that the regular people can actually see these elaborate parties that were going on. And you were talking about, like, they would hand out cigars wrapped in $100 bills. Yeah, at their parties, yes. At the parties, they had, like, elephants. They would each, they would outdo each other. They'd be written on the society pages. And so they proudly announced themselves as being the elite, and they wanted everyone to see just how very rich they were.
So, yeah, how did we get from this era to now? Consumption to stealth wealth. Da-da-da. Taxes.
Yes. Taxes.
How did the wealthy's display of wealth change over time?
I know. Taxes. You're like, uh, tax season just ended. I don't want to think about taxes. I know. No one likes to pay taxes. No one likes to think about taxes. But that's the thing. Because they are so icky to confront, they really haven't been examined very closely.
And that is how we're getting growing wealth inequality.
And as Professor Madoff proposes in her excellent book, The Second Estate, How the Tax Code Made an American Aristocracy, taxes are part of why rich people dress so boring now.
When we see our rich, they do look like us. And so they seem less alien.
And they are alien in that they are separate from us because these ultra rich people. Just don't pay taxes, almost none. And to be clear, when I'm talking about rich people, I'm not talking about, like, a doctor or a lawyer.
For purposes of this book, the rich are anybody who doesn't need a salary.
The lifetime earnings of a doctor, on average, are $6.7 million. A hedge fund manager earns, on average, $84 million over a lifetime. Those are wealthy people by any measure. But they pale in comparison to Mark Zuckerberg's net worth, which is $237 billion. Jeff Bezos is worth $269 billion. And, you know, the difference between a million and a billion is massive. It's literally a thousand times larger. So we're talking about phenomenally wealthy people, people who are above a paycheck.
If somebody can get by without earning money, they have enough money that they can live off of, those are the people who are able to grow their money tax-free.
We are talking about people who are so rich that they do not need to earn an income. Because income gets taxed. Like people who earn a lot of money, the working rich, they pay taxes. They pay a lot of taxes, actually. They are our comrades here.
People with high income are much more aligned with people with low and moderate amount of income in that we all pay a lot of taxes. But people with huge amounts of wealth don't have to pay taxes at all.
And this, in part, explains why we no longer see the top hats and the tiaras and the cigars wrapped in $100 bills. All that visible excess attracted too much attention.
They thought these people, they're a bunch of lazy layabouts. They live these lavish lifestyles. And all of this is a big problem, and therefore we need to have taxes on inheritances.
The splashy largesse of the rich led to the creation of a tax code that was meant to curb all that behavior. And yet... In the years since, that fair tax system we made has been whittled away.
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