American billionaires added $1.62 trillion to their wealth over the last 13 months

Elon Musk
Tesla CEO Elon Musk.

  • From March 2020 to April 2021, America’s billionaires added $1.62 trillion to their wealth.
  • A new report from IPS/ATF tracks how much billionaires have gained during the pandemic.
  • These gains could signal that inequality keeps increasing during the pandemic.
  • See more stories on Insider’s business page.

Over the last 13 months, American billionaires added $1.62 trillion to their wealth – a 55% increase.

This was a finding in the latest report from the left-leaning Institute for Policy Studies (IPS) and Americans for Tax Fairness (ATF). Both groups have tracked billionaire gains throughout the coronavirus pandemic, which has seen a K-shaped economic recovery for Americans: High-income workers have seen their jobs and pay grow, while low-wage workers have experienced the opposite.

“Billionaires’ huge pandemic-era wealth growth comes on top of a 19-fold increase in billionaire wealth over 31 years-from an inflation-adjusted $240 billion in 1990 to $4.56 trillion in 2021,” the report said. The report used data from Forbes to track billionaire gains from March 18, 2020 through April 12, 2021.

The number of billionaires has also grown, going from 66 in 1990 to 719 today.

“The concern is that we sort of further entrench the inequalities that we came into the pandemic with, meaning the number of households that are economically precarious grows,” Chuck Collins, director of the Program on Inequality at IPS, told Insider.

He said the “concentration” or “pooling” of wealth among billionaires has also accelerated.

“That’s the reality: We’re going to come out of the pandemic another degree of more unequal,” he said.

In the fourth quarter of 2020, the bottom 50% of Americans held $2.49 trillion in total household wealth. Meanwhile, the top 1% added about $4 trillion to their wealth during that time – more than the bottom 50% holds in total.

To offset the inequality that’s arisen during the pandemic, Collins recommends a combination of supporting frontline workers, lifting up the wage floor, and taxing the rich over the next six months.

If nothing is done, Collins said, that economic precarity could grow. He predicts that homeownership could decrease, as economic vulnerability – and the lack of savings – rises.

Additional taxes on the wealthy have become a hot-button topic during the pandemic. The International Monetary Fund has said that one-off taxes on the wealthy and corporations could help with coronavirus recovery; however, not everyone agrees, with Nobel Prize-winning inequality economist Angus Deaton saying the wealthy would find a way to dodge a tax. IRS Commissioner Charles Rettig also just said that $1 trillion or more in taxes could be going uncollected every year.

President Joe Biden has proposed a hike in the corporate tax to fund his infrastructure package, and has said that Americans earning over $400,000 could see a tax increase. In a speech defending the tax increase, he said that he was “sick and tired of ordinary people being fleeced.”

Collins said he thinks Biden has about two years to enact change and start making a meaningful difference in people’s lives.

“There’s a possibility of totally turning the course here,” Collins said. “But it is going to require some courage and boldness and spine, but I actually think the broader public is with the president on this.”

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Billionaires around the world added $4 trillion to their wealth during the pandemic

tax the rich protest US billionaires
  • A new report from the Institute for Policy Studies analyzes billionaires’ gains during the pandemic.
  • The world’s 2,365 billionaires added $4 trillion to their collective wealth, it found.
  • A January Oxfam report said billionaires’ global gains could pay for everyone’s vaccine.
  • See more stories on Insider’s business page.

From March 18, 2020, to March 18, 2021, the world’s billionaires added $4 trillion to their wealth, according to a new report from the left-leaning Institute for Policy Studies (IPS).

That’s a 54% increase for the world’s 2,365 billionaires, who now have $12.39 trillion. The wealthiest 20 billionaires alone added $742 billion to their collective wealth during a pandemic – a 68% increase.

A January Oxfam report, which tracked global billionaire gains through December 31, 2020, found that the world’s billionaires had added $3.9 trillion to their wealth during the pandemic – an increase that could pay for the entire world’s vaccinations and prevent anyone from falling into poverty. That report found that recovery for people at the bottom could take up to a decade, with 200 million to 500 million people falling into poverty in 2020.

Now, according to the IPS report, which analyzes data from Forbes, Bloomberg, and Wealth-X, those billionaire gains have grown.

Renewed calls for a wealth tax

One of the Oxfam report’s possible solutions for creating a “better world” was imposing a wealth tax.

The IPS report found that American billionaires account for less than a third of that total wealth. But a wealth tax like the one proposed by Sen. Elizabeth Warren – where households with a net worth of over $50 million would see a 2% tax, and those with over $3 billion would see a 3% tax – would still raise $120 billion per year, according to the report.

From the end of 2019 to the end of 2020, the top 1% of Americans added just about $4 trillion to their wealth, while the bottom 50% held just $2.49 trillion in total household wealth by the end of 2020.

However, a wealth tax may still be a ways off in the US. President Joe Biden’s new infrastructure package is paired with an accompanying tax hike. But that increase would only target corporations, raising the corporate tax from 21% to 28%, and seek to enact a global minimum tax rate of 21%. It leaves wealth individuals alone, for now, although Biden’s administration has said it wants to tax households making $400,000 a year and up.

“I’m open to other ideas, so long as they do not impose any tax increase on people making less than $400,000,” Biden said in his speech introducing the package.

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The Oscar Mayer heir who gave away his fortune reveals how the rich hide their wealth – and how to stop them

chuck collins
Chuck Collins.

  • New research has shown that the wealthiest Americans hide away their money from tax collectors.
  • Researcher Chuck Collins has written a whole book on how the wealthy hide their fortunes.
  • He told Insider it’s a fixable problem, but one that requires closing loopholes.
  • See more stories on Insider’s business page.

Chuck Collins knows how rich people hide their money.

Collins was an heir to the Oscar Mayer wiener fortune, an inheritance that he gave away completely. But that meant he learned firsthand how the wealthy (even the very charitable) hold onto their fortunes. It’s one thing to give up your income, he learned, and another to compromise the principal – and deprive future generations of accrued wealth – completely.

He opted to give it all away. Today, he’s the director of the program on inequality and the common good at the Institute for Policy Studies, where he delves deep into billionaire gains, income inequality, and how the ultrawealthy dodge taxes in America.

The situation is likely worse than widely appreciated. Recent research found that America’s highest earners may have been hiding billions from the IRS – far more than assumed. In fact, the report found that the top 1% of Americans don’t report 21% of their income, and the figure might be twice as high for the top 0.1%. That research comes from the government itself in the form of the Internal Revenue Service (IRS), along with academic economists.

Sen. Bernie Sanders has introduced legislation that would increase taxes and cut loopholes, and The Wall Street Journal reported that Biden is looking into beefing up the IRS. (Sanders wrote a blurb fo Collins’ book.)

In his upcoming book, “The Wealth Hoarders,” Collins dives into what he calls the Wealth Defense Industry: The army of tax attorneys, family offices, accountants, and more who are devoted to protecting clients’ wealth – and circumventing taxes. His thesis implies that this industry is an inevitable outgrowth of financialization, in which the financial sector grows out of proportion to the rest of the economy. But he argues it’s not too late to reverse it.

Ahead of its publication, Insider spoke to Collins about his own history, the book, and what needs to come next.

The current state of the ‘Wealth Defense Industry’

Collins writes that the Wealth Defense Industry has “mushroomed” in size since his first introduction to it in 1983. For instance, there are now over 10,000 family offices worldwide, he writes.

Collins said that legislation like that introduced by Sanders, Biden’s election, and the blue wave of the 2020 election, led wealth advisors to urge clients to move their money into “new forms” that would be more difficult for tax collectors to find.

“I feel like we’re kind of in a moment where this industry has been growing and growing and accelerating really in the last 15 years – the number of family offices, the number of planners, the number of dynasty trusts,” Collins said. “And it’s reaching this pinnacle moment because, for the first time in a long time, there’s a meaningful discussion about taxing the very wealthy.”

What ordinary people may not understand about how wealth is hidden

Collins told Insider that there’s an outdated image of wealth hiding, where it’s all stored offshore. But the US is the number two destination for “global kleptocratic capital.” Instead of storing money offshore, he said, the wealthy can turn to places like South Dakota, Wyoming, or Delaware.

“The thing I think we don’t understand is we are now the tax haven,” Collins said.

In the book, Collins details the myriad, complex systems that the so-called “Wealth Defense Industry” uses to obscure money. One is “artports,” or art-storage facilities that could be in your neighborhood, full of incredibly valuable paintings.

While one of those facilities could be mere blocks away from you, these ports are technically in Free Trade Zones, and the art never actually enters US commerce.

Gen Z musuem
Rather than a museum, art could be hiding in your backyard.

Or take, for instance, those brand-new glass towers in your downtown, where the wealthy could be parking their wealth by buying up units. Collins uses the Millennium Tower in Boston as an example. Those empty apartments, with their panoramic views, function as “wealth storage units” – and, Collins writes, over 35% of the units there are owned by shell companies and trusts.

On his own decision to give up his wealth, and the pressure that the wealthy face

“I would say the overwhelming cultural message for someone growing up in my class was ‘protect and preserve. You can do quirky things with your income, but don’t touch the corpus. Don’t touch the asset, let it just keep growing,'” Collins said.

For him to think differently meant going up against the “whole universe of wealth management” – and others in his position face an industry that has a self-interest in holding onto their assets and growing them. But Collins contends that there’s a certain point where people don’t need to keep accumulating or stockpiling wealth.

“There’s probably people out there that fundamentally think that they should pay more taxes, but their advisors, just it’s unthinkable, right?” Collins said. He said that there’s a whole culture surrounding the urge to utilize every possible tool and loophole to reduce taxes.

But there’s momentum for change

Collins said he thinks the “reform train” is moving, pointing to potential tax increases being put forward by the Biden administration. But even with new laws, he said, the agenda could be undermined by the Wealth Defense Industry, which underscores the need to shut down this hidden wealth system and close up loopholes.

Bernie Sanders
Senate Budget Committee Chairman Sen. Bernie Sanders (I-VT).

“it’s like we’ve had a wild party at this restaurant, and now the billionaires are going to slip out the kitchen door before the bill comes,” Collins said. “And we basically have to say, ‘Nope, everybody has to stay and we need you all to chip in from the bill here.'”

He later added: “This is totally fixable. Start with enforcement, outlaw the bad trusts, increase transparency in reporting and disclosure, and then join with our global partners to clean up the global system. We could reverse it in 10 years.”

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The minimum wage would be $44 per hour if it had grown at the same rate as Wall Street bonuses

GettyImages 1207533986 Traders work during the closing bell at the New York Stock Exchange (NYSE) on March 17, 2020 at Wall Street in New York City. - Wall Street stocks rallied Tuesday on expectations for massive federal stimulus to address the economic hit from the coronavirus, partially recovering some of their losses from the prior session. (Photo by Johannes EISELE / AFP) (Photo by JOHANNES EISELE/AFP via Getty Images)
Wall Street employees based in New York City earned an average bonus of $184,000 last year – a 10% increase from the year before.

The chaos that the pandemic unleashed on America’s economy turned out to be a major boon for Wall Street traders, according to new data from the New York State comptroller’s office.

Wall Street firms paid their New York City-based traders an average bonus of $184,000 last year, a 10% increase from 2019, New York comptroller Thomas DiNapoli said in a press release Friday.

But those paydays have been skyrocketing for decades. Since 1985, Wall Street traders’ bonuses have grown 1,217% – and that’s just a fraction of their overall pay, which was more than $406,000 in 2019, according to data from DiNapoli’s office.

By comparison, the federal minimum wage has flatlined at $7.25 per hour – or $15,080 annually – for 12 consecutive years. When adjusted for inflation, it has actually decreased by 11% since 1985.

If the minimum wage had instead grown at the same rate as Wall Street bonuses, it would be $44.12 per hour today.

Unlike a majority of the US, Wall Street saw massive financial success in 2020, and experts say it exposed just how detached the industry has become from the rest of the country’s reality.

“It’s just another reminder that there’s a total disconnect between what happens on Wall Street and what happens in people’s everyday lives and in the real economy,” Sarah Anderson, director of the global economy program at the Institute for Policy Studies, told Insider.

Read more: Reddit day traders wanted to beat Wall Street to prove the system is rigged. Instead, they did it by losing.

The stock market blew past pre-pandemic levels months ago as millions of Americans still struggled to find work, while increased volatility in the markets led to record years for Wall Street firms that netted bank executives paydays of up to $33 million, even as many banks laid off workers despite promises not to during the pandemic.

In a blog post for IPS on Monday, Anderson highlighted how deregulation of the financial industry has allowed firms to link traders’ pay packages to increasingly risky investing practices that are mostly only beneficial for Wall Street.

“So much of what is the most rewarded on Wall Street is the kind of trading activity that really doesn’t add a lot to the real economy and isn’t essential,” Anderson told Insider, adding that last year’s huge bonuses were “mostly because of market volatility, not necessarily because they’ve added a lot of value to the economy.”

After the 2008 financial crisis, lawmakers passed the Dodd-Frank Act, which banned pay packages with “inappropriate risks,” but Wall Street lobbyists have successfully blocked efforts to implement the rule for years.

IPS’ report also examined how Wall Street has made racial and gender pay disparities worse because they’ve disproportionately hired white male employees for decades while people of color and women are overrepresented in low-wage jobs.

“Nationally, securities industry employees are 80.5 percent white, 5.8 percent Black, 11.5 percent Asian, and 8.1 percent Latino. By contrast, whites make up an estimated 55.4 percent of people in jobs that pay less than $15 per hour,” Anderson wrote.

Wall Street’s risky, lucrative business models and pay practices are coming under increased scrutiny as the pandemic forces Americans to reckon with the country’s growing inequality.

“I just hope that it will lead to a real assessment of how skewed our values are when people doing these essential jobs are paid such a pittance compared to people on Wall Street,” Anderson told Insider.

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