Exercising one of many prerogatives that comes with an estimated $185 billion fortune, Jeff Bezos has booked himself a trip to outer space. The trip, scheduled for July 20, will be historic. Bezos will be the first astronaut to ride his own rocket into space. (Billionaire Richard Branson hopes to beat Bezos to space by flying on July 4, but Branson’s ride isn’t owned personally by him but is part of the small fleet of space tourism craft owned by Virgin Galactic, a public firm.)
I guess I am supposed to be in awe of Mr. Bezos’ accomplishments. Amazon, founded by Bezos, made him a mega-billionaire. Not everyone can look with pride at more than 1.6 million packages a day, 608 million per year, sent by a business started in 1994. Whenever I visit the recycling center in Easton, I am reminded at how ubiquitous Amazon is. Amazon is, one could say, amazing.
But what is most amazing about Amazon is how it enabled Bezos to get so rich. The company enabled him to establish his own space agency, amass a fleet of boats, mansions, The Washington Post, and much more. Now reports are circulating that he is building a 417-foot mega sailing yacht. No doubt it will be reported to be “ecologically sound.” I wonder if I will see it on the Choptank when it launches next year.
It makes you wonder if Bezos must work to think of things to buy or how to otherwise dispose of his money. It also prompts me to recall those scenes in Nomadland of Fern (played by Frances McDormand) engaging in backbreaking work at an Amazon distribution center while living out of an old van.
Something doesn’t seem right. Entrepreneur magazine estimated Bezos made about $2,500 per second in 2019. Amazon stock, the source of Bezos’ wealth, has significantly increased in value since then. In contrast, the average Amazon worker makes about $29,000 per year.
What about those stories about Amazon not paying any income tax? They are not entirely true. In 2000, the company paid an effective tax rate of 9.4 percent. It avoided more than $2.3 billion in other taxes by taking advantage of provisions in the tax code that help big corporations avoid taxes and enrich their shareholders.
Dare I say that Bezos, and other “mega-billionaires” have too much money? Think of Bill Gates, Elon Musk, Larry Ellison, Mark Zuckerberg, and even Warren Buffett. Each of them has a story to tell like Bezos. They all worked hard, are extremely smart, innovative and lucky. They still have, in my view, too much money. I say that even though all of them, with the possible exception of Mr. Musk, regularly make huge philanthropic donations.
The problem is income inequality. The incredible wealth of each of these billionaires, and of the estimated 614 other billionaires in the U.S., and hundreds of “mega-millionaires” sends a troubling message to working people at a time when income security in the U.S. is a huge problem.
Income inequality is growing like a weed during a wet spring. It’s exploding. The top one percent of Americans controls 15 times the wealth of the bottom 50 percent. Federal Reserve data also shows that income inequality is a key element of racial injustice. White households control 85 percent of the nation’s wealth. Black-led households control only 4.1 percent.
Making matters worse is the continuing economic disruption that the pandemic caused. Americans already in financial duress fared exceptionally poorly during the last year and a half. At the same time, the wealthiest Americans prospered. This makes worsening income inequality an underappreciated outcome of the pandemic.
The implications of income disparity are significant. The risk is that those without income or wealth conclude that, as Elizabeth Warren frequently claims, the system is rigged. Those who have concluded that the government and the economy are “rigged” against them often are less motivated to vote and, if they do vote, are more likely to cast a “protest” vote than other voters. Angry voters, convinced they are being cheated, are more likely to vote for extreme candidates—either ones running on “soak the rich” platforms or candidates blaming others, especially immigrants, for their situations.
Maryland, unfortunately, especially the Eastern Shore, suffers from income inequality. This is so despite the state being among the top in the nation in terms of per capita income. In 2018, according to the U.S. Census Bureau, Maryland had the second highest income in the country. Unfortunately, that good news is offset by the state ranking 35th out of 50 in income equality.
Inside Maryland, the story gets worse. My home county of Talbot was, in 2016, the worst in the State in terms of income inequality. The average income of the top one percent was $1.5 million compared to the average income of the other 99 percent of $54,139. Income in Kent County, in 2019 dollars, was better, but still under $59,000. Since, 2016, the situation has gotten worse nationally.
As Spy readers know, Eastern Shore counties also fare poorly on income inequality when compared to counties close to Washington, D.C. Income derived directly or indirectly from the federal government has made Maryland suburbs of D.C., like those in Northern Virginia–wealthy.
So, what is to be done? Democratic progressives have proposed increases in personal and corporate income taxes focused on the “ultra-wealthy.” These proposals are popular among those who assume such higher taxes will not impact them. However, many fear that as government spending grows, income groups subject to higher taxes will grow with it. As a result, the prospects for much higher taxes are cloudy, especially given the partisan split in Congress.
Another proposal to address income inequality is Elizabeth Warren’s and Bernie Sanders’ “wealth tax.” This tax would focus on the incredible accumulations of wealth that people such as Mr. Bezos have achieved. The pair recommend imposing a tax of two percent on wealth more than $50 million and three percent on wealth more than one billion.
An alternative approach is to raise the income of those who need money most. Andrew Yang, a 2020 Democratic presidential candidate and a current candidate for mayor of New York City, proposed a $1,000 per month universal basic income check for all Americans. Yang argued that these payments would help address the problems of homelessness, hunger, and access to healthcare.
Sorting out these and other proposals to reduce income inequality is well beyond the scope of this editorial. Multiple issues must be considered, including enforceability, the fairness of taxing wealth after having already taxed the income that made the wealth possible, and the problem of discouraging capital investment.
Fortunately, Congress is looking at these issues, as well as issues associated with the trillions in new spending that the Biden administration proposes. With a little luck and, hopefully, bipartisanship, progress on income inequality is possible.
In the interim, I am not troubled by Mr. Bezos’ upcoming trip to outer space. It is a modest, 15-minute flight that will pale in comparison with Elon Musk’s planned trip to Mars in the next decade. Let these two billionaires enjoy their wealth. But please don’t tell me income inequality is not a problem. It is. And it cannot be ignored except at our collective peril.
J.E. Dean of Oxford is a retired attorney and public affairs consultant writing on politics, government, birds, and occasionally goldendoodles.