Friday, November 19, 2021

How Much Is Too Much?


Two of my favorite comic book characters when I was a kid were Ritchie Ritch and Scrooge McDuck. Ritchie had all the cool and fun toys and even had a dog named Dollar. Ritchie was always smiling and having fun adventures. On the exact opposite you had Scrooge McDuck who swam in his money and only wanted more and more money. 

Recently, there were news stories about the Democrats considering a tax on the ultra wealthy. They had plans to tax those who were worth billions of dollars. The issue was shelved and replaced with a possible tax hike on those making $5 million or more with an extra 3% surtax. There is a large section of the public that wants to tax the rich as much as they can to pay for social programs. So, "how much is too much?'" is being looked at on the government level. 

Recent statistics show that there are about 8.3 million millionaire households in the US or about 6.7% of all US households. A lot of millionaires would consider themselves well off but not "rich". A lot of households may reach the millionaire status by owning a home and having a good retirement next egg. But even if you have a $1 million dollar nest egg and draw out the recommended 4%  a year, your yearly income may only be $40K even though you are a millionaire. You certainly can't live the rich lifestyle unless you cash it all out and blow it in year one or two!   The US is also home to 630 billionaires. That is a lot of wealth! The first person in the world to hold the title of billionaire was John D. Rockefeller. He reportedly crossed that threshold in 1916. His wealth is estimated to be $300-400 billion in today's money. Rockefeller made his fortune in oil. Other wealthy Americans over the years include Cornelius Vanderbilt,  Andrew Carnegie, Henry Ford, Sam Walton, Bill Gates, Jeff Bezos and Elon Musk just to name a few. In my opinion, these men made huge contributions to society by building railroads, cars, computers, electric cars, space travel, etc. There is a certain class of the rich that have done mankind a tremendous service while also making a fortune for their efforts. All have provided employment to countless people and have changed the world for the better. They have shown they are more capable of accomplishing something quicker and more efficient than the government. Regardless of their contribution to society, is it too much when the 7 richest people own about $1 trillion?

So, back to the question. Is there an upward limit to how much any one person should be allowed to possess? Where do you set the bar? Is it $1 million, $100 million, $1 billion, $100 billion or more? In my lifetime I may see the first trillionaire. When I was young, I remember being in awe that Sam Walton was worth $1 billion. My how things have changed and now billionaires are everywhere. If the government gets into the business of setting a limit of "how much is too much" it will get it's hooks into a whole new line of taxation. Once the government sets the limit of $100 billion, how quickly will that number be reduced over the years until more and more people get surtaxed to death?  If a large amount of their funds were transferred to the government through taxation I fear the government would not get that same return on those dollars. 

Many of the billionaires listed above are also the world's top philanthropist and have given billions of dollars to charity and good causes. Many cities have libraries built by Carnegie. Bill Gates has a huge foundation giving away billions of dollars. Many have pledged to give away the majority of their wealth.

There are also the bad billionaires out there in the world. Pablo Escobar is one that gained his wealth from illegal drugs and ultimately died in a hail of bullets. Bernie Madoff made his wealth swindling people and died while in prison. The Sackler family made billions by selling the poison Oxycontin which contributed to about 190,000 opioid deaths since 1999. The Sacklers settled lawsuits for $4.5 billion but kept most of their wealth. (I've been watching Dopesick on Hulu about the Sackler family and Purdue Pharma).

Is there a difference in a self made billionaire and one who inherited billionaire status from previous generations? The original one may have earned the money by making society better while the latter just got the status by just being born in the right family. Should that make a difference in answering the question of "how much is too much?".  In trying to figure out "how much is too much?" what parameters should there be. Once the limit is set, how do you enforce that limit? Does the government just take over their assets and businesses of one who reaches the limit like some communist country? Do you just tax everything over the limit at 100% and have them write the IRS a check? Do you make them give everything over the limit to charity. These are hard questions with no clear answer. 

What is your opinion of "how much is too much?".


  1. I would agree that many extremely wealthy have made large contributions to society. We must not forget that most of them also had dark sides. Numerous people you listed supported Mussolini, Hitler & fascism. Some were rabidly anti Jewish. This is a matter of historical fact. They had little interest in workers rights and were more interested in perpetuating corporate welfare. This unfortunately is a perpetual feature of human nature. Unlimited power will always lead to unlimited abuse. A tax on total wealth will never work out. I would use graduated tax rates and government led monopoly breakups to help the situation. We also need to look at corporate stock buybacks and stock options. These two items frequently lead to increased wealth disparity and very poor short term corporate decisions. We have had far higher upper tax rates in the past and grown the economy and middle class at the same time. 1000 millionaires serves the economy far better than 1 billionaire.

    1. Thanks for the comment. I don't doubt that some had dark sides as I haven't looked deeply into their history. In taxation there must be a big disparity when you see published reports about some of the rich paying very little in taxes after using legal loopholes.

  2. I have no idea how much is too much, but if any new taxes are imposed on the rich I think it would be a good idea if they could completely deduct any large charitable contributions.

    1. I agree. The charity deduction should be an incentive for everyone.