Wealth and Righteousness
The Justification of Avarice
On June 8 reporters at Propublica.org published an article, The Secret IRS Files, revealing that some of the wealthiest Americans often pay little or no income tax. The article produced rippling headlines and discussion across the media (Google “wealthy people who pay no taxes”). A lot of coverage paraded the names of the morbidly wealthy, Bezos, Musk, Buffet, Soros, Bloomberg, Icahn. Much of the media coverage missed the more important point: At this level of wealth, wriggling out of paying income tax is perfectly legal. The morbidly wealthy don’t play be different rules. The rules apply to everyone, but only the wealthy are in a position to take advantage of the arcane world of tax law, a world of capital gains, income offsets, and trusts, . (Almost always this advantage is achieved with the aid of an army of tax attorneys who make it their business it is to understand and take advantage of the rules as written.) Importantly, as Abigail Disney points out in The Atlantic this month (pasted below), all of these people see themselves as good folk. After all, everyone is playing within the rules as written. It would be the mark of a fool not to work within those rules to one’s best advantage.
Who writes the rules that offer advantage to the wealthy? Well, in a fundamental sense, we do. The representatives we elect to the U.S. Congress and the fifty state legislatures have accreted the rules over decades. Since the Ronald Reagan’s presidency (1980-1988) there have been two guiding principles: 1) Government cannot be trusted and 2) the more money the wealthy (called “the job creators” in this myth) get to keep the more of it will “trickle down” to the work-a-day folk. The result is a concentration of income and wealth at the top that hasn’t been seen in this country since the late 19th and early 20th century. In spite of reality, Republican U.S. Representatives like Cathy McMorris Rodgers (R-WA CD5, eastern Washington), no doubt with the best of intentions and purity of ideology, push through law like The Tax Cuts and Jobs Act of 2017 that increase the concentration at the top, even as they preach of the “money in your pocket,” the pittance the law afforded the less-than-wealthy.
Abigail Disney is one of the heirs to the Disney fortune. Her Atlantic article, reproduced below, shines light on the mindset of the dynastically wealthy—from the inside.
Keep to the high ground,
The Atlantic, June 17, 2021
I Was Taught From a Young Age to Protect My Dynastic Wealth
By Abigail Disney
When ProPublica published its report last week on the tax profiles of 25 of the richest Americans, jaws dropped across the United States. How was it possible that plutocrats such as Elon Musk, Jeff Bezos, and Warren Buffett could pay nothing in income taxes to the federal government? What sneaky sleights of pen, what subterfuge, what acts of turpitude could have led to this result?
The shock stems, in part, from a disturbing reality: Nowhere does ProPublica assert that these men cheated, lied, or did anything felonious to lower their tax burdens. The naked fact of the matter is that not a single one of the documented methods and practices that allowed these billionaires to so radically minimize their tax obligations was illegal.
What’s worse, these methods and practices—things such as offsetting income with losses in unrelated businesses; structuring assets to grow rather than generate income, then borrowing against those growing assets for cash needs; and deducting interest payments and state taxes from taxable income—are so downright mundane and commonly applied that most rich people don’t see them as unethical. The more interesting question is not how the men in ProPublica’s report were able to avoid paying much or anything in federal income taxes, but why. What motivates people with so much money to try to withhold every last bit of it from the public’s reach?
One factor is the common ideology that underlies all of these practices: The government is bad and cannot be trusted with money. Far better for the wealthy to keep as much of it as possible for themselves and use (a fraction of) it to do benevolent things through philanthropy.
My grandfather Roy O. Disney, who co-founded the Walt Disney Company with his brother Walt, was a fervent believer in this idea. He was so determined to prevent the government from taking any of the money he wanted to leave to his family that he created generation-skipping trusts to end-run the IRS. What he did back then was so effective that most of it is illegal today.
I will protest to my dying breath that he was a good man—one of the best, in fact.
But I will also add, at the very end of that dying breath, that he should not have been able to do that.
Practically speaking, the way the trusts were devised meant that I came into a significant amount of money at the tender age of 21. I became an asset manager before a lot of people get their first apartment. I’m 61 now, meaning I’ve been the recipient of four decades’ worth of tax advice from the decent, good, kind men (yes, they were all men) who were put in place by my grandparents, and then my parents, to ensure that I wouldn’t do anything stupid with what I had been given.
Every single method and practice outlined in the ProPublica report has been suggested to me at one time or another by these decent men as a credible, perfectly legal, and not-at-all-questionable way to manage my assets. And, over the years, I have said yes to many of those suggestions. So it’s true: If you were to get a hold of my tax returns, you would find a record of a person who has adhered scrupulously to the law and, in doing so, has also taken advantage of the many holes our legal system has left wide open.
When you come into money as I did—young, scared, and not very savvy about the world—you are taught certain precepts as though they are gospel: Never spend the “corpus” (also known as the capital) you were left. Steward your assets to leave even more to your children, and then teach them to do the same. And finally, use every tool at your disposal within the law, especially through estate planning, to keep as much of that money as possible out of the hands of government bureaucrats who will only misuse it.
If you are raised in a deeply conservative family like my own, you are taught some extra bits of doctrine: Philanthropy is good, but too much of it is unseemly and performative. Marry people “of your own class” to save yourself from the complexity and conflict that come with a broad gulf in income, assets, and, therefore, power. And, as one of my uncles said to me during the Reagan administration, it’s best to leave the important decision making to people who are “successful,” rather than in the pitiable hands of those who aren't.
I took far too long to look with clarity upon these precepts and see them for what they are: blueprints for dynastic wealth. Why it took me so long is a fair question. All I know is that if you are a fish, it is hard to describe water, much less to ask if water is necessary, ethical, and structured the way it ought to be. As long as no one so much as raised an eyebrow about the ethics of the CRAT, the CRUT, and the credit swap, who did I think I was to query the fundamentals? I did not have the emotional courage to go down that path.
There was another reason for my inaction, and I am deeply ashamed to say what it was. But here goes: Having money—a lot of money—is very, very nice. It’s damn hard to resist the seductions of what money buys you. I’ve never been much of a materialist, but I have wallowed in the less concrete privileges that come with a trust fund, such as time, control, security, attention, power, and choice. The fact is, this is pretty standard software that comes with the hardware of a human body.
As time has passed, I have realized that the dynamics of wealth are similar to the dynamics of addiction. The more you have, the more you need. Whereas once a single beer was enough to achieve a feeling of calm, now you find that you can’t stop at six. Likewise, if you move up from coach to business to first class, you won’t want to go back to coach. And once you’ve flown private, wild horses will never drag you through a public airport terminal again.
Comforts, once gained, become necessities. And if enough of those comforts become necessities, you eventually peel yourself away from any kind of common feeling with the rest of humanity.
I tell you all this not to defend myself; that’s between me and my conscience. I am telling you this because human nature is a mighty force, and fighting it requires understanding it.
What has caused me to question my indoctrination has been ethics. Goddamn ethics. For many people, especially those most deeply embedded in the culture of having and getting money, ethics are a wispy and ineffectual nuisance—an abstract set of principles that can’t possibly stand up to the rigors of life lived fast, business conducted efficiently, and competitors devoured and cast aside.
The older I’ve gotten and the more clearly I’ve understood these things, the more the impulse to betray my own class has taken charge of my judgment.
What’s shocking about the ProPublica report is not just that the tax bills are so low, but that these billionaires can live with themselves.
If your comfort requires that society be structured so that a decent percentage of your fellow citizens live in a constant state of terror about whether they’ll get health care in an emergency, or whether they can keep a roof over their family’s heads, or whether they will simply have enough to eat, perhaps the problem does not rest with those people, but with you and what you think of as necessary, proper, and acceptable.
Abigail Disney is a documentary filmmaker, a co-founder of Fork Films, and the host of the podcast All Ears.