September 25, 2012
Is Self-Made Wealth a Myth?
by Robert Kropp
United for a Fair Economy analyzes the Forbes 400 list of wealthiest Americans, finding that 40%
inherited considerable wealth, while a quarter earned their wealth through investment.
For the past 30 years, Forbes Magazine has published the Forbes 400 list of wealthiest Americans. Perhaps in response to growing criticism of wealth
inequality in the US, Forbes pointed out that 70% of those included on this year's list "made their
fortunes entirely from scratch." Forbes also reported that "the average net worth of a Forbes 400
member is a staggering $4.2 billion," the highest ever. In 1982, when Forbes launched the list,
only 13 members were billionaires; now, all of them are.
Is the magazine's perpetuation of
the self-made myth strictly factual? Not according to a new report, entitled Born On Third Base,
from United for a Fair Economy, a nonprofit
organization advocating for greater economic equality.
According to the report, the
assertion by Forbes that 70% of those on the list are "'self-made' is a loaded one, suggesting that
these individuals attained financial success independent of assistance from family and society." In
reality, the report argues, among those included in the group "are many people born solidly in the
top five or one percent, who may have inherited a business, attended Ivy League universities, and
benefited from family connections."
Forty percent of those on the list inherited
considerable assets from a family member, the report found, and over 20% inherited enough wealth to
make the list by their inheritance alone.
The most common source of wealth among the
members of the Forbes 400 is investment. Twenty-five percent made it onto the list because of
investment income, more than twice the percentage of those who did so through technology, the
second-most common source of wealth. "Tax loopholes, offshore accounts, and various other schemes
allow the super-wealthy to use the tools of finance to protect their wealth and lower their tax
rates further," the report observed. "Deregulation of banking has also contributed to financial
speculation making up a larger and larger portion of our economy."
Additional factors that
reveal the extent of wealth inequality in the US include the fact that Oprah Winfrey is the only
African-American among the 400 members. Winfrey is also one of only 40 women on the list, 90% of
whom inherited their fortunes. In 1982, the list included 75 women.
"Income from work
should not be taxed at a higher rate than income from stocks, bonds and investment real estate,"
the report concludes. "To enable the 99 percent to save and build assets, the tax burden should be
shifted back onto the wealthy, particularly concentrated asset-holders."
Less than a week
after a leaked video caught him writing off 47% of the American electorate as believing "they are
victims" and thus entitled to the largesse provided by government programs, Republican Presidential
candidate Mitt Romney reiterated his support for a low tax rate on capital gains, arguing that it
is "the right way to encourage economic growth, to get people to invest, to start businesses, to
put people to work."
But as Joe Nocero wrote in The New York Times, "The American dream exists not because of the capital
gains differential but in spite of it. It is the tax break that most glaringly exists to benefit
the wealthy. If you have any doubts about that, all you need to do is read the latest Forbes 400."