I've been a capitalist and entrepreneur ever since I opened my shoeshine stand at the age of 8 in Belle Plaine, Minn. With a little pluck and a lot of luck over the following 75 years, I advanced to founding an advertising agency and other companies with some 700 total employees.
I'm proud of what I accomplished. I'm also humbled by the fact that I could not have done it alone or without all the vital things that our democratic governments do for our economy and society at every level, including my almost free education at the University of Minnesota back in the 1950s.
These perilous times make me more concerned than ever about growing inequality and racial injustice in Minnesota, and the need for the most privileged among us to pay back a greater share into the common pot for the common good. The pandemic and economic dislocation were aptly described in a recent front-page Star Tribune article as producing an "uneven economic toll." An understatement, for sure.
And so I strongly support proposals by Gov. Tim Walz and President Joe Biden to impose modest tax increases on those of us who continue to prosper.
In addition to these first modest increases, both our federal and state governments must move on many other fronts to undo decades of policies that have shifted money and power to those at the very top, creating obscene dynastic wealth and threatening our democracy.
Those of us only near the top must contribute more too. Not to be punished or to achieve greater equality through tax policy alone, but to invest in the productivity that occurs when we improve the health, education and economic security of our workforce and all our people.
I'm not actually in the top 0.01% of wealthiest Americans, but I have enough, more than enough. I eat well (too well), take vacations, own more than one residence and invest in small companies. I can pay for my grandchildren's college educations so they can graduate debt-free. Our estate will go to the nonprofits that reflect my wife's and my values.
Countless studies show incredible growth in assets of my wealthier peers while the assets of the middle and lower classes have shrunk or shown no growth. About 40% of all household wealth now comes from inheritance. That means not necessarily hard work, smarts or entrepreneurial spirit, but from parents and grandparents. In 2020 Americans will inherit over $750 billion while paying approximately 2.1% in taxes.
The Waltons of Walmart, the nation's wealthiest family and possibly the world's, saw their net worth grow between June 2017 and June 2018 at the rate of $4 million per hour. Yes, per hour.
Some of this money is spent on yachts, cars, planes or even mountains and islands. Some seek to multiply their influence and power by contributing handsomely to the elections of legislators, judges and governors. Some hope to sleep in the Lincoln Bedroom. Some invest heavily in their church or favorite charity. But some of the wealthiest tend to give very little as a percentage of their net worth. Elon Musk has given less than 1% of his net worth since founding Tesla in 2002.
Among further changes, we can dramatically reform the estate tax while still leaving modest but not dynastic wealth to future generations.
We must continue to progressively increase the income taxes on the very wealthy and the merely wealthy. In the '70s and '80s tax rates were significantly higher than today's rate, yet people like me still worked hard to build wealth. Warren Buffett, the famed investor, thinks it's grossly unfair that his overall effective tax rate is lower than his secretary's.
We also need to change the capital gains tax rate and close the most egregious tax loopholes, such as the "carried interest" rule, real estate gimmicks, oil and gas depletion allowances and myriad other accounting tricks. These loopholes allow corporations and billionaires like former President Donald Trump to avoid paying federal taxes altogether, in some years.
We also need to restore to the IRS the funds it needs to catch those who are ethically challenged. Replacing the 5,600 auditors who have left the service would help us reverse the 80% decline in audits for millionaires between 2011 and 2019.
Many wealthy people and their allies will scream "socialism" in response to all of this, just as they did when the original federal income tax became law a century ago, and when Social Security, Medicare and the Affordable Care Act were passed. But those reforms did not create a Wall Street collapse or a howling economic wasteland, as routinely predicted. The opposite occurred, and in fact, the regression toward tax cuts for the rich and minimal improvements in economic security for others over the last 40 years has helped create the inequality crisis.
In a free-market democracy there will always be considerable income and wealth inequality. But the larger threat to capitalists like me looms ahead if inequality worsens and the nation turns toward more extreme solutions offered by would-be authoritarians on the right and left.
Lee Lynch is a philanthropist, former owner of an advertising agency, author of "Amazing Minnesota," and longtime board member of Growth and Justice, a policy research organization.