Chuck Collins is the great-grandson of Oscar F. Mayer, the founder of the Oscar Mayer meat company. At the age of 26, he received an inheritance of $500,000 (the equivalent of $1.4 million today) and donated it to various foundations for social works. “To me, in my mid 20s, inheriting a lot of wealth at a time of inequality just felt wrong to me. I wanted to make my own way without help from something that happened four generations ago. So I’m proud of my family and the company. But I just felt like after four generations, the cycle of wealth should kind of come to an end. And that me and my children should work for a living,” he explains in an interview in Washington.
The 63-year-old instead chose to follow the path of an activist and academic expert, specializing in inequality, tax policy and hereditary wealth. He directs the inequality program at the Washington Institute for Policy Studies, and in his latest book, The Wealth Hoarders: How Billionaires Spend Millions to Hide Trillions, he takes aim at what he calls the “wealth defense industry.” Collins sheds light on how billionaires use loopholes to avoid paying taxes, frequently hold political power hostage and use philanthropy as a disguise, which is often a way to perpetuate their wealth and power.
Question. In your book, you say that the rich spend billions to save trillions. How does this wealth defense industry work?
Answer. When people have substantial wealth, say $30 million or more, they have power to hire professionals, tax attorneys, accountants, wealth managers, who basically get up every morning with the goal of how do I protect and preserve this wealth, minimize tax and pass as much on to the next generation as possible. That is their North Star. That’s their goal. And so this whole industry has grown up, and it’s getting more and more effective. At the same time, in the United States, the oversight, the Internal Revenue Service, has weakened. So now, for the very wealthy, taxes are becoming optional, because they’re able to use trusts. The wealth defense industry has many tools in their toolbox. Trusts, offshore corporations, onshore shell companies, it’s kind of a shell game to move money to the shadows.
Q. You also argue that this industry is lobbying to change the law.
A. They will say, ‘we are just helping our clients obey the law.’ But what my book tries to show is they write the laws. They create the trusts. In the United States, they lobby state governments to literally change their laws to allow for perpetual trusts. We call them dynasty trusts; they can exist for centuries. So they’re not benign. They are actively engaged in the political system fending off oversight, lobbying to weaken the IRS and allow their clients to have free run.
Q. You are critical of dynastic wealth. What do you think of the self-made millionaires who have built businesses and worked hard?
A. In a dynamic society, you want to have situations where people can invent something or create something useful and be financially rewarded for it. So we should celebrate entrepreneurs and people who invent useful things. What happens is, after a certain point, they begin to focus on defending their assets. That is the point where, as a society, we should say: ‘No, you can’t build a wall. You can’t hide it. Pay your fair share of taxes. Don’t be so focused on the next generation.’ People get wealthy and they start to think about their legacy. Their children and their grandchildren. They think about immortality, that’s when it becomes corrupt and corrosive, and a problem. So hooray for somebody who invents something or figures out a product that everybody wants. But when they start to use their power to build monopolies, to fend off competition, or to avoid taxes, or create dynastic wealth, that’s when we should be concerned.
Q. You gave a graduation address at Harvard Business School, in which you asked students not to work for business.
A. There’s this whole discussion about Effective Altruism, with Sam Bankman-Fried [founder of the FTX cryptocurrency market who is facing criminal charges for fraud]. That philosophy was, ‘go out there, make a lot of money. It doesn’t matter how you make it, and then do good later.’ And my point of view is, don’t dance with the devil. Don’t work for the devil. Don’t work for the billionaires who already have all this wealth and power. There are plenty of other good paying jobs where you don’t have to help billionaires become a protected class. Work for the community, work for the tax authorities, work for creating affordable housing. There’s so much more meaningful work. So yeah, I get to speak to young students a lot. And my message and part of that comes from talking to people in their 60s and 70s, who did the wealth defense industry, who were tax attorneys and they worked with clients and they regret how they spent their life. They regret that they gave all their life’s work to helping the already rich get richer. And so I want to pass that on to the younger people and say, ‘do something else.’
They have sold their souls. They see the harm that’s now been caused by concentrated wealth and power. They see that it’s wrecking our society, and they feel bad about it. Some of them are helping me understand the system or helping lobby. I have a couple of retired whistleblower types. And by the way, everything we know about this hidden wealth system is because of leaks, because of the Pandora Papers and the international consortium and we’ve learned how the system works because people inside those companies gave information. The system is cracking.
Q. Amazon founder Jeff Bezos has announced that he will donate much of his fortune, but you’re skeptical about this and other announcements, including the Giving Pledge, the philanthropic campaign started by Warren Buffett and Bill Gates. Why?
A. I think it’s great if they announced they want to give away this wealth and have it leave their domain. But we should be skeptical. In the initial group of Giving Pledge, which is now 12 years old, there’s maybe 70 billionaires. They pledge to give away half their wealth in their lifetime. But their wealth has doubled in the last 12 years. So they have a challenge. They have a problem, which is their wealth is growing so fast that they can’t give it away fast enough. So I think an announcement is meaningless. What we should be watching for is when the money leaves their domain, when it’s out the door.
MacKenzie Scott [Bezos ex-wife] is a better example. She’s given away $14 billion in five years. That’s newsworthy because she’s not controlling it. What happens with philanthropy is the wealthy create private foundations and Donor Advised Funds. They create intermediaries that they control. They get a tax reduction when they put the money into their foundation, but it could sit there for generations. So we should be encouraging the flow of money. Move the money. Move it to the nonprofit charity sector, give it to universities, but don’t have it just sit in these donor controlled intermediaries. I think the press should ignore the announcements and pay attention to the money moving out the door.
Q. Do you distrust philanthropy?
A. These are our tax dollars at work in the United States. If I’m a billionaire, and I give $1 to my private foundation, I get 73 cents in tax reductions. We as taxpayers subsidize the charitable giving of billionaires. We should be skeptical and we should say, well maybe that they should pay higher taxes. And society should decide how the money is invested, as opposed to people deciding how the money is invested. Philanthropy is fundamentally not democratic. It’s a form of power and it’s becoming an extension of the wealth and power and influence of the billionaire class. It’s not a substitute for a fair tax system and a democratically controlled investment decision.
Q. You have denounced the use of philanthropy to pursue political objectives.
A. More and more people use philanthropy as one of their influence tools. I’ll give some money to candidates directly. I’ll give money to what are called 501 C four advocacy groups and I can give money to my political organizations, think tanks, research groups. People are weaponizing their philanthropy to advance their political aims on the left and the right. Either way, it’s not good for society to have billionaires duking it out among each other, over the fate of our society.
Q. Buffett and Gates have said they will not leave their fortune to their kids. What do you think of this decision?
A. I actually used to work with Bill Gates, his father [William Gates Sr]. He and I wrote a book together about why we should have an inheritance tax. Bill Gates senior used to say, ‘don’t you think there’s something wrong that my son can take $100 billion of Microsoft wealth, put it into a foundation, never pay any taxes?’ So my view is there should be a limit on how much you can avoid taxes. It’s great that they have said they’re not going to create dynasties. Some families are actively creating dynasties, the Mars family, the Waltons, the Kochs. They’re investing in multi-generational wealth hoarding. And so anytime somebody says they’re not going to do that, that’s good, but it’s still not a substitute for taxes. I would like to say to Warren Buffett and Bill Gates: ‘Pay a fair tax, pay as if you were paying an inheritance tax, pay back society.’ That’s what Bill Gates senior would have wanted. He would have been like, ‘great that you’re doing charity, not the same as paying your taxes.’ It’s interesting because you want to celebrate generosity. But you want to be skeptical about the system that currently is in place. You don’t want wealthy people to opt out of paying taxes.
Q. What do you think of Elon Musk?
A. He’s an example how, at an early stage, a lot of billionaire wealth is built on a foundation of public investments. We as taxpayers create investments in knowledge technology, we provide subsidies to the startups of certain companies. We should understand that we as taxpayers, are a stakeholder in Tesla, and some of those technologies. But he’s an example where he has been a successful entrepreneur, with Tesla, Starlink, his interest in space [SpaceX]. But now he’s moving into the oligarchic phase of his wealth, which is about wielding his power. You can be wealthy, but not an oligarch. An oligarch invests in wealth defense. Owning Twitter is part of an extension of power. It’s like you’re buying a newspaper, you’re buying the media, you’re buying the town square. That’s when they go from being a billionaire to an oligarch and that’s when we should be very concerned.
P. Are there too many loopholes in the US that allow billionaires to hide wealth?
A. I think the the revelation of the Pandora Papers is that the United States is now one of the biggest tax havens because we have not kept up with the rest of the world. The United States is now the scofflaw, we’re the outlier. We’re not engaged. We’re not reciprocating. We get information about US citizens in Switzerland and their bank accounts. But if there’s a billionaire who has money in the United States, we don’t share information. The European Union has done a better job. It’s beginning to share information country by country on tax reporting, transparency and ownership of real estate, disclosure of banking assets. The United States is not, so we are the weak link in the global system. And wealth moves to the shadows, to the weakest links and the least regulated spaces. And that’s the United States now. Within the United States, there’s probably a dozen states – and they tend to be small, rural states – where the industries have captured the state political system and rewritten the laws. But we can fix that. You can require trans disclosure. You can require the enablers, the wealth defense industry, to disclose information. You can outlaw certain kinds of trusts and you can enforce the law.
P. Do you think the US has a different popular perception of wealth than Europe?
A. I would say the United States has a very high tolerance for inequality if we believe that people earn their wealth fairly, and that everybody else has the same opportunity. What’s changed in the last couple of years is that people believe the rules are rigged, that the wealthy are gaming the system, that some of these great fortunes are because people have cornered the market. Billionaire assets increased during the pandemic, while everyone else was suffering and tightening their belts. The billionaires saw their wealth surge. I think that has created skepticism and resentment. The billionaires themselves are making really good examples of why we should be concerned. You know, Musk and Twitter, Bezos and Amazon. They’re showing us why we should be alarmed about billionaire power and monopoly control. And so I think that the United States is becoming more like Europe, being skeptical of great, concentrated wealth,
Q. Is that perception changing with the new generations?
A. Younger people understand how the rules are rigged. They have more student debt. They are never going to have affordable housing. They see politics being corrupted and captured by big money. So younger people are even more skeptical. And the narrative that justifies wealth is that people deserve it. He gets up early in the morning and works hard all day. He invents useful things. He deserves what he has, but that mythology of deservingness is changing because people are like, they got government help. They cornered the market. They pushed their competitors out of the way. They use their power to protect their wealth and change the laws.
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