Steve Roth, the CEO of real estate investment firm Vornado Realty Trust, recently made headlines when he likened the phrase “tax the rich” to a racial slur on an earnings call. Needless to say, it got the blowback that it rightfully deserved. We here at Patriotic Millionaires completely, vehemently, and unequivocally disagree with Roth’s statement, and we won’t dignify it further by devoting any more ink to it than that.
What we will respond to, though, is another comment that Roth made on that same call about his wealthy peers in New York. He said:
“The rich whom the politicians are targeting, starting with nothing, are the epitome of the American dream. They are our largest employers and largest philanthropists, and it is the 1% that makes 50% of New York’s income taxes. They are at the top of the great American economic pyramid for a reason. They should be praised and thanked.”
We told you last week that, when we tell people we want our taxes raised, the most common pushback we get is: “Why don’t you just write a voluntary check to the IRS?” (if you didn’t catch that, read it here.) The second most common criticism we receive, though, is along the lines of what Roth said: “Rich people worked hard for their wealth and deserve to keep it. Taxing them more would be akin to theft and disincentivize people from innovating and starting new businesses.”
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Short on time? Here’s what you need to know:
- One of the most common critiques we receive when we tell people we want our taxes raised is: “Rich people worked hard for their wealth and deserve to keep it. Taxing them more would be akin to theft and disincentivize people from innovating and starting new businesses.” Our response? While rich people certainly deserve their wealth (to varying extents), no one is entirely “self-made” and therefore should not be allowed to skirt their civic duty to pay their fair share in taxes.
- A growing number of wealthy people in the US and around the world have inherited their fortunes. They did nothing to earn their wealth besides win the lottery at birth.
- Many rich people came from wealthy and well-connected families that played a major role in propelling them to success, e.g. by providing critical seed funding and making connections.
- Even rags-to-riches millionaires and billionaires aren’t entirely “self-made.” Their products, ideas, and businesses stand on the shoulders of innovators that came before them. Public services also play a critical role in supporting their path to wealth.
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We understand the sentiment behind this thinking, especially in a country like ours that celebrates ingenuity and achieving the American Dream to the degree we do. But many of us here at Patriotic Millionaires did not work hard to achieve our wealth—we merely hit the lottery at birth by being born to rich parents or grandparents. Yet even for those of us that did work hard to create new businesses or climb to the top of our fields, we still don’t feel entirely comfortable calling ourselves “self-made;” some of us relied on help from our families, and all of us were supported by taxpayer-funded services and the progress of innovators that came before us. And in no way, shape, or form do any of us feel comfortable not paying our fair share in taxes.
We’ll spend the rest of this week’s Closer Look explaining why we feel this way. We’ll focus on the growth in inherited wealth in America; how it is that so many rich people get a major head start in their path to success; and how no rich person is “self-made.” We’ll then close by arguing why all rich people must be taxed fairly, no matter what their journey to wealth looks like.
A growing number of rich people win the birth lottery
If we asked you to name a rich person, we’d bet most of you would name people like Elon Musk, Bill Gates, or Jeff Bezos. But with the way things are trending in the US and around the world, you’d be wise to add more people like Rob, Jim, and Alice Walton (descendants of Sam Walton, the founder of Walmart) to your rich person rolodex.
As billionaires around the world age—the average billionaire is 65 years old—they are expected to pass down historic levels of wealth to their heirs in the coming years in what’s being dubbed the “Great Wealth Transfer.” According to Swiss investment bank UBS, billionaires around the world are expected to pass down $6.9 trillion by 2040. It appears the “Great Wealth Transfer” is already underway, as a record 91 billionaires were minted last year through inheritance, receiving a collective $298 billion.
Many of our members at Patriotic Millionaires inherited our wealth. We think it is perfectly natural for people who achieve great success to want to leave something behind for their loved ones. But it’s important to recognize that those loved ones did nothing whatsoever to deserve their inheritances—nothing, that is, except being born to the right family at the right time. And that’s especially important to keep in mind these days as the number of ultra-rich inheritors continues to tick up around the world.
Many rich people had a huge head start
To our knowledge, Elon Musk, Bill Gates, and Jeff Bezos did not inherit wealth. But we do know that their wealthy and well-connected families still gave them a major head start in their path to achieving billionaire status.
Elon Musk came from a wealthy South African family. There are reports that his father, Errol Musk, gave him a $28,000 loan to help him start Zip2, his first software company. Jeff Bezos got an even bigger loan—a cool $245,000—from his wealthy parents to start Amazon. And while Bill Gates didn’t get money directly from his parents, his mom put in a good word for him with the chair of IBM, which helped Gates’ then-fledgling Microsoft land a lucrative contract that was instrumental in propelling the company into the behemoth that it is today.
Examples beyond Elon, Jeff, and Bill abound in this regard. Mark Zuckerberg got a $100,000 loan from his dad to start Facebook. Kylie Jenner became a billionaire through her cosmetics line—in 2019, Forbes called her “the youngest self-made billionaire ever”—but it’s hard to believe she would have gotten there were it not for the fame she achieved through her family’s reality TV show, Keeping Up With the Kardashians. And perhaps most of all, it’s hard to believe that none other than Donald Trump would have made that infamous ride down his golden escalator eleven years ago were it not for the $413 million he received from his father’s real estate empire.
Outside of these big-name examples, there are also numerous studies and research findings to bring to bear to this idea of innovators getting a head start. One study found that children born to families in the top 1% of earners are ten times more likely to become inventors than children born to families below the median. Another found that the most important factor in determining whether someone will become an entrepreneur is the income of their parents.
We have no inherent problem with so-called “nepo babies.” (Seriously, imagine where the world would be without Microsoft!) We just have a problem with these types going around calling themselves “self-made” and failing to recognize their privilege and the numerous and immense head starts they received in life that catapulted them to success.
All rich people have a start
Some rich people really do have rags-to-riches origin stories and have more of a right to call themselves “self-made.” But that doesn’t mean they should. Let’s use Starbucks’ former Chair and CEO, Howard Schultz, as an example to explain what we mean.
In a congressional hearing in 2023, Schultz had this to say about his background: “I grew up in federally subsidized housing. My parents never owned a home. I came from nothing. Yes, I have billions of dollars. I earned it. No one gave it to me. And I’ve shared it constantly with the people of Starbucks.”
From what we know about his background, Schultz was right to say he grew up poor. But he was not right to suggest that he earned his billions all by himself, or that he’s shared them widely with his Starbucks employees. It’s safe to say he and other Starbucks executives have gotten rich off the backs of their underpaid employees. In 2024, the median Starbucks worker earned $14,674 a year while Brian Niccol, Starbucks’ CEO, made $95 million. That’s 6,666 times more, for anyone counting. And that 2023 congressional hearing? That was about Starbucks’ infamously aggressive union-busting campaign.
We certainly don’t mean to suggest that people can’t rise the socioeconomic ranks without resorting to nefarious tactics like underpaying workers or union-busting. Some of us became rich through entrepreneurship and like to think we did so while treating our employees with dignity and respect. But none of us—and we mean, none of us—got rich without standing on the shoulders of giants. We’ll use Howard Schultz again to explain what we mean.
Howard Schultz did not invent coffee. Howard Schultz did not invent the coffeemaker. Howard Schultz did not create the concept of a coffee bar (he got that on a trip to Italy). He didn’t even technically create Starbucks; he acquired the original Starbucks Coffee Company in 1987 and made it into Starbucks Corp. He also did not invent everything from the telephone, or computers, or electricity, or high-speed internet, or printers, or credit cards, or cars, or planes, or all of the other million things we can guarantee were instrumental to Starbucks becoming the largest coffee chain in the world today.
In short, rich people’s inventions and businesses are just the latest iterations of the millions upon millions of inventions, ideas, and businesses that came before them. According to calculations by Dr. Tee Malleson, approximately 99% of the income of the top 1% comes from other people’s labor. That’s a pretty stunning statistic.
We’re not looking for sympathy here, but a number of us grew up poor. We had private support, albeit not of the financial kind, from friends and family that was instrumental in helping us achieve our dreams. Yet we also, critically, had public support that got us to where we are. We had excellent public school teachers that drilled us in our ABCs and 123s. We had bus drivers and train conductors that got us to and from school and our after-school jobs. We had museums and libraries that piqued our curiosity. We had hospitals that nursed us back to health when we broke a leg (or two). And so on.
They say it takes a village to raise a child. You could say it takes a village to make a millionaire as well. No rich person is an island. And no rich person is completely “self-made.”
Conclusion
We’ve said it before, and we’ll say it again. We have absolutely no problem with people being rich. People need financial incentives to create new businesses and products, which ultimately benefits all of society. And minus the inheritors, we agree that rich people deserve their wealth, albeit to varying extents.
Here’s what we do have a problem with. We have a problem with people like Steve Roth suggesting that rich people earned their millions and billions all by themselves. This is a flat-out lie when it comes to inheritors, and disingenuous at best for those that received a massive head start in life. And as discussed, although rags-to-riches millionaires undoubtedly had to work much harder to achieve financial success than their peers, they also can’t honestly say they came from “nothing.”
This is why no rich person, no matter how they found their way into wealth, should be allowed to skirt their civic duty to pay what they rightfully owe in taxes. Taxation is not theft. It will not disincentivize people from innovating and starting new businesses. It is merely the most productive and equitable way to reinvest into the myriad communities and systems that made their (or their families’) success possible.
We can’t think of a better way to put this than our Founder and President, Erica Payne, did in a Fast Company interview about Roth’s comments: “The only thing that will collapse if we tax billionaires at an appropriate level is an over-inflated ego or two, and I think that would be a wonderful thing for all of us.”