Here in the United States, we spend a lot of time arguing about income taxes . . . who should pay, how they should pay, and how The French Prime Minister Georges Clemenceau once said that if a man is not radical at 25, he has no heart — and if he’s still radical at 45, he has no head. And while Clemenceau focused his attention on the battlefields of World War I, history supplies an endless number of stories where radical youth challenge their entrenched elders.
Income inequality has always been a popular target of the young. Today, It’s growing even worse. The Berkeley economists who helped design Senator Elizabeth Warren’s wealth tax have reported that for the first time ever, the 400 richest households in the country paid less tax, as a percentage of their income, than any other group of Americans. Naturally, that’s inspiring young radicals to pick up their torches and pitchforks and storm some castles. Their ranks include some of those who have benefited most from the problem.
Last month, everyone’s favorite chronicler of the carriage trade, Town & Country magazine, profiled “The Rich Kids Who Want to Give Away All Their Money.” It’s clear that at least some young inheritors are thinking critically about their fortune. The article quotes Sam, a 24-year-old Qualcomm heir with a $25 million trust fund, who says that for him, the concept of “risk” means the possibility of losing money in a hedge fund. But for someone his age working as a bike messenger in New York, it’s the possibility of getting hit by a car while delivering a burrito.
The article also interviews Karen, who gave her $3 million trust fund to a private foundation. She concedes the challenge left-wing inheritors face: “You’re not necessarily going to convince your dyed-in-the-wool Republican grandma that . . . Well, anything, probably. But you probably can move the needle a little bit.”
Finally, there’s Holly, daughter of a Fortune 500 CEO, who says families like hers will be happier when they don’t have to deal with the burden of feeling responsible for the injustices their wealth helps create. She sounds delightfully idealistic and perhaps a bit naive — a Holly Golightly figure in a Paris Hilton world. But it’s hard to argue with her commitment and her sincerity. Clemenceau would be proud.
Sam, Karen, and Holly are all members of a group called Resource Generation, a “membership community of young people (18-35) with wealth and/or class privilege committed to the equitable distribution of wealth, land, and power.” The group counts 600 members in 15 chapters across the country, and raised over $20 million last year for social justice groups. (Click here to take their handy Class Privilege Quiz.)
Of course, the Resource Generation radicals want to see higher taxes. But while socking it to the wealthiest Americans would surely combat inequality, it won’t solve the problem entirely. In 2016, the top 400 earners reported total income of $127 billion. But even if they paid 100% of their supersized earnings in tax, there would still be an enormous gulf between them and the rest of America. It’s also worth noting that inheritors who give their fortunes to social justice groups deprive the government of billions in future inheritance taxes.
If you’re like most clients, your financial concerns lie closer to home. But paying less tax leaves you more money to give to whatever causes you support, whether they spring from 25-year-old youth or 45-year-old maturity. And if you are looking to play a bigger role in your community, we can help you make the most of your gifts there, too. So call us when you’re ready to change the world . . . you might be surprised how much we can help you accomplish!