Column, 695 words

Taxing the #RichKids

A reality TV show's gaudy displays of wealth beg the question: How much is too much?

It doesn’t take long for viewers of #RichKids of Beverly Hills to realize the show is deliberately trying to make you feel poor.

Watching heiresses in their mid-twenties drop more on a day of shopping than the average American spends buying a home makes the point quite well — and that’s just the intro. To watch #RichKids, now in its second season on E!, is like entering a parallel universe where the weather is always sunny, the people are all good-looking, and everyone is filthy rich.

Rich Kids of Beverly Hills

dorothywang/Instagram

The show was inspired by Rich Kids of Instagram. In that cultural sensation, the children of today’s super-wealthy take their excess to the Internet with pictures of six-figure bar tabs and their parents’ Italian sports cars.

#RichKids of Beverly Hills tracks Morgan Stewart and Dorothy Wang as they fill their days with Instagram selfies and casual $40,000 Friday night house parties with their equally wealthy friends.

If not for the commercials, you might completely forget that some people “pay less” for shoes or buy clothes at discount big box stores like Wal-Mart that pay their employees less than it costs to just eke by. The show offers an escape from the crushing reality of things like the “jobless recovery,” widespread unemployment and under-employment, and student debt now topping $1 trillion.

Wang has other problems. “Opening wine is the hardest thing in the entire world to do,” she says.

Historically, people who make their money off inherited nest eggs and spend their lives in comfort free from the requirement to keep a steady job or establish their own business would be called aristocrats. From the beginning, Americans looked harshly on this class of people.

As Alexis de Tocqueville, the famous French commentator on U.S. values, once said: “They will tolerate poverty, enslavement, barbarism, but they will not tolerate aristocracy.”

The producers of #RichKids have challenged this prediction. They’re betting that today’s Americans won’t only tolerate historic levels of inequality with obscene displays of unearned wealth — they’ll celebrate it.

At a time when more than a fifth of U.S. children live in poverty, when two-thirds of American adults haven’t saved enough for retirement, and when nearly 4 in 10 young households are saddled with student debt, maybe this show is daring the American public to say enough is enough.

While middle and working class families across the country struggle to make ends meet, these gaudy displays of wealth beg the question: How much is too much? At what point do we say: “You’ve benefited enormously from the American economic, judicial, educational, and transportation systems — it’s time you gave back.”

While it’s true that the heirs and heiresses of America’s elite pay a sales tax on their thousand-dollar Christian Louboutin shoes and Birkin bags that can cost $10,000 or more, it’s also true that the poorest Californians pay a greater share of their income in state and local taxes than the richest 1 percent in their state.

You see, California has done away with its state gift and estate taxes, the only kinds of tax on their unearned fortunes that the #RichKids might pay. At the federal level, the estate tax is so riddled with loopholes that estate planners can help their clients just about avoid it altogether.

The #RichKids are an excellent example of what happens when a toothless estate tax fails to curb the concentration of wealth. Congress could and should take action. For starters, it could pass the Responsible Estate Tax Act Senator Bernie Sanders recently announced.

This innovative bill would close billionaire-friendly loopholes in the federal estate tax and raise rates only on the top quarter of 1 percent of wealthy Americans. The Vermont independent’s legislation would exempt the first $3.5 million for individuals ($7 million for married couples) and levy a surtax on the 492 American billionaires.

Raising taxes on #RichKids wouldn’t impact the rest of us — about 99.7 percent of Americans — yet it would narrow the widening inequality divide.

And Congress could invest the revenue into health care, education, and other things that will level the playing field.

That way, more Americans will get a shot at the good life, not just kids who inherit great fortunes.

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Josh Hoxie is the director of the Project on Taxation and Opportunity at the Institute for Policy Studies IPS-dc.org Distributed via OtherWords.org