Greed at a Glance
A weekly update on avarice in America and beyond

June 30, 2008

Corporate attorney Tim Durham, a specialist in leveraged buyouts, became a TV star last week — as the featured personality in an hour-long CNBC documentary entitled Untold Wealth: The Rise of the Super Rich. Durham sits among the 49,000 Americans now worth over $50 million, a “species unto themselves,” CNBC’s David Faber noted to his national audience. Durham owns dozens of cars — and once paid $22,000 to have a punctured tire on his $1.8-million Bugatti replaced. Durham’s home sports eight bedrooms and 20 televisions, “including two in his bathroom mirror.” One TV critic, the Baltimore Sun’s David Hinckley, appreciated the glimpse into the life of the wealthy the CNBC hour offered. But he found it unnerving that a show entitled the “rise of the super rich” totally ignored the one factor that made that rise so effortless, “the rise of tax laws favorable to the super rich — starting with the administration of Ronald Reagan in the 1980s and escalating with the efforts of President Bush during the past seven years.”

In London last week, a Claude Monet painting, Le Bassin aux Nympheas, went for $80 million at auction, an all-time record for the Impressionist master. But anyone looking for real excess in the British economy, notes the UK Daily Telegraph, might want to look at Avolus rental, a thriving company that charters luxury limos, helicopters, jets, and yachts. One Avolus client recently spent $100,000 flying a pet across the Atlantic. Proclaims Avolus CEO Justine Angelli: “I probably won't do business with you unless you have over a billion.”

How much influence do the rich have over politics? The Missouri Citizens Education Fund recently set out to see. The group's researchers zeroed in on Rex Sinquefield, a retired mega-millionaire St. Louis investment banker. Last year, in a victory for campaign finance reform, the state Supreme Court struck down a state law that allowed deep pockets to make unlimited political contributions. Sinquefield promptly bankrolled 100 separate political action committees, in the process multiplying the new limit on his personal giving a hundred-fold. Of Missouri House members who have pocketed contributions from Sinquefield, notes the Citizens Education Fund, 79 percent have now voted to funnel public tax dollars to private schools, a Sinquefield priority. But the real political damage the rich do, Boone County activist J. Scott Christianson noted last week in the Columbia Tribune, goes far deeper than any vote tally can show: “Issues that affect the majority of people — such as access to health care and insurance, road safety and food costs — are pushed aside so issues of concern to major campaign donors can be debated at length.” Adds Christianson: “Do we really want to live in a plutocracy, where only the wealthy decide what and who is important?”

Let's add U.S. Supreme Court Justice John Paul Stevens to that list of Americans who would rather not live in a plutocracy. The 88-year-old jurist last week noted that the nation’s courts “have long recognized” the importance of “statutes designed to protect against the undue influence of aggregations of wealth on the political process.” Unfortunately, the rest of the Supreme Court doesn’t seem to agree. On Thursday, in a 5-4 decision, the high court struck down the “millionaire’s amendment,” a key clause of the 2002 federal campaign finance reform that “allows congressional candidates who face wealthy, self-funded opponents to raise more than fundraising limits normally allow.” The decision, says Common Cause’s Josh Zaharoff, “helps make the playing field uneven and gives a huge advantage to wealthy individuals.”

In 2006, the IRS called in fewer than one out of every 200 high-income tax filers for a face-to-face tax audit. That may be one reason why the annual tax gap — the distance between taxes owed in the United States and taxes actually paid — is now running over $300 billion. In Germany, tax officials are taking a somewhat tougher stance against wealthy tax cheats in their new offensive against tax evasion. The German rule of thumb for any mega millionaire who doesn’t cooperate: one year in jail for each million in unpaid taxes. Tax evaders who turn themselves in voluntarily, notes Business Week, can get a discount off the going rate on tax penalties, currently $2 in fine for every $1 evaded.

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