Billionaire PIMCO Founder Bill Gross: “I’ve Grown Rich at the Expense of Labor”
The billionaire founder of one of the world’s largest investment firms has acknowledged that he has gotten incredibly wealthy “at the expense of labor” and is calling for higher taxes on the rich to help curb growing economic inequality.
Having benefited enormously via the leveraging of capital since the beginning of my career and having shared a decreasing percentage of my income thanks to Presidents Reagan and [George W.] Bush via lower government taxes, I now find my intellectual leanings shifting to the plight of labor.
“Having grown rich at the expense of labor, the guilt sets in and I begin to feel sorry for the less well-off,” Gross writes.
I would ask the Scrooge McDucks of the world who so vehemently criticize what they consider to be counterproductive, even crippling, taxation of the wealthy in the midst of historically high corporate profits and personal income to consider this: Instead of approaching the tax reform argument from the standpoint of what an enormous percentage of the overall income taxes the top 1 percent pay, consider how much of the national income you’ve been privileged to make.
Indeed, the top 1 percent of US income earners made 19.3 percent of national household income in 2012, its largest slice of the proverbial pie since the IRS began keeping records a century ago. Since the Great Recession officially ended in 2009, 95 percent of all income gains went to the top 1 percent of earners.
Gross implores his fellow plutocrats to “admit that you, and I, and others in the magnificent ’1 percent’ grew up in a gilded age of credit, where those who borrowed money or charged fees on expanded financial assets had a much better chance of making it to the big tent than those who used their hands for a living.”
“A fair economic system should always allow for an opportunity to succeed,” Gross asserts. “…Acknowledge your good fortune at having been born in the ’40s, ’50s or ’60s, entering the male-dominated workforce 25 years later, and having had the privilege of riding a credit wave and a credit boom for the past three decades. You did not, as President Obama averred, ‘build that,’ you did not create the wave. You rode it.”
Gross is also critical of the growing economic inequality in the United States:
Developed economies work best when inequality of incomes are at a minimum. Right now, the US ranks 16th on a Gini coefficient for developed countries, barely ahead of Spain and Greece. By reducing the 20 percent of income that ‘golden scrooges’ now earn, by implementing more equitable tax reforms… we might move up the list to challenge more productive economies such as Germany and Canada.
And now it’s time to kick out and share some of your good fortune by paying higher taxes or reforming them to favor economic growth and labor, as opposed to corporate profits and individual gazillions… If you’re in the privileged 1 percent, you should be… willing to support higher taxes on carried interest, and certainly capital gains readjusted to existing marginal income tax rates. Stanley Druckenmiller and Warren Buffet have recently advocated similar proposals. The era of taxing ‘capital’ at lower rates than ‘labor’ should now end.
California-based PIMCO is the world’s largest bond investor, with more than $2 trillion in assets under management as of December 2012. Gross manages the firm’s Total Return Fund, the world’s largest mutual fund, with assets of more than $240 billion. The company, which was started with $12 million in investments in 1971, was acquired by German financial services giant Allianz SE in 2000, although PIMCO continues to operate as an autonomous subsidiary.