Yes, we can slim the rich down to size. Unfortunately, they can also grow back.
David Rockefeller has just passed away.
You may have already heard that news. You may have not. America’s major media outlets haven’t treated Rockefeller’s death — at age 101 — as a top-of-the-news story.
How things change. Once upon a time, any breaking news that involved a Rockefeller almost automatically qualified as news not to be missed. And for good reason.
A century ago, David Rockefeller’s granddad, John D. Rockefeller, ranked as America’s richest man. No other fortune in the United States — or the world — came even close in size to his.
Old John D. passed away in 1937 at age 97. Newspapers treated his death as a mega big deal. Front-page headlines everywhere. Editorial pages filled with reflections on his long and lucrative life.
One of those reflections came from America’s most noted 20th-century pundit, columnist Walter Lippmann. The nation, Lippmann observed, would likely never see a fortune as grand as Rockefeller’s ever again. John D. had “lived long enough to see the methods by which such a fortune can be accumulated outlawed by public opinion, forbidden by statute, and prevented by the tax laws.”
In the United States, Lippmann added, “sentiment has turned wholly against the private accumulation of so much wealth.”
John D. Rockefeller raged mightily against that public sentiment over his life’s last decades. He fiercely denounced, for instance, the drive to enact a federal income tax.
“When a man has accumulated a sum of money within the law,” old John D. intoned, “the people no longer have any right to share in the earnings resulting from the accumulation.”
The people felt otherwise. A federal income tax became the law of the land in 1913. That tax would go on to whittle down the fortune John D. later left his six grandchildren.
The most celebrated of those six, longtime New York governor Nelson Rockefeller, would end up feeling intensely embarrassed about his diminished financial status, as one Washington insider discovered in 1974.
That insider, a veteran lobbyist by the name of Tom Korologos, vetted Nelson Rockefeller to be then-President Gerald Ford’s vice president.
“I’ve got something to worry about,” Korologos remembers Nelson grimacing. The former governor, Korologos soon learned, didn’t want to publicly reveal his personal financial picture.
“His concern,” the vetter explained, “was that when it became public, he wasn’t going to be as rich as everybody thought he was.”
What had happened to the fabled Rockefeller family fortune? Taxes.
Beginning in the early 1940s and lasting into the 1960s, the federal tax rate on individual income over $200,000 annually hovered around 90 percent.
And many states also had their own progressive taxes. In New York, the state tax rate on top-bracket income stood at 15.375 percent.
Deep pockets could, of course, deduct their state taxes off their federal taxable income. But those deductions didn’t change the basic bottom line: The extravagantly rich, in mid-20th century America, were losing their capacity to be extravagant.
Nelson Rockefeller passed away in 1979, just before the Reagan Revolution began undoing the progressive tax system that had so shaved his net worth. His younger brother David, a banker, lived on to prosper in the rich-people-friendly political environment the Reagan years ushered in.
Where Nelson watched his wealth shrink, David saw his wealth soar. At his death, Forbes magazine put David’s net worth at $3.3 billion, the world’s 604th largest fortune.
What would John D. Rockefeller think about how his last grandchild’s life turned out? He might be a tad disappointed that his flesh and blood no longer ranked as the richest of the world’s rich. But he’d probably be overjoyed that in America the rich still rule.
At least for now.
Sam Pizzigati, an Institute for Policy Studies associate fellow, co-edits Inequality.org. His latest book is The Rich Don’t Always Win. Distributed by www.OtherWords.org.