Hedge fund billionaire Tom Steyer, a former 2020 Democratic presidential candidate, in a new interview sharply criticized the notion of a self-made billionaire, saying the wealth accrued by ultra-rich individuals like former Microsoft (MSFT) CEO Bill Gates depends on “millions of poor people.”
The remarks come as taxes on wealthy individuals remain a key sticking point in negotiations among Congressional Democrats over a spending bill that would expand social services and accelerate the U.S. response to climate change.
The measure, which initially aimed to raise taxes on wealthy people as a central source of revenue, could end up reducing their tax bill, if the law includes a proposed repeal of the $10,000 cap on the federal deduction for state and local taxes, known as SALT, the bipartisan Committee for a Responsible Federal Budget found in an analysis released last week.
Steyer, who supports raising taxes on the wealthy, said company founders deserve to benefit from lucrative ventures. But he acknowledged that their success owes to a working class of millions who made it possible for them to flourish.
“I have always thought that the capitalist system should reward people for coming up with ideas and products that make other people’s lives safer, healthier, more fun, more productive,” he says. “Absolutely.”
“Having said that, do I also think that those people when they succeed — when a Bill Gates succeeds, did he create Microsoft? Yeah, at some level he did. But he did it within a system that other people, millions of poor people, millions of unassuming people, had dedicated their lives to create.”
“So he was building it — you know the old saying — standing on the shoulders of giants,” Steyer adds.
The wealthiest 400 American families paid an 8.2% average rate on federal income taxes from 2010 to 2018, according to an analysis released by the White House in September. The tax rate for the wealthiest families over that period fell below the average 13.3% tax rate paid by US families in 2018, the Tax Foundation found.
To be sure, many of the wealthiest Americans give away large sums to charity. Bill and Melinda Gates have given nearly $37 billion to the Gates Foundation, a philanthropic organization that fights poverty and disease across the globe. At the COP26 climate summit this week, Amazon CEO Jeff Bezos pledged $2 billion for restoring natural habitats and addressing flaws in the food system.
The COVID-19 pandemic has coincided with a rise in average CEO compensation as well as an explosion in income among the nation’s top-earning CEOs and its wealthiest individuals.
Eight of the highest-earning executives each received compensation last year worth more than $100 million. In 2019, only one executive reached that threshold, according to a survey conducted by consulting firm Equilar for The New York Times.
Moreover, the richest 1% of Americans own roughly 16 times more wealth than the bottom 50%, Federal Reserve data for the first quarter of 2021 showed.
The fortune of U.S. billionaires has grown $2.1 trillion during the pandemic, boosting their collective wealth by 70%, according to the left-leaning Institute for Policy Studies.
Steyer rose to prominence as the founder and senior managing member of hedge fund Farallon Capital Management, which he departed in 2012. Since then, he launched the voter engagement organization NextGen America and became a leading advocate on environmental issues.
Wealthy people take on a duty to those who built and sustained the society that enabled their success, Steyer says.
“You have huge obligations, responsibilities, and debts to your fellow citizens who have done so much,” he says. “That teacher, that soldier, that nurse who’ve done so much to create a system that is safe for you to go write some code, and make a ton of money.”
“So let’s just be clear, we’re in this together,” he adds. “Nobody is going to succeed the United States of America without everybody else succeeding.”