12. The Survey of Economically Successful Americans (SESA) examined the
political attitudes and behavior of a small (n = 102) but representative sample of Chicago- area multimillionaires in the top one or two percent of US wealth holders. See Page, Bartels, and Seawright 2013; Cook, Page, and Moskowitz 2014.
13. West 2014.
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notes to pages 3–11
14. It is difficult to obtain exact figures regarding the net worth of Olin (who died in 1982) or the Bradley brothers (who died in 1942 and 1965), but all three owned large corporations and were among America’s wealthiest individuals.
15. Mayer 2016. See also Mayer (2004, 2017).
16. Skocpol and Hertel- Fernandez, forthcoming; Skocpol and Hertel- Fernandez 2016; Sclar et al. 2016.
17. MacLean 2017.
18. As remarked by Cathy Haggerty, a NORC expert on interviewing the
wealthy. On this and other obstacles to conducting interviews with wealthy Americans, see Page, Bartels, and Seawright 2011.
19. Even the highly respected, Federal Reserve- sponsored Survey of Consumer Finances— which oversamples wealthy Americans and has a great deal of clout for getting respondents to cooperate— does not attempt to include the Forbes 400 in its sampling (Bricker et al. 2015).
20. See Bonica 2014 and, for an application of his methodology that discusses billionaires, Bonica et al. 2013.
21. The policy stands of party leaders and elected officials tend to be forced into a single dimension by our two- party system.
22. Billionaires’ contributions to specific policy- oriented groups provide the best single indicator that we have been able to find for the policy preferences of the many billionaires who have expressed no preferences in public. And billionaire-wide statistical patterns involving those contributions can help us infer the policy preferences of a broader set of billionaires. Still, only a minority of billionaires have made such contributions. Neither we nor anyone else we know of has been able to produce reliable estimates of the policy preferences of all individual billionaires.
23. Although the Koch brothers have been highly active in politics for decades, we show in chap. 2 that for most of that period, they were almost totally silent in public about specific matters of public policy. Until recently, very few Americans had heard of them.
Chapter One: Who the Billionaires Are
1. Forbes 2013 (US), 18.
2. Forbes 2013 (US), 124; Becraft 2014, 49– 74. On Gates’s biography, see Becraft 2014.
3. Forbes 2013 (US), 125. For an excellent biography of Buffett, see Schroeder 2009.
4. Wilson 1997, 43– 67.
5. PwC 2016.
6. Forbes 2013 (US), 125.
7. Temple 2008; Kerstetter 2008; Mader 2008. On Ellison and Oracle generally, see Wilson 1997.
notes to pages 11–21
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8. Forbes 2013 (US), 125; Schulman 2014; Mayer 2016.
9. Forbes 2013 (US), 126; Walton and Huey 1992.
10. Forbes 2013 (US), 126.
11. Forbes 2013 (US), 128, 137.
12. Forbes 2013 (US), 138, 140, 142.
13. Forbes 2013 (US), 144– 64.
14. Forbes 2013 (US), 172.
15. O’Brien 2015.
16. Forbes 2017a (global), 38, 82– 3, 142; Forbes 2017b (US), 124. A “definitive”
account of Trump’s assets and liabilities as of 2016, including a close look at his major real estate properties, is given in Forbes 2016a (global), 80– 90. On Trump’s financial history, see Johnson 2016.
17. Forbes 2013 (US), 125, 128, 137; Forbes 2016a (global), 129, 132, 133.
18. Five billionaires in our 2013 group (Forrest Mars Jr., Jack Taylor, Harold Simmons, S. Truett Cathy, and Patrick McGovern) had passed away by 2016.
Three (Anne Cox Chambers, Charles Butt, and Gayle Cook) were still alive but dropped off the Forbes list because they passed their wealth to heirs. One (Elaine Marshall) dropped off the Forbes list for unclear reasons. Eleven billionaires fell out of the top 100 but remained on the Forbes 400 list, all but one staying in the top 150. One additional billionaire— Samuel “Si” Newhouse Jr.— was included in the 2016 Forbes rankings but passed away in 2017.
19. All figures as of mid- 2017.
20. US Census Bureau, n.d.
21. On the lives of America’s wealthy, see Frank 2007; Freeland 2012.
22. Forbes 2013 (US), 124– 37.
23. Forbes 2016a (global), 40, 129, 140, 142.
24. Forbes 2017a (global), 32.
25. Forbes 2013 (US), 34.
26. Forbes 2016a (global), 188.
27. Forbes 2016a (global), 152, 179.
28. Forbes 2016a (global), 143, 147, 148, 162, 163, 172, 174, 178, 182.
29. Forbes 2016a (global), 56– 70.
30. Forbes 2016a (global), 133, 137, 138, 140, 142.
31. Forbes 2016a (global), 66.
32. Forbes 2017a (global), 138– 39.
33. See Piketty 2014, chaps. 3– 4.
34. Forbes 2017a (global), 138; Fontevecchia 2014.
35. Piketty 2014, chaps. 10– 11.
36. Gladwell 2008, 55– 68.
37. Forbes 2017a (global), 138.
38. Bivens 2013.
39. Friedman 2007.
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notes to pages 21–27
40. Taub 2017; 2016; 2015; 2014; 2013: Institutional Investor’s Alpha “ Hedge Fund Rich List.”
41. Forbes 2016a (global), 128, 129, 137; Mallaby 2010.
42. Forbes 2016a (global), 138, 140.
43. Forbes 2016a (global), 142.
44. Setting aside unscrupulous caregivers to the elderly, or relatives who feign friendliness to— but privately loathe— rich, crotchety Aunt Jane, it would be fan-ciful to suppose that the amounts of money “earned” through inheritance are set by competitive markets.
45. The idea that entrepreneurs can be incentivized to work harder by the prospect of passing riches on to their children does not rest on any solid evidence we know of. If true, that would be a rather expensive and inefficient incentive.
46. Friedman 1962, 161– 66.
47. Here we disagree with Milton Friedman, who apparently assumed that considerations of economic efficiency make payment in accordance with the market value of marginal product “necessary” (1962, 166). Later in Capitalism and Freedom, however, Friedman advocated a “negative income tax” to alleviate poverty (1962, chap. 12). And he said nothing in favor of inheritance.
Chapter Two: Stealth Politics on Taxes and Social Security
1. Useful accounts of techniques by which wealthy individuals may be able to influence politics include Domhoff (2014); Ferguson (1995); Hacker and Pierson (2010); and Winters (2011).
2. We decided on a search window of ten years— ending in 2015, our final year of data collection— because the digitization and web- based indexing of media contents appears to be consistently comprehensive starting in about 2005 but is more fragmentary before that. A ten- year period seems long enough to give billionaires abundant time to speak out if they want to, yet short enough that most individuals’ positions on major issues would not be expected to change substantially during the period. (In fact, they very rarely did so.) Our searches produced some relevant public statements made before our official starting date, but very few that were not later reaffirmed and included in our data set.
3. Congressional Budget Office 2017. According to the same CBO data, tax
revenue in 2016 amounted to about $3.27 trillion, resulting in a deficit of about $587 billion.
4. Of all the OECD countries with lower taxes than the US, Japan and Israel are roughly comparable to our country in terms of GDP. The other OECD countries with lower taxes have per- capita GDPs that are half that of the US or lower: Spain, Slovenia, Portugal, Greece, Korea, Czech Republic, Estonia, Slovak Republic, Hungary, Poland, Latvia, Turkey, Chile, and Mexico. For these countries, the
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economic trade- offs related to tax rates are quite different than for the US and other more comparable countries.
5. Organisation for Economic Co- operation and Development 2017. As of the most recent year with data for all OECD countries (2014), the US ranked nineteenth out of thirty- five countries in tax revenue per capita— including state and local as well as federal taxes. The US per- person tax revenue of $14,115 was close to the OECD median of $14,327 but further below the OECD average of $14,916.
The difference of $801 per capita, multiplied by the US population, is quite substantial. Raising US per- person tax rates to match the OECD average would have generated about $255 billion in additional revenue in 2014, more than half of the federal deficit in that year. If tax rates had been raised to match those of Finland (the seventh- highest- taxed OECD country, at $21,856 per person), that would have generated $2 trillion in new revenue, completely eliminating budget deficits and opening the way for substantial new policy initiatives.
6. See Hacker and Pierson 2010, especially chap. 2; and Piketty and Saez
2007.
7. Internal Revenue Service 2017.
8. Huang and Cho 2017.
9. Tax Policy Center 2016.
10. Thomson Reuters 2016: Payroll taxes for Social Security— which in 2016
applied only to the first $118,500 of a person’s income— are more regressive than Medicare taxes, which are not subject to income caps. However, Social Security makes up most of the total payroll taxes— 12.4 percent up to the cap, as opposed to only 2.9 percent to Medicare.
11. The 15.3 percent payroll tax rate combines Social Security and Medicare taxes. It combines the “employee’s” and the “employer’s” contributions, as most economists say should be done— since the tax “on employers” lowers employees’
wages.
12. Thomson Reuters 2016.
13. Page and Jacobs 2009, chap. 4.
14. Our calculation assumes that the billionaire gets at least $118,500 in wages and salaries. Most billionaires’ incomes actually derive largely from capital gains, dividends, and interest— all of which are entirely outside the purview of the payroll taxes.
15. Congressional Budget Office 2017.
16. Social Security Administration 2017a.
17. Social Security Administration 2016.
18. Romig and Sherman 2016; Engelhardt and Gruber 2004; Social Security
Administration 2017b; Blank 1997; Jencks 2015.
19. Cook and Moskowitz 2014; Gallup, n.d.
20. Bartels 2008, 2016; Gilens 2005, 2012; Gilens and Page 2014; Jacobs and Page 2005; Page and Gilens 2017.
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notes to pages 30–35
21. Gilens 2009, 2012. Gilens speaks of preferences “at the 90th income percentile.” This is the same thing as the median preferences of the top 20 percent of income earners. Soroka and Wlezien 2008 point out that outsized influence by the affluent may be less worrisome if their policy preferences agree with those of ordinary voters, but Gilens 2009 shows that on many important issues this is not the case.
22. Page, Bartels, and Seawright 2013. On the top 4 percent or so, see Page and Hennessy 2010.
23. In 2013, the year of the Forbes list used for our research on billionaires, approximately $7.8 million was needed to fall within the top 1 percent of US wealth holders (Hines 2014).
24. For some time, a mere $1.0 billion has not been sufficient to make the Forbes 400 list. In October 2013, when a minimum of $1.3 billion was required, sixty- one billionaires fell below the cutoff point. Forbes graciously printed their names in a sort of consolation coda to the real list. Forbes 2013 (US), 265, 272– 75.
25. Zhao, Seibert, and Lumpkin 2010.
26. Bezos purchased the Post in 2013 for $250 million (Farhi 2013). Bezos’s net worth that year was just over $27 billion.
27. Verba, Schlozman, and Brady 1995; Schlozman, Verba, and Brady 2012;
Cook, Page, and Moskowitz 2014.
28. Forbes 2013 (US). Daniel, Dirk, and Robert Ziff were— along with Gordon Moore— tied at #98 on the 2013 list. We observed our n = 100 cutoff point by arbi-trarily excluding Robert, whose political behavior appears to be virtually identical to that of his brothers. Otherwise we would have ended up with a set of 101 bil lionaires, the last of whom would effectively duplicate two individuals already included in the analysis.
29. GDP data from International Monetary Fund 2013.
30. See Page, Bartels, and Seawright 2011.
31. Bricker et al. 2014, 38.
32. But see Bonica 2014; Bonica et al. 2013.
33. Since questions about several of these topics were asked on the SESA survey and have also been included in national polls of the general public, policy-related statements and actions by billionaires can be compared with the views of the top 1 percent or so of wealth holders and with the opinions of average citizens.
34. Sartori 2009.
35. Because Google searches are not case sensitive, proper nouns like Social Security and Earned Income Tax Credit were typically not capitalized in our searches. Proper nouns were capitalized in LexisNexis searches and when quotation marks were used in Google searches.
36. Yoon et al. 2007.
37. Quotation marks, which instruct search engines to look for exact matches to the words or phrases included within them, were generally not used. In most cases, experimental searches that included quotation marks produced very similar
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results to those that did not. But the use of quotation marks sometimes leads to the exclusion of relevant texts. For example, a search for “comprehensive tax reform”
would fail to locate texts using the phrase “comprehensive corporate tax reform.”
Quotation marks were occasionally used, however, when the initial results from a particular search were unusually noisy. For example, quotation marks were placed around “tax revenue expansion,” after initial searches without quotation marks mostly returned results pertaining to the expansion of business revenue.
38. For example, the third result produced by a search for “Charles Koch on
‘capital gains tax’ ” was a link to a blog and media aggregation website, Crooks and Liars, that specializes in heavily pro- Democratic “progressive news and media criticism.” While this source perhaps has its own value, most of its content is clearly less informative for the present research than, for example, transcripts of MSNBC interviews or profiles in major newspapers.
39. Koch 2016.
40. Statements and narrow policy positions released by organizations led by billionaires in our sample were collected and coded as statements, whereas donations to policy- specific groups are considered policy- specific actions.
41. The authors (chiefly Lacombe) personally conducted all of the searches on tax policy and Social Security, which required approximately 400 hours of work.
42. Searches had to cover a number of years in order to avoid missing relevant statements. We watched carefully for any changes in individuals’ stands but did not detect any in these policy areas.
43. The only others who came close were Stephen Schwarzman and John
Malone, with five tax policy comments each, and George Kaiser and Eric Schmidt, with four each. Three others made three each.
44. For example, John Malone on Social Security: “You know, in my dream of dreams, we would take Social Security and Medicare and make them the legiti-mate retirement and insurance programs run actuarially that they should be, take them out of politics and not confuse welfare with insurance or retirement savings.
That would be a wonderful transition. But the question is, you know, is there the political will to go in that direction and you know, I’m skeptical that there is.”
45. As noted above, John Malone showed up in our search as mentioning Social Security once, but without clear expand/contract policy content— though it might be reasonable to interpret his reference
s to actuarial soundness and “welfare” as signaling a preference for a nonredistributive system with defined contributions rather than defined benefits, as in privatization proposals.
46. Altman and Kingson (2015, chap. 9) describe “the billionaires’ war against Social Security.”
47. Gallup n.d. and Newport and Saad 2005. As discussed earlier, Americans strongly and clearly oppose cuts to Social Security. Public support for or opposition to privatization is less clear; a bare question tends to elicit support, but support declines substantially to less than the majority level when additional information
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notes to pages 39–43
about privatization (e.g., abolition of guaranteed payments, subjection to stock market fluctuations) is given to respondents.
48. Page, Bartels, and Seawright 2013; Page and Gilens 2017, chap. 4.
49. These numbers do not add up to 26 (the number of individuals taking at least one stand on taxes) because two billionaires— Michael Bloomberg and Ronald Perelman— favored more revenue from some types of taxes but less from others.
50. Sensitivity analysis was carried out with different specifications, including ordinary least squares regression with a logged dependent variable, a logistic regression in which the dependent variable was transformed to capture whether or not a billionaire spoke at all, and a zero- inflated model. The substantive results proved not to be sensitive to these specification changes.
51. Our “heir” measure might more accurately be described as “nonentrepreneur.” Rather than attempting to untangle the complicated issues of exactly how much each billionaire got from parents by gift or inheritance, and at what stage of life, we simply coded as an heir anyone who did not participate in starting his or her own business.
52. A dichotomous consumer- exposure variable was measured by identifying whether or not the primary business through which a billionaire acquired his or her wealth marketed products directly to public consumers.
53. Two cases had relatively large Cook’s distance values, indicating some influence on the final regression results: Warren Buffett, with a Cook’s distance of 0.81; and Bill Gates, with a Cook’s distance of 0.23. Estimating the regression while excluding these two cases does not change the substantive patterns discussed above, although the magnitude of the estimated wealth effect drops by about half.
Billionaires and Stealth Politics Page 25