Singer to Washington: Stop overtaxing the rich--we earned it!
By Lawrence Delevingne
Wed Jan 30, 2013
"Our nation is not a rigid, class-bound aristocracy. It is an upwardly-mobile republic--if we can keep it."
Billionaire Paul Singer railed against President Obama and
Democrats' efforts to increase taxes on the rich, arguing that
most wealthy Americans succeeded on their own initiative and
not because of a privileged upbringing.
Singer (Photo: Bloomberg)
"Advocates for higher taxes instead insinuate that wealth in
America is a rigged game, and that redistributive taxation is
necessary to level the playing field. But empirical reality is
not kind to that claim," Singer said in $21.1 billion Elliott
Management Corporation's yearend letter to investors this week.
To bolster the point, Elliott analyzed the backgrounds of
people on the Forbes 400, a list of the wealthiest Americans.
"Contrary to the rhetoric we hear from Washington, the results
of our study suggest that America remains an upwardly mobile
nation where anyone can turn ingenuity into success," Elliott
wrote. "In 2012, self-starters made up 64% of the Forbes 400,
while those who inherited their wealth made up 29.3%. Fewer
than 7% of those on the list came from beginnings we deemed to
be 'advantaged,'" the letter said.
Examples noted by Elliott include hardware mogul John
Menard, "who built post-frame buildings in college to
finance his own education," and healthcare entrepreneur Patrick
Soon-Shiong, "who grew up a second-class citizen under
South Africa's apartheid regime."
"Taken by themselves, these observations are only suggestive,
not determinative. But what they suggest is that upward
mobility is alive and well in the United States, and in some
ways getting stronger--and that the wealthy in America, far
from being a fixed class, is a group that remain open to
newcomers from all backgrounds, provided that they have access
to some form of higher education," the letter said.
Singer comes from humble roots himself. As a 2012
Fortune profile of Singer noted, he grew up one of three
children of a pharmacist and a homemaker in Tenafly, New
Jersey. He majored in psychology at the University of Rochester
before going to Harvard Law School. Singer then became an
attorney in the real estate division of the investment bank
Donaldson Lufkin & Jenrette but left after three years to
launch Elliott Associates in 1977.
A political conservative, Singer
supported Mitt Romney's presidential bid, which advocated
for lower taxes on the wealthy as a counterpoint to Barack
Obama's agenda. The hedge fund manager is number
392 on the Forbes list with an estimated net worth of $1.1
billion as of September 2012.
Singer's policy alternative to higher taxes is education. "All
this indicates that upward mobility in America would be
improved if policymakers spent less time calling for
redistributive taxation and more time devising education
reforms that actually work. Improving upward mobility is a
worthy goal, but a myopic focus on inequality as such can be a
destructive distraction," the letter said.
"Redistributive measures designed to transfer resources from
the top quintile to the bottom do nothing to improve mobility,
and can actually hinder it. Punitive taxation can harm
incentives for striving and risk-taking, while income transfers
can create dependency traps that keep people stuck at the
bottom. Our look at the Forbes 400 provides a timely reminder
that our nation is not a rigid, class-bound aristocracy. It is
an upwardly-mobile republic--if we can keep it."
A spokesman for Elliott declined to comment.
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ISSN: 2151-1845 / CDC10004H