Self-made billionaires including Jeff Bezos and Elon Musk made huge profits during the Covid-19 pandemic but a new report shows there’s no beating family money when it comes to getting – and staying – really, really rich.
Ten of the US’s richest families, including the Walmart family and the dynasties behind industries including candy and cosmetics, also saw their assets balloon over the pandemic, with a shared increase in their combined net worth of over $136bn in 14 months, according to a report by the Institute for Policy Studies (IPS) published on Wednesday.
The report, Silver Spoon Oligarchs, details how these families have not only increased their wealth by billions in the last year, but have also worked to ensure the system supports this exponential growth over decades.
Chuck Collins, a co-author of the report and director at IPS, said: “If the system is functioning as it should, we should not see wealth accelerating over generations, it should be dispersing.”
In 1983 the Walton family, whose patriarch Sam Walton founded Walmart, were worth $2.15bn (or $5.6bn in 2020 dollars). By the end of 2020, Walton’s descendants had a combined net worth of over $247bn, an inflation-adjusted increase of 4,320%.
The family behind some of the US’s favorite candy bars, the Mars family, have also enjoyed a sweet return on their fortunes, increasing their family wealth by 28% or $21bn from March 2020 to May 2021.
The Mars dynasty began in 1911, when Franklin and Ethel Mars opened a candy factory that grew to produce bestsellers such as Milky Way and Snickers in the 1920s and 1930s. Today, it is run by their descendants.
In 2020, their family wealth was $94bn, according to the Forbes magazine Billion-Dollar Dynasties List, which was a key resource for the report. IPS compared information from the 2020 list to a similar list Forbes published in 1983 and adjusted that information to reflect what it would be in today’s dollars.
Between 1983 and 2020, Mars family wealth increased by 3,517% from $2.6bn to $94bn. They were one of 27 families to appear on the Forbes lists in 1983 and in 2020, and together those families combined assets have grown by 1,007% in 37 years.
Even among the super rich income inequality is an issue. The very, very wealthy did even better than their less rich cohorts. The five wealthiest dynastic families in the US have seen their wealth increase by a median 2,484% from 1983 to 2020.
The numbers for an average American family are a blip in comparison. From 1989 to 2019, the most recent year the data is available, a typical family’s median wealth increased by an inflation-adjusted 93%, according to the report.
Collins, director of the IPS Program on Inequality and the Common Good, said these families weren’t just making more money, they were also getting better at putting it out of reach of taxation.
The report outlines six “habits of highly entrenched dynasties”, which include limiting charitable donations and avoiding taxation through tools such as dynasty trusts, which protect the ultra-wealthy from getting taxed on money transfers over a long period of time.
Another habit is fighting tax increases for the wealthy. The Mars family corporation, Mars Inc, has spent more than $20m in the past 10 years on lobbying, including $720,000 in 2020 on “issues related to estate and gift tax reform”, according to the report.
The report outlined several proposals already under consideration to curb this wealth accumulation, including the Make Billionaires Pay Act, a proposal introduced by several senators to institute a one-time 60% pandemic wealth tax on billionaires’ gains in 2020. There is also a renewed push to increase funding for the notoriously underfunded Internal Revenue Service (IRS) as well as other efforts to increase inheritance and estate taxes.
But even with the proposals, more must be done, said Collins, to stamp out tax loopholes, offshore tax havens and certain types of trusts that allow families to hide their wealth.
“There is a pretty powerful wealth defense industry that has a vested interest in keeping this dynasty system growing,” Collins said.
Just last week, an investigation by ProPublica revealed that the 25 richest Americans paid a “true tax rate” of just 3.4% between 2014 and 2018, despite their collective net worth rising by more than $400bn in the same period.
“One reason we should be concerned about the ProPublica release, the amount of tax avoidance, is that maybe a sliver will end up in philanthropy, but most of it will be passed down the generational line,” Collin said. “So in a sense they are setting up the next generation of inherited wealth dynasties.”