{"id":2257,"date":"2020-12-15T08:56:57","date_gmt":"2020-12-15T08:56:57","guid":{"rendered":"https:\/\/www.radiofree.org\/?p=139400"},"modified":"2020-12-15T08:56:57","modified_gmt":"2020-12-15T08:56:57","slug":"our-youngest-self-made-billionaire-our-wealthys-oldest-bogus-claim-2","status":"publish","type":"post","link":"https:\/\/radiofree.asia\/2020\/12\/15\/our-youngest-self-made-billionaire-our-wealthys-oldest-bogus-claim-2\/","title":{"rendered":"Our Youngest \u2018Self-Made\u2019 Billionaire, Our Wealthy\u2019s Oldest Bogus Claim"},"content":{"rendered":"
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Photograph Source: Web Summit – CC BY 2.0<\/a><\/p>\n<\/div>\n

Myths die hard, especially when the myths in question serve to prop up the legitimacy of the richest among us. And the myth these richest hold dearest: that their grand fortunes represent a fitting reward for smarts and hard work.<\/p>\n

Wall Street has just juiced this deeply cherished myth with a stock public offering that\u2019s created<\/a> \u201cthe world\u2019s newest and youngest self-made billionaire.\u201d Meet Austin Russell, the 25-year-old founder and CEO of Luminar, a company aiming to outfit self-driving cars with laser technology.<\/p>\n

Russell holds<\/a> about a third of Luminar\u2019s stock. After the first day of public trading earlier this month, that stock\u2019s soaring value boosted Russell\u2019s net worth to $2.4 billion. Five days later, more soaring brought Russell another billion.<\/p>\n

All these billions, business commentators gushed, couldn\u2019t be going to a smarter guy. At age two, Forbes<\/em> informed<\/a> us, Russell memorized the periodic table of elements. \u00a0At age 11, the Wall Street Journal<\/em> added<\/a>, he was \u201cbuilding prototype supercomputers and optical-electronics systems.\u201d At age 13, marveled<\/a> Entrepreneur<\/em>, Russell filed his first patent.<\/p>\n

Four years later, this precocious young man dropped out of Stanford to found Luminar after winning a $100,000 fellowship from PayPal billionaire Peter Thiel. Ever since then, Russell has been fine-tuning<\/a> \u201claser sensors that bounce off objects, to give vehicles a three-dimensional view of their surroundings.\u201d<\/p>\n

His work, Russell assures us, hasn\u2019t been easy.<\/p>\n

\u201cScaling this up,\u201d he noted<\/a> after entering America\u2019s billionaire ranks, has \u201cbeen insanely intense, grueling.\u201d<\/p>\n

None of this past week\u2019s coverage about young Russell\u2019s emergence should particularly surprise us. Business commentators are always rushing to find brilliance in billionaires \u2014 and billionaires seldom shy from supplying the evidence.<\/p>\n

What should surprise us, at least a little bit, turns out to be the rush by a newly named Joe Biden appointee to endorse the heroic claims our captains of industry and their cheerleaders so regularly inflict upon us.<\/p>\n

This surprisingly full-throated endorsement came courtesy of Rep. Cedric Richmond of Louisiana, president-elect Biden\u2019s pick to direct the White House Office of Public Engagement.<\/p>\n

\u201cNobody\u2019s going to persuade me,\u201d Richmond told<\/a> a gathering of the Wall Street Journal<\/em>\u2019s CEO Council, \u201cthat CEOs in this country are bad people. CEOs in this country are creating jobs, they are supporting families.\u2019\u2019<\/p>\n

CEOs in this country are also making fantastically big bucks. They\u2019ve spent recent decades growing the gap ever wider between what they take home and what their workers earn. Major chief execs, the Economic Policy Institute calculates<\/a>, now make 320 times worker pay, up from 21 times worker pay in 1969 and 61 times in 1989.<\/p>\n

These CEOs remain exceptionally adverse to any move that might narrow that gap. Walt Disney, for instance, has just announced<\/a> the layoff of 4,000 employees, on top of the 28,000 layoffs the company announced this past October. This autumnal assault on Disney workers came after <\/em>the company \u2014 in August \u2014 gave its top execs a reprieve from pandemic hardship by ending the temporary corona pay cuts the execs accepted last spring.<\/p>\n

Disney\u2019s Bob Iger, for the record, pocketed<\/a> $47.5 million last year as CEO and chairman.<\/p>\n

The same economic insecurity Disney workers now face has become chronic nationwide. American workers a half-century ago had jobs that paid enough to support families and buy homes. Millions of Americans workers today, by contrast, find themselves trapped in a 21st-century \u201cprecariat.\u201d They have no security. And the myths that justify grand fortunes help lock this precariat in place.<\/p>\n

So let\u2019s start piercing those myths at every opportunity. Yes, Austin Russell certainly has smarts and works hard. But plenty of top execs a half-century ago also had exceptional smarts and worked hard and never made it anywhere close to the billionaire status Russell has now registered.<\/p>\n

Smarts and hard work haven\u2019t made Russell a billionaire. He owes his ten-digit status to a variety of factors that have nothing to do with talent or work ethic.<\/p>\n

Consider Luminar\u2019s lofty share price, the vehicle driving Russell\u2019s new-found fortune. That share price reflects a stock market awash with rich investors eager to speculate on unproven firms like Russell\u2019s that just might hit the jackpot. Those rich investors, in turn, owe their stashes of cash to decades of public policies that have crushed<\/a> trade unions and prevented workers from sharing fairly in the wealth they create.<\/p>\n

And let\u2019s not overlook the role the current federal tax code plays. High-tech corporate wunderkinds <\/em>like Austin Russell enjoy kid-gloves treatment at tax time, thanks to the obscure but incredibly potent \u201cfounders\u2019 stock\u201d loophole.<\/p>\n

Founders of start-ups typically don\u2019t take big paychecks as compensation. They take stock in their company instead. Over time, the stock appreciates in value. The founders pay no tax on that increase. Eventually, they start selling their shares, reaping huge windfalls. They do have to pay taxes on these profits, but at just the discounted \u201ccapital gains\u201d tax rate.<\/p>\n

And top execs getting on in years, tax watchdog Victor Fleischer adds, often bequeath founder shares of stock to their heirs, who only face taxes on the increase in the value of those shares after they\u2019ve taken possession of them. In other words, the vast increase in the value of the shares goes totally untaxed.<\/p>\n

\u201cThe tax treatment of founders\u2019 stock,\u201d notes<\/a> Fleischer, \u201crepresents a critical design flaw in a progressive income tax system\u201d that \u201ccontributes to the broader trend of increasing inequality, particularly at the very top of the scale.\u201d<\/p>\n

Those at the top and their cheerleaders have a justification, of course, for their preferential tax treatment. Our entrepreneurial geniuses, the argument goes, need an incentive to take the risks that create jobs and make our economy grow. But researchers, Fleischer points out<\/a>, have found next to no evidence that tax breaks for entrepreneurs do anything more than reward these entrepreneurs for what they would be doing anyway.<\/p>\n

Many Americans, observes Fleischer, take risks and get no tax breaks for their risk-taking.<\/p>\n

\u201cIt is not self-evident,\u201d he writes, \u201cwhy risk taking by rich executives and venture capitalists is more valuable than risk taking by, say, a Korean-American grocer, a Mexican-American restaurateur, a farmer in California, or an Uber driver in Miami.\u201d<\/p>\n

Joe Biden campaigned on a call for a tax code that ends the \u201cfounders\u2019 tax\u201d loophole. His advisers have detailed changes that would both tax the capital gains of America\u2019s rich at ordinary income tax rates \u2014 in effect almost doubling, the Tax Foundation reports<\/a>, the federal levy on capital gains income \u2014 and tax the unrealized capital gains the rich bequeath to their heirs.<\/p>\n

The Congress that takes office in January will be unlikely to enact such changes, given the party split in the Senate. Fundamental changes in the federal tax code will have to await the results of the 2022 midterm elections. But what we can do right now: change the conversation \u2014 and blow away the bogus rationales that let billion-dollar fortunes proliferate at our economy\u2019s ridiculously lofty summit.<\/p>\n

The post Our Youngest \u2018Self-Made\u2019 Billionaire, Our Wealthy\u2019s Oldest Bogus Claim<\/a> appeared first on CounterPunch.org<\/a>.<\/p>\n\n

This post was originally published on Radio Free<\/a>. <\/p>","protected":false},"excerpt":{"rendered":"

Photograph Source: Web Summit \u2013 CC BY 2.0 Myths die hard, especially when the myths in question serve to prop up the legitimacy of the richest among us.\u2026<\/p>\n","protected":false},"author":55,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[22,266,4],"tags":[],"_links":{"self":[{"href":"https:\/\/radiofree.asia\/wp-json\/wp\/v2\/posts\/2257"}],"collection":[{"href":"https:\/\/radiofree.asia\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/radiofree.asia\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/radiofree.asia\/wp-json\/wp\/v2\/users\/55"}],"replies":[{"embeddable":true,"href":"https:\/\/radiofree.asia\/wp-json\/wp\/v2\/comments?post=2257"}],"version-history":[{"count":1,"href":"https:\/\/radiofree.asia\/wp-json\/wp\/v2\/posts\/2257\/revisions"}],"predecessor-version":[{"id":2258,"href":"https:\/\/radiofree.asia\/wp-json\/wp\/v2\/posts\/2257\/revisions\/2258"}],"wp:attachment":[{"href":"https:\/\/radiofree.asia\/wp-json\/wp\/v2\/media?parent=2257"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/radiofree.asia\/wp-json\/wp\/v2\/categories?post=2257"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/radiofree.asia\/wp-json\/wp\/v2\/tags?post=2257"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}