Morris Pearl used to be one of the very rich folks who worked in finance, exploiting the rest of us. He was a financier who helped to bail out the banks, to force austerity on countries like Greece creating massive suffering—and he made a lot of money in the process.
But after a while, he told me recently, he realized that he wasn’t doing anyone any good—and now he’s the president of Patriotic Millionaires, a group that advocates for higher taxes on the rich.
Pearl isn’t some kind of socialist, or even, he says, that much of an altruist. He has a nice comfortable life, and he has no intention of giving it up. He told me he’s come to the conclusion that the social instability created by economic inequality is bad for everyone—including the rich.
Many historians suggest that FDR prevented a violent socialist revolution in the United States at the height of the Depression by raising income taxes on the rich as high as 75 percent, and using the money for a vastly expanded public works program and social safety net.
Roosevelt insisted he wasn’t a socialist. But a lot of democratic socialists today see the legacy of the New Deal as part of an agenda for the future of the us (it’s no mistake AOC talks about a “Green New Deal.”)
So it’s interesting to hear from very wealthy people who think both that the current system is wildly unfair—and that it’s alarmingly unsustainable.
I had a chance to speak with Pearl last week about the real problems with the US tax system, his group’s goals—and how possible it is in the era of Trump to make the very rich pay their fair share.
This interview is condensed a bit for space.
48HILLS Tell me how you got started with Patriotic Millionaires.
MORRIS PEARL I was working for Black Rock, helping governments bail out the banks. I was in Greece one day, in a nice fancy building, and we took a lunch break and I walked over to the window and saw what I thought was a parade. But it wasn’t a parade, it was a riot. I turned around and looked at all those bank executives, and I realized that what we were doing was good for the executives, but it wasn’t any good for anyone else.
48HILLS What did you take away from that experience?
MORRIS PEARL I realized that essentially the very wealthy were taking more and more of the economic pie, even though the pie was growing.
48HILLS Have you read the works of Thomas Piketty?
MORRIS PEARL Yes, of course. He came and talked at one of our meetings. What he says in essence is that if you’re rich, you invest your money and your existing wealth is getting bigger faster than the economy is growing.
48HILLS The Rand Corporation concluded several years ago that if the US had the same marginal tax rate as we had in 1975, the bottom 90 percent would have an additional $50 trillion. Should we go back to those marginal tax rates?
MORRIS PEARL Of course we could. But the bigger question is not the tax rate but what we tax. For the very rich, it’s just buy, borrow, die; they don’t pay taxes on anything. I don’t pay taxes because I don’t have any income, but I live very comfortably. It’s not just the rate you charge, it’s that so many of these assets aren’t taxed. The tax system does not include the money rich people have.
48HILLS The system you are talking about has created tremendous social instability and is one of the reasons Trump was elected. It’s just not sustainable and is going to lead to more instability.
MORRIS PEARL I agree.
48HILLS It’s not going to change in a peaceful manner unless we get people elected to Congress who advocate for higher taxes on the rich. Your group has a lot of high-worth people who could fund those kinds of campaigns. I haven’t seen that happening.
MORRIS PEARL Well, we just started TaxPac, but we are not that kind of organization. We’re more of a PR firm to help people with messaging. our entire budget is about $4 million a year.
48HILLS In San Francisco, we had a county supervisor who found effective ways to tax the rich to bring in money for affordable housing. And a handful of billionaires put up huge amounts of money to get him out of office. There was no comparable money pushing back. You have a lot of wealthy members who could do that if they wanted.
MORRIS PEARL You have a point.
48HILLS Under Trump, this is going to be very difficult.
MORRIS PEARL Yes, but I think the window has moved a bit. Then years ago, there was nobody talking seriously about this. We have moved from outside the conversation to inside the conversation. So that’s some progress.
