Personal Finance

The Myth Of The Big Bad Billionaire

Elon Musk’s takeover of Twitter
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has got many inflamed on and off the platform, angry that a billion gets to come in and scoop up a property used to broadly. How dare he. How dare the board let him.

In that context, a press release and recording from Project Veritas claims to have clips from the all-hands call when Twitter’s upper management and the board told the employees of the decision to sell.

Project Veritas has frequently edited videos and audio to create an apparent event that didn’t happen they way they tried to imply, so great wariness is a must. This release seems clearly edited to heighten the emotional effect.

But there was one line that was hard to see as possibly out of context, when board member Bret Taylor reportedly said, “By law, we are required to act in the best interest of our shareholders.”

That statement goes to the hart of this article’s headline. There are plenty of big and bad billionaires, whether someone who has used Twitter in ways that caused SEC sanctions or an avuncular figure who sadly explains that his secretary pays a higher percentage of tax than he does.

What the latter doesn’t go on to say is, “But then, I don’t have to use all the tax strategies so that happens.”

Similarly, acting in the best interest of shareholders isn’t the same as maximizing profits or shareholder returns, as the late Lynn Stout, who was a corporate law scholar and professor at Cornell, explained in the New York Times
NYT
in 2015. A company’s board is not obliged to sell the corporation, even if it’s for roughly $44 billion.

This isn’t to argue that Twitter’s board shouldn’t have sold the business. That’s a tough vast fortune to turn down. Instead, it’s a reminder that people with many millions of dollars can be just as bad, if not as big, and contribute regularly to the continuation of income inequality as billionaires do.

There are hundreds of billionaires in the U.S., maybe close to 1,000, depending on who does the count, according to the New York Times. But as much influence as they have, as much as they own, as much as they use outrageous strategies to avoid taxes and leave everyone else to shoulder the burden, they don’t own everything, run all companies, provide all the pressure on elected officials.

They don’t have all the money. According to data from the Census Bureau, the top 20% of the country’s economic distribution makes 52.2% of all the money. The top 5% gets 23% of the income.

It’s not all billionaires. There are too many businesses, too many employees, too many hard-pressed families, too many struggling to afford a home or buy food to look only at billionaires.

For example, when Musk wasn’t buying Twitter, who owned it? Looking at the 2021 proxy statement, Jack Dorsey held 2.26% of the company. But Vanguard owned 10.41%. BlackRock
BLK
, 6.65%. Morgan Stanley
MS
, 8.05%. Based on a $44 billion price, that’s $994.4 million, $4.58 billion, $2.93 billion, and $3.54 billion. Twitter’s current CEO, Parag Agrawal, has a base salary of $1 million, according to the 2022 proxy statement, with a 2021 bonus of $599,507 and $9 million in stock, which is now worth much more.

Even CEOs that make many millions a year typically are nowhere near billionaire status. Nor other top executives, most inheritors of wealth, business owners. Income inequality exists most obviously and clearly not comparing the common person to a Warren Buffett or Elon Musk, but to people who also have extensive control over life, but increasingly get ignored because of the country’s collective fixation on billionaires.

The wealthiest should pay a fair share of taxes. But so do the nearly 22 million millionaires in the country. Want a greater foundation of equity? Start with that nearly 9% of the U.S. population and work your way up.

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