The Patriotic Millionaires are a nationwide confederation of 220 individuals who profess seven-figure incomes. Yet to hear them speak, you could swear you were eavesdropping on a reunion of Occupy Wall Street protestors.
They believe the wealthy should shoulder more of the country’s financial burden at this critical economic juncture. On the flip side, government ought to invest in things that promote the common weal and help Americans achieve success, such as education and infrastructure, while keeping the wolf from the door of the least fortunate.
If the Patriotic Millionaires’ message seems strikingly similar to progressive-media programming, it’s the group’s ultra-high-net-worth composition that distinguishes it.
“The point is who’s saying it,” best-selling financial expert and Patriotic Millionaire Andrew Tobias tells Private Wealth. “It would be like a group of oil-company executives advocating for a carbon tax, which already has support from people you would expect to support it. But if it came from fossil-fuel executives, that could impact the discussion,” says Tobias, whose works include My Vast Fortune and the software program Managing Your Money. Tobias is also treasurer of the Democratic National Committee.
Although the recent American Taxpayer Relief Act raised the income-tax rate on top earners from 35% to 39.6% and hiked the estate tax 5%, the Patriotic Millionaires have just begun their fight. Attacking a false (they say) conservative mantra—that taxes are simply the government’s way of killing incentive by stealing money earned entirely on one’s own—is merely their first foray into helping shape fiscal policy.
The group formed in 2010 as the Bush tax cuts’ first flirt with expiration neared. The idea of adding to the national debt by extending the cuts for America’s highest earners maddened two wealthy men in California, a lawyer and an early Google engineer who hit it big with stock options.
They circulated e-mails to some well-to-do associates, aided by the politically well-connected head of the Agenda Project, a New York economic think tank that now coordinates the group’s activities. For about a grand, a Web site was slapped up with a letter to the president urging a halt to the cuts for million-dollar earners. Major media attention came instantaneously, and faster than you can say Patriotic Millionaires for Fiscal Strength (the group’s full name), the upstart outfit was on the White House’s radar.
Marquee-name members include television producer/writer Norman Lear (All In The Family, Sanford And Son, The Jeffersons); travel host Rick Steves; platinum-selling head-shaved techno artist Moby; and the CEO of the Men’s Wearhouse, clothier George “You’re going to like the way you look” Zimmer.
A complete roster of members, along with their city and state, can be found at patrioticmillionaires.net, where millionaires can join and sign the letter to the president.
Their Stories Told
It’s easy to dismiss the avowedly anti-conservative bunch as a league of over-sensitive artistes, bleeding-heart blue staters or, as anti-tax zealot Grover Norquist was quoted as saying after meeting with some Patriotic Millionaires, “Democratic Party hacks.”
Richard Schottenfeld only partly fits the stereotype. He’s in deep-blue New York, that’s true. But he runs a proprietary trading and investment firm, Schottenfeld Group Holdings, and claims Republican registration.
“I joined because I wanted to be more vocal. I study markets and felt the country was running on mistaken principles and not creating a sound fiscal foundation for the next generation. I have three sons and want them to have the same opportunity I did, and I saw that slipping away,” says Schottenfeld, 52.
For Tal Zlotnitsky, who arrived in America as a child with his immigrant parents, becoming a Patriotic Millionaire is the latest chapter in a life that truly reads like an essay on America.
“We came here with nothing”—he emphasizes that word—“except a willingness to work hard. I received a subsidized lunch and when I was sick, my parents took me to a public clinic. I went to a public university, the University of Maryland, on student loans and a scholarship,” Zlotnitsky says.
A serial entrepreneur, he says money spent by the government brought him opportunity. “Government provided me a hand up, not a handout. And here I am now, 39 years old and very successful. But most importantly, I am eager to give something back to my country, eager to give other kids like me a chance at the same American dream.”
Other Patriotic Millionaires come from completely different birth circumstances. One of those is Abigail Disney, Walt’s great-niece. She spends much of her time in philanthropic work when she isn’t shooting a film in some far-flung part of the globe.
“Philanthropy is a valuable piece of building communities but it’s not enough on its own, and it will never be able to do as much good in the world as can be done if the world is running justly,” she says. “Philanthropy doesn’t replace what one should do in terms of making sure the government is acting equitably. The Patriotic Millionaires appeal to me because I care about my country and the economy.”
Why Pay More?
As suggested earlier, the group’s reasons for wanting to tax the rich aren’t particularly novel.
One is simple math. “We’re supposed to make up that lost tax revenue by borrowing from China or cutting back Pell Grants or letting our bridges crumble?” Tobias asks incredulously. Patriotic Millionaires prefer to see sound investments in the country’s future than to see a wealthy person’s wallet fattened now.
They argue that contrary to the fervent conservative view, raising taxes on the wealthy does not stifle job creation—and therefore doesn’t hurt the economy. It’s customer demand that drives Zlotnitsky and other business-owning Patriotic Millionaires to hire, not their tax bracket.
Tobias points out that after tax rates rose in the Clinton years, the economy performed splendidly. “Almost everyone got richer, with the rich getting richer fastest of all,” he says.
Schottenfeld adds, “If cutting taxes on wealthy Americans created jobs, we’d be swimming in jobs right now.”
Instead, the dramatic drop in the top individual tax bracket from 70% since 1980, plus myriad breaks favoring high earners, have produced inequality and hurt the middle class by funneling less money to education—“the real job creator,” Schottenfeld says—health care and other critical areas.
Now here’s the rub: This ultimately hurts the wealthy, too.
“Without a thriving middle class, businesses like Disney don’t have a chance. That’s an important piece of the puzzle,” says Abby Disney.
Zlotnitsky has much at stake as well. His present company, iControl Systems in Burtonsville, Md., is a supply-chain forecasting and collaboration firm, whose customers include some very large retailers and food companies. “If the consumer feels financially strained, then she buys less, or may not buy at all. That affects the corner store, the manufacturer, the distributor and a business like mine—and all our employees. Cuts in funding that directly affect the pocketbooks of middle-class families have a crucial impact on American job creation and economic prosperity,” Zlotnitsky contends.
Schottenfeld puts it a different way: “I believe that the success and stability of my country are more important to my long-term self-interest than any tax break I might get. A lot of my friends who are successful don’t quite understand that.”
Bastille Day, anyone?
Denunciations
The shout-back from detractors is that taxing the wealthy, besides punishing life’s winners, won’t solve America’s fiscal woes. The real problem is spending, although many Patriotic Millionaires want spending cuts, too. It’s just a question of where.
“Nobody wants the country to be less secure. But if you really could dig into the defense budget, my guess is that you’d find a lot of money is spent which doesn’t make us more secure,” Schottenfeld says.
Other criticisms are more visceral, such as the declaration that true patriots want less taxation, not more. Some call the group hypocritical for hiring experts to minimize their tax bill while taking corporate welfare for their businesses.
And as Norquist told the Patriotic Millionaires in their tête-à-tête, they are more than welcome to give money to the government if they like—to which the group retorted, stop using the roads and put out the fire yourself the next time the house is burning down if you don’t want to pay for government.
The Experience
Like the reasons for joining the Patriotic Millionaires, members’ level of engagement within the group varies. There isn’t a Patriotic Millionaires holiday gala or anything. Events focus strictly on the organization’s agenda.
Last year, several private conference calls were held with federal budget experts and insiders to prep the Patriotic Millionaires on key issues in upcoming policy fights. Economists, House Speaker John Boehner’s policy assistant and Erskine Bowles from the Simpson-Bowles deficit-reduction committee were among the guests on the hot seat.
The most dedicated Patriotic Millionaires take occasional, often spur-of-the-moment trips to the nation’s capital when a window opens to influence policy. On one memorable trip, over 40 Patriotic Millionaires attended a presidential press conference pushing the so-called “Buffett Rule” for taxing wealthy Americans, with six seated on the president’s dais. The group also got to spend time at the White House with senior administration officials such as Valerie Jarrett.
Turning April 15 Into A Celebration
For tax day, the group is planning to promote the idea that paying taxes is something you do for your country and fellow citizens. It’s part of Americans’ patriotic duty, in other words. Details of the campaign were not final at this writing.
In the longer term, the Patriotic Millionaires will push for what might broadly be termed loophole reform. One target is carried interest, which is taxed as capital gain, even if it looks and smells like ordinary income.
Eliminating corporate breaks, in conjunction with lowering the corporate tax rate from 35% currently, is another objective. Yet the existence of corporate loopholes betrays a larger issue that could be the ultimate brass ring for the Patriotic Millionaires: campaign finance reform.
Members of Congress spend roughly four hours a day fund-raising for their re-election, Schottenfeld learned on one of those group trips inside the Beltway. “That makes you very beholden to the people whose money you’re getting, and I think that’s why we get these loopholes that can save a company millions of dollars or squeeze out the competition”—outcomes that don’t necessarily serve the greater good. “Lobbying is a big reason for some of the problems we have in this country,” Schottenfeld says.
But forget the future for now. Has the movement had impact so far?
“No clue,” shrugs Tobias. “But it’s too important not to have tried.”
Schottenfeld believes the group has affected the dialogue in Washington. Yet he also derives other things from being a Patriotic Millionaire. “I find this interesting and I care about it, and look, it also dovetails into what I do. Getting access and information helps me trade better,” he says.
For Zlotnitsky, the primary benefit of being a Patriotic Millionaire is “not letting others who don’t share my views speak for me.” Some organizations claiming to speak for business only do so for big business, he says, “not entrepreneurs like me who care about the average American because that is not just our neighbor, but also our customer.”
There is risk in being a Patriotic Millionaire, Zlotnitsky admits. “Not all of my customers will agree with me and I may alienate or upset some people. That’s not fun,” he says.
Abby Disney, too, has experienced push-back. “I think there’s a special kind of anger reserved for people who are traitors to their own class,” she laughs.
But joining the organization has likewise been moving for her. “I’ve had working-class people reach out to me on social media and say the most extraordinary thank-yous. I think it really does everybody a great service to show that the wealthy are not just a faceless group walking lockstep, fighting for their own self-interest,” she says.
“Frankly, it makes me really proud when people say, ‘I think your uncle would be proud.’” Then she laughs, “But as conservative as my uncle was, I doubt it.”