Monday, the White House proposed a new tax bracket for millionaires and billionaires, part of a $4.4 trillion proposal to rein in the country’s debt. Republicans such as Rep. Paul Ryan have called the proposal “class warfare,” but Obama defends it as only fair. Since the recession hit, the country’s rich have kept on getting richer. In fact, the flourishing of the ultra-rich raises an interesting thought experiment: In a world in which a lucky hedge fund manager can make billions in a single year, when will we get our first trillionaire?
The answer depends on variables including inflation, tax rates, and overall conomic growth. In a first case, let’s assume that our hypothetical trillionaire is actually only as rich as today’s richest American, Bill Gates, whose estimated net worth is $56 billion. Since inflation slowly erodes the value of the dollar, it will be easier and easier to hit the trillion-dollar mark as time goes on. (We were all once Zimbabwean trillionaires, after all.) If the United States averages 3 percent annual inflation, and the richest American’s fortunes keep up with Gates’, America would have a trillionaire in 98 years. But now let’s assume that the richest American’s fortune not only matches the rate of inflation, but outpaces it by, say, an additional 3 percent a year. At that rate, we should have a trillionaire in 50 years.
Even that may be a conservative estimate, considering how fast the super-rich have been getting super-richer. Gauging how quickly the richest American’s net worth is increasing is a tricky exercise, given that for the past 15 years it has mostly meant tracking the worth of just one individual—Bill Gates. (His friend Warren Buffett, the billionaire namesake of Obama’s millionaire’s tax, briefly topped him in 2008.) His worth has plunged and climbed along with the price of Microsoft’s stock, peaking at the height of the tech bubble in 1999 at an eye-watering $90 billion. But at an average pace of growth, between 4 and 9 percent per year, the richest American could possess a trillion sometime between 2050 and 2085, presuming no major changes to the tax code and a healthy conomy otherwise.