In May 2012, the same month Mitt Romney made the “47 percent” remark that helped lose him the election, his consulting-industry alma mater, the Boston Consulting Group, released its annual report of global wealth, a statistics-laden summary of who’s rich where. The United States ranked seventh in millionaire households per capita. Of the countries that beat us, two are well-managed city-states — Singapore, which topped the list, and Hong Kong — and one is the world’s piggy bank, Switzerland. The remaining three ahead of us — Kuwait, Qatar, and the United Arab Emirates — owe their wealth to vast oil deposits.
So among countries that are not statistical outliers, because of either their size or their natural resources or their readiness to conceal Nazi gold, the United States is the millionaire capital of the world. Various proposals have called for some type of “millionaire’s tax.” One version would impose a minimum tax rate on those earning $1 million or more per year. Another would exclude them from a deal to extend the Bush tax cuts that are set to expire at the end of the year. These measures are quite popular by all accounts. Earlier this year, for example, an Associated Press–GfK survey found that 65 percent of Americans backed a minimum federal tax rate of 30 percent for households earning over $1 million, an overwhelming endorsement of President Obama’s “Buffett rule.” State governments have also gotten in on the act. This November, voters in millionaire-dense California passed by a margin of 55 percent to 45 percent a ballot initiative designed to “temporarily” hike taxes on high earners, and other states are sure to follow.
And yet the common conception of millionaires, on whom so much of the nation’s long-term fiscal viability depends, is largely a caricature. An accurate snapshot of this group — whether one understands it to include those who have $1 million or more in assets or those who make $1 million or more per year — shows that it is enviable, to be sure, but also that it pays a hefty share of the government’s bills. In 2007, a peak year for America’s high earners, the top 1 percent of households earned 19 percent of all income and paid 27 percent of all federal taxes, including payroll, corporate, excise, and income taxes.
Millionaires are also a surprisingly broad group of Americans, not just an über-wealthy group of idle rich. Among the millionaires-by-wealth, those whose net worth exceeds $1 million, the majority are working people, and not exclusively in professions that involve stethoscopes or compulsory neckties. Even the millionaires-by-earnings are a group that exhibits many qualities widely regarded as desirable: relatively fluid membership, entrepreneurial spirit, and increasing diversity of national origin as well as race. We might acknowledge the virtues of the millionaire class, even as we prepare to open its veins.
First, a note on the distinction between the millionaires who have $1 million in the bank or in assets, and the millionaires who stack another million-dollar block of cash in their accounts every year. The first group, as the Boston Consulting Group report noted, is not just large, but huge: 4.3 percent of American households — 5.26 million nationwide — meet this definition. (For perspective, though, keep in mind that about a quarter of households have zero or negative net worth.) The second group, millionaires-by-earnings, is more rarefied, and includes fewer than half a million tax-filing households per year.