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Monday, September 22, 2014 |  Madison, WI: 67.0° F  A Few Clouds
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Wisconsin has become a richly rewarding place for the über-wealthy
The new Gilded Age
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Once known as a progressive state, Wisconsin is now deep into what might be called the post-progressive era. The poster boy for the new Gilded Age is home-improvement retailer John Menard, the 57th wealthiest American, according to the most recent Forbes 400 list.

Menard makes all the big money generated at his company while opposing unions and fining his managers as much as 60% of their pay if they break one of his rules. A Minneapolis Star Tribune columnist once described Menard's style of handling employees as "something exhumed from the Bronze Age with all its primitive logic intact."

Wisconsin had nine billionaires on the Forbes list, and all so rich they are actually among the top 250. Wisconsin has 1.8% of the nation's population but 3.6% of the wealthiest 250 Americans.

The list is a stunning testament to the growth of wealth inequity in this nation. The wealthiest 400 Americans have an average net worth of $5 billion and are together worth $2.2 trillion, "roughly equivalent to the GDP of Russia," Forbes notes.

That $2.2 trillion owned by 400 people is greater than the wealth of the bottom 50% of Americans, meaning 150 million people are worth less in total than these 400 plutocrats.

Ranked 65th (and second in Wisconsin) is Herb Kohler (net worth $6.4 billion). The Kohler company for decades ran the ultimate company town, Kohler, Wis., where everything was owned by the company.

Ranked 103rd (net worth $4.4 billion) is Diane Hendricks, the sole owner of ABC Supply in Beloit, a roofing, window and siding wholesaler. Hendricks was the largest donor to Gov. Scott Walker in 2012, giving him more than $500,000, and became infamous among Democrats when a documentary film captured her urging him to turn Wisconsin into a right-to-work state.

The next-four-richest Wisconsinites are all beneficiaries of the SC Johnson company in Racine, maker of floor wax and cleaning supplies. They include Curtis Johnson, H. Fisk Johnson, Imogene Powers Johnson and Helen Johnson-Leipold, each with a net worth of $3 billion. Ranked 209th is Wisconsinite James Cargill II ($2.6 billion), CEO of the Twin Cities-based Cargill company, which makes ingredients for food manufacturers. Madison's Judy Faulkner, founder and CEO of the electronic health records company Epic Systems, is ranked 243rd ($2.3 billion).

While America's wealthy get ever richer, almost none of the money trickles down to others. Between 1993 and 2012, the real incomes of the top 1% grew 86.1%, while those of the 99% grew just 6.6%, according to a recent study (PDF) by economists at UC-Berkeley, the Paris School of Economics and Oxford University. The study found the wealth gap between the top 1% and bottom 99% is wider than it's been in a century.

The study goes all the way back to 1917, when the federal income tax began. It finds the wealth of the top 10% of Americans hit a peak of owning about 48% of all wealth in the year before the 1929 market crash, averaged a bit above 45% until 1940, then dropped to an average of about 33% from World War II until the late 1970s, when it began creeping up. Today the wealthiest 10% own more than half -- 50.4% -- of all wealth in America.

This trend has had a huge impact on Wisconsin. A study by the Center on Wisconsin Strategy found that between 1996 and 2010, the bottom 40% in this state actually saw their income drop by $2,407 while the income of the richest 1% grew by $168,773.

Between 2000 and 2010, the incomes of the top 20% of Wisconsinites rose by a total of $4.8 billion, while the incomes of the bottom 80% of Wisconsinites dropped by $4.8 billion. All of the gains of that decade went to the wealthy, according to an analysis (PDF) of state tax data by the Wisconsin Council on Children and Families.

Is there any way to narrow the wealth gap? Liberal groups have called for expanding the earned income tax credit, instituting more progressive taxation, increasing the value of the Homestead Tax Credit, offering better legal protection of efforts to unionize, raising the minimum wage and indexing it to inflation, and building the skills and education of Wisconsin's workforce.

The income tax was first created in Wisconsin in 1911, not long after the first Gilded Age, so that those better able to afford it would pay more in taxes. Thus, the decision by Walker and the Republicans to cut this tax, rather than the sales or property tax, gives the greatest benefit to the well off. The nonpartisan Legislative Fiscal Bureau found that more than 60% of the new tax cut will go to those making more than $100,000 a year. For those at the top, the new Gilded Age is about to become more golden.


Bruce Murphy is the editor of UrbanMilwaukee.com.

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